Good Stuff Podcast - Episode 2: The Value Trap Hosts: Andy and Pete Andy and Pete dive into their "Value Trap" framework a visual framework to explain how AI will transform industries and the approach to escape the value trap. Introduction and reflection on their lo-fi podcast approachExplanation of the "Value Trap" concept Phase 1: Cost reduction through AI implementation Phase 2: Revenue growth and pricing power Phase 3: Competition and mean reversion - Capital allocation strategies for the AI transition - Business characteristics that fare better through this transition - The paradox of technology laggards benefiting most from AI - Strategies for incumbents: The "Netflix model" of business transformation - Buy vs. build approaches for traditional businesses - Risk management during AI transformation - Potential macroeconomic impacts of widespread job displacement - Monetary policy implications and inflation concerns - Buy Bitcoin "This is a renaissance for entrepreneurs. If you're entrepreneurial minded, this is just a huge, an amazing time to be alive."

Hosts: Andy and Pete (recorded at City Beach, Perth) Episode Overview: The inaugural episode explores how AI will transform business models, where value will accrue, and strategic approaches for businesses adapting to AI. Key Discussion Points: Value Shift in AI: The hosts argue that value in AI won't primarily accrue to companies like OpenAI but to traditional service businesses that leverage AI to transform their operations. Transformation of Traditional Businesses: Businesses with language-heavy workflows and high human labor costs can use AI to shift the "unit of intelligence" from humans to scalable AI systems, potentially achieving software-style margins. Hyper-Localization: Pete predicts a future where power and control shift to small businesses that can leverage commodity intelligence, rather than large centralized players. SaaS Evolution: Discussion about whether SaaS business models will decline as AI enables more custom-built solutions specific to individual business needs, reducing dependency on one-size-fits-all platforms. App Players vs. Agentic Workflows: The hosts debate whether there will be an "app player renaissance" or if agentic workflows will eliminate the need for traditional application interfaces. First Principles Thinking: Businesses need to reimagine their processes from first principles rather than simply adding AI tools to existing workflows. Human Role Transformation: A key insight is the shift of humans from being central to business processes to working "at the edge" - where humans become interfaces with the real world while AI handles core processes. The Value Trap: Andy and Pete introduce the concept of the "value trap" - where initial AI efficiency gains create massive value, but competition eventually erodes pricing power, potentially creating challenging transitions. Transformation Strategies: Discussion of whether businesses should create "digital twins" (like Netflix did when moving from DVDs to streaming) or transform their existing operations. Capital Allocation Opportunity: Private equity and venture capital firms are already raising funds to acquire businesses specifically to implement AI transformation strategies. Looking Ahead: The hosts tease a deeper discussion of the "value trap" concept for episode two, promising to show listeners how to navigate this transitional period.Closing Thought: "We spent the last two decades searching for product market fit, and it turned out the valuable thing was just to stick with the companies that already had it."