Profitability is a Human Problem, Not a Math Problem

Sean Weisbrot: What is eight x and why are you so bullish on what you do with it?

Matt Putra: Yeah, so we are former CFOs, um, who've run bigger businesses and now we're helping lower to mid-market businesses run their businesses better.

Matt Putra: And what I love about what we do is we are deeply, deeply embedded with the business, with their marketing team, supply operations, finance and ownership.

Matt Putra: We're helping them work better together. When you do that, research proves that you make a lot more money.

Matt Putra: So that's why I love WHI what we do.

Sean Weisbrot: And you're focused mostly on e-commerce brands,

Matt Putra: e-commerce and CPG, and we do some clean tech and some green tech as well.

Sean Weisbrot: So you said it, so I have to ask, why did you say that there's a difference between E-commerce and CPG?

Matt Putra: Well, there's a perceived one. I think a lot of times e-comm people think it's, you know, one, a single channel online only.

Matt Putra: Um, most of the time, at least at this point, anybody that's succeeding is typically doing CPG sales anyway.

Matt Putra: Um, but CPG strictly would be, you know, consumer packaged goods through retail, like, uh, in-store environment.

Matt Putra: And then they would say, e-comm is the other side of that. But most people are omni now.

Sean Weisbrot: I was gonna say like D two C, like you could sell the con.

Sean Weisbrot: So for people who don't know, CPG is consumer packaged goods.

Sean Weisbrot: You could sell them through retail, you could sell them direct to consumer.

Sean Weisbrot: DTC is the, the, the, the, I don't even know what the word is.

Sean Weisbrot: The what's what, how do you say that? The acronym? The No, the acronym. Acronym, yeah. Yeah. Acronym. Yeah.

Sean Weisbrot: The word acronym was, uh, blanking for me. Um, it's Friday already in my head.

Sean Weisbrot: So how are you using AI in the business?

Matt Putra: Yeah. Right now I would say we're using AI a lot for our internal processes.

Matt Putra: So we have like a client coordinator agent who's listening to all the calls, taking notes, giving notes to our internal teams, um, and also like listening for sentiment.

Matt Putra: So are these words precursors to somebody being upset? So we've done a lot of analysis.

Matt Putra: Now we've looked at people who have left, who were irritated, and we can look three or four calls before that point.

Matt Putra: What are they saying? What are they doing? What are they asking?

Matt Putra: 'cause we're trying to predict when they'll be upset so that we can get ahead of it.

Matt Putra: So that's one big one that we're doing is just, I mean, it's gonna equate to better service, but for us, we just know when to dig in more or, you know, change something.

Matt Putra: Um, obviously a lot of administrative processes, uh, workflows and any time you have to transfer text from here to there and AI can do something like that.

Matt Putra: Um, we're also doing AI for outreach as well. Uh, we do a lot of research. Um.

Matt Putra: Nothing much on the delivery side for us at this point, but we're, we're working on that too.

Sean Weisbrot: It sounds like quite a lot actually.

Sean Weisbrot: You, you made it same in the beginning, like, well, you know,

Matt Putra: yeah. I mean, we have a, a dedicated person full-time working on AI and engineering for us.

Matt Putra: Uh, we have a part-time person as well, and we had three people.

Matt Putra: Um, but we're down to sort of one and a half right now.

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Sean Weisbrot: How has your operations changed as you've been more automated?

Sean Weisbrot: Do you find it getting better or do you find there slippages in in things?

Matt Putra: Uh, no. I would say it's better, so I wouldn't say we've saved a ton of time, or maybe we have what, we've redeployed it anyway.

Matt Putra: We're not just like working less. But I would say our outputs are better, our understanding is better.

Matt Putra: Because again, like these ais are keeping notes and helping us think better and maybe catching things that we've missed.

Matt Putra: So I would say our outputs are better. Uh, when we working with a client on a thorny issue.

Matt Putra: Obviously all my, my staff have access to Gemini, which just got really smart, and so we're using it.

Matt Putra: Um, so how do we understand the client's problems better? How do we analyze their stuff better?

Matt Putra: Um, you know, we're doing, like for example, I'm trying to understand, can you.

Matt Putra: Predict future sales or CPMs and, and click through rates with AI given historical data.

Matt Putra: So we're working on a ton of stuff to help people predict better and make better decisions.

Sean Weisbrot: It's interesting you say that because there's a company I'm working with that helps B2C brands that are a probably mid-market.

Sean Weisbrot: Um, they, they were a traditional service agency focused on, on this, where the companies were having an issue managing the number of campaigns, the number of ad sets and ads and things like that.

Sean Weisbrot: And so traditionally, a human from each of those teams were what was responsible for understanding, you know, what should they do, should they increase the spend on a certain campaign, should they kill a campaign?

Sean Weisbrot: How could they make derivatives of this campaign so that they have a unique, uh, and fresh, you know, angle and whatnot.

Sean Weisbrot: And it was a really tiring thing for their clients.

Sean Weisbrot: So they decided to build an AI agent that would actually do all of the work for them and give them much better, clearer, more realtime insight into how to handle these things.

Sean Weisbrot: And their businesses just exploded as a result of, of this new offering.

Sean Weisbrot: That's awesome.

Matt Putra: Yeah, we run our own ads too, and it's, uh, you know, a lot of work, uh, to be in there every day.

Matt Putra: Looking at things, creating new stuff. So much work. That's great.

Sean Weisbrot: Yeah, something that I don't have much experience with, but I understand from the other side because I have a partner that I work with who is a meta partner, and he gets a line of credit from, uh, you know, from meta directly.

Sean Weisbrot: And so we're able to, we, we don't help the clients with their ads, but we support them through, um, having their accounts, you know, giving them accounts that are really strong that can handle different kinds of, uh, gray and black hat kind of.

Sean Weisbrot: Advertising things that are harder to run for a lot of things.

Sean Weisbrot: And so we, we get to see their struggle, but from the other side, which is like, oh, I don't know how to make this thing profitable, or, I'm trying.

Sean Weisbrot: So we, we constantly are talking to the clients about that. So

Matt Putra: I might need to talk to that person.

Matt Putra: I have some clients that are that struggle 'cause they're on the edges of what meta thinks is, is acceptable.

Sean Weisbrot: Okay. Well we can definitely talk about that later.

Matt Putra: Amazing.

Sean Weisbrot: See, this is why I love doing podcasts. Of course. So.

Sean Weisbrot: Is there something unique about what you're doing that gives you an edge?

Matt Putra: Yeah. Yeah. Um, I guess there's, there's maybe one thing that's not us and then a couple things that are us.

Matt Putra: So the, the not us part is, I joined Hampton, uh, a year ago, just, uh, Hampton.

Matt Putra: It's like the group for CEOs or whatever, and. I, I, I feel that being in that group has sort of raised my, my thinking of what's possible and, and, and achievable.

Matt Putra: So we're pushing hard on AI a lot because we can bounce ideas off each other, like they share templates and things.

Matt Putra: So that's been really cool for me.

Matt Putra: Um, and then on, on our side, what I've always believed is over-serving. And so.

Matt Putra: When we take a client on who wants us to be their CFO or their finance team, we almost say yes to everything.

Matt Putra: And in so doing, they, they begin to ask us questions that are just outside of finance to hr, ops, inventory, supply chain.

Matt Putra: And so what what we do is we embed ourselves now, uh, structurally we've changed our structure a little bit.

Matt Putra: So we embed with the supply team, we embed with the marketing team and the finance team. And the executives.

Matt Putra: And we have this like defined process where we check in with each of those teams and weekly cadences and make sure that they're all running off the same song sheet.

Matt Putra: Um, and so what that prevents is over ordering, under ordering misreading demand.

Matt Putra: We do all the data prep, we do all the cleaning, um, but we have sort of frameworks for decision making among these four teams.

Matt Putra: Um. We find people are working a lot better together.

Matt Putra: We find the executives or owners don't have to be the police men or women anymore, or the referee, um, because the teams learn to referee themselves.

Matt Putra: Um. And we are, we are finding, we are creating savings on inventory so we, we can reduce the inventory but increase their on time fulfillment at the same time.

Matt Putra: Um, we find cost savings in freight, generally we see increases in EBITDA of one to 2%.

Matt Putra: Um, so we've gone very, very high touch, very embedded, uh, and that's, that's what I love doing most of all.

Matt Putra: So, yeah.

Sean Weisbrot: Are you building agents to handle the supply chain and inventory management?

Matt Putra: Not yet. Right now we are just rolling up our sleeves, so to speak, and, and digging in. Obviously we have analysts, so we have analysts, we have supply chain and analysts, we have accountants, we have CFOs, we got all that stuff and, but we're just digging in with elbow grease.

Matt Putra: Um, I would say when. People use automation too early, it tends to backfire.

Matt Putra: And so what we do in a lot of cases is we pull back on the software, we pull back on the automation, and we ask people to have more human conversations.

Matt Putra: And when, when we fight, when you do that, the whole company starts to run better.

Matt Putra: And then we haven't gotten to the point yet where then, where now we're going back on the software side.

Matt Putra: Um, yeah, I'm just finding that that profitability is not a. It's not a math problem, it's a human problem.

Matt Putra: And so that's how we're working on it.

Sean Weisbrot: What do you mean it's a human problem?

Matt Putra: Well, so as the business grows, and you'll know this, you hire people that then have authority to do things.

Matt Putra: So a classic example is you hire your first supply chain person.

Matt Putra: And they go, oh man, to better serve the West Coast, we should have another warehouse over there.

Matt Putra: And to better bump our a oob, we should have a new skew and we should have this much safety and so on.

Matt Putra: And so what happens is that you hire people who are experts at their thing and they want to show value and so then they do more stuff.

Matt Putra: But doing more stuff often creates drag operationally. So you add another warehouse, now you've doubled the safety stock requirements.

Matt Putra: So you've just taken cash outta your business just 'cause you've added to new warehouse where your customers are likely fine with four days shipping, let's say.

Matt Putra: Um, and so the premise is that well-meaning very talented people destroy value in a company when they're not aligned.

Matt Putra: Um, and so we work on the alignment part and so then we help these well-meaning, and they're all very talented most of the time.

Matt Putra: We help them stay aligned on the plan and making things as simple as possible, reducing complexity, and then you add the well meaning people and then the business gets better, more valuable.

Sean Weisbrot: Can't you just put an AI in charge of those decisions so you don't need a human to be aligned?

Matt Putra: I mean, that's fair. So probably, probably, uh, I haven't yet cracked that.

Matt Putra: Um, I think maybe we will or somebody will. Um.

Matt Putra: But for now on supply chain, like I think if you ran an AI against your supply chain, it probably would suggest opening another warehouse.

Matt Putra: I would, I would think. Um, but maybe if you set up your constraints intelligently, it wouldn't, I don't know.

Matt Putra: Um, that said, we looked at a software where the client of mine, they were high eight figures, uh, growing, raising another se follow on series A. And we looked at this software called Relax, and they ran their algorithm against our supply chain and they thought they could reduce our inventory by, I think it was 20%, and, and, and then increase our service levels.

Matt Putra: So on time fulfillment from 94 to 97%. And that would've given us approximately between cash and profit, another million and a half dollars.

Matt Putra: Um, so I don't know, I think, but the software was 250 grand a year.

Sean Weisbrot: So they're saving you 750,000.

Matt Putra: Yeah, it was worth it. It was worth it a hundred percent, but it's just very expensive.

Matt Putra: So I don't know. I think probably yes at some point.

Matt Putra: Uh, but right now, um, we still believe in the power of human conversation.

Sean Weisbrot: I am, I'm in between. Tell me about, trying to think about how.

Sean Weisbrot: I can make myself more efficient by doing less. Yep.

Sean Weisbrot: So like I see there's people using Cursor with Claude or Claude Code where Claude Code is now your CTO instead of your, your, uh, junior level developer, a hundred percent with debugging and test.

Sean Weisbrot: It can create QA tests and stuff like that. All sorts of things. So I'm.

Sean Weisbrot: I had built a, a FinTech, or I had, I had built a financial SaaS by myself using Cursor and Claude.

Sean Weisbrot: Mm-hmm. So I, I had built it in a certain way, and when I built it, I built it with a traditional SaaS mindset where I'm gonna build a SaaS and then I'm gonna figure out how to make it useful, more useful with AI and everything worked.

Sean Weisbrot: But then I put it down for a few months because I got busy with other things and I didn't have any customers yet, although I had a few businesses that were interested in using it.

Sean Weisbrot: And now that I'm much more involved with startups, and I'm seeing that a lot of 'em are using agents, especially like yourself.

Sean Weisbrot: I'm like, you know, maybe I should go back. Let Claude have a crack at the code base and go, Hey, this is how we can turn this from a traditional SaaS with AI features to an AI native or an AI core product That's much more agentic.

Sean Weisbrot: Because the goal was actually to be kind of like a partner, kind of like a CFO partner where it, it takes in your QuickBooks, but ignores all of the revenue.

Sean Weisbrot: It only looks at your expenses. Because humans really suffer when they're looking at the p and l.

Sean Weisbrot: They're looking at both sides, and so they're trying to balance something.

Sean Weisbrot: But in most cases, especially when you cross a million a year and spend whatever that, you know, whatever that is you're spending on, you have like as a founder, lost control of the budget.

Sean Weisbrot: You'll have at least one, possibly two, maybe even three more people that have some budget they can spend.

Sean Weisbrot: And so. At that point, you probably have a financial officer or an accountant or somebody.

Sean Weisbrot: And so someone needs to be able to see what the hell is going on with all of the expenses.

Sean Weisbrot: And so I thought if I built this traditional SaaS, you know, businesses could look at it and there's a chat bot that's trained on, you know, it's able to access their live real-time data so you could communicate with it, even though it's a GPT wrapper for that part.

Sean Weisbrot: Mm-hmm. And then I'm like. There's gotta be a better way to do this because I had built something that was essentially obsolete, like as I was building it, because if you talk to VCs, they don't care about traditional SaaS with AI on top.

Sean Weisbrot: They want AI native. So if it's gonna be a fundable business, it has to be an AI native type of system that's agentic and fully automated and all this shit, or nobody cares.

Sean Weisbrot: Um. So it's crazy how you build something and it's obsolete.

Sean Weisbrot: That's why e-commerce is great, because you know, it's less likely to become obsolete.

Matt Putra: Well, this is the thing, right? I mean, we're grappling with, there's a chance that in a, in a couple years, I won't have a business, right?

Matt Putra: And so we're grappling with that, and that's part of why we're going very, very high touch.

Sean Weisbrot: That's a good idea. So that, that's why when you were saying you look at, you know, these different aspects of the business, I thought it was really great.

Sean Weisbrot: It's, it's smart, but at the same time, you could probably have agents doing all of that stuff so you can stay high touch without needing more humans to remain high touch.

Sean Weisbrot: So you can offer those services to remain sticky while it doesn't increase your cost of serving those people.

Matt Putra: Yes, yes. Yeah, I think so. I mean, I think that as we do more of this work.

Matt Putra: We'll be able to create proprietary algorithms probably. Right, and that might be one of the ways we go about it, is create our own software that maybe we just deploy it for our clients only, but it ingests their data, uses our algorithms, and spits out information back to them.

Matt Putra: That would be probably the direction we'd go in eventually.

Sean Weisbrot: Do you believe that AI is utopian or dystopian?

Matt Putra: Well, that's a very good question. I choose to believe the utopian version.

Matt Putra: I know that there is a very real possibility of a dystopian version, um, but the one where AI takes all the jobs and we all get a great universal basic income and we just chill out, is the one that I'm sort of choosing to go along with.

Matt Putra: I know there's a real risk though of, of a dystopia. Where, where are you at?

Sean Weisbrot: I, I don't think there's a chance for a utopia.

Sean Weisbrot: Because the people that are running these AI have no incentive to do anything other than put more money in their pockets.

Matt Putra: Yes, but the, the government though, we one would hope, well, not that we should trust them all the time, but one would hope they'd step in at some point and do something.

Sean Weisbrot: Well, the US government has.

Sean Weisbrot: Made a point to prevent states from regulating AI on their own basis. Mm-hmm.

Sean Weisbrot: Which could potentially be good, but then you have to trust that the federal government is capable of understanding AI to a point that it can create an overarching regulatory system for ai, which I don't trust 80-year-old white men with beards to understand ai.

Sean Weisbrot: Nope, that's fair. So if the US is in charge, I don't trust it.

Matt Putra: I think, I suppose the mechanism would be GDP should increase, right?

Matt Putra: And they will have to tax on the AI economy.

Matt Putra: The tax would be higher, I would assume, because the, I would, well, the company, so I, I'd imagine that the workload or the margins should increase astronomically at some point, thus leaving more room for tax.

Matt Putra: Again, we hope. And if more tax, hopefully they could redistribute that.

Matt Putra: So again, margins should go up astronomically at some point.

Matt Putra: Um, and so either prices should come down a lot, which can't trust private companies necessarily, but with that margin, the federal government should tax them more, and the hope is that they'll return that in the form of UBI.

Matt Putra: That's the hope.

Sean Weisbrot: But the government could also just go, all right, well. We've got more revenue. Thanks guys.

Sean Weisbrot: It's possible they have the revenue and they just put it into Department of War. Yeah, that's possible.

Sean Weisbrot: Build more drones to fight China. Well, yeah. Yes. This turned dark very fast. Well,

Matt Putra: it's okay. I mean, look, I think again, I, I, I still, I still.

Matt Putra: Think there's a high likelihood of a generous UBI and we're all okay.

Sean Weisbrot: I think a lot of people are delusional about UBI for one single fact.

Matt Putra: Go ahead.

Sean Weisbrot: If the goal is to give every American a thousand dollars a month, that's 350 million times a thousand times 12. Mm-hmm.

Sean Weisbrot: Trillions of dollars, where is it gonna come from?

Sean Weisbrot: Trillions of dollars and trillions of dollars a year. What is the current GDP?

Sean Weisbrot: Um, I think it's like 30 billion. Uh, 30 trillion. Yeah.

Sean Weisbrot: So I would imagine it'd be like a hundred percent of the GDP every two or three years that would be an issue.

Matt Putra: Yeah.

Sean Weisbrot: Five years, whatever it is. It's just a thousand and, and like.

Sean Weisbrot: A thousand dollars right now is not even half of a month's rent for the average American.

Matt Putra: Yeah.

Sean Weisbrot: So what is it supposed to do?

Sean Weisbrot: It, it's gonna give you half of a place to live and then you still can't even feed yourself.

Sean Weisbrot: Can't close yourself. Clo, clothe yourself. Can't drive anywhere like you.

Sean Weisbrot: You would need six to $10,000 per person per month.

Sean Weisbrot: Unless the cost of everything was dis inflated so deeply that the entire planet just imploded financially and a brand new system came into place where everything cost zero again.

Sean Weisbrot: Where, you know, bubblegum cost, LA scent. Yep. You would have to, you'd have to destroy the entire global economy to make this work.

Sean Weisbrot: Hmm. It would have to become a post money society.

Matt Putra: That's an interesting point you make 'cause.

Matt Putra: If AI and robots are doing all the work, why do you need money?

Matt Putra: Well, and or why do you need money? Yeah, exactly. Yeah.

Sean Weisbrot: The, the fact remains that we can feed every human.

Sean Weisbrot: We just choose not to through supply chain as management.

Matt Putra: Yeah.

Matt Putra: Right. So there's a margin plus efficiency. If we had AI making all the decisions.

Matt Putra: Which posts other problems.

Sean Weisbrot: But the AI might also decide that instead of fixing those mismanagement problems, it's easier to probably let some people die.

Sean Weisbrot: Yep. Rather than feed them, which is what humans already do. Yep.

Sean Weisbrot: Like iRobot too. All those, at least, you can't even really trust the AI to do what's best for humans.

Sean Weisbrot: This is why I struggle to see a utopian path.

Matt Putra: Yes. And I know that. My choosing to imagine the utopia is maybe a little naive, but I can't influence the decision either way.

Matt Putra: I think my approach is to try to create a valuable company very quickly, exit so that my family's okay, and yet still choose to believe in eutopia even though I'm maybe buffering the, the downside.

Sean Weisbrot: Well, what you're doing is choosing you.

Sean Weisbrot: You are pretending you believe in the utopia while preparing for the dystopia. That's fair. That's fair.

Sean Weisbrot: And so by, by telling yourself, you believe in the utopia, you're preventing the stress you might go through in acknowledging the dystopian future.

Sean Weisbrot: Yep. So that you can run the company to make the money you need in order to go and hide in New Zealand with your family.

Matt Putra: That's totally fair. Totally fair. I think you're right.

Matt Putra: I don't wanna stress about the dystopia and I don't wanna talk to my kids about dystopia.

Matt Putra: Uh, and, but however, I'm working my ass off to build something very valuable very quickly.

Matt Putra: Um, and that the, in the hopes of an exit so that I don't have to stress about it.

Sean Weisbrot: And I think the smart people understand that there's only really a few years before five, right?

Sean Weisbrot: I think five is generous. Yeah, before things are really bad in that regard, and so like people say, oh, we're in cycles.

Sean Weisbrot: Like I don't think we're in a cycle. I don't think we're seeing a recession.

Sean Weisbrot: I think we're seeing the downfall of the financial system so that AI can take over.

Sean Weisbrot: Hmm. I don't think there's gonna be a boom. I think we're seeing the global financial economy.

Sean Weisbrot: Kind of becoming something different.

Matt Putra: There'll be a boom for some,

Sean Weisbrot: right. Elon Musk and Sam Altman.

Matt Putra: Well, it depends. I think if the average person can deploy, I dunno what the number would be, but get money in the, into the market, I think they will see a windfall as efficiency picks up with ai.

Matt Putra: But if you can't get money into the system, I think that'll be, you'll be suffering is my, is my, again, in the dystopian version.

Matt Putra: And there's always gonna be a period of time where it's really bad before we figure out utopia.

Matt Putra: So I don't know how long that would be, but there's always gonna be a version where it's shitty for a little bit.

Sean Weisbrot: You'll only have a utopia if you get rid of governments

Matt Putra: well. So, yeah. So even if, even if. So let's assume we acknowledging you, hope it's possible.

Matt Putra: There's still gonna be a bad period of time while we've, there's a transition, but

Sean Weisbrot: that's gonna happen as, as your kids are growing up and as my, I don't, I don't have a kid yet, but like, yeah, it's gonna happen as my kid is becoming an adult.

Matt Putra: Or earlier. Or earlier. Yeah. And so, but if the people can get money in the market, even in the stock market and, and without picking, but they will see major efficiency gains in the biggest companies creating a lot of shareholder value, I think one of the thinking is that you'll see an astronomic inflation of economic value in the stock market if you can get money in there.

Matt Putra: There's a chance you can be okay. Furthermore, if you can get money into private listings, so Venture Angel and you can pick that appropriately, not that I'm good at that kind of thing, and this is not financial advice.

Matt Putra: There are people who will see massive windfalls as AI takes over.

Matt Putra: So for me, again, can I create liquidity very quickly, deploy it or sell my company?

Matt Putra: That's sort of the plan.

Sean Weisbrot: Good

Matt Putra: luck. Thank you.

Sean Weisbrot: Good luck to all of us. We need it. We need it. Yeah.

Sean Weisbrot: To go out on a better note, what's the most important thing you've learned in your life so far?

Matt Putra: I think an irrational belief in oneself is the most important thing.

Matt Putra: Um, I'll credit my mother with this. She was irrationally told me my whole life that I was gonna amount to something.

Matt Putra: And I, we didn't see that that was possible until I was probably in my late twenties.

Matt Putra: And I think at this point now, I just sort of think I can figure anything out.

Matt Putra: Uh, you, I'm very optimistic, as you might tell. Um, and so I just think I can, I can figure anything out no matter what it is.

Matt Putra: I just apply myself.

Matt Putra: And I think kids should feel that way about sport. Anything they wanna do.

Matt Putra: An adult who is struggling or or whatever. I think that person should have irrational belief in wants something can figure it out because if someone applies enough work against an issue, they'll figure it out.

Matt Putra: That's my belief.

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