Welcome to the ENT!
Is Artificial Intelligence creating a tight labor market?
Recent headlines say AI will create massive layoffs and portends terrible things for the workforce. However, Meta just announced $100 million signing bonuses and annual salaries of a similar range–so which is it? A tight market with incredible demand or a soft labor market where employers have their pick?
Nate Merrill and Karl Frank describe their recent company experiences, which are dissimilar. They offer practical advice for business owners, and job seekers, in the rising world of AI work.
As a quick reminder, the Expert Network Team provides free consultations. We would love the opportunity to be of service to you or someone you care about. Just scroll the liner notes to contact one of our experts or today’s guest. And please share this podcast with anyone who you think might find it interesting.
As always, it is good to have an expert on your side.
Karl Frank: That's great. So did you put your code on for them?
Nathan Merrill: Yeah, we both did. Chris and his crew back, and me and my step caller
Nathan Merrill: I mean, mine actually, surprisingly went well with it, even though it's like checkered, and that jacket was checkered. But.
Karl Frank: No man can't even tell on a zoom call looks great.
Nathan Merrill: And I've got this white stripe through my face.
Karl Frank: Because you're facing west. Maybe.
Nathan Merrill: Yeah, my, my blackout shades are down, but it's like the the crack in the window right there. So I'm just gonna move over here.
Karl Frank: That's great, and no one wait. Where's that coming from up there?
Karl Frank: Sorry that we couldn't meet in person at Murphy's. Law that we'd be up in Winter Park the 1st time you're in Denver for a while. So that's great.
Nathan Merrill: Yeah, no, it's understandable. You're probably there for the 4.th
Karl Frank: We are.
Karl Frank: we are. It's 20 degrees cooler up here. It's like 72 or something. So it's really nice. Yeah, you're missing out. You should be here. Come, join us.
Nathan Merrill: Grand Junction. I'll tell you that.
Karl Frank: Is it hot? There.
Nathan Merrill: It's been in the nineties got up to 100 the other day, which is fine. It's summer. I can't complain what is interesting, though. And I thought about this. And this isn't for public dissemination on the, you know, the podcast but
Nathan Merrill: I just have these epiphanies. Every once in a while I'm driving through the mountains last night, as I'm coming.
Nathan Merrill: I'm looking up at the mountains copper round as an example for the skiers.
Karl Frank: Oh, yeah.
Nathan Merrill: The higher ends of the run still have snow in them.
Karl Frank: Yeah, absolutely.
Nathan Merrill: And we're in the middle of July. So you you tell me global warming 5 years ago.
Karl Frank: Anecdotal Evidence.
Nathan Merrill: Turning up, and now we still have snow in the mountains in July. So I'm
Nathan Merrill: straining to see the evidence that everybody and I still see
Nathan Merrill: whack jobs out there talking about all the global warming that's happening. And I'm just like
Nathan Merrill: you're cherry picking data because it ain't happening.
Karl Frank: Your anecdotal evidence is not lining up with the story, Nate. That's not the popular narrative.
Nathan Merrill: Well, and and just what I don't know. If you caught what Rfk. Revealed. Was it yesterday or the day before about the hepatitis b vaccine?
Karl Frank: No.
Nathan Merrill: So
Nathan Merrill: he basically revealed that the Cdc committed fraud on their study, that they used to support the hepatitis B vaccine. They basically they studied the the kids who were given the vaccine and to determine which ones developed autism or not.
Nathan Merrill: and what they ended up doing, because it was so evident that there was a high risk of autism as a result of this vaccine on the schedule, that they were administering it, that what they did was they just reduced the age range before the diagnoses started happening. So they basically said, well, from this age to this age, no impact
Nathan Merrill: when you have actually open it up to the longitudinal longer term study.
Nathan Merrill: It's like a 1,135% increase in risk of autism resulting from the hepatitis b vaccine.
Karl Frank: Hmm crazy.
Nathan Merrill: They knew it.
Nathan Merrill: They manipulated the data, and that's what they published to America.
Karl Frank: Yeah, I didn't really.
Nathan Merrill: Save.
Karl Frank: I did. I did not read that story.
Nathan Merrill: And that's you. Read that book? I don't know.
Karl Frank: Haven't seen it.
Nathan Merrill: It to you. The it's either a false alarm. It's it's 1 of the Bjorn Lormborg books.
Nathan Merrill: Oh, okay.
Karl Frank: Okay.
Nathan Merrill: It's no, it's the other guy what's his name? Steve Cronin.
Nathan Merrill: He was a former Obama Department of Energy deputy secretary.
Nathan Merrill: He's since been, you know, disowned by everybody. But he was a guy that was responsible for developing the early computer models that they relied on for
Nathan Merrill: global warming model.
Karl Frank: Oh, okay. Alright. Yeah.
Nathan Merrill: And he makes some amazing revelations in there that that when you actually he's actually gotten into the studies, the data, the raw data before. It's distilled summary before it's distilled.
Nathan Merrill: Talking points.
Karl Frank: Yeah.
Nathan Merrill: Says, there is a massive disconnect between the narrative that is expressed.
Karl Frank: Family.
Nathan Merrill: Actual underlying data. And it's all politics between the data, the scientists and the the politicians. Scientists, anyway.
Karl Frank: Yeah, no, I've read. I've read a lot, and maybe even Cronin about the global warming and the data, and and how we're, you know, jumping to conclusions. I haven't read much, if any, about rfk's
Karl Frank: claims about fraud. So yeah.
Nathan Merrill: The other thing.
Karl Frank: All of that. So.
Nathan Merrill: That Cronin Guy revealed that I thought was fascinating. Was he pointed out that as computing power has increased, and so you can run tighter and tighter variations in terms of kind of grid variations.
Karl Frank: Yeah.
Nathan Merrill: You should actually get convergence of data.
Nathan Merrill: But what they're actually getting.
Karl Frank: Oh!
Nathan Merrill: Divergence of data.
Karl Frank: Yeah. Okay.
Nathan Merrill: More powerful the models, the more the data more unreliable the model, and so
Nathan Merrill: models that that relied on larger blocks of kind of assumptions.
Nathan Merrill: That's where they got the converge.
Karl Frank: You would.
Nathan Merrill: Now that we have better computing, we should basically say it doesn't work anymore, because it's going the other way.
Karl Frank: Right? We're getting less certainty. Yeah, yeah, that makes just logical sense, doesn't it?
Nathan Merrill: Yep.
Nathan Merrill: I mean the environment, very.
Karl Frank: So many variables.
Nathan Merrill: Very intricate thing to predict, and so.
Karl Frank: Yeah, that's right.
Nathan Merrill: Great that we can now enter and and model all those.
Karl Frank: Oh, yeah.
Nathan Merrill: Have a very, you know, micro scale.
Karl Frank: To be a little humble about.
Nathan Merrill: Results as well.
Karl Frank: Right, right? We should be a little humble about it. There's a lot of truth to that. There's just a lot of truth, just experience with life about that, too, isn't there, that you know. The more you know, the more humble you get, the more you realize you don't know
Karl Frank: the smarter you get, the more you realize. Gosh, there's a lot more I need to know to be certain, the less certain you are sometimes the more wise you are, because there's just so many variables, so many variables in a in a person's life you're talking to, or in a business, or in any sort of almost anything.
Nathan Merrill: Yeah.
Karl Frank: Yeah. And the other thing is, you know, computers seem like they're logical and predictable until you actually use one. And then you're like, oh, I'll just reboot shut down, Restart. That might do the trick, and it does. So. What's on your mind? What's what's new.
Nathan Merrill: I wish I could tell you, but we're being recorded, and there's a.
Karl Frank: Yeah, well, we can ditch the recording. I mean.
Nathan Merrill: I, I can tell you later, after we stop. But I'm working on. I can allude to what I'm working on later and let you kind of connect the dots because it
Karl Frank: Pretty exciting, though right.
Nathan Merrill: My mind has been daily exploding for at least the last 2 weeks. It was Wednesday, 2 weeks ago
Nathan Merrill: that I had the 1st of a series of calls that have just totally changed my
Nathan Merrill: paradigm in terms of what the
Nathan Merrill: forward looking prospects of our country are.
Karl Frank: 9.
Nathan Merrill: If you knew me, and I was to say what the one big thing
Nathan Merrill: that is going to hold aside from spirituality
Nathan Merrill: one big thing that the Government's involved in that is holding us back from our potential. What would you say? It was.
Karl Frank: I. You talk about demographics a lot, but I don't think it's demographics.
Nathan Merrill: Doesn't control demographic.
Karl Frank: It. It's the no, it certainly doesn't, that's for sure. Are we talking about financial irresponsibility? That's certainly my risk. I worry.
Nathan Merrill: The data I'm with Elon Musk. Generally speaking.
Karl Frank: Yeah.
Nathan Merrill: All I'll say is, there's some stuff that Elon Musk doesn't know that's in motion.
Karl Frank: That are even bigger.
Nathan Merrill: That if you can fathom it potentially solves that problem.
Karl Frank: Oh, that's exciting. Okay, so so there's something that could happen there that would actually be good news.
Nathan Merrill: Incredibly good. News.
Karl Frank: Oh, that's great!
Nathan Merrill: I just don't know how they're gonna say, I don't know how they're gonna disclose this news, because this news.
Nathan Merrill: when I when I 1st heard it I was fascinated, and then I was kind of pissed.
Nathan Merrill: and then I was. Now. I've just been mostly in awe ever since, as we're working through it.
Karl Frank: Right.
Nathan Merrill: This is involved with
Nathan Merrill: Dave Shepard and kind of his cohort of connections. That Guy is connected like you wouldn't believe.
Karl Frank: That's great.
Karl Frank: I don't know
Nathan Merrill: Yeah, I just don't know how much John told you about him, but he's.
Karl Frank: Not at all. Nothing. Yeah.
Nathan Merrill: Incredible.
Karl Frank: Well, there you have it, my friend. That's a sneaky intro to something else.
Nathan Merrill: Yeah, I can't tell you much, but.
Karl Frank: No.
Nathan Merrill: You a little bit, so you can draw your own conclusions.
Karl Frank: Yeah, yeah, well, that's cool.
Nathan Merrill: So I'm really not liking the lighting.
Karl Frank: It's a little weird.
Karl Frank: Yeah, that lighting looks great right there where we are. Right? There looks good. Yeah. You look sharp.
Nathan Merrill: Put that on your head. So I'm looking at you. It looks like I'm looking at the so.
Karl Frank: End of day. End of day lighting in the Denver office.
Karl Frank: Yeah. Top of mind. Top of mind for me. I mean all of the things related to you know, the government, I think, are also always on people's minds. I think leading a business is always on people's minds.
Karl Frank: you know, certainly. Last time we had a great conversation with Jeff about actually leaving the business. And and I think that turned into 2 or 3 podcasts. So those podcasts are are great.
Karl Frank: I think, for the book, you know, there's a great chapter on, Oh, boy, what is it called it's the story about the ship. So if we want to, just look at that chapter, that's easy. It's crossing an unknown sea or something like that is the.
Karl Frank: There's just some great stories in that chapter
Karl Frank: that we could simplify our conversation on the book for a future podcast
Karl Frank: and then the business broker. We've got him on for August 14. So I'll send out a you know, an invite.
Nathan Merrill: Connected with David Pigard. Yet.
Karl Frank: Nope, Nope never got in touch with him. I may be.
Nathan Merrill: I've connected you to. Right like you have email contact between the 2 of you.
Karl Frank: It seems like months and months ago, maybe even a year ago, right? We we started to try and do that, and never got on the calendar. I I think his latest response to us was something like, I'll look into it and get back to you.
Karl Frank: So not sure about him.
Nathan Merrill: There. There's a gal who is, I think, kind of like his assistant, but I don't know if she's truly his assistant, so I.
Karl Frank: Hesitate to loop her in. I can ask him the next time I talk.
Karl Frank: Do you have a
Karl Frank: if you have a Cpa. You know, by the time we record our next, podcast. We'll know what the tax bill looks like. They might come on and
Karl Frank: it'd be a soft.
Karl Frank: probably a soft pitch to them to talk about how much they know about taxes, and teach us all about the changes in the tax code. Now that the
Karl Frank: because the bill will have passed in the next 2 weeks.
Nathan Merrill: Yeah,
Nathan Merrill: I'm trying to think of who we just met a really great Cpa firm out in tulsa
Nathan Merrill: and I could. I could ping them to see if they cause they're they're gonna be a lumberjack for Taylor.
Nathan Merrill: Locally. The ones I know are just. I don't know that they take the time and and prepare because they're just so busy.
Karl Frank: Well, if you can think of one, let me know.
Karl Frank: I'm writing down right now on my phone.
Nathan Merrill: I can ping Tristan Erickson. He's the
Nathan Merrill: we do a lot of work with them. I don't know how much he'll consider himself a subject matter. Expert on the bill, though
Nathan Merrill: he leans a fair amount on me for strategy. He does a lot of strategy, but it's more the
Nathan Merrill: the typical accountant strategies of writing right and Modestar.
Karl Frank: Yeah.
Nathan Merrill: Like that, and Home Office and.
Karl Frank: I do more of the.
Nathan Merrill: Upper tier.
Karl Frank: Yeah, yeah, yeah, yeah.
Karl Frank: Yeah. Well, there's tax law changes. So it'd be good to interview a Cpa, and it'd be a good plug for his business, whoever they are.
Nathan Merrill: Yeah, let me
Nathan Merrill: reach out to a couple that we've been working more and more with, and see who wants to see if any of them bite.
Karl Frank: Yeah podcasts are easy. I've also got a lunch and learn opportunity where we do a video and live recording. But sometimes people feel more
Karl Frank: If they have to do a presentation, they feel less con, you know, less confident where, if we just have a friendly conversation bantering back and forth.
Karl Frank: It's podcasts are easy. You don't have to be very.
Karl Frank: You don't have to be a competent speaker to do that. So.
Nathan Merrill: Used to. Oh, it's September, so
Nathan Merrill: we're doing my presentation in at Raymond James again in September.
Karl Frank: Oh, yeah, yeah. Well, you'll know by then for sure what the tax law is, and and maybe people won't feel confident until almost September, right? Maybe
Karl Frank: August is the is the right time.
Nathan Merrill: Yeah, I, I think there are going to be a few changes to Qsbs, which would be a worthy podcast. Just for me.
Karl Frank: Sure.
Karl Frank: Yeah.
Nathan Merrill: The benefits there.
Karl Frank: Yeah, if they got better, that'd be really exciting. I wish we had done a Qsbs.
Karl Frank: My little company.
Nathan Merrill: Your firm.
Karl Frank: Yeah.
Nathan Merrill: Not eligible.
Karl Frank: Yeah, right? I mean, you just can't do it.
Nathan Merrill: Law, firms, financial firms.
Karl Frank: And you need to go C. Corp, right?
Nathan Merrill: You have to be a C. Corp. But yeah, we're we're expressly excluded from eligibility as.
Karl Frank: Yeah.
Nathan Merrill: No, we could do a quick one on
Nathan Merrill: patriotic theme. We got July, but then, again, this won't air.
Karl Frank: This won't air until August at the earliest, you know. It'll be a
Karl Frank: It'll be a much more less
Karl Frank: timely if we do. Patriotic right now.
Nathan Merrill: So here's the other thing that's on my mind that maybe we could talk about. This is
Nathan Merrill: is the job market tightening, or how tight it because we just got someone poached from us.
Karl Frank: Okay, that's.
Nathan Merrill: Big firms are raising salaries, they're causing upward pressure. But I don't know if that's just a law firm phenomenon, or if we're seeing that there's upward. And this is again what trump has been trumpeting is as the economy surges. There's going to be upward pressure on wages across the board, because, as the top firms move up, everybody else has to follow to maintain competitiveness.
Karl Frank: Yeah, that sucks to get somebody poached is the job market tightening. I mean, maybe this is the topic that other business owners are facing, I know, at our firm. It seems the opposite, or but we haven't hired in a while. Right? We found some great recruits. We had so many more applicants even for our summer internship position.
Karl Frank: At the beginning of the summer and springtime, when we were looking that it was tough to choose. We had a huge array of people to choose from, and when we hired for operations people in my company, we had a great
Karl Frank: number of applicants there, too, and and it felt like, gosh, this is the best time to be hiring, you know. People are afraid of the economy. Other companies are laying off
Karl Frank: the other thing that's really interesting about that, Nate. I don't know. I know Microsoft has big news about laying off a big number of their workforce, and other tech companies are threatening to do the same.
Karl Frank: so is it a good opportunity, or is it a is it a challenge for business owners right now.
Nathan Merrill: Well, the question on something like that is, how much? How many of those jobs? Because
Nathan Merrill: part of the problem with being at a Microsoft or a large tech firm is you're getting premium wages. And so
Nathan Merrill: yeah.
Nathan Merrill: there's 2 components there. It's harder to swallow your pride and go to a lower paying job because you got used to it. You kind of developed that entitlement.
Karl Frank: Oh, yeah.
Nathan Merrill: Secondarily, is
Nathan Merrill: depending on what roles those people who are getting downsized are, how much of those skills will translate into outside of the industry. So if the whole industry is contracting workforce, it's not like, you can take your Microsoft job and go over to Google. If Google's doing the same thing.
Karl Frank: That's right. I know this. I know microsoft used to have a reputation of being the softest of this tech companies. Once you got a job in there you never got laid off.
Karl Frank: and to see them doing layoffs is pretty surprising, or among the softest right among the most forgiving of low performers, and let's try and get them back on track. And other companies had a much more ruthless reputation for that. I think Amazon would top the list of you know. Bezos made made his name
Karl Frank: you know, one of the things he became famous for was was for, you know. Let's get rid of the lower 5% or 10%, I think, is what they said. So even if you're a good performer.
Nathan Merrill: A lot the same thing they've just cut.
Nathan Merrill: But now, December demographic group, as we were talking earlier, the demographics are shrinking.
Karl Frank: Oh!
Nathan Merrill: To say, we can just get rid of our B's or C's. Sometimes you have to rehabilitate them.
Nathan Merrill: However, I mean, this would be an interesting.
Nathan Merrill: Since you look at the market data more broadly. I mean, these are very specific companies that are laying off. But are these companies laying off because of market pressures? Or is this an impact of something like
Nathan Merrill: AI making other people within the organization more productive where you just don't need the workforce anymore. Because AI is making people more productive, which is a positive and a negative.
Nathan Merrill: You want as much productivity as possible. If you're a business because it helps the bottom line
Nathan Merrill: bad for individuals who find themselves expendable because they can't perform, or they're
Nathan Merrill: redundant for what AI can help the company do.
Karl Frank: Yeah, I think that's a really good question. I don't know if it's real yet. I don't know if the AI productivity boost is here yet it seems like AI is a bunch of
Karl Frank: you know. Chat bots right now. AI is a bunch of research papers or helping you write emails
Karl Frank: as far as.
Nathan Merrill: Maybe if you're Microsoft and you're in Google, and you're like, you're developing the AI. Maybe they have already started deploying it internally in ways that the rest of the market just isn't aware.
Karl Frank: Yeah, my understanding is, all these companies are absolutely have to learn. AI, and we want you to use it as much as possible, and that the shortcoming now is the stuff that AI is making up is not reliable.
Karl Frank: and they all need testers like evaluation. AI evaluator. The real human is actually looking at the code that the AI produces, or the written product, or the whatever it is, is accurate, isn't biased, is actually effective in answering in direct.
Karl Frank: you know, directly getting at the the topic and the subject that it's that it's supposed to be addressing, and my understanding is, it's nowhere near that yet. But the hope is huge, right? The hope for productivity is really amazing.
Nathan Merrill: Sure.
Karl Frank: And certainly we can look at the future and and think that's a bigger deal. I know our clients, our business owner clients, run smaller businesses, and and all of us are certainly looking at ways to improve our business, and and some of my clients are way more into the AI than others.
Karl Frank: and they themselves are, you know, looking for testers. Right? They're looking for ways to make this real
Karl Frank: a metric I saw the other day from some various companies are. The revenue per employee is going way up.
Karl Frank: and and it's almost like a.
Nathan Merrill: Good for Mark again, market indicators would seem to suggest, that's a strong.
Karl Frank: That's strong.
Nathan Merrill: But then you have the resulting unemployment, and that's a drag. So unless.
Karl Frank: Right.
Nathan Merrill: People can be redeployed in other fields. I guess that's the big unknown is, are they gonna have to be retrained into other fields in order to be useful in our economy? Or can we just now take people who were be performers at Microsoft and plug them into an entrepreneurial enterprise that really needs the help. You know what I mean.
Karl Frank: I think so. I think they've got to train themselves. I think it's going to be a ruthless job environment here real soon for any job that an AI could actually replace. I think those people better start
Karl Frank: thinking about what happens when they have to exit. How are they going to be the AI whisperer. How are they going to be the evaluation person, or the one who makes the AI get a better answer, and then what the company can get without them. I think that's the key. And
Karl Frank: the people who do that are the people that are going to thrive. And and I know this. I know that the jobs that are good at AI are unbelievably lucrative for the employee. Facebook is offering 100 million dollars signing bonus
Karl Frank: to come over 100 million dollars, signing bonus to come over and be their top AI engineer. On top of that they're offering a hundred 1 million dollars a year.
Karl Frank: If you will be their Facebook AI whisperer.
Karl Frank: And they're offering this. They're trying to pull everybody out of open AI and out of other leading companies, because Facebook. Meta is, is worried about falling behind, and
Karl Frank: you know Zuckerberg is, he has a huge cash budget at Meta. I don't know what their cash budget is, but it's tens, if not hundreds, of billions of sitting in cash just ready to spend on this. And and they're looking at this as a huge threat to their business, so does it make sense for them to spend that much money. It might.
Nathan Merrill: Well, I yeah, I mean, I think, as you noted, we're still in growth stage
Nathan Merrill: development of AI, I mean, it's not like it was 5 years ago, or I don't. I don't know when AI technically was like when did open AI and Chat Gpt launch their first.st
Karl Frank: We're talking. It's been a couple of years. It's been amazing how quickly this has happened.
Nathan Merrill: And and it's exponential just with the amount of money that's pouring. And it, it takes a lot of computing power. But as that computing power comes online. The large language models are just gonna become exponentially more refined.
Karl Frank: No, it's an exciting time, I think, for for you know, big picture thinkers and and for entrepreneurs, and for people who are willing to to switch. And for people who are less prone to that, people are looking for stability. I think they're going to really suffer. They're going to have to find ways to be comfortable with a completely different job description than what they had before. Their skills are going to need to be
Karl Frank: much more staring at a computer screen reading or talking to their computer about what the computer can do. Better to deal with the actual end user client and or create a new code or or write a new you know, piece of writing that needs, you know, that's either marketing or technology driven.
Karl Frank: That's a challenge. That's a challenge for people and and for business owners. I mean a little business like us. You know, we're using AI around the edge, right? The the guys on my team do AI searches just to keep me honest and and pull up the numbers that we need to know for tax code. And, for instance, but you can't rely on it for advice, because it's still not accurate.
Karl Frank: It's accurate about a handful of things, but it's wrong about some of the biggest, and it can't put things in context, and it can't. Give you the advice. But, boy, it sure puts a lot of flowery language around it, and it probably says things nicer in an email than I would.
Nathan Merrill: Right well, and in terms of business operations. Maybe this is somewhat what you're alluding to. I can point to. We had a meeting this morning our executive committee
Nathan Merrill: and Randy, our CEO,
Nathan Merrill: presented the 2 2025 rate study. So we're trying. We're trying to figure out how our rates, and he had all the data, but he he used AI to help put together the whole presentation for us. He said this would have taken me 3 days to put it together before now I did it in 4 h.
Karl Frank: That's awesome.
Nathan Merrill: Like that kind of.
Karl Frank: Huge productivity game.
Karl Frank: What a huge productivity gain! And so for you, that's a revenue determiner. Right? That is a.
Nathan Merrill: And anytime I'm involved in business operations like I was putting together some of our structural stuff which I'm not billing the firm for my time on that, so that.
Karl Frank: Of course not.
Nathan Merrill: So anytime I can save when I'm putting together like the thing I I pre prepared today in about an hour and a half was a.
Nathan Merrill: We're gonna have each of our partners actually
Nathan Merrill: prepare their own strategic plans that.
Karl Frank: Yep.
Nathan Merrill: That that integrate into the firm the practice group and their individual. And I wanted to outline all these things, and I was just 3 or 4 times back and forth with
Nathan Merrill: perplexity, is the one I use right now. Produce this well thought out, well worded, organized
Nathan Merrill: framework for each of them to put together a strategic plan, not billable time for me again. So I'm losing revenue by me even doing it. But I got it done in like an hour and a half, whereas that would have taken me a half a day before to to kind of.
Karl Frank: It's huge.
Karl Frank: That's it.
Karl Frank: Huge time saver. So it's a revenue increaser, and it's a cost decreaser for your firm. It's a it goes straight to profitability by being able to to use a tool like that.
Nathan Merrill: Crafting emails like what I want to say make it sound good.
Karl Frank: Right right, and if it's not too flowery and not too fake sounding, and people believe it's from you. Then you did good.
Karl Frank: Nate. Is it a direct threat to your business? Is this something that that other do it yourselfers are gonna be able to just go out there and say, Hey, AI, write something like a lawyer would write.
Nathan Merrill: The writing side, perhaps. But here's I. I am experimenting myself with AI quite a bit
Nathan Merrill: more as a tool to facilitate the quick reduction to key issues, like.
Nathan Merrill: you know, almost like an associate like if I had an associate sitting here in the room, and I go back and forth with the associate. AI is kind of like my little associate.
Nathan Merrill: and the one thing I've noticed and you you alluded to some of this is as I get a conversation going with AI.
Nathan Merrill: It
Nathan Merrill: doesn't really always bring in some of our prior conversation. It gets too focused as we get moving down. Maybe that's.
Nathan Merrill: And this is, I think, my point operator error. So
Nathan Merrill: AI is still, I think, gonna only be as reliable as the prompt.
Karl Frank: Yes.
Nathan Merrill: And so learning, and you were kind of alluding to this becoming the whisperer, as it were, of AI is going.
Karl Frank: Right.
Nathan Merrill: More valuable skill. But I think any lay people trying to solve some of the complex tax problems that we're dealing with. They don't even know how to frame the question, to get the outcome that they want. If they say.
Karl Frank: It's gonna be difficult.
Nathan Merrill: How do I create a tax efficiency strategy for this situation?
Nathan Merrill: It's it's gonna be too broad for it to actually
Nathan Merrill: know what you're really trying to accomplish all the nuance, and then to your point. It often misses things because you haven't provided it enough facts
Nathan Merrill: to rule something out, because
Nathan Merrill: one strategy may only work for C. Corporations, and you didn't think to put in there. Oh, by the way, I'm a c. Corporation, you know what I mean.
Karl Frank: I do know exactly what you mean. That's gonna limit the the labor pool.
Karl Frank: You might have some some lower paid people or mid-level people who who don't have the grammatical skills or just the cognitive thinking skills. Maybe they're not college graduates, and they're going to struggle with
Karl Frank: understanding all the limits they need to put on AI. And then, maybe, when the AI produces a result looks good, it could be erroneous. It's not as good as of quality as what it would have been
Karl Frank: had they done it in a different way in a prior day.
Nathan Merrill: I'll give you a perfect example.
Nathan Merrill: And I would I would actually be curious to test this out with AI, because I haven't actually tested this question because I know the answer.
Nathan Merrill: But you could say to AI, you know we do some tax equity strategies. I won't get into the details, because I know we can't for regulatory purposes. But someone comes to us and says, I make a million dollars of income. Can I cancel that out investing in a film.
Nathan Merrill: And that general question, the answer is absolutely yes, but
Nathan Merrill: it depends on what kind of income it is. If it's investment income, not so much. If it's wages, you're going to be limited, you know, if it's passive income, it depends. So there's all these factors that come into play where you could make a general prompt, and it can give you a general answer, but unless you tell it, unless you think to have it, tell you tell me all the exceptions to where this might not be true or something like that. It's not going to even look
Nathan Merrill: for the exceptions to the rule. It's just gonna say, yeah, you can absolutely knock out a million dollars of income investing in a movie right?
Karl Frank: Right. That's a really good example in your business, absolutely. And it would be the same thing in my business if it asked some general financial planning question. It would give you some answer. That would be, oh, sure, yeah, no problem. And then you dive into the or you implement it. And then you realize all the details exclude you from being able to benefit from that. And you're like, Oh, shoot! This thing really messed up.
Nathan Merrill: I'll give you the other place where it can start to get Dicey
Nathan Merrill: until the models are better again is is medicine and health.
Karl Frank: I could be.
Nathan Merrill: Say I'm a diabetic, and I go and I ask AI, hey, is sourdough bread better than regular wheat.
Nathan Merrill: you know, and if I don't ask it about the glycemic index and tell it that I'm a diabetic. It's gonna answer it with a very general.
Karl Frank: Right? That'll sound really authoritative. Yeah.
Nathan Merrill: Right, whereas, as it pertains to me as an individual, I haven't given it enough facts to tell me, make a.
Karl Frank: I agree.
Nathan Merrill: For me.
Karl Frank: And then I don't even know everything that's going on inside my body. So diabetes aside.
Nathan Merrill: You know I may have gluten intolerance if I haven't told about Gluten. I you know the list.
Karl Frank: All of it.
Nathan Merrill: And on and on. So that's where
Nathan Merrill: the AI overlays are going to come into play to help people navigate the prompts into AI, so that you get the right information in the request.
Karl Frank: Yeah, this is what this is, what we want to build at. Our firm in in some sense, is our own limited data set. We want the right answers that we know are right.
Karl Frank: and then have an AI that'll query just that. And then from there we can get the answers quickly and reliably, in a manner that we can trust. And you know to build. That, I think, for a small firm is a big lift. But for some of these big firms. That's a no brainer. They're already building them, and they're going to be great. And I think that the results will be dramatically better than anything we've seen so far. So it's kind of exciting from a
Karl Frank: you know. But garbage in garbage out right? I'm sitting on a I'm sitting on a call with my Internet provider that I can't make because they won't answer the phone. And you have to have Internet in order to get to their chat menu, and that's like, Well, wait a minute. This is a infinite loop of failure here. I don't have the Internet. That's why I can't get a hold of my ISP. You know, it's just like poorly designed things like that
Karl Frank: are gonna proliferate, and there's no amount of AI that's on the other end of that chat. Bot! That's gonna help me get to that chat bot without Internet.
Nathan Merrill: Right, so.
Karl Frank: Yeah. Oops.
Nathan Merrill: And listen to us. We're talking so authoritatively about AI when we're you know very well that we're mostly just not.
Karl Frank: This is here, but.
Nathan Merrill: I think I think the novice application is what's really relevant to anybody
Nathan Merrill: there, because, you know, you mentioned the 100 million dollar. But.
Karl Frank: Unbelievable.
Nathan Merrill: The guy like that. That's fascinating. But that
Nathan Merrill: that knowledge of that doesn't change my need or or engagement with AI.
Karl Frank: Yeah.
Nathan Merrill: And and so.
Karl Frank: The rubber hitting the road is still.
Nathan Merrill: The daunting aspect of
Nathan Merrill: that's that's and and the fact that it's gonna develop and become more robust in the future, all that's great. But what do we do now? That's that's the the key.
Karl Frank: Yeah. Yeah. And you started out by wondering, gosh, is it is a job market tightening. Because you, you know, you're being poached. And and of course that's a big worry for all of us. Business owners, especially in professional services, are now becoming much more valuable, and and certainly Meta has no cap, there's no limit. A 100 million dollars is so huge. It's such an obscene salary to pay anybody
Karl Frank: that there and they don't. You know there's just no limit on on the amount of demand for people who know what they're doing in in the AI world. So so, yeah, maybe it is shrinking the job market right? Making it is making it more demanding for people who can really crank that stuff out and and for lawyers you can do it for financial planners. You can do it, too. Perhaps.
Nathan Merrill: Well, and this this gets to the other point I was making. So in the, in the law, firm environment. And and this was the question I was posing.
Nathan Merrill: and further, further worthy of discussion, I think, is
Nathan Merrill: as the top end starts to move salaries and compensation up it. It does have a kind of a vacuum effect, where.
Karl Frank: No, no.
Nathan Merrill: Lifts the market. You can't keep separating. You can't stay static when.
Karl Frank: Can't compete.
Nathan Merrill: You can't let that gap get bigger and bigger. Otherwise it's just going to.
Karl Frank: Yeah, you can't compete.
Nathan Merrill: So.
Nathan Merrill: And and I think I even see this in service sector industries they over hire because they know that someone else come is gonna come along.
Nathan Merrill: Sure, workforce is very finicky or opportunities, because it's largely, you know, service industry stuff is outside of.
Karl Frank: Great.
Nathan Merrill: The like hotels, but your restaurants and that sort of thing.
Karl Frank: Because the turnover.
Nathan Merrill: It's hard to do that with AI. For one thing.
Karl Frank: For sure.
Nathan Merrill: And second, it's largely dependent on tips. And so if you can create a
Nathan Merrill: garner more tips you, you're gonna lose all your workforce to that other enterprise.
Nathan Merrill: And so it's a very finicky workforce that's always chasing a higher wage. And so I think it. It applies across industries as as top revenue goes up
Nathan Merrill: it it
Nathan Merrill: for better or worse. And this is where businesses have to strategically be aware of this is, you gotta
Nathan Merrill: in our case, if we have to raise our rates so we can raise our salaries and keep the people to actually serve our clients. That's the reality of what it takes to serve our clients.
Karl Frank: Yeah, that's exactly right. That's what you're gonna have to do. So you have to raise your costs. I mean, you have to raise your the the client cost. You have to raise your revenue in order to hire E effectively and and get the job done.
Karl Frank: So unfortunately, that's inflationary, and that's certainly a thing I'm hearing about from some of the clients, and the rumor mill in my office is, you know, clients are more affected by inflation. Now, you know, restaurants seem to be exceptionally more expensive than they were even a year ago, and I think measurably more than 2 years ago.
Karl Frank: The latest Bls report. I think that we looked at. I've probably got on the computer screen here, maybe 6 or 8 or 9% inflation on that on the restaurants where it's, you know, overall Cpi somewhere really low in the choose 2% something. But you know, restaurants are a part of it. And that's a that's a big increase. And and maybe it's just a demographic problem, right? Maybe the demographic you and I and our clients are a part of
Karl Frank: we just feel in different ways.
Nathan Merrill: Yeah, although, here's here's a suggestion to anybody in the hospitality industry like that I would make
Nathan Merrill: with our our kind of growing understanding of the health crisis that we're presently facing. I know this is a little off topic, but we could stand to have smaller portions and pay the original price like.
Nathan Merrill: Don't give us so much food that we're getting, and you know.
Karl Frank: Right.
Nathan Merrill: Talk to our systems. We tend to use smaller portions and pay.
Karl Frank: We can eat a little less. I love it. There's there's some practical advice from.
Nathan Merrill: So if inflation is hitting you, I'm just offering this as suggestion.
Nathan Merrill: Smaller portions.
Karl Frank: Smaller, smaller portions are you and your wife go out and you split the dinner.
Nathan Merrill: Yeah, there you go.
Nathan Merrill: That's a great idea.
Nathan Merrill: Keep that would keep you healthier for sure.
Karl Frank: We'll take one dinner. We'll take 2 salads and and 2 drinks, and that's our that's our meal for the night. And all of a sudden we're back to the price we used to be at.
Nathan Merrill: Or you go to Olive Garden and you order the meal that you eat. Tomorrow you just pick out on the salad and the bread.
Karl Frank: Exactly so much food there, so much food famously, so
Karl Frank: well, excellent. I don't know if we I don't know if we answered the question. Nate about is the job market, shrinking out anecdotally. It seems like yes for you, and and not for me. But that could change the next time we need to hire.
Nathan Merrill: Timing right. And that's why I said.
Karl Frank: Could be.
Nathan Merrill: It's just
Nathan Merrill: It's a
Nathan Merrill: because, like you said, you hired all these people. And for the summer program and stuff like that.
Karl Frank: Yeah.
Nathan Merrill: But they're it's it's a it'd be interesting to see it
Nathan Merrill: visualized as a data thing. I'm sure you'd see like ripple effects and waves if you could map it out. Data wise and visualize that.
Karl Frank: Yeah.
Nathan Merrill: It. It would probably be like the ebbing and flowing of the of the tide, or the you know the the surf, as it were, where
Nathan Merrill: got a lot of people to hire, and then they're all got like it's just like a feast or famine. Sometimes you just can't.
Karl Frank: It.
Karl Frank: It feels like that, doesn't it? Oh, I know it feels like that. It feels like the companies that can always be hiring are the ones who are in best shape. The ones who find the great hire create a great job for the hire, and then they're not desperate when it's famine, and they've got to find a great hire, and the toughest market could be really difficult.
Nathan Merrill: And the the clue I took from just some of what I've observed in hospitality
Nathan Merrill: is maybe just this. The strategy is to over hire.
Karl Frank: Yeah, right.
Nathan Merrill: More than you need, because, you know, you're going to lose some. And that way.
Karl Frank: Are you gonna get to me guilty.
Nathan Merrill: Pull in place.
Karl Frank: Yeah, and redundant training. Right? Everybody, everybody, at least, is partially trained on yeah, cross training on on all sorts of different things. So that if you lose somebody it's not you know a massive
Karl Frank: cog breaking in the machine that you gotta shut down the whole operation until you can get it fixed.
Nathan Merrill: So, I guess in in in rough conclusion, my cautionary counsel or tail would be to people.
Nathan Merrill: If it's not hitting you net yet it probably will so start planning ahead, and don't be caught flat foot and wonder. Where did this tight labor market come from? I thought. Everybody like you say, I thought, everybody's getting laid off. Well, that's 1 industry, but it's not.
Nathan Merrill: It's not necessarily.
Karl Frank: It's not yours.
Nathan Merrill: Paste.
Karl Frank: Good advice, my friend. Great to see you.
Nathan Merrill: Yep.
Karl Frank: Good beautiful day.