Episode 36

Peter Kang (00:04.776) you Sei-Wook Kim (00:19.266) On today's episode, we're flipping the script. Everyone's asking what's going to change in the agency business because of AI. Peter and I have been asking a different question borrowed from Jeff Bezos. What isn't going to change in the next 10 years? We've come up with six themes we'll cover today. Peter Kang (00:37.58) All right, so before we dive in, it's probably worth reading the full Bezos quote because this is a really good one that he's obviously applied during the rise of Amazon and it's something that has been very core to their success. So here's the full quote. I very frequently get the question, what's going to change in the next 10 years? And that is a very interesting question. It's a very common one. I almost never get the question, what's not going to change in the next 10 years? And I submit to you that that second question is actually the more important of the two because you can build a business strategy around the things that are stable in time. Sei-Wook Kim (01:20.333) It's interesting because every agency conversation that we have these days starts with, what's changing with AI? And obviously that matters a lot because AI is having a big impact across the board. But if AI is really the whole conversation and the only thing you're thinking about, your strategy is built against a moving target. It keeps changing — models keep evolving every few months, best practices for how you use AI keep evolving. You look at something in April and then you look at it in October and it's totally different. Your whole approach for AI can change so quickly. Peter Kang (02:03.53) Yeah. These are all things we're grappling with. But today we just wanted to sit with this other question — thinking about what will still be true even beyond this AI disruptive wave that we're feeling right now. So let's dive into the six themes that we came up with. Sei-Wook Kim (02:29.153) The first theme is that it still starts with trust. One of the fundamentals of an agency business is that it's really a trust business. If you think about clients and their relationship with us, they're handing us their brands, their reputation, their budget, and in some cases their careers on the line for working with an agency. Those fundamentals don't really change because the tools and AI change. If anything, if you think about the relationship, it gets even more intense because there's more changing in the environment and the industry, and clients really need to feel like they're in good hands with an agency. Peter Kang (03:14.644) Yeah. As we brainstormed this and thought a bit deeper — when people typically think about trust, it's about building more trust. But we inverted that as well. We asked ourselves, what breaks trust? Because if you think about the client dynamic, you can have a great thing going with them and then all of a sudden something happens that hurts that trust and it could really unravel a lot of the goodwill you've built up. So we made a short list of things that won't change in terms of breaking trust. The first one is promising something and not delivering — bad surprises, especially about money or timing. Saying one thing to the client and a different thing internally. And then not owning up when we make a mistake. Those are things that even in 10 years, whether AI is doing the work or a human, will still impact trust in a big way. Sei-Wook Kim (04:16.992) Yeah, it's interesting because there are many ways you could try to appear more trustworthy to a client or at large. You can do more case study work, testimonials, apply for awards, work on your website. But it's really thinking about the opposite, to your point — are there things you're doing that are actually breaking trust? In the day-to-day, you didn't send out a status update to your client, or they got a surprise change order that showed up in their inbox out of nowhere, or your invoicing isn't synced up and maybe you've invoiced before you actually delivered the work. These are the things that clients remember. When they think about their relationship working with you and your name comes up, they're like, these guys did this. Peter Kang (05:08.743) Yeah. The natural inclination for a lot of folks is, AI automates stuff, so now we can turbocharge and automate and scale up our marketing — now we can have tens of thousands of LinkedIn followers more easily than before, we can blast emails to all these people. But it comes back to some of the things we've been talking about on this podcast, which is we're in the business of expertise and really helping solve problems. And those things start with a smaller group of people, maybe 50 or 100. These are folks that know you, can vouch for you. It's about investing in those relationships because those are the folks who are going to have an impact on referring you quality opportunities. Do you know them personally, maybe even know their kids' names? Are you showing up for them when maybe they're fundraising or they have a new job? And then staying top of mind by sending them valuable articles that might be helpful. These are things where the work is still needed to cultivate and build those relationships. Sei-Wook Kim (06:26.068) Yeah, you can't automate the relationship part of it, but there are some aspects where AI can help. AI can help you recall what did we talk about last time, you can look at your call recording, or if you needed to draft an email, AI can help you do a better job of that. But the actual work of caring for someone, showing up for them, and being there for them in all phases of life over several years — that's the human relationship you have with people. It's easy right now for people to spot when AI is trying to inject warmth in an email, people can see through it. But over time, the more you can build true relationships, your agency will continue to benefit from that. Peter Kang (07:20.42) Yeah, and this is where the old school idea of face time — as in literally showing up in person, in the flesh, being around people and creating moments together — is going to be important. Sei-Wook Kim (07:36.668) All right. The second theme is strategic focus, or where not to play. We've talked about this quite a bit on this podcast, but specialization is really the unlock for everything else in an agency. If you have a narrow focus, your marketing gets sharper, your sales conversations get easier and shorter, the delivery for all the work you do gets more repeatable, your pricing — you can demand more for it, the team you hire, the processes, all of it gets easier and you can hire more effectively. None of that changes with AI. And if anything, the penalty for not being specialized and being a generalist actually goes up because there'll be so many other generalist agencies using AI to deliver their work and there'll just be more and more competitors in that space. Peter Kang (08:40.398) Yeah, going along with that — if you specialize, you have to be able to articulate it. So the positioning side becomes a real conviction move. You have to bet on what you are and, more importantly, what you're not, because that is really hard. You can say, hey, we're a Shopify agency doing stuff for CPG food and beverage brands, but on the flip side you have to be able to say, no, we're not going to take on that industrial B2B project that is a warm lead. Most agency owners deep down know they should narrow their focus and the steps they need to take, but they typically freeze when it's time to actually turn work away. That's the real work of positioning. The decision to leave money on the table is tough, but it's actually the thing that's going to help you find the right clients faster. Sei-Wook Kim (09:45.129) Yeah, to that point, agencies that are easier to buy are the ones that are narrow in their positioning. When a prospect is describing their problem to a friend who might know you, it's clear to say, hey, you should talk to these people because that's exactly what they do. That's positioning doing its job. That only really happens if you've done the work of committing to a specific answer to a specific question that someone is trying to ask. Peter Kang (10:24.484) Yeah, and this comes back to the point that AI is not going to change it because you still have to make that strategic decision about what you want to be. AI can help amplify that once you have that decision made — especially if your positioning is sharp, you can turbocharge it with AI, better content, better outreach, better case studies, all that stuff. But that core decision is still very much a timeless thing that's going to stretch out into the future. Sei-Wook Kim (11:00.764) That's right. The next theme is talent — human talent. People ask this all the time. Is AI going to shrink agency teams? And our answer to that is yes, probably. That may be the reality, but the bigger story we're thinking about isn't about the numbers or the headcount. It's about the skills of each person on the team and what they are now capable of using AI. Peter Kang (11:46.596) Right. The old model of the pyramid structure is definitely going to be questioned. By pyramid structure we mean you have a bunch of junior level folks that are paid less and then a smaller number of senior roles. The juniors are really the ones cranking out the deliverables and then you have someone above them checking the quality of that work. And now what are we seeing? We're seeing a lot of those junior roles — and sometimes it's offshore talent — being replaced with AI. What does that do? It puts more of a premium on that senior level. Rather than just checking the work, those folks now have to think about, here's a brief or a problem we're helping solve for a client, figure out what we're really solving for, how to direct AI to do the production work, review it, make sure it's differentiated work, and then articulate what that is to the client. It's really about understanding the level of talent and capability in the people who are going to help your agency to the next level. But once again, this is still about people and talent. That's always been a constant. Sei-Wook Kim (13:21.255) Yeah, it's not that junior talent is going to disappear, but what they can achieve and deliver for their role — the demands will continue to go up. On the flip side, leadership gets even more important in this framework because there are so many tools and your output can keep growing, but ultimately it comes down to judgment for a leader. Deciding, like we talked about with specialization, what clients should we take on, whether we're going to shift our engagement models and pricing and how we're selling and working with clients — all of those are bigger decisions that will need to be made by someone in a leadership position. Thinking about who are the people really embracing AI, who do you invest in from a talent standpoint over time — a lot of these decisions are still very human and could be supported by AI but aren't going to be made solely by AI. Peter Kang (14:35.188) Yeah, just as an aside, I know there are some folks who are incredibly excited about the one-person agency with dozens or hundreds of agents doing all these things and providing incredible amounts of leverage. I think maybe at certain levels that is going to be a durable business. But I can't help thinking the concept of team, and this idea of continuing to build out a team and finding and keeping people, is still going to be timeless and something we're still going to see years from now. Because there's something about human collaboration that AI enables but that just isn't going to go away. Sei-Wook Kim (15:32.944) Yeah, there's probably a business model to be had like that, the one-person agency. But we're betting that the human relationships will prevail for agencies. All right. On that note, let's talk about the fourth theme — hospitality, or really the experience as the real deliverable. Most agencies think that the deliverable is what they're selling and making. If it's a website, a campaign, a brand system. But really the client's experience working with an agency is a big part of what they're buying, whether or not that was intentional. From an interaction standpoint, how did they feel about a kickoff meeting? You have a weekly status meeting — is it really well planned or is it chaotic? When you get feedback, how does that go? Do you receive it openly, do you push back, are you defensive? Those are very critical for thinking about the experience the client has working with you. And that is ultimately the product your agency is also selling. Peter Kang (17:00.374) Yeah, and think about the real job the client is hiring us for. It isn't just the stuff bulleted out in an SOW. It's the mushier stuff of like, make me feel confident about this decision. Make me look good to my CEO. Take this off my plate so I can sleep more easily. Show me you understand my world because it's very lonely trying to figure this out on my own. The work is important and it's important to deliver something well, but if the client felt anxious, out of the loop, under-communicated to — all of this can easily fall apart. And just going back to what we said in the first theme, trust can easily be eroded. Sei-Wook Kim (17:50.065) Yeah, we call this hospitality. If you think about your experience at a restaurant or hotel, the food could be awesome when it arrives at the table, but all the things leading up to it — tension the moment you arrive, the server giving you an attitude — that affects everything. It's not just about the thing that appears in front of you and whether it tasted good. Peter Kang (18:15.008) Yeah, to that point, hospitality conjures up so many analogies to the restaurant space. You could argue that with AI there's going to be, just like in the restaurant space, a fast casual type of experience where you order by app, you go, you pick up, you're not interacting with any humans, you're putting in stuff on a kiosk and picking up your food with very minimal human interaction. You get the deliverable. That is a business model. Many agencies are running to that model with agent tech and self-service and blurring software and service together. But I think you could argue there's also going to be more appetite for that fine dining experience where you're looking for that white glove, white tablecloth, four-star service where every need is being anticipated — your water is filled before you even think to ask for it, all kinds of things that provide an experience. I truly believe that even future clients will still be willing to pay for that premium. And the work itself is going to have that craftsmanship — it's not an assembly line thing, there's a craft, custom thoughtfulness that goes into it. That's an interesting analogy to think about along these lines. Sei-Wook Kim (19:59.97) Yeah, they can totally coexist. But we're saying that in 10 years there'll still be value to that relationship, that experience. From an agency perspective, what are some things that make you feel like you have a really good experience? You get an agenda before a meeting, or the team sends a recap after a meeting covering what we discussed and what happens next. It's all the proactivity — hey, I think this project is going to go sideways — and not being defensive about feedback. There are so many ways you provide a good experience around the work on top of the actual deliverable. Peter Kang (20:48.961) Yeah, like when you're held up at a restaurant and they bring you free champagne and say, sorry, it's going to be 15 more minutes for your table to clear — all right, cool, I'll enjoy the champagne. So to sum that up, AI right now is very good at the output part, but that human-to-human caring is still going to be relevant in 10 years. Sei-Wook Kim (21:15.361) The next theme is the fifth — the work itself, the results, and the surprise that comes from it. Stripping down everything else to the core of an engagement: is the same pre-AI and post-AI — clients are paying agencies for results, for value, and for speed. And in addition to that, they want to be surprised by thinking that an agency can provide something they couldn't have done themselves. We think in 10 years those four constants aren't going to disappear. If anything, they're going to get increasingly more demanding. Peter Kang (21:58.385) Yeah, starting with results — clients are spending dollars to invest in some kind of an outcome. That's super key to any of these engagements. And the value associated with that matters because they're not going to have infinite budget. They have to feel like they're not overpaying, that there's a consumer surplus — hey, I got a good deal, I paid the right amount. And of course speed has always mattered, but AI has pushed clients to think, I should expect things on a tighter timeline, fast means something a little different now. And when we talk about surprise, it's a combination of creativity, delight, or just being challenged by the agency you hire, because part of why an agency is brought in is for that fresh perspective — hey, help me see something that might be a blind spot for me. These are all things that make the agency engagement, that relationship, and the work that comes out of it still meaningful. Sei-Wook Kim (23:33.439) Yeah, because if it's just execution, clients would just build a team in-house, which has always been the case. Nothing has changed there. But thinking about the next 10 years, what AI is providing is that the floor has increased, not the ceiling. Execution, fast execution, competent execution — all of that keeps rising where agencies will need to keep up on pace and quality or else they're going to be priced out of the conversation. And to your point, clients often bring in an agency because they want ideas they didn't expect, a fresh perspective, and that is something that will continue to be valuable. Peter Kang (24:22.674) Yeah, and you could argue that AI can help you generate more and more ideas and maybe that plays a part in being more effective on that front. But it's still the concept of being bold enough to approach the client and bring those ideas, frame it to them in the right way, really understand their business and make it all relate. There's definitely a timeless element to that that has been done in the past and will continue into the future. Sei-Wook Kim (24:55.009) All right, so we're at theme number six — focusing on the long view. This theme is interesting because it's hard to have perspective on when things are moving so fast day to day. Patience is one of the rare things that is still undervalued in this business. Maybe for us, having been in it for so long, we see a lot of people wanting the quick fix or the quick results. Peter Kang (25:29.756) Yeah. Going back to a lot of the things we touched upon in this episode — the things that matter for an agency often take years to build. Your best clients are going to be people you work with for five or 10 years. Your best team members are also going to be people you may have developed from when they were just fresh into the work, and now they've moved up the ranks and become really important and indispensable to the business. And reputation — we've talked about this over and over again — it's a commitment. It's not something you can just flip a switch on and suddenly have. You really have to invest in it and build and build. Part of the brand-building exercise for agencies, being able to build up that referral network and build up that inbound quality, just takes several years. It's really hard to expect that to happen all of a sudden just because AI exists. Sei-Wook Kim (26:45.696) Yeah, and for any agency leader, it's really thinking about the long term — what are you doing now that will pay off in 10 years? What are the client relationships you're investing in that you still want to have in 10 years? Who are the people on your team that could be running your agency in 10 years if you decide to step back? We talk about positioning and specialization — what are the choices that are uncomfortable to make now but will eventually pay off over the next decade? It's really about having that long-term perspective versus focusing only on what are the tools and processes you have to capture and stay on top of right now. Peter Kang (27:41.666) Yeah, and 10 years is long — even three years, honestly, is a long-term perspective. Especially in a period where every month feels like a year's worth of developments and changes, it's worth just being like, what is our three-year plan, and asking those questions you noted. Okay, awesome. All right, so we made it. Those are the six: trust, strategic focus, talent, hospitality, the work itself, and the long view. This has been the antidote to the AI fatigue — all the everything's-AI-AI — but this is the stuff we think is still going to be relevant in the next 10 years. Thanks for joining us and until next time, have a good one. Sei-Wook Kim (28:37.736) Thanks.