Ep 322: How AI Will Change Business Acquisitions & Exits Forever with Adam Boostrom

This will make us business buyers and sellers a lot more money, a lot more easily. But you need to know how to use this AI and the AI agents.

Hi, I'm Jared Krauss. I'm the host of the Buying Online Businesses podcast, and today I'm speaking with Adam Bustrom, who is a consultant, an author, a futurist, and an unashamed lover of artificial intelligence.

Through his keynotes and addresses, and foresights, workshops, and the partners that he works with, he reimagines business scenarios of tomorrow. No, after earning degrees from the University of Chicago School of Economics and the UC Berkeley School of Business, Adam moved to New York, where he writes white papers and science fiction novels in his free time.

His first book, Athena's Choice, was an award-winning bestseller about an AI-enabled future without men, which is crazy. More recently, Adam has discovered an unrecognized talent for Bar Trivia, and in this podcast episode, Adam and I dive into buying businesses using AI, growing businesses using AI, and selling businesses using AI. How can we already tap into AI to find the businesses we want to buy?

How do we tap into AI already to work out what size business we should buy? How can we use AI agents and train them to search for how we can get financing to buy certain businesses? We also talk about the growth of online businesses and how we can use AI to grow businesses based on what our competitors are doing. And we talk about certain prompts that we can use and how you would train the AI agent to work in your favor.

We also talk about what it looks like to sell the business that you have and how the AI agent can collect all of the data for you, basically run due diligence, build out a prospectors, build out a listing to sell your business, how AI can and possibly will be doing due diligence for you guys when acquiring and selling businesses in the future. What does that look like?

So it's so damn fascinating. Of course, if you haven't got my due diligence framework, please get it, buyingonlinembusiness.com, for that's a free resource that takes the guesswork out of buying a business. And yeah, jump into this podcast episode. It's fascinating to see where the world is turning and how it's going to make us more money with less work through AI.

Enjoy.

Adam, welcome to the Buying Online Business podcast. Thanks so much for your time.

Thank you for having me. Good to be here.

I'm excited to talk about the changes that are going to come to the industry in terms of buying and selling online businesses. I've heard you talk about this before, but I don't know where to start. You've done a lot of study on AI, so tell me a little bit about why you moved into this and how you moved into this.

That's an interesting question. So it's very hard to, when you look back at whatever your career trajectory has been, when you get to a certain age and it's maybe not where you expected, it was a lot of little things along the way. But real briefly, I worked in finance for a while, and decided I didn't want to do that. I went to business school. I also wrote a science fiction novel about the future and AI.

And so I was looking for a way to sort of combine my natural interest, like artificial intelligence, which is objectively interesting. You have, we have all these technologies, we're surrounded by technologies everywhere. But, like if you look at a toaster, toasters are very useful. But if I put bread in, I know what's going to come out. But if you go to AI and I type something in, nobody knows what's going to come out. And that just makes it very interesting.

So I just find AI very fascinating, but the implications are enormous. I don't know what's going to happen. Nobody knows what's going to happen, but entire workforces may be going to become digital, and what the implications are for humanity and the future of wor,k and tax bases for governments. Nobody knows. So it's just really interesting. And so I wanted to think and write about these things.

So I work as a consultant and a futurist now at TCS, the large international IT consulting firm. And among other things, I write thought leadership white papers about how AI could be used. So, typically what I'm writing about is more the futurist angle, so I'm not writing about studies or reviews of how people are using AI. There's plenty of that out there, if anybody wants to check it out. I try to write about things that other people aren't saying, because it's more interesting for me.

Yeah, cool. Awesome, man. Well, congrats on your consultancy and the stuff that you, you know, have to do what you love now. So, how does this look for acquiring businesses? Like, are we talking like brokerage, more self-listed brokerage websites? Like, I guess where we start is like in the acquisition, like acquisition phase, have you bought a business before, or do you know anybody that's bought a bit of online business before?

I probably do. Yeah. Because I've worked with a lot of people in finance, as I mentioned, for many years, I'm sure, invariably, some of my colleagues have bought businesses, but I can't think of one off the top of my head. So I can't talk about that. I can say that AI is going to transform how &A deals are initiated and specifically how they're sought out.

The search phase AI is going to transform every part of &A. But to me, the most interesting aspect is transforming the search face, and you mentioned a database. The thing about AI is that if it's intelligent enough, you don't even need a database. You can just have…

You'll find it straight away.

Well, maybe not immediately, but one time, someone was talking about one of the things that I think about a lot for our current AI. And it's possible again that AI may evolve into who knows what. But right now, when you think about AI, you shouldn't think of having an Albert Einstein sitting next to you.

You should think about having 10,000 idiots because you can send the digital programs and large language models to do various tasks for you if the tasks are simple enough. So you wouldn't need to have a database. You could just say, search out everywhere that you could look.

You AI agent, you go look in these places for potential companies to acquire. Your AI agent, look in these places for companies to acquire. You agent, you contact, you email, cold email, all these people, and provide relevant details in each of the emails explaining why I would be interested in acquiring this and what I could offer.

And that's just touching the surface. But I think that the best way to think about it is, what could you do with 10,000 idiots? Or maybe it is too cruel, but like high schoolers.

Yeah.

10,000 laborers, know? Yeah. Yeah. Digital laborers. Yeah. So, is there a way to do that now? Like, so the hardest part about buying a business is finding the right one and doing due diligence. So I'd like to move into like due diligence and then execution of it. But the search phase, is there a way that that can be done now? What tools would be used?

What sort of prompts would we be giving? Say somebody wants to buy a million-dollar e-commerce business. Is there a way that it can be done now? And if not, what would that look like to be out of these 10,000 digital laborers to be able to find that within a couple of week period for you?

Well, because I haven't tried and attempted this myself, hard to say. I don't know what tools are out there, and anything that I would mention would quickly go out of date as the newest models are released. Everyone needs to understand AI because it's evolving so rapidly.

Nobody knows what you can do with it what it's used for. What's important is just to get in there and get your hands dirty and try things. And what AI is good at is helping you one of the things it's good at is helping you plan things out to begin with. So the question you posed to me was, how would you go about this?

That question should be posed whenever anyone is listening to this, whether it's tomorrow or a year from now, you should go to your AI of choice, because many of the frontier models are comparable in their abilities. Whether you're looking at OpenAI, Brock is now scoring pretty highly, Meta's llama is not bad. Claude's anthropic is not bad.

DeepSeq is not bad. And there are different reasons for choosing different models, but whichever one you want to use, you go to it and you say, This is the goal I'm trying to achieve. How can you help me achieve this? And it'll suggest some things. And it's important not to just trust whatever it's telling you, because AIs make things up and they're not perfect, but they're very good.

And at listing a lot of things, typically when I'm asking for roadmaps for plans for things, I'll ask for a lot of steps and I won't use some of them, but some of them I will, and I'll find I wouldn't have thought of that. So you'll get a game plan, and I'm not sure what it would look like in this particular case.

It might say I'm going to research all the companies that are listed at this valuation that have published anything about what they're doing, about their customer bases, or you'd look at... Anyway, I'm not sure what the plan would look like. Perhaps it'll say, reach out to the tech crunch or or other databases, say how many employees a company has, and what kind of revenue they're bringing in.

And it'll start by researching you. And then it'll maybe start by cold emailing everyone to say, Are you interested in selling? Because, of course, not everyone is. It can do research. Guy's very good at researching to give information, individualized reports about every company to help you understand the pros and cons of every kind of company.

Mm-hmm.

These are just some of the ways I could probably continue droning on. Feel free to interrupt.

It makes sense. You could just go to chat GPT and be like, Hey, like where this is the type of business I want to buy, this price range, this business model in this specific niche. Can you find out if it's available for sale online for any brokerage sites, and then see what comes back, and then if it's available for sale, can you find it for me?

Yeah, that would probably work. Would suggest trying to put more steps in the process because these models. Okay. Yeah. All right. As long as you understand. Yeah. What I want to say is that for listeners who might not understand these AI models, they don't think on their own in the background. The thinking that they do is literally through the words that are written.

So, if text is not written to work things through, that's why everyone advises that you prompt using work step by step, because that's allowing the AI to have steps that approximate machine thinking. So you wouldn't ever want to tell the AI, just go find me this company. You'd want to say, How would I go about finding this?

And it'll come up with a list. And then you'll ask it, okay, how can I attack these bullet points? And then you'll get better results that way for anyone who needs to hear that.

Cool. Your futurist hat on, then. How do you foresee, yeah, which is what your grade at, how do you foresee &A deals and transactions on the buyer side working in say the next one to five years, or maybe five years, and then how about on the sell side? Like, what does it look like for you in terms of the future? When it's so hard for us as common folk who don't study AI to predict.

I think it's hard for us, uncommon folk, to predict as well. It's also hard to talk. I'm going to be pedantic here. I apologize. It's hard to talk about AI in a vacuum because there are so many other things that are going on simultaneously. Obviously, for those of us in America, there are some political challenges currently, and you've also got other technologies that are advancing simultaneously.

Happen to think that the most dramatic technological advance is not AI for digital assistance, it's going to be AI for robots. Robots, machine labor, from where I'm sitting, that's just going to completely change the world. To have a high-quality, high-skilled laborer who can be a chef, can be a construction worker, can be all these other manual tasks that you would name, because you can look it all up online.

How do I accomplish this task? And then it can control the hands to do it. And the marginal cost of operating this is just whatever the electricity is to run it. That's so I can't, what I'm trying to say is it's hard to talk about just AI and &A in a vacuum because it doesn't exist in a vacuumArere all these other things.

And when you're a futurist, you try not to just think about one thing. You try to think about all these things interacting together. That's what brings in the complexity and makes it hard. That being said, I think it's certainly going to be easier for buyers and sellers to find one another because you're going to have digital agents working as intermediaries.

It's have iIt'svery possible that everyone has a digital agent, sort of like a digital secretary, working for them all the time very shortly. So somebody who was looking to sell a business, but they don't want to do the work of going out there. They just have their secretary take care of everything.

And you're going to have a lot of people messaging a lot of other people or a lot of agents messaging a lot of other agents in essentially beginning early negotiations. So you might have a digital agent where you say, I'm looking for these requirements. I'm willing to pay this amount.

I can also offer these other guarantees to the seller if this sweetens the pot for them. And then your agent will talk to all these other agents and find out if it's worth having a potential buyer and seller meet in person.

It seems like we should stick with the threat of selling your business. Say, for example, I want to sell one of my businesses, and I use my AI agent,t, and I would say, Hey, first I want to sell my business. How do I do it? It's going to come back with a prompt of like, well, first you need to value it and know how much it's worth.

So then you can ask it, Hey, how much is it worth? And it will go through and scrape all the data from the traffic data, revenue data. And then basically do due diligence, right? And then once it's done due diligence, you can ask it to analyze based on the data of this business over the last 12 months.

What would you value that in the current marketplace today? Right. And then you could go and then say, okay, now that I know how much it's worth, can you find people that are looking for this type of business with this acquisition criteria and that AI, your AI agent can go and start to look for people that have made their interest known that they're looking for that type of business, right? And seems like it could cut out, like maybe some, a lot of brokers.

I think it'll cut out a bunch of brokers. I think it'll cut out a lot of investment bankers too, because no disrespect to my business school colleagues who went down that road, but a lot of the investment banking formulations to convert free cash flow and sector multiples into evaluation can feel very daunting for humans to calculate, but is trivial for a machine to calculate.

Someone even before who would think, well, to get a proper valuation here, I'd have to pay a fee to whoever. Now they can get it for 10 cents.

And that's even some brokers, finance brokers don't charge fees. I guess if you go from that, I've just given what I believe is an example of what a sell side could look like on the buyer side. For example, I could ask my AR agent, Hey, look at my bank accounts, my assets, and my liabilities.

What type of loan could I buy if I wanted to buy an online business? And what type of online business should I buy based on my risk tolerance or whatever it is? There might be other prompts in between, based on, like, this is how much risk I want to take. This is how much risk I don't want to take.

And then that AI agent could work out what sort of borrowing capacity could be, right? Your amount of money that you could lend and what your deposit would be based on the risk tolerance of how much cash you, out of your capital funding, want to deploy towards a deposit. And then I guess once it knows that, it could go and reach out to banks directly.

Like the AI agents of banks, and say, Hey, what have you guys got available? Link up and then create that loan.

Yeah, completely agree. Think the age of the solopreneur is dawning. So before someone who thought, well, first I have to understand what I want to do, what I want to invest in, then I have to know all the hurdles you just mentioned, then I have to know what my financial restrictions are going to be, then I have to physically reach out to the lender, then I have to supply all these documents.

This is going to be trivial shortly. You're going to say, initiate, look this up for me. Offer some suggestions and tell me what I could loan, and maybe even get the loan if I'm serious about it. The one thing that the AI is not going to do is decide to do it in the first place.

So there's going to be probably a growing divide between people who have increased agency and those who don't. If you're someone who says I'm ready to take on this challenge, the tools are going to be there for you. People are still... that's just not in their character.

The desire to push myself out of my comfort zone, okay

Yeah, that's like at the end of the day, we are driving the tool. Driving the AI. The AI is the vehicle. We need, we're to be responsible whether we want to invest that money or not. Right. It's like, we're going to have to confirm whether we want to take out that amount of finance, and confirm whether we want to purchase the deal. But it makes sense that that can happen pretty fast. Like, I could work out what, like, how far in the future are we looking?

Where I go, right, agent assess my net wealth, assess what, based on my risk tolerance at my age, what amount of capital should I deploy from my net wealth that I can afford to as well to buy, and then connect with a bank? How we all connect with the possible buyer, and then how far, like it's I think that's why we do that. Most of, so when it comes to getting financial advice, you can 100 % get that right now. You can get good advice. I said earlier, 10,000 idiots, but I want to draw a distinction. The idiot part is that, for the most part, the agents need specific instructions, and they can make dumb mistakes if you're not watching them.

Like super specific because it can give you very general advice, and you think it's going to be specific advice to you. So the more specific you are with your prompting, the better the advice, right?

Right, but on the other side of that, they're sort of like idiots of ones. Cause if you ask a very specific question and you give specifics like this is my net worth, this is what I'm comfortable with, this is my monthly free cashflow. These are the sectors that I find interesting. This is my geographical location. These are the prevailing interest rates. Like you'll get excellent, excellent advice.

Expert-level financial advice from an AI right now. You just need to have the conversation.

Yeah. Well, my question is then how far out is it where you, where I can, I know what that is. Like I can work that out now with expert advice. If I'm very specific with my prompting, how far out are we for AI agents going out and searching for the business that I want to buy and finding it? then also then connecting with different lenders. What.

It depends on a person's technical ability because if your technical ability is let's, let's stick with say the average Joe, because the, you know, an average Joe that wants to buy a business and they want to use AI to do it. Their technical ability is probably not going to be exceptional.

So let's just say, like the average, if your technical ability is high, you can do that right now because you can create agents. The current AIs are very good at coding, among other things, and they're very good at replicating programs that already exist. But they're not perfect, so you would need technical ability to fill in the gaps right now.

But I think six months a year, honestly, I think you're going to be able to take any SAS program currently in existence and tell an AI to make you a personalized copy of it that you can use and you can tailor to your specifications. And you can tell the AI, change this here, change that there.

I want you to focus on doing this here. It's uncertain. Don't hold me to that prediction. Maybe it'll be a couple of years. But at the rate we're going, I'll just be surprised if we're not at a point where I would just tell an AI, want you to make a web crawler that does this and it will do it not long.

Yeah. My thing is like that part can be sped up, but then I think what might hold it back is like the banks, like if you're looking to buy a business using lending, like the banks sort of saying, okay, or maybe your AI agent, I mean, I guess it could apply for, apply for those loans without you needing to do the work too. Yeah, I could see that working.

Absolutely. Anything a digital secretary could do, the AIs will be able to do, already can do, or will be able to do very soon. You'll be able to tell an AI, make a digital agent that does this.

Okay. Mm-hmm.

Now that doesn't mean that anytime you're interacting with a third party, that doesn't mean they're going to be prompt in their replies. The or banks might take a while to get back to you, but hopefully they'll be using agents too.

Well, yeah, I mean, and they're to be pretty trained up smart agents to deal with the incoming requests. What makes this fascinating is like, you've then got, you basically have an AI agent buy a business for you and also sell it for you. What we haven't talked about is the growth of a business, which, thinking about it now, prompts me to ask, " Be wise, correct me if wrong, or come up with a better scenario.

Say I have a specific business, and I have an agent go through my complete business and then ask, Hey, what direct competitors do I have? They're doing better than me that are quite similar. Can you employ their marketing strategies in this business? Which is fascinating because then my question becomes what happens to them, it just becomes like whoever has my thought is like level of competition.

If everybody can do that, then why doesn't everybody do it? But it comes back to the same thinking. It was like, if everybody can buy an online business, then why doesn't everybody do it? The reality is that not everybody knows they can or has the ability through finance or knowledge. The same with like, not everybody can just grow a business the same as everybody else, because they might not have the AI agents or the resources to do it.

Logical thinking is that does what ends up.

Yeah, that makes perfect sense to me. I would say it's sort of like a fan of Saber Metrics and, to a lesser extent, baseball. So if you're familiar with the story of Saber Metrics, it's the advanced analytics that were pioneered by a few teams, but most famously by the Oakland A's, which was then chronicled in the book and later the film Moneyball.

And what they did was they used statistics to identify inefficiencies in the market for baseball players. Specifically, they noticed that people who walked a lot, who had a high on-base percentage but didn't have as high a batting average, were being undervalued. So the people, the analogy here is that what the A's, Oakland A's, realized back in the early 2000s and late 90s, was that there were tools that they could use that would allow them to out-compete the competition.

And I think that's where we are now. There are tools now that people can use to outcompete the competition. So, to copy an opponent's marketing strategy 100%, you can do that now. And to fulfill all kinds of roles, there are going to be a lot of businesses that get acquired by people who realize that the businesses as they're currently run are inefficient because they're not taking advantage of all the digital labor, almost cost-free digital labor that exists.

But the A's haven't been to the playoffs in a while because, eventually, as you said, the market catches up. So what's the difference, reader, in the end? Because you say, let's say for instance, my opponents are running a bunch of ads on TikTok. Like that's really what their advantage is. So then you start to run ads on TikTok. Everybody starts running ads on TikTok. The price per impression for an ad on TikTok skyrockets. And suddenly it's no longer a good idea, cost-benefit-wise. So.

Yeah.

That's what you'll see happening. Once these tools are more widely adopted, which they will be, then you're going to have to think differently again or find a new inefficiency.

Because what gets you from A to B is not going to get you from B to C, right? You might employ a tick-tock.

I think that's a mixed metaphor because there's a big difference between going from 0 to 1 and going from 1 to 100. You find different problems like…

The compounding effect, and you become a better problem solver from your experience.

Sure, sure. I just mean when a company is very small, the problems it faces and the solutions it needs are very fundamentally different from when a company gets bigger. But here, what we're talking about is having a technological advantage or an intellectual advantage that you have for a little bit, and then you don't have it anymore as it pervades throughout the entire market.

When I think when you mentioned that, you know, once somebody has the advantage of knowing how to grow a specific business, and it's minimal cost because the AI agents are doing it for you. Once you have that same business model, you just, the acquisitions of online businesses get superior because you can just say, Hey, I've done this with this business. Can you find me another business like this that hasn't?

Got this same strategy and is there.

100%. There are going to be a couple tycoons out there. I'm not trying to put dollar signs in people's eyes unnecessarily or be like some sort of hype person here, but for sure there are going to be people that realize there's a repeatable process where they acquire a type of business and they implement some level of digital agentry and they realize I could do this with 10 more businesses. That's going to happen.

It's already being done, though. Yeah. Like, without AI. Yeah. It's been happening for years. Like one person has an e-commerce brand and then they develop and digital marketing agency, or they start running ads for that e-commerce brand.

Works well. And then they just start offering that to multiple other e-commerce brands, or they just buy other e-commerce brands and run the digital market. Like it's already being done without AI agents. It's just becoming more digitized and probably far more efficient. I shouldn't say probably very much more efficient, right?

The point is that the advantages are changing. So in the past, maybe your advantage was that you were good at advertising or you had a high social media presence. And so you can parlay that into helping a lot of different businesses. The advantage that AI agents offer, some of which are already apparent, some of which are not apparent because the AI literally can't do it yet.

But the thing about AI is that the capabilities are increasing exponentially over the last few years, and there's no reason to think that the exponential increase in capabilities is going to stop or plateau anytime soon. It might. But if capabilities keep increasing, every few months, there will be some new thing that AI can do that not everyone realizes.

And if you realize it, then you can maybe get to the market first and take advantage of it. And then the market will catch up, and then you'll have to find something else.

Yeah. Yeah. It's cool. Like, if I just think about it in terms of online brokers and buying businesses, if online brokers aren't using these tools now to find businesses that want to be sold, they're not at them. They're missing out, or they're going to get left behind. I should say, right.

Yeah, yeah, commitment. Yeah, I like that. Is there anything else that you could see in terms of like &A that we haven't talked about that you'd be like, wow, this is interesting, and this could be a pretty wild change that people should be aware of.

Yeah

And I think it's fascinating because yeah, like it's not just for acquisitions, right? It's like growing your business to like hiring, like removing people that are not great for the culture, and then hiring more people in which is only going to create a far better culture, which is only going to create far better businesses and work environments for people. So it's pretty exciting.

Absolutely. The companies that I have seen people hire like great salespeople, they're not just like an extrovert or just, you know, D in the disc profile or whatever it is. It's not that. Like, it's more about what experience do they have? How do they speak? There are so many different things. We can go down a rabbit hole, but yeah, it's pretty exciting how I'm thrilled that you came on, Adam.

Thanks so much for having a chat.

Yeah, where can we send people to find out more about what you're up to?

Cool, I'll put a link to your LinkedIn in the show notes. Everybody is listening.

Thank you for listening. If you like this episode and you feel that we should be doing more of these, please do let me know. I love the feedback and look forward to hearing from you guys.