Funding No-Nos and Retirement Uh-Ohs. 👀
The Weekly from The Liquid Lunch Project, Issue No 116 | May 3, 2024
Giddyup Drink Up: Tomorrow, the "Greatest Two Minutes in Sports" will take place at Churchill Downs, with 20 horses and their pint-sized riders vying for the coveted blanket of roses. Not into the races? Stay for the mint juleps. The Kentucky Derby's signature drink requires over 1,000 pounds of mint for the event. Cheers!
ON TAP THIS WEEK
🤖 Want Bot-tomless Customer Service? It’s AI to the rescue.
🧠 Phi-3: Big Brains, Small Package - Is this Microsoft's game-changer?
🐾 Paws for Thought: The Ruff Reality behind veterinary practice investments.
👍🏽 How to Turn Retirement Worries into Opportunities.
🔬 Under the FDA Microscope: New regs for lab tests shake up the $10 billion industry.
🚫 Funding Fumbles to Avoid as a Small Biz Owner
🌐 And from Around the Web: Rats Vanish, Time's Gold, and Disney Hosts Bush's Heroes.
THE CLASSROOM
Chatbots and Beyond: A beginners look at AI-powered customer service.
by Luigi Rosabianca
Ready to take your customer service game to the next level? Well, buckle up because we're diving into the world of AI-powered customer service, where chatbots and AI assistants are changing the game for businesses of all sizes, including yours.
Now, I know what you're thinking: "AI sounds intimidating and expensive." But hold your virtual horses: Implementing AI in your customer service strategy doesn't have to break the bank or require a team of tech wizards. With a bit of know-how and the right tools, you can harness the power of AI to delight your customers and streamline your operations.
HEARD ON THE STREET
Macro-soft Just Put the Passing Blinkers On
Microsoft recently released Phi-3, their third generation of small language models (SLMs). Phi-3's models are trained on both curated educational materials and synthetic data. They’re setting a new standard on general knowledge benchmarks like MMLU (Massive Multitask Language Understanding) relative to similarly sized models like Meta's Llama 3 8B and Alphabet's Gemma 7B.
Phi-3 Mini, which is the smallest 3.8B parameter model of Phi-3, scored 68.8% on MMLU, almost the same as the scores of much larger flagship models from 2022 and 2023, such as Llama 2 70 B's 68.9% and GPT-3.5's 70.0%.
As language models continue to improve at a rapid pace, their size is becoming more and more important. For example, some versions of Phi-3 have only 3.8-14 billion parameters. In contrast, larger models like GPT-4 and Llama 3 have over 1.7 trillion and 400 billion parameters respectively. This means that they are more than 400 times and over 100 times larger than Phi-Mini respectively. Smaller models like Phi-Mini are cheaper and easier to use on a wider range of devices, including consumer laptops and smartphones. In our view, as their performance improves, the low-cost and portability of SLMs should help AI run locally on everyday smart electronics.
Regardless, small models lack some planning and reasoning capabilities that are important for more complex tasks. As a result, hybrid deployments leveraging both large and small models will be the winning formula. With Microsoft's 3T+ valuation (and counting…), we don't think ole' Billy Gates is playing Wednesday night Bingo at the Elks Lodge!
🐕🦺 Curb Your Pet but Not Your Investments
Few industries are as fractured as veterinarian practices. One pup’s poop is an investor’s treasure, so investors and VCs have been sinking their claws into independent vet practices and small chains, driving up costs for consumers.
Private equity firms invested $51.6B into the vet sector between 2017 and 2023, in addition to $9.3B in the first four months of this year. Pet owners will gladly overspend (or go into debt for their pets), especially for medical emergencies. The veterinary industry has been deemed “low-risk, high-reward” by many investors. Thanks to these tempting metrics, large corporations have gobbled up small vet practices, which now own an estimated 25%-30% of American vet clinics, up from 8% in 2011 and ~75% of specialty clinics.
Mars Inc. (yep, the candy company -ngl, that feels weird) is the largest owner of free-standing vet clinics in the US, with 2K+ Banfield, VCA, and BluePearl locations. JAB Holding Co., which owns brands like Panera and Espresso House, operates 1K+ National Veterinary Associates hospitals and multiple pet insurance lines. These acquisitions translate to higher costs for pet-owner-consumers.
Americans spent $38B+ on pet care and related services in ‘23, up from ~$29B in ‘19. This past March, the Consumer Price Index was up 3.5% YoY for urban consumers, while the vet services category alone was up 9.6%. The American Veterinary Medical Association’s tracker shows that vet visits and medication purchases are down despite revenue being up, signifying consumers might be struggling to cover costs.
Doggonit: The FTC has now decried JAB must receive approval before buying any other emergency vet clinics within 25 miles of its current locations in California and Texas through 2032. Opportunities in this sector are ever present as it largely remains operated via ‘Mom + Pops.’ Just don’t invest in thousands of them like Mars and JAB have!
🧓🏽 Boomers Keep Going Boom
About one-quarter of U.S. adults aged 50+ who aren't yet retired say they expect to never retire, and 70% are concerned about prices rising faster than their income. Exorbitant everyday expenses and housing costs, including rent and mortgage payments, are the biggest reasons why people are unable to save for retirement.
Another looming issue affecting Americans' ability to retire is the financial health of Social Security and Medicare. The latest annual report from the program's trustees evidence this financial safety net for millions of older Americans will run short of money to pay full benefits within the next decade.
But where most people see problems, we see opportunities.
Opportunity #1: We've got hundreds of thousands of Baby Boomers who own small businesses and WANT to retire...but can't afford to...unless someone buys the business from them. And these are established companies with SOPs, clients, inventory, name recognition, etc. If you've got the itch to own your own business, why not BUY one?
Opportunity #2: While hope springs eternal that the government will get its act together and get the whole Social Security and Medicare situation under control...we must be practical. (And realistic.) Why not pad your retirement account with multiple income streams so you can retire before you're one step from the grave? A.k.a., own multiple businesses.
Intrigued? We wrote a whole book on buying a business. It's an Amazon bestseller, AND it's the exact process we ourselves have used to acquire small businesses. Grab your copy at the link below and take advantage of these opportunities while the gettin' is good!
🩸 Pound of Flesh or A Pint of Blood
The FDA wants to make sure your blood or urine tests fall under its purvey, so the agency finalized regulations this week to govern the $10B lab test industry. Tests designed by laboratories have long gone without gub’ment scrutiny. Still, the FDA feels the time has come to ensure these tests are accurate (and the government should oversee efficacy?!). Though the new standards will be phased in over several years, about 80K medical tests are currently available from ~1,200 labs, and those will mostly be grandfathered in.
As labs developing their own tests don’t have to register them with the FDA, no one knows exactly how many are on the market or how well they work. The FDA’s proposed rule would change that by requiring manufacturers to register their tests with the FDA, and the agency would review lab tests based on risk criteria. The proposed rule says that even though no one systemically collects instances of patient harm due to lab-developed tests, the agency has enough evidence from anecdotal reports and independent research to increase regulation of these tests.
Large hospitals and universities that develop their own in-house tests have been able to market them without each one undergoing agency review. The industry has resisted additional scrutiny for decades, saying it will stifle innovation and drive-up costs and could sue to block the rules from taking effect.
THE MONEY MINUTE WITH MRM
7 Post-Funding No-Nos
with Matthew R. Meehan
So, you just secured a fresh infusion of funds for your biz...now what?
Well, before you start throwing cash around like a modern-day Daddy Warbucks, let's review some of the Top 7 NO-NOs we see business owners make post-funding.
From bad planning to ignoring your investors to spending too little (yes, that's a thing!) we're covering it all. Click below to learn how to dodge these pitfalls like a pro.
AROUND THE WEB
Rat’s Out of the Bag: After years of fame, Chicago's beloved 'rat hole' sidewalk imprint has been whisked away, leaving neighbors relieved. 🐀 The decision came after a tide of complaints from locals about the constant gathering of curious onlookers, who left behind not just admiration but also scattered coins and clutter.
Time is Money: Americans, valuing their time like gold, put a hefty price tag on each hour—at $240, to be exact. 💰💰 That's nearly eight times higher than the average annual salary! With such high stakes, it's no wonder folks are willing to pay for convenience, whether it's shelling out for delivery or outsourcing household chores. Would you trade some cash for a little extra time in your day?
Brush with Heroes, Disney Edition: Walt Disney World is bringing the patriotic spirit to Epcot with a special exhibit featuring portraits 🎨 of service members and veterans by none other than former President George W. Bush. Accompanied by heartfelt biographies penned by the President himself, these portraits will honor the leadership and sacrifice of our heroes.
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