AI, Code & Capital: The New Playbook for Founders

In this episode of the 2PointZero Voice Podcast, we speak with Mike Carter, Founder & CEO of EMG Worldwide Inc., on the challenge of business valuation and the role of AI in shaping a new era in entrepreneurship. 

With a mission to expand access to entrepreneurship, he shares his ambition to support one million of the next generation of founders, alongside insights from building the world’s largest business valuation platform, now used by financial institutions globally.

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Transcript

SPEAKER_00 0:00

We found that for 92% of all companies, they had no way to figure out what the business worth. So we created the world's largest platform to value businesses, and we were used by over 4,000 financial services institutions, and we helped 500,000 SMEs around the world. And I remember asking them, well, what do you think the business is worth? And they were off in terms of their valuation by 65-70%, but on the low side. But if the entrepreneur doesn't know the prompts or the questions to ask, it doesn't matter how good the LLM is. I think the huge opportunity we're going to see this renaissance of entrepreneurship where because of AI, there's going to be a billion entrepreneurs by 2035 around the world. Can you tell us a bit about yourself? Sure. So I'm an entrepreneur from the US. I started my career in technology and consulting at Cambridge Technology Partners, and I went on, I've probably had seven software companies since then.

SPEAKER_01 1:20

Wow. Seven software companies. You want to tell us a bit about some of them? Yeah.

SPEAKER_00 1:26

So my my last software company um which we sold um successfully was called BizEquity. BizEquity. And BizEquity had a global mission to help democratize business valuation. Because the idea being that the folks that businesses that need that the most are usually the smaller businesses, the SMEs, and they had no way to figure that out unless it was incredibly expensive and took a lot of time. So the companies that always had the best valuations or like the most accurate valuations were the largest companies that could afford, you know, a proper investment banker or the best advice. But what we found is for 92% of all companies, they had no way in an affordable way perspective to figure out what their businesses were. So we created the world's largest platform to value businesses, and it was called BizEquity. And we were used by over 4,000 financial services institutions, and we helped 500,000 SMEs um around the world. Wow. What made you enter this domain? Um around business valuation. Business valuation stack. Yeah, yeah. So in between, probably my fourth software company, I think, or my fifth or something like that, um, I was super blessed. I had a mentor for over 25 years, um, a great um entrepreneur in the United States called Pete Musser, Warren B. Pete Musser, and he kind of was the founder of Venture Capital on the East Coast of America. And Pete is credited with being the founding investor of Comcast, which owns um Sky News and MBC and kind of a global media company, QVC, which is an interactive shopping brand, and Novell, um, where Eric Schmidt, the CEO at the time that went on to become the CEO of Google, where he was CEO. And Pete was just an amazing person that believed in entrepreneurs and had a venture operating company called Safeguard Scientific. Um, and I worked with him in his family office, and he would always ask a question to the entrepreneur coming in. And regardless of stage, whether it was seed, series A, B, C, D, regardless of the sector, one of the questions would always be, Well, what do you think your business is worth? And I was always blown away that no matter how confident, say confident, the entrepreneur was, he or she would always stumble at that question. And we looked at a company um in upstate New York, um a lithium ion battery maker, and two older successful businessmen. And I remember asking them, Well, what do you think the business is worth? And they were off in terms of their valuation by 65-70%, but on the low side. And I remember taking the little commuter flight back to my hometown and thinking, why were they off with that valuation number? And what I realized was, you know, it was right before this age of big data or the beginning of big data during cloud hosting. And I figured because they didn't have the best advice, they didn't have the most up-to-date data. So I thought to myself, if we could combine maybe the the kind of the this living algorithm powered by comparable data sets or multiples across, you know, 700 different um industry classifications, we could really help business owners. So the I really started it around this mission to help business owners. And I thought the business model would evolve, um, and it did. And we ended up having a really interesting strategy where it was B to B through our channel partners. So it was like B2B to SME. And the middle piece, our channel partners, ecosystem partners were financial services firms that wanted to pass on this knowledge for different reasons, but it still accomplished our mission to democratize business valuation. So um we I really did it based upon seeing the need with real live entrepreneurs that need it and wanted that benefit and were would be taken advantage of by the marketplace.

SPEAKER_01 5:24

That's a fantastic thing to do. And uh, what are you now? What are you up to?

SPEAKER_00 5:29

Yeah, so um similar being mission-oriented, and and the mission now, I think, is a much larger mission where business valuation is just one component of it. What we're doing at EMG is creating um the kind of, we believe, entrepreneur platform or entrepreneur operating system that helps an entrepreneur from creation, growth, and exit along what we call 73 steps, or what will be in the region 71 steps um to help them because of Hub 71. Yeah, yeah, but to help an entrepreneur in their um creation phase, the ideation and creation phase, their growth phase, and their exit phase. Because what I learned from building, you know, seven companies or so was regardless of the industry sector I was in, there were actual deliverables or executables that you had to perform. One, for example, is company formation. No matter where you are in the world, every country has, you know, different classifications for how to form your business. And that's a really important consideration for an entrepreneur, both from a tax consideration perspective and the ability to reward stakeholders and how that would be done. That's one example of the 73 steps on our entrepreneurs roadmap. So, what EMG is doing is we want to be the entrepreneur's platform that uses AI and provides a roadmap or a playbook, if you would, to help them in their journey of building of being an entrepreneur.

SPEAKER_01 6:56

And what other challenges are you seeing all these companies facing nowadays, especially with the introduction was not instruction, but with AI becoming a very strong reality over the past 18 months? Totally.

SPEAKER_00 7:08

I think there's multiple challenges, but also multiple opportunities. Like one of the biggest promises of AI, and I'm so like um passionate about it, and so I think empowered by what I've seen in the region with your mission that you know in the UAE to create a million entrepreneurs in the next half dozen years or so. Yes, is one of the upsides of AI is it's this ability to democratize entrepreneurship because it makes knowledge liquid through all these LLMs that we all um speak about or talk about in the infrastructure layer where all this investment is gone. But if the entrepreneur doesn't know the prompts or the questions to ask, it doesn't matter how good the LLM is because you're just gonna get a lot of knowledge back that isn't actionable. So what we're doing with our roadmap, powered by what we call our entrepreneurs agent, um, which leverages an LLM, but with our proprietary knowledge base on top, is really be the co-founder or co-pilot for that entrepreneur to help um help them along their journey. So the challenges, I think, are it's information overload, right? Understanding the prompts to ask in building your company. And then I also think, you know, and I've heard this from a lot of investors both here and in the US, at the venture stage and even the private equity stages, so many of us, me included, right, have invested in private technology companies. And if you think about it, it's the only asset class that sometimes the investor or the CEO doesn't really know how to verify the core asset. And what I mean by that is you're investing in a software company. Yes. But how good is that code? Is the code been verified with AI code gen technologies? And we all read about the uh unicorns in that space. You know, there's about eight or nine big names now where it's AI code gen tools, where they're saying 85% of all code being generated today is from AI code gen, but enterprises aren't deploying that code yet because they don't want the same LLM that writes the code to verify the code. And the and the issues there, right, are around from a compliance perspective, from a security perspective, from an IT perspective. Was that actually their code? Is it licensed? What open source contract is it? So one of the companies that we helped to incubate and start, which is one of the steps on our 73-step or 71-step here roadmap, is a great company out of London called the Code Registry. And the code registry registers the code, verifies the code, and is really the bridge between the trillion plus lines of legacy code and the trillion plus new lines of AI code gen to be that trust layer. So I think that's a real challenge. I think on it from an investor perspective, when you think about investing in software companies or when you're running a software company. My line, as I would say, because I was a really bad programmer 20 plus years ago, so I wouldn't say I was a technical founder, but as a non-technical founder CEO, I always have felt held hostage by my CTO, even when I liked him or her. Um, and I'm being funny saying I liked him or her, but like because you ask where where's the code? Oh, don't worry about it. It's in GitHub. But you or I can't read or understand that code base. True. So now to leverage AI and proprietary code base that code registry is created, now you can have that layer of intelligence that no one's had before. So I think it's information overloads a challenge. I think code overload and lack of verification is a huge challenge because you're going to be deploying this code, if you don't have code registry, in your environment that you don't really know where it came from. Um, to and you don't want what we're hearing even from the LLM code gen companies, is they want a third-party product to come in and verify that code base because their enterprises that want to use their product are saying, well, we don't necessarily want you to verify your own code. So I think that's an incredible challenge that um investors and entrepreneurs face. A lot of ethical concerns that are keep that keep on coming up with this. Um, yeah, so so sure. Ethical in the sense of because sometimes I'm sure folks that are deploying AI code gen, yeah, they don't even know if they're violating anything, right? Um, because it's just coming from this, you know, God or brain in the sky, you know, that's creating this layer of intelligence.

SPEAKER_01 11:52

And how do you see AI keep on developing and changing the landscape for entrepreneurs over the next few years?

SPEAKER_00 11:59

Yeah. So I think, you know, the last three to four years, right? Since I think it was um three years ago, right, when when OpenAI, you know, announced you know, their big their big announcement with chat GPT. Um, I think we've seen so much investment being made on the infrastructure layer, yes, both from a data center perspective and the LLM modeling perspective. And I think the next three to four years, I think there's going to be so much excitement at the application layer. So, in other words, you leveraging that great and rich and powerful infrastructure both from the LLM and and data center providers, right? Now, from an application perspective, how can you help do something better, faster, and cheaper? And that's the opportunity, and that's the opportunity we see with EMG. So we're creating a horizontal application. We call that market, right? Entrepreneur as a service. So entrepreneur as a service platform that leverages an LLM, but is deployed through this very helpful roadmap to help guide entrepreneurs. The 73. The 73 steps in the US. Okay.

SPEAKER_01 13:05

These 73 steps can they be applied elsewhere, or do they do you have to adapt to to like certain jurisdictions? So for example, entrepreneur in Latam or in Asia or here in the the the GCC would have to have different set of steps.

SPEAKER_00 13:21

Yeah, yeah. So in the UAE, what we're going to be doing is 71 steps and refine those. But I think the core is always going to be the core. There's always executables or deliverables that you're going to have to do when you start a company. Um, but the knowledge base within those executables will obviously need to be, you know, um country specific. And the resource providers in each of those steps, in some form, will be country specific. So, for instance, in the UAE for company formation, there's a great company or great product called Incorporify that helps with company formation. So they would be a step in the UAE that wouldn't be applied in the US because they're not in the US yet, for example. What are some common things across the board? Well, so we talked about it a little bit, but yeah, the code audit, the ability to do an AI code audit. And as Mark Andreessen says from Andreessen Horowitz, right, every company today in the world is a software company. So whether they're a retail store, um, a restaurant, or let alone a software company, they have software in their enterprises. So if every company today is a software company, I always say kind of um AI is its teeth in the sense. And so um the ability to understand the code base, I think, regardless of the industry you're in. As I mentioned at BizEquity, we covered over 700 different industry classifications. Every type of company has software they're deploying. So that's an example of a step that every company should deploy is to understand the code that they have. That's just one of the 71. Absolutely.

SPEAKER_01 15:00

You had said something earlier that um a lot of the so one of the mistakes that entrepreneurs do is that they don't write direct prompts. How can they improve?

SPEAKER_00 15:12

So I I think as we talked about the next three to four or three to five years, this application layer that's gonna be so important. I think there's gonna be applications that exist that basically reverse engineer prompts to solve a problem, but they're gonna be consumed in the form of an application. So, meaning for the EMG example is we took the idea of like what are the prompts that entrepreneurs really should be asking to execute on their business, whether they're creating a company, growing their company, or exiting their company, and we built an application on top of that. Yeah.

SPEAKER_01 15:46

Wanted to ask you about the technology ecosystem overall, uh, not just AI. So, what kind of future trends do you see also happening over the next few years?

SPEAKER_00 15:57

Yeah, so as I mentioned, right, I think the biggest trend we're gonna see, because it's almost like everyone's been asleep, you know, not but but been asleep and focused on the infrastructure layer. And I think the renaissance that's gonna happen in software is so exciting at the application layer because now there's this dichotomy in the market, as we've seen in the public markets just this past week, around um software companies being historic software companies being devalued because of AI. And it's so funny to me because it's like, no, no, no, like the great software companies of tomorrow, or even the great existing software companies like an SAP, for instance, they're deploying AI and what they're gonna reinvent is this new layer of applications where maybe the pricing model is different, right? So software as a service, right, has been so popular the last 10 years on the on the, you know, basically using the cloud infrastructures to create this SaaS layer. Yes. Now we're gonna use this LLM layer to create these AI-powered applications that don't just provide knowledge or do something better, faster, cheaper, but actually can be actionable. I think you're gonna see, you know, as Elon Musk talks about beast mode for the car where the car is autonomous. You're gonna have like the version of beast mode and these applications where the applications through the agents actually perform the tasks, right? So it's not just a line manager or director or manager that uses the software application. It'll be uh actual agents within the software applications that perform the functions that normally they would perform.

SPEAKER_01 17:35

And given all these changes, how do you think investors should evaluate technology infrastructure and assess future investment opportunities in the space?

SPEAKER_00 17:44

Yeah, so I think the technology infrastructure play is obviously uh super large, super important, and is basically the foundation. We people talk about foundational models, but the whole data center and um LLMs are the foundation for these new applications. But I think what's going to be so vital and so critical if you look back, I always sometimes play a game to myself in my head, like, okay, 10 years from now, looking back, what will be like you won't be able to believe that people did certain things um just and took it for granted and just performed um or invested in something with taking something for granted, for instance. What I think people are gonna look back on is say, do you believe really smart people invested in software companies or technology companies without ever understanding what the software did? And I'm not saying you need a degree to understand what the application did, but you should have a business intelligence layer or code intelligence layer that helps you see what the software is doing or helps provide what is the true replication value of the code base, for instance. What are the security concerns? What's the quality of the code? Has it been verified? So I think that's a big thing 10 years from now, everyone will be doing it. And software will really be on what we would say in the in the US is in the balance sheet. It's an asset, right? So how do you value that asset? And we're gonna look back and say, oh my gosh, all this money went in to technology investments that people didn't necessarily understand and they never valued. So how will they value? Well, EMG with the code registry.

SPEAKER_01 19:29

Yeah, yeah. Cool. Before we started, you told me uh you're launching a book very soon. Yes.

SPEAKER_00 19:35

So I'm uh launching a book, hopefully next month, I'm told, by the publisher. It's called The Entrepreneur's Roadmap, your guide in the age of AI to creating a winning business. And it goes through our 73-step in the US, 71-step here entrepreneurs roadmap that's AI enabled with the actual steps and what they mean and why they're important, and who are some great companies that can help you on those steps, or what AI um agents can be utilized. And it's really around this um, I think the huge opportunity we're gonna see, this renaissance of entrepreneurship, where because of AI, there's gonna be a billion entrepreneurs by 2035 around the world, literally a billion entrepreneurs. And what I tried to do in the book is make the analogy between, you know, the as when we grew up, right, we just assume people have jobs, right? But the concept of a job really didn't exist before the industrial revolution. And I think the same parallel can be said about entrepreneurialism. So entrepreneurialism obviously re-existed before AI, but AI is going to light the fuse to make it explode. And I think the investments that this region is making in terms of putting entrepreneurs at the center of the economy and investing in the infrastructure layer. But now I think also investing in the entrepreneurs and with your taxation system and everything, um, I think is going to be so powerful. And that's the future. So, you know, I I'm so excited about the fact that, you know, the age of entrepreneurialism is going to be ushered in. And I think, you know, today in university campuses, I think around the world, if you ask students, 65 to 70% of students what they want to be when they grow up, maybe first year of university, they say, I want to be an entrepreneur. But they need to have a playbook to help them along the way. Um, and and hopefully, you know, the company that I'm building and the book comes in there to help a little bit. So our mission is to help democratize entrepreneurship. And we want to help a million of those billion entrepreneurs in the next 10 years do it. And we're really excited to be in the region. Um, you know, by the end of Q2, we're going to have an operation here in the form of a joint venture in in the UAE. And we're very excited about everything that the country is doing, the people that we've met, and hopefully what we can help. provide a little bit with. That's music to my ears.

SPEAKER_01 22:03

That's well, thank you for uh absolutely for uh you know uh choosing to come to the AE and to share all this knowledge uh with us today and uh hopefully the next time you're around we can have you back on the podcast we can continue the conversation.

SPEAKER_00 22:17

Absolutely and I heard you're a good paddle tennis player so with our friend Griff and Jordan