Nasir and Matt talk about fast food restaurants replacing employees with robots and answer the question, "I'm trying to raise some capital from investors. When they ask how I am going to use their investment, what should I say?"
Full Podcast Transcript
NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: Welcome to our business legal podcast where we cover business news and add our legal twist and also answer some of your business legal questions that you, the listener, sends in to email@example.com. We really appreciate those questions. Those of you who have not sent any questions, you guys can stop listening because we don’t care about you guys.
MATT: The people that don’t send in questions don’t have problems so maybe that’s a consideration as well.
NASIR: I guess that’s true. Well, you can still listen.
MATT: We don’t want to alienate people that don’t have questions that need to be answered – or at least I don’t; maybe you do.
NASIR: I guess that’s fine.
MATT: All right. Well, let’s get to what we have for this Monday episode.
NASIR: Actually, this episode is coming on Tuesday, I think, because of the Memorial Day. Just a procedural clarification, for those listening.
MATT: For people that have hacked into my computer and listened to the audio a day in advance. But, for those that haven’t, happy Tuesday! We kind of talked about this before, I think, with fast food workers and the protesting but I didn’t even know this was still going on but more fast food workers are protesting, want higher wages, blah blah blah.
But this is getting to robots that are supposedly going to replace fast food workers. I thought this was pretty interesting. I don’t think there can ever be a situation where it’s going to be 100 percent replaced. I don’t even know if you can get to 25 percent. But it gets to an interesting point of efficiency in the workplace. If these robots can do things more efficiently than actual people, great for none of the problems. But it also gets to what jobs should people be doing for a fast food restaurant – task allocation. If someone can do these three things, can they do that? Great. If not, maybe we should have some sort of robot in place.
NASIR: Yeah, it’s not a new issue because we’ve talked about how, in GM, when they started automating everything – or everything from the assembly line to now robots are building cars that are building self-driving cars which is robots building robots – and so, this is stuff that’s been going on for a while, but I think it’s different now that it’s in the fast food industry.
But I’m just wondering if the argument to start replacing these guys with robots, are they going to have faces? Am I going to Panera Bread – by the way, Panera Bread is going to start doing this very soon with some kind of automated service – am I going to walk in and some robot with eyes and a mouth is going to talk to me and ask for my order? That’s going to be kind of weird.
MATT: Well, you’re thinking of it from the perspective of actual robot people.
NASIR: Yeah, it’s as if it’s Back to the Future made another movie and they would do this. It would look like that – some robot with someone asking for your order like they did in Back to the Future Part II.
MATT: Well, keep in mind that a lot of tasks – well, not a lot but there’s a good amount of tasks – that still go on at restaurants today or a lot of different industries that are done by robots but more so like machines and equipment so I don’t think you’re necessarily going to walk in and have a robot person there. “Can I take your order?”
NASIR: Taken from the employer’s perspective, it’s kind of hard to do it because you kind of have to take your heart out of the whole concept because these are actually real people that they’re replacing. But I suppose, if a robot can do the exact same thing, it’s cheaper. It’s just like before, we used to have messengers – well, we still have messengers that deliver the mail but now we have email and certain things aren’t delivered anymore so that’s one of the reasons why the US Postal Service isn’t doing too well anymore. Things change, I guess.
MATT: Yeah, there’s definitely certain industries where you’ll see reports come out, “We predict that, a decade from now, some of these jobs are just going to not even be in existence anymore because it’s all going to be automated.” I guess the key is just to be one step ahead of technology. If you think your job is something that can be done by a robot, then, I mean, I know I’m afraid of my job being replaced by robot lawyers walking around.
NASIR: Oh, not much difference, I think between real lawyers and robots.
MATT: In some instances, you’re right, I think.
NASIR: Yeah, it reminds me of back in college when I was living in the dorms. For money, I manned the front desk reception and it had all these weird rules. I think a lot of college students, they take advantage and so forth. But one of the rules was that you can’t talk to guests or people that are entering in a robot voice. Of course, you know, when you have that in there, you have to talk in a robot voice. It’s like it almost becomes mandatory. I thought that was so funny.
MATT: Is that real?
NASIR: That was real. They were jumping over the desk. Other valid rules, too. But that was probably the most ridiculous one. Why someone would actually type that out and put that in a policy as if it needs to be said and it said it in such a way. Does that mean I can talk in an elf voice?
MATT: It’s pretty funny. I mean, the reason you get all these ridiculous rules are because things have happened in the past that cause those rules to go in effect. So, there must have been something that happened at some point where they had to create that. That’s pretty funny, though.
NASIR: You know what? Lawyers are just as silly because all those disclaimers that you get – whether it’s products or even services – if you actually read some of the disclaimers, sometimes, they’re ridiculous and they’re unneeded but they’re just so over-pre-cautioned with being sued.
There was one time when CDs were popular, a CD rack, it was one of those horizontal ones that you stack them up on top of each other. One of the disclaimers it said was, you know, this was about probably two or three feet high. It says, “Don’t use this as a ladder.” That was the disclaimer. And you know some lawyer wrote that or they got sued because maybe someone stood on it and they were like, “Okay, what are we going to do? Now we need some kind of disclaimer. Let’s just add ‘Don’t use this as a ladder.’”
MATT: Yeah, and I think we remember talking about this during law school and in towards class about product warranties. I think some things are obvious. I guess it can’t hurt to put stuff in there but, exactly what you said, the only reason that’s there is because someone tried to do that before.
MATT: It gets to the thing where I’ve heard someone mention this before and I always thought it was interesting how basically every single thing has been done before. Like, there’s someone out there that tried to eat a rock once.
NASIR: Now, you have to put “Don’t eat a rock.”
MATT: It’s a really random example.
NASIR: I know what you mean. People are always going to use it the wrong way. This is kind of unrelated to our topic but, when it comes to product liability, don’t fall into this idea that you have to disclaim everything. The law is just not like that. It’s just that some attorneys are a little bit more aggressive, I suppose, in trying to protect their clients – which is fine. I don’t want to make it ridiculous for their marketing. Can you imagine all the other things that you can use that CD rack for that you should disclaim? It would be endless.
MATT: That’s true.
NASIR: Anyway, let’s get to our question. This otherwise is going to be like a five-hour episode and I’m getting tired.
MATT: We really veered off the track of robot fast food workers but, yeah, let’s get into the question.
From New York City.
“I’m trying to raise some capital from investors. When they ask how I’m going to use their investment, what should I say?”
NASIR: Yeah, that’s a good question.
I know what you shouldn’t say is “I’m going to use this for your salary, basically.”
MATT: Yeah, I think that’s the obvious how not to answer it.
NASIR: I think it’s a very common question amongst investors. It’s something that, if you’re not prepared to answer, then why are you in the room in the first place? Because they’re asking for money and the question is “What are you going to use it for?”
When they ask me how I’m going to use it, what should I say? I think you should know the answer already. If you don’t, then I would revisit your plan of why you’re looking for money in the first place.
NASIR: If it is just to put it in your pockets, then you have the wrong understanding of how this works. Even these startup companies that get a huge investment, a lot of times, they end up giving up some of the management control and they don’t buy a car the next day. Maybe they get something here or there but, most of the time, they’re struggling just as they were before, but now they have capital to grow their business.
MATT: Yeah, and you’re exactly right. You shouldn’t be there unless you know the answer to that already. If you’re in front of investors, you’re going to get a lot more difficult questions than that. I’m actually seeing – and who knows if this is real or not – I’m seeing people on Shark Tank get asked that question and have no idea how to answer it. It’s even worse because that’s on national TV to millions of people so you look so unprepared.
This is interesting, I just went to a panel where they had some angel investors and there was investors and there was people on the other side of companies that had been invested in. One guy said something really interesting. He said, “You know, investors,” and I think he was an investor but he said, “I’d be much more upset at someone who didn’t spend the money that I gave them as opposed to just blew through it.”
A lot of times, people are just afraid to spend money that they’re given and that shouldn’t be the case. It almost stifles. You know, they get this investment and they’re almost scared to do anything with it.
NASIR: Yeah, and I suspect it might be because they’re overwhelmed with that amount of money, maybe. They haven’t had to spend that money in the past and so they don’t know how to do it. But, yeah, that’s an interesting perspective from that investor.
MATT: Yeah, let me give a couple of answers here to this question.
I think what you could say is anything that’s scaling your business, that’s obviously a good answer. And then, anything about if you have negative cash flow, turning it to cash positive or anything that generates some cash is going to be a good answer to that – not, “Hey, I’m going to pay myself a lot of money because I deserve it.”
NASIR: Yeah, I think scaling is a priority there. They’re investing in your business model. Now, you have to execute even further than you have and sometimes that takes marketing dollars, that takes investment in your operations or your employees, et cetera.
MATT: I think that’s it.
NASIR: Very good. And lawyers, of course, and securing your intellectual property.
MATT: That’s good, too.
NASIR: Okay. Well, that’s our…
MATT: A really good answer that you just threw in at the end.
NASIR: Yeah, and give your attorneys money, of course, don’t forget that.
All right. well, that’s our episode – nice, long Tuesday episode that you can listen to on your way to work or on your way from work or what else? When you’re exercising, I guess.
MATT: Traveling back from a long weekend.
NASIR: Oh, that’s true. Yeah, good idea. I’ll probably do that myself.
All right, thanks for joining us!
MATT: Keep it sound and keep it smart.
NASIR: Oh, wow. We’re going to have to use that every time now.
NASIR: Thanks for saying “robot” at the end, as if we didn’t know.