#181 · What GPT-5 means for AI agencies
Start with three niches. Make one real estate agents, another digital agencies (not real estate), and a third whatever you want—maybe a mid-to-high ticket SaaS offering around $700/month with a 6-month average engagement, which totals about $4,200 to get you started.
Generally speaking, a good niche requires three things: you must be good at it, it must pay well and be accessible, and you must have some social proof in it. As a beginner, you likely aren't good at it yet, but you can still achieve two of the three—typically, it pays well and is accessible. Therefore, you should sell to people who are typically digital, because digital offers higher margins and avoids logistics, delivery, inventory, rent, etc. It's also easier to scrape leads digitally. Additionally, you need social proof: being able to say you've done something impressive in the industry builds trust and differentiates you from countless others reaching out. Whether real estate agents pay well depends on the specific submarket; for example, luxury real estate agents in LA or Beverly Hills can earn over $75 million annually and could pay well for services. However, targeting every small real estate agent likely won't be lucrative. Hopefully that makes sense.
I tried targeting real estate agents with two email campaigns, and the results were poor. One campaign got almost no responses, and the other had a very low reply rate, with most replies being negative. Compared to other niches where I see 20‑25 replies turning into 11‑16 opportunities, the real estate outreach performed badly, so I probably won’t pursue real estate as a niche again soon.
Marketing agencies are a great niche — I niche down into marketing agencies myself, I'm not particularly 'different' about it, and I still make more than most people doing an equivalent service. It really depends on how big you want to go: if you want to scale to $100M/year selling to marketing agencies broadly, you'll need to differentiate more. But if you're carving out a smaller niche, you can target whatever you want, especially if you already have relevant experience — that alone can make you stand out. A few good assets to send marketing/creative agencies: full HTML websites, built and hosted one-shot using an HTML template populated with AI based on context about the business.
An agency is just one of many scalable business models, but it’s generally harder to scale an agency to $250k a month compared to SaaS or e‑commerce. It’s relatively easy to hit $10k a month with an agency—one 10k client or a couple of 5k clients can be secured in 30 days, even by a complete beginner. Building a SaaS product that generates $10k recurring revenue in 30 days is far more difficult, as is scaling e‑commerce to the same level because of thin margins and higher workload. Agencies tend to cap out sooner, whereas SaaS and e‑commerce have longer growth curves. For total beginners, starting with a service‑based business is advisable because you lack the technical skill to create a SaaS product and need to learn how to identify and solve business problems first.