00:02:15 · Dan Lifshits, Sebastian Johnson
[00:02:15] S2: Actually, think talking about the raise, I wouldn't say that there was any specific milestones that we wanted to achieve in terms of CD entrance or something like that. In general, the roll up business model is a very capital efficient business model. So reality is we have burned very limited money throughout the business was found because we're buying the profitable businesses and they become even more profitable kind of pretty soon. So meaning that they overcome our kind of central costs that are going into developing the platform and product and acquiring those businesses and integrating them very, very fast. That's why what we've always been focused on is rather buying great established outstanding businesses across The UK. And I think what is more important for us is rather the customer base and the strength of the underlying portfolio and the underlying business that we acquire. And this strategy was always the case and continues being the case. It's just that, obviously, with entering London, you need to make sure that you have more capital because, like, it's not that helpful to kind of to buy one, two of the small agencies in London with lack of opportunity to expand further. And now that we're confident that we can do that, this is a good time to... [00:03:23] S0: And you're you're managing, I think, thousands of properties now. What was it like making that very first acquisition?
00:03:23 · Sebastian Johnson, Ilia Drozdov
[00:03:23] S0: And you're you're managing, I think, thousands of properties now. What was it like making that very first acquisition? [00:03:30] S1: It is. Yeah. It was very exciting. I think additional context is that we are kind of both immigrants and we didn't have much context about, obviously, British culture and local operations of the kind of lettings agencies. We obviously kind of got ourselves slightly educated, but buying the first business and thinking that you are actually kind of running the business are two different things. And that's why we actually made a very strong commitment. We moved with our families up north to Howe, the city where we acquired the first agency, and spent there fifteen months. That's what it means, actually, to run the first agency.
00:04:07 · Dan Lifshits
[00:04:07] S2: You just have to move there. I think there are even some fun stories associated with that. I remember when we had the first dinner with the agency owner that sold the first business, actually, absolutely amazing professional. His name is Sam Humphreys, and he is with us now running all our m and a activities effectively. I remember that when we had a lunch and after... I was asking Elia because Elia, in general, maybe not the most talkative person in the world. But I was asking him, you've been even more silent than usual. I mean, why is that? And he's like, mate, I mean, because honestly, I probably was understanding only kind of 25% of what Sam was saying. Kind of you are in The UK, have lived already longer, and I used to study here in London School of Economics. So it was a bit easier for me. But Ilya was trying to triangulate, think, what Sam was saying by the fact of what I was answering and some kind of just emotions. Right? And he was like, oh, well, if, like, I understand only forest, how are gonna run business with with... What's up? So, yes, that... That's how it was buying the first business. I was very anxious at first, but I think at the same time, incredibly exciting because clearly was the moment of time when it was obvious for us that we're onto something huge because it was obvious that you can really reinforce. And I think that, obviously, transform existing businesses with the AI pretty significantly. I think it was a bit ahead of time when I think no one of the investors, and still even to this day, so I think limited amount didn't stand the thesis. So it was pretty obvious that we're doing something highly contrarian and super non obvious where we, once it becomes a big thing, we'll have hopefully a first mover advantage and hopefully now we do.
00:05:41 · Sebastian Johnson, Ilia Drozdov, Dan Lifshits
[00:05:41] S0: And it's certainly becoming more hot in the industry, like more people are talking about us, there's been some viral moments about AI rollouts more broadly. I've spoken to Constantina Arbio and I was speaking to Brenna, know like you know there are some companies doing it, you guys as well like all of you guys actually been doing it for a few years. Why do you think it's got so hot like it's become a really exciting sector or industry, everyone's talking about it, Why do you think it is now versus when you started? [00:06:09] S1: I I have some thoughts, but, [00:06:11] S2: I mean, to be honest, I mean, investors probably would be better to say why it is the thing. There is fundamentals, and then I think there is catch up moment. In terms of fundamentals, traditional service businesses and industries are described by the fact with super labor intensive, pretty manual operational activities, where [00:06:32] S1: a lot
00:06:33 · Dan Lifshits
[00:06:33] S2: of those you could have tried to kind of to, I think, digitize in pre AI era. But, like, the extent of the impact that you could have achieved was limited. Where I think with the current developments of technology and especially all the recent fundamental progress that I think Claude and the kind of other foundation model have done, especially in the last six months, I think just now proves to everyone how fundamental the capabilities are and how transformative they might be, especially for the human centric workflow orchestration industries, especially where most of you do is communication. And I think that it was clear that the science of that was starting to happen few years ago. Now I think it's just obvious to everyone on one end. I think that this is talking about the fundamentals. And I think talking about a bit of a catch up, I think that with that happening, I can only see from the kind of other side that I think a lot of investors were probably a bit puzzled with, like, all the kind of upcoming investments of the kind SaaS and other industries. I mean, obviously, there is a tendency that a lot of funds are raising big amount of capital. And I think that they're obviously looking for the opportunity to deploy this big amount of capital. At the same time, I think it was a bit of an inflection point where what used to work before typical SaaS investments and other things felt like stopping to work at some point of time. And I think at this point of time, you're sitting down and reconsidering, okay, kind of where to go next and what to do. And I think it took a bit of time to just reconstruct back some of the thinking and thesis and I think get alignment about some thoughts But obviously, I think general catalysts were the pioneers in the thesis, obviously. But I think right now, that's why we see this bigger trend at the moment. That's how I would say it. Plus, obviously, kind of in the service industries, you can go for astronomical outcomes that is bigger than the SaaS by the magnitude of times. Because just simply addressable market is, like, almost 50 x bigger than the SaaS industries itself. Probably, that will be my recollection. But...
00:08:25 · Ilia Drozdov, Sebastian Johnson
[00:08:25] S1: No. I think exactly right. Kind of maybe a few words from my side is that I think in many industries right now, especially labor intensive industries, AI allows to drive both kind of efficiency and level of service just insanely. That can justify kind of quite a significant investment into the buy and build strategy because also the speed of that buy and build strategy is unlocked. In traditional PE roll up, the integration is pretty much manual exercise. In an AI enabled roll up integration is just kind of a a process that is significantly automated, and you can scale faster. And that's why kind of there is a kind of so much attention because through PE roll up, you can deploy only kind of that amount of capital. You either have to buy expensive big platforms, but small integrations, you cannot run like hundreds, hundreds, hundreds a year. Only very kind of few roll ups achieve that. In the AI enabled roll up I think you can run even thousands of integrations a year, probably kind of in a couple of years from now we'll get there because it's like fully automated process. [00:09:29] S0: And what happens then, you know, you've just acquired a business, right? Maybe it's old school, traditional, old workflows, old tech. What is the first thing that you do to kind of improve the margins, disrupt the business model?