Long Lake Management agreed to acquire American Express Global Business Travel in a deal valued at about $6.3bn, which Elad Gil calls the world's first AI take private.
Alexander Taubman says Long Lake's acquired businesses grew zero to 5% annually before its investment and now grow more than 20% a year, crediting AI-driven capacity for more customers.
Taubman argues Long Lake's ownership model beats selling software because owning companies aligns incentives and lets engineers work inside businesses for about two years.
Long Lake bets owning service companies beats selling them AI software
Long Lake argues the best way to capture AI's value in service businesses is to own them rather than sell software to them. Labor-heavy firms keep little of each new revenue dollar, so AI efficiency lets them grow at software-like margins. The Amex GBT deal applies that model to a large, trusted travel franchise, and long-term ownership is what makes a multi-year transformation workable.
Takeaways
Long Lake buys service businesses to transform them with AI. Long Lake owns companies in architecture, HOA, HR services and specialty tax, and has agreed to buy Amex GBT for about $6.3bn. Taubman says owning the customer relationship aligns incentives and tightens feedback loops better than selling software.
A shared platform makes deployment take days. Roughly 80% of the Nexus infrastructure is shared across verticals. Each deployment still means mapping workflows, cleaning data and customizing for the business, but early acquisitions took over a year to show AI's potential and new ones now take days.
Acquired businesses now grow over 20% annually. Before Long Lake invested, its companies typically grew zero to 5% a year in volume. Taubman says AI gives employees capacity to serve more customers, so growth rises, retention improves, and jobs are created rather than cut.
Winning needs deal skill, AI engineering and change management. Gil argues AI roll-ups need all three. Long Lake was built cross-functionally from day one, hiring early staff from Palantir, Ramp, Robinhood and Glean, and M&A talent from GTCR, Blackstone, TPG and HIG, who Taubman says are not AI native.
Amex GBT fits as a mission-critical, trusted franchise. Taubman calls the 111-year-old company's century of customer trust extraordinary. Travel was on Long Lake's list of 15 to 20 target industries because it is mission critical, costly to fail and mostly revenue generating. Counselors would gain AI superpowers.
Long Lake intends to own companies permanently. Taubman says transformation takes two to five years, not one, so Long Lake will not build and sell. He cites Danaher and TransDigm as compounding models and aims for market leadership in each segment, shaped by his family's 75-year business exit.
AI lets service firms grow with software-like margins. Service firms keep only about 20 cents of each incremental revenue dollar because labor absorbs the rest. Taubman says AI efficiency of 30% to 40% changes that, and only about 1% of enterprise AI use cases are penetrated.
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