00:23:50 · John Reynolds, Dan Lifshits
[00:23:50] S0: Yeah. Yeah. [00:23:51] S3: I think that kind of one of our largest equity investors to date is General Catalyst, as kind of is known. And I think that kind of General Catalyst has been, to some extent, the kind of ambassadors of this kind of strategy across the globe, especially in The US, but I think in Europe in general. And I think that they understand very well what it takes to operate in between this kind of your typical VC world and your typical PE world. So I think that they've been probably one of the best partners we could have had for the journey so far. Again, the gentlemen around the table do not have General Catalyst as an investor. So, actually, maybe they can compare and say that kind of how other VC is kind of equally good as well. But very, very supportive partner, understanding really well the playbooks of kind of digitization of the business with AI as well as kind of how to implement some of the kind of roll up and M and A playbooks into kind of diligence of the deals, remain very diligent on kind of what you buy, how you buy, financing playbooks between kind of balancing debt and equity. So I think that these are some of the things that we need the help with, especially on the kind of this PM and a front because we're not coming from there. We're rather kind of product people and operators. And General Catalyst has been a huge help in that. [00:25:09] S0: Have your VC backers been equally as supportive, Constantine?
00:25:09 · John Reynolds, Din Bisavak
[00:25:09] S0: Have your VC backers been equally as supportive, Constantine? [00:25:14] S1: I think I think I would put it more broadly. I think there's kind of two types of VCs in the market for businesses like ours right now. There are VCs who, you know, believe it's a roll up with AI injection. And then there's VCs who believe we are product companies who choose the most efficient go to market strategy to scale quickly and efficiently that exists. And I mean, I can tell from my experience, I think when we raised our first round a few years ago, most VCs tended to be kind of in the first camp, and people just didn't understand yet where this could lead. I think today, the the the landscape is really evolving. I think GC, General Catalyst, was, as Dan said, kind of they are the ambassadors of that strategy, and I think they were the first ones to really start making big bets on that strategy. But there is other funds like Thrive, mean, GV in our case, and I know that every other kind of tier one big investor is actively looking into the thesis and actively looking into the strategy and thinking how to deploy their money best into into probably one of our companies. [00:26:31] S0: Constantine, you're not in there. Go on. You go.
00:26:31 · John Reynolds, Constantin Schröder, Dan Lifshits
[00:26:31] S0: Constantine, you're not in there. Go on. You go. [00:26:33] S2: Yeah. I would I would fully agree. I think the the market is like exactly like Dean said. There's two different types of VC, and a couple of a handful of them have understood the thesis. And I think that's that's what I saw when I... We we just quite recently did a series a fundraise. Still to this day, there are some VCs, I think, that are struggling to understand kind of the potential of of what we're doing here. But it's evolving, and I think that's that's the good thing to focus on. We've we've raised our series a from Eurazeo, which we also saw as one of the European funds to have super high conviction on AI. First of all, like backing some of the the best foundational companies, foundation model companies, and then also quickly tapping into this thesis, and they've been super, super supportive. And if I think with their very broad kind of funds from not only a venture capital arm, but a growth arm, more private equity focused a debt arm, and also an infrastructure fund that they have. I think they cover the full life cycle and are faster, the perfect partner, and and all the steps that we that we're going to take in the next years. [00:27:45] S0: Why would a why would a VC struggling to understand it? They just didn't like the model then. [00:27:48] S3: I think the challenge there... Yeah. Go go on,
00:27:48 · Dan Lifshits, Constantin Schröder
[00:27:48] S3: I think the challenge there... Yeah. Go go on, [00:27:51] S2: Kaz. Yeah. I think that's just like like like Dean said. I think many of the VCs have see... Have been burned due to roll up style companies that have kind of gone bust in the last couple of years and have raised on extremely inflated valuations. And when you kind of opened the opened the doors of the car, saw inside that there were a bunch of kind of people doing very manual tasks and things were not technology. Those were companies that had raised on billion dollar valuations and were called kind of the next unicorns, but they had zero tech basically in their business. I think that's what, from my point of view, has led a couple of VCs to be very skeptical and critical about the model. And and and we're here to prove prove that that's very different. And as Dean said, the most important distinction is that we are product led companies that use a r... That use roll up or buying companies as a go to market. But that's not what the company itself is. If you look at how big our tech team compared to the company in total is, that's an all product and tech team. You see that that is completely different to those companies from from back then, from the last years. But I think that's a thing I
00:29:05 · Dan Lifshits
[00:29:05] S3: was about to comment exactly on that. Think, John, interesting perspective might be kind of for you personally, I believe, is that I think there are two kind of slightly to simplify distinct asset classes, right, VCP. Right? VCs are looking at things I'm simplifying on purpose. We will make 20 investments. 19 out of those would go bust. One out of those would make 100x. As the fund will make 3x kind of net TVPI, DPI, right? PE is looking at things in a kind of similar nature in terms of end return, but different underwriting logic. We'll make 10, 15 investments. Each of them would make three to five x. We don't need more than five, but we do not really rate the return less than three as well. And I think that what we're talking about here, why it's like so challenging in a way both camps of investors to get their head around it, is that this business model in general presents a bit of a features of the best of the two worlds. Because you're having kind of a PE style downside protected returns, but then you're having a VC style kind of huge upside potential. And this is a different kind of financing kind of... This is a different business model that has different profile of returns for the investor that requires different underwriting logic internally as investment committee as to how they think about things. That I think it just takes time to adjust. Because whenever you're trying to kind of pull this different profile of returns and obviously risk associated with those returns into your typical kind of VC zero to 100x or PE three to 5x financing strategies, it doesn't fully fit proper plug and play. That's why I believe the huge thing that we're talking about is an opportunity for either the new crossover asset class opportunity emerging sitting in between those two to finance these sort of things, or natural convergence between the kind of your typical VC type asset class and PE type asset class to cater this kind of middle ground opportunity where probably all of us might have different views on that. But my personal belief is that VCs are better to capture that than PEs because VCs are just naturally slightly faster moving and slightly more flexible than PEs. So there needs to be someone to grasp it.
00:31:09 · Dan Lifshits, John Reynolds, Din Bisavak
I think it's either a new pocket of capital that just understands how to underwrite the new type of investment philosophy, or VC is pushing themselves into making roll ups not as scary as I think they historically believe it to be. [00:31:22] S0: Okay. So it sounds like all three of you don't really like terminology. It's not a of an apt term. Perhaps a good way we've done half an hour to to end it is just to go around the room and just talk about where you envisage your business will be in two years time if you've kinda moved away from this model and how you think AI roll ups will generally generally evolve where we'll be in the next few years. So let's start with you. Dean. [00:31:50] S1: I I hope that in two years, I think the... Just to follow on on on what we just discussed. I think one of the reasons why we see this have such a hard time underwriting is underwriting it is there's just no kind of comparison company that, you know, is public where it can really kind of draw a conclusion on where a business like Dwelly, Arboe or Buena would trade. And I really hope that in the next two or three years that happens. In terms of Buena, we are on the verge of becoming the market leader in property management in Germany. We should become that in Q1 next year. And I assume in two years, we'll probably have something like 500,000 units under management, do hundreds of millions of euros in revenue, be highly profitable and have probably three to four business lines that each generate 50 to €100,000,000,000 in in annual revenues. [00:32:46] S0: Right. Okay. Constantine?