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?
00:32:46 · John Reynolds, Constantin Schröder
[00:32:46] S0: Right. Okay. Constantine? [00:32:48] S2: Yeah. Fully fully agree with what Dean said. We are pioneering this. I think two years is an interesting horizon. We're currently leading in in Germany. We're leading in Austria. And within two years' time, I would say we want to, and I hope strongly we will be the market leader in Europe for short term rental property management. For us, super interesting to move into the sunny sides of Europe, into Spain, Italy, Portugal. Very very interesting markets which we will probably have a tough time cracking. There's a lot of movement down there, but I think that's something we want to focus on. Then for us focus right now, we'll stay Europe, huge opportunity, but we will be the market leaders in Europe running a highly profitable business with a small lean headquarter that consists of the best people you can find for product and technology. And I hope we have a couple of VCs that have understood where this can lead, and will kind of be collaborative in also funding other businesses. Think there's a huge potential to what we are doing also for other markets that are service heavy, and I want to see a lot more of these companies being funded by top tier VC funds. [00:34:09] S0: That's great. And and final word to you, Dan.
00:34:12 · Dan Lifshits
[00:34:12] S3: I think on your two questions, on the first one, our longer term vision is to evolve, I think, like what the guys have mentioned, from effectively just AI enabled kind of property management lettings platform to more like an end to end fully transactional rental kind of marketplace for the tenants and for the landlords. So think of, like, providing all the different adjacent household driven services to both the tenant and the landlord. And I think that in the two years, that's definitely the horizon where it's already achievable to start driving meaningful traction on that dimensions. Talking about kind of where all this AI roll up strategy is kind of going to, I think that kind of it's seen the same across all trends. I think that all kind of other VCs, other VPs looking up for someone like a big brother that leads the way and kind of effectively navigates the whole kind of movement. And I think that we see it very much ourselves because we started Vale as a roll up day number one because it was clear for us that this is the only way to overcome limitation of organic growth. When we went out fundraising two years ago, we got 200 VC rejections and declines. No one was understanding that. A year ago, some first VCs already started investing into that and more started talking about it. Right now, think that only Lazy is not talking about it, but still just a few doing some activities in there. And I think that talking to your tier one European VCs, everyone already understands the thesis and maybe even start doing deals. So I think that precede seed funds start doing that. The next stage is going to be some tech growth kind of funds would start underwriting and doing the store. I think that they just naturally would evolve into, as discussed, kind of either a separate asset class or just a huge kind of category of investment that just didn't exist before, not just across property management verticals that we three here represent, but across all the range of traditional business services.