00:03:55 · John Reynolds, Din Bisavak
[00:03:55] S0: Okay. No, that was brilliant. Very concise and disciplined. So there's obviously commonality between the the three of you. So you're all playing in the the real estate property services area. You're all European, and you're all kinda so called AI roll up. So let... I'm gonna come with you of a definition of an AI roll up, and then you can kind of dispute if I've got this completely wrong. So, it's kind of a buzzy term, and my definition is you're effectively leveraging AI to reinvent traditional businesses. So, the idea is you identify opportunities to buy mature, perhaps people intensive businesses, scale them through the... Through AI, then use improved margins to acquire other businesses. So you're effectively, I guess, using generative AI to transform low margin businesses into high margin software. So it's kind of like a modern day private equity, play. So perhaps, Din, you can tell me I've got that completely wrong. [00:04:52] S1: I think it was completely correct. [00:04:54] S0: Right. Okay. Well, what's your... If... I mean, can you kind of give a bit more color? How would how would you define AI roll ups? And why why are they so buzzy at the moment?
00:04:54 · John Reynolds, Din Bisavak
[00:04:54] S0: Right. Okay. Well, what's your... If... I mean, can you kind of give a bit more color? How would how would you define AI roll ups? And why why are they so buzzy at the moment? [00:05:04] S1: I think they are so buzzy, because they attract... Like, if you compare it to starting a traditional company where kind of your first problem is to find product market fit with an AI roll up, you typically start in an industry that already exists with a service that already exists. So you kind of save yourself the entire... I build a product, and I need to find the audience and sell my product to that audience. Mhmm. So you start a step later, I would say. However, I think that one step later is actually the really hard one where already have a running business, typically a very low margin business, as you say, and then you have to kind of go in there and really transform it from the bottom up. So you have to retrain people to new processes. You actually have to build a product that makes them more efficient and measurably so and repeatably so. So I think in general, AI roll ups are, you know, you build a very good product that takes an industry and improves the efficiency of everyone participating in it, and then you go and acquire those businesses to actually leverage the product. [00:06:15] S0: How many how many businesses have you acquired today? I mean, did you start off as an AI roll up or have you kind of pivoted?
00:06:15 · John Reynolds, Din Bisavak
[00:06:15] S0: How many how many businesses have you acquired today? I mean, did you start off as an AI roll up or have you kind of pivoted? [00:06:22] S1: So the company history is a bit complicated, but we pivoted to AI roll ups three and a half years ago. And over the last two and a half years ago, we have acquired 26 businesses. [00:06:35] S0: Right. Okay. Konstantin, can you talk us about the the virtues of being acquisitive, being an AI roll up than kinda compared to organic growth? And just give us a give us a bit of history of ABO too.
00:06:48 · Constantin Schröder
[00:06:48] S2: Yeah. I think very well described also by Din. I would add that in our space, it's a very operationally heavy business, a business where there's a lot of communication needed. And with how AI has developed in the last one and a half, two years, that's a fantastic kind of playing field to inject kind of AI into, because we have to communicate with property owners, with guests a lot that have many questions with service providers, and we see ourselves in the middle orchestrating these three stakeholders, and how AI has developed with large language models, it's absolutely fantastic to adapt into. I think the virtues of what you are asking, the big kind of difference I think to classical business where you grow organically is that you you also have debt that you have to manage, and you have a far more complicated kind of setup in which you have to show that you're actually performing. So the businesses that you acquire always have a track track record, a history. And you have to really show very very well that you are improving margins and service quality. And at the same time, you're financing these businesses that you acquire with with debt, and managing that, we've done around 45, 50 acquisitions now. Managing that debt is is quite difficult when when you scale, and you also have to kind of serve that that debt well. So there's I think pros and cons, some of the pros that Din mentioned, some of the cons I think you have to balance and juggle really really well and understand before you actually do that. When we started, we were very much focused on the guest side, so we acquired small scale Airbnb hosts and we built a company that was running very well, we had some automations, we were growing, but we realized that we had basically done many many learnings that a classical property manager hadn't had. And so we looked into the property manager side a lot more, and we saw that there's around 50 to 60,000 property management agencies in Europe in our space. And we saw that all of these companies are struggling to scale, and that they are delivering extremely poor quality to property owners. And so we started tapping into that market and that field a lot quicker, and started doing some acquisitions there. It happened around one and a half years ago that we transformed and moved into that direction stronger.
00:09:01 · John Reynolds
[00:09:01] S0: Okay. Same question to you then, Dan, and then we'll go
00:09:04 · Dan Lifshits
[00:09:04] S3: we'll go around To be a devil's advocate a little bit. I would slightly disagree with your interpretation, I think, of how you call AI roll ups. What has happened is that kind of with the appearance of AI, clearly, I think a little bit of a borderlines between your typical kind of VC backed businesses and PE backed businesses slightly overlapped. I think that's exactly the topic that one of my cofounders, Eliade, was discussing with Kate kind of the other day, I think, like, this month or something. And I think the battlefield for this crossover especially happened in kind of traditional business services and businesses. This is like a huge space of economy. I think that in Europe alone, it's like trillions of dollars of, like, household consumer expense, so kind of clearly a huge battlefield to potentially go after. And I think that you can look at this business model from two distinct lands. I think that you can call it a PE roll up, but with a glimpse of technology. And I think that was your kind of last part of the definition of a year roll up that you've made. But if you would ask me, then I personally, and I guess that the gentleman would agree with me, look at it differently. I think that the way why it's different is effectively rather the, I think, vision and the philosophy of what we're building is just an AI native or kind of AI first kind of business in the given vertical of a new generation. In our space, kind of AI native letting agency or in Guy's example, for example, AI native kind of property management company with kitchen rentals. And I think the important distinction is that... And we're building kind of this business while for us acquisitions just happen to be the only scalable way of the go to market today as a tactical go to market angle. But the way to me why I underline it is just that tactical go to market angle. Because today, we're buying the businesses, tomorrow maybe we'll find a way to overcome the limitation of organic growth. The day after tomorrow, we maybe would like platform our product and start kind of offering to the other kind of players. That's why to me I think that kind of roll up here is not the core of the value creation in itself, as usually how your typical PE would position that.