No Priors: Artificial Intelligence | Technology | Startups
00:11:22 · Elad Gil, Alexander Taubman
[00:11:22] S0: the way, this company, I think, got started when the only thing you could book on it was railways and boats. Again, it's been around for a while. I think this predates air travel. That's [00:11:31] S1: right. That's right. Yeah. This is a 111 year old company. It was started in 1915 by American Express as a way for them to get their Travelzhex customers out of Europe during World War I. And, actually, some parts Carlson WagonLead, which they acquired late last year, was founded, I think, in 1876. Wow. WagonLead stands for sleeping cars in the train. It's French. So, I mean, these are these are businesses that have navigated a century plus worth of technology transformation. And so and we think they're gonna be it's gonna be an extraordinary franchise for another century to come. But the the way we came up with the thesis is we'd actually been you know, we have a prepared mind approach at Long Lake. We there's we have a whiteboard of, call it, fifteen, twenty industries that we think are very high value for us to focus on, and travel was always one of them. And the reasons are, you know, it's a mission critical service. It's high cost to failure. Most trips are revenue generating. And, you know, if you miss, you know, like a podcast with your favorite, you know, podcaster, for example Yeah, they're tragic. [00:12:33] S0: Right. So,
00:12:33 · Elad Gil, Alexander Taubman
[00:12:33] S0: Right. So, [00:12:37] S1: you know, this is a the customer trust that this franchise has built over one hundred years is really extraordinary. And I think and the company actually and publicly reported has done a really great job charting its future with AI transformation, and we just think we can double down on that and drive a lot of customer excellence. [00:12:55] S0: Is there anything I know, again, you can't say much because of, you know, it's a transaction in progress for, like, a public company. But is there anything you can tell us about how you're thinking about where you want to take this? [00:13:05] S1: Yeah. And I've said this publicly in the press release is that our vision is to really double down on the company's existing AI transformation strategy. And we see it as any industry that we operate in, we see our Nexus platform as giving our team members superpowers, deliver better customer outcomes, faster response times, faster disruption resolution. And imagine basically your travel counselor with AI superpowers. That's kind of the future we envision for MXGBT's customers.
00:13:05 · Alexander Taubman, Elad Gil
[00:13:05] S1: Yeah. And I've said this publicly in the press release is that our vision is to really double down on the company's existing AI transformation strategy. And we see it as any industry that we operate in, we see our Nexus platform as giving our team members superpowers, deliver better customer outcomes, faster response times, faster disruption resolution. And imagine basically your travel counselor with AI superpowers. That's kind of the future we envision for MXGBT's customers. [00:13:36] S0: So I know that there's a few different versions of people who will buy companies to operate them or improve them. The traditional private equity playbook tends to be very short term, right? They'll buy a business for a couple of years, they'll load it up with data. In many cases, they may cut costs aggressively or teams aggressively, and then flip the business. And I think you've taken an approach which I would view more as in the Berkshire Hathaway mold, which is you want to buy businesses you can own and hold for a very long time. And you kind of want to invest in these businesses over time. Where do you want to be in ten years or twenty years? Or how do you think about where this all goes?
00:14:09 · Alexander Taubman
[00:14:09] S1: Well, look, I think it's a really big market opportunity. This is 20 plus trillion TAM, like I said before. And I think we'd like to be the market leader in every segment that we're operating in. And I think there's a lot of segments to potentially, you know, add value to. So part of what inspired us always about, you know, the Danaher's of the world is they were able to compound. They developed a differentiated operating model. In their case, started manufacturing and then life sciences, but they were always able to drive better growth, better customer satisfaction, better employee retention, and ultimately better productivity. And that allowed them to, you know, continually consolidate all these industries over a long period of time with a lot of outperformance. And so our vision is to sort of follow in the footsteps of some of those great companies within the and do it within the services sector and with our sort of AI platform as our advantage. And I do think that there's something about the long term nature of what we're doing. You know, it's really hard. What we're doing is actually really hard. Mhmm. And doing it you can't do this in a year. You can't do this even in two years, three years. This is a multiyear transformation. These are these these are sort of compounding effects where as you as we talked about earlier, as you sort of give your people better tools, you get better people, and then you can pay them more. And then they can deliver better customer outcomes, then you can grow faster. That's not a one month, two month cycle. That's a two, three, four, five year transformation cycle. And then what are you going to do? You're going do all that? You're going to build the best company in the industry, and then you're going to sell it? That just doesn't make sense to me. I'd want to own that company forever and compound on that advantage for decades to come and then extrapolate it into ancillary areas and other service lines. And so our vision really is to be a long term owner partner to world class services companies. And by the way, if I was a founder owned business who had built a great business over fifty years, you know, I'd love to know that the next steward of that company is going to be a long term investor and a long term steward of the employees and the customers. And so that's part of our vision as well.
00:16:12 · Alexander Taubman, Elad Gil
We've designed Long Lake. Part of it is, you know, I grew up in a family of entrepreneurs, and we had a family business that my grandfather started, my dad and uncle ran for a seventy five year old company that we recently exited, actually. And when we designed Long Lake, I designed it with that mindset of sort of build the product you yourself would want to use, which is I would love to be, you know, if I was a seller of an asset partnering with Long Lake. And that's our ambition. [00:16:37] S0: So one other thing that I've noticed is that often it seems like you win a lot of the companies that you are bidding on in a competitive process, or in some cases, you're the only person people want to sell to. Could you explain why that is or how that's shifted over the last two, three years? [00:16:52] S1: Yeah. Thank you. Have had a really good success. Our message has really resonated with business owners and management teams, I think, because I think it is solving a really important need, which is having a long term permanent capital partner is already a wonderful thing. But having that partner with deep applied AI engineering expertise and a platform that you can deploy day one [00:17:16] S0: because these folks never see anything like that, right, in terms of the industries that they're currently in.
00:17:16 · Elad Gil, Alexander Taubman
[00:17:16] S0: because these folks never see anything like that, right, in terms of the industries that they're currently in. [00:17:19] S1: Yeah. We have to you know, AI is very, very underpenetrated. It's probably around 1% penetrated in terms of real enterprise AI use cases. And when you think about sort of the overall economy, first of all, 99% of businesses in America are small businesses, and they don't have access to the resources of big companies. But even big companies, you know, are having a hard time figuring out, you know, how to drive maximum impact from AI. So we are sort of a We're solving many needs. And, you know, in terms of the, you know, the philosophy I mentioned before of we've kind of tried to design, you know, the product you want to use as a If we were a seller or if we were a management team to be the optimal partner. And that's how we've designed Long Lake. And so we have this cross functional team. They become your partners day one. I mean, you get to partner with Varun, you get Varun, Taras, Prateek, and, you know, Jason. And our extraordinary engineering team will basically live in your office for the next two years helping you fix all your problems. It's a pretty good value prop. And then we also encourage rollover and equity alignment from existing shareholders or management and founders. And so in our first four verticals, service lines that we've gone into, we have significant rollover participation from the original founders So