No Priors: Artificial Intelligence | Technology | Startups
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
00:17:19 · Alexander Taubman, Elad Gil
[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 [00:18:31] S0: and the new of the business gets a piece of the new business in some sense so that they benefit in the upside or the change that's coming.
00:18:31 · Elad Gil, Alexander Taubman
[00:18:31] S0: and the new of the business gets a piece of the new business in some sense so that they benefit in the upside or the change that's coming. [00:18:37] S1: That's right. We're very open to that, and we've been encouraging of that because we like to win together. I mean, goes back to super positive sum about AI. We think we can make everyone happy here, customers, team members, you know, and the business founders and management who participate alongside us in the productivity increase. And so that's why I think we've been a differentiated partner. And my view is as we prove this out more and more over time and the capital markets start to understand kind of our vision and what we're doing, I'd like to think our cost of capital will keep coming down as well, which then further makes us a better partner to these folks because we can actually pay more than anyone else. Because, you know, and this is sort of what Danaher proved and TransDigm and all these great operators over many years is that, you know, if you can establish a currency, you can actually not have to lose deals overpriced because you can operate the deals better. And then, you know, you have a diversified platform that's more valuable and growing faster with, you know, better financial metrics.
00:18:37 · Alexander Taubman, Elad Gil
[00:18:37] S1: That's right. We're very open to that, and we've been encouraging of that because we like to win together. I mean, goes back to super positive sum about AI. We think we can make everyone happy here, customers, team members, you know, and the business founders and management who participate alongside us in the productivity increase. And so that's why I think we've been a differentiated partner. And my view is as we prove this out more and more over time and the capital markets start to understand kind of our vision and what we're doing, I'd like to think our cost of capital will keep coming down as well, which then further makes us a better partner to these folks because we can actually pay more than anyone else. Because, you know, and this is sort of what Danaher proved and TransDigm and all these great operators over many years is that, you know, if you can establish a currency, you can actually not have to lose deals overpriced because you can operate the deals better. And then, you know, you have a diversified platform that's more valuable and growing faster with, you know, better financial metrics. [00:19:32] S0: I guess the other thing that's related to this is you tend to grow the business as you buy. So you're not really focused as much on how do we cut costs as much as possible. You're often focused on how do we grow top line? How do we grow revenue? How do we make our employees more productive in terms of sales and serving customers? Can you talk a little bit about that and how you approach that?
00:19:32 · Elad Gil, Alexander Taubman
[00:19:32] S0: I guess the other thing that's related to this is you tend to grow the business as you buy. So you're not really focused as much on how do we cut costs as much as possible. You're often focused on how do we grow top line? How do we grow revenue? How do we make our employees more productive in terms of sales and serving customers? Can you talk a little bit about that and how you approach that? [00:19:48] S1: Yeah. For us, growth is And customer experience and growth and expansion is the top priority. So [00:19:55] S0: And by the way, this is very true for tech companies, but it's not very true for many other types of companies, I think.