The Iferia Techcast
00:12:00 · Adam Sand
And these software companies, like a very recent one, a software called AccuLynx, sold to Verisk, an insurance company, for $2,340,000,000. Now, selling for 17 times revenue, right, so not even profit, 17 times revenue, top line revenue, that you don't do that because you built a great software. You do that because you have great data. Right? And that data is being purchased by an insurance company because it's worth it to the insurance company. It's kinda like your your your worst enemy buying your diary. But instead, it's the diary of a 100,000 roofers. So I thought that the roofers that are on our platform, since we're going public, we should build our own platform similar to how Delta Airlines doesn't use Salesforce. They have their own ticket management system. They have their own website. They have their own mobile app. And the real long term picture. Right? What makes this investable? Because to get all this done sounds great and altruistic, and yeah, roofers should get to own the value of their data, and roofers should be able to be a part of the incitement or the the creation of the publicly traded roofing company. That's all great. But you gotta get investors to pay for it. And investors buy a growth story, not a margin story. They wanna see growth. And the biggest single expense of a roofing company is the labor to install the roof. And if you look out far enough, like if you think in terms of decades, not days, we know that robots are coming. Right? Robots are coming to do work. We know this is coming. The way we saw AI and how it disrupted knowledge work, marketing, creative work, all this kind of stuff. Well, robotics is gonna do the same thing. And we believe that in ten years or less, I believe it to be three to five years, there will be robots working on roofs. They are already working in factories. They're already cleaning houses. Right? Cars are like autonomous cars are just robots with tires. They're already in our daily life. And so investors are interested in the idea of robotics and roofing because what you're seeing is there's two kind of big finance worlds. You have private equity and venture capital. Okay? Private equity buys frothy, fragmented markets, combines businesses, and finds profit. Right? They make economies of scale.
00:14:29 · Adam Sand
If 30 roofing companies all have to market their roofing company, they're all paying $5,000 a month to a Facebook ad company to market their roofing company. But if you take those 30 roofing companies and combine them, you can get three very talented marketers to run the ads for all of them. Right? You find savings, margin, profit. Venture capital is different. Venture capital is venture. They're doing a new venture. They're going into a... Venturing into a new world. They're... That they're the present biting into the future. And venture capital says, okay. To make this future a reality, somebody has to invest in it before it's real. And they'll place 10 bets and nine of those bets fail, but one succeeds and pays for the rest. Right? Mhmm. So you invest in 10 companies, one of them's Facebook, and nine of them you've never heard of. Facebook pays for the nine losses. Whereas private equity doesn't have nine losses for every one win. They generally have eight wins for two losses. But here's what's interesting about today. Venture capital can make things faster than ever. Software, they can make faster than ever. Technology, they can make faster than ever. But the hardest thing about speed, right, is the resistance to change. Right? People resist change. They get uncomfortable with change. And so in the hospital industry, for example, there's amazing medical technologies, things that can make kidney stones go from a full day surgery in an operating room to something that can happen in a day office. Something that turns it from a $50,000 cost to an $1,800 cost. The hardest part about getting that into the market is actually the hospitals and the medical centers not wanting to venture into it. They just don't want to do it. They're like, they're like, nah. Like, we don't know. We're not sure. And so venture capital's number one problem is that the hospitals won't buy it. Now venture capital or private equity would typically go buy a bunch of hospitals and find profit. Right? They would they would consolidate the health insurance programs they work on. They would work with they get bigger discounts because they buy more stuff, right, in bulk. So venture capital and private equity are merging. And the the venture capital company is buying the hospitals like a private equity firm would. And private equity is investing in venture technology.
00:17:03 · Adam Sand, Ezekiel Iferia
And so investors, they might go one direction or the other, typically, but they're now starting to think the same. They're starting to think like a merge of the two. And so you would say, oh, we're gonna make robots that can roof. That's a venture investment. But the hardest part about getting robots on the roof would be getting the roofers to train them and use them. So what do you do? You buy the roofing companies so you can force the training and force the deployment. And so through buying and rolling up these roofing companies, deploying artificial intelligence and software and software that they own and giving them a piece of that public entity, they have a vested interest in deploying and training the robots because they own the outcome. They have a piece of what those shares will be worth in the future. And so then the venture investor is buying the roofing companies to force the resistance of change out of the way. I hope that it clear enough. [00:18:07] S0: Yes. Yes. Adam, that was a really deep and elaborate response. I have a couple of follow-up questions for that. You know, how is an AI native roll up, you know, different from the classic private equity, you know, buy cut cost flip playbook?
00:18:29 · Adam Sand
[00:18:29] S1: Yeah. I've actually tried selling our technology to private equity companies. Like, I have built and done work for many private equity backed roofing businesses. They don't wanna invest in it because it doesn't match their fund cycle. Right? It'll take ten years to pay off. They wanna get in, get out in five. So it just doesn't match their funds cycle. Now the difference in how an AI native company runs and why it doesn't really line up with private equity is because in a truly AI native company, you centralize intelligence and you democratize the travel of information. So what does that mean? Well, when you're in founder mode in a company, right, you are working with five dudes or five friends or five, like, five... A small team, and you're all doing everything. And the founder can speak to everyone directly. Right? And then it's a very flat organization. Right? This is a flat line. Right? And then just like the Roman legions, right, companies have run the same way that Roman legions did in, like, five hundred AD. Right? Which is where you get a hierarchy. You get a triangle. Right? So you get Mhmm. You get corporals, sergeants, master sergeants, lieutenant, like lieutenants, and you go all the way up to captains and everything like that. And so you... And then in court companies, you have you have coordinators. Right? Well, you have individual contributors, coordinators, managers, directors, junior vice president, vice president, senior vice president, c level. Right? And basically, that was all about communicating information up and down that chain. So managers communicate to a director. The directors communicate to a vice president. The vice presidents communicate to a CEO or a CFO or a COO. And it's because you needed a way to translate information up and down this hierarchy. Well, an AI native company is more like a circle. Right? And so then information is stored in a centralized place. You call it a rag database or a knowledge base or a second brain or a singularity organization. There's all kinds of names for it. All it means is all the information, everything everybody does goes to a centralized place. Easy way to understand it is if you think about Tesla's cars. Right? Every single one of those cars is a sensor. Right? And every car gets better because all that information goes to a centralized place.
00:21:07 · Adam Sand
It gets computed, and then a better way to do full self driving pushes out to all the cars at the same time. So every car gets better because everybody in the organization, in this case, cars, every car in the organization is a node connected to the center. And so private equity doesn't like that because there's the private equity firm and then there's all the companies they own. And there's this. And basically the companies report to the private equity. It it it's broken in that function. And so an AI native roofing company means that everything in the business has to become a sensor. That's how every autonomous thing ever happens. Because if you look at say Bedrock, which is automating and building autonomous construction equipment. So those big, you know, diggers and front end loaders and backhoes and cats and dozers and all that. The first thing is always sensors, right? Because they put sensors on equipment that humans use, and then they learn how the humans use it. And then they eventually don't need the driver. Look at Palantir and Anduril, the military equipment companies. They put sensors on the soldiers in the field. They understand how the field works, how the battlefield actually runs, and then they learn how to make better weapons. So an AI native organization at its simplest form just means that everything in the business needs a sensor of some kind, a way to report back to a central system that can compute all of that data to make better data driven decisions. And then everybody communicates with and derives action and decisions from a centralized place. So it removes the hierarchy.
00:22:56 · Ezekiel Iferia
[00:22:56] S0: Okay. Alright. So so, you know, you say that robots are coming and you believe in about three to five years, there will be robots working on roof. And, you know, one of the challenges you mentioned, you said the hardest thing to get robots to the roof is getting the roofers to train them. So let's look at things from the perspective of the roofers. Why do you think that's a challenge for them? Do you think they fear robots will want to replace their jobs? So I like to hear your own opinion on this.