00:00:58 · Zeynep Yavuz-Willson, Sebastian Johnson
[00:00:58] S1: Very good. How are you? [00:00:59] S0: Very good. Now, I think you're one of the most exciting investors in Europe in this age of AI, investments like Legora, Dwelly. Very interesting investments, right, both focused on the services industry. So just like, get straight into it. Why is that the bet that you've made a couple of times now in this age of AI? What does that say about where you think the value is going be captured?
00:01:22 · Zeynep Yavuz-Willson
[00:01:22] S1: Yeah. Maybe I go a little bit to the story of how this AI transformation thesis was born. So, you might know, at GC, we're an investment company. And at our core, we're very much of a people business. So, we focus on early stage. We're very active at the seed stage. Our mission is to partner with exceptional people as early as possible in their founding journey. We are intentional about that. And it's also a little bit kind of you can't plan it, right? You meet exceptional people anywhere, anytime, and that's a little bit kind of like the fun part of the surprise part of the job. And then we have the intentionality side, and that's quite important as well. Mhmm. So, when AI happened, we kind of got around altogether as partners, and we were trying to map out like where we think the biggest impacts are going to be, what are going to be the second, third, or consequences of having AI diffuse into different economies. And one of the topics we had was services. So, a lot of service categories that are very tech space and voice space, where AI can really transform the way we do work, and also the way people experience those services is gonna change. And actually, that is quite different in The US context versus the European context, because a lot of these services are quite local. And also, the industries will be transformed with AI in different ways. And I think Legora and Dwelly are actually perfect examples of this. So, step one was like, we knew AI was going to transform services. Mhmm. And these categories, like, these services categories are just so much bigger from a TAM perspective compared to software. Right? So, that's super exciting.
00:02:57 · Sebastian Johnson, Zeynep Yavuz-Willson
[00:02:57] S0: Yep. [00:02:57] S1: And beyond that, it touches everyday lives. Like, if you think about accounting, you think about property management, real estate, law, you know, these are touching everyday lives of people, and I think that's what really inspired me. The second thing that was important was that I knew that for some of these industries, by just selling AI tooling to them, we could transform them. But for some other industries, selling them technology was not going to work. And and I can talk about that in the context of Legora, where I believe selling the technology is making real difference in the way lawyers and legal professionals are, are doing their work today. [00:03:38] S0: Yeah. [00:03:39] S1: Whereas in the property management space or in the real estate agency space, or in accounting and insurance, we just didn't have that. You know, these industries were not buying the technology. We were not seeing the same market pull. But the opportunity was still there to transform these huge industries. A lot of investors would look at property management or real estate, and will say, I'm not investing in this again. [00:04:01] S0: Yeah, [00:04:01] S1: yeah. Because so many people have been burning, including myself. I remember when I got Dwelly's first, like when I saw the first pre seed deck, was like property management or like real estate. No. Because it's so hard, right? Yeah. So, you need to think about this in creative ways. You can't be like, I'm just going to do a seed investment and see how it plays out. [00:04:20] S0: Yeah.
00:04:20 · Sebastian Johnson, Zeynep Yavuz-Willson
[00:04:20] S0: Yeah. [00:04:20] S1: There are not that many firms, I think, who can really get behind this thesis and say, I'm going to think creatively. I'm not going to have like a rigid way of investing, and it's not just going to be capital to do this anyways, but I am going to go try to transform or help people transform property management and real estate and accounting and insurance, even though these industries are not buying any technology. [00:04:42] S0: Looking at Dwelly specifically then, given your, I don't know, your experience being burned in this industry, what made you kind of get over that? Right? What made you think actually what they're doing or the approach that they're taking, I'm still going to get involved?
00:04:42 · Sebastian Johnson, Zeynep Yavuz-Willson
[00:04:42] S0: Looking at Dwelly specifically then, given your, I don't know, your experience being burned in this industry, what made you kind of get over that? Right? What made you think actually what they're doing or the approach that they're taking, I'm still going to get involved? [00:04:55] S1: First, I mean, I met them and I think like when I first met them, I was kind of like, you see their hustle and they had such deep industry insights as well because they had built a business in real estate. Yeah. And that's important because they had built a business in real estate. They knew that driving organic growth in that market is close to impossible structurally, Because a lot of the contracts, rental contracts, as you know, The UK are three to five years, and people will just renew them. Yeah. So, if you want to turn that landlord or tenant away from an agency, good luck. You know, you have that window that's going to happen in three to five years. Yeah. Same with property management. You know, a vote happens in a building once a year. And you need to convince everyone to vote to change to you. So, dragging organic growth in this market is really hard. [00:05:39] S0: Sweat.
00:05:39 · Sebastian Johnson, Zeynep Yavuz-Willson
[00:05:39] S0: Sweat. [00:05:40] S1: Then if you were doing venture investing, right? All you care about is growth. Like all you care about is organic growth. So, obviously that makes sense, right? You do classic venture. It doesn't just fit in your mandate. So, you say, I'm not gonna invest in this property management, leave it. But then with our mindset, what you can do, and this is how we do our investments out of our creation funds. We still have the ambition to say, okay, yes, venture, classic venture investing, maybe it's not going to work, but this is still a huge industry that's arrived for transformation. So, let's think of a way that will work that can transform this industry. And there we knew that inorganic growth to get to some scale was key to effectively seeing how we can start that transformation. When we get to certain scale and we drive better customer service, then ultimately organic growth will be there. And maybe the organic growth is not going be at the same rate of a Legora. It might not be as fast because the market structure is different, but that's okay because our goal is not necessarily to invest in the fastest growing company. We want to invest in the company, be part of the journey for the most enduring company, and that's what I'm focused on.