00:05:41 · Sebastian Johnson, Ilia Drozdov, Dan Lifshits
[00:05:41] S0: And it's certainly becoming more hot in the industry, like more people are talking about us, there's been some viral moments about AI rollouts more broadly. I've spoken to Constantina Arbio and I was speaking to Brenna, know like you know there are some companies doing it, you guys as well like all of you guys actually been doing it for a few years. Why do you think it's got so hot like it's become a really exciting sector or industry, everyone's talking about it, Why do you think it is now versus when you started? [00:06:09] S1: I I have some thoughts, but, [00:06:11] S2: I mean, to be honest, I mean, investors probably would be better to say why it is the thing. There is fundamentals, and then I think there is catch up moment. In terms of fundamentals, traditional service businesses and industries are described by the fact with super labor intensive, pretty manual operational activities, where [00:06:32] S1: a lot
00:06:33 · Dan Lifshits
[00:06:33] S2: of those you could have tried to kind of to, I think, digitize in pre AI era. But, like, the extent of the impact that you could have achieved was limited. Where I think with the current developments of technology and especially all the recent fundamental progress that I think Claude and the kind of other foundation model have done, especially in the last six months, I think just now proves to everyone how fundamental the capabilities are and how transformative they might be, especially for the human centric workflow orchestration industries, especially where most of you do is communication. And I think that it was clear that the science of that was starting to happen few years ago. Now I think it's just obvious to everyone on one end. I think that this is talking about the fundamentals. And I think talking about a bit of a catch up, I think that with that happening, I can only see from the kind of other side that I think a lot of investors were probably a bit puzzled with, like, all the kind of upcoming investments of the kind SaaS and other industries. I mean, obviously, there is a tendency that a lot of funds are raising big amount of capital. And I think that they're obviously looking for the opportunity to deploy this big amount of capital. At the same time, I think it was a bit of an inflection point where what used to work before typical SaaS investments and other things felt like stopping to work at some point of time. And I think at this point of time, you're sitting down and reconsidering, okay, kind of where to go next and what to do. And I think it took a bit of time to just reconstruct back some of the thinking and thesis and I think get alignment about some thoughts But obviously, I think general catalysts were the pioneers in the thesis, obviously. But I think right now, that's why we see this bigger trend at the moment. That's how I would say it. Plus, obviously, kind of in the service industries, you can go for astronomical outcomes that is bigger than the SaaS by the magnitude of times. Because just simply addressable market is, like, almost 50 x bigger than the SaaS industries itself. Probably, that will be my recollection. But...
00:08:25 · Ilia Drozdov, Sebastian Johnson
[00:08:25] S1: No. I think exactly right. Kind of maybe a few words from my side is that I think in many industries right now, especially labor intensive industries, AI allows to drive both kind of efficiency and level of service just insanely. That can justify kind of quite a significant investment into the buy and build strategy because also the speed of that buy and build strategy is unlocked. In traditional PE roll up, the integration is pretty much manual exercise. In an AI enabled roll up integration is just kind of a a process that is significantly automated, and you can scale faster. And that's why kind of there is a kind of so much attention because through PE roll up, you can deploy only kind of that amount of capital. You either have to buy expensive big platforms, but small integrations, you cannot run like hundreds, hundreds, hundreds a year. Only very kind of few roll ups achieve that. In the AI enabled roll up I think you can run even thousands of integrations a year, probably kind of in a couple of years from now we'll get there because it's like fully automated process. [00:09:29] S0: And what happens then, you know, you've just acquired a business, right? Maybe it's old school, traditional, old workflows, old tech. What is the first thing that you do to kind of improve the margins, disrupt the business model?
00:09:40 · Ilia Drozdov
[00:09:40] S1: I think actually the first thing we do is not kind of the improvement of margins or disruption of the model. The first thing to do is to give teams comfort because the first thing that happens with every acquisition is people become anxious what's coming next. And I remember when Uber merged business with local competitor with the index back in 2018, my first immediate reaction was as well, like, what's going on? Like, I feel pretty much threatened. Right? Like, what happens? Like, what comes next, etcetera? And appreciating that feelings, we for the first month focus on getting people kind of up to speed on what's going next, getting them comfortable, presenting them changes in a way that they don't feel threatened that their job will be automated with AI because a lot of what they actually do day to day will be automated. It's not kind of a secret secret. Right? But what they can do with that new technology to which kind of level they can elevate the the the service level to to customers, to the end customers and how much more they can deliver with a lot of stuff, very simple admin stuff being automated, you need to inspire them. You need to kind of show them that there is actually a nice future where they... Like, which they can be part of. And on that, we'll spend the first month, not the disruption itself, but getting people in our way.
00:10:55 · Sebastian Johnson, Ilia Drozdov
[00:10:55] S0: Yeah. That's super interesting. I guess it's like aligning around the mission and getting people on board and excited. To that point, is there a specific culture at Dwelly? Know, is there a certain certain ways of working or cultural kind of points that you then have to try and bring the acquisitions into? You know, you try and get them to adopt like the dwelling way of working, dwelling way of life? How does that work culturally when you're acquiring so many businesses? [00:11:22] S1: Spot on actually, amazing question. The answer will be we don't yet have kind of a very kind of clear culture that you can formulate in a set of a few kind of principles. And there is a reason to that. The reason to that is that previously no tech company was buying so many traditional businesses. And the collab kind of... No. The friction between tech first mindset, which kind of we have here in the HQ, and property kind of mindset that comes with the companies that joined Valley family. Like, there is no playbook how to address that, but we appreciate and where we are moving to. We are moving to the kind of environment in which these worlds can coexist and they understand why actually they coexist and which kind of impact is driven by either property mindset or tech mindset. And we're already doing quite kind of good steps towards kind of that alignment, but this is the road we have to kind of probably drive for the next couple of years to figure out actually how it looks like.
00:11:22 · Ilia Drozdov, Sebastian Johnson
[00:11:22] S1: Spot on actually, amazing question. The answer will be we don't yet have kind of a very kind of clear culture that you can formulate in a set of a few kind of principles. And there is a reason to that. The reason to that is that previously no tech company was buying so many traditional businesses. And the collab kind of... No. The friction between tech first mindset, which kind of we have here in the HQ, and property kind of mindset that comes with the companies that joined Valley family. Like, there is no playbook how to address that, but we appreciate and where we are moving to. We are moving to the kind of environment in which these worlds can coexist and they understand why actually they coexist and which kind of impact is driven by either property mindset or tech mindset. And we're already doing quite kind of good steps towards kind of that alignment, but this is the road we have to kind of probably drive for the next couple of years to figure out actually how it looks like. [00:12:22] S0: And both of you, you know, not being from The UK, why was The UK where you decided that this was the right place to build your business?