· David Senra
[00:00:00] S0: I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world, and one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the Ramp data, too. The median company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should, too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. I found one of my all-time favorite quotes when I was reading the book "Zero to One." The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin, and you can do that by going to applovin.com. That's applovin.com.
· David Senra, Alexander Taubman
Okay, so I hang out with you guys a lot. We have a lot of dinners. I basically drop in on your office every time I'm in New York. I want to talk about the people that you've like pattern matched off of or that have inspired you. I know we've talked about some companies in the past, too. But people are like, "Okay, wait, this guy founded a company three years ago. How the hell did he just buy a 110-year-old company for six and a half billion dollars?" We'll talk about your crazy revenue growth. You're obscenely profitable, and I mean obscene, the deepest love. I love obscene profits. What I understand about you, just from being your friend, is that you kind of have a map of all... How do you think about this? It's like, just the same way that Buffett, you couldn't tell him about an asset and he'd be surprised, like, "Oh, I didn't know I wanted that asset." He's like, "No, I kind of like mapped out everything, kind of just waited for the right time if I could buy that company or could buy that asset. I already knew about it. I already studied it." You guys do the same thing, correct? [00:00:00] S1: We do. [00:00:00] S0: Okay. Why? And explain this. [00:00:00] S1: Yeah, so we want to be doing this for a long time. I'm still relatively young. I like to think I'm still young. [00:00:00] S0: You are.
· David Senra, Alexander Taubman
[00:00:00] S0: You are. [00:00:00] S1: And our friend Zach tells us we're going to live to 150, so hopefully I could actually be doing this for at least 50 years, maybe 100 years. So in the fullness of time, we want to bring Long Lake and we want to bring AI to- Huge swaths of the economy. We're now operating in roughly $3 trillion of the $20 trillion TAM, so-called 15% of the economy in the US, and now we're global. And we just want to keep adding to that. So over time, we'd love to have a market-leading business and platform in many more industries. But there's moments in time when you can find a great asset with a great team at the right price, and then there's other times where certain industries are not attractive for long periods of time. And so we take a prepared mind approach, where there's this sort of our top 15 or 20 industries that we think are interesting for our strategy at any given time. We're constantly force-ranking those industries based on what we learn, based on how market dynamics are evolving. And the best way to learn about is look at deals in the space. And so we've built a really powerful sourcing engine where we're seeing 4,000 or 5,000 deals a year across all these sectors, and we'll literally do one or two new industries per year. So it's a big funnel, very tight filter, and I can talk to you about how we select industries and assets.
· David Senra
[00:00:00] S0: That's literally what I was thinking. I was like, okay, when you're select- I assume this is operating at the founder level, that you guys are the ones selecting, okay, this is the next industry we're going to to enter, correct?
· Alexander Taubman, David Senra
[00:00:00] S1: It's more based on opportunities coming our way. To go back to Buffett, you have a better chance of getting a date if you're bisexual public and private. You know that quote? Twice the chance of getting a date. So we like to kind of keep an open mind. If you're open to 20 industries, you're more likely to find a great business and a great team to partner with. We just keep that funnel going all the time. We're constantly looking, and when we see something, it's kind of like you know it when you see it. If there's a great business like Amex GBT with high 90s customer logo retention, 100-plus percent kind of dollar retention, with tremendous customer relationships with the best companies in the world, built average of 15-year relationship with their top couple hundred customers, deep, deep embedded partnerships where we sort of managed a mission-critical service for all these companies. Travel, I mean, it's a small cost and it's mission-critical. You don't want to screw it up. We talk about that century of customer trust, but it really means something, especially in travel, right? If you have thousands of people traveling in the Middle East and a war breaks out, or you have a huge snowstorm in Chicago and your entire team gets stuck in the middle of the night at 2:00 in the morning. Things have to work. Somebody's got to be able to answer the phone and know what to do. This is an amazing business. You just kind of know when you see it. [00:00:00] S0: So wait, was Amex your first entry into travel? [00:00:00] S1: Yeah. [00:00:00] S0: Okay.
· David Senra, Alexander Taubman
[00:00:00] S0: Okay. [00:00:00] S1: We'd been building a thesis in that space for like a year, meaning looking at several other assets. It was on our whiteboard of industries that we thought was really attractive for reasons I'm happy to go into and- [00:00:00] S0: Yeah, I want to hear about this. What do you think AI is going to do to this business? [00:00:00] S1: I think it's going to make the travel experience much more seamless. I think things can be much more personalized, more proactive. Right now there are a lot of legacy messy data issues and systems issues in the travel space. You have these supplier systems and customer systems and distributor systems, and it's a longstanding industry, so over many decades. And so it's kind of complicated, but one thing, as an example, AI is really good at this, is like our friend Scott Wu, obviously, like his Devin and things like that, integrating messy systems. And this is what we've built Nexus to do. So Nexus and our co-founder, Rasmus Wisman, comes from a data... He was the top computer science PhD at Oxford. He won the prize for the best thesis, and he's amazing at building, simplifying complex messy data structures. And so Nexus, our AI platform, is built specifically for this use case. And so we think about how do we make this a better experience? [00:00:00] S0: Hold on. Let's not move on because I know what Nexus is. The person listening might not. Explain what Nexus is.