Riding Unicorns: Venture Capital | Entrepreneurship | Technology
00:31:18 · Dan Lifshits
And then you write that skill set number three that is required is capital strategy, capital fundraising, debt to equity, M and A, kind of running the M and A process, building out the proper origination function, the proper deal execution function. Effectively, this is stream number three. I would say honestly that I think that this business model is almost like merging two businesses in one because effectively on one end, you have tech enabled operational business, your likes of Ubers and deliveries and everything, as well as you're executing side by side, it's almost like a roll up type buy and build. And effectively, it's a combination of two models where I definitely would say that I don't believe that this is a business model that can be pulled off by a solo founder. I think that you need to be two founders, at least, if not even three, where I think the three skill set needs to be operator more like M and A capital guy and more like technical guy. That would be, I think, the best mix. And it's definitely not a business model for kind of faint hearted or for the first time founders or for other people, because I mean, it does require rolling up the sleeves and doing lots of hard work kind of yourself. However, I think that if you are a strong operator and experienced founder, second time founder, I think that this is one of the best business models that you can do to apply your knowledge and skills at form. And the way that was split, we have three co founders out of which two of us focus more on all things business matters, where we co share quite a bunch of things and I think start splitting more and more as the business obviously gets bigger, where I focus more on product fundraising, some of the bigger M and A opportunities. And Aelia, the second co founder, covers more of everything else effectively, like integrations, operations, finance, legal, all the internal things, so kind of lots, lots of day to day stuff. And our third co founder fully owns all the technological stream, Dimitry. So, I think that in our case, we've been quite lucky with a way that's quite complimentary skill set and exactly fits pretty much what the business model requires to have you as the founding team. But again, I think that this is in a way a coincidence as well.
00:33:24 · Dan Lifshits, Hector Mason
When you look at it from the financial thesis standpoint, when we've been looking at it from the standpoint of we want to build a new wave of letting agency or tech first platform, and the only way to do that is through acquisitions. It made sense for us, our skill sets, but we weren't looking at obviously from the standpoint of financial thesis of AI roll ups. [00:33:44] S2: How with your experience buying companies at this point, how repeatable have you made the process? Like, is there any way to make this a streamlined, repeatable acquisition process? Or is just every acquisition is too diff... To be able to run a playbook?
00:33:58 · Dan Lifshits
[00:33:58] S1: You get to unify lots of things. I think this is where private equity playbooks come handy very well because effectively, you can preserve a lot of this knowledge. And especially when you're doing the same size and the same configuration type deals, it starts getting to be a bit cookie cutter at some point. I think whenever you're completing kind of tenth ish deal, it's already like a cookie cutter, at least what we're experiencing on our front. Again, every deal is still unique. Every deal has its unique combination of shareholders and owners and what is the succession plan and who stays and what are the current roles and responsibilities operationally in the business today. So obviously, there are some tailored adjustments you need to be doing. But a lot of things with regards to due diligence, process, your heads of terms, SPA, what things you check against, what is your integration plan looks like in terms of steps is kind of the same. Yes, obviously, it's maybe the feeling of the part of what exactly you do is slightly different, but the broad strokes, it gets to be already playbooked pretty well. Think the second thing obviously that gets different is whenever you grow in scale of acquisitions, Whenever you've been doing acquisitions of like 1 to 3,000,000 revenue business is one thing. Whenever you start buying business at 10,000,000 revenue, it's second thing. You start buying business at 100,000,000 revenue is like third thing. But again, on the deep down level of like branch operation in each agency, it's quite repetitive.
00:35:19 · Hector Mason, Dan Lifshits
[00:35:19] S2: Yeah. And how do you select the agencies to buy? What sort of criteria do you match them again or mark them against? [00:35:26] S1: It's super evolving criteria as we go because we keep learning and keep feeding back if some things need to become a bit more controlled, effectively, in a way kind of what we buy. But one of the key things we've always been looking at is effectively that the business, first off, is growing, and it means that it has very good operational practices in the business as status quo. Second is that the customer base is that it's letting focus the business and that the customer base is highly fragmented. Usually, that will be the case. Most often, it's very rare when you will have concentration of the revenue coming from a few landlords, usually kind of institutional only. Most of the landlords in The UK are moms and pops kind of private rented sector landlords, meaning that by default, usually it's fragmented, but we check for that. And some other things such as strength of the management team succession plan, but usually, it very well blends into the growth of the business, because usually is growing quite often, it means that the management team there is pretty strong in the business that you acquire. And there are many more secondary criteria, but this is one of the key ones that we'll have.
00:36:25 · James Pringle, Dan Lifshits
[00:36:25] S0: And Dan, the property sector, sometimes not everyone has the best experience, and that's one of the reasons why you're doing what you're doing. So how much do you take into consideration that agencies like, let's just call it NPS score for a better word? And do you ever sort of feel like you have to try and reverse an NPS score or would you be looking for an agency that already has a very good NPS score? How do you sort of think about like their reputation with their customers as well as just growing and being operationally sound? [00:36:58] S1: I think that that comes back to the point of growth primarily because it means that if you're growing, then you're already better than the average in the market in terms of providing service to the landlord. And growth usually means you're growing your landlord base because landlord is the customer that pays you money as the agency. But effectively, you're right that I think connecting the dots on what we discussed earlier that then what we're doing with the business is bringing it as close as possible to our target operating model and kind of target product powering this target operating model, where for us in a way the entry point and what was the status quo in a way matters less. If the business was growing, and it's like good operational practices there, it's a good starting point. And then we know where we want to take this to in terms of the processes, in terms of service delivery NPS. So that's why the starting point matters less. In fact, you kind of it's the journey that matters.
00:36:58 · Dan Lifshits, James Pringle
[00:36:58] S1: I think that that comes back to the point of growth primarily because it means that if you're growing, then you're already better than the average in the market in terms of providing service to the landlord. And growth usually means you're growing your landlord base because landlord is the customer that pays you money as the agency. But effectively, you're right that I think connecting the dots on what we discussed earlier that then what we're doing with the business is bringing it as close as possible to our target operating model and kind of target product powering this target operating model, where for us in a way the entry point and what was the status quo in a way matters less. If the business was growing, and it's like good operational practices there, it's a good starting point. And then we know where we want to take this to in terms of the processes, in terms of service delivery NPS. So that's why the starting point matters less. In fact, you kind of it's the journey that matters. [00:37:46] S0: Yeah, so interesting. It feels like we've got so many more questions to ask, but we're running out of time. It's gone so quickly. It's just such an interesting business model, and it's so unique. We haven't... We... I don't think we've had any other AI enabled rollout company on the show. So I had to... [00:38:03] S1: Think there's gonna be many, many more worrisome.