Riding Unicorns: Venture Capital | Entrepreneurship | Technology
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.
00:38:03 · Dan Lifshits, James Pringle
[00:38:03] S1: Think there's gonna be many, many more worrisome. [00:38:05] S0: Yeah. I'm sure we'll have many more, and we'll look back to this and we'll go, yeah, we know that already because Dan told us. But, this is the first one. So we've got loads of questions still to ask, but we're gonna have to move on to our our final two questions. So the the first is a future unicorn prediction. You don't have to pick an AI enabled roll out company, but you might do. But if there was another company that you thought could potentially go all the way and become a unicorn, who would they be?
00:38:31 · Dan Lifshits
[00:38:31] S1: Yeah. I mean, I'm not an investor. It means that, obviously, I'm not seeing the, that many opportunities coming through me. That's why I think that I'm rather thinking categories than potentially specific companies. But what I know for sure of the companies that I think, like, maybe it's gonna be a bit of, like, controversial view, but of the kind of hyped hot companies out there that I'm not really sure how much they would exist long term is, like, I'm I'm very, like, liking to look at the, a way, first principles of certain things. Right? And I think that what I do not understand and again, just because I'm not close, right, I'm sure there is a convincing story and some investors understand that. But what I don't understand is, for example, some AI first companies where I get it, when there is a gold rush, go and dig gold. Right? But I think that what a lot of people feels like not doing enough to me is trying to think what is the long term defensibility or differentiation that they're gonna have. Whenever you're building certain AI applications such as like, let's say, phone call, notetaker type solutions or others, I mean, I get it that it's a very handsome product to use in the day to day yourself as a founder. But the problem we're having with that is that you do not control distribution and you're building just effectively application product that then the only moment when the likes of Zoom and Google Meets and others would just bring in the sort of product into their existing NetSuite, you're done, you're out of the business. And this sort of businesses, I'm not really sure I understand. And I think that it comes back to the point that not every business needs to be a venture backed and backable business, right? To go and build just a profitable b to b SaaS, earn $1,020,000,000 dollars in the next few years by just like selling this as a subscription and kind of earn a great ton of money, your business will be killed soon. That's fine. But again, because it would take bigger companies longer term to just do proper AB tests and everything and bring this product into there. So these categories, don't believe in. Equally, I don't believe in the categories where everyone is, I think, running after AI types where there is no customer mode being created.
00:40:36 · Dan Lifshits
And I think that at the moment, we're just living in the, in a way, analog of Internet 1.0 era, but just of AI. And I think that we don't know yet who's going to be the AI Internet 2.0 era winners, to be honest. And I think the whole investments now is like investment into, in a way, a bit spray and pray type thing, even at $10.20, 50,000,000,000 valuation. But I think that a lot of companies in ten years would not exist because we just kind of don't know who are gonna be the winners. And using another AI model is as simple as they say, effectively opening another tab and start kind of doing it there. So I think all the arguments about the customer moat and everything, honestly, I don't buy it. It's not kind of long term differentiation to me. So that's why I'm really bullish on, as you can see by, I think, my background and track record, I think that there are two types of entrepreneurs in general. I think that there are entrepreneurs that going and finding the product market fit, and it's incredibly hard job, but whenever you're behind it and you've done it, this is a great success. But 99 out of 100 would never push through this wall and will never reach this part of the journey. Or I think that there are second type of entrepreneurs that take existing crazy huge industries that are just kind of crying for disruption. And with some enhancements of technologies making them 10x better just because the time has come to make them 10x better. I'm a firm believer in the second category. So that's why to me, the examples of AI roll ups makes a ton of sense. Because effectively, you're just taking existing traditional industries and just rewiring them much better. And it might be not just a billion type outcome, but 10,000,000,000, 100,000,000,000, because we're rewiring the whole industry. So yeah, I might not need to mention specific AI roll up companies. However, I believe that this would be a huge wave that would create the next big wave of like, 1,000,000,000,000 companies in the next five to ten years.