AI roll-ups: The upsides and challenges

Hello and welcome to the TechieU podcast. My name is John Reynolds, the host. This week we have another cracking episode and we are joined by three founders to discuss a subject that some of you will know and others might not call AI Rollups which is a buzzy term which we'll go on to discuss after we have introduced our three founders. So we are

joined by Dinh Bisavat, the founder of the German real estate startup Buena, which is backed by Google and Harry Steving, 20 VC. Konstantin Schroeder, founder of AirBio,

which is focused on vacation rental management rollups. And Dan Lischitz, founder of Dwellee, which automates and acquires local letting agencies in the UK.

So we've got loads of those to get through. I think a good starting point, if we can go around the room and just I'm going to be quite vigilant on this.

Just kind of give me a one minute overview of your startup and the science of it. So let's start with you, Dinh, please. Sure.

Buena is on the mission to become the one-stop shop for homeowners, starting with property management today. So the first step is to make actually owning the residential real estate simple by providing the best possible property

management service to homeowners. And now we're working on vertically integrating more services like financial services, insurance, brokerage and so on. Okay.

And what's the what's the size of the team? So the size of the team is around 350 people today across Germany, across like 16 or 17 offices. Okay.

Constant team. Yes. So with Arbio, we are building something same, but different. We're focused on the property management space, but on the vacation rental side.

So Arbio builds a platform for homeowners that have holiday homes and basically helps them to manage everything that happens during this day of a guest that starts from guest communication to pricing and revenue distribution laundry cleaning so every everything that's really on the ground when

Holiday homeowners rent out their apartments to guests and we basically build a platform that helps owners to manage all these things in one place and one app and see a very big market especially in Europe for Property managers that are struggling to scale and are struggling to really provide fantastic quality to home owners So we go ahead and buy these companies and then put our tech on top to distribute as quickly as possible

That's what we do. We're based in Berlin. Sorry Sorry, we're based in Berlin roughly 75 people in the team and we are also active in UK We're active in Austria, but headquarters is in Berlin. That's great. That's very concise. And finally, Dan?

Thank you, John. Dvali is a UK-based lettings and property management EIFRS platform. We grow by acquiring and partnering with traditional letting agencies to effectively core goal being elevated level of service. After a series of acquisitions and partnerships, we kind of aim to consolidate and dominate to a significant extent.

Around a 10 billion pounds UK lighting markets are kind of quite a huge and one of the largest household consumer expenses markets. And using AI Post acquiring a partner with a business that was streamlined the entire lighting life cycle for all parties of the ecosystem tenant landlord contractor from finding a tenant to collecting rental property management. rental property management, the full spectrum, while enhancing the user experience. We're around slightly more than 100 people at the moment, and with a few more acquisitions coming through,

should be approaching 200 by the year end. Okay, now that was brilliant, very concise and disciplined. So there's obviously commonality between the three of you. So you're all playing in the real estate property services area, you're all European, and you're all kind of a so-called AI roll-up.

So I'm going to come with you of a definition of an AI roll-up. And then you can kind of dispute if I've got this completely wrong. So it's kind of a buzzy term.

My definition is you're effectively leveraging AI to reinvent traditional businesses. So the idea is you identify opportunities to buy mature, people-intended businesses,

scale them through AI, then use improved margins to acquire other businesses. So you're effectively, I guess, using generative AI to transform low-margin businesses into high-margin software.

So it's kind of like a modern-day private equity play. So perhaps, Dean, you can tell me I've got that completely wrong. I think it was completely correct.

Right. OK. I mean, can you kind of give a bit more color? How would you define AI rollups?

And why are they so busy at the moment? I think they're so buzzy because they're tricked. If you compare it to starting a traditional company where kind of your first problem is to find product market fit with an AI rollup, you typically start in an industry that already

exists with a service that already exists. So you kind of save yourself the entire, I build a product and I need to find the audience and sell my product to that audience. So you start a step later, I would say. However, I think that one step later is actually the really hard one where you already have a running business

typically a very low margin business, as you say, and then you have to kind of go in there and really transform it from the bottom up. So you have to retrain people to new processes. You actually have to build a product that makes them more efficient and measurably so and repeatably so.

So I think in general, AI rollups are, you know, you build a very good product that takes an industry and improves the efficiency of everyone participating in it. And then you go and acquire those businesses to actually leverage the product. How many businesses have you acquired today?

I mean, did you start off as an AI rollup or have you kind of pivoted? So the company history is a bit complicated, but we pivoted to AI rollups three and a half years ago. And over the last two and a half years ago, we have acquired 26 businesses.

Right. Okay. Konstantin, can you talk us about the virtues of being acquisitive, being an AI rollup