Investing in AI rollups, he’s the hyperconnected, early venture capitalist who backed AI startups like Perplexity, Character.AI and Harvey. Using this method, seasoned businesses, often labor intensive such as law firms and professional services businesses, are bought and artificial intelligence technologies are put to work to increase efficiency and profitability.
Gil’s strategy is founded on the belief that generative AI transforms the space of things that can be automated, most strikingly for language-based, repetitive tasks. These traditionally manual processes such as sales outreach, coding or various back office operations can be streamlined by leveraging AI to perform these functions and this way, can lead to significant improvement in operational margins. Gil says owning the company outright expedited and accelerated this much more, more so than just being an AI solution vendor.
This model is financially interesting. For example, improving a company’s gross margin from 10% to 40% is as good for profitability as for boosting its financial leverage from using that margin and more cash to acquire more companies and thereby creating a scalable and repeatable growth. The crux of Gil’s rollup strategy is about acquisition and AI driven optimisation in a perpetual loop.
Enam Co. which is a startup dedicated to use AI to increase worker productivity, is one of the companies carrying this approach. Within a year of getting going, Enam Co. is backed by Andreessen Horowitz and OpenAI’s Startup Fund, all raising a successful value of over $300 million. Such rapid growth indicates the feasibility and attractiveness of combining AI with normal business models.
Gil’s current efforts represent a bit of a shift from previous technology enabled rollups which typically deployed technology in the ‘smartest elevator in the dumbest building’ manner, applying a ‘superficial technological enhancement’ to the underlying business model without meaningfully changing the cost structure of the underlying business. However, Gil’s model tries to integrate AI to bring about massive operational changes that will unlock new levels of efficiency and profitability.
Gil’s investment in AI powered rollups is a forward thinking and strategic choice to take advantage of the AI technology being able to revolutionize existing industries. This approach features focused concentration on those sectors best suited for disruption and applying AI to core operational processes, promising large returns, but also a blueprint for future AI deployment in traditional business domains.
