Elad Gil started betting on AI before most of the world took notice. By the time investors began grasping the implications of ChatGPT, Gil had already written seed checks to startups like Perplexity, Character.AI, and Harvey. Now, as the early winners of the AI wave become clearer, the renowned “solo” VC is increasingly focused on a fresh opportunity: using AI to reinvent traditional businesses and scale them through roll-ups. The idea is to identify opportunities to buy mature, people-intensive businesses like law firms and other professional services firms, help them scale through AI, then use the improved margins to acquire other such businesses and repeat the process. He has been at it for three years. “It just seems so obvious,” said Gil over a Zoom call earlier this week. “This type of generative AI is very good at understanding language, manipulating language, manipulating text, producing text. And that’s audio, that’s video, that includes coding, sales outreach, and different back-office processes.” If you can “effectively transform some of those repetitive tasks into software,” he said, “you can increase the margins dramatically and create very different types of businesses.” The math is particularly compelling if one owns the business outright, he added. “If you own the asset, you can [transform it] much more rapidly than if you’re just selling software as a vendor,” Gil said. “And because you take the gross margin of a company from, say, 10% to 40%, that’s a huge lift. Suddenly you can buy other companies at a higher price than anyone else because you have that increased cash flow per business; you have enormous leverage on the business on a relative basis, so you can do roll-ups in ways that others can’t.” So far, Gil has backed two companies pursuing this strategy. According to The Information, one is a one-year-old company called Enam Co., focused on worker productivity, which has been valued at more than $300 million by its backers, including Andreess...
First seen: 2025-06-01 19:32
Last seen: 2025-06-02 18:36