Bringing AI to the Real Economy | Alexander Taubman

Alexander Taubman is the co-founder and CEO of Long Lake, a company that buys established service businesses and uses AI to improve how they operate. He explains Long Lake’s $6.3 billion deal for American Express Global Business Travel, why deploying AI in the real economy is difficult and why he sees productivity gains creating more jobs as businesses grow. Alex describes how Nexus, Long Lake’s AI platform, connects models to business data and workflows, why its engineers work alongside employees in the field and why he wants to own businesses rather than sell software. He shares how his grandfather’s idea of “threshold resistance” applies to AI adoption, what he learned at Goldman Sachs and Oaktree and how investing in founder-owned businesses through Taubman Capital prepared him to build Long Lake. Alex also discusses the influence of Danaher, Henry Singleton and John Malone, why he values partners who make him more ambitious and why Long Lake plans to hold its businesses for decades. Including Amex GBT, he expects more than $4 billion in combined revenue the following year and explains why he believes long-term compounding could eventually build a trillion-dollar company. Show notes: https://www.davidsenra.com/episode/alexander-taubman Made possible by Ramp: https://ramp.com AppLovin: https://applovin.com/senra Deel: https://deel.com/senra Chapters (00:00:00) The $6.3 billion Amex GBT deal (00:01:21) Bringing AI to the real economy (00:06:17) Why greater productivity can mean more jobs (00:11:29) A prepared mind and a tight acquisition filter (00:16:01) Nexus and the AI platform behind Long Lake (00:17:32) Put the engineers where the work happens (00:20:36) Why own the businesses instead of selling software? (00:22:28) Build tools people want to use (00:25:24) A high bar for talent, acquisitions and technology (00:28:03) What his grandfather taught him about removing friction (00:36:40) Learning capital allocation at Goldman Sachs and Oaktree (00:41:01) Buying founder-owned businesses with permanent capital (00:44:35) How the Long Lake team came together (00:47:26) The best partners make you more ambitious (00:49:28) More than $4 billion in projected revenue (00:53:32) Why going public could expand Long Lake’s ambition (00:54:23) Henry Singleton and staying flexible (00:55:57) John Malone and the businesses that will endure (00:57:57) Why Long Lake doesn’t plan to sell (01:00:13) Could Long Lake become a trillion-dollar company? Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02David Senra?

  I want to start with the fact that you just bought a public company. You took it private. It's over 100 years old and you paid, what, six and a half billion for it?

• 0:09Speaker 01

  Yep.

• 0:10David Senra?

  This is Amex Travel.

• 0:11Speaker 01

  Yeah.

• 0:11David Senra?

  Can you tell the story?

• 0:12Speaker 01

  We announced that we're buying American Express Global Business Travel for $6.3 billion. And, you know, it's just an unbelievable business. We've always respected this business. You know, it's a 111-year-old company over a century of customer excellence. And it was actually started in 1915 by American Express to help get their travelers' checks customers out of Europe during World War I. I've been a customer of this business. Most people have. They do, you know, they manage to travel for some of the most iconic customers and businesses in the world, close to half the Fortune 500, a huge percentage of the Global 2000, a lot of the US government and military governments around the world.

• 0:52Speaker 01

  It's a really remarkable franchise and the opportunity to partner with them, take the company private, invest in growth, invest in technology and bring AI into the travel experience for millions of travelers per year that they're supporting. It's a big scale of impact for us to, you know, pursue the Long Lake mission, which is to deploy AI into the real economy. And, you know, travel is a huge multi-trillion-dollar global sector, growing better than GDP, and we just think that we can have a massive impact here.

• 1:21David Senra?

  So let's step back because me and you have been friends for a long time. Long Lake has always been a company that it's like if you know, you know thing, where, you know, you guys had basically no public profile. I don't even think you have a LinkedIn or anything.

• 1:35Speaker 01

  True.

• 1:36David Senra?

  Yeah. So no public profile. You, I know everybody involved actively were like not seeking attention, yet ton of people were starting to copy your idea. And then I've seen some of their financials and they're just like copying it way worse than you guys are. So like for the people that don't have never heard of Long Lake, explain the thesis and explain why you think right now is the best opportunity to pursue that thesis.

• 1:59Speaker 01

  We formed the company three years ago with the mission of basically bringing AI into the real economy. What we saw was incredible revolution happening on the intelligence frontier, you know, dating back. If you had, if we had talked to each other four years ago after ChatGPT launch and you told me that four years from now, back then, if you remember, the models were amazing, but they couldn't do addition. And recently, the last couple of weeks, you know, the model solved some of the 10 most difficult, you know, unknown math problems in history and may win a Fields Medal. And if you had told me that that level of frontier intelligence was going to, you know, many people would have thought you were crazy. It couldn't happen that fast. But a lot of people in Dorkesh was talking about this recently. You know, you would have thought in that world, everybody would be using AI everywhere.

• 2:43Speaker 01

  The economy would look totally different. GDP would have doubled or tripled. What we saw is we'd been working a lot with small businesses and in the real economy prior to founding Long Lake. That was my history for 10 or 15 years, working with founder-owned businesses. And deploying technology innovations in the real economy is actually really hard. There's tons of legacy systems, tons of legacy data, workflows, change management. And so being able to deploy these innovations at scale in the economy is actually really hard. And so we saw that with, with Long Lake and the mission of Long Lake was really to be, you know, to help pioneer the, you know, bringing those frontier intelligence innovations and breakthroughs into real businesses and partnering with real American entrepreneurs and important verticals and important businesses where we could help diffuse the technology at scale.

• 3:27Speaker 01

  We never wanted much publicity. We just want to be known for our work. I think, you know, my chief of staff, Kim, who, you know, she was in a leadership program. And the mantra of the leadership program was talk less, do more. And so that's kind of been, you know, our ethos. We just keep our head down and just focus on executing. It's a lot of work. It's really hard.

• 3:45David Senra?

  Hold on, I gotta tell you a funny story about that. So I've spent a few times with a lot of people that know like these European private family dynasties, right? They never had, like there's, the companies aren't public. They don't see publicity. Like you just, they're essentially hidden, but they're extremely wealthy. And somebody who told me one of their family mottos was to be, to not be seen. So like we want to be, but not be seen. I just love that idea.

• 4:08Speaker 01

  Yeah, I think, look, I was very inspired, you know, growing up in Michigan in the Midwest. Like there's some unbelievable entrepreneurs and businesses that have been built that are worth, you know, billions of dollars doing, you know, unsexy things like construction or distribution or whatever you might. And people are very low key. They're totally normal people. You don't, you know, so, so our view is we want to be the best possible partner to those kinds of business owners. You know, we want to, they've built in many cases, I mean, MXGPT is a great example. It's a, it's an iconic franchise. It predates the invention of the airline. That's the brand, you know, that, that we want to sort of partner with and let them shine. Long Lake is just here to be sort of a deep, long-term permanent capital partner who's

• 4:51Speaker 01

  going to help you bring AI into the company, make your team members faster, better, smarter, make your customers happier.

• 4:58David Senra?

  But say specifically why you think there was such an opportunity even three years ago to bring AI into the real world?

• 5:04Speaker 01

  The sort of diffusion problem is a really hard, hard problem. Several years ago, there was this question of like, will, will intelligence work? And obviously it's worked and we're seeing that now and crazy levels and faster. And I'm super AI-pilled always had. That's why I, you know, left my old job to co-found the company, but it's happened even better and faster than, you know, even I expected. It's no longer a question of does the technology work? Now it's a question of now the markets are very concerned about how are we going to finance all this? And, you know, I think the real answer is we need to demonstrate, you know, you can borrow against future cash flows in order to finance this stuff. And people are now just running into the trillions of dollars of investment to be able to scale the models to really where we want them to be in 10 or 20 years.

• 5:46Speaker 01

  In order to finance all of that, you need to see a return in the real economy. So actually, one of the things Long Lake was formed to do is actually take those frontier innovations, deploy them into really high ROI use cases, taking away toilsome work from our team members, you know, mundane work, data entry, you know, process-oriented stuff that really a lot of people don't like to do. And that, taking that away and freeing up human capacity for, you know, more impactful work, dealing with the customers, focusing on growth, that's super high ROI.

• 6:17David Senra?

  Focusing on growth is really important. People think, oh, you take some technologists matching with some PE guys, they're going to buy a bunch of existing businesses, gut it, replace all the humans with AI, you know, essentially cut costs. And that's like the value creation. And that's not the thesis of what you guys are actually doing. You actually think that, and you're demonstrating that you're increasing revenue growth and you're actually not cutting people.

• 6:42Speaker 01

  Yeah, absolutely. So this is like a contrarian take that we had in the beginning as well. We're very positive some, you know, we really believe in this concept of like AI abundance. And if you look throughout history, you know, most innovations that lead to big productivity gains are actually good for the economy, good for wages, good for consumers. And we think this is like, you know, just a sort of like a mega productivity gain. It's going to be good for everybody. And so what we're seeing in our companies and we started in HOA management and we've now bought, I think, 20 something companies in that space. We've bought close to 40 companies now in total across, this travel makes it our fifth service line. And what we're seeing across industries and in our businesses that we've owned for, for longest, like HOA management, what we're seeing is significant job growth.

• 7:26Speaker 01

  We're actually adding heads because if you think about it, if your people are 50% more productive and can handle 50% more clients and with better customer service, so you're retaining customers better, you're growing faster, you know, so the people are much more valuable. Do you want more of them or less of them? You obviously want more of them. It's like a salesperson, you know? If you have a salesperson with AI that's now doing three X quota, do you want to have like one-third the salespeople? No, you obviously want, you know, as many of those people as you can have. And so I think this is all going to be very good for jobs and very good for US GDP and the economy. And that, that's a big part of our mission as well. It's basically bringing this positive sum, you know, AI revolution to the economy, 20

• 8:08Speaker 01

  trillion plus dollar services economy in the US and, you know, obviously, you know, millions of people.

• 8:13David Senra?

  Wait, so you said you're in five different verticals now?

• 8:16Speaker 01

  Yeah.

• 8:16David Senra?

  What are they?

• 8:17Speaker 01

  So we started in homeowner association management, which is a actually really big business that people, you know, don't pay a lot of attention to, but there's tens of millions of homes managed in association. And so we're providing, you know, now market-leading service and one of the fastest growing companies in that space. We then moved into HR services, specialty tax, infrastructure services now is a big area for us. So we have architecture, engineering, we're looking at other sort of businesses in that broader infrastructure space and now travel.

• 8:48David Senra?

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• 9:31David Senra?

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• 10:15David Senra?

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• 10:57David Senra?

  So I hang out with you guys a lot. We have a lot of dinners. I basically drop in on your office every time I'm in New York. I want to talk about the people that you've like pattern matched off of or that have inspired you. I know we've talked about some companies in the past too. But people are like, okay, wait, this guy founded a company three years ago. How the hell did he just buy a 110 year old company for six and a half billion dollars? We'll talk about your crazy revenue growth, your obscenely profitable, and I mean obscene, the deepest love. I love obscene profits. What I understand about you, just from being your friend, is that it's like you kind of have like a map of all. How do you think about this? It's like, just say when Buffett, you couldn't tell him about an asset and he'd be like surprised, like, oh, I didn't know I wanted that asset.

• 11:37David Senra?

  He's like, no, I kind of like mapped out everything, kind of just waited for the right time, you know, if I could buy that company or could buy that asset. Like, I already knew about it, I already studied it. You guys do the same thing, correct?

• 11:48Speaker 01

  We do.

• 11:49David Senra?

  Okay, why? And explain this.

• 11:51Speaker 01

  Yeah, so we want to be doing this for a long time. You know, I'm still relatively young. I like to think I'm still young.

• 11:57David Senra?

  You are.

• 11:58Speaker 01

  And, you know, our friend Zach tells us we're going to live to 150. So hopefully I could actually be doing this for, you know, at least 50 years, maybe 100 years. So in the fullness of time, you know, we'd really, we want, we want to bring Long Lake and we want to bring AI to huge swaths of the economy. We're now operating in, you know, roughly $3 trillion of the $20 trillion TAM, so-called 15% of the economy in the US. And now we're global. And we just want to keep adding to that. So over time, we'd love to be, you know, have a market leading business and platform in many more industries. But, you know, there's moments in time when you can find a great asset with a great team at the right price. And then there's other times where certain industries, you know, are not attractive for long periods of time.

• 12:38Speaker 01

  And so we take a prepared mind, you know, approach where there's this sort of our top 15 or 20 industries that we think are interesting for our strategy at any given time. We're constantly force ranking those industries based on what we learn, based on how, you know, market dynamics are evolving. And the best way to learn about is look at deals in the space. And so we've built a really powerful sourcing engine where we're seeing four or 5,000 deals a year across all these sectors. And we'll literally do, you know, one or two new industries per year. So it's a big funnel, very tight filter. And I can talk to you about, you know, how we select industries and assets.

• 13:16David Senra?

  That's literally what I was thinking. I was like, okay, when you're select, I assume this is that operating at the founder level that like you guys are the ones selecting, okay, this is the industry, the next industry we're going to, to enter, correct?

• 13:27Speaker 01

  It's more based on opportunities coming our way, you know, to go back to Buffett, like, you know, the better chance of getting a date if you're public and, if you're bisexual, public and private, you know, that quote? If you're twice the chance of getting a date. So we like to kind of keep an open mind, you know, if you, if you're open to 20 industries, you're more likely to find a great business and a great team to partner with. We just keep that funnel going all the time. We're constantly looking and we just, when we see something, it's kind of like, you know it when you see it. If there's a great business like MXGPT with high 90s, you know, logo, customer logo retention, 100 plus percent kind of dollar retention

• 14:02Speaker 01

  with tremendous, you know, customer relationships with the best companies in the world, built, you know, average of 15 year relationship with their top, you know, a couple hundred customers. Deep, deep embedded partnerships where we sort of manage, you know, a mission critical service for all these companies travel. I mean, it's a small cost and it's mission critical. You don't want to screw it up. We talked about that century of customer trust, but it really means something, especially in travel, right? If you have like thousands of people traveling in the Middle East and a war breaks out, or you have like a huge snowstorm in Chicago and your entire team gets stuck in the middle of the night at 2:00 in the morning. Like, things have to work. Somebody's got to be able to answer the phone and know what to do. This is an amazing business. You just kind of know it when you see it.

• 14:43David Senra?

  So wait, was AMX your first entry into travel?

• 14:46Speaker 01

  Yeah.

• 14:47David Senra?

  Okay.

• 14:48Speaker 01

  We'd been building a thesis in that space for like a year, meaning looking at several other assets. It was on our whiteboard of industries that we thought was really attractive, you know, for reasons, you know, I'm happy to go into.

• 14:57David Senra?

  Yeah, I want to hear about this. Like, what do you think AI is going to do to this business?

• 15:01Speaker 01

  I think it's going to make the travel experience much more seamless. I think things can be much more personalized, more proactive. You know, right now there are a lot of legacy messy data issues and, you know, systems issues in the travel space. You have like these, you know, supplier systems and customer systems and distributor systems, and it's a longstanding industry. So over, over many decades. And so it's kind of complicated, but what one thing, as an example, AI is really good at this. It's like, you know, our friend Scott Wu, obviously, like, you know, Devin and things like that, integrating messy systems. And this is what we've built Nexus to do. So Nexus and, you know, our co-founder Rasmus Wissman comes from like a data, he was just like, with, with, was the top, you know, computer science PhD at Oxford.

• 15:46Speaker 01

  He won the prize for the best thesis and he's like amazing at building, simplifying, complex, you know, messy data structures. And so Nexus, our AI platform, is built specifically for this use case. And so we think about how do we make this a better experience?

• 16:01David Senra?

  Move on, because I know what Nexus is. The person listening might not explain what Nexus is.

• 16:05Speaker 01

  Yeah. So Nexus is our horizontal AI platform that we've been building, you know, across verticals. And so we've been investing and part of the reason we're in multiple verticals is I think scale's, you know, increasingly important in an AI world in general. You're competing for the best talent, being able to leverage innovation and building a platform across five, 10, you know, 15 different scaled industries allows you, I think, every single industry we go into, it makes Nexus better. We gain, we add additional capabilities.

• 16:36David Senra?

  Why is it making it better?

• 16:37Speaker 01

  So as an example, about 70, 80% of the infrastructure is shared across the verticals. And that's kind of like our, you know, it's our platform where on one side we, we integrate with all the models, we're model agnostic. And we kind of use different models for different tasks, or even one task might be using several models just to complete one task. On the other side, you integrate with the data, you know, the workflows and the different software systems of the business. And you have to build that deep integration. So Nexus sits in the middle. A lot of that, you know, intelligent model routing, security, you know, sort of agentic orchestration layer, things like that, that's reusable across all the industries. That last 20 or 30%, which is embedding Nexus into the workflows of the business, mapping the workflows, integrating with these different data sources.

• 17:22Speaker 01

  That is what takes, it's a very hard technical challenge. It's why you need like a world-class AI team to be able to actually use AI in the real world, because you have all these systems.

• 17:32David Senra?

  Hold on, this is a really important part too, because again, I hear other people talk about Long Lake and I'm like, oh, they don't actually understand what you guys are actually doing. Like, how many different states are your engineers operating in right now? They're not fucking just sitting in New York.

• 17:42Speaker 01

  Yeah, I mean, we're operating in probably almost every state at this point. And our engineering team will be, you know, I'm guessing 70% of the engineering team, but today is probably sitting with a team member in the field across, you know, 15 or 20 states.

• 17:54David Senra?

  And they're working on that last 20%.

• 17:56Speaker 01

  Exactly. Sitting with our team members, understanding the pain points, what's breaking, what's useful, what's not useful, and iterating. And we, you know, we, to your point about learning from greatest histories, history's greatest entrepreneurs, like Kelly Johnson, very inspiring on this. You know, the Skunk Works, like you want the engineer sitting in the factory. And that's actually kind of what Long Lake is.

• 18:18David Senra?

  There's a book on the counter behind there that's unreleased and it's all about like SpaceX. What's fascinating to me is I just did an episode of Founders on Kelly Johnson, because in the preface of that unreleased book, he talks about, he's like, if you just go back and read Kelly Johnson's like 14 points and the way he operated Skunk Works, it's like it reads exactly like what SpaceX is doing. His ideas are not new. They're just used over and over again.

• 18:41Speaker 01

  The other great motto that I love is, is on this point is from Danaher, who's a big inspiration to us also, the Rails Brothers. Is their motto was common sense rigorously applied.

• 18:50David Senra?

  Yeah, it's excellent.

• 18:51Speaker 01

  And so if you, that's kind of what we do too. If you can take some of the world's best AI engineers and they can sit with your team members, understand the problems and we can use common sense to fix them, it makes Nexus better. So Nexus now integrates better with all those various systems. And each different industry needs different things. So for example, in HOA management, it turns out a lot of the work is done in email. So you're, you're taking in emails from homeowners and boards and responding, and they're complex emails. It'll be like, you know, what's going on? We need to find a snow removal company. And so it's not just a simple response. You actually have to go map out, here's the 10 other communities we manage. Here's the five vendors. Here's what they charge you. Here's how people reviewed them. Here's the schedule that you might need to actually send an email to the vendor, get schedules, and then respond.

• 19:35Speaker 01

  That email could take 45 minutes, you know, or an hour or longer to actually craft a thoughtful sort of response and proposal. If Nexus has access to all that information and can draft an email for you before you even wake up in the morning, you have a draft in your inbox to respond with an accurate, with a 99% accurate. And then you can just edit it as the manager. So now instead of spending an hour, you spend five or 10 minutes, you know, putting it in your own voice. And by the way, the voices are getting better and better now. This is something we're working on to, each of our managers now can have Nexus drafting emails in their own voice. And, you know, so this is like a capability that we built for HOA management, but is now applicable to every other business.

• 20:13Speaker 01

  Turns out pretty much every business works a lot in email. Travel, for example, 55% of travel agent inbound queries from travelers is in email. New bookings, changes, cancellations, it's all in email. So because we solved that problem in HOA management, Nexus is now better, has this tool built in. It's going to day one have a huge impact in MXGPT. And I could give you 10 other examples of this.

• 20:36David Senra?

  Has anybody tried to buy Nexus as a separate tool?

• 20:39Speaker 01

  You know, it's funny, we do, it's, you know, because we haven't been very public, not a lot of people really know about what we're doing. But a lot of our investors have asked us, can we, can we, can we partner to use Nexus? And maybe for them we would do it. But we've never wanted to sell software. First of all, software obviously is a great business. We partner with tons of software companies in all these industries and with the labs, et cetera. But the problem with selling software is you don't actually care about what happens in the outcome. So for us, we're very outcomes driven. We want to really actually change the way these businesses operate, change the way these industries actually function. And to do that, you need to be an owner. You need to really be an owner operator. And so taking Nexus, taking the AI breakthroughs that are happening at the frontier, deploying them into the businesses for real outcomes, i.e.

• 21:23Speaker 01

  faster growth, better customer experience, better team member experience, being able to pay your team members more because they're more productive. And then ultimately, to your point, shareholder returns, that's what we're focused on. And I think the vertical integration of owning your own platform and deploying it only into your own companies creates a lot of alignment.

• 21:41David Senra?

  We've talked a bunch about all these other founders episodes, and I love that you're, part of your onboarding in Long Lake is listening to specific episodes of Founders, which I think obviously is fucking genius, but I'm biased on that. But I think this is, because I think, again, especially like on the investor side, it's like, oh yeah, let's just sell the software. It's just like, well, it's not a, I go back to like Larry Ellison. I've done like, I don't know, six episodes on him. And he has this great line about this, you know, he's the, maybe the best in the world at understanding this. He's like, it's not a software problem, it's a human problem. It's like, you can't like, there's no point in me selling something if your work, if the way you work doesn't change. It's like, then I can't build a good business around that. And it's like, okay, so how do you get over the human problem? Well, you own the goddamn company. You control the workflow.

• 22:25Speaker 01

  It's interesting because A slightly non-obvious thing with this is we don't actually force anyone to use our tools. So owning the company is really valuable in a lot of ways, but not because we force people to use the tools.

• 22:37David Senra?

  That was Larry Ellis's point. You can't force them.

• 22:39Speaker 01

  If we have to force someone to use our Nexus platform, then the platform's not good enough. We take an approach of the customer are our team members, and we're now going to have 30,000 team members operating globally across all these sectors.

• 22:50David Senra?

  Wait, you said this to me?

• 22:51Speaker 01

  We're 30,000 people working at-

• 22:53David Senra?

  You said your customer are your team members?

• 22:55Speaker 01

  Yeah, we think of our team members, and we now have 30,000 of them globally as our customer. And so the whole idea is we want Nexus to be so magical-

• 23:02David Senra?

  30,000 employees-

• 23:03Speaker 01

  Yeah.

• 23:04David Senra?

  In the business of general-

• 23:04Speaker 01

  That's right.

• 23:05David Senra?

  Okay. And we- I have to always convert, "I love you, but you're like an East Coast finance guy." And I always have to convert to where you talk.

• 23:12Speaker 01

  We think of them as partners, you know, design partners, and that's our customer. And so the whole idea is we want it to be so magical that when you introduce the tools to them, it goes viral inside the company. And we've now seen that. And each, we are, it's happening where as the models get better, as our products get better, and as our deployment playbooks get better, we're seeing the cohorts of adoption going crazy. Like, it used to take us like, maybe, I don't know, six months or something to activate a cohort. Now it's like, you give them the tools and in like, you know, days-

• 23:42David Senra?

  And wait a minute, hold on. Am I understanding this correctly? So you're targeting these services, so let's say HOA management, right? And let's say I work there, and now I'm using Nexus and all the other tools that you guys are building, right? Because you're, and we'll talk about how you got elite technical talent too, right? My job is now fucking 90% better. That also protects you for retention.

• 24:01Speaker 01

  100%.

• 24:01David Senra?

  Because like, another HOA service company doesn't have these tools-

• 24:04Speaker 01

  Yeah.

• 24:04David Senra?

  I'm gonna go over there and-

• 24:06Speaker 01

  It would be horrible.

• 24:07David Senra?

  Work 90% more?

• 24:07Speaker 01

  Yeah. No, you don't want to do that. That's, this is a big part of our vision too, is that we want, we really want to be a talent magnet. We want to have, we want to be the best place to work in every industry that we operate in. And part of that is, if you can build people the best tools, make them more productive, so they can make more money and have a better job. And by the way, we have these amazing quotes now from our team members. They're saying like, "I don't feel like I'm working anymore." Because there's so much mental friction that comes from that 30% of work, that's, you know, this manual road, responding to emails, data entry, dah dah dah dah. What they want to do is they want to focus on getting more customers, understanding that, you know, helping the customers more, interacting more with them. You know, there's a lot of fun parts of the job that keep people going. If we can do more of the fun parts, less of the, of the

• 24:48Speaker 01

  dull parts, they love their job more, they can make more money. And so then think about having to leave a Long Lake partner company that has these tools and this setup, and go to like, you know, a competitor down the street.

• 25:00David Senra?

  You're not going to.

• 25:01Speaker 01

  It's gonna become really powerful. We're already starting to see this. We're obviously only a couple of years in, but if you think forward, and this flywheel then, if you then have the best people in every industry, using the best tools, creates a much better customer experience. And then you grow faster, you retain your customers better, you make more money, you can pay your people more. That's the positive sum, you know, vision of, for us of AI deployment, is you can really create a better mousetrap in all these industries.

• 25:24David Senra?

  Why should you be the one buying these companies, right? So we'll talk about that in one second. So the way I think about it is like, you have a ton of experience, right, in finance. What you were just telling me and my partner before we started recording, it's just like, you blew his mind, because he didn't even, he was thinking about the same thing you were thinking about, and you're like, "Hey, you didn't think about this other part, this missing piece, which we'll, we want to talk about." But like, that's another example. I've seen you do this a million times. And then with Zach, it's just like, he's gonna be able to recruit the best technical AI talent in the world. And that's how I see the combination, that like, everybody's like, "I want to do what Long Lake does." Yeah, but you're not Alex, and you're not Zach. Am I wrong about this?

• 26:01Speaker 01

  Well, thank you for saying that. We, we've got an amazing team. We go back a long ways. Zach and I first met at Goldman when, when he was a summer analyst, I was an analyst. He introduced me to Rasmus, our co-founder and CTO, who he was, he was at Oxford with at the same time, you know, I mentioned, was top student there. The sort of team came together through network. And so, you know, the first 20 people, I think, were all from like, you know, network, and people that we knew deeply from both an investment acquisition side, as well as applied AI technology. We're growing much faster now. We're closer to 60, I mean, we're still small at Long Lake level. We're only about 55, 56 people now. We'll probably be, you know, closer to 100 people by the end of the year. It really

• 26:42Speaker 01

  is a world-class team. It's, you know, it's, I'd say 90% AI engineers and operations deployment folks, and then 10% sort of acquisitions, you know, M&A finance. But yeah, I do think you need, you need to be able to do three things really world-class to be able to, to deploy this technology. You need to be able to buy great companies well, so you need a great M&A function. You need to be able to build amazing world-class technology. So you need world-class technology that rivals, you know, the labs or some of the best, you know, applied AI companies. And then you need change management operations. Because we were purpose-built, and because we started with the big vision of we want to, you really kind of help change the whole economy, I think we were able to attract, you know, much better

• 27:27Speaker 01

  people. And that's been, you know, that's been starting to compound now. And, you know, we still, I think 75% of our teams come from referrals, from in-network referrals. So we have a very strong, and it's a very tight filter, as you can imagine. I mean, I think this quarter, you know, we hired 3% of applicants, basically. And we saw, I don't know, close to 1,000 applicants this quarter. So we have a very tight funnel, just like we do for deals. And, you know, I think, one of my biggest learnings is just, high bar in everything is really the key. And so high bar in talent, high bar in acquisitions, high bar in technology, and that's kind of what I think you need to make this work.

• 28:02David Senra?

  What initially got you interested in finance to begin with?

• 28:05Speaker 01

  I just loved it. I grew up in a, in a family of entrepreneurs. My grandfather, who was a big inspiration to me, started a real estate business after World War II.

• 28:14David Senra?

  He essentially invented the strip mall.

• 28:16Speaker 01

  Yeah, the shopping center. Yeah, yeah, yeah, exactly. He didn't actually do strip malls. Well, he did probably earlier in his career, but he eventually did-

• 28:22David Senra?

  There's a great book that you gave me about him called Threshold Resistance.

• 28:25Speaker 01

  Yeah.

• 28:25David Senra?

  Can you talk about the idea? Why would it be called Threshold Resistance?

• 28:28Speaker 01

  Yeah, so the concept, by the way, it's, you know, it's a, it's a fun reference. We have it in our office. But basically, the whole concept of threshold resistance is you want the shopper to, to be more likely to go into the store. So he was, he was sort of a early pioneer of, of retail. He just thought he could make things better. And it was actually, that was a big inspiration to me, try to make things better in life. And so, one of the ideas was, you know, you don't, the threshold was, is the entrance to the store. And you, the more you had to step up steps, or go down some dark hallway in order to get, and that's how stores used to be designed. There used to be these big windows with big, you know, with merchandising in them, and you'd have to go through the windows in some like dark alley in order to get to the door in the back. Nobody fucking want

• 29:12Speaker 01

  to go in them. So his idea was, bring the door to the front, have no, have no threshold, have it be the same, you know, like, like that over there, you can't see, but that, you want to walk through that.

• 29:21David Senra?

  Because even a step, he brought it down almost like, like a math equation. Like, even like, half a step up or reduce it by like 20, the people coming by like 20%.

• 29:28Speaker 01

  Exactly. He did a lot of really creative things that, you know, I can tell you more about it. He was very innovative, and he always brought this kind of continuous improvement mindset, similar to like the Danaher continuous improvement concept. And honestly, it's all a big inspiration for me. You want to make it so easy and so magical for the shopper to go into the store, that they'll go in and spend more money ultimately, which is good for the store and all that. And actually, some of those principles, like, I think you can apply more generally, like with technology, for example. We want to make Nexus so magical and so easy to use, that our team members just love it, and they can just use it. You want to minimize threshold resistance on AI adoption.

• 30:02David Senra?

  This is exactly what you were talking about. It's like, hey, you know, the reason we can have this horizontal AI platform is because 70, 80%, it's like, every business deals with the same shit.

• 30:08Speaker 01

  Yes.

• 30:09David Senra?

  When you were just talking about this, I just recorded this crazy episode with Travis Kalanick from Uber. It was fucking crazy, sat exactly where you are, and we talked for hours. And he was breaking down in like minute detail about even like the, every single page you would see at Uber compared to like Lyft, and he's just like, every single little thing. It's like, there's a thousand things I had optimized, that if you're just copying me, you like, you copy what you see, but you don't understand the thinking behind it. It's exactly what you're talking about. It's like, this guy's just obsessed with shopping malls or shopping centers, and realizing that, hey, I'm gonna knock six inches off here, and my bottom line, you know, my profit increases by 25% or whatever.

• 30:43Speaker 01

  By the way, I think it's very much the same with technology and websites and, you know, Amazon that came later and things like that, which was, just these little tweaks can really impact behavior. And, you know, just by making things better-

• 30:53David Senra?

  It's why both my podcasts, like, Founders has no intro. I just get right fucking to it. And this one has like a six, six-second one. It's like, no one wants to sit through that shit.

• 31:01Speaker 01

  Yeah.

• 31:01David Senra?

  Like, I want, I'm listening to your podcast so I can hear some 30-second melody that you made? Like, no, this is not, this is not a concert, dude. I get right to the point.

• 31:09Speaker 01

  Yeah, exactly. So I grew up in this family of entrepreneurs, and my father and uncle ran that business for 75 years. And so one of the inspiration, we called the business Long Lake, because that business was built and, and lived on Long Lake Road for the last 40 or 50 years in Michigan, where I grew up. And there's actually a funny story about-

• 31:24David Senra?

  I dismissively called you an East Coast finance guy, which you know I love you and we're friends. I was like, shit, I forgot, he's from Michigan.

• 31:30Speaker 01

  Yeah. I basically just really grew up, kind of, with a tremendous respect for like the American entrepreneur. And growing up in Michigan, you know, I mentioned earlier, but, you know, all these incredible entrepreneurs in businesses that you've never heard of. The people in Michigan in the community, in the business community, you looked up to, there's no finance scene there, there's no tech scene there. It was people that built, you know, these, these, what, you know, people might, people on the East Coast might call unsexy businesses, but they're amazing businesses that you've built, you know, over 50 years or 75 years in the case of my family. And these people that built them are extraordinary people. As you know, they're, they're classic American founders. And, you know, bootstrap their way in, you know, to build what could be a huge business over time that had, provides

• 32:14Speaker 01

  an unparalleled service in that market. Like, you know, we partnered with an architecture business in Minnesota that's built 50% of the K through 12 schools in Minnesota the last 70 years. I mean, they are like the McDonald's of, you know, architecture for schools. And this is why it's such a great country. You can go to any region in the country and any service line, and there's someone that spent 100 years obsessing over that product and service. And so, growing up, you know, seeing this and around, you know, at the dinner table, meeting some of these people, and it was very inspiring to me. And so I think- Part of the reason that I was uniquely interested in this problem and mission was, how do we bring the best of the intelligence revolution and the best engineers in the world

• 32:58Speaker 01

  to help these sort of iconic, you know, American entrepreneurs across industries, you know, deploy AI into their, into their business to make their team members, employees happier, make their customers happier, improve their bottom line, I mean, and grow faster. And by the way, if you do this in enough industries with enough businesses, you're eventually going to add up to really contributing to the economy in a big way. So I think there's a long-term, over decades, opportunity to make a meaningful contribution. You know, I don't want to, I don't want to overstate our role in the intelligence revolution, but I think actually deploying the technology in the real world, driving real ROI, which, by the way, and I was sort of starting to get this earlier, but by driving real ROI, we're actually generating cash back into the system to scale the models.

• 33:42Speaker 01

  And so you actually need this flywheel, you need someone, you need distribution. And so part of the mission of Long Lake was-

• 33:48David Senra?

  Oh, your distribution for the labs, that's hilarious.

• 33:50Speaker 01

  Yeah, we, we, we generate ROI in the real economy on the intelligence to reinvest into scaling the models.

• 33:56David Senra?

  That's funny.

• 33:57Speaker 01

  And someone's got to do this. And by the way, you're seeing the labs start to dabble and deploy codes and things like this, but I think somebody, you know, and many people, it's not going to be one company. You talked about, you know, other, you know, people, people often ask me about competition in the space, you know, people trying to do what Long Lake's doing. And I think it's great because I think to actually scale the models, we actually need to deploy this technology at scale, which is going to be, you know, this is, this is a big economy and the, by the way, it's a global economy too.

• 34:23David Senra?

  And it's going to happen slowly.

• 34:25Speaker 01

  Very slowly.

• 34:26David Senra?

  Like the technology changes way faster than human nature does, human behavior does. The bottleneck is changing actually what people do.

• 34:31Speaker 01

  And there are real hard technical problems and, you know, like Rasmus and, you know, a bunch of our co-founders like Varun and founding engineers are, you know, Pratik, Taraz, these are some of the best engineers, they all, you know, any one of them could, could raise money from a top VC tomorrow to start their own company. Any one of them could go get offers at, you know, amazing, whether it's the labs or some amazing software company. You need people like that. These are really hard technical problems and what they would tell you is it's really interesting work because it's, it's not easy to figure out how to, you know, take a hundred year old businesses, systems and data and problems that are global with each customer having some different optimization that it needs, like in MXGPT, for example, and somehow

• 35:15Speaker 01

  scaling that with Nexus and diffusing AI into that whole stack.

• 35:19David Senra?

  Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade and one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, 11Labs, Uber and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers.

• 36:01David Senra?

  The founder of 11Labs has a great description of the value Deal can give your company. He said, "We built 11Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories and ideas to every corner of the world." Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com/cenra. That is deal.com/cenra. Okay, so you're meeting all these entrepreneurs, you're growing up, you grew up in an entrepreneurial family, these are family businesses. When did you start paying attention to finance though, in that aspect of it?

• 36:40Speaker 01

  Yeah, so I knew I was really interested in business and I wanted to learn about, you know, capital markets and I started my career at Goldman. That's where I met one of our co-founders, Zach, who, who, you know, helped introduce me to Rasmus and sort of all this ended up coming together through that. But when I was at Goldman, I, I worked in the internal investment unit, which was called Special Situations Group. And it doesn't really exist in the same way because of regulation now, but at the time it was a very cool group, which I, you know, I can, I can talk more about, but I sort of just fell in love with this whole idea of capital allocation and I had some really amazing mentors there. And the whole idea of putting resources of the economy into the highest and best use and the whole concept of capitalism, I just kind of fell in love with it and capital allocation across industries.

• 37:22Speaker 01

  That was one of the beautiful things about SSG at Goldman at the time was the pitch to young people coming out of school was, you know, you can, you get to sort of invest right away, you get to, it's, we invest up and down the capital structure from, from debt, you know, down to equity, public and private, across all industries. So I just got tremendous exposure at a young age to all these different types of businesses and ended up, you know, working on some really interesting investments there, learned a ton by sort of, you know, not just observing, but also like getting to manage risk at a young age, which was, which was a very unique experience.

• 37:56David Senra?

  Young age is what, early twenties?

• 37:57Speaker 01

  Yeah, I think I was like 22, 23.

• 37:58David Senra?

  Okay.

• 37:59Speaker 01

  And actually I had a great mentor there who I later partnered with and worked with at Oaktree, a guy called Patrick McHaney, who empowered me very early, I think in my first year, to basically manage like a couple of hundred million of invested capital. I mean, he was helping me, of course, and, you know, he gave me a lot of guidance, but he empowered me to like take real risks early in my career and that was very formative for me. And I realized I just, I loved investing. I loved allocating capital and I loved businesses and learning about, you know, how, how the world works. To me, like, understanding how these different businesses work in all these industries is sort of like really understanding how, you know, the economy in America really functions. And so I love that, the intellectual curiosity of just learning more about how different things work.

• 38:40David Senra?

  So wait, then you go to Oaktree?

• 38:41Speaker 01

  It's funny, you know, people ask me about Long Lake. I never could have told you at any point in time that I was going to be doing what I'm doing today, but if you-

• 38:51David Senra?

  Did you think you were going to found your own company or you thought it was going to be a fund? Like, what did you think it was going to be?

• 38:55Speaker 01

  I didn't know what I wanted to do. I was very focused on just continuing to learn and get better and improve my skills. So after Goldman, I went to business school and I actually, you know, what I was going to say is my favorite case was Danaher. I've talked about Danaher, they're a big inspiration for us, the idea of like having that long-term compounding model where you have a structural advantage, you can operate the businesses better, you can have better cost of capital and you can have the best people and all that and-

• 39:18David Senra?

  Hold on, let's come back to Danaher.

• 39:19Speaker 01

  Yeah.

• 39:20David Senra?

  I do, I want to hear about that, Danaher, which you and I have talked about before, but also the other people that you guys look up to and you emulate, but you go to business school.

• 39:29Speaker 01

  So I went to business school. I ended up interning, this is like, I'm just going chronological order, but I ended up interning at a, at a holding company called Lucadia. So I was very interested in holding companies and then I spent some time hanging out with Josh at Thrive. So basically I was always interested in technology and holding companies dating back 15 years. None of this clicked for me until much later. So I went to Oaktree after business school, I graduated, I decided I wanted to stick with investing and partnered with the guy I mentioned, Patrick, and we worked directly with Howard Marks and Bruce Karsh, two legends of, of the investment world to build kind of some new businesses for them. We had started Oaktree's first equity business. We ended up getting involved in some of their credit businesses and helping out with a few

• 40:13Speaker 01

  things and doing, you know, we started several different products there and worked very closely with Howard and Bruce and just had a tremendous amount of fun, learned a lot from them. But the whole time I, I knew I was not sort of fully expressing myself. I eventually wanted to start something, but I didn't know it was-

• 40:33David Senra?

  On your own, as a founder, even if it was going to be a fund or an investment company?

• 40:36Speaker 01

  Yeah, I think I just knew I wanted to do something entrepreneurial, I wanted to build something and I wanted to, you know, do something on my own, but I didn't really know what it was. But then, you know, when I started really thinking, I, after I was at Oaktree for almost 10 years, I started really thinking and, you know, brainstorming with some of the early co-founders of Long Lake, who we've talked about and, and, you know, the chat GPT moment came out and it just became very obvious to me, like this was-

• 41:01David Senra?

  But wait, where was the Toddman Capital? When did that happen in your life?

• 41:04Speaker 01

  Yeah, so when I was at Oaktree, um, you know, I mentioned, you know, my dad and grandfather's business and I was helping, working with our family to build out Toddman Capital, which is our kind of family investment business, which was all our own money. And we ended up partnering with, you know, we did a bunch of these deals with investments in founder-owned companies and we did, I think, close to 50 of them over that decade.

• 41:27David Senra?

  So that's where you learned how to buy companies, do you think?

• 41:28Speaker 01

  Yeah, it was a combination of stuff I learned at Oaktree and stuff I was doing with Toddman Capital and Oaktree stuff was generally larger companies, public companies.

• 41:35David Senra?

  Yeah, but the returns you had at Toddman Capital, you don't like talking about this, but I'll just say it and we can cut it if you're embarrassed, but it was like something like 70% IR or some shit like that, correct?

• 41:43Speaker 01

  We had a very good run. We had a very good run. But yeah, it was an eye opening experience for me because what I realized is we, you know, there's some remarkable businesses out there and just because something is a small or midsize business doesn't mean it's a it's a bad business. Actually, I mentioned that, you know, this is in Minnesota, we partner with that's been building all, you know, most of the schools and entire state for the last like 70 years. It's an amazing business. And so my learning was there's some unbelievable entrepreneurs, going back to my roots in Michigan, it really resonated with me to be able to partner with some of these folks and help them grow their companies. And so, you know, to your point, we had a very successful run in bringing sort of permanent flexible capital, which was our own internal balance sheet, a long term horizon,

• 42:27Speaker 01

  being comfortable in it, not just comfortable, very encouraging of investing in growth. We don't, you know, we're not focused on short term quarterly earnings. We're not overlevering the companies, you know, like a lot of private equity funds do. We basically are a long term growth investor in great American businesses, partner with great founders, and we can bring them things that they may not have. Like, for us, it was helping them get growth resources, helping them get M and A resources, helping them have capital. You know, a lot of folks have built an amazing business, but they'd never done an acquisition before. And they may have tons of competitors that they could run the business better than, and we can help them go and consolidate that industry and become a bigger scale player and get the sort of industrial logic of that. And so, we had a lot of fun. That was sort of nights and weekends

• 43:09Speaker 01

  for me, over the 10 years, you know, when I was working at Oaktree. So that was a very formative experience as well. Long Lake, it all clicked. You know, it turns out, I was always passionate about, you know, partnering with founders. I was always passionate about technology.

• 43:22David Senra?

  Passion about capital allocation.

• 43:23Speaker 01

  Yeah.

• 43:24David Senra?

  And then now you met the right people where you could actually build a unique partnership that very few people can match.

• 43:29Speaker 01

  Yeah, exactly. I got very lucky, super grateful to have incredible early investors. I think they've really pushed our, our thinking and level of ambition. And, you know, obviously, our mutual friend Rick, who's an extraordinary investor and been one of our biggest partners, and Heymont at General Catalyst, and Mark, and, you know, it's, it's an amazing group of people, Elad Gil, and, you know, they've basically really pushed my thinking in a big way since the beginning.

• 43:56David Senra?

  What Rick tells me about you is that you're unusually receptive to both new ideas and criticism. And a lot of founders, obviously, you know, are more like, kind of headstrong and, you know, less, usually they'll listen, but they're running the ship, you know?

• 44:13Speaker 01

  Well, that's nice of him to say. I think feedback's a gift. We want to get better every day. Just like, you know, we want our companies to get better every day. We want our team to get better every day. I want to get better every day, and I have a tremendous amount to learn. That's why I love your podcast, actually. I learn, you know, more from you, probably than from, from almost anyone, from, from your episodes. And that's why I make everybody, I actually do, it's a true thing.

• 44:31David Senra?

  I know.

• 44:31Speaker 01

  Long Lake onboarding includes like half a dozen of your episodes.

• 44:35David Senra?

  That's just smart. Okay, so, I know you were working on a few deals, you and Zach were working on a few deals together before you found Long Lake. You guys are talking about this thesis for what, six months a year? Like, how long does it actually take? And then we got to talk about the fucking crazy growth that you've had in the last three years.

• 44:50Speaker 01

  Yeah. So, yeah, Zach and I, and we go way back, we started, you know, in Goldman, as I mentioned, and we'd stayed friends a long time. And, you know, he's done some amazing things in technology, brought me into some of those things.

• 45:01David Senra?

  That's an understatement.

• 45:02Speaker 01

  And then, and then, you know, he, he was very inspiring on that. And, and then he was coming into some of our top in capital deals. And, you know, we, you know, buying, we did a funny thing where we ended up like, we built one of the largest go kart track companies in America. We bought, we partnered with, you know, 20 different locally owned go kart tracks and created a platform. And so Zach invested in that deal with us. And, you know, we realized, you know, there's some really great businesses out there that people don't spend a lot of time thinking about. And what if we could bring the world-class technology expertise of some of the, you know, some of the companies like, you know, Ramp and Cognition and the Labs, and you could bring some of these, that type of world-class

• 45:44Speaker 01

  AI team to, you know, the mainstream American businesses and enterprises. And that was the idea.

• 45:50David Senra?

  Was it that idea from the very beginning?

• 45:52Speaker 01

  It was that idea from the very beginning.

• 45:54David Senra?

  So from that, the conversations you guys start having about this to, shit, we're going to start the company to it's founded, is what's the timeframe there?

• 46:01Speaker 01

  I think it was like nine months from the first conversation until we actually incorporated the company. I was still at Oaktree at the time, so we were spending a lot of time thinking about it, meeting some of the early engineers who ended up joining us. And I think the thing that got me really excited was when I started to talk about this idea with engineers, it was, there was a lot of palpable excitement. People were really excited to work on the project. I knew we could build an extraordinary team. Being able to build the right team at the right time to go and do this was a unique opportunity. I was very bullish on the company and very excited, but I think we just continued to get more and more, you know, excited about what's ahead. You know, our bar for what we want to build and what we want to do keeps going up every day.

• 46:42David Senra?

  Dude, I've been there from like, I think day one. But, this is like, when I heard about the Amex deal, I'm like, why am I not thinking? Like, I know, these are my friends. I'm not even thinking, like, I didn't even think it was a possibility that you would do a $6 billion valuation, or $6 billion acquisition. I was like, damn, these guys are really good.

• 47:01Speaker 01

  Our vision is really big. I mean, it sounded kind of crazy when we were a couple of years ago, when we were saying, you know, we wanted to play, we want to be-

• 47:07David Senra?

  But it's not just your vision. Like, the way you guys are executing is even better now. Like, you're getting better. You guys are getting, you were already super impressive, but you are literally getting better.

• 47:18Speaker 01

  Yeah, I do think we're getting much better. This is partly why I value feedback from some of our smart friends and some of our investors is, we want to get better every day. And I do think, I do think it's true.

• 47:26David Senra?

  Can we talk about the story? You guys were thinking about like, a few acquisitions, and we don't want to talk about the prices or whatever. It was just like, well, we could do this one over here, or we do this one, or we do this one. And you told me the story, and Rick's like, why not do them all?

• 47:42Speaker 01

  Exactly. Sometimes we like to say, you know, I think the greatest gift that you can have in a partner is someone who makes you more ambitious. And I think our, you know, our, our partners today really make us more ambitious. And when we, when we started the company, we talked a lot about how, you know, if we do this right, we can really help change a lot of industries and change the economy. And it sounded kind of lofty. But now that we're operating in 15% of the services TAM, and, you know, with tens of thousands of team members, you know, it's starting to feel like it's coming alive. And so I think that's really exciting, which means we're able to, you know, it's much, I remember in the beginning, like, convincing some of our earliest, you know, founding partners

• 48:25Speaker 01

  to leave their, you know, sexy jobs in technology. Like, I was like, talking to people's parents about why they should like, drop out of school and come, and come work on Long Lake and stuff like that. And it was like, you know, it was like a long process, because I had to like, explain all of this and, you know, but now it's getting much, much easier. So, people have seen what we're doing, they're inspired by it, they want to join and be part of the mission. And so I think the team's getting better and better every day. Like, our rule is, the incremental hire has to make us better, make the, raise the average. And we've been able to do that, which is really extraordinary. And so, team's getting better, we're getting much more experience. We've now bought close to 40 companies across five industries. Like, we've built a process, we built a playbook, we have the Nexus platform, which we can redeploy.

• 49:07Speaker 01

  So our ability to drive impact is better. Our team is getting better, you know? And so I do think our ambition level of like, if it's not Long Lake that buys MXGPT, like, who should it be? Like, it should be us. That's kind of how we think about it. And frankly, you know, we're thinking, there could be other big things we can do. We're not going to stop, obviously. We want to keep doing this for the next 50 years.

• 49:27David Senra?

  Give us some details about the size of the business today.

• 49:30Speaker 01

  We haven't disclosed, you know, valuations yet, but I-

• 49:33David Senra?

  We don't need to.

• 49:34Speaker 01

  You'll get the first exclusive at some point. But we, you know, I can tell you that including, you know, MXGPT is a big business, and the scale of our other businesses was, is also compounding and getting meaningful. And so, you know, if you combine, you know, we're expecting to do over $4 billion of revenue next year. You know, it's amazing revenue base, it's very stable, you know, 100% dollar retention type business. You know, I mentioned, you know, we have a lot of employees now globally. And, you know, we're, we're very profitable, as you highlighted, because our strategy is to buy established profitable businesses that already are making 20, 25% plus, you know, EBITDA margins. And so our view is, you know, we actually never need to raise capital again, which is nice. We can, you know, we're going to be generating enough cash flow on our existing assets that

• 50:19Speaker 01

  we could compound, you know, just on internal reinvestment for decades to come.

• 50:23David Senra?

  Yeah, we have a line of people at the door.

• 50:25Speaker 01

  We've had tremendous support and interest from investors to help inspire us to do bigger and bigger things. I mean, one of the nice things about being able to access, you know, access capital is it allows us to think bigger and move faster.

• 50:40David Senra?

  And I was at dinner last night with Rick and Zach and, you know, your main partners, and they made the good point where, you know, a lot of founders fuck up because they optimized for valuation. And, you know, Zach and Rick made the point, it's just like, well, if we're gonna be working together for 20 years, like, this is a long-term partnership. Like, you can't just, it's not a bidding contest. It's just like, who can you work with and who actually, to your point, like, not that you get along with, you actually want to do life with, because we're all gonna have more money we can spend anyways. So it's like, who do you get to spend your time with? Like, shouldn't that matter? And then the second part of that is, is like, are they actually helping you on your mission and increasing the size of your ambition?

• 51:17Speaker 01

  No, I, listen, I 100% agree. I think it's about having the right partners. And so, like, you know, I mentioned kind of growing up and, you know, in our, in our family in the real estate business, my father and grandfather had partners for 50 years in some of their real estate deals. And so, being a partner was like, almost higher than being family. It was like, someone that you treat with like, the highest respect.

• 51:38David Senra?

  You guys are loyal guys. This is what I like about you. You know what I mean? Like, there's an army of, like, you're fucking way too humble, and you're always gonna be like that, so nothing I'm gonna tell you today is gonna change that. But like, there's an army of people trying to put more money into your company that would, probably, you'd get obscene terms, and it's just like, yeah, but I like these guys. These are my already existing partners. My version of this is like, every fucking company comes, and it's like, do what you, what you have with Ramp, we want that, and we'll pay double. And I'm like, you think this is like, a bidding thing? It's like, these are like, some of my closest friends. They're the easiest people to work with. Like, fucking, they backed me, and they did what, at the time, was the biggest deal in business podcasts, is the partnership we had. This is like, just because they had intuition that this is fucking valuable.

• 52:21David Senra?

  You think I'm gonna exchange and destroy that fucking relationship for money?

• 52:24Speaker 01

  Yeah.

• 52:25David Senra?

  Come on.

• 52:25Speaker 01

  Exactly. I agree. I mean, it's one of the things we're super grateful for. When we first met with, with Hemant about this, and he was our, you know, GC, let our first round of outside capital, gave us our first 100 million bucks, basically, when, you know, that was, that was, you know, remember, this was three or four years ago. That was a lot of money back then. And, you know, and by the way, they've given us a lot more since then, and been incredible partners. You know, from day one, they got the thesis. They believed in us, almost, in a way, before we even believed in ourselves. And that's such a gift that we'll always be grateful for. And, you know, I just want to keep working with these guys, you know, our, our investors that we have. And obviously, we like bringing more people into the mix. And there's been some extraordinary people that have come in recently, like, many great people that you know. And so, we want to keep building that. I do think, like,

• 53:10Speaker 01

  continuing to kind of expand our, our world a little bit is very valuable. Each time new people come in, they add a lot of, they add a lot of value to our thinking and all that. But, yes, it's about much more than capital. It's really about, how do they help us execute? And the biggest way to help us execute is by believing in us, and, you know, inspiring us to move faster and think bigger.

• 53:31David Senra?

  Does Long Lake have to be public?

• 53:33Speaker 01

  It doesn't have to be public, no.

• 53:36David Senra?

  You think it will be?

• 53:36Speaker 01

  But I think the maximally ambitious path is to be public.

• 53:39David Senra?

  Why? Why is that maximally ambitious?

• 53:41Speaker 01

  Because, because I think we'll have ultimately deeper and lower cost of capital, lower cost capital, and just, you know, the public markets are the biggest stage in terms of deepest pools of capital. And I do believe, and one of the things about some of the great holding companies, and, you know, people like Henry Singleton and others, and John Malone, they've all proven this over time, is that if you execute over a long period of time, you earn a currency that trades at a lower cost of capital, and then that allows you to do even more ambitious things. And so, by getting, you know, access to that over time, we can think even way bigger. So I think there's some, you know, potentially, to scale our impact to even larger and larger businesses and industries, you know, over time, I think having that currency will be very valuable.

• 54:22David Senra?

  What else did you learn from Singleton? You and I have talked about Teledyne a bunch.

• 54:26Speaker 01

  Yeah, I mean, he's probably, like, of all the holding companies, one of the people that's inspired us the most. And first of all, he was a math genius. He was on the Putnam team at MIT. He was in Office of Special Services. I mean, you did, you know, you've sent me the book, I think, Distant Force, which is a great book. One thing that people don't understand is Singleton compounded his earnings per share, like, over 40% a year for 20, 25 years, you know? People, and Buffett always called him the best capital allocator in America, and the best, best operator. And he was very kind of under the radar. The biggest learning from him, I think, is, he used to say, stay flexible. His mantra was, he didn't like detailed strategic plans, he preferred to stay flexible.

• 55:04David Senra?

  He says, he says, I prefer to steer the boat a little bit every day.

• 55:07Speaker 01

  It's a great quote. It was subject to all these outside forces.

• 55:09David Senra?

  Yes.

• 55:09Speaker 01

  And nobody's smart enough to predict them, so you just need to come in and steer the boat every day. And so, I think that's part of our whole philosophy of staying open to different industries, the, you know, the flexible capital allocation mantra of, you know, for example, we never would have said, when we started the company, that we wanted to do travel. It wasn't, it just wasn't something I'd thought about. We eventually built a thesis on it, but that was because we had an open mind. And now we're doing, I think it's one of the most exciting deals we've ever done. I mean, it's like, a unbelievable iconic business with a reputation for, you know, you know, gold-plated customer excellence, with one of the best, you know, AI opportunities to improve the service, at a pretty reasonable multiple, actually, when you look at it. And had we not kept an open mind and stayed flexible about industries, we never would have looked at it. You know, I think that's

• 55:53Speaker 01

  a, a very inspirational principle to us, that we try to embody.

• 55:57David Senra?

  What about John Malone? Anything from him?

• 55:58Speaker 01

  Yeah, I mean, he was amazing. I was studying him at Oak Tree, and actually, we invested in a number of his, his stocks over the years. You know, I think just creativity on structuring and, and creativity on financing and things like that. He was kind of, you know, top of his, top of his class. And another thing, you know, I read in Cable Cowboy, that he liked, he was a very first principles thinker, which, you know, he would, he would do, like, ask, ask why five times, get to the root cause. Like, he was a big root cause thinker, and that's something we try to also embody in our, you know, in our investment process, now, capital allocation process. We want to always understand, why is a business good business? Because we do plan on, you know, you talked about permanent capital, we want to be doing this for decades. And so, it's actually very hard to think out 20, 30 years

• 56:43Speaker 01

  on what's gonna still be a great business, especially now.

• 56:46David Senra?

  Yeah, especially now.

• 56:47Speaker 01

  So, first principles thinking about why a business is gonna be great post AGI is really important. It's maybe the most important thing in capital allocation right now. And I think stock selection, stock, it's like, they used to say, it's a stock picker's market, meaning, there's gonna be winners and losers, a lot of dispersion. I think there's gonna be a lot of dispersion in the next 20 years between the best assets and mediocre assets, in terms of, you know, a post AGI, you think about how industries are gonna shift.

• 57:13David Senra?

  The gains of the winners is gonna be even more extreme in a post AGI world. Is that what you mean?

• 57:18Speaker 01

  Yeah, I think there's just gonna be a lot of dispersion. I think the gains to the winners is gonna be extraordinary.

• 57:22David Senra?

  Yeah.

• 57:22Speaker 01

  And businesses that, you know, are well-positioned, that are high-quality services, that are gonna preserve their place in the ecosystem and expand it, which we think our businesses all fit that mold, you know, can become orders of magnitude more valuable. But businesses that are lower quality, easier to disintermediate, aren't providing a sort of a enduring, value-added service, and really are more of like, a tax, some of those are just gonna go away.

• 57:46David Senra?

  Yeah.

• 57:47Speaker 01

  And that's good for the economy, by the way. Less friction is good. But I think thinking through businesses holistically, and sort of thinking about what makes a business sustainable or not, enduring or not.

• 57:57David Senra?

  Have you guys bought any businesses that were weaker than you expected? And have you sold any of them, or no?

• 58:02Speaker 01

  No, we've never sold anything, and we don't plan to ever sell anything. You never say never?

• 58:06David Senra?

  Yeah, of course.

• 58:07Speaker 01

  It's more about, are we adding value to the business? Is it a business that Long Lake should be in? I think that's the, the bigger question. You know, if you're, if you're gonna invest all this time and energy to get into a great business, with a great team, you know, build that partnership, deploy tech, build, you know, nexus to deploy into that space, create the best technology in the space, the best people, the best team in the space, and then you're gonna sell? Like, that, you want to let it compound for a long period of time.

• 58:32David Senra?

  So, I just had a thought, and I don't even know the answer to this question. You guys are acquiring businesses. Have you guys had any acquisition offers for Long Lake itself?

• 58:38Speaker 01

  Everybody knows we're, we're not a seller, so we haven't really entertained or had any of those conversations. My plan is, this is what I want to be doing forever.

• 58:46David Senra?

  Okay, I'm on a run right now. So, Torsten, there's a bunch of these episodes aren't even out. Torsten from Housing, he sat in the same chair, and he's just like, he's legitimately mission-driven. He's just like, I'm building a great European defense company, because, he's already rich, like, when he started the company, and he's just like, you know, because like, Europe has to be able to protect itself. So, this is like, this is a mission-driven company. He's like, we're not for sale for any price. You know, Scott Wu, I've pushed him on this a lot, because billions are getting thrown in that guy's face.

• 59:12Speaker 01

  Yes.

• 59:12David Senra?

  And he's just like, nope, not doing it. He has this great line, he's like, oh, we'd sell if it was the maximally ambitious thing to do, which is obviously-

• 59:19Speaker 01

  Great line.

• 59:19David Senra?

  Yeah, it's a great line, which is obviously his way of saying, no. I'm even gonna tell you some of the conversations I've had with him on the phone, which, we, I was like, I can't put this in the podcast, because he's like, you know, definitely like, friendly UI, but conqueror spirit underneath that friendly UI. And then I just talked to Zach Dell, and I was like, is this the last business? Because what I love about Kareem and Eric from Ramp, I asked them both the question, like, this is our last business. It's not like, I'm gonna fucking sell this and start another company. Like, this is it. This is the last one. And Zach Dell had the funniest thing, because, you know, he wants to build something, like you said, relatively young. He's like, I want to work on this for 50 years, and go see how far I can take this thing. And he goes, and do you think I'm doing this for a paycheck? He's like, thinking about my background, I was like, yeah, good point. You're not doing it for a paycheck. So, what, like, what would be the point of

• 1:00:01David Senra?

  being, you know, selling it again, for more money that you're never gonna spend anyways? So, I just love this idea. But we never closed the loop on your maximum ambition, which is, like, you guys could be building a trillion-dollar company.

• 1:00:13Speaker 01

  I think we can, yeah. If you just think about the power of compounding, and this is one of the reasons that long-term thinking and, you know, not being a seller is so valuable, is that it's amazing, if you just, you know, kind of can keep getting a little bit better every year, how that can add up to, well, then you're, you know, tripling the value of these businesses every five years. And if you just keep doing that for 20 years, you know, you're a trillion-dollar company. I'm not trying to make that sound easy. That's really hard, to keep executing that way over a long period of time, over decades, and, you know, avoid mistakes, and continue to retain the best talent, best technology talent in the world, and, you know, deliver the best customer service, customer excellence in the world, across these service lines. That's really hard to do. But if you do it for long enough, you know, the pie here is just extraordinarily big. We're talking

• 1:00:58Speaker 01

  about the whole economy, basically. This is like, the largest TAM imaginable. And so, if we can just keep executing and doing what we're doing for a long enough period of time, I think, you know, the potential is, is pretty, is staggering.

• 1:01:09David Senra?

  Well, I have to say, as somebody that's been there, like, been able to see this from, you know, almost the very beginning, I remember when, the first time Long Lake got name-dropped on a podcast, and people were like, oh, no, like, you know, because it was, it was something relatively stealth, even though you guys were killing and buying everything, and doing, and, you know, doing everything, for you to now, you know, I know for a fact, and firsthand knowledge, that one of the 10 best entrepreneurs in the world, like, you got their attention when you did the Amex deal. And they're like, hey, what's going on with Long Lake? And how do I get involved in this? So, just as a friend and a fan, it's been wonderful to see you, man. And I really appreciate you trusting me with, you know, coming out and telling the history of Long Lake today.

• 1:01:43Speaker 01

  Thank you so much. Honored to be here.

• 1:01:45David Senra?

  Yep. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening, and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I have obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.