From HOA Management to $4B in Revenue & $6.3B Deal for Amex GBT | Alexander Taubman, Long Lake

1. 0:00 – 1:21

   The $6.3 billion Amex GBT deal

   1. DSDavid Senra0:00

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

   2. ATAlexander Taubman0:09

      Yep.

   3. DSDavid Senra0:10

      This is Amex Travel.

   4. ATAlexander Taubman0:11

      Yeah.

   5. DSDavid Senra0:11

      Can you tell the story?

   6. ATAlexander Taubman0:13

      We announced that we're buying American Express Global Business Travel for six point three billion dollars. And, uh, you know, it's just an unbelievable business. We've always respected this business. You know, it's a, it's a hundred and eleven-year-old company, over a century of customer excellence. And it was actually started in nineteen fifteen 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, 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 five hundred, a huge percentage of the Global two thousand, a lot of the US government and military, uh, governments around the world. 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's a huge multi-trillion-dollar global sector growing better than GB- GDP, and we just think that we can have a massive,

2. 1:21 – 6:17

   Bringing AI to the real economy

   1. ATAlexander Taubman1:21

      uh, impact here.

   2. DSDavid Senra1:22

      So let, let's step back because me and you have been friends for a long time. Um, Long Lake has always been a company that it's like an 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. [laughs]

   3. ATAlexander Taubman1:36

      True.

   4. DSDavid Senra1:36

      Yeah. [laughs] So no public profile. You-- I know everybody involved actively were, like, not seeking attention, yet ton of people were starting to copy your, your, 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.

   5. ATAlexander Taubman1:59

      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 in, you know, dating back. If you had-- If we had talked to each other four years ago after ChatGPT launched 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, uh, you know, the model solved some of the ten 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, uh, a lot of people, and Dwarkesh was talking about this, um, recently. You know, you would have thought in that world, everybody would be using AI everywhere. 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, in the real economy pr-prior to founding Long Lake. That was my history for ten or fifteen 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. We never wanted much publicity. We just want to be known for our work. I think, you know, uh, 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.

   6. DSDavid Senra3:45

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

   7. ATAlexander Taubman4:08

      Yeah. I think, look, w- I was very inspired, you know, um, growing up in, in, 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, or whatever you might. And people are very low-key. They're to-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, Amex GBT is a great example. It's a, it's a iconic franchise. It predates the invention of the airline. That's the brand, you know, that, that, that we want to sort of partner with and let them shine. Long Lake is just here to be sort of a, a, a deep, long-term permanent capital partner who's going to help you bring AI into the company, make your team members, uh, faster, better, smarter, make your customers happier.

   8. DSDavid Senra4:58

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

   9. ATAlexander Taubman5:04

      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 in cr-crazy levels and faster. And, and I'm super AI-pilled always have. That's why I, you know, uh, 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 gonna finance all this. And, you know, I think the real answer is we need to demonstrate... Y-you know, you can borrow against future cash flows in order to finance this stuff. And pe-people, you know, are now just gonna-- running into the trillions of dollars of investment to be able to scale the models to, to, to really where we want them to be in ten or twenty years. 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 w-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, and freeing up human capacity for, you know, more impactful work, dealing with the customers, focusing on growth, that's super high ROI.

3. 6:17 – 11:29

   Why greater productivity can mean more jobs

   1. DSDavid Senra6:17

      Focusing on growth is really important. People think, oh, you take some technologists, match them with some PE guys, they're gonna 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 you, you-- the-- that's not the thesis-

   2. ATAlexander Taubman6:33

      Yeah

   3. DSDavid Senra6:33

      ... of what you guys are actually doing. You actually think that, and you, you're demonstrating, that you're increasing revenue growth, and you're actually not cutting people.

   4. ATAlexander Taubman6:42

      Yeah, absolutely. So this is, like, a contrarian take that we had in the beginning as well. We're very positive sum. 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 that's gonna be good for everybody. And so what we're seeing in our companies, and we started in, uh, HOA management, and we've now bought, I think, twenty-something companies in that space. Um, we've bought close to forty companies now in total, uh, 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. We're actually adding heads because if you think about it, if your people are fifty percent more productive and can handle fifty percent 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, you obviously want more of them. It's like a salesperson. You know, uh, if you have a salesperson with AI that's now s- doing three x quota, do you wanna 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, 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. Twenty trillion-plus dollar services economy in the US and, you know, obviously, you know, millions of people.

   5. DSDavid Senra8:13

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

   6. ATAlexander Taubman8:16

      Yeah.

   7. DSDavid Senra8:16

      What are they?

   8. ATAlexander Taubman8:17

      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, a now market-leading service and one of the fastest-growing companies in that space. We then moved into HR services, uh, specialty tax, uh, infrastructure services now is a big area for us, so we have architecture, engineering. We're looking at other sort of, uh, businesses in that broader infrastructure space, and now travel.

   9. DSDavid Senra8:48

      I wanna tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world, and one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by five percent. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the Ramp data too. The median company running on Ramp also grows their revenue by sixteen percent. So when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of thirty-five seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results scale to hundreds of thousands of dollars of spend per day and increase their revenue by millions. So you wanna get started quickly before all of your competitors are on AppLovin. And you can do that by going to applovin.com. That's applovin.com. 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 wanna talk about the people that you've, like, pattern-matched off of or that have inspired you. I know sort of s- we've talked about some companies in the past too, but people are like, "Okay, wait, this, this guy founded a company three years ago. How the hell did he just buy a hundred and ten-year-old company for six and a half billion dollars?" Uh, we'll talk about, like, your crazy revenue growth. You're obscenely profitable, and I mean obscene, uh, the deepest love. I love obscene profits. What I understand about you, just from being your friend, is that it's,

4. 11:29 – 16:01

   A prepared mind and a tight acquisition filter

   1. DSDavid Senra11:29

      like, you kinda have, like, a map of all... How, how do you think about this? It's like, just say Warren 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." He's like, "No, I kinda, like, mapped out everything, kinda just waited for the right time, you know, uh, uh, if, 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?

   2. ATAlexander Taubman11:48

      We do.

   3. DSDavid Senra11:49

      Okay. Why? And explain this.

   4. ATAlexander Taubman11:51

      Yeah. So w- we wanna be doing this for a long time. I, you know, I- I'm still re-relatively young. I like to think I'm still young.

   5. DSDavid Senra11:57

      You are.

   6. ATAlexander Taubman11:58

      And, uh, you know, our friend Zach tells us we're gonna live to a hundred and fifty. Um, so hopefully I could actually be doing this for, for, for, you know, at least fifty years, maybe a hundred years. So in the fullness of time, you know, we'd really-- we want, we wanna bring Long Lake, and we wanna bring AI to Huge swaths of the economy. We're now operating in, you know, roughly three trillion dollars of the twenty trillion dollar TAM, so-called fifteen percent of the economy in, in the US, and now we're global. And we just wanna keep adding to that. So over time, we'd love to be, you know, have a market-leading business and platform in, in, in many more industries. But, you know, there's moments in time when you can find a great asset, uh, 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. And so we take a prepared mind, you know, approach, where there's this sort of our top fifteen or twenty industries that we think are industry, i-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, uh, where we're seeing four or five thousand deals a year, uh, across all these sectors. And we'll literally do, you know, one or two new industries per year. Um, so it's a, a big fil- big funnel, very tight filter, and I can talk to you about, you know, how we select industries and assets.

   7. DSDavid Senra13:16

      That, that's literally what I was thinking. I was like, okay, when you're select-- I assume this is at, 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?

   8. ATAlexander Taubman13:27

      It's more based on opportunities coming our way. You know, to, to, to go back to Buffett, like, you know, the, you better chance of getting a date if you're public and pr- if you're bisexual, public and private. You know that quote?

   9. DSDavid Senra13:37

      [laughs] Yeah.

   10. ATAlexander Taubman13:37

       If you're twice the chance of getting a date. Um, so we like to kinda keep an open mind. You know, if you, if you're open to twenty industries, you're more likely to find a great business and a, and a great, uh, 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 kinda like you know it when you see it. If there's a great business like Amex GBT with high nineties, you know, logo rete- customer logo retention, hundred plus percent kind of dollar retention with, uh, tremendous, you know, customer relationships with the best companies in the world, built, you know, average of fifteen-year relationship with their top, you know, couple hundred customers. Um, deep, deep embedded partnerships, uh, 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 wanna screw it up. We talk about that century of customer trust, but it really means something in, 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 two in the morning. Like, things have to work. Somebody's gotta be able to answer the phone and know what to do. It's an amazing business. You just kinda know when you see it.

   11. DSDavid Senra14:43

       So wait, was Amex your first entry into travel?

   12. ATAlexander Taubman14:46

       Yeah.

   13. DSDavid Senra14:47

       Okay.

   14. ATAlexander Taubman14:48

       We'd been building a thesis in that space for, for, 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, for reasons, you know, I'm happy to go into and-

   15. DSDavid Senra14:58

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

   16. ATAlexander Taubman15:01

       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 long-standing 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, uh, our friend Scott Wu obviously, like, is, 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, our, uh, co-founder, Rasmus Vismann, comes from, like, a data... He was just, like, with, with, uh, was the top, you know, computer science PhD at, at Oxford. He won the prize for the best thesis, and he's, like, amazing at building, uh, 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

5. 16:01 – 17:32

   Nexus and the AI platform behind Long Lake

   1. ATAlexander Taubman16:01

      a better experience?

   2. DSDavid Senra16:01

      Hold on. Let's not, let's not move on 'cause I know what Nexus is. The person listening might not. Explain what Nexus is.

   3. ATAlexander Taubman16:05

      Yeah. Yeah. So Nexus is our horizontal, uh, AI platform that we've been building, um, you know, across verticals, and so we've been investing. And p-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, ten, you know, fifteen different scaled industries allows you, I think, every single industry we go into, it makes Nexus better. We gain-- We add additional capabilities.

   4. DSDavid Senra16:36

      Why? Why does it make it better, better?

   5. ATAlexander Taubman16:37

      So as an example, it-- about eight- seventy, eighty percent of the infrastructure is shared across the verticals, and that's kind of like our, you know, it's our, uh, 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, um, 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, um, sort of, uh, agentic orchestration layer, things like that, that's reusable across all the industries. That last twenty or thirty percent, which is embedding Nexus into the workflows of the business, mapping the workflows, integrating with these different data sources, that is, uh, 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.

6. 17:32 – 20:36

   Put the engineers where the work happens

   1. DSDavid Senra17:32

      Hold on. This is a really important part too because, again, I hear other people talking 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.

   2. ATAlexander Taubman17:42

      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 seventy percent of the engineering team, but today is probably sitting with a team member in the field across, you know, fifteen or twenty states.

   3. DSDavid Senra17:55

      And they're working on that last twenty percent, correct?

   4. ATAlexander Taubman17:57

      Exactly.

   5. DSDavid Senra17:57

      Okay.

   6. ATAlexander Taubman17:57

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

   7. DSDavid Senra18:18

      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 a, 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, uh, Skunk Works," he's like, "It reads exactly like what SpaceX is doing."

   8. ATAlexander Taubman18:38

      Yeah.

   9. DSDavid Senra18:38

      These ideas are not new.

   10. ATAlexander Taubman18:39

       Yeah, 100%.

   11. DSDavid Senra18:39

       They're just used over, over and over again.

   12. ATAlexander Taubman18:41

       The other great motto that I love is, is, is, uh, on this point is, um, from Danaher, who's a big inspiration to us also, the Rails brothers, is they-their motto was, "Common sense rigorously applied."

   13. DSDavid Senra18:50

       Yeah, that's excellent.

   14. ATAlexander Taubman18:51

       And so if you ba... 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, and each different industry ha- 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, 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? Uh, w-we need to find a snow removal company." And so i-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. That email could take forty-five 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, you have a draft in your inbox to respond with an accurate, with a ninety-nine percent accurate, and then you can just edit it as the manager. So now instead of spending an hour, you spend five or ten minutes, you know, putting it in your own voice, and by the way, the voices are getting better and better now. We're-- 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. Turns out pretty much every business works a lot in email. Travel, for example, fifty-five percent 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 gonna day one have a huge impact in Amex GBT, and I could give you ten other examples of

7. 20:36 – 22:28

   Why own the businesses instead of selling software?

   1. ATAlexander Taubman20:36

      this.

   2. DSDavid Senra20:36

      Has anybody tried to buy Nexus as a separate tool?

   3. ATAlexander Taubman20:39

      You know, it's funny. We, we do. It's, [laughs] you know, we-- 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, to, to, to use Nexus?" And maybe for them, we would do it. But, uh, 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, 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 wanna 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., 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.

   4. DSDavid Senra21:41

      We've talked a bunch about all these other Founders episodes, and I love that your, part of your, uh, onboarding at Long Lake is listening to specific episodes of Founders, which I think obviously is [laughs] 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 program-problem. It's a human problem."

   5. ATAlexander Taubman22:11

      Yeah.

   6. DSDavid Senra22:11

      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.

   7. ATAlexander Taubman22:15

      Yeah.

   8. DSDavid Senra22:15

      It's like then I can't build a good business, uh, around that. And it's like, okay, so how do you get over the human problem? Well, you own the goddamn company. [laughs] You control the workflow.

   9. ATAlexander Taubman22:25

      It, it's interesting because I, I, there--

8. 22:28 – 25:24

   Build tools people want to use

   1. ATAlexander Taubman22:28

      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.

   2. DSDavid Senra22:37

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

   3. ATAlexander Taubman22:39

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

   4. DSDavid Senra22:50

      Wait, you explained this to me?

   5. ATAlexander Taubman22:51

      We're thirty thousand people working at-

   6. DSDavid Senra22:53

      You said your customer are your team members?

   7. ATAlexander Taubman22:55

      Yeah, we think of our team members, and we now have thirty thousand of them globally, as our customer.

   8. DSDavid Senra22:59

      Okay.

   9. ATAlexander Taubman22:59

      And so the, the, these, the whole idea is we want Nexus to be so magical-

   10. DSDavid Senra23:02

       Thirty thousand employees-

   11. ATAlexander Taubman23:03

       Yeah

   12. DSDavid Senra23:04

       ... in the business in general.

   13. ATAlexander Taubman23:04

       That's right. Mm-hmm.

   14. DSDavid Senra23:05

       Okay.

   15. ATAlexander Taubman23:06

       And we-

   16. DSDavid Senra23:06

       I have to always convert, I love you, but you're like an East Coast finance guy, [laughs] and I always have to convert the way you talk.

   17. ATAlexander Taubman23:12

       We think of them as partners, you know-

   18. DSDavid Senra23:13

       Yeah

   19. ATAlexander Taubman23:13

       ... design partners, and that's our customer. And so the whole idea is, um, 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-

   20. DSDavid Senra23:42

       And wait a minute. Hold on. Am I understanding this correctly? So you're, 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?

   21. ATAlexander Taubman23:52

       Mm-hmm.

   22. DSDavid Senra23:52

       Because you have elite, and we'll talk about how you got elite technical talent, too, right? My job is now fucking ninety percent better. That also protects you for retention.

   23. ATAlexander Taubman24:01

       A hundred percent.

   24. DSDavid Senra24:01

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

   25. ATAlexander Taubman24:04

       Yeah.

   26. DSDavid Senra24:04

       I'm gonna go over there-

   27. ATAlexander Taubman24:06

       And it would be horrible

   28. DSDavid Senra24:07

       Work ninety percent more?

   29. ATAlexander Taubman24:07

       Yeah. No, you don't wanna do that. That's, this is a big part of our vision too, is that we want-- we really wanna be a talent magnet. We wanna have-- We wanna be the best place to work in every industry that we operate in. And part of that is y-y-you if you can build people the best tools, make them more productive so they can make more money and have a, 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 thirty percent of work that's, you know, this manual road, responding to emails, data entry, da, da, da, da, da. What they wanna do is they wanna focus on getting more customers, understanding the, you know, helping the customers more, interacting more with them. You know, there, 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, uh, 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.

   30. DSDavid Senra25:00

       You're not going to.
9. 25:24 – 28:03

   A high bar for talent, acquisitions and technology

   1. ATAlexander Taubman25:24

      industries.

   2. DSDavid Senra25:24

      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, uh, what you were just telling me and my partner before we started recording, and it's just like you blew his mind 'cause he didn't even th-- you-- 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'll, we wanna 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 tal-talent in the world. And that's how I see the combination. That, like, everybody's like, "I wanna do what Long Lake does." Yeah, but you're not Alex, and you're not Zach. Am I wrong about this?

   3. ATAlexander Taubman26:02

      Well, thank you for saying that. We, we, we, we've got an amazing team. Uh, we go back a long ways. Uh, Zach and I first met at Goldman when, when he was a summer analyst. I was an analyst. He introduced, uh, me to Rasmus, our co-founder and CTO, who he was at, he was at Oxford with at the same time as, you know, I mentioned was top student there. The sort of team came together through network, and so, you know, uh, first twenty 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 sixty-- I mean, we're still small. At Long Lake level, we're only about fifty-five, fifty-six people now. We'll probably be, you know, closer to a hundred people by the end of the year. It really is a world-class team. It's, it, it, you know, it's I'd say ninety percent, uh, AI engineers and operations deployment folks, and then ten percent sort of, um, 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, uh, technology. You need to be able to buy great companies well, uh, 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, uh, you know, applied AI companies. And then you need, uh, change management operations. Because we were purpose-built and because we started with the big vision of we wanna really kinda help change the whole economy, I think we were able to attract, you know, much better people, and that's been, you know, that's been starting to compound now. And, uh, you know, we still, I think seventy-five percent 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, we, we hired three percent of applicants, basically. And we saw, I don't know, close to a thousand 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 and i-i-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 kinda what I think you need to make this work.

10. 28:03 – 36:40

    What his grandfather taught him about removing friction

    1. DSDavid Senra28:03

       What, uh, initially got you interested in finance to begin with?

    2. ATAlexander Taubman28:06

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

    3. DSDavid Senra28:14

       He essentially invented the strip mall. [chuckles]

    4. ATAlexander Taubman28:17

       Yeah, the, the shopping center. Yeah, yeah, yeah, exactly.

    5. DSDavid Senra28:19

       [laughs]

    6. ATAlexander Taubman28:19

       He didn't actually do strip malls. He-- Well, he did it probably earlier in his career, but he eventually did-

    7. DSDavid Senra28:22

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

    8. ATAlexander Taubman28:25

       Yeah.

    9. DSDavid Senra28:25

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

    10. ATAlexander Taubman28:28

        Yeah. So the concept, uh, by the way, it's, it's a, the, you know, it's a, it's a, it's a fun reference. Um, 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, he sort of a early pioneer of, uh, 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 the, is the entrance to the store. And you, the, 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, um, 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 wanna go in them.

    11. DSDavid Senra29:12

        [laughs]

    12. ATAlexander Taubman29:12

        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-

    13. DSDavid Senra29:18

        Yeah

    14. ATAlexander Taubman29:19

        ... you can't see, but th- that, that, you wanna walk through that.

    15. DSDavid Senra29:21

        'Cause even a step, uh, he, he broke it down almost like a, like a math equation.

    16. ATAlexander Taubman29:24

        Yes.

    17. DSDavid Senra29:24

        Like, even, like, half a step up would reduce it by, like, twenty... The people coming by, like, twenty percent.

    18. ATAlexander Taubman29:28

        Exactly. He did a lot of really creative things that, you know, be- I can tell you more about, is he was very innovative, and he always brought this kinda continuous improvement mindset, similar to, like, the Danaher Continuous Improvement concept, and honestly, it's all a big inspiration for me. You wanna 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, and all that. And actually, some of those principles, like, I think you can apply more generally. Like with technology, for example. We wanna make Nexus so magical and so easy to use that our team members just love it, and they can just use it. You wanna minimize threshold resistance on AI adopters.

    19. DSDavid Senra30:02

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

    20. ATAlexander Taubman30:08

        Yes.

    21. DSDavid Senra30:09

        When you were just talking about this, I just recorded this crazy, um, episode with Travis Kalanick from Uber. It was fucking crazy, sat exactly where you are, and we, we, we talked for hours. And he was breaking down in, like, minute detail about even, like, the, the, every single page you would see to Uber compared to, like, Lyft, and just, like, every single little thing. He's like, "There's a thousand things I had to optimize, that if you're just copying me, you're like, you copy what you see, but you don't understand the thinking behind it." And this is 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 twenty-five percent," or whatever.

    22. ATAlexander Taubman30:43

        By the way, I think it's very much the same with technology and, 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-

    23. DSDavid Senra30:54

        That's why my, that'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. Just like, no one wants to sit through that shit.

    24. ATAlexander Taubman31:01

        Yeah.

    25. DSDavid Senra31:01

        Like, I want th- I'm listening to your podcast so I can hear some thirty-second melody that you made. Like, no. This is not fu- um, this is not a concert, dude.

    26. ATAlexander Taubman31:08

        Yeah.

    27. DSDavid Senra31:08

        Like, get right to the point.

    28. ATAlexander Taubman31:09

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

    29. DSDavid Senra31:24

        I know, I, I dismissively called you an East Coast-

    30. ATAlexander Taubman31:26

        [laughs]
11. 36:40 – 41:01

    Learning capital allocation at Goldman Sachs and Oaktree

    1. DSDavid Senra36:40

       of it? 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, uh, 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 'cause 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 i- concept of capitalism, I just kind of fell in love with it, and capital allocation across industries. 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, e- down to equity, public and private, across all industries. So j- I just got tremendous exposure at a young age to all these different types of businesses and ended up w- you know, working on some really interesting investments there. Uh, learned a ton by sort of, uh, you know, not just observing but also, like, getting to, to manage risk at a young age, which was, which was a very unique experience. Young age is what? Early twenties? Yeah, I think I was, like, twenty-two, twenty-three. Okay. And actually, I had a great mentor there who I later partnered with and worked with at Oaktree, a guy called Patrick McCaaney, 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 and 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. Sweet. Then you go to Oaktree. 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- Did you think you were gonna found your own company, or you thought it was gonna be a fund? Like, what'd you think it was gonna be? 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, uh, actually, you know, as I... What I was gonna 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 have better cost capital, and you can have the best people and, and all that and- Hold on. Let's come back to Danaher- Yeah ... 'cause I, I do, I wanna hear about that, Danaher, which you and I- Yeah ... have talked about before, but also the other people that you guys look up to and you emulate. But you go to business school. Yeah. So I went to business school. I ended up interning. Uh, um, th- this is, like, a, I'm just going chronological order, but, uh, I ended up interning at a, at a holding company, uh, called Leucadia. So I was v- interested in holding companies, and then I spent some time, uh, hanging out with Josh at Thrive. So basically, I was always interested in technology and holding companies dating back fifteen 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, uh, the guy I mentioned, Patrick, and we worked directly with Howard Marks and Bru- Bruce Karsh, two legends of, 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, uh, credit businesses and helping out with a few things and doing... You know, we started several, uh, different products there and worked very closely with Howard and Bruce, um, and just had a tremendous amount of fun, learned a lot from them. But the whole time I, I, I knew I was not sort of, um, fully expressing myself. I, I, I eventually wanted to start something, but I didn't know what it was. On your own. Yeah. As a founder, even if it was gonna be a fund or investment company. I... Yeah, I think I just knew I wanted to do something entrepreneurial. I wanted to build something, um, 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 ten years, I started really thinking and, you know, brainstorming with some of the early co-founders of Long Lake, uh, who we've talked about, and, and, you know, the ChatGPT moment came out, and it just became very obvious to me,

12. 41:01 – 44:35

    Buying founder-owned businesses with permanent capital

    1. DSDavid Senra41:01

       like, this was, this was gonna be- But wait, where was the Taubman Capital? When did that happen in your life? Yeah. So when I was at Oaktree, um, you know, I mentioned, uh, you know, my dad and, and, and grandfather's business, and I was helping working with our family to build out Taubman 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 part investments i- in founder-owned companies, and we did, I think, close to fifty of them o- over that decade. So that's where you learned how to buy companies, do you think?

    2. ATAlexander Taubman41:29

       Yeah, it was a combination of stuff I learned at Oaktree and stuff I was doing with Taubman Capital, and Oaktree stuff was generally larger companies, public companies. Yeah, but the returns you had at Taubman 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 seventy percent IR or some shit like that, correct? It-- we had a very good run. We had a very good run. [laughs] Uh, but yeah, it was an eye-opening experience for me because what I realized is we, you know, um, you know, there's some remarkable businesses out there, and just because something is a small or mid-sized business doesn't mean it's a, it's a bad business. Actually, I mentioned that, you know, business in Minnesota we partner with that's been building all, you know, most of the schools in the entire state for the last like seven 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, to your point, we had a, a very successful run in bringing sort of permanent flexible capital, which was our own internal balance sheet, a long-term horizon, being comfortable and, not just comfortable, very, uh, encouraging of investing in growth. We don't, you know, we're not focused on short-term quarterly earnings. We're not over-leveraging 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, uh, things that they may not have. Like for us, it was helping them get growth resources, helping them get M&A resources, helping them have capital. You know, a, a lot of folks have built an amazing business, but they've 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, and consolidate that industry and become a bigger scale player and get, get the sort of industrial logic of that. And so we had a lot of fun. That was sort of nights and weekends for me, uh, over the ten years, you know, when I was working at Oaktree. So that was a very formative experience as well, 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. Passionate about capital allocation. Yeah. And then now you met the right people where you could actually build a unique partnership that very few people can match. 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, our mutual friend Rick, who, who, who's an extraordinary investor and been one of our biggest partners and, uh, Hemant at General Catalyst and Mark and, um, you know, it's, it's an amazing group of people, Elad Gil, and, you know, they, they, they've basically really pushed my thinking in a big way since the beginning. 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 kinda headstrong and, you know, less... Usually they'll listen, but they're running the ship, you know? Well, that's nice of him to say. I think feedback's a gift. We wanna 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 wanna get better every day, and I have a tremendous amount to learn. It's why I love your podcast, actually. I learn, you know, more from you probably than from, from almost anyone from, from your episodes. Um, and that's why I make everybody... I actually do. It's a true thing. I know this is true. Long Lake onboarding includes like half a dozen of your episodes.

13. 44:35 – 47:26

    How the Long Lake team came together

    1. ATAlexander Taubman44:35

       [laughs] That's just smart. Um, okay. So the... I know you were working on a few deals. You and Zach were working on a few deals together before you found Long Lake. Mm-hmm. You guys are talking about this thesis for what? Six months, a year? Like, how long does it actually take to? And then we gotta talk about the fucking crazy growth that you've had in the last three years. Yeah. So yeah, Zach and I, you know, we go way back. We started, you know, in, in, at Goldman, as I mentioned, and we'd stayed friends a long time and, you know, he, he, he's done some amazing things in technology, brought me into some of those things. That's an understatement. Um, and then- [laughs] And then he, you know, he, uh, he was very inspiring on that and, and then he was coming into some of our Taubman Capital deals and, you know, we, you know, buying... We, we, we did a funny thing where we, we ended up like we, we built one of the largest go-kart track companies in America. We bought-- we, we partnered with, uh, you know, twenty different locally owned go-kart tracks and created a, a platform. And so Zach invested in that deal with us and, you know, w- w- we, 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, and Cognition in the labs, and you could bring some of these, that type of world-class AI team to, you know, the Main Street American businesses and enterprises. And that was the idea. Was it that idea from the very beginning? It was that idea from the very beginning. So from that, the conversation just you guys start having about this to, "Shit, we're gonna start the company," to it's founded, is what's the timeframe there? I think it, 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 the, the... 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. Uh, you know, our bar for what we wanna build and what we wanna do keeps going up every day. Dude, I've been there from like the, I think day one. But this is like, when I heard about the Amex deal, I'm like, "Why am I not thinking like, like I know these are my friends. I'm not even thinking like..." I, I didn't even think it was a possibility [laughs] that you would do a six billion dollar valua-- or six billion dollar acquisition. And I was like, "Damn, these guys are really good." Our vision is really big. I mean, it sounded kinda crazy when we're a couple of years ago when we were saying, you know, we wanted to play at, we wanna be- But it's not just your vision, like your, you... The way you guys are executing is even better now. I think that's true. Like you're getting better. Yeah. You guys are getting... You were already super impressive, but you are literally getting better. Yeah, I do think we're getting much better. This is pa- partly why I value feedback from some of our smart friends and, and some of our investors is we wanna get better every day, and I do think, I do think it's

14. 47:26 – 49:28

    The best partners make you more ambitious

    1. ATAlexander Taubman47:26

       true. Oh, wait, can we talk about the story? Uh-

    2. DSDavid Senra47:29

       You guys were thinking about like a, a few acquisitions, and we don't have 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?" [laughing]

    3. ATAlexander Taubman47:41

       [laughing] Exactly. Sometimes we like to say, you know, I think the, the, 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 kinda lofty. But now that we're operating in fifteen percent of the services TAM, and, you know, with tens of thousands of, 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, uh, some of our earliest, you know, uh, founding partners to, to leave their, you know, um, sexy jobs in technology. Like I, I, 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 'cause 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 wanna join and be part of, uh, 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 a-- 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 forty companies across five industries. Like we've built a, a process. We built a playbook. We have the Nexus platform, which we can redeploy. 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 Amex GBT, like who should it be? Like it, it, it should be us. That's kind of how we, we, we think about it. And frankly, you know, we're thinking there could be other big things we can do. We're not gonna stop, obviously. We wanna keep doing this for the next fifty years.

15. 49:28 – 53:32

    More than $4 billion in projected revenue

    1. DSDavid Senra49:28

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

    2. ATAlexander Taubman49:30

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

    3. DSDavid Senra49:33

       We don't need to.

    4. ATAlexander Taubman49:34

       You'll get the first exclusive at, at some point. Um, but we-- you know, I can tell you that including, you know, Amex GBT's big business and the scale of our other businesses was, is also compounding and, and getting meaningful. And so, you know, if you combine, you know, we're expecting to do over four billion of revenue next year. Um, you know, it's amazing revenue base. It's very stable, you know, a hundred percent dollar retention type business. Um, you know, I mentioned, you know, we have a lot of employees now, uh, globally and, you know, we're, we're, we're very profitable, as you highlighted, because our strategy is to buy established profitable businesses that already are making twenty, twenty-five percent plus, you know, uh, 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 gonna be generating enough cash flow on our existing assets that we could compound, you know, just on internal reinvestment for, for decades to come. But-

    5. DSDavid Senra50:23

       Yeah, but you have a line of people out the door.

    6. ATAlexander Taubman50:25

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

    7. DSDavid Senra50:41

       I was at dinner last night with Rick and Zach and, you know, your, your main partners, and, uh, they made the good point where, you know, a lot of founders fuck up because they, they, um, optimize for valuation. And, and, you know, Zach and Rick made the point, it's just like, well, if we're gonna be working together for twenty years, like you should be-- this is a long-term partnership.

    8. ATAlexander Taubman50:58

       Mm-hmm.

    9. DSDavid Senra50:59

       Like, you can't just... This is not a bidding contest. It's just like, who can you work with?

    10. ATAlexander Taubman51:03

        Yeah.

    11. DSDavid Senra51:03

        And who actually, to your point, like not only do you get along with, you actually wanna do life with, 'cause 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, doesn't, 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?

    12. ATAlexander Taubman51:18

        Yeah. No, I, I... Listen, I a hundred percent 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 fifty years in, in some of their, uh, 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.

    13. DSDavid Senra51:39

        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, 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." M-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 for, with. Like fucking they backed me, and they, the, the, what at the time was the biggest deal in business podcast is the partnership we had. This is like just because they had intuition that this is fucking valuable. You think I'm gonna exchange and destroy that fucking relationship for money?

    14. ATAlexander Taubman52:25

        Yeah.

    15. DSDavid Senra52:25

        Come on.

    16. ATAlexander Taubman52:26

        Exactly. I agree. I mean, the, the... it's one of the things we're super grateful for. When we first met with, uh, with Hemant about this, and he was our, you know, GC led our first round of, uh, outside capital, gave us our first hundred 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.

    17. DSDavid Senra52:42

        [laughing]

    18. ATAlexander Taubman52:43

        And, uh, 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 be-before we even believed in ourselves. And that's such a gift that we'll always be grateful for. And, you know, I just wanna 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 wanna keep building that. I do think like 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 the, to our thinking and, and all that. But yes, it's, it's about much more than capital. It's, 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, to move faster and think bigger.

16. 53:32 – 54:23

    Why going public could expand Long Lake’s ambition

    1. DSDavid Senra53:32

       Does Long Lake have to be public?

    2. ATAlexander Taubman53:34

       It doesn't have to be public, no.

    3. DSDavid Senra53:36

       Do you think it will be?

    4. ATAlexander Taubman53:36

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

    5. DSDavid Senra53:40

       Why? Why is that maximally ambitious?

    6. ATAlexander Taubman53:41

       Because, because I think we'll have ultimately deeper and lower cost of capital, lo-lower cost capital and, and, and just, you know, public markets are, 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, 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.

17. 54:23 – 55:57

    Henry Singleton and staying flexible

    1. DSDavid Senra54:23

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

    2. ATAlexander Taubman54:26

       Yeah, I mean, he's probably like of all the holding companies, one, one of the people that's inspired us the most. I mean, first of all, he was a math genius. He was on the Putnam team at MIT. He, he was in office of special services. I mean, you, you, you did, you know, you, you, you've read, you, you sent me the book, I think-

    3. DSDavid Senra54:41

       Yeah.

    4. ATAlexander Taubman54:41

       Distant Forces, which is a great book. One thing that people don't understand is Singleton compounded his earnings per share like over forty percent a year for twenty, twenty-five 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, he didn't like detailed strategic plans. He preferred to stay flexible.

    5. DSDavid Senra55:04

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

    6. ATAlexander Taubman55:07

       It's a great quote. We're subject to all these outside forces-

    7. DSDavid Senra55:09

       Yes

    8. ATAlexander Taubman55:09

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

18. 55:57 – 57:57

    John Malone and the businesses that will endure

    1. DSDavid Senra55:57

       What about John Malone? Anything from him?

    2. ATAlexander Taubman55:59

       Yeah, I mean, he was amazing. I was studying him at Oaktree, 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, 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, uh, you know, in our investment process and our capital allocation process. We want to always understand why is a business good business, because we do plan on do- you know, you talk about permanent capital. We want to be doing this for decades. And so it's actually very hard to think out twenty, thirty years on what's gonna still be a great business, especially now.

    3. DSDavid Senra56:46

       Yeah, especially now. [chuckles]

    4. ATAlexander Taubman56:47

       So first principles, thinking about why a business is gonna be great post AGI is, is really important. It's maybe the most important thing in capital allocation right now. And st- I think stock selection, stock, it's like a, 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 twenty years between the best assets and mediocre assets in terms of, you know, a post AGI. You think about how industries are gonna shift.

    5. DSDavid Senra57:13

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

    6. ATAlexander Taubman57:18

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

    7. DSDavid Senra57:22

       Yeah.

    8. ATAlexander Taubman57:22

       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.

    9. DSDavid Senra57:46

       Yeah.

    10. ATAlexander Taubman57:47

        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

19. 57:57 – 1:00:13

    Why Long Lake doesn’t plan to sell

    1. ATAlexander Taubman57:57

       or not.

    2. DSDavid Senra57:57

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

    3. ATAlexander Taubman58:02

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

    4. DSDavid Senra58:06

       Yeah, of course.

    5. ATAlexander Taubman58:07

       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, not 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 wanna let it compound for a long period of time.

    6. DSDavid Senra58:32

       So wait, 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?

    7. ATAlexander Taubman58:39

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

    8. DSDavid Senra58:47

       Okay, I'm on a run right now. So Thorsen, there's a bunch of these episodes aren't even out. Uh, Thorsen from Housing, he sat in the same chair, and he's just like, he's, he's legitimately mission-driven. He's just like, "I'm building a great European defense company because..." He's already rich. Like he's rich when he started the company, and he's just like, uh, 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 push him on this a lot because billions are getting thrown in that guy's face.

    9. ATAlexander Taubman59:12

       Yeah.

    10. DSDavid Senra59:13

        And he's like, "Nope, not doing it." Uh, he, he has this great line. He's like, "Oh, we'd sell if it was the maximally ambitious thing to do."

    11. ATAlexander Taubman59:18

        Yeah.

    12. DSDavid Senra59:18

        Which is obviously-

    13. ATAlexander Taubman59:19

        It's a great line.

    14. DSDavid Senra59:19

        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, uh, 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. Um, and then I just talked to Zach Dell. And I was like, "Is this the last business?" 'Cause what I love about Karim and Eric from Ramp, I asked them both the question, like, "This is our last business."

    15. ATAlexander Taubman59:40

        Yeah.

    16. DSDavid Senra59:40

        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, uh, 'cause, you know, he wants to build something like you said. He's relatively young. He's like, "I want to work on this for fifty years and, and go see how far I can take this thing." And he goes, "And do you think I'm doing this for a paycheck?" [laughs] 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 the point of 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.

20. 1:00:13 – 1:02:09

    Could Long Lake become a trillion-dollar company?

    1. ATAlexander Taubman1:00:13

       I think we can, yeah. If you just think about, uh, 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 twenty 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 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, uh, is, is staggering.

    2. DSDavid Senra1:01:10

       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, 'cause it was, it was something relatively stealth, even though you guys were killing and buying everything and do- and, you know, doing everything. For you to now, you know... I, I know for a fact and firsthand knowledge that one of the ten best entrepreneurs in the world, like, you got their attention when you did the Amex deal, and they were like, "Hey, w-w-what, what's going on with Long Lake, and how do I get involved in this?" Uh, 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.

    3. ATAlexander Taubman1:01:44

       Thank you so much. Honored to be here.

    4. DSDavid Senra1:01:45

       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've obsessively read over four hundred 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. [electronic sound]

Episode duration: 1:02:09