Elad Gil is betting on AI to reshape traditional businesses. The renowned VC is focusing on using AI to scale mature companies, particularly in the legal and professional services sectors. His plan? Acquire established firms, boost efficiency with AI, increase profit margins, and then roll up other businesses.
Gil has been pioneering this approach for three years. He emphasizes the power of generative AI in transforming repetitive tasks: “It just seems so obvious,” he stated.
“If you can ‘effectively transform some of those repetitive tasks into software,’ you can increase the margins dramatically and create very different types of businesses.”
He’s already backed two companies pursuing this method. One is Enam Co., a year-old firm focused on productivity, valued over $300 million.
Gil aims to go beyond previous tech-enabled roll-ups. He dismissed past attempts as superficial. “It was kind of like a thin veneer painted on to increase the valuation of the company,” he said. “In the case of AI, you can actually radically change the cost structure of these things.”
The competition is heating up. Other firms, like Khosla Ventures, are eyeing similar AI roll-ups.
Gil’s track record includes early investments in Airbnb and Coinbase. However, he acknowledges the difficulty of assembling the right teams for successful roll-ups, highlighting the need for strong technologists alongside experienced private equity players.
“I’ve met ‘maybe two dozen of these teams’ so far… not because they weren’t amazing, but because they still need to sort some things out.”
He’s optimistic about his current investments. Among them are Harvey, which provides large language models for law firms, and Abridge, an AI firm improving healthcare documentation.
Despite his confidence, Gil warns that the landscape is still evolving. “I don’t mean to paint the picture that the game is over,” he said, hinting at ongoing potential for emerging winners.
“I just think it’s a really fun period of time, because so much change is happening, and there’s just a ton to do,” he remarked.
Gil’s hands-on approach in the AI space remains evident, and he’s excited for what’s next in this transformative era. More insights from his conversation will feature in the upcoming StrictlyVC Download podcast.
