Renowned venture capitalist Elad Gil is setting his sights on a new frontier in artificial intelligence: using AI to transform and scale traditional businesses through rollups. With a track record of early investments in successful AI startups, Gil is now focusing on acquiring mature, people-intensive companies and leveraging AI to dramatically improve their efficiency and profitability.
Gil’s strategy involves identifying opportunities in sectors like law firms and professional services, where AI can automate repetitive tasks and significantly boost margins. By owning these businesses outright, Gil believes he can rapidly implement AI solutions and use the increased cash flow to acquire similar companies at a premium, creating a snowball effect of growth and profitability.
“If you can effectively transform repetitive tasks into software, you can increase the margins dramatically and create very different types of businesses,” Gil explained in a recent interview. He added that owning the assets allows for much faster transformation than simply selling software as a vendor.
This approach represents a new twist on technology-enabled rollups, which Gil argues often failed to truly leverage technology in the past. With AI, he sees the potential for radical changes in cost structures and operational efficiency.
Gil has already backed two companies pursuing this strategy, including Enam Co., a worker productivity-focused startup valued at over $300 million. While he remains tight-lipped about specifics, Gil emphasized the importance of finding the right team composition, ideally blending strong technologists with private equity expertise.
As more venture capital firms consider similar AI rollup strategies, competition in this space is likely to intensify. However, Gil’s track record of successful early bets on companies like Airbnb, Coinbase, and Stripe suggests he may be onto something big once again.
Gil’s enthusiasm for AI extends beyond just investment opportunities. He and his team actively experiment with various AI tools and technologies, allowing them to spot trends and potential winners early. This hands-on approach has led Gil to believe that clear market leaders are emerging in sectors like legal tech, healthcare AI, and customer support.
While Gil is careful not to declare the game over, he notes that the landscape of likely winners is becoming more defined. “I don’t mean to paint the picture that the game is over or that things are done,” he said. “I think it’s more that there were two dozen companies that all seemed kind of interesting, and maybe now there’s three or four of them [per vertical].”
As AI continues to reshape industries and create new opportunities, Gil’s latest bet on AI-powered rollups could represent the next wave of transformation in the business world. With his proven eye for emerging trends and deep understanding of AI technology, many in Silicon Valley will be watching closely to see how this strategy unfolds.
