McKinsey

The tactical pivot from SaaS to full-stack ownership For years, the venture capital playbook dictated a narrow path: build a software layer, sell it to incumbents, and hope for adoption. Dan Lifshits, co-founder of Dwelly, argues that this era of pure B2B SaaS is entering a structural slowdown. The resistance to change within traditional industries is too high, and the distribution costs for targeting fragmented customer bases—like individual landlords—are prohibitive. Instead of trying to sell software to resistant legacy players, Dwelly represents a new breed of "full-stack" startups that acquire the incumbents themselves. This "AI-rollup" model is a strategic response to the customer acquisition cost (CAC) death spiral. In the property management world, landlords are notoriously difficult to target. They hide behind shell companies or remain offline, making organic digital marketing ineffective. By acquiring existing letting agencies, Dwelly effectively buys its customers in bulk. This isn't just about financial engineering; it is about taking total control of the service delivery. When you own the business, you don't have to convince a client to use your AI tool; you simply rewire the internal operations to be AI-native from day one. Re-engineering the target operating model Dan Lifshits is quick to distinguish Dwelly from traditional private equity rollups. While PE firms often focus on financial consolidation while keeping local operations intact, Dwelly views acquisitions as a "forward-deployed" engineering challenge. To truly understand the friction points in property management, the founding team famously relocated to Hull to sit side-by-side with their first acquired agency. This proximity allowed them to map the "messy" reality of property management—a world of leaky toilets, disgruntled tenants, and endless phone calls—and translate it into a unified digital workflow. The goal is to create a single, opinionated way of working. Traditional agencies are often "mom-and-pop" shops with idiosyncratic processes. Dwelly analyzes these varied methods, identifies the most efficient path through data, and then forces a migration to a centralized, tech-first operating model. This level of standardization is the prerequisite for meaningful AI implementation. You cannot automate a chaotic process; you must first simplify and unify the workflow before the algorithms can take over the heavy lifting of communication and project management. Conversational AI as the new operational backbone In the property sector, the product is communication. Most of a property manager's day is spent as a high-stakes switchboard operator, triangulating information between landlords, tenants, and contractors. Dwelly applies conversational AI to these specific, high-friction workflows to drive radical efficiency gains. For instance, by using AI to handle initial tenant inquiries and qualification, the platform can increase the number of validated offers per property from the industry average of two up to ten. This doesn't just save time; it improves the outcome for the landlord by widening the applicant pool and reducing vacancy periods. Maintenance is another area where the AI-native approach is slashing traditional timelines. The average time to resolve a repair in the UK sits at a staggering 50 days. By automating the "conversational project management" required to coordinate a plumber, a tenant, and a landlord's approval, Dwelly has already brought that figure down to 30 days, with a target of under 10. The AI acts as a tireless facilitator, moving the process from one state to the next without human intervention, ensuring that nothing falls through the cracks of a crowded inbox. The triad of skills required for the rollup era Building an AI-rollup is significantly more complex than launching a standard tech startup because it requires merging two fundamentally different business cultures: the high-speed iteration of a software house and the capital-intensive rigour of an M&A firm. Dan Lifshits identifies three non-negotiable skill sets for any team attempting this model. First, you need a relentless operator—someone who understands the grit of labor-intensive services, a role shaped by his experience scaling Gett to a billion-dollar business. Second, the team must have deep technical expertise in "applied AI"—not just building foundational models, but knowing how to integrate them into messy, real-world service workflows. Third, and perhaps most critically, the business requires a sophisticated capital strategist. Because this model relies on acquiring revenue-generating assets, the founders must be adept at balancing equity fundraising from VCs like General%20Catalyst with debt facilities and M&A execution. This is not a playground for solo founders or first-time entrepreneurs; it is a high-stakes game that demands experienced leaders who can roll up their sleeves and navigate complex legal and financial structures. Investor skepticism and the 2030 vision Despite the current hype, the journey to funding Dwelly was fraught with rejection. In 2023, many VCs were wary of the "balance sheet heavy" nature of rollups, preferring the clean margins of pure software. Dan Lifshits recalls over 200 rejections before finding partners who understood the long-term vision. The tide is turning because the math is becoming undeniable. Large VC funds, which now control the vast majority of global capital, need to deploy massive checks into high-conviction bets. Rollups provide a perfect vehicle for this capital because they can absorb significant investment to acquire market share while building a technological moat. Looking toward 2030, the prediction is clear: the next wave of decacorns will not be the "wrappers" on top of existing platforms, but the companies that rewired entire traditional industries from the inside out. By combining the stability of recurring service revenue with the infinite scalability of AI, firms like Dwelly are positioning themselves to dominate the massive, fragmented service markets that have remained untouched by the first two waves of the internet. The winners will be those who stop trying to sell the future to the past and simply buy the past to build the future.