How Global AI Internet Freedom Fund Raised $20M to Back Amazon Sellers with Proprietary AI (Interview with CEO Simon Gillett)

Host Introduction and Guest Background

Nathan Latka

00:00Hello, everyone. My guest today is Simon Gillett after careers in financial markets and academia. He started to buy and build businesses and today has had an IRR of 27%. He built sustainable incomes in eight countries and is now living in Virginia with his wife and daughter. He's English with a dual US and British citizenship. He's an alumni of the University College of London, University of Edinburgh, and the University of Exeter, along with University of Cambridge, and

00:23is the past recipient of the Engineering and Physical Sciences Research Council scholarship for artificial intelligence. He's now building a company called GAIIFF, gaiiff.com. Simon, you ready to take

Simon Gillett

00:34>> us to the top? Let's do it, Nathan.

What Is GAIIFF and What Does It Do

Nathan Latka

00:36Okay. So what is GAIIFF doing? What are working on?

Simon Gillett

00:39>> Well, GAIIFF is short for the Global AI Internet Freedom Fund. So really, we're a micro private equity fund, and we built an API in partnership with our cloud provider to allow Amazon sellers to do demand forecasting, to do pricing analytics. And it's called ATM, actually, the product of the Global AI Internet Freedom Fund. The fund is a separate entity, as you can imagine, but we do use this sourcing and diligencing tool called ATM to find our

01:08>> and grow our portfolio after investment.

Ownership of the ATM Analytics Tool

Nathan Latka

01:11Okay. But but to be clear, are do you own the reporting analytics tool as well?

Simon Gillett

01:17>> Yeah, yeah, absolutely. It's entirely proprietary.

Nathan Latka

01:20And it's lead gen for your private equity. If you see someone playing with the analytics, you write a nice little email and say, we'd love to buy you.

Simon Gillett

01:27>> Yeah, I mean, the actual process, this tends to be quite conversational, I think. Whether it's email or whether it's more inbound direct sourcing, but it's a sourcing and diligencing tool and it uses the same technology as amazon.com. So that obviously tells you our partnership is pretty strong with the with the cloud provider. And then we get these extremely warm leads into the into the fund.

Nathan Latka

01:53Yep. Now I understand the research side of things based off your background and history. I don't understand the Amazon side of things. What got you turned on to sort of Amazon businesses?

Simon Gillett

02:03>> Well, know, I've been doing AI for about twenty years. You mentioned the scholarship I got. By by the way, it's Edinburgh, but you never ask an Englishman to to to correct pronunciation to an American. So forgive me for that.

Nathan Latka

02:14Forgive me for getting it wrong.

Simon Gillett

02:17>> You're good. So I've been doing it for a while. But what's changed in the in the period that I've been doing it is the move to cloud. So now instead of having these big boxes that we used to do AI in when I first started, it was all shifted up to the cloud. So the emphasis is more on the bandwidth rather than the compute. As long as you can write the algorithm, you can shift the compute

02:39>> up to the cloud. And it's way more efficient now, so you can do it with any of the big cloud providers. And we just happen to have chosen AWS.

Nathan Latka

02:47And so what is the tool that an AWS seller would plug into that you guys own? Like, what's the URL?

How Amazon Sellers Access ATM

Simon Gillett

02:55>> Yeah. So it's actually on the amazonsellercentral.com, and you need to already have had an account as a merchant with amazon.com to be able to sell there. But the tool itself has been approved for any of the global marketplaces in which Amazon operates. I think it's something like 17 now. And so like, for example, amazon.com obviously covers The United States marketplace. And if you're a merchant in The United States marketplace, you can use your login for that

03:24>> to access ATM. If Canadian you're

03:28>> marketplace merchant, then you can use your amazon.ca login to ATM and to get your forecasting from ATM with

Nathan Latka

03:37the So ATM same ATM's the name of your tool, product demand, financial planning, resource planning, but there's not a site for it. You have to access it via Amazon's back end via partnership portal or something?

Simon Gillett

03:46>> Yeah, it's an API. We're built on the API and it's a partnership portal. You can also access it via our website at gaiiff.com, gaiiff.com.

Nathan Latka

03:57Yeah, where is that? I'm on the site right now. I'm on the page. I don't see a sign up. It says for a free funding assessment register now. Is that the onboarding?

Simon Gillett

04:05>> Yep, that's the I

Nathan Latka

04:08>> see.

04:08Okay. So once we all connect here, then you can start giving a reporting chart to do those three things you just mentioned, product planning, research, etcetera.

ATM Is Free and Serves as Lead Generation

Simon Gillett

04:15>> Yep. And as you said, Nathan, it's entirely free. So we don't charge for the forecasting. It's simply also a business analytics tool that is a warm lead gen for us.

Nathan Latka

04:26I was going say, well, you know what they say? When anything is free, you are the product, which in this case, let's talk about sort of how you're understanding and understand the data. Right? Do you anonymize all this stuff when someone connects it? How do you treat data that's connected to your platform?

Simon Gillett

04:42>> Yeah. I mean, think of it service based, right? So what rather than productized, I mean, we don't charge SaaS subscriptions like time period, time bound access payments for ATM. But then we do enable the merchants to get greater analytic insights into the business. So that helps with demand forecasting. And whether it goes into a funding conversation down the road later is a later conversation. But that ability to do financial planning and resource planning with the forecasting

05:18>> technique that amazon.com uses does attract quite sophisticated merchants who want to forecast their sales revenue. Want to do their business owners, manage expenses and understand the business' s performances. And this is entirely free and delivered within one day. Training period of the AI and the modeling that happens to take place to split the training data into the models does take some period, but we say that we can deliver that forecast within one day.

Merchants Connected and GMV Analyzed

Nathan Latka

05:46And Simon, how many merchants are connected?

Simon Gillett

05:48>> I can't say entirely because I said we have a partnership, but I'll give you a range if you if you insist.

Nathan Latka

05:55Yeah. I insist.

Simon Gillett

05:58>> Okay. Well, it's somewhere between fifty and five hundred.

Nathan Latka

06:02Okay. Got it. So between fifty and five hundred merchants connected. Is that a representative sample size for you to do some of this modeling you're talking about?

Simon Gillett

06:09>> Yeah, well, so the modeling is unique by account, right? So the way that all these works, these reports are entirely unique and customized to each different account. There is no one model. There's a model that's trained based on every single order history, and that financial planning plan is unique to every single merchant. There is no one size fits all what ATM does.

Nathan Latka

06:35Okay. And of the 50 to 500 merchants connected, about how much GMV flows through your platform? How much are you analyzing on a yearly basis?

Simon Gillett

06:43>> Again, I can only give you a range, but it's in the 9 figures.

The Fund: IRR, Track Record, and Deployment

Nathan Latka

06:48Okay, got it. So 100,000,000 to a billion, somewhere in that range. Talk to me about where you really make money, which is the actual fund so much so that in your bio, that's the number you chose to share, which was the 27% IRR. When did you first put your first dollar behind an Amazon business? What year?

Simon Gillett

07:06>> Yeah. So the IRR figure comes from track record. It's not to do with the present fund. The present fund is still in its deployment stage. There is no IRR from the fund.

Nathan Latka

07:16What is the current fund and when did you raise it?

Fund Close Date and Structure

Simon Gillett

07:19>> It closed at the end of last year, 12/31/2020. And it has a three year period. The IRR comes from track record from a previous business that I exited as a franchise in the Northern Virginia area. Actually, in Loudoun, which I know you know well, Nathan.

07:37>> My hometown there, yeah, hometown.

Nathan Latka

07:40What did so you closed a new fund in December. How much did you close it for?

Simon Gillett

07:47>> I can't say because the LPs that the fund is not something I can talk about at all, unfortunately.

Nathan Latka

07:53Okay.

07:56In your bio, what you talked about was an IRR. An IRR is I mean, your your your the story you're telling is the story of the fund. Your SaaS product is free. There's nothing to talk about there. The whole model here is get behind and use the fund to get into Amazon businesses. So true or false, you have not actually deployed any of the fund yet. You are not behind, and you have not purchased equity in

08:14any Amazon business today.

Simon Gillett

08:16>> Oh, we are. Yeah, we do. We actually monitor several hundred thousand SKUs with our cloud, and we have deployed capital. But the actual the history of the 27% IRR comes from a business that I ran previously in

First Portfolio Acquisition and Investment Thesis

Nathan Latka

08:31Ignore that. I'm trying to understand how the fund's going operate. So when you say you're tracking millions of SKUs, that doesn't mean anything in terms of you using your fund dollars that you just closed to get behind the business. So what are you going to do with the fund? What's the thesis?

Simon Gillett

08:43>> It's to invest in Amazon merchants. So we're able to use the forecasting to make better investment decisions. That's what ATM does for us.

Nathan Latka

08:56Yep. That makes a lot of sense. That makes a lot of sense. There's a lot of analogies to CircleUp. Does this in the CPG space? Clearbanc does this in the CPG space, SaaS space. Know, we're doing this as Founderpath in the SaaS space. So I totally understand that. Have you actually written any checks yet into Amazon merchants?

Simon Gillett

09:10>> Yes.

Nathan Latka

09:11Okay, got it. How many different merchants have you invested in?

Simon Gillett

09:14>> One.

Nathan Latka

09:15Okay, one, got it. Talk to me, that's the biggest deal. That's the hardest step to take, right? Walk me through getting that deal done.

Simon Gillett

09:22>> Yeah, I mean, in terms of the actual acquisition process, sales and purchase is very plain vanilla. It goes the typical route that 95 percent of M&A deals go. There's a letter of intent. There is You

Nathan Latka

09:36buy it outright or you're buying like 5% of the business?

Simon Gillett

09:40>> The one we bought is bought outright, but actually what we're looking for is partnerships with merchants that want to grow and especially merchants that want to grow internationally.

Nathan Latka

09:49Yep, that makes sense. Got it. So you bought this one and then was there a specific Can you name the company yet? Is it public?

Simon Gillett

09:56>> There is a brand that's called Territree, t e r r a t e e.

Nathan Latka

10:02Say that one more time, t e r r?

Simon Gillett

10:04>> T e r r a t r e e.

Nathan Latka

10:07Got it. And how did was there was that a sector you like? Were you targeting like a specific kind of product on Amazon? Or was it just you looked at the metrics and said, is a winner, I want to get in?

Simon Gillett

10:16>> Yeah, this absolutely a winner. It does have a lot of industrial supplies in terms of the category of what's being sold for that brand. But we're actually category agnostic.

10:29>> Just territory is in the business Planners industrial supply

Nathan Latka

10:33like moleskin, bakery boxes, post, but within ESG focused sort of deal, right? So it's economically focused or ecologically focused, I should say, sustainability.

Simon Gillett

10:44>> Yeah. There is an element of that that is branding. So what we do, we have a team, offshore team that actually is constantly researching and developing what the best way to increment margin growth, to grow incremental margins on our platform.

Nathan Latka

11:00How many are this? How many are researchers?

Team Size and Operations

Simon Gillett

11:04>> We have we have really one researcher, and we have one developer, and we have a small operations team of two people.

Nathan Latka

11:12And you're bootstrapping all this with your past exit money. Is that accurate?

Simon Gillett

11:16>> Well, apart from the fund. Yeah.

Nathan Latka

11:18Yeah, yeah. Well, how do you make money on the fund? What are charging two and 20?

Simon Gillett

11:23>> Yep.

Nathan Latka

11:24Got it. Okay. And when did you write your first sign of code for ATM? What year?

ATM Development Timeline

Simon Gillett

11:29>> ATM was written mostly Q1 twenty twenty.

Nathan Latka

11:33Okay, got it. Q1 twenty twenty. Young works, you'll have to come back on in six months and tell us about all your other deals and you'll have the fund announced at that point and everything, right?

Simon Gillett

11:42>> The fund is announced and it's just, I mean, the fund is no longer open to investment.

Nathan Latka

11:49Well, that's not what I'm at. But you told me here you can't talk about the fund at all. So now you're telling me

Simon Gillett

11:53>> I can't talk about the fund economics. Yeah.

Fund Size: Setting Out to Raise $20M

Nathan Latka

11:56Well, you just told me two and twenty. So we touched on it already. Did you announce the size of the fund? The reason I'm asking is because there are Amazon sellers listening right now that might think you're a great fit. But if it's a million dollar fund, it's gonna attract a different audience than if it's a $100,000,000,000 fund.

Simon Gillett

12:13>> Yeah. But I mean, at this point, it's a closed fund. And like to the marketing for the fund is over.

Nathan Latka

12:19No. I'm not trying to get more people to invest in your fund, Simon. I'm trying to understand how much you'd raise. What was the total size of the fund?

Simon Gillett

12:27>> Well, we have an agreement with the LPs that we don't discuss that at this point now.

Nathan Latka

12:31Don't you have to file, doc?

Simon Gillett

12:32>> I'll tell you we set out to raise 20,000,000.

Nathan Latka

12:35Okay.

Simon Gillett

12:35>> And we closed that easily.

Nathan Latka

12:37Okay. So you broke 20,000,000. Got it. So That's an RACI pipeline. If folks if folks are listening that run an Amazon brand like Territory, right, and they're doing a million, 2,000,000 revenue, they know that you have the potential if they connect to ATM and you like their metrics to actually do a deal with them. That's that's what was trying to get to. I'm to I'm trying to help you here.

Simon Gillett

12:52>> Absolutely. You're a great guy and you do I love it. I love your shows, Nathan. The energy you bring is very

Nathan Latka

12:58Oh, you listen.

Simon Gillett

12:59>> You knew what to expect.

13:01>> Yeah. Yeah. This is good.

Nathan Latka

13:03Good. Good. Good. Well, hey. Listen. We're rooting for you. You're in a hot space. Obviously, there's big companies like Thrasio and others playing in this Amazon roll up space. But if you truly have unique proprietary algorithms on the reporting side, maybe you can find gems where they don't see anything.

Competitive Landscape and Algorithm Value

Simon Gillett

13:15>> We've had the discussions. We're aware of those. And absolutely, the CEO of

13:24>> Thrasio is a connection. But yeah, obviously, we don't share our proprietary algorithm because

13:33>> potential for profit that it brings us.

Nathan Latka

13:36Yeah. No. Josh is a great guy. And again, you have an algorithm and it works, and I think you would define works while you have build years of history and the

Simon Gillett

13:42>> company don't think he's the CEO, though, is he?

Nathan Latka

13:45He's a co founder and co CEO, I believe. But but point point being is your algorithm is only valuable if you can, you know, use it for five years and then say, look, we saw this early signal. No one else saw it. We acted on it. We put money behind it, and then we just sold it for a big month. One, hey, LPs. You made a bunch of money. So we'll track it closely, Simon. Come back

14:03on in six months, and I appreciate you taking us to the top.

Simon Gillett

14:06>> Totally cool, Nathan. It's great to chat.

Nathan Latka

14:09One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday one

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