Don't Sell Software, Sell Transformation

Will Quist from Slow Ventures’s latest piece on “Don’t Default to a Software Company”, he suggested that “If your product actually creates real, outsized economic leverage, the real question isn’t ‘how do I sell this?’ but ‘what kind of company do I need to become to capture that value?‘

AI is top of mind for main street businesses, but most struggle to develop greenfield solutions and derive value from out-of-the-box AI applications due to market structural constraints and a lack of expertise in AI transformation. 

PropTech is an excellent example of this. Property management has long been a “slow adopter” of technology, not because of cultural resistance, but because the industry’s decentralized operating model actively suppresses the adoption of software at scale.

EliseAI understood this early and began investing in something far more difficult: building in-house tra

EliseAI was founded in 2017 by Minna Song and Tony Stoyanov. It is an AI-native platform that helps property managers streamline leasing, resident engagement, maintenance, and other operational workflows across the multifamily housing sector

The company began with an MVP of an AI agent to automate after-hours renter inquiries via SMS, email, phone, and web chat. Since then, it has expanded its suite of 9 product solutions to cover more of the property management lifecycle.

In August 2025, EliseAI raised a $250M Series E led by a16z Growth, with participation from Bessemer Venture Partners, Sapphire Ventures, and Navitas Capital. At the time of the raise, the company served over 600 owners and operators, including a majority of the top 50 multifamily housing operators, collectively managing more than 4.7 million rental units.

For decades, the industry relied on a decentralized model where each property manager oversaw their own P&Ls for specific buildings, deterring them from leveraging technology due to the variability of workflows and customers. As a result, they lock them into a rigid 1:100 staffing ratio (one staff per 100 units)

EliseAI knew that to embed AI into their core operations, they needed scale, which requires a change in the way these property managers are managed. 

To drive this shift, EliseAI has led its Go-To-Market (GTM) strategy with the "business case for centralization," even naming their annual customer conference the “EliseAI Centralization Summit” to align the industry around a reimagined operating model. This transformation relies on AI as the "engine" that makes centralization scalable, automating high-volume tasks so that specialized offsite teams can support the portfolio at scale

In practice, centralization does not eliminate onsite staff; it redefines their roles within the "North Star" operating model, which combines automation, centralized specialization, and lean onsite teams. By delegating 80–90% of prospect communications and routine administrative work (e.g., collections and renewals) to AI and offsite specialists, the on-site teams can focus on high-touch activities such as welcoming new residents and handling nuanced, in-person issues.

From the operator’s perspective, it addresses one of the industry’s most persistent problems: a 44% average annual employee turnover rate. By offloading “grunt work,” EliseAI customers have seen employee retention increase by ~47%.

Financially, the model resets unit economics. A single centralized leasing agent can support over 3,000 units, reducing onsite payroll costs by 10–20%, which translates to a margin uplift that appeals to owners and investors.

EliseAI built in-house consulting teams that run months-long transformation programs. These teams span technology implementation, organizational redesign, day-to-day operational changes, and change management across stakeholders from asset owners to REITs to property managers.

EliseAI’s dedicated consulting team offers five key services: 

For 1-2, EliseAI focuses on the transformation from a legacy world to a centralized model with new ways of working between the on-site team, central team and AI. It serves as an integrator between all stakeholders and ensures their technology is customized to their nuanced preferences and organizational design. 

For 3-5, EliseAI focuses on overcoming fictions by aligning stakeholders with different objectives.  Elise recognizes the complexities within property managers, owners (e.g., REIT, GPs) and capital providers (i.e., LPs), and established hands-on service offerings to advocate for AI adoptions, recognizing the nuanced dynamics between these stakeholders. 

This is particularly powerful because most software company cultures are very focused on design & engineering, whereas at EliseAI, customer success has played an equally pivotal role in accelerating adoption from property managers and owners. 

There will be an increasing premium on durability over scalability in software applications, as software development becomes cheaper. The winners of the vertical AI application layer will not merely ship better software; they will redesign how work gets done and embed themselves with their customers to realize the value

The real edge from AI applications emerges from an organization’s willingness to embed deeply, own outcomes, and drive organizational redesign to enable adoption.

By building in-house transformation teams that run multi-month programs, which no other software companies are willing to do, they help customers migrate to a centralized operating model while creating a structural lock-in for their products

Once the transformation is completed, it creates room for substantial data and workflow gravity for the platform. It replaces legacy systems as the new system of record and execution layer for key workflows across the residential lifecycle

Similar to Salesforce and Oracle, with a network of consulting and implementation partners, embedding transformation as part of the product reduces implementation risk, builds shared economic incentives, and accelerates salescycle.

For decades, the multifamily industry treated decentralization as a law of nature. Buildings were too different, so local managers had to own everything. Operators and owners accepted the 1:100 staffing ratio as a structural constraint.

The rise of AI solutions has been proven to challenge this belief. When software can handle variability across language, channel, timing, and intent, centralization is now a feasible operating model for most property managers to consider

Many industries that appear “too fragmented” or “too complex” are constrained less by structural limits than by legacy systems/bias for the status quo. Vertical AI companies that identify the gaps and build transformation capabilities will create new markets.

In enterprise software, adoption rarely fails because the product doesn’t work. It fails because incentives are misaligned. The buyer is not the user. The user is not the economic owner. And the economic owner often doesn’t feel the operational pain.

The AI companies that win will not stop at asking, “Does this model work?”
They will ask, “Who needs to believe in this, and what do they need to see?”

In multifamily, those answers diverge sharply. In multifamily, the answers diverge sharply: managers dread disruption and turnover spikes, owners fixate on NOI/margin resets, investors underwrite risk around assumptions, and boards demand narratives.

EliseAI built explicit services to close those gaps: ownership pitches, fee-manager audits, underwriting/investor decks, board-level storytelling. In verticals with complex value chains and decision dynamics, product-led growth is insufficient for scaling enterprise solutions, and institutional buy-in will be key. 

EliseAI is an excellent example where they didn’t default themselves to a software company, but to invest heavily in services for all stakeholders in multi-family to transform their operating model, and they became the engine of industry redesign. In slow-water verticals with high fragmentation and misaligned incentives, that's the path to structural control points that survive model commoditization and deliver enduring multiples.

Disclaimer: The information contained in this article is not investment advice. Investors should do their own due diligence before investing in any securities discussed in this article. Views expressed in posts and other content linked on this website are my own