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(uplifting music) [INTERVIEWER] Orlando, welcome back to GSB.
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[ORLANDO BRAVO] Let's go. (laughs) Let's go.
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(audience applauds) Man, look at all you guys out there. This is great.
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It reminds me of many, many years ago when I was having so much fun here.
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Made my best friends, just incredible to see all of you, really.
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It feels just like coming back home.
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[INTERVIEWER] And we're so lucky to have you here, who's been in our shoes, to come and join us here for the first 'View from the Top' of a year.
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We wanted to start by bringing some of the memories back from the time you were a student here back in '97.
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(audience laughing) [ORLANDO BRAVO] JJ, what did you do? Charlotte?
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(audience laughs) [INTERVIEWER] Who knew this guy would go and build one of the most successful private equity firms in the world?
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[ORLANDO BRAVO] Yeah, you know this is funny.
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That guy right there, Mason, my best friend from business school.
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One time we were in Vegas, and I do believe that my class started that Vegas tradition that has become now super fancy.
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We would go in a small group.
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He was brushing his teeth in the morning and goes, "Do you think any of us would ever like start a company or do something?"
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And he told me the other day that we were one of them, so that's good. I think I'll take it.
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[INTERVIEWER] He'll take it.
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Well, I'm thinking a lot of students here today are going to relate to your story, maybe even in ways they don't expect.
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Here is something I relate to.
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At 15, I moved to the US as an international student.
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At 15, you moved to Florida from a small coastal town in Puerto Rico.
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What was that like for you?
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[ORLANDO BRAVO] Well, you're from Lithuania, we relate to that. [INTERVIEWER] Yeah.
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[ORLANDO BRAVO] It was scary.
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It's not only, I'm not only from Puerto Rico But I'm from a small town on the west coast of Puerto Rico.
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So if you wanna do play tennis look for a better life.
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You have to drive four hours just across the island to get to San Juan and then that's a city and you get that opportunity. But it was scary.
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My family, we were all very, very close, but it also was really special.
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I thought I was being handed like an opportunity of a lifetime, I was just 15 playing tennis, but it was very meaningful for me.
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[INTERVIEWER] And in Florida, you went to Nick Bollettieri Tennis Academy.
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It's known to be one of the most prestigious tennis academies in the world.
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What did tennis teach you about life?
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[ORLANDO BRAVO] Humility.
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You talk about that tennis academy and I found out pretty quickly that I wasn't that good.
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(laughter) But I did private equity, so that's okay.
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(audience laughs) I'll take it.
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You know, that's really an important part of who I am, how I think about business, and how I lead.
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For example, right, in tennis, when you get on the court with somebody, it doesn't matter what your ranking is, you could be ranked higher, you could be ranked lower, the other player might have more coaching, this or that, but you have to try to figure out how to win that match.
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And I had some of the most amazing experiences when I was a little kid, being paid to go to Venezuela to play in an international tournament in Latin America.
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And you notice that you're as equally nervous as your opponent.
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You notice that you may have the same style, that you kind of play in the same way, and that equalizer is so, so important.
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Like today we're pretty big in tech, but we still need to win that deal, even if we're much bigger, even if we've had good returns in the past, even if we have a great team, and that other competitor is equal to us. And that's great.
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And also I mentioned it's really humbling because there's always somebody better than you, and it's okay not to always be the best at everything and the best, you just try your hardest and you do your own thing.
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And that really has, those two things have really stuck with me.
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[INTERVIEWER] You left the tennis courts and joined investment banking in the early '90s.
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What surprised you the most about your first few years on Wall Street?
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[ORLANDO BRAVO] The opportunity.
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I was blown away, and I think many of you have done investment banking, you're going into entrepreneurship or private equity, but I was gonna go to Stanford Law School.
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I was lucky to have gotten in, and 'cause I really didn't know what I wanted to do after undergrad.
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And Morgan Stanley gave me a job, and Stanford was the only school that deferred me, which was just incredible.
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I remember calling Harvard, 'cause at the time that was my first choice to go to law school, and they said, "Ah, you gotta apply next year.
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You have to compare to the next class."
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And all this serious stuff.
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And Stanford, when I called just admissions, thank you, they said, "You're welcome to come here anytime you want."
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I was like, "Wow, West Coast." That's so true, right? So chill.
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(laughs) And I was like, "That's where I wanna go."
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But I wanted this opportunity, I get to work in Wall Street, this is unbelievable.
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Really early on I noticed and it was 1992, so it was really early for private equity, but they put me on a deal and there was this group trying to buy this company that didn't own a company, that didn't have a big company in the space, they didn't have anything, they just had money.
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And I was incredibly impressed about the American opportunity that without anything people will trust you, give you money, and with that you can buy a multinational corporation.
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I thought that was just the most ridiculous opportunity there was.
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And they seemed to have a lot of money too, so I said, maybe I'll try that."
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[INTERVIEWER] You'll try that. Yeah.
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You come to Stanford after two years of Morgan Stanley, but not only to do JD, also MBA.
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Can you share more about what were your biggest takeaways from the time you spent on this campus?
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[ORLANDO BRAVO] Well, I was the luckiest.
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I met Gabriel, and she and I had Charlotte, who is here. Sorry to embarrass you.
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My oldest, Charlotte's 23.
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She's a senior at Stanford.
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So proud of you, Charlotte.
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And without me being at Stanford, I wouldn't have met Gabriel.
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So we had Charlotte and Xander, and now have other wonderful kids.
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Met her, met my best friends, had time to really explore what I enjoyed and what I was really like, was inspired by my classmates was really loved by my classmates.
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You know, you saw the pictures.
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Those are my best friends still today.
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We've kind of traveled life together, kids, challenges, work you name it, right?
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That's kind of my support group. I don't know.
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It was really what gave me the true opportunity to do what I do and explore the world and the way I do it now.
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[INTERVIEWER] And your journey in private equity also started here.
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You landed a summer internship at a private equity firm nearby here in Menlo Park.
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And for many of us here, when we go on our summer internships after the first year, we hope that two things will happen.
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First, we'll love our job, and second, we'll get the return offer to come back after graduation.
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What was that experience like for you? [ORLANDO BRAVO] Wow.
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(audience laughing) Nobody has asked me about that summer job and not getting the return offer.
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(audience laughing) I thought you were going to jump to the GOAT of private equity, Karl Thoma, but we'll talk about that in a second.
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But that was a GSB alum Alex Seaver, actually a very, very good tennis player and incredible investor.
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He was affiliated with TPG at the time, right?
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He lived here in Palo Alto.
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Now he lives in Connecticut.
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We kept in touch with him and I didn't get a return offer. I don't know what I did.
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(laughing) [INTERVIEWER] When you realized that-- [ORLANDO BRAVO] But you know what the truth is? [INTERVIEWER] Yeah.
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[ORLANDO BRAVO] Is that then when Karl Thoma gave me an offer, he gave me an offer. And I didn't take it.
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(laughing) [INTERVIEWER] But that time, when you realized that the offer wasn't coming, what got you to the mindset to keep going, to not give up on private equity? [ORLANDO BRAVO] I know.
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[INTERVIEWER] And what would you say to someone in this room who might be facing that kind of rejection right now?
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[ORLANDO BRAVO] You got to do your thing.
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I sent out 500 random resumes.
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And at the time, not a lot of people used the internet, so you had to mail some of them because they weren't, you know, up to speed on this stuff.
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But I would send them to random firms. I would cold call.
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And, you know, I think the lesson is, you don't need many offers. You just need one.
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And it has to be the right one.
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And it wasn't until the end, I think I had two weeks left in graduation, that Karl Thoma decided to open up an office in San Francisco.
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He was splitting from GTCR, the firm he founded, and he interviewed a few people, and I got that job.
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I just would say, keep going.
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Absolutely stay the course. It will come.
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It may not come at this time, it will come a little later, but it will absolutely be there.
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[INTERVIEWER] So let's go to that persistence and you going to Chicago, meeting Karl and the team, and the job is almost there.
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But then comes San Francisco dinner that almost cost you that job offer. What happened?
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[ORLANDO BRAVO] How do you know this?
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(laughing) (audience laughing) This is a, no wonder you're GSB all the studios.
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Nobody has asked me that. (laughs) So Karl.
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(laughs) Does anybody here know Karl Thoma? Right, of course.
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My colleague, my partner at Thoma Bravo, you know Karl.
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He kind of did the same thing to me that he did to you when he was interviewing you.
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But Karl is GSB, one of the greatest investors of all time has the highest ethical principles, these old school values of who you partner with, who you work with in management.
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The best thing that happened to me is I was lucky that I had him as a mentor.
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And I never created anything new, I just listened well.
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I give him credit for listening. That's the key.
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So, Karl comes to San Francisco to close my offer.
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We're having this dinner, and I said, "You know what?"
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I'm going to, I'm going to ask him for a carry.
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You know, this offer just includes salary and bonus.
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I need some carried interest.
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Isn't that what private equity is about?
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There isn't any carry here.
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So I asked him, "Hey, how about a point of carry, half a point of carry?"
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And he kind of listened, he didn't say much, and he called his colleague and said, "Withdraw that offer."
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"I don't think this is a good fit.
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You got to earn your way through it."
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And I said, "No, no, no, I'll take it."
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And I had like three sleepless nights, and he did not withdraw the offer. So that's what happened.
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[INTERVIEWER] Luckily, you started in their San Francisco office right after graduation, but in the middle of a dot-com boom.
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Can you share more about how did that go?
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[ORLANDO BRAVO] Not well.
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And there may be parallels now.
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You never know, maybe 50-50 at best.
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But Karl gave me a lot of responsibility and authority early.
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That's the way he leads and that's the way he taught me how to lead.
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We do that with our colleagues now.
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I love an associate to call, meet a company, and try to see if she or he can buy it, and learn the business by, or mentor by doing the business or learning the business.
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And I started investing in IT service companies that were providing services to a lot of dot-com firms.
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That was the hot thing at the time, and I was in San Francisco.
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I did three deals and when the dot-com bubble burst, two out of the three went to zero.
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We couldn't recover any money.
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And one, we got like 50% of the money back.
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So it was an absolute disaster.
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And I thought I had worked so hard.
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You started when I was 15 in tennis, even before, right? [INTERVIEWER] Mm-hmm.
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[ORLANDO BRAVO] Little by little, trying to do everything perfect and the school and the thing, just like all of you have done.
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And I'm like, "Now that I made it into private equity, I'm gonna get fired."
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And he, in his 70th birthday, Carl said, you know, 'cause I was there.
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It was a great event some years ago, and he said, "Remember, I was about to fire you." And I go, "I know."
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(interviewer laughs) I can s-- I could sense it.
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I knew that something like that was coming.
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And what allowed me to relax a little bit is I, I had just had Charlotte.
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I spoke about that at commencement.
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And I was like, you know, in the grand scheme of things, nothing else matters.
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So relax, let's see what happens.
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And Carl gave me another chance. [INTERVIEWER] Mm-hmm.
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[ORLANDO BRAVO] He sat me down and said, "I'm gonna give you one more chance.
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Just don't take those types of risks.
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Those are not the type of risks that our firm as a private equity firm, as a buyout firm, takes.
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And you can make mistakes, but don't make similar mistakes."
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And he gave me a lot of rope to try again And I knew that was gonna be my last chance with him, but at least there was one.
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[INTERVIEWER] Well, most people who survive that, afterwards, and that feedback would have kept it safe, would not go and pitch something new.
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Instead, you go back to Carl and present him a new idea at that time, software buyouts. You were 30 years old.
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How did you have guts to do that?
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[ORLANDO BRAVO] I had nothing else to do.
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No, I mean-- Nothing had worked. I had to try something.
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It was a super entrepreneurial firm, and I always, for some reason wanted to always do something a little different.
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You know, one of the things about New York, it's my favorite city in the world.
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I love New York City, but one of the things about that job is leaving the job, I felt like I was walking with 100,000 other people that were doing the same thing day to day.
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Still now, I walk into a lot of those offices 'cause we do business with many of the groups and I see these huge places with everybody dressed the same way and doing the same thing.
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So I wanted, I always wanted to do something a little different.
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I wasn't creative enough to be like 180 degrees different.
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Uh, but I thought, look, software at the time, our, our viewpoint was, to Carl, you can buy it super cheap.
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He liked that, a value investor.
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You could buy recurring revenue in software less expensively than every other category GTCR had done and was successful at.
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Outdoor advertising, radio media, a number of them.
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The challenge was that no company at the time really was making money in software, similar to now.
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There's been no improvement in the operating capability of those businesses.
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I'm here with all the GSB, with the best of the best in leadership and management.
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And in almost 30 years in the software space, now a $1.
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3 trillion economy in revenue, the average publicly traded software company loses money just like it did when we started in software.
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So we kinda, we were very open with Carl that we have no expertise in running one of these companies.
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We'd never even done a deal, but he allowed us to take the risk to do the first one and try to see if we could restructure the business to make it a profitable buyout business. And he said, "Go do it."
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And it was only a $50 million deal, so you gotta start really small.
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It's not like we were trying to take the whole risk right there.
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And then I met my second mentor, operationally, Marcel Bernard, who's the best operator I'll ever meet in my whole life.
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He ran Motorola, different divisions of Motorola in the '70s, when that was an incredible school of management.
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And then he kinda taught us what to do and we followed him at it.
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If that first deal wouldn't have worked, right? That would've been over.
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So our first deal allowed us to do a second and a third and a fourth and so on.
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[INTERVIEWER] You mentioned those two mentors, Carl and Marcel having a big influence on how the story played out.
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For the people in the room who also want to attract that kind of mentorship, getting people invest the time and energy in them and their success or to make people want to bet on their ideas.
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What do you think they should be doing?
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[ORLANDO BRAVO] Mentors are all around you and people that have had success, it's because somebody else taught 'em something.
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Marcel Bernard had this great quote, 'Everybody needs somebody else to learn from.'
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That's why our model in private equity was to work with existing management.
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Restructure the company, change the way it's being operated, but actually do it with the existing people of the business.
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So anybody that's self-aware knows that the reason they've had luck is because somebody brought 'em there.
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Somebody took 'em to a place they didn't know they could find or they could see.
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Now, you have to get that at the job day to day.
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Like I sometimes get calls from talented young adults and say, 'Yo, can you mentor me in something?'
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It's, 'Of course, I will.' But it's ad hoc.
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Once a month I get a call.
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I don't have enough context of what that individual really wants to do and the challenges day to day.
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You have them all at work, at your workplaces, unless you're starting a company from scratch.
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Maybe a board member can be extremely helpful engaging day to day.
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But those people are all over.
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The key is also finding somebody that shares your values.
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I always thought that among everybody in private equity, 'No, I wanna listen to that guy.'
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I looked up to Carl so much that it allowed me to absorb more what he was saying.
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[INTERVIEWER] And in 2005, at the age of 35, you became a named partner. That's not just a title.
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It's Carl saying, 'I trust you enough to share my name.'
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What did that mean to you?
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[ORLANDO BRAVO] Oh, it was incredible and a five-year turnaround from getting fired to (audience laughing) getting a, 'Okay, now they cannot fire me.'
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(audience laughing) That was the key.
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That was really, you know, incredible.
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I don't think too much about the name of our firm.
19:01
You know, it was just the legacy of how it was.
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You know, GTCR, they named it like that, they named Thoma Cressey like that, they added me, et cetera.
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But I really, we as partners, I have many equal partners in the firm and we run the business as a partnership and as a private partnership, and I don't think anybody's too worried about that now, but for me, it was great when it happened. [INTERVIEWER] Yeah.
19:23
And a few years later, the firm's name changed again and became what it is today, Thoma Bravo.
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At that time, you had around one billion in assets under management and today, it's closer to 200 million. That's 200X.
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Through that period of such extraordinary growth, through those 17 years, what changed the most for you personally?
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[ORLANDO BRAVO] Not much.
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We do, you know, that example that I gave you, one deal at a time, our first deal was 50.
20:01
Our second we bought VECTORsgi, that was 75 million.
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Our third deal, we bought Datatel for 250 million, a bit of a jump, and that was a great deal.
20:10
Then we bought SonicWall for 550 million our first cybersecurity buy and a company here in Silicon Valley, which we hadn't done before, so we were really afraid of turnover when we made these changes and when That was a wonderful experience.
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Then we moved to buying companies for a billion.
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We bought three in a row, two of them here in Silicon Valley and those worked.
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And we bought CompuWare for 2. 2.
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So it was this trajectory.
20:34
We haven't changed that much.
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We still have to get the money, win the deal, and improve the deal.
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Just the numbers have gotten bigger and since we've done okay we have a bigger following of people that now, allows us to buy the jewel.
20:51
See, now we're in a place we've never been before.
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We can buy the number one software company in so many different areas and the opportunity for that, for the next generation of Thoma Bravo is ridiculous.
21:04
Because before, we had to buy a niche player and try to make work of it.
21:08
Now we can maybe drive these companies, we're close to it, to 50% margin and 20% growth and maybe create the next 50, $75 billion market caps.
21:19
It's just amazing, but the tactics and the philosophy around it have remained the same and we have remained with our feet on the ground, not levitating.
21:28
I am extremely hands-on like I was before.
21:32
You talk about mentorship, I love to get a call from an associate to talk about something or a deal and I reach out to them.
21:40
They're probably going, 'Why is this guy calling me all the time?'
21:43
Does he not have confidence?
21:45
You know, all the people doing models at work, I kind of creep behind them like a super-- You could see.
21:52
And I'm legitimately interested in what they're looking at and how they're thinking about the business.
21:57
[INTERVIEWER] Well, without a doubt, you reached the peak business-wise quite early in your career.
22:03
But personally, everything changed for you in September 2017 when you got a call from Puerto Rico. What happened?
22:14
[ORLANDO BRAVO] So I was traveling with Jennifer James. Remember JJ?
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She's our chief operating officer.
22:20
We were coming back from Tokyo and Hurricane Maria had hit Puerto Rico when we were leaving Tokyo.
22:29
When we land, I tried to call family and friends and I could reach no one and it's like, 'This must be pretty bad.'
22:36
And my brother, who's very close to different communities in the island a reporter called him and said, 'Hey, there's a shelter next to my hometown with 35 people that have two-day supply of food and water."
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I said, 'This is unbelievable.'
22:51
(crowd murmurs) Sorry, I was-- [BACKGROUND] What?
22:58
[ORLANDO BRAVO] I-- I get super emotional because he said, "If we don't do anything about it--" That was the feeling.
23:06
Nobody's gonna do anything about it.
23:09
So we said, "Hey, we'll go there and we'll work it out. We'll see you in a day."
23:13
I told her, "We will leave and we'll see you in a day.
23:16
We'll land at this airport, really close to the place, and we will help you out."
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And we landed, and the people were there.
23:23
They had brought all these trucks.
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They got the food, the water, whatever they needed to hold them over for four or five more days until we figured things out and that worked out.
23:32
And then other communities would come, and we would do the same And then we started developing all these distribution systems in Fort Lauderdale, Florida, 'cause it was, it was manageable to do it from there.
23:42
It was much closer than coming from San Francisco with a bunch of supplies.
23:45
And we started this huge relief operation all over the island, and FEMA didn't get there till, like, two months till after we were there.
23:55
It was incredible, and I always like thank the GSB for that risk-taking and get out there and do something different.
24:02
I didn't know anything about disaster relief or hurricane relief or anything like that.
24:07
We just did it, and it worked.
24:09
The nice thing is, I did have a background in entrepreneurship.
24:12
You can be entrepreneurial. Let's solve the problem. Let's get it done.
24:15
And I think in the process we were able to hold together some communities that though otherwise would have been in trouble.
24:21
[BACKGROUND] But you didn't stop just at really relief.
24:24
[ORLANDO BRAVO] And Charlotte went with me on that first trip here, remember that? That was crazy, okay?
24:30
[BACKGROUND] You didn't stop just at the relief and help. You kept going.
24:37
What was the intention behind the Bravo Family Foundation and to create the opportunity in the island for the long run?
24:44
[ORLANDO BRAVO] I was going to the island every weekend, every four or five days, whatever, working there with communities.
24:52
And I met so many good people.
24:55
Like, it reminded me of the side of Puerto Rico that is incredible.
25:00
People that were educated, talented, salespeople, a lot of salespeople that couldn't work for months because they didn't have any electricity, right?
25:06
You can't call customers, and they're all commission-based, 100%, so they didn't have any other income, and I said, "That's isolating, that's totally unfair."
25:16
So we started, six years ago, the permanent programs that we have in Puerto Rico and the, the center of it is entrepreneurship-- Is our Rising Entrepreneurs Program.
25:27
We've now have launched over 100 companies in Puerto Rico.
25:30
We have a bunch of people from Thoma Bravo involved in those companies and one-on-one mentorship.
25:35
CEOs from our companies go there.
25:37
We give them free capital, free education.
25:39
We've taken all the playbook from our firm and applied it to how you build a business because they are, they can't raise any outside money, so you gotta get profitable very quickly and do the kind of things that we try to do with bigger companies.
25:52
Leadership, and that program, I really, really believe it's setting up an ecosystem in Puerto Rico that will entirely change the outcome for so many young adults.
26:03
We have paired up with a high school program that we have where we have now two-thirds of the municipalities in Puerto Rico, those kids from public schools participate in those programs, and the kind of hope that I see and the kind of way that we take those kids off the street, off of just playing video games, now true opportunity.
26:21
They think about solving problems of today, problems of their communities.
26:24
It's incredibly uplifting and, you know, coming back, it's so tied to what we do.
26:30
At Thoma Bravo, we try to help a really big company that's super innovative and not making any money become also a great business by doing it with the existing people.
26:39
When you see, when you try to help these entrepreneurs that have very little resources, you know, if you can do that, you can certainly do it at a billion-dollar company in Silicon Valley.
26:49
This stuff is easy, so it gives you also a lot of hope for your business.
26:53
[INTERVIEWER] Well, it's undeniable the impact you had on people in Puerto Rico, multiplied because of that long-term mindset.
27:03
And I wanna talk more about that, but in the context of private equity.
27:09
I hear a lot of my classmates here at GSB say that today private equity is too crowded, that the golden era is over, and that it's almost impossible to build the next Thoma Bravo or become the next Orlando Bravo.
27:25
Where do you think the critics are right?
27:27
What's generally harder today?
27:30
[ORLANDO BRAVO] This is much easier today.
27:31
(audience laughing) I believe some of you in this room that will choose that industry as a career, you stay with it, you will build a firm much bigger than Thoma Bravo and better.
27:48
The next generation's always better and you're some generations below me, but it's always better than the prior. It's not even close. The industry's tiny.
27:59
We feel ourselves that we're just getting started.
28:02
I feel that I've been training with my team of partners for 30 years to now get the opportunity that I just spoke about. This is new.
28:09
This is tiny versus the public market and other forms of ownership.
28:14
When I was interviewing for a job, one of those many 500 jobs that I did not get, I met the head of a private equity firm, very large at the time, and that person in that interview told me, 'Private equity's taken.'
28:26
And I've mentioned that before in, in some other conversations, "Private equity's taken.
28:31
Uh, there's not much for young people to do in the business." That was 1997. Come on.
28:40
Now our firm is much bigger than that firm.
28:42
I kind of look at that all the time.
28:45
It makes me feel pretty good when I'm down And we have a lot of portfolio problems.
28:49
But it's gonna be the same thing.
28:50
There is no substitute for somebody being able to buy a corporation, having full control of it, partnering with great leaders, solving problems.
29:03
As Marcel Bernard would say, "Every business problem can be solved.
29:05
Health is another matter."
29:07
And creating an entity that people thought was impossible to create.
29:11
That opportunity for creativity, value creation, only exists when you can buy the whole company, not a piece of paper, not pieces of that company, not credit in that company, not public stocks, absolutely nothing else.
29:24
So I'm, I'm a firm believer it just requires people to stay humble, keep their feet on the ground, be practical, and focus on the business, not on anything else.
29:35
We would not have gotten into software if we were listening to the word at the time.
29:41
Venture capitalists would say, "These companies that you're addressing are too old and new VC companies will put them out of business for sure."
29:50
That was a scary comment from people that had done really well in VC, really good VCs that I highly respect.
29:56
The big buyout firms at the time were saying, "You're crazy to get into tech and software because that is too risky."
30:02
Both of those were extremely general comments.
30:05
When we would go into a company and look at all their files one by one, customer one, customer two, customer three, when we would sit there in their support center listening to all the calls that were going, all their salespeople that were working on the system, we would say, "This is an incredible business.
30:21
What I am I missing, what are they talking about?"
30:25
Now, when you look at today with AI, some people are doubting software.
30:31
Of course, you can read an article that says, "Well, maybe the stock will do this and that."
30:35
Theoretically that makes sense.
30:37
But when you go to a corporate environment and know how people work, clearly, it is a huge tailwind.
30:44
But you just have to do the work.
30:46
You can't be scared of it, you can't fall with whatever else everybody's saying.
30:51
It's a place where you could do your own thing, that's the key.
30:54
[INTERVIEWER] That's the key.
30:56
Looking ahead, when you think about the next generation of investors, entrepreneurs, builders who are with us here today in this room, what's the one lesson you hope they take away from your journey?
31:12
[ORLANDO BRAVO] Can I give you two? [INTERVIEWER] Go ahead.
31:16
[ORLANDO BRAVO] Do your thing. Do your own thing.
31:18
There's a lot of pressure, and we even face it now.
31:21
We have all this capital, why don't we just go off and build all these AI data centers, and just people are making money on that stuff, or do this, do that.
31:28
There's a lot of pressure to do things where others that you highly respect say, "Yeah, you're doing the right thing."
31:35
Or the great job to get, or the type of company to form now, do the work, focus on your business, focus on you, and do your thing.
31:46
That will pay huge, huge dividends, will make everything very, very clear.
31:51
And the second piece is, and you spoke about it with challenges of today, look, it won't be linear.
31:56
We just walked through my good luck and how it wasn't linear, it was terrible in some places.
32:03
It won't be linear, but you have to stay positive, because all of you, if you apply to it, and if you want to do it, you will build things that were much bigger and better than what anybody else had done before.
32:13
Just don't be intimidated by it.
32:15
If you look at the end result, then you might not want to focus on it.
32:20
Just focus on step by step and stay super positive in your journey.
32:25
[INTERVIEWER] Orlando, we have a few students who submitted a couple of questions. Let's turn to them.
32:33
[ABDULLAH ALMUTLAGH] Hi, Orlando.
32:34
Thank you for being with us here today.
32:35
My name is Abdullah Almutlagh, and I'm an MBA too.
32:39
You are actually one of the reasons why I chose to come to the GSB, and you even made an appearance in my Why Stanford essay based on a meeting we had in '21.
32:48
My question is about fundraising.
32:49
Despite a pretty challenging LB fundraising environment, Thoma Bravo has consistently exceeded its fundraise targets.
32:57
In a world where every GB claims top quartile performance and mark-to-market figures are difficult to trust, I'm curious if there are any lessons or qualities you took away from your time at the GSB that you bring to your LP conversations that help differentiate Thoma Bravo further?
33:11
[ORLANDO BRAVO] So, Carl, Thoma, when we were starting Thoma Bravo 1.
33:14
0, which we called Thoma Bravo 9 cause we tried to promote as much as we could that we have been around for a while.
33:22
(audience laughing) I was doing all these presentations, one PowerPoint after the other, 'We're gonna position ourselves as this and this and that and that.'
33:33
And he said, 'Orlando, stop.'
33:35
He said, "In private equity, the only thing that matters is returns.
33:41
Investors have incredible choices of where to put their money." I'm like, 'Oh, okay.'
33:46
And we were getting turned down a lot by LPs at the time, and they were giving us all kinds of different excuses.
33:53
One, I was walking down the street in New York, and I called him and said, 'Hey, when are you coming into the fund?'
33:58
He said, 'We're not gonna be doing the fund.' I said, 'How come?'
34:01
He goes, 'Because your numbers are not good enough.'
34:06
Wow, what a–- Okay, note to self, my numbers have to be good to get some money.
34:11
(audience laughing) And I promise you that that's why we're step by step and deal by deal right now.
34:16
So we have had, you know, good enough numbers to have our base of customers stay with us and stay the course.
34:26
So you have to have a certain level of performance.
34:30
And there are other great performers out there.
34:32
But then the second thing, and this is what Jennifer James does so well, is we really attend to the customer.
34:39
We know in our partner what they like, what they don't like, how their family is, who makes the decision.
34:46
How does that organization make the decision?
34:48
If you're gonna try to sell something, one person that decides, two people, is this a group decision?
34:54
Who do we need to talk to here?
34:55
And we know each customer, do they buy from the top?
34:58
Does private equity buy here?
35:00
And I see my peers making a bunch of mistakes.
35:03
Some people go straight to the top because they have that access, and then the person asks the head of private equity, 'What do you think of these guys?'
35:09
And they go, 'No, I have somebody else.' And that's us.
35:11
(laughing) Or we try to do, like that, there is getting the money, that one third I say in private equity, get the money, improve the deal, and sell the deal.
35:21
But getting the money is a really, really important skill of attention, right?
35:26
Right after this, I'm headed out to Hong Kong, seeing, seeing some of our customers there, being very, very close 'cause there are other ways that you can add value to them.
35:34
Co-invest, when they have an issue with AI, how quickly do you have their back in front of their boards?
35:38
So many things, it's a kind of a day-to-day thing.
35:41
And finally, Burt, I have to give you a lot of credit.
35:44
And please take his class if you haven't done it. You know, communication.
35:49
At first, as we were getting a little bigger, I was imitating the goats of private equity from the '70s and '80s.
36:01
"this is the way you talk, and that's the way I have to seem, and this is what I have to pretend to be."
36:06
And Burt said, "you're funny, you're Puerto Rican, you don't take yourself seriously, be yourself."
36:11
And I think that allows me to connect pretty decently and Jennifer James with other people.
36:17
One of the best heads of sales that we've had at one of our companies, at Dynatrace, he said, "Remember, people don't want to buy your product, people want to buy from you."
36:25
And that was very consistent with what Burt was trying to, trying to have me understand. Thank you.
36:33
[OWEN] Hi, my name's Owen class of 2027.
36:39
Thank you for coming here.
36:40
My question is, you guys have built Thoma Bravo on the thesis that enterprise software has durable moats.
36:48
But my question is, as generative AI decreases the cost of software creation, and some say, commoditizes it, how is that impacting your investment thesis moving forward? [ORLANDO BRAVO] Yeah.
37:02
The software having a great-- That's a phenomenal question that we're deep in now, and we've always been.
37:07
The fact that software has a moat in general is not really true.
37:14
Never been true, especially in dynamic spaces like cyber, that's a third of our investment.
37:20
Infrastructure software, that's almost another third, and all these horizontals.
37:24
You face constant changes competition, and if you're not growing bookings, even if you had a moat around your customer base, if you're not growing new bookings, nobody's gonna buy your company and you cannot take it public.
37:37
It might seem like a decent financial investment, or if you got lucky on the price or something else prior.
37:43
So it's always been a fast-evolving space.
37:45
Now, when we were doing our early deals in software, we were buying what seemed to be some old software companies with legacy code, legacy architecture.
37:54
That's where venture capitalists would say, 'New companies are gonna put you out of business.'
37:58
A great engineer at Stanford could have built a much better product, faster, better code, with newer architecture than many of the companies that we have bought in the past.
38:09
No offense to those development teams.
38:12
But those companies are about understanding the customer's process and about servicing that customer.
38:19
The developing of code is a very, very small subset of what that company does to deliver value to that customer, to give them that five to one ROI over a year or that payback period of nine months.
38:34
You have to really understand the function, or the vertical or the process, or all of it and be able to provide a custom solution, not custom code.
38:46
But you take this code that you have, and how do you figure out the problem that a customer has, let them know that they have a big problem, allow them to re-engineer their organization to absorb this way, this better way of doing things?
39:00
You take Salesforce now, $41 billion in revenues, and there's thought that, 'Oh, they can get commoditized.' Not at all. There's no way.
39:13
Because if you're a salesperson, you are, you work, the way you get trained and the way you work is in stage 1, there's an account.
39:21
Stage 2, they have money.
39:23
Stage 3, they have a champion.
39:24
Stage 4, I met with them.
39:26
And that is the process of getting somebody to close.
39:30
Now, if we get to a world where there's no longer process, where there's no longer organizational structures in a company, oh, maybe way, you know, may be may be back in the future, if somebody invents a new way that we all organize ourselves in a totally different way, that could be a risk, but not if we remain organized the way we are.
39:52
And I don't see that in the next ten years. I really don't.
39:54
I don't even know how you train a new salesperson to do their job.
39:58
Oh, right, AI can give you more context on what accounts to go sell than Salesforce can.
40:04
Yeah, ‘cause it gets all this unstructured data. It reads all the emails.
40:08
It looks at the customer buying activity. It looks at their speed.
40:10
It looks at much more rich information and can give you a better sense of where to go.
40:18
And Salesforce then just becomes one of those pieces of information in the system.
40:24
But how do you train that person of where to go and what to do and how to move that account along? I don't think so.
40:31
I think it's still gonna be okay.
40:32
Same thing happened with SaaS 10 years ago.
40:36
Of course, every change is different.
40:37
This could be more transformative.
40:39
But I think we'll be okay. At least, I hope so.
40:42
(audience member laughing) [DAISUKE] Thank you.
40:48
I'm Daisuke, class of 2027.
40:51
I'm originally from the Japan private equity.
40:55
My question is about global expansion and challenge.
40:59
I think you built a strong franchise in terms of the U. S.
41:02
software investment with a repeatable playbook, but as you see in the global expansion next beyond to the Europe, where do you think is most, like a good place to apply your playbook and why?
41:24
And also, I would like to ask what kind of leadership capability is essential or required to achieve those success in that challenge?
41:34
[ORLANDO BRAVO] Thank you.
41:35
Where could our playbook be applied globally?
41:37
What are the best places-- [DAISUKE] (unintelligible) [ORLANDO BRAVO] -- for that? Everywhere.
41:41
(audience laughing) Thank you.
41:43
Look, it's more than a playbook, right?
41:47
Of course, we have by sales, support customer success, professional services, product.
41:53
We have an entire playbook that we built over buying 600 companies.
41:59
So we add to it from people that we learn and Marcel Bernard, and everything else, right?
42:04
We can tell you the number of reps per manager and why, and how many underperforming reps can you have on quota, on territory.
42:10
We have all that, all those metrics, on some of the best ways.
42:16
Now, how do you apply so much to a company?
42:19
They cannot absorb all that.
42:20
You don't have time to do all that.
42:22
As Marcel would say, "If you try to do it all, you'll get to none."
42:26
Come up with the three biggest areas that will completely change that business that are also the easiest to do and give you the most money, that kind of combination of all, that's tough to do.
42:40
Then align yourselves with management so that they lead them, so that they truly believe that this can be done and so the CEO of that company can manage and lead her or his direct reports to go into that.
42:53
That is about 80% of it, and that leadership place is the most difficult.
42:59
Now there are country differences, regional differences and whatever differences around, but people are people, and if you have leaders that wanna make money, that care about numbers and that are open-minded enough, this works.
43:14
This is business 101 by far.
43:17
Now we diligence that because we usually start the deal by cost reduction.
43:22
Before, people didn't like that in Silicon Valley.
43:25
Now Elon Musk has made that super popular, so now we hear a bunch of people going, 'Yeah, I cut cost' and everything else.
43:30
But we start the deal because they're usually not very profitable companies, by cutting 15%, maybe 20%.
43:39
Marcel would say if you try to cut more than 20, you're gonna have to change the way that company works. That's too risky.
43:46
No matter how unprofitable it is.
43:48
But no matter how profitable you are, you can always cut 10%.
43:52
Even now the time to do that is when you close the deal because people are expecting that change.
43:56
Don't go bother all these great workers and employees and colleagues and executives two years into the mission because a board member decided that you could be more profitable. Do it now.
44:06
And then the CEO as a leader can stand up and say, "This won't happen again.
44:10
But we needed to do it once.
44:12
From here we're gonna grow and do acquisitions."
44:14
All that stuff and all that model of turning a great innovator into a great business applies everywhere.
44:20
You just have to adjust yourselves to the local culture and the local laws.
44:24
In Europe, you can't do that immediately.
44:26
You have to go through labor council and a long process.
44:29
And I'm glad that you're from private equity from Japan.
44:33
I'm headed there after Hong Kong, and Japan is an unbelievable market.
44:38
Just an unbelievable private equity market right now.
44:42
That's another thing of opportunity. That an obvious one.
44:46
In software though, it's a bit small for us so that may be a place we get to in three years. Thank you.
44:53
[INTERVIEWER] Thank you to the students and Orlando.
44:56
Before we wrap it up, we have to do our view from the top tradition, a few rapid-fire questions.
45:05
[ORLANDO BRAVO] What is this?
45:06
(host laughs) [INTERVIEWER] Just don't think too much.
45:11
Say the first thing that comes to your mind.
45:13
[ORLANDO BRAVO] Okay, really?
45:14
(host laughs) Okay, now, cut it.
45:18
[INTERVIEWER] Are you ready? [ORLANDO BRAVO] Yes.
45:20
[INTERVIEWER] Okay, let's go. San Francisco or Miami? [ORLANDO BRAVO] Miami.
45:24
(audience laughing) I have to have the backs of my team.
45:29
Half of them moved there.
45:30
I'm not gonna tell them I'm moving back.
45:32
[INTERVIEWER] Don't worry, I'm moving to Miami after GSV as well.
45:35
[ORLANDO BRAVO] Okay, Lithuania to Miami. I like that.
45:38
(audience laughing) [INTERVIEWER] V-neck or crew neck? [ORLANDO BRAVO] What? [INTERVIEWER] V-neck? [ORLANDO BRAVO] V.
45:43
(audience laughing) Yeah, V, not too deep But V.
45:48
(audience laughing) It's like a Saturday Night Live skit, I should come back like that. Yeah.
45:53
[INTERVIEWER] Most overused word in private equity.
45:56
[ORLANDO BRAVO] Escape velocity.
45:58
(audience laughing) Gosh, I really don't like that word. Don't, yeah, anyway.
46:02
[INTERVIEWER] Wimbledon or US Open?
46:04
[ORLANDO BRAVO] Wimbledon.
46:05
[INTERVIEWER] And finally, the best business advice you've ever received.
46:10
[ORLANDO BRAVO] That's not a rapid fire question.
46:11
(audience laughing) [INTERVIEWER] That's why it's the final one.
46:14
[ORLANDO BRAVO] That's a really, really deep question.
46:17
I was in a meeting once with Carl Thoma in Denver and there was this partner that was arguing with him about a deal.
46:28
And he said, "Well if you wanna make money, you have to take risk."
46:31
And Carl said, "Yes, but not that kind." And it's what fits you.
46:37
Like we take big risks in turning around these companies and what we buy.
46:41
Sometimes we put these equity checks that represent almost 20% of the fund.
46:44
We have to syndicate it those are huge risks that others would perceive as enormous.
46:49
For us it's something that we can do.
46:51
So find the ones that are meant for you to take but not others.
46:56
[INTERVIEWER] And Orlando du Bat, thank you very much.
46:59
[ORLANDO BRAVO] Thank you.
47:00
(applause) (upbeat instrumental music)