My guest today is Orlando Bravo, co-founder and Managing Partner of leading private equity firm, Thoma Bravo. Thoma Bravo manages over $90bn of assets and is best known for investing in software and technology businesses. It was Orlando who led the firm’s early entry into software buyouts some twenty years ago, and he has overseen more than 350 software acquisitions since. There are few, if any, people better placed to discuss private equity and software investing. Please enjoy this excellent discussion with Orlando Bravo.
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Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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[00:02:36] - [First question] - His belief about an opportunity/capital mismatch in private equity
[00:04:26] - Adjusting his own approach to take advantage of seemingly niche opportunities
[00:06:13] - Differences between software businesses they invest in versus traditional ones
[00:08:25] - Outline of how he runs their four-hour portfolio meetings
[00:09:53] - Overview of the very first deal he ever made in the software sector
[00:14:01] - The dissonance between the average SaaS company and the ones they try to manage
[00:18:22] - Major contributors that allow for their higher margins
[00:20:16] - Common mistakes of companies that mis-invest capital for growth only
[00:22:28] - Defining what market leader means writ large
[00:23:45] - Why the subsector of cyber security is such a good opportunity set
[00:26:25] - The evolving nature of the private equity world in general
[00:28:41] - Where returns will come from going forward
[00:31:47] - How good the opportunity for returns in this style of investing today is
[00:35:32] - Lessons learned on knowing when to exit or sell a position
[00:37:59] - How short their holding periods can be and how much influence they can have in such a short time
[00:40:04] - Surprising things about deal-making that he’s learned over his career
[00:41:20] - Difficulties and points of frictions in deals that still exist for him today
[00:43:11] - What part of the deal-making process he loves the most
[00:44:30] - If your job title has a C in it you’re not allowed to complain about it
[00:46:27] - Deeply held beliefs about operating excellence
[00:47:33] - What the word service means to him given everything we’ve talked about
[00:50:27] - How we do a better job of inviting talent into this space
[00:52:51] - How decentralization will define the 2020s and beyond
[00:55:48] - What is most interesting about Web3 that might affect cyber security
[00:57:42] - Where there is a lack in innovation in private equity today
[01:00:45] - Advice for young talent for building their careers
[01:03:16] - The kindest thing that anyone has ever done for him