How Carl Thoma and Orlando Bravo Built the Largest Tech Buyout Firm | Behind the Deal
Carl Thoma: When you've made mistakes and you've learned, you've got to capitalize on that, and I think that's just true of a lot of things in life. Mistakes are meant to be stepping stones to success, not stepping stones to ultimate failure. Orlando Bravo: You used to tell me, "You can go ahead and make mistakes, just don't make the same ones again." Disclaimer: This podcast is for informational purposes only and does not constitute an advertisement. Views expressed are
those of the individuals and not necessarily the views of Thoma Bravo or its affiliates. Thoma Bravo funds generally hold interest in the companies discussed. This podcast should not be considered as an offer to solicit the purchase of any interest in any Thoma Bravo fund. Orlando Bravo: Welcome to Thoma Bravo's Behind the Deal. I'm
Orlando Bravo, co-founder and managing partner of Thoma Bravo. Today on Behind the Deal, I thought we'd do something really special. Instead of talking about the partnerships with our portfolio companies, I wanted to discuss one of the most significant partnerships to me, my partnership with Thoma Bravo co-founder Carl Thoma. Carl Thoma is the OG of private equity. He
started Golder Thoma in 1980 as one of the first venture capital firms in the US. Instead of doing traditional venture capital, Carl Thoma invented the industry consolidation strategy or buy and build approach. In the process, he built Golder Thoma, now GTCR, into one of the best private equity firms in the world. He then founded Thoma Cressey and pivoted to form Thoma Bravo. Carl is known best for founding private equity and creating the buy and build investment strategy. While that is a legacy in and of itself, I feel Carl Thoma has accomplished something even bigger. He is a founder that had an investment approach that worked for two decades and at the same time had the vision and courage to transform that approach into the software industry and into what Thoma Bravo is today. I do not know anyone else in the private equity industry that has done
this. Today we are going to get underneath Carl's values, investment fundamentals, and operating truths that enabled him to be a leader in the private equity industry for almost 50 years. When I was graduating from Stanford Business School and Stanford Law School, I decided I wanted to be a tech investor, but at that time in 1998, there was not much private equity in the software industry. Tech investing then was dominated by early stage investments and venture capitalists
in Silicon Valley, and that environment was not for me. Carl Thoma hired me and I applied his value investment fundamentals and buy and build approach to the software industry, the sector I was mostly interested in. Early on, Carl allowed me to proceed with our first software bio. It was the year 2000 and the internet bubble had just burst. It was at the time one of the first take privates of a software company done by a private equity firm. As we were doing due diligence, I looked for industry participants to give
me external reaffirmation. I called my venture capital friends and they told me we were crazy because these companies of this type were old and would be put out of business by new startups. I then called my buyout friends in New York and they told me we were crazy too because tech buyouts were just too risky. The more we applied Carl Thoma's fundamentals to this company and others like it, it was so obvious that this was one of the best franchises in the world and that could have the ability to produce very stable cash flows. Carl, myself, Scott Crabill, we did the deal. We earned (beep) on that deal.
Disclaimer: For legal reasons, we can't discuss the actual returns from these deals. Orlando Bravo: We did another deal like it. We earned (beep). We did another deal like it. We earned (beep). We did another one after that one was successful and we earned (beep). Quickly, we were becoming a software-focused private equity firm. Along with some others at the time, we were building the category of software private equity, one of the best sectors in the private equity industry today. There are two very important lessons for listeners, especially those that are looking to get into the industry that I feel you'll get from my conversation with Carl. First, listen to your mentor very carefully. I was lucky that I had the
best one. I see so many young professionals, incredibly talented getting into the industry and in some cases, they're left on their own. Just remember, everyone needs someone else to learn from. I didn't create anything on my own. I took all of Carl's values and I do give myself credit for listening to him. Second, you can apply what you learn from your mentor to something that is of interest to you. You have to work hard to stay true to what makes sense to you regardless of what industry participants are saying or doing at the time. Start with solid fundamentals from your mentor. Do what makes sense,
and my partners and I have done that all along. In this episode with Carl, I will bring to life what mentorship looks like and what those values are by talking about key decisions we made on deals, on how we treat our investors, and how we treat our partnership. Now, here's my conversation with Carl Thoma, co-founder and managing partner of Thoma Bravo. Carl, your speakers are cooler than mine, so is your background. There it is as always.
Carl Thoma: Not really. Orlando Bravo: Well, you know. Carl Thoma: I got a window shade and you got a piece of art. Orlando Bravo: Well, Carl, I have to tell you something. We've worked together now for over 25 years and I still learn something new every time we talk, and out of warning as well, I remember every single word you've ever told me, so I'm going to be bringing some of those up in our conversation, but thanks so much for taking your time to share your thoughts with our listeners.
Carl Thoma: You're welcome. Honored to do it. Orlando Bravo: I'm going to start off going way back in the past. You're one of the first in private equity and you invented industry consolidation or buy and build. How did you come up with it? What happened?
Carl Thoma: I've always thought of buy and build or industry consolidations is really an investment process that started when I first got in the industry was how can we deliver superior returns, and much as in sports, you try to perfect as many aspects of your game as you can. We know in the economy that companies start out growing really rapid and then they start to slow their growth and then what follows next is consolidations. So we step back and say, "How do we take advantage of that?" because early accelerating growth is probably venture capital and we've learned over the years we were not great venture capitalists, but we thought we could be great investors. Then what do you do after you've got industries that are going to go through some consolidation? Then the second part of that process is work with superior management so that you can get superior returns because they're going to know better how to consolidate and create value. Also, something else that we always focused on, which and what's great, all of these still apply today under your leadership is we want to invest for free cashflow because that allows you to finance internal growth and to pay down debt.
Orlando Bravo: As you were reminding me of that history, I thought of so many parallels with the software industry, not only when we started in it but today, and we'll get into that. Now, we met in 1997 when you were nice enough to interview me and I flew from Stanford to Chicago. Do you remember what you spoke to me about then? Carl Thoma: You talked about when you joined private equity in the late '90s, the industry consolidation, I might say it had its golden era which was the 1990s when people would consolidate companies in mundane industries and create a lot of growth, but it was all inorganic growth, and yet the stock market seemed to be treating that as internal growth. So you might say in the late '90s it was a pretty, quote, "hot sector" and then, unfortunately, as economy cooled and people realized that this was inorganic growth and multiples plummeted as we went into 2000. Orlando Bravo: I remember that like yesterday too. These valuations of industry consolidators have
never been treated since that time as internal growers. That has never come back. To me, it was the coolest meeting because I was trying to get a job in the industry and I couldn't believe that most of our talk you asked me some insightful questions, but at 45 minutes of the hour you spend your time teaching me about this stuff and I was like, "I got to work for that guy. How can I get a job?" So I want to fast forward to that. Maybe it was like six months later or so, we had dinner. Bill Leback brought me to that dinner with you and you gave an offer. Do you remember what happened after you gave me an offer? Carl Thoma: True to this day, Orlando, you're very aggressive, and I say that in a positive way in leadership and that's why our firm has been so successful. It's much in my sports analogy of the hurry up offenses that when you're not playing, you're not scoring. So you in your aggressive style wanted to come in as a partner and they told
you you had to earn it and you luckily didn't call the question on us and joined us. So thank you. Orlando Bravo: Carl, I didn't want to join as a partner, I just wanted a little bit of carry and you weren't going to give it to me. I got some terrible advice from my classmates at Stanford, "Oh, you deserve a little bit of carry in this fund." I remember asking for it and Bill Leback scared me saying that you were going to pull the
offer. I spent about a week being so scared that I lost my offer. So when I saw you the next time, I'm like, "I'll take it. I'm in." So thanks for not ever rescinding an offer. I appreciate that. Carl Thoma: No, thank you for joining us. To this day, I keep looking back and saying, "What did Orlando see in us?" With your credentials and summer experience, it was like, "Wow, we got to get this person." So glad you didn't know how bad we wanted you. Orlando Bravo: I feel so humbled by it because you were the only one that saw that, but here we are. Carl Thoma: It's hard to believe.
Orlando Bravo: You also remember this so well. When I started with you, it was never easy. I made a ton of mistakes, and I was really touched that at your birthday party when you turned 70 and I surprised you by showing up, you had just a great event, you spoke about that when you thanked everyone. I want to get into that a little bit. We were at a meeting in Denver when we had a Denver office at Thoma Cressey then. One of my peers who was awesome at the time was trying to do a deal that looked a bit like venture capital. You didn't like the deal so we weren't going to do it. He said, "But Carl, if you want returns, you have to take risk," and your answer was,
"Not that kind of risk." Can you talk for our listeners a little bit about that? Carl Thoma: I almost call this an investment pet peeve, but it seems like that when somebody wants to make an investment and they're getting some pushback from their peers, they seem to forget about the risk because sometimes what can make a great investment is just controlling your risk and not spending all your time bragging about the upside because I do feel that consistent with the day is you just cannot afford to lose money anymore with valuations higher. I just get a little frustrated that people, when they want to do something, they tend to ignore the risk. They ought to amplify the risk and tell them how they're going to manage them instead of just trying to ignore them. Orlando Bravo: That was a big moment for me because I was making mistakes on what I was doing in IT services at the time, and it meant is what risk is right for you from your knowledge base and from your values and your core competencies, and how can then you assume risk that is small based on what you know really well to make a return. I thought that was one of the greatest quotes of all time. I remember it like yesterday. In that same meeting my colleague got all fired up and we were looking at another deal
that he wanted to do and he said, "Carl, you get what you pay for," and you told them back, quote, unquote, "No, you get what you negotiate for." Talk a little bit about deal making because you taught me how to talk to people and actually do a deal. Carl Thoma: I would probably say that the best way to start deal making is to establish a constructive in mutual respect with each other of the party you're dealing with because I think it really starts there, and then you've just got to remind people that if you force us to pay too much, we all suffer going forward. So our job is to come up with our experience of what's a fair price and work from there.
Orlando Bravo: You taught me how to do deals in a way that you would always say when I had an issue, you would always tell me, "Get on the phone and ask him. Be really open." Whenever I was stuck, you would always come back to the point, "You can always work things out." As you're negotiating and numbers are changing and financing is changing and public valuations are changing, it's okay to adjust things, but you can work it out with openness, and that thing of we're not market takers in terms of price. These are companies we're buying and the sellers negotiating we are as well to get to a mutually beneficial outcome. I think that also was one of the best quotes that I remember from you. Now, as things are going poorly, so I'm going to get into the depths here,
I thought you were going to fire me in 2000. Is that true? Were you actually thinking about it? Carl Thoma: No. The answer to that is, and I can't take the original credit for this quote, but I'd already lost $50 million on Orlando, I can't afford to fire him. Orlando Bravo: I was going to say, is it because you had nobody else? Carl Thoma: No, I've sunk $50 million of experience into you, so therefore, you're a star now. You got a lot of good expensive training.
Orlando Bravo: Fair enough. That is well said. Carl Thoma: No, seriously, I think what you went through absolutely gave you a sense of caution, balance with your aggressiveness that's led to phenomenal return and success. I'm not sure you could have been as successful without stumbling a little bit early on, but you had enough pride and drive that it didn't put you in a stumper and then leave the industry. So I think it was a one-on-one equals about 10 driving some failures, I guess, or experience. Orlando Bravo: You're so right about that. Even when we were mid through doing our software investments, I would ask Scott Crabill, who wasn't with us at the time but was with us really early, I would ask him, "Does this look like that deal? I think it may look like that bad deal. Let's not do it," and he would look at me and say, "This has nothing
to do with that company," but I still have that fear of the big lessons learned on the tough ones. Carl Thoma: If you focus on the upside and also asking that question, "How can we lose money on this investment?" I'll tell you it helps you, and that's back to you don't even use the word risk, but you got to think of the upside and the downside and then hopefully the upside way outweighs the downside. I want to follow up on your first statement, but one thing that I'm proud of and I know it continues today under your leadership is that you can resolve so many issues if you just communicate. I remember one of the first deals I did and I got in the business, got on a plane, flew somewhere in the middle of West Virginia to meet with the CEO. You didn't even have your suitcase with you, but if you go meet and talk to people, things get worked out. Then the second part of that is then in fairness
to everybody, if you overpay for an investment, there are no winners. The employees don't win at the company. The previous shareholders really don't win because nobody likes to sell a company that later doesn't perform well. So you just got to have communications in a sense of what
works for everybody. The second part of your question, I guess we all go back to our mentor, is that Stan Golder used to feel and I think I felt the same way and that's the reason we're here today is that people learn from their mistakes, but as Reed Dennis, who's one of the icons in the venture field once said that, "Mistakes early on make great investors, but you got to make sure they haven't made so many mistakes that they have lost their confidence." Fortunately, while we were all frustrated with the mistakes we made in that fund, I did not feel you'd lost your confidence, but more importantly, what you had learned when you and Scott and I were talking about it, I think 2004 or something about it, when you've made mistakes and you've learned, you've got to capitalize on that, and I think that's just true of a lot of things in life. Mistakes are meant to be stepping stones to success, not stepping stones to ultimate failure. Orlando Bravo: You used to tell me, "You can go ahead and make mistakes, just don't make the same once again." One of the changes that
we did, which is exactly what you're saying is I was making mistakes doing project-based businesses with new management earlier stage and I switched everything to 180-degree different. Let me take really established companies with recurring revenues and existing management that's working. So it's interesting, I tell that to young people now. If you're making mistakes, don't keep doing the same thing because valuations are a little lower or because you're finding companies that are a little better. That's just at the margin. You're going to fall into the same trap. I think that's very impactful. Going back to another point of working things
out with people because deal making is such a people business, it's not like screens and you cannot sell the stock if you don't like it. You're stuck with your partners. It was really inspiring for me one day after you had taught me this when I was taking a red eye to Boston to meet a CEO on something we were working on. That night I called you and you said, "That's the difference between a great venture capitalist and an average venture capitalist," and I was like, "Wow, I think I'm doing something special with this. All this wear and tear, it makes sense and it's for something." Now, just to talk a little bit about the values and an example of how fair and direct you were with me is we had a bad deal, one of our worst deals that was mine, and I came back to San Francisco and you were in the San Francisco office that day or night because we were there till about 8:00 P.M. I went up to you and I go, "Carl, this company, we're going to need another
$10 million." I was so scared to ask you that, and you said, "No. Then we put it up personally and you do your [inaudible 00:19:07] share." I said, "But Carl, I'm an associate. I don't have any money," and you said, "I'll lend it to you." Can you talk a little bit about how you thought about money and you thought about protecting investors and letting me have those values? Carl Thoma: What we must remember is that people in private equity, even venture capital, we're managing other people's savings, pensions, endowments, and we cannot lose sight of that. So to me, when it really gets tough, then you got to ask, "Would I put my own money behind this situation?" Sometimes it forces one to step back and say, "Maybe the risk are so high that it might not be where I want to spend my last dollar," and we just have to have that sense of duty to our investors. Our integrity
is our whole key to success is we got to just take care of our partners, financial partners. Orlando Bravo: That's a great segue to our first deal because you're so consistent in your philosophy about our investors and managing other people's money. The first software deal we looked at was a software company based in Sacramento and you decided ... I'll talk about why we didn't do it. I'll come back to that,
but you decided to spend a lot of time with me flying back to the Bay Area and then driving to Sacramento to have spaghetti dinner with a CEO in his kitchen in his house to do all this. What led you to spend all that time on that deal with me? Carl Thoma: I'd say first is you seem pretty passionate about it and, two, we've made the decision. I think us talking about that we wanted to build on our mistakes or let's say experience in some of our consolidations in the IT space and Y2K and felt it was worthwhile to test our theory because one of the things that always scared me a little bit when we wanted to start focusing more on software is, could we actually get traction to build our firm around it? So in that sense, it's a little bit like if you're going to take up golf, you probably want to do a few practice rounds before you go out there. I thought probably you could ultimately persuade the fellow to do a deal with us.
Orlando Bravo: You did. That was the problem because then I don't know why I did this so late. I brought up the fact that the company didn't have audited financials, but the quality of earnings looked really good, and that was the point you told me clearly, "Orlando, we represent pensioners' money. We cannot do that and we don't have time to go through a whole audit." So we drop that deal and then you spend the same amount of time with me on the first software deal we did back in 2000, Prophet 21. We go to one of our final diligence meetings and we're sitting there with the CEO and
the head of sales, Doug Levin, a great guy, the head of sales, Chuck Boyle, the CEO. It's good company, but it was a scary time and they were always missing their bookings. Carl, you remember, you and I are there with some of our LPs and we asked the head of sales, "You missed your numbers this year. How'd you do last year?" and he said, "Ah, I missed that too." We look at each other and then I look at you and I go, "How about the year before?" I was just looking for a single year. He goes, "Nah, no, we didn't make our numbers that year either." I think you asked him, "Have you ever made your numbers?" There was a moment of silence, pause, very uncomfortable, and he was looking back over this history and said, "Nah, we've never made them." I was so deflated. That was like a defeat. You told me when we broke out of that meeting, you said, "Yeah, this is not good, but it's not fatal." What were you thinking at the time?
Carl Thoma: It was in a maturing part of IT and software, which we like that. It's a reasonable price. As I recall, and you've got the perfect memory, is I may have said to you or maybe we jointly agreed is that we need to get some help to work with this company to make sure that they make their numbers going forward. I'll probably let you finish the story is that a miracle happened when Marcel agreed to work with you. Orlando Bravo: I like that you said it was a miracle because that's my second luckiest moment ever. You told me to get somebody that really knew operations to help out and we introduced about five people to Chuck Boyle, the CEO of Prophet 21, and he rejected all of them. We were coming to Yardley,
Pennsylvania where this company was and he was saying, "Nah, I don't want to work with that person." We met Marcel and he said, "That's who I want to work with," and with the same exact management team since the company had been run for 10 years, remember they never missed. Carl Thoma: No.
Orlando Bravo: They went from no profits to these great margins, six add-on acquisitions, and they hit their numbers and that really was a stepping stone in starting our whole buy and build for the software industry with him. That's really incredible. We also quote Marcel all the time today. So we were doing these deals in software as part of Thoma Cressey, but in the process, we were quickly becoming a software private equity firm. Then we decide, "Okay. There's going to be a group that does healthcare and we're going to go forward and do software only." We went out to raise, we tried to raise one and a half billion for
that fund. That was our first software fund, Thoma Bravo nine, and we weren't getting any traction. I remember calling you on a Sunday afternoon before a fundraising trip with all these comments about, "I don't think we're pitching the firm right. Maybe people are not getting what we're about," and you stopped me and you said, "But Orlando, private equity is all about the numbers." Tell me how you think about performance and the truths about that in our industry.
Carl Thoma: We have to remember that private equity is an investment class that our financial partners look at and at the end of the day have to look at every turns. So therefore, we have to make sure that we focus on returns. I don't know how much more I can add to that, but we like to build great companies. It's ultimately the score of how we do that we get evaluated by our investors.
Orlando Bravo: That was really powerful because after that Sunday, I was walking in the street on New York the following week and finally, this potential LP called me back that would never talk to us and he said, "Orlando, we're not going to do that fund." I asked him, "Why?" You know what he said? "Because your numbers are not good enough." So what you said was so validated. Once again, when you get that plain, direct and very powerful piece of feedback, so I said, "I guess Carl was right. We got to go get better numbers," and we did. It's so important for today because the firm that Thoma Bravo is today, we're private, we're not public, we don't have any outside investors because if you do, you have to focus on all these other things that have nothing to do with investment performance, which is the reason why people give us their capital. So that focus that you've always
had on performance and LPs, it's just ingrained in our culture and how we do things today. Carl Thoma: One thing that came out of that, and I give you credit for this, is that we had to tighten up how we were calculating our returns because one of the ways to have a good fund return is you got to have individual investment returns, so you tighten up the time period to make money, how quick we had to make money, and I think that really was just part of the investment processes maturing is that there's a lot of little things you can do to drive performance and giving somebody three times their money in four years is a higher ROI than giving somebody three times their money in six years. That was a pretty big shift that I think has been one our cornerstones is you got to create value quickly and you get all the credit for sitting around saying, "How are we going to get higher numbers to keep our investors happy?" Orlando Bravo: You told me early on when we were doing this in fund nine, you said, you looked at me and you said, "The velocity of capital is really going to benefit us," and that is so true. People now talk about DPIs and they need more DPIs, but the velocity was a huge factor in establishing who we are today. No question about it. You were always talking about if you think you need six months to do something, can you do it in three? Because time is ticking against you, and this is the type of business we're in. It's a tough
business, super competitive, and there's only one way to stay ahead, which is performance. Carl Thoma: Agree. Orlando Bravo: Now, in this incredibly competitive intense industry, you have been very steady and stayed in the business for a very long time. I remember we were having a staff meeting in Chicago and I was working on a deal. I think it was a spinoff out of Pitney Bowes, a software company spinoff. We were working with another group on it,
actually. I stepped out of the meeting. I had a call with the CEO of the company, the divisional, head of the business, then the banker, and it was just a really tough deal to pull together. I come into the conference room and I vented. I just said, "Carl, how have you stayed in this business for so long? This is killing me." You said, "You know what? I just don't worry about the little stuff." Tell me when you got to the point where you prioritize,
where you just focus on the big things and that gives you so much staying power. Carl Thoma: That's probably the advantage of you and I being a number of years apart in an agent experience is that when you first get in this industry, you worry about all the little things and you somehow think you can micromanage a company to success. Then when you discover that doesn't work, you show a little maturity and finally start to say, "I've got to focus on the bigger issues and keep that strong relationship with the CEO of the company, on the bigger pictures," and then also part of our secret sauce, at some point you got to start to delegate a little bit because you just can't do it all because private equity is a tough business and you cannot get yourself too stressed out or too bogged down because it's a little higher level is where we play the best role. Orlando Bravo: I always found that as I hear you now, it reminds me that you and Marcel Bernard would say the same thing independently even though you had separate careers. One was in private equity and investing, the other one is running different divisions of Motorola. Marcel would say the following way, he would say, "Just remember, every business
problem can be solved. Health is another matter." What you're saying about, "Hey, if the leadership is good and the CEO is good and that person has good direct reports and you're on the same page, you can work together to figure things out just like you can in a deal," versus what maybe younger people and I was trying to do at the time is get into every detail. At the end of the day, you're not running the company if you want to go at it, but you need partners to accomplish your goals. That leads me a bit into partnership. Even on this conversation, you quoted Stan Golder and you used to quote him a lot. One of the quotes from him that you used to tell me is, "Remember, private equity is the only industry that you can decide who to work with." Talk to
us about how you think about what CEOs you like to partner with, et cetera. Carl Thoma: As you said, when you're trying to bring change to an organization and when you can't sell your stock at the end of the day like public securities, you really have to focus on that personal relationship with people and the team around them because much like in sports, the great teams are all collaborative They work together. As your coach there in the Bay Area would say, "You got to pass the ball around at least five times before somebody can take a shot." I think a lot of those same things apply to what makes us successful private equity firm is we have to work together and we're in this together with the management companies to our peers. Orlando Bravo: You bring up so much of this unbelievable relationship, deal making, focus on fundamentals and values, and it is just so important today with so much capital and so many firms, just the basics of this very tough but very rewarding business. On the rewarding side and giving back, I want to get a little personal on your interests. What the listeners may not know about you is you're the coolest guy. You have
done it all. You're an amazing art collector of different periods. You have the coolest art. You have this winery. You used to have another one. You've done it all. I still learn about something new. I think it was a couple years ago, we were at a Thoma Bravo event and one of our associates, his dad was really into cars and I asked you about it and you said, "Oh, yeah, I used to do that too." So I just love it how you know so much about these things and living life to the fullest. One thing is philanthropy. I have followed that very closely. You're an amazing philanthropist. I remember when I was starting at Thoma Cressey, you invited me to a Stanford event where you were doing some wonderful things for the university and professors. You gave this
talk. You spoke about your mom, homework, putting good values, and then a second time much later, you invited me as well to another event where you were doing some major giving for professorships, and there you spoke about giving back to people, not buildings, but people because it was you work in a people business. Talk to us about your philosophy on philanthropy. Carl Thoma: My feeling is that I've been very fortunate in my career and the opportunities I've been given, and I really do feel that I'm a strong believer in capitalism and I feel the greatest way for capitalism to grow and society to better themselves is you have to have people feel like they have to earn it, and pretty much when most of my wealth is ultimately going to be given away because I feel that gives others a chance. I've always focused on people because people is what makes the difference. I don't care how many billions you spend on your football stadium. If you don't have a good coach and players, it doesn't matter as people is what makes success not buildings. As I told you recently, if we were really into buildings, I guess I'd have gone into real estate.
Orlando Bravo: Well, you've also been a mentor to me and a lot of us at Thoma Bravo on that. There is that tie between the business and giving back to people as well, and there's an exciting element about that in a really big way. I want to end with a bit of a conversation on partnership. You've been in this industry 50 years. Firms change. Firms evolve. Partners leave. There are spin outs.
People start new firms. At Thoma Bravo, we've been at this together now for over 25 years. Nothing has changed. We're still here doing the same thing. Frankly, as we say it all the time, I feel we're only getting started. What, in all your experience, what has been different about our partnership in Thoma Bravo that has created this longevity and the future for us? Carl Thoma: Maybe I'll back up and give you a little longer answer to that question, but the advantage of having been in private equity for many years as I have, when private equity originally started, it was a little bit like a federation. Four or five people would get together. They would go raise some money. Each person would focus a different sector of the economy. Then as the industry started to mature, it just started dawning on me that to be successful, you really have to build an organization with culture. When you and I teamed up, as I said to you,
I want one person to lead the firm, to set the culture, we're not going to be a loose federation, and you've just done a brilliant job of stepping into that and accomplishing just what it takes to create an enduring company, which you have to have a leader that sets the culture and the investment policies and everybody wins. Whereas it's the same in sports. You just cannot have five individual players that are brilliant, that aren't performing as a team. We got away with that for the first 25, 30 years of private equity, but it's now gotten too competitive. We got to function as a team.
Orlando Bravo: You taught me a lot about that, and I feel we have done a combination of having that consistency of culture, consistency of process that you spoke about, consistency of mission, of purpose while letting our leaders be their own artists and pursue their own strengths but all together, all going coordinated after the same thing. We're all really, really close friends and we enjoy each other. I love getting a call at night from you, Seth, Holden, Scott, and working something out and thinking about winning or doing something really special. Well, Carl, thank you so much for sharing your incredible insights. You are an amazing leader, investor, deal maker, and you're an even better person, and I think the listeners now will really understand why you are the greatest of all time. Thanks so much.
Carl Thoma: Thank you. Orlando Bravo: Thanks to Carl Thoma for talking with me today and more importantly for being the best mentor anyone could ever have. To learn more about our firm and our latest deals, visit thomabravo.com, and for more stories behind the deal, check out all of our episodes wherever you get your podcasts. Plus, don't forget to subscribe to Behind the Deal to hear the latest episodes as soon as they drop. If you liked this episode, check out our mini series Beyond the Deal for more from Carl and me that you didn't get to hear today. Catch it on YouTube and here in this feed next week.
Thoma Bravo's Behind the Deal is produced by Thoma Bravo in partnership with Pod People. Stay tuned for more stories behind the deal. I'm Orlando Bravo. Thanks for listening. Certain statements about Thoma Bravo made by portfolio company executives are intended to illustrate Thoma Bravo's business relationship with such persons rather than Thoma Bravo's capabilities or expertise with respect to investment advisory services. Portfolio company executives were not compensated in connection with their podcast participation, although they generally received compensation and investment opportunities in connection with their portfolio company roles, and in certain cases are also owners of portfolio company securities and/or investors in Thoma Bravo funds. Such compensation and investments subject podcast participants to potential conflicts of interest.
2024-04-19 12:56
