How Carl Thoma and Orlando Bravo Built the Largest Tech Buyout Firm | Behind the Deal

How Carl Thoma and Orlando Bravo Built the Largest Tech Buyout Firm | Behind the Deal

Show Video

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, 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

Show Video

Other news