Orlando Bravo: Finding Your Niche | E16

do. We all have different backgrounds, personalities, and surroundings. We all have different routes on how we hope and want to get there. My guest today is Orlando Bravo Orlando is the Founder and Managing Member of Thoma Bravo, which manages more than $100 billion and has been ranked as the best performing private equity firm in the world. Since Orlando joined its predecessor firm in

1997. Thoma Bravo has completed more than 350 acquisitions worth nearly $155 billion, and it presently oversees a portfolio of 50 software companies that generate $21 billion in annual revenue and employs more than 72,000 people around the world. According to Forbes magazine in 2019, Orlando became the first Puerto Rico born billionaire and has a current net worth of $6.3

billion. Rolando serves on many nonprofit boards, including Brown University, and he has been an incredible and very generous philanthropist who has given to many causes. Orlando, thanks for being here today. Welcome to In Search of Excellence.

the port of my request. Could you tell us what your parents were like? And how growing up in a privileged life influence your future, and the kind of values your parents instilled in you?

reasons. And he instilled in me hard work, and entrepreneurial spirit ethics, how to do business, right, how to be a small business person and make a great living and do it the right way. Since I was 10 years old, I will go to the office on the weekends and work with them. And they communicated by telex, with the chips that I will go to the pork with him and I would try to help in whatever way I can, or I could when the chips were

important. So it was a very active lifestyle where his work was intertwined with family, my mom, just an amazing influence on my life. My mom's family immigrated from Cuba. And my mom was not only extremely hardworking, but she had a vision for the family and for the kids of doing something different of exploring different things. Even though I grew up privileged, I grew up in an isolated place. And being privileged in minor ways is very different than being privileged

in New York City. And my mom thought big, and she thought about the world. And she let me explore it mainly through the sport.

And I think modern society, and the next generation we would disagree with that, that was always ingrained in me is if I can accomplish something here and then I can move on to something else, and so on and so forth. And that stayed with me since a really young age because when she introduced the sport of tennis to me, it was She really correlated and helped me correlate hard work with good luck, or hard work with results. And it was so tangible at such an early time. That's always been with me.

You're excited to go to a much bigger city to play against much better players. Can you tell us about the excitement you felt about playing against better competition people who are better than you? And can you tell us why you consider yourself an underdog and how that mindset influenced your tennis career and your future?

feeling was just awesome. But at the same time, it was a lot of added pressure. Because if my family was making that big effort, it wasn't just me. It was a whole family affair of driving those two and a half hours every weekend. And I lost and had a horrible match. The pressure of letting everybody else down was pretty big. So it was both the excitement of being the underdog, but then you have that added pressure.

tennis. For our listeners and viewers who don't know Nick voluntary has coached the Williams sisters, Andre Agassi, Jim Courier, and Monica Salas, all of whom at one time were the number one players in the world, Nick is considered one of the best, if not the best tennis coaches of all time. Can you tell us what your experience there was? Like what time you woke up in the morning, the hours you went to school, the hours you train, and what you've

described as physical pain? And can you tell us how all of this and the other lessons you learn there, including playing with people better than you who ended up as the best in the world, were critical factors on your path to excellence,

breakfast, seven to 745. Then there were three types of schools that you could go to I went to the more academic one, once again, advised by my parents, and they would put you through they had a schedule where you would go to college and real school with other kids, but they accommodate your schedule. So you would start at 830. And nonstop except for a 15 minute break. And a two after you were rushed back into the academy about a 20 minute drive

30 minutes for lunch. And then you were on the courts, relatively when 145 till about 545. You had half an hour to shower, an hour for dining hall. And you had to be in study hall for two hours no matter what. sitting there quietly, if you didn't want to do homework, if you even didn't have any homework done, you just had to sit there. And then you had half an hour before going to bed and it was lights out. And you had counselors kind of walking around the dorms, making sure

that the lights were out. We slept for kids per room. And on the one hand while it was grueling, and the only time we left the academy was either to go play tournament, or on Saturday, we'd go to the mall at night to watch a movie or grab some food in and it was tough. But the camaraderie and the people that you meet, and just having kids that are looking at the same that have the same interest in the sport, that are traveling together that are going through the same journey.

That level of support was so big that it made it very doable.

relatively quickly. And maybe it was a defense mechanism to say Whoa, it's much better than to go to a great college, or play the sport at a good college. So the goal changed so quickly that I didn't really I don't feel like I suffered through the pain of of that crushing disappointment of not making it because also that goal was hard enough. If you didn't do well, especially in Kalamazoo, you were not going to get recruited, potentially to some of the places that I wanted a shot

Friday, Saturday and Sunday. And then you either leave Sunday night or travel on Monday and you're living from a hotel room, you're paying for your own flights and your own food and you have a trainer, and sometimes a coach, it's hard to make any money at all you're playing, hoping you're going to crack through and win a tournament.

living. Let's talk about the value of an education, which for many of us is one of the building blocks of our success and our search for excellence. You attended private schools. You went back to Puerto Rico to finish high school. And although you weren't good enough to go pro, you're good enough to play in college on a tennis

scholarship. You went to an Ivy League school and when you get there, you're intimidated and scared you wouldn't make it so much so that you took Pass Fail classes your freshman year. Ultimately, you did make it in fact you really made it you graduated Phi Beta Kappa with degrees in economics and political science. For our listeners and viewers who don't know Phi Beta Kappa is the oldest and most prestigious.

tourney in the United States for academics is typically awarded to the top one to 3% of the student body is something you don't apply for they found you. So you're the top 1% of one percenters. How did this happen? How did you go from I'm scared and I'm not going to make it to graduating in the top one to 3% of your class and what's your

advice for people? If we're too scared or intimidated, and fear failure, whether it's in college or grad school, or whatever else in life, for that matter who are telling themselves, I want to do that, but I won't succeed. So why should I try? My advice

go ahead and do that. I love talking to the younger people in our team and telling them, it's okay, go out there and do bad deals, just collaborate a lot, have the backs of your teammates, and be very open minded, but it's okay to do bad deals, because over time, you will do really well. For me specifically, there were two factors that were helpful. At

that time. One was the institution, Brown University gave me a soft landing, that was the right place for me, by far, I did not need any more pressure that I already put on myself. And by allowing me to take everything pass fail, I could go and try see how it was without having the external negative validation of having not done well or made a mistake. Soft

Landing is really important. I when I talk to leaders, I let them know that, for me the importance of that when we have a new colleague joined the firm, give him or her a couple of wins early. Don't ask for too much too early because they have enough pressure on themselves.

The second factor that helped me going back to the line of thought that you had at the beginning with work ethic was I was used to working X number of hours a day, whether it was in the sport or in school, and I could send myself in the library from 8pm to midnight when the Rockefeller library and Brown University closed, and I was there. So I over rotated and I Oh, maybe even I overdid it with putting too much time to do

pretty well. The second semester I took three pass fail one for a grade, and I did great then it was two and two. And then I finally went went all grades because I felt comfortable enough in that environment.

Like you I had all this free time I was in the library every night, whether I had a test or not. And what's interesting from that group, there were 10 of us in the law library with this beautiful gothic building one of most beautiful buildings you've ever seen. And all 10 people who were there in our little group, five of us are in touch today had been phenomenally successful in life, which is been super fun for us to see and support one

another. I was scared I actually took one pass fail class in the class. I didn't think I may not get an A. I graduated Phi Beta Kappa as well. And then I went to Northwestern law school and I did well there also but I had the same exact experience in college, and through the hard work that you mentioned was able to do well. And it served me well in life. Let's talk about

the start of your career. You graduated top your class at Brown then you get a very prestigious job and mergers and acquisition department and Morgan Stanley that was headed by a guy named Joe Perella, who had spent 40 years as an investment banker at his own firm before he joined Morgan Stanley as Chairman of their mergers and acquisitions department. Like most junior

bankers, you work grueling. 100 hour weeks, most analysts are locked away in a data room, crank out 100 Page Excel models but you spoke fluent Spanish which got you in front of other clients. He had the opportunity to work on some pretty cool deals including the foreigner $50 million acquisition of the Puerto Rico supermarket chain Pueblo extra International, which was purchased by a Venezuelan billionaire named Gustavo Cisneros. And that deal opened your eyes to the world of

buyouts. You were learning a lot about business and finance. But after a couple years at Morgan Stanley, you decided you didn't want to be a banker. Then you went to Stanford to get a JD MBA. You're originally accepted to law school, then you're repeatedly called the Business School and you got in there. Graduate school is very expensive. The average cost of going to law school is $50,000 a year which means that it's going to cost you $150,000 for three

years. To go to a top law school the cost is $70,000 a year or 210,000 over three years. When you're talking about business schools, the average range is between five 50 and $100,000 and when you're talking about the toppy schools, Stanford's 241,000 and Wharton's 230,000. And of course, it doesn't factor in the opportunity cost of the income you're giving up, which can easily add another $200,000 or more, depending on what you

were doing before. There was a recent Gallup poll a 4000 adults who got a law degree and only 23% said that the decree was worth it. On the flip side, a 2021 survey by the Graduate Management Admission Council concluded that individuals with MBAs are $3 million more over a span of 35 years than those with only a bachelor degree. There are a lot of young professionals listening today who are thinking about graduate school and are asking themselves the same questions. Is it worth it? Will

it help me and do I need it? Did you need a JD MBA to succeed and what's your advice on getting a graduate degree or backing up step is a college degree necessary to our success and our path to excellent

The rigorous analytical, qualitative, deductive reasoning skills that you learned in college, the communication skills, writing skills that you learned in college being part as you were mentioning, being part of a peer group, and navigating a journey with that peer group that has similar interests, because the later you go to any school, whether especially grad school, then you're starting to get into a peer group that is looking at the same thing, so you start collaborating with

them in friendly competition with one another that drives one another like these athletes. Right, Roger made Rafa better Rafa made Roger bet during that journey. I think it's, I mean, a college degree, I'm a huge fan of, I also believe that for graduate degrees, you an individual should do what they feel is best for them at the time, I would not counsel a young person, the following way, I would not say you should get

an MBA in order to do this. If that person wants to do whatever it is, and they want to do it now. And they don't want to go to graduate school, don't do it. Just go Go follow your path. However, many individuals want to spend a couple of years of business school or another trade or law school, reflecting on what they really want to do. And I think that's an important time and a formative time. I would not do anything differently than I did. I really enjoyed law

school. I believe you enjoyed law school as well, jurisprudence, a way of thinking, I was completely inspired by my law school professors, and by my law school classmates, many of which were choosing public interest paths, and different very deep thinkers about big issues in society that are very helpful as a business

person as a leader. And in this school, of course, you have the incredible camaraderie of this very competitive, very outgoing set of people that ended up becoming lifelong friends.

side of Los Angeles. In some cases, our kids go to school with one another, which is very cool.

And the first year was a tough year for me, culturally, there and then I accepted it, and I thought I had a phenomenal second year. In terms of the friendships. That's another place where you make incredible friends like you mentioned, I stay in touch with most of them. And with most of my open mates, Holly Moore runs her own private equity firm. She was at Silverlake before and Hellman and Friedman before Adam clamor was at KKR. Now he has his own firm. We were in the same

bullpen together. Joe Bharata, who runs Blackstone private equity and I are close friends and we were in the same boat but it was a good experience from that perspective.

remember a month after. I mean, I love the work ethic, by the way, you ask them, and this is sort of I can't tell this is good or bad to say, but if you threw a hand grenade, they would jump on it. They just wanted to learn as much as possible. And I remember coming in to work and Tom Barber, who now has his own private equity firm. I walked into his office and back then I got in at six o'clock in the morning, I'd wait for the bagel shop, to open across the street, I grabbed my bagel, I'd go to

work. And I look in Tom's office, his feet are hanging out beneath the desk. And I thought he died. I thought, why was he there? So I looked under the desk. He was sleeping on a stack of Wall Street Journals. And I woke them up and I said, Hey, Tom, what are you doing? And he said, I was here late studying, learning about the sector and technology that we were looking at a deal. And I said to him, I appreciate you, Tom. I love you. We're not going to do that

again. You're gonna know when we have to work the night through which we never did in the venture capital business. You really don't need to you do all the diligence. You talked to some of the CO investors and it was just not necessary. But I love the work ethic. I'm in touch with Tom we also had soon faux work here. I introduced him to Josh Freeman, who I know, you know, soon retired at age 38. One day I'm going to be working for soon. It's been fun to watch people who've worked with me do

very, very well. It's a very rewarding thing for me to see. That's outstanding. While you were at Stanford, you had a summer internship right down the street in Menlo Park and a firm called Seaver Kent which was a joint venture with David Bonderman to Texas Pacific Group, David was and remains one of the most successful private equity investors in the world where you have a summer internship and grad school. The idea is that you work there for

the summer. It's like a job tryout and you get an offer to work there after graduation. If you have a good summer. You graduated but did not get an offer. So over the next few months, you started sending out tons of resumes you made 100 cold calls. One of the resumes went to Carl Toma, who is considered one of the founders of private equity. He was the founding partner of a Chicago based private equity firm called Golder Toma, Cressy and Rhona

and the two of you hit it off. I have a saying that sometimes our greatest disappointments lead to our best opportunities. Can you tell us how disappointed you were not to get the offer from TPG? Were you depressed? And can you also tell us about the value of cold calling and its role on our path to excellence. And please also tell us about the first meeting with Carl and what you guys talked about. So

would get lucky. Carl at the time was starting or predecessor for in 1997. Toma Cressy, leaving with partner Brian Cressy and setting up an office in San Francisco. And they were looking for an associate then. So that was a very easy and the first time I met Carl was I went to Chicago, I flew out there. And I met him and go there Tomas dtrs offices. And he was the coolest. He kind of sat me down. And it wasn't like an interview. He was just talking and

discussing investing. And the main thing that he said Is he showed me how industry consolidation was not going to kind of work anymore. Those roll ups of mundane industries. Were trading at too high prices as public companies because the public environment was valuing them as internal growth engines. And they were not, and that he was really worried about that. So how he built that business from 1980 to 1997 as one of the most successful firms. He was being self critical and worried

about what was next. And I thought that was incredibly humble. incredibly interesting. And I was I was inspired after that meeting.

go well. And I was afraid that the offer was gonna get pulled, but I was able to kind of apologize and get it back together.

love it. I love it. And I actually prefer it to being introduced by somebody else, you kind of maybe ask a favor waste a week, to get an introduction when the other person is more than willing to talk to you and make the call and maybe even more appreciative that you went straight to the source to have an open conversation, or come with an agenda or with a proposal that came very naturally to me. Maybe it's from

the from the job search. But also that was the way Carl toma taught me to pursue industries and really learn by talking to as many people as you could. And the close

And it's, you think it's funny, and it is kind of funny. It's awkward, you're gonna have a lot of people look at you like you're strange or weird, or it's not appropriate. But the lesson is a great one. The cold calling is great, but you have to be able to sell yourself.

What matters is to that individual or to that group, how we're going to do with them now. And it's a super competitive environment. So it's it's, it's been a good thing that we've developed that skill.

either. The firm had made some poor investments in the oil and gas, business and telecommunication business, which altogether made your firm one of the worst performers and private equity at that time. So let's talk about mistakes. When we make mistakes, one of the goals is to learn from them. And my own portfolio, we make a ton of mistakes. And it's never fun to lose money. But there are very important lessons to be learned. When we make a mistake.

I believe we would learn more from our mistakes than our successes. What did you learn about these deals? And how did it change your focus? And how did the.com Bust play a huge role in your investment strategy going forward?

tech. I said well why don't we do industry consolidation in IT services, since we didn't want to, quote unquote, take the risk of actually investing in a product company because that seems scary. Isn't isn't that strange. So we ended up investing in a, in a tough business model in businesses that were part of a bubble, obviously, in hindsight, that didn't add as much value, and that were very difficult to run. And they failed, they failed

quickly. They didn't do well, I am proud of the fact of how they failed because I am still friends with the founders, and the leadership of those companies and their good leaders. It was wrong business Wrong place, wrong time, a number of factors. But what I mostly learned from that is that style of investing did not pay me, I would not have fit as an associate in Draper Fisher

Jurvetson. Even though I think the world of Tim, I didn't beg him for a job, when I didn't have any Hi fit better coming from law school and investment banking, and perhaps a more conservative culture in Puerto Rico, hi fit better in a place where you could analyze cash flow and think about established companies and do quite a bit of analytics on revenue, quality and margins and start thinking about operations with management that maybe has been around for a number of years. That's also the

firm that I joined. That's what Carl toma does. That's what he's about. And that's one of the reasons why there may have been a fit. And I was trying to do something to different that didn't even fit myself. There was a meeting that we had when all those things were not going well. But it was certainly not going well. But already there weren't failures yet. And I was pushing for another deal. And I remember mentioning to Carl, well, Carl, if you want to make return, you have to take risks.

And he looked at me and he said yes, but not that kind of risks. And I always remember that take the risks that fits your makeup, and that you can assume and then you can deal with in tough times. And they are and I had no idea. For example, when those companies needed cash, we weren't part of the venture community to come in with a bunch of friends and finance it and see how we could keep it afloat. We were kind of there on our own.

named profit 21. It was the first software deal your firm had ever done, and was one of the earliest deals in the software industry where a private equity firm, bought a public company and took it private at that time, lenders were very hesitant to provide capital for these kinds of deals. So you did the deal borrowing very little money, the company was doing $40 million a year in revenues at the time it was trading at one time sales.

Usually, when a private equity firm buys a company, they often get rid of the CEO and bring in their own management team. You didn't and you still don't today, you kept the company CEO, Chuck Boyle, and you worked alongside him to boost profits by buying your competitors. First Company was a company called Fastpack, which is based in San Diego, and you work out of the Fastpack owner's garage for five days going through hundreds of contracts to see if

the deal makes sense. So a lot of grunt work after you bought profit 21, you made seven more acquisitions, which doubled the company's revenues to $80 million. And a little over three years later, you sold the business for $250 million, making your investors five times their money. So let's talk about actually how you do it. Tell us about the economics of software, your investment strategy, chasing rabbits and making peace with the past.

stay there. And I would go through the paper change orders of all their customers A through Z. And one of the things that I noticed there which in hindsight, we should have seen the world should have seen there so much growth and there were so many change orders that were related to y2k. And then they start, I was looking at that one and going this is just amazing. It was all right here, who did not notice that there was a huge

blip of growth. That was not sustainable due to people investing around y2k, but that's another matter. We did the opposite of the mistakes that we had made on those failed deals. Those failed deals were about buying expensive trying to chase momentum and not worrying about profits. When the internet bubble burst buying software meant 100%, the opposite. It was by cheap, buy safe, recurring

revenue and stability. And by 90%, gross margins, something just miserably failed, let's still completely the opposite, that the economics were so obvious at the time, you would buy these companies for two times maintenance revenue, one times total revenue, the business model was 50%, variable 50%. Maintenance or recurring at the time, because it was a

product business. And you could theoretically drop down 50% of your maintenance revenue to the bottom line, one way to look at it was, you could pay for all the cost of the company with maintenance, and every variable piece of revenue was profit. That was the other way of looking at it, there was an academic reason for it, when you separated these companies into a manufacturing company and into a distribution company and you assign royalties, because there are many that work that way. It

absolutely made sense. It was also a model where cash flow is greater than EBIT da, because in software customers pay you ahead of delivery of the product. So you have negative working capital. And it was a business that between having these embedded pieces of software that customers find it hard and expensive to replace, combined with intellectual property protection, it wasn't just a really stable place to be debt consolidation, economics, or

even better. Because if you were buying customers and putting them in your platform, you could typically get a 60 to 70% EBIT down margin from the acquired customers because he didn't need overlapping r&d overlapping sales, and obviously overlapping DNA, the same thing applied if you were buying products, because you could put them through your distribution channels. So we came at it with a with an industry consolidation angle. That was a way maybe that we sold it to the rest of the

partnership. This is one of the best consolidating sectors there are, but it's cheap, right now that's called trial

to pay multiples higher. But these companies aren't growing. I mean, you see it, and that's what you invest in. And that's what Akamai is they're growing at a really rapid rates at scale, and changing underlying industries. So being part of that is is just so exciting. I feel that our team, the way I look at it is we've been training for this moment. And we almost are anxious about doing really well at it because there's a point in time that that really fits our background and our history.

today. But let's go back 22 years to when you became a partner, you're 30 years old, working alongside someone who's considered one of the founders of private equity. And your name is on the door of a major private equity firm, you're making a ton of money? What was going through your head, in your mind? Had you made it? And how are you thinking about then about your future?

really, really good. Now, the changes that software has undergone have exceeded our expectations. So we've been very lucky to be in the right place. is at the right time. But then we were really excited that it was the beginning of we could we could really see that actually,

incredible. In 2019, you about a software maker for the mortgage market named Ellie Mae, the company had gone public in April 2001, it shares rose 20x, through the middle of 2018, as its revenues increased from 50 million to $500 billion, then the Fed raises interest rates, its stock dropped 50% In three months, because investors had lost confidence in the mortgage

market. So you jumped in to buy it, you paid a 47% premium to his 30 day average, and you purchased the company for $3.7 billion, you invested 2.2 billion of equity and borrow the remaining 1.5 billion 80 months later, he sold the company to IntercontinentalExchange for $11 billion in cash and stock resulting in a $9 billion profit in 18 months. Not bad. Just to put some context around this, that's 548 days, which translates to a gain of

$1,369,863.01 a day. And the $9 billion is more than the total GDP of 66 countries. Did you take your wife Katie to dinner that night,

wrong. Interest rates went completely down through that journey. Now when we really studied it, once we own the company, the forecasts on interest rates are mostly wrong. Because when we were selling the company, there were a number of forecasts out there. And we proved that most of the time, it's actually not 5050, they're actually wrong on predicting

interest rates. So it's interesting that the market follows these forecasts in order to have a view on future growth and cash flow when if you look back, once again, there's not a correlation there. So that was a an element of luck and good fortune. Now, management in our team did take the company from 20% EBIT down margin still about 60, while increasing its growth rate significantly, also partly due to the environmental partly due to some internal factors

that were put in place. We also did some interesting add on acquisitions that helped. And when a strategic approach is here, it has been our view, our bias, that you should really listen and maybe time to sell because they won't be around. If you say no, they'll go build their by somebody, somebody else.

up. Why isn't it Tanner 15 Or three, I guess it's 10 or 15 is too long, because maybe people want to return from the age of 40 to 45. They don't want to wait till they're 55. And maybe three years is just too short, or too, but when you extrapolate it to the, the normal things that we look at four to five years, you know, these companies had an effective PE of 1213 times for companies that are still shouldn't be growing over 20%. At scale, that's a really good place to be.

reacting this way. And the Fed is raising rates SEVEN TIMES IN THE NEXT 12 to 15 months, you have a lot of very scared CEOs, and also boards.

less. All these opinions are valid, but they don't give companies and executives and leaders the direction. And finally, in tough markets, consolidation plays become more important for leadership as a way to grow a bit more rapidly than you're doing organically to differentiate yourself from competitors. And that's difficult to do as a public company. Because investors don't like a lot of leverage, but they also don't like you selling a piece of yourself to buy

somebody else. And they second guess was that acquisition done because the company was about to miss numbers, investors go to the negative place. First, as cynical not even skeptical. So in these markets, one ownership group with a clear and consistent agenda that doesn't change is very empowering for for leaders.

the terminal value. Therefore the industry becoming a lot more like venture capital or growth, equity, all these aspects coming together as one. In most of those cases, good ownership groups, let the growth get you to the margin, instead of making a mistake, and cutting headcount and cost that could have a material impact before you really get to know that business on what really pulls the train. You don't want to do that in these assets that you're paying good prices for good quality

growth. It's not that big of a phenomenon now, as it was 15 and 20 years ago, when you're buying a legacy company growing at 5%. That's not making a lot of money, and you're looking to make your return at least 50% on your return on the cash yield today. In those cases, you would reduce headcount. Now hopefully, ultimately, it's like taking two steps back before starting to

move forward. An example of that, and you probably experienced this and how come I let's take sales, you take a sales manager managing eight to 12 reps, we say that out of that group say they're managing 10 reps, you should not have more than three underperforming reps. Because if that's the case, managers spending too much time helping the underperformance and very little time helping what's driving the business. In organizations that have a bit of a sales problem and may have a

broken sales model. You have to take out headcount before you can move forward and progress with maybe different sales plays or strategies, or divisions of territories or quota structures, you name it. Now in those cases, we institute In training, onboarding and onboarding, and we stay as close to the individuals as we possibly can to ourselves, give them a soft

landing, so they can move on. We would like to think that I think this is true that given the labor markets and technology, and the knowledge workers that are part of these companies, they're very quickly able to land on their feet into a better opportunity that fits them better.

August 15. We finally found somebody who started on Monday, we flew him in from South Dakota, but we had nine recruiting firms looking and the quality of the applicants they sent us weren't good. They all want to work from home. Like I said, we're a four person company, you have to build a team with the DNA necessary. And let's move on to teams. Let's talk about the importance of those around us on our path to

excellence. You can't build a great company without a great team and I want to talk about the type of people you hire. But first I want to start with a guy named ace Greenberg, one of the Great Wall Street icons of all time, who ran Bear Stearns for 24 years. In 1996. He wrote an awesome book called memos from the chairman, which is a collection of memos that he had sent to various employees at Bear Stearns over his long

career. These memos were famous on Wall Street, on October 16 1987, he wrote a memo to all managing directors and associate directors, there are five bullet points in the memo and the first one was higher PSDs, which stands for poor, smart and a deep desire to get rich. Then he goes on to write please do not infer from this that we are prejudiced against people who possess almost other worthless

degrees. That's one way to do it hire people on the basis of their drive and their hunger instead of degrees from fancy schools or grades from the schools. At your firm, you have said that the next generation is always better than the one before it. And one of your famous comments came from one of your young team members, which is this When hiring don't think about culture fit, think about culture add. So what do you look

for when you hire somebody? In How do you retain your amazing talent, people who need to be superstars to get a job there in the first place.

differently. So we've become very open to both and not too opinionated on on either. In that way. What we look for is, number one is give me a good person, give me somebody that in their past, has shown that they come out the right door, that do the right thing, from the information that they were given. We work in a business of partnership, not only amongst ourselves, but with our companies. We cannot accomplish anything without a CEO and her

team or his team. And the best we can do is empower them, give them confidence, give them more tools, but it's their job to do, we're not going to do it for them, we don't know how to do it for them. So you have to be a good person to get that buy in, and to develop a strong relationship of trust. The second piece is give me somebody that has a strong opinion, right to disagree, my partners could

disagree. It could be of something unrelated to finance or private equity or invest me somebody that stands for something solid, that their journey becomes bigger than making a return on their certainty. And third, collaboration. We our model is to work with existing management to make them successful, to not necessarily hire the proven executive that comes from a different company. Sometimes we'd have to do that in cases when things are not progressing. But we don't go to that place.

First, we go to the empowerment piece first. So how do you collaborate and delegate and look for help and be vulnerable when you need to in a collaboration setting that makes you really powerful and a really powerful member of the ownership group. We like to hire people that are very young, because we have a big mentorship culture.

We believe in doing things within a certain philosophy and value based system, but then giving people the autonomy and responsibility to be their own artist, and maybe to do deals their own way and put their own imprint in things. I think that's one of the reasons why we have no turnover, we have been able to find leadership positions for young talented adults and our next generation leadership, that is very exciting. And that doesn't have

limits towards them. I am personally big into that because I feel the pressure of owing our young, talented team members, the same experience as people gave me and my partners, and the more it is about them, the better the firm will do anyway. And the better we'll all be. I've learned a lot from my mentor Marcel Bernard on operations, and delegation, and stepping out of things, and letting things happen organically and by other people

that is really powerful. We try to implement that in investing.

not love crypto? So why should we love it given us tremendously risky nature and very volatile? price swings? And should ordinary investors be buying it?

connectivity. These are really, really good themes to address some centralized practices and policies and control systems that have negative unintended consequences. The second piece of why really like it going to young people and innovators, young people today want their own culture, and they want their own financial system. And

they're building it. And what's going to come out of that, I'm really optimistic that with the brains behind it and the innovation and the optimism, it's going to be great, there's going to be great use cases that we cannot even envision today that are going to be incredibly powerful. In software, enterprise software. Right now, we're almost nervous that we don't see any crypto threats to enterprise, most of them are happening social media and consumer and other use cases.

But those will come because we can think of use cases we're using the blockchain is back. I don't know keeping a stock, like knowing who your shareholders are, knowing who's buying and selling your stock, limited partner arrangements. There are many of them. So those are the reasons and the themes, or I'm a big believer in it. And finally, I think it's fun. I think it's fun to see a system that is coexisting with a government controlled system and almost competing with it.

generation. You've also said that there are mentors all around us and to find the right one you have to listen carefully. Keep an open mind and an open heart and then it will become clear what mentor best fits your values. This is great advice but can you please give some more concrete action steps on how to get a great mentor and you have to work at Thoma bravo to have you as a mentor

What does that mean? What is being a good executive? How do they prioritize what's important? What do they focus on? They will be in The same page, one of them will look at it from the investment side, the other one will look at it from the operating side. Those were my two, my two mentors. Can I have all the time that I would

ask for? So one of the drivers for me is how can I pass that on plus whatever we brought into the equation to young people so that they they can use it in their own way, in a new world with new deals with new opportunities with it with changing environments, with changing cultures with changing social norms. But what do they do with these principles, Marcel used to say, we all need to learn from somebody, nobody's born with innate knowledge. So really being a good listener is

important. Mentors are all around us. Because if you take any one of my team members, any associate, I'd love to take their calls and talk to them for hours about something, you and I right, everybody loves to help in the same way we were helped before that also get helps produce better results. And you think that you're dragging the organization around a certain

set of values. The 25 years is an example of that, and you brought it up was with one of our young associates the quote that you had, you spent 25 years getting the principles, the tools for people that have done it before, and applying them in your own way, you then after a while after then start looking at what are young people coming up with that is disruptive, that

is a big opportunity. And that guides where you should go as an organization and as a group, because the older generation is going to be here so long, and private equity itself, and finance and technology. They're all young person's business. And that's where where the action is. So when we were looking to significantly improve diversity and inclusion, I was really talking to a lot of the young people at the firm. And Veronica came up with that quote, and I thought it was extremely

powerful. And it was extremely powerful for a whole team to get a lot of buy in to start including a lot of different people into our organization.

was fun. Jay was a 37 year old vice chairman and CEO when I joined the company, and Jay was phenomenal. To watch him. He's very tough, very fair. Very

funny. I remember we were working on a deal in Florida, we were in this horrible conference room with papers and boxes looking to buy the John Alden insurance company, and Jays there, I remember us being on a phone call, where serious phone call or banker from Morgan Stanley, the head of the financing services group is on the other end of the line, the CEO of a company we're looking at to buy, and there's Jay buting, the call drumming, you know, he's a drummer, making

jokes, and then he would put the mute button off. And it's just great to see people like that he has people fairly and most important for me, he's very humble. He's had great success. No one knows his name, unless you have worked with him in the past. And that's also been a great thing to watch.

can follow it. That's very different than getting a call once in a while from somebody that needs more theoretical, perhaps advice if they're asking for

remember being there. I would always get there 30 minutes before LA traffic never be late. And I walked up 10 minutes before I was sitting in the waiting room and I'll come Strauss he's got his headset on and goes like this, he said, I'm sorry, I'm late. I'll be there in three minutes. I don't know another CEO in the world, who's running a huge company that would have done that. And things like that are great role model to me. Strauss gives 10 to 15% of his time mentoring people,

and I follow the path. When I'm late, I come out myself. And it's just so great to see people like that I have a summer intern program. We get 1000 applications a year. We hire 36 interns. We have lead interns the following summer, the best interns, they do all the hiring, they interview, they get the hiring, I see a stack of 36 resumes when they're finished, and one of the greatest joys in

my life. But one of the reasons I do the podcast is to inspire and motivate these interns, and I'm in touch with over 100 of them today. Last year, I emailed David Solomon, CEO of Goldman, I met him at Sun America when he was at Bear Stearns. He was a junior Managing Director, then he had a cocktail party. I haven't seen him since I

reminded him of that. This student, it was between her and one other person for an investment banking job at Goldman, which as you know, is the holy grail for a lot of people. She got the job, and it's so fun for me to mentor people and give back. I've had great mentors. I've had great role models, and I never forgot where I came from.

you're consistent. You're a good person, you're humble, you're up front, you're vulnerable. And it's quite simple when you summarize it that way. And when you lift things consistently in everything you do, for example, I use the same principles on philanthropy, as I use in investing and in business. And in making decisions with management teams. It's all consistent. So it keeps things very real for me.

incredibly lucky. I think all successful people have some amount of luck to where they get to where they are today. But there's one thing above everything else that has allowed me to achieve certain things in my career at a significantly faster speed and is also resulted in me achieving results that without it would have never been possible. And that's being the most prepared person in the

room. And as an example of that, when I interviewed with Eli Brode when I was 27 years old, he had created to Fortune 500 companies from scratch at the time, one of only three people in the United States who have done that. So what did I do I prepare for that meeting like it

was a final exam. How many hours do we spend for tests in college studying for classes, we can't remember 1020 For what a good grade, which will lead to a good GPA which will open doors and theoretically improving your chances of getting a good job. When you graduate. I didn't spend 10 hours preparing for my interview and I didn't spend 20 I spent 40 hours I read every article about Eli and son America I read the last five

annual reports. The last 510 K's the last 2010 Q's and I made a 20 page single spaced outline. And I prepared a list of 20 questions I memorized them not softballs like how did you do this? Or do that? These were questions about footnotes in the financial statements questions

about acquisitions. That son America that son America had one time considered but didn't make due to arcane accounting rules rules from the Internal Revenue Code, which I knew nothing about at the time but learning and memorizing couldn't recite word for word. I went in there armed with more knowledge about him in the company than any person he

had ever interviewed. And I worked on my 27th birthday he hired me as the assistant to the chairman of the great birthday for a guy who was incredibly unsuccessful lawyer, who had had three jobs and eight months after law school. And at the end of our meeting, he told me that I was the most prepared job

candidate he had ever met. Can you tell us about the importance of preparation in everything we do, and tell us how being the most successful person in the room has contributed to some of your success.

it. So I I appreciate that. In terms of being so prepared, I have found that instead of maybe we look at the opposite of a of a job applicant, we look at a CEO. We're one of the ultimate leaders in leadership positions in businesses. And in board meetings, and an operational review meetings, when that CEO or leader comes in so prepared with details around the budget, what went right and what went

wrong. Knowledge about headcount, direct reports, just complete command, their ability to move the business forward, both from getting the support of all the board, and from getting the the buy in, of all members of management, and direct reports is night and day, versus somebody that is very good and knowledgeable, but it's just not that prepared in that meeting at

that time to do that. And the growth rate of the first company is going to way exceed the second because there's going to not be useless conversations, quantification, questioning further meetings, further analysis, further uncertainty, contests, we really have noticed, that is the level of precision and preparedness of of leaders is instrumental for me, especially early investing in software, my team and I would really have command of all the numbers to also get buy in from,

from management that we were a good partner, not only because we needed to know it to make good decisions, but when you sometimes expose things about the business, that management may not have noticed over the year, so just operating and doing the day to day job, you can present yourselves as a very good partner. And as a partner that will actually close the deal. Because you've gone that far into analyzing every single

detail. And summarizing into what's important, the two or three things that really, that really matter the effect of business.

his assistant. And then four days later, I get a call, Mr. Brown would like to see you. So that's either a good call, or it's a bad call because he was brutally direct when you did something very good. He would tell you we did something very bad. And there were many of those moments. Those were not fun meetings, but he called me up. And he said he was holding it in his hand. He said, Did you write this all yourself? I said yes, of course. He said

outstanding. And he nodded. And that was my cue to leave the office. Has anybody at your firm, totally blown you off your chair, by preparing something like that? And has it really advanced that person's career at your firm,

not think about it anymore. And if we have to redirect them or slow them down, we can do that later. But go as fast as you can,

And I always like to be present, both with a family and at work. I enjoy it. And I enjoy the chaos that way and it comes naturally to me. I don't need a lot of time to kind of relax by myself. I like being around people. That helps maybe that that balance. I do try to work out every morning, I never skip it. If I don't, I slow down things don't feel don't feel as great. It keeps me there mentally, emotionally. That's my alone time is about that hour in the morning. And then the day

goes crazy. I think it's doable. Sometimes we tell our colleagues, that they're working too hard. You mentioned these all nighters and investment banking. We don't do that in private equity. Unless there's a specific deal or big decision that happens very rarely. But people go home at 6pm 7pm. And they get into the office at eight or nine.

There's no expectation there, that there'll be anywhere near the field that I've been in, or maybe they will maybe they won't. But I hope that working hard and the dinner conversations and what we value has served as a good role model for being a super good productive citizen and working hard and finding your dream and what you really want to pursue.

I drive them back here we get here at 10 to three, they would crack their books open on the kitchen table. My two girls would not my son, and we would have dinner every night. And it's something that I cherish similar to you. My kids make fun of me all the time. I'm not cool. My jokes are corny. And they take every opportunity to rag on me, which I also enjoy. I don't mind it. It's fun for me to learn a lot of the lingo. I'm

way out of the loop on that. And I'm way out of the loop on the popular songs today and the type of music but it's a great way to learn.

year. And it's a great opportunity with no competition from their friends making plans. I remind them all the time, no phones at dinner, they still try to do it. But I will essentially this is the wrong word. But bribe my kids by taking them on very nice vacations, which is really, really fun for me. My son just turned 18 years old. He wanted to go to Las Vegas. I brought two of his friends. We stayed at the when we did things

like go to a gun range. We raised Ferraris, and those are memories we're going to cherish forever. But he did say to me, Dad, I'm not coming back here until I'm 21 years old. I said why Charlie? And he said, it's like a kid being in a candy store and you can't taste the candy.

20 2017. It killed 2982 people and it caused $91 billion in property damage, which made it the third costliest hurricane in the United States and the costliest hurricane in Puerto Rico. History it completely destroyed neighborhoods, took out the island's power grid and wreaked havoc on nearly all of Puerto Rico's 3 million people. You were in Japan raising money when it happened and frantically called your parents who were in San Juan and thankfully, they were okay. So what did you do?

You came back to the States. And five days later, you flew your Gulfstream jet and brought 1000 pounds of supplies, things like water, granola bars, milk, kids, satellite phones, diapers, IVs, hydration pills, and a lot more. You packed a lot of those supplies yourself. Two weeks later, you charted a DC 10 cargo plane with 7000 pounds of supplies and van, you charged it to container ships that carried 600,000 pounds of supplies. And after that you donated $10 million for hurricane relief

efforts. That's just amazing. Can you tell us what an airport worker said to you? And how he looked when he opened the door of your plane? And then what you did for there? And post Maria, can you tell us what you're doing for aspiring entrepreneurs in Puerto Rico, in the 44% of the population who live below the poverty line?

who's going to meet us here? And he goes, I don't know. We'll just see if they show up or not. And that's the pain got closer, right? You just see. Puerto Rico is very green. And it was 100%, gray, even the sea on the beach, everything was great. And we land. And when the plane door opened, there was a person that worked at the at the airport. And he didn't say anything. He was the look of fear, complete fear. And you think about it.

That's a person that has worked at the airport for many years that is well trained that has seen things happen. It was like wow, we're about to enter into a really, really tough, difficult place that luck was it will always stay with me. It was very, very hard. The one thing that came out of that, that I always mentioned to young people that are looking at starting

from Anthropy. If you don't do anything about it, nobody else will do anything about something that you're very passionate about and that you care about. I've been in San Francisco at the time before I moved to Miami for so long. That I was I removed from Puerto Rico, from my high school friendships kept in touch online, or what have you, I didn't visit the island very much except to see my parents maybe once every 18 months. And this brought me back, because I saw what was

happening. And nobody was doing anything about it. Because you needed local people that felt a sense of belonging there to be able to help from the outside. What then happened is, I got reconnected, not to former friends, but to a culture and an environment that reminded me of how much I'd like to that really good feeling of Puerto Rico, lots of talent that lacked opportunity, very open, loving, welcoming people. And it also woke me up to the poverty that

exists in the island. Living in Maya West, even though I grew up privileged, I would drive around or my parents it is kind of where you lived. But when you went back, especially after the hurricane, and you visited some of these towns, it then became very real, how 60% of the kids live below the poverty line. And I'm from there. Now, I'm going to leave after hurricane relief. So the mission that we established in the foundation is a really big one. Puerto Rico

has a big problem. And it's a cultural problem, actually, as a society. It is one of the most unequal places in the world. There was one study done about five years ago, that looked at places and they characterize Puerto Rico as a country, which is not, but they looked at the most unequal countries in terms of wealth, and Puerto Rico ranked fourth, after three African nations. And what's happening is it's a very divided society. It's a very polarized

society. And we developed a mission where we would like to provide meaningful opportunities for both personal and professional growth to all talented young people that live in the island. We have three programs that do that. And one of them is this racing and preparedness program that we're, we're really involved with that I think we're making incredible progress. You have to be humble about this. I didn't know anything about this. When we

started it. I didn't know anything about hurricane relief. The only things I drew upon were how did they teach me to do business at Thoma Bravo, we back existing management, we go straight to the source. So what we did is we started back in community leaders to small communities that really know that that had the following other people, and that are always going to be their own the problem. And then we've made a lot of mistakes and had some successes, and some not so good.

And little by little we've been, we've been figuring it out with a rising Entrepreneurs Program, we have been, I feel selecting better generations of teams, not necessarily the ones that are going to make the most money. But the ones that you should really mentor that maybe are 25 years old, and maybe that business will work. But that's somebody that the foundation really wants to invest in for a

number of reasons. Now, what we're seeing is the development of an ecosystem within our program where some of the board members in these young companies are rising entrepreneurs that we back three years ago, and how they're helping each other and how they're bringing each other up. And that's just great.

that. As we finish, do you have any other advice for those listening and watching today to go about how to go about how to achieve their dreams? And do you have anything else you'd like to relay to our listeners and viewers, including something you would like to promote?