Private Equity Secret Sauce
Robert Smith launched Vista Equity Partners in 2000, a private equity firm focused entirely on software companies, and he is partially responsible for convincing the investment community that software companies make attractive investments. At the time, investors were wary of software companies as investments for two reasons: (1) a lack of hard assets, and (2) the currently extremely popular software-as-a-service revenue model had not yet been so uniformly accepted.
The firm currently manages $30 billion plus and Smith's net worth is in excess of $4 billion. The success has been attributed to his early commitment to the space, and the approach the firm takes each time it makes a new investment. On the subject of starting early in a new industry, the WSJ reported the following:
“Robert, over time, convinced an entire market to see this cash-flow stream of software revenue as a reliable annuity that could be financed with debt,” says Gregg Lemkau, co-head of Goldman’s investment banking division, who worked with Mr. Smith before he founded Vista.
As for the firms ability to consistently add value, that is quite literally a secret:
His private-equity firm, Vista Equity Partners, has codified that notion into 110 acronym-heavy directives known as Vista Best Practices. They are secret—stored on a company server that makes a record every time anyone downloads or prints them.
Source: Miriam Gottfried and Laura Cooper | “Billionaire’s Secret Buyout Formula: 110 Instructions and an Intelligence Test” | The Wall Street Journal | 7/9/2018 | Visit