In Search Of Excellence - Orlando Bravo: Finding Your Niche | E16

Episode Date: March 29, 2022

The incredible story of Orlando Bravo’s journey from a tuna fishing village in Puerto Rico to the most successful private equity investor in the world, is one of incredibly hard work and a fierce determination to succeed.  When Orlando’s childhood dream of becoming a professional tennis player ended, he went to Brown on a tennis scholarship, was terrified he wouldn't succeed, graduated Phi Beta Kappa in the top 2% of his class, and later earned a JD / MBA from Stanford. After not being offered a summer internship position at a prestigious private equity firm and graduating from Stanford without a job, Orlando made 100 cold calls to potential employers, one of whom was Carl Thoma who is considered one of the founders and pioneers of private equity.  It was here that Orlando put himself on the map.  After making a series of poor acquisitions of technology companies that survived the dot.com bust in 2010-2011, he pivoted and began investing in software companies.  His first deal was the acquisition of Prophet 21, a product distribution software provider based in San Diego where he worked for five days in the garage of the company’s founder before going forward with the deal.  The investment made a 4x return and earned Orlando a seat at the table, and by the age of 30 Orlando became a partner in the firm.  Since its founding, Thomas Bravo has completed more than 350 acquisitions worth nearly $155 billion, and 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. In this inspirational episode, Randall and Orlando discuss Orlando’s journey from tennis to higher education, why he focuses on investing in well-established software companies instead of startups, the importance of learning from investment mistakes and other failures, and why he believes the next generation is always better than the previous one.Topics Include: - Lessons about work ethic learned from his parents and grandfather- How “soft landings” and limiting pressure can build environments where people thrive- Why Orlando prefers cold calling to introductions- How the dot-com bubble influenced his investment strategy - The story of the Profit 21 acquisition- How he made a $9 billion profit in 18 months by buying and selling Ellie Mae- How to attract and retain top talent- The place cryptocurrency in our society- The value of preparation- Mentorship- The importance of philanthropy and his incredible efforts after Hurricane Maria, and what he’s doing to help Puerto Rico and young entrepreneurs there- And other topics… ​​Orlando Bravo is the Founder and Managing Partner of Thoma Bravo, a private equity firm with a focus on software and technology that has been rated the top-performing private equity firm in the world.  Orlando is an incredibly generous philanthropist and serves as the Founder and Chairman of the Bravo Family Foundation whose mission is to provide access and opportunities to young adults in Puerto Rico.  He has committed over $100 million to the Foundation’s Rising Entrepreneurs Program (REP), a program that promotes entrepreneurship in Puerto Rico.  Resources Mentioned: Memos from the Chairman by Alan GreenbergSponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

I don't think success is doing higher return deals than somebody else or building more wealth than somebody else or having a bigger firm. Success is doing things right. When you look back, did you do your craft and your art the right way? And did you do so much with what you were given? That to me is success. Welcome to A Search of Excellence, which is about our quest for greatness and our desire to be the very best we can be, to learn, educate, and motivate ourselves to live up to

our highest potential. It's about planning for excellence and how we achieve excellence through incredibly hard work, dedication, and perseverance. It's about believing in ourselves and the ability to overcome the many obstacles we all face on our way there. Achieving excellence is our goal and it's never easy to 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 Tomo 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, Toma 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. Orlando 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. Randy, thanks so much for having me. I appreciate it. I always start my podcast with our family because from the moment we're born, our family helped shape our personalities, our values, and the preparation for our future.

You were born into a privileged life in Mayaguez, Puerto Rico, in a city of 100,000 people, which is best known for being the port for tuna fishing vessels. In 1945, your grandfather started Bravo Shipping and eventually your dad ran it. The company serves as an agent for the huge tuna fishing factory ships that enter the port of Mayaguez. Could you tell us what your parents were like and how growing up in a privileged life influenced your future and the kind of values your parents instilled in you? First of all, Randy, nobody knows that about my background. I am impressed. I actually saw my dad here in Puerto Rico last week, and we were talking about his business there when the tuna factories were there. I think my parents are the main reason

for my luck. I had my dad, who had the small agency business around the tuna ships that came into the ports, the canneries that existed back then. They're no longer around for a number of reasons. And he instilled in me hard work, an 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 would go to the office on the weekends and work with him. And they communicated by telex with the ships. And I would go to the port with him and I would try to help in whatever way I can or I could when the ships were in port. 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 my area 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. Did they teach you specifically about the value of work ethic?

Was this part of your DNA? And at what point in your childhood or part of your childhood did you decide I'm going to be the very best that I can be? My dad taught me work ethic and ethics by example. My mom really pushed me almost to the point where right now I'm so happy and the next generation would disagree with that. That was always ingrained in me is if I can accomplish something here, 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, 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. So let's talk about what you were like as a kid. You started playing tennis when you were eight years old. You practiced primarily at two places, a local university and a Hilton hotel. You were very good. You played in a lot of local tournaments. You did very well in those, so much so that your parents started driving two and a half hours to San Juan on weekends so you could play against better competition. You said you've loved this opportunity. You were 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 considered yourself an underdog and how that mindset influenced your tennis career and your future? Yeah, that on the one hand, it was really exciting. And I have less pressure because I felt like I was the outsider, the underdog coming from the relatively small town to the big city to play. I remember once when I actually won a tournament, this place called Palmas del Mar. It was a clay court tournament, an important tournament in Puerto Rico. There was an American head of the

tournament who mentioned all the way from Mayagüez. And that 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. But you rose to the challenge and you kept winning. And soon, competition in Puerto Rico wasn't good enough. So in 1985, when you were 15 years old, you moved to Bradenton, Florida, to enroll in Nick Boletari's Tennis Academy to pursue a possible career in tennis.

For our listeners and viewers who don't know, Nick Boletari has coached the Williams sisters, Andre Agassi, Jim Currier, and Monica Sellis, 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 trained, and what you've described as physical pain? And can you tell us how all of this and the other lessons you learned 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? You really learn humility

pretty quickly because you think you're doing well in something and then you go to a different place and it becomes a lot bigger and a lot different. And you understand your limitations really quickly. So one thing was understanding where you fit and where you could go. I mean, I want to talk more about that, but the days were really grueling. We had alarms on at 6.30. You had breakfast 7 to 7.45. 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, call it a real school with other kids, but they accommodate your schedule. So you would start at 8.30 and nonstop, except for a 15-minute break, end at 12.30. You were rushed back into the academy about a 20-minute drive, 30 minutes for lunch, and then you were on the courts relatively from 1.45 till about 5.45. 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 four 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 a tournament or on saturday we would go to the mall at night to watch a movie or grab some food 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. Jim Currier was your roommate. Was it super cool to see him progress and get to number one in the world? Unbelievable. Jim is one of the most gifted athletes and certainly one of the hardest workers and one of the smartest as well. He has it all. And what was so cool is seeing him become one of the best with the same style as I would hit with him or watch him play when he was 12 years old, just much bigger, faster, hitting the ball a lot harder. He and I have stayed in touch over the years, and he's just a phenomenal person. You have these dreams to go pro, and you get to a top 40 junior ranking in the United States, and then you peak.

You'd put in a ton of work, and your dream was to go pro, and it wasn't going to happen because you weren't good enough. At what point did you realize it wasn't going to happen? Was there an exact moment? And if so, what was it? And how did you deal with the disappointment of having your childhood dream shattered? It was probably the first year of the 16 and unders, where before Kalamazoo, which is the main tournament in the US, 16 and under, 18 and under.

Before that tournament, I kept losing in the second or third round. And I just saw the top 10, which included Jim Currier, certainly Agassi, Michael Chang, keep getting better exponentially. That was a very pivotal time where the game for the top completely changed and everybody else kind of stayed in the same group. I switched relatively quickly. 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 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 at. I want to make a quick comment about the world of professional tennis. If you want to make a good living doing it, you need to be one of the top players in the world. Only 50 players make over a million dollars a year. And over the last seven years, on average, only 195 players made more than $100,000 a year. 76% of all professional players make less than $20,000 a year. So it's fair to say you probably picked the right career

from a money-making point of view. Yes, that is true. I did. And I noticed that. I'm in touch with some pro players. And if you have, for example, the number 60 in the world without naming a specific individual, if they are not from the US where sponsorships are more feasible, you get almost no sponsorship money and you're having to live your own P&L, which is the price money you win in tournaments minus your coach, minus the travel, minus your physio and whatever else you need to spend money on. So the margins are really thin. There's a pro golfer who I don't want to name. We became friends with him when he comes and plays at Riviera. He'll stay with us. And I was very surprised to learn the life of a pro golfer. You play the Pro-Am on Wednesday, you get there on Tuesday, you play the Pro-Am on Wednesday,

you have four rounds Thursday, 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. I'm glad you mentioned that. I've noticed how the P&L is ingrained in each of these pro tennis players, and maybe it's the same in golf, where when they're playing a tournament, I noticed that most of them are staying in somebody's house. No matter how successful they are, they could be one of the best in the world, but they're not paying for a hotel because they learned that very early not to have to deal with that cost.

Well, he told me it's very lonely is the first thing. And it gets tiring checking into a room each day. And he wanted the home-cooked meals. So my wife, Madison, cooked nice meals. We went to dinner one night. And he felt like a human being is what he said and how he called it. So for me, it's fun to learn about new things. Like you said, it's a P&L and it's very hard to make a 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 were 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 attorney in the United States for academics. It's typically awarded to the top 1% to 3% of the student body. It's something you don't apply for. They found you. So you're the top 1% of 1%ers. 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 1% to 3% of your class? And what's your advice for people who are 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 is like Carl Toma once told me, making mistakes means that you're trying. And of course, you try not to make the same mistakes over and over again.

That's part of you managing your own journey. Risk-taking and taking risks that are right for you is the most beautiful thing. And it takes a lot of courage. And you 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. When I talk to leaders, I let them know that, for me, the importance of that. When we have a new colleague join 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 sit myself in the library from 8 p.m. to midnight when the Rockefeller Library and Brown University closed, and I was there. So I over-rotated, and maybe even I over-did it with putting too much time to do pretty well. The second semester, I took three pastel and one for a grade. And I did great. Then it was two and two. And then I finally went all grades because I felt comfortable enough in that environment. I went to a private high school in Detroit, Michigan, very rigorous. They made you play two sports a year. The motto was men's Sano and corporate Sano, sound mind and sound body. It was very tough. Homework till 11 o'clock midnight. You come home from practice, play a sport. I got to Michigan and I thought, I have so much free time, I don't know what to do. But I was intimidated as well. Great school, look in the first lecture class, there's 500 people there.

How am I going to be the best here? 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 the 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, have been phenomenally successful in life, which has been super fun for us to see and support one another. I was scared. I actually took one pass-fail class

in a 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 of your class at Brown. Then you get a very prestigious job in mergers and acquisition department at 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 cranking 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 $450 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 of 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. If you 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 ranges between $50,000 and $100,000. And when you're talking about the top E schools, Stanford's $241,000 and Wharton's $230,000. And when you're talking about the top e-schools, Stanford's $241,000 and Wharton's $230,000. And of course, it doesn't factor into 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 of 4,000 adults who got a law degree and only 23% said that the degree was worth it. On the flip side, a 2021 survey

by the Graduate Management Admission Council concluded that individuals with MBAs earned $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 these 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 a step? Is a college degree necessary to our success and our path to excellence? College degree is absolutely necessary. And I am not suggesting that somebody without it cannot be successful. The rigorous, analytical, qualitative, deductive reasoning skills that you learn in college, the communication skills, writing skills that you learn 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, 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 better. You're in 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 follow your path. However, many individuals want to spend a couple of years in business school or another trade or law school reflecting on what they really want to do. I think that's an important time and an informative time. I would not do anything differently than I did. I really enjoyed law school. I believe he 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 very deep thinkers about big issues in society

that are very helpful as a business person and leader. And in business school, of course, you have the incredible camaraderie of this very competitive, very outgoing set of people that end up becoming lifelong friends. What was it like working for Joe Perella? I've read all the books when I was in high school and college. He was an icon. And then are you still in touch with your classmates at Morgan Stanley from back in the day? When I moved to Los Angeles, there were a group of us, young professionals, very, very motivated. And it's been fun to see us grow in our careers, have families and kids. My kids go to a private school on the west side of Los Angeles. In some cases, our kids go to school with one another, which is very cool. Well, first, Joe Perella wouldn't have known me then.

I was an analyst. I don't think I was invited to any meetings that he was at. Working for the associates of Morgan Stanley was brutal because they were looking to make their mark. So they will give you assignments that may not have been necessary at midnight in order to show it to their VP or their boss the next morning. And maybe something will come out of it. Maybe something would not. But that was a rite of passage. 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 bullpen mates. Holly Moore runs her own private equity firm. She was at Silver Lake before, at Hellman and Friedman before. Adam Klamer was at KKR. Now he has his own firm. We were in the same bullpen together. Joe Baratta, who runs Blackstone's Private Equity and I are close friends, and we were in the same bullpen. It was a good experience from that perspective. When I started my investment firm back at the end of 99,

DLJ was the best investment bank in town. Ken Mollis ran it. And my company had gone public. Everyone thought I had the magic touch. I didn't. But I got a call from a couple of the young, the analysts there, and they wanted to come work with me. So they did. And I 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 if 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 6 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 him up

and I said, hey, Tom, what are you doing? And he said, oh, 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 going to know when we have to work the night through, which we never did. In a venture capital business, you really don't need to. You do all the diligence. You talk 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 Fo work here. I introduced him to Josh Friedman, 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 at a firm called Seaver Kent, which was a joint venture with David Bonnerman's Texas Pacific Group. David was and remains one of the most successful private equity investors in the world. When you have a summer internship in 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 Rohner. 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 I was so used to being turned down by every single private equity firm in the world that it wasn't that disappointing. It was almost like you would actually send out resumes blindly, and most of the time

you wouldn't even get a response. And sometimes, maybe 10% of the time, you would get a very polite letter written back that said, we'll keep your resume on file in case things change. I just thought that the more I did, maybe one would land and I would get lucky. Carl, at the time, was starting our predecessor firm 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 end. The first time I met Carl was I went to Chicago.

I flew out there and I met him at Golder Thomas, DTCR's 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. 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 inspired after that meeting. Did he offer you a job right out of the gate or did he give you an assignment you had to do? He didn't. But I felt that in hindsight, that was true. It went well. His partner at the time, Bill Lieback, who ran the San Francisco office, he then offered me a job. After that, I was very excited about that. And to close me or to close the deal, he invited me to dinner in San Francisco with him and with Carl. And I made the bad mistake of asking for more carry. And that dinner did not go well. And I was afraid that the offer was going to get pulled, but I was able to kind of apologize and get it back together.

What about cold calling? How important is that to our success? Huge. I do it today. Now, it might be a little easier if you've done so many deals in software and you call a software company, they might know something about you, but I love it. I love it. 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 take 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 was from the job search, but also that was the way Carl Thoma taught me to pursue industries and really learn by talking to as many people as you could. And the close corollary there is being a salesperson. You make a call, you have to sell yourself, you have to sell your firm. I mean, at this point,

every CEO in the world is going to take your call. They all know who you are, but at some point, they're not. I spoke at Draper University around four years ago, and Tim Draper gives the assignment where each of the students have to go out into the streets of San Francisco and sell 100 condoms with the Draper University logo on the condoms. And you think it's funny, and it is kind of funny. It's awkward. You're going to 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. I loved him. I met him when I was in business school because I would play tennis with him and

got to know him that way. And he was awesome. He would invite me to these dinners. And I am a huge fan of his. I'm not surprised that he's been that creative in terms of mentoring people and coming up with new ways. But see, even today, even if it might be an easier cold call, I feel like we need to prove ourselves just as much every time because it doesn't matter what our past has been. 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 been a good thing that we've developed that skill. Let's talk about the rough start to your career. You're 27 years old. When you joined Carl's firm in 1997, your first few deals were disasters. You backed two websites, Design Startups, NerveWire, and Eclipse Networks right as the dot-com bubble burst. You invested $100 million in these two deals and lost most of it. To make matters worse, Tomacresti wasn't doing

well 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 in private equity at that time. So let's talk about mistakes. When we make mistakes, one of the goals is to learn from them. In 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 dot-com bust play a huge role in your investment strategy going forward? First, I was trying to go too fast. And maybe that was also a product of the environment that I was in.

Small San Francisco office in the middle of, I mean, you remember this well. One of the stocks I bought in my personal portfolio at the time was Akamai. Okay. Pre-IPA, did you get friends and family shares? Because I cringe when everybody I know bought it afterward. I think the stock closed the first day in public at 28. It closed the first day at 144. And it ended the year at 345, giving us a market cap more than Chrysler, GM, and Ford combined on $3.2 million in revenue, 90% of which would come from Apple.

Believe me, I did not get any friends and family. I bought it on like 250 bucks or something like that. But I held it through. But things were happening so fast. And even culturally in San Francisco, things were happening so fast that my classmates from business school were getting net worths of $2 million over options in a really, really young company that was about to go public and all this stuff. So being in that environment and having, for some reason, an affinity towards 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 that strange? So we ended up investing 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 fit me. I would not have fit as an associate in Draper Fisher Jervison, even though I think the world of Tim and I didn't beg him for a job when I didn't

have any. I fit better coming from law school and investment banking and perhaps a more conservative culture in Puerto Rico. I 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 Thoma does. That's what he's about. And that's one of the reasons why they may have been a fit. And I was trying to do something too 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 early.

Not going well, but early. 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 risk. And he looked at me and he said, yes, but not that kind of risk. And I always remember that. Take the risk that fits your makeup and that you can assume and that you can deal with in tough times. And there, I have 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. Let's talk about the turnaround. You do some bad deals and you learn from them.

You became a software expert. Then 2002 rolls around. You've been at the firm for five years and then Carl lets you lead the acquisition of a product distribution software company named Profit21. 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's 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 made sense. It's a lot of grunt work. After you bought Profit21, 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 $215 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 add-on acquisition. One of the thoughts that we had is if that deal went right, we could then do so many more add-on acquisitions for Profit21. So that's one of the reasons we were so hands-on on that first opportunity. I remember going through, I would stay late at night in the garage. The owner would let me 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 was so much growth and there were so many change orders that were related to Y2K. And then they stopped. I was looking at that one night 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 buy cheap, buy safe recurring revenue and stability, and buy 90% gross margins. If something just miserably failed, let's do completely the opposite.

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 assigned royalties because there are many that work that way. It absolutely made sense. It was also a model where cash flow is greater than EBITDA 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 platform, you could typically get a 60% to 70% even down margin from the acquired customers because you didn't need overlapping R&D, overlapping sales, and obviously overlapping G&A. The same thing applied if you were buying products because you could put them through

your distribution channels. So we came at it 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 and it's cheap right now. Let's go try it. There's 75 subscription software companies now worth nearly a trillion dollars

that you can target versus fewer than 20 worth less than $100 billion. So you're excited about the opportunities today. It's not even close. Back then we were in a tiny niche. And software itself was not that interesting. Back office-oriented, on-premise, difficult to implement, all that. Now software is clearly becoming the business of every company.

Digital transformation is still at its infancy. We still haven't deployed a fraction of what's available from a technology and IP standpoint. Now, groups like us are not at the fringes of the industry. We get to buy market leaders. Sure, we have to pay multiples higher, but these companies are growing. I mean, you see it and that's what you invest in and that's what Akamai is. They're growing at really rapid rates at scale and changing underlying industries. So being part of that 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 this is a point in time that really fits our background and our history.

Let's go back to the Profit21 deal for a minute. It's a huge win for the firm and you had a few big wins right after that. And at age 30, you're running the firm's software group in recognition of your contributions. The firm changes its name to Toma Cressy Bravo. And then a year later, Brian Cressy had been a healthcare investor, left the firm and the firm's

free name, Toma Bravo. You're 52 years old 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? I don't think we had made it then, and I don't think we've made it now. I really, really mean that. I really do. And then we were still very small relative to our peers. And we really felt that software private equity was a no-brainer. From those economics that you and I discussed, it was so obvious that the economic model of investing in software in a controlled way with some leverage and consolidating these

markets compared to all other industries was just really, 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 at the right time. But then we were really excited that it was the beginning and we could really see that, actually. You've had too many great deals to name, but I want to talk about a recent good one. Actually, it wasn't a good one. It was off the charts incredible. In 2019, you bought a software maker for the mortgage market named Ellie Mae. The company had gone public in April 2001. Its 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 borrowed the 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 in one cent 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? I took my team to, we had a party that night. But those celebrations are short-lived

because then you are really excited about it, but then you lost a great company as well. And then you have to go find another one. I was really proud of our partners. I was really proud of management on that deal. There were a couple of things that happened. One is the stock, as you correctly pointed out, went way down because the entire market

thought interest rates were going up and they were dead 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 it, once we owned 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 50-50. They're actually wrong in 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 an element of luck and good fortune. Now, management and our team did take the company from 20% EBITDA margins to about 60%, while increasing its growth rate significantly, also partly due to the environment, but partly due to some internal factors that were put in place.

We also did some interesting add-on acquisitions that helped. When a strategic approaches you, it has been our view, our bias, that you should really listen and it may be time to sell because they won't be around if you say no, they'll go builder by somebody else. You said they approach you. How many of the acquisitions you made of the 350 over the years have approached you versus you going out and approaching them? And typically, a lot of companies have poison pills in place, two classes of stock. They don't want to be bought even though they're not performing well. The majority we approach, it may turn

into a very large process in which they approach a lot of people anyway. But the majority are things that we have followed for many years where we have some sort of a pre-existing relationship with management and potentially some board members and where there has been an intent for a while. You just have to be patient and wait for the right time when something like this really makes sense as part of a company's journey. Are you super excited in meeting with your team every day, looking at these tech companies over the past two weeks, losing 40% of their value? I've been buying from my personal portfolio, CrowdStrike, or Shopify, which has been my biggest position, which has lost more than one half of its value. I think long term, and I'm actually loving what's going on right now. I completely agree with you. The valuations that we saw on Thursday and Friday for these growers at scale that have huge TAMs and good management do not make any sense. It's so

theoretical to say that a 200 basis point increase in interest rates would have that dramatic effect on the prospects of these companies. It really doesn't make sense. And when you extrapolate into four years or five, and we all think that way, I don't know when that came up. Why isn't it 10 or 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 until they're 55. And maybe three years is just too short or two.

But when you extrapolate it to the normal things that we look at, four to five years, you'll own these companies at an effective PE of 12, 13 times for companies that are still should be growing over 20% at scale. That's a really good place to be. My guess is there's a lot of nervous CEOs right now who are looking at their personal net worth dropping by half. I know some of these people on a personal basis, you have very private kind of your own board of director conversations. And I think more people are now are open to a deal because they

don't want to wait the four to five years or three years. They just don't know if the market's 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. It's so distracting in tough markets to be spending so much time apologizing to investors for your stock price, even though you have nothing to do with that. Also, it's very distracting to listen to very different opinions on how to increase shareholder value because there are almost infinite ways to increase your, oh, you should do an acquisition. You should do a buyback. I think you should get profitable now.

Let's change the model. Maybe you should grow 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 leaders. I want to talk about one of the unpleasant side effects of private equity deal layoffs. When you buy a company and make it more efficient, people lose their jobs. When you do this, do you think about the people who get that notice, especially those

who live month to month, don't have any savings and have families? And do you wonder ever how they're going to put food on the table? So big time, I want to say a number of things about that. Those layoffs over the past five years are very uncommon because groups like us are looking to buy market leaders that have rapid organic growth. That's the thesis. And leverage is a very small part of the total purchase price when you're buying something at 10 times forward revenue. Leverage just doesn't get you a lot. So you're not making your return the cash yield today. You're making most of your return on 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 or what really pulls the train. You don't want to do that in these assets that you're paying good prices for good quality and 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% of 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 at Akamai, let's take sales. You take a sales manager managing 8 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,

that manager is spending too much time helping the underperformers 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 training, outboarding 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, and I think this

is true, that given the labor markets in 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. The labor market for the technology world, I've never seen it like this. We have full-stack engineers who are making $130,000, now making $180,000. They all want to work from home. Some of them are taking two jobs and the employers don't know it. My company, Sandy, we're building a Yelp for beaches. We've cataloged 94 categories of data for each beach in the world, more than 90,000 beaches in 212 countries. We've been looking for a full-stack engineer since August 15th.

We finally found somebody who started on Monday. We flew them 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 16th, 1987, he wrote a memo to all managing directors and associate directors. There were five bullet points in the memo, and the first one was hire 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

these 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? And how do you retain your amazing talent, people who need to be superstars, to get a job there in the first place? I go back and forth in terms of the fancy schools. The reason I go back and forth is the journeys are equally good.

Sometimes somebody that went to a quote-unquote fancy school, you know what? They earned it. They showed in their path all that hard work and dedication. And sure, they may have had better luck with parents that mentored them or mentors that knew about those schools. And people that did not go to fancy schools could be just as hardworking and successful. They just chose differently. So we've become very open to both and not too opinionated on either in that way. What we look for is, number one, give me a good person. Give me somebody that in their past has shown that they've 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. I could disagree. My partners could disagree. It could be of something unrelated to finance or private equity or investing.

Give me somebody that stands for something so that their journey becomes bigger than making a return on a certain deal. And third, collaboration. 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 have to do that in cases when things are not progressing. But we don't go to that place first. We go to the that place first. We go to

the empowerment place 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 imprint in things. I think that's one of the reasons why we have low 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. It's really powerful. We try to implement that in investing.

Let's move on to the most popular and debated topic today, Bitcoin and blockchain. You own Bitcoin, you're very bullish on it, and Toma Bravo has invested in several blockchain companies, including the Series B round of a cryptocurrency exchange called FTX, which was valued at $18 billion when you invested, which only a year later is raising $1.5 billion at a $32 billion valuation. You've said, how can you not love crypto? So why should we love it given its tremendously risky nature and very volatile price swings? And should ordinary investors be buying it? I am not allowed to give investment advice. Okay. These views are only my own. I don't think

it's a debate that our current financial system has a bunch of things that are wrong with it and that can be improved. And Web3 and crypto, in a way, address that. That's one big issue. And they don't address it perfectly yet because it's new and they'll improve over time. But transaction fees, international breakage, a way to store value, peer-to-peer connectivity, these are really, really good things to address some centralized practices and policies and control systems that have negative unintended consequences. The second piece of why I 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. 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 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 in social media and consumer and other use cases. But those will come because we can think of use cases where using the blockchain is better. I don't know, keeping a stock ledger, knowing where 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 for 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. You touched upon it briefly, but I want to talk about the value of mentors on our path to excellence. You mentioned Carl Thoma. He was a great mentor to you. And I was fortunate to have had Eli Broad and many others who took an interest in me and my future when I really had nothing. You've said that people should spend the first 25 years

of their careers learning from their mentors and the next 25 years learning from the next 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 Tomo Bravo to have you as a mentor. So have me as a day-to-day mentor, yes. And that's my favorite part about the job is how can I pass on what Carl Thoma taught me, which was what he taught me was how to talk to people openly and how to do deals.

He taught me values of investing as well. We do this. We don't do that. This is the reasons why we are attracted to certain things and certain executives and people. Marcel Bernard had exactly the same philosophy as Carl, applied to operations. They both would agree on what is a good leader? What does that mean? What is being a good executive? How do they prioritize? What's important? What do they focus on? They would be on the same page. One of them would look at it from the investing side. The other one would look at it from the operating side. Those were my two mentors. And I had 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 can use it in their own way, in a new world with new deals, with new opportunities, 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 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 helps produce better results. You think that you're driving the organization around a certain set of values. The 25 years is an example of that. And you brought it up with one of our young associates, the quote that she had. You spend the 25 years getting the principles, the tools from people that have done it before and applying them in your own way. You then, after a while, have to 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. Private equity itself and finance and technology, they're all a young person's business. And that's where the action is. So when we were looking to significantly improve our 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 our whole team to get a lot of buy-in, to start including a lot of different people into our organization. It's great to have mentors who proactively help you. You can call them. And

it's also great to observe people. I'm sure there's a lot of younger people in your firm who love working with you. You're in a conference room and they're watching you on a phone call, how you speak to people. Jay Wintraub, who you may know is now the CEO of Oaktree, was a former assistant to the chairman. He was the second. Bruce Karsh, the founder of Oaktree, the co-founder, was the first. I was the fifth. And it was fun. Jay was a 37-year-old vice chairman and COO 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 Jay's there. I remember us being on a phone call where serious phone call, our banker from Morgan Stanley, the head of the financial services group is on the other end of the line, the CEO of a company we were looking at to buy. And there's Jay muting the call, drumming, 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 treats 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. That's phenomenal. I want to go back to something that I took a while answering is, would you mentor somebody that's not part of the Topo Bravo team? And I said, yes, but not on a daily basis.

The benefit of having mentors that you work with day in and day out in whatever organization it is, is that there's context to that mentorship. It's around a specific problem and you 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 it. I was 26 years old, unhappy lawyer, and I had an idea. I was going to write letters to CEOs asking for informational job interviews, not jobs. That goes in the waste paper basket. I got 80 meetings, Sumner Redstone, CEO of Disney, Marriott. And I remember meeting Strauss Elnick, the CEO of Take Two Interactive, which just bought Zynga last week. I met Strauss. He was the CEO. I wrote him a letter. I met with him in their Los Angeles office. And I remember being there, I would always get there 30 minutes before.

LA traffic, never be late. And I walk up 10 minutes before, I'm sitting in the waiting room and out comes 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 a 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 1,000 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, 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. That's phenomenal. You see, it proves my point. That's why I mentioned you is mentors are all around you. Just reach out. Let's talk about success. What's your definition of success? And what are the three to five ingredients on our path to achieving excellence? Success is doing things right. I don't think success is doing higher return deals than somebody else or building more wealth than somebody else or having a bigger firm. It's when you look back, did you do your craft and your art the right way? And did you do so much with what you were given? That to me is a success. I think the key characteristics of that or what drives that is optimism, work ethic, and a balanced life. And by balanced life,

it means in all aspects, you're consistent, you're a good person, you're humble, you're upfront, you're vulnerable. And it's quite simple when you summarize it that way. And when you live 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. Let's talk about the value of preparation on our path to excellence. When I look at my own career and what got me to where I am today, there are a lot of things that contributed to it. I've always been the hardest worker. I've been creative. I've done unique things that people

hadn't thought of before. I trusted my instincts and I tuned out the noise and the doubters. And the many people who told me that what I was doing at the time would never work or was even stupid. And of course, I was 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 has 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 Broad when I was 27 years old, he

had created two Fortune 500 companies from scratch at the time, one of only three people in the United States to have done that. So what did I do? I prepared for that meeting like it was a final exam. How many hours do we spend for tests and college studying for classes we can't remember? 10? 20 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. 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 Sun America. I read the last five annual reports, the last five 10Ks, the last 20 10Qs. And I made a 20-page single space 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 Sun 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 learned and memorized and couldn't recite word for word. I went in their arm with more knowledge about him and 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. It was a great birthday for a guy who was incredibly unsuccessful lawyer, who had had three jobs in 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. So I love that story because as you are describing it, and before we talked about whether there's value or not in graduate school education, and you used the word, I read all this and I summarized it into an outline, I thought of law school, right? That's what you do in law school. You take a whole case book and you use the word, I read all this and I summarized it into an outline, I thought of law school. That's what you do in law school. You take a whole casebook and you summarize it or try to distill it into an outline. The more concise it is, the better you understand the subject of it. I appreciate that. In terms of being so prepared, I have found that instead of maybe we look at the opposite of a job applicant, we look at a CEO, one of the ultimate leadership positions in businesses. And in board meetings and in 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 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. There's going to not be useless conversations, pontification, questioning, further meetings, further analysis, further uncertainty on things. We really have noticed that the level of precision and preparedness 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 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 years of 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 matter and affect that business. There are a lot of companies we looked at at Sun America. We couldn't buy them due to non-gap pooling of interest accounting rules that made an acquisition that would hit the earnings to the bottom line. And obviously, you got to keep the earnings in the growth rate. But I remember I was assigned to look at Charles Schwab. And I did my research. And a month later, I came back with a 200-page tab

report. I handed it in to Eli, gave it to his assistant. And then four days later, I get a call. Mr. Broad 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, and when you 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? Multiple times. And not only has it advanced that person's career, but at times it's been transformational to us. There have been examples of really big deals by our standards that we've done that have come that way. There have been examples of getting into cybersecurity, that industry that we got into as the third leg of enterprise software, what we do in 2009, 2010. It's also created a culture for us where incredible ideas based on rigorous thought, we say, go do them. Just go. Let's 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. Let's talk about work-life balance. You're married and you have three kids. You run

a hugely successful company. You serve on many boards and spend a lot of time on philanthropy, which we're going to talk about in a minute. How do you balance all of these? And then how do you motivate your children to be successful and have the drive that you had as they grow up? So now I have four. Congratulations. Yeah, thank you very much. This is the new addition to the family. How old? She is now nine months. Congratulations. I have five kids, 20-year-old twin girls, one at Wisconsin, one at Cornell, a senior in high school who's going to Menlo College, which you probably know, then I have a five and a half year old and a one and a half year old. And there's nothing in the world I love more than my kids. I completely agree with that. The relationship

and the memories and all the love and work that everybody puts in, in support of one another is truly special. And the older I get, the more I cherish that as well, the more meaningful it becomes. I'm probably like you that way. I am just super busy all the time. And I like being super busy. So I jump from one project to another at work and one family event or situation or support from one to the other. And I always like to be present, both with the 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 balance. I do try to work out every morning. I never skip it. If I don't, I slow down. Things 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

in investment banking. We don't do that in private equity. Unless there's a specific deal or big decision, it happens very rarely. But people go home at 6 p.m., 7 p.m., and they get into the office at 8 or 9. What about your kids? How do you motivate them? That hasn't been that hard because everybody makes fun of me at the dinner table. They take me the opposite of seriously. It's kind of like pure comedy. I don't know what I've done to deserve that. So I take myself very lightly. I let others make a lot of fun of me. And every one of my kids, and I'll have really young ones like you do, so it's early. But my older kids, they've chosen their own paths.

And I support them in those paths. There's no expectation there that they'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. One of the great advantages and lucky and fortunate things in my life that I cherish was to have made money at a fairly young age. And I decided I would never miss a meal with my kids. And for some

long amount of time, I never did. I got divorced when my kids were six and four. Their private school is right down the street from my office. It's about two miles. I would pick them up at 2.30. I wanted them to feel safe. I'd drive them back here. We'd get here 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. Well, Randy, you're not that way out of the lingo. You're one of the original

gangsters. You're one of the OGs. So we can talk about that. But what you described sounds very familiar to my life with my now two old kids, now my two young ones. And dinners are super important. That's the time to just sit down for half an hour, 45 minutes. And now I have to do it at 5.45 for my four-year-old and then at 7.30, my older kids when they're visiting, which is really cool. I love spending alone time with my kids, which is very hard to do. I mean, at 14 years old, that's kind of finished. But I've taken each of my kids on a solo trip each year, starting when they were four. And when my girls, who are best friends and twins, when they were 15 years old, I would take them on a trip. And sometimes they're friends on a trip, just me. And as we get older now, it's just us. And I do it every 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 Wynn. We did things like go to a gun range. We raced 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. I love that. And that's great you do that. My trips with my oldest ones, with my 19-year-old is going to New York. We would do that one-on-one.

Had a great time for just two to three nights. And with my 17-year-old boy, who's a tennis player, we would go to the French Open for three days, maybe four. And the memories of that, we remember every match we saw. We talked about it the other day. Remember four years ago, Wawrinka, that match and that fifth set, it's very cool. Let's talk about philanthropy and the amazing, amazing things you've done at Give Back. You serve on a lot of boards. You've given a large amount of money to Brown, Stanford, and a lot of other organizations.

But I want to focus on what you've done for Puerto Rico, and specifically what you did after Hurricane Maria. For those who don't know the details, Hurricane Maria was a Category 5 hurricane, which hit Puerto Rico on September 20th, 2017. It killed 2,982 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 a thousand pounds of supplies, things like water, granola bars, meal kits, satellite phones, diapers, IVs, hydration pills, and a lot more. You packed a lot of those supplies yourself. Two weeks later, you chartered a DC-10 cargo plane with 7,000 pounds of supplies. And then you chartered two 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. We landed in Aguadilla, which is on the west coast of Puerto Rico next to Mayagüez, because

there's an old military base there. Now they're flying some commercial flights. I think JetBlue flies out of there, but it's mostly an airport that you can use with very little commercial flights. And that's the area of the island that was not getting as much relief because most of the supplies were in San Juan. When we're about to land, I'm there with my brother. And I asked him, what are we about to see?

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 as the plane got closer, right, you just see Puerto Rico is very green and it was 100% gray. Even the sea and the beach, everything was gray and we land. And when the plane door opened, there was a person there that worked at the airport and he didn't say anything. It was a 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. He was like, wow, we're about

to enter into a really, really tough, difficult place. That look will always stay with me. It was very, very hard. The one thing that came out of that, that I always mention to young people that are looking to start a philanthropy, if you don't do anything about it, nobody else will do anything about it. Something that you're very passionate about and that you care about. I had been in San Francisco at the time before I moved to Miami for so long that I was quite removed from Puerto Rico for my high school friendships, kept in touch online, 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 liked it, 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 on the island. Living in my OS, even though I grew up privileged, I would drive around or my parents said, this 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 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 characterized Puerto Rico as a country, which it's 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 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 Rising Entrepreneurs Program that we're really involved with. And 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 Tomah Bravo? We back existing management. We go straight to the source. So what we did is we started backing community leaders in small communities that really know them, that have the following of their people, and that are always going to be there and own the problem. And then we made a lot of mistakes and had some successes and some not so good. And little by little, we've been figuring it out.

With the 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, that maybe that business won't 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 backed three years ago and how they're helping each other and how they're bringing each other up. And that's just great. What you've done there is amazing. And I also want to mention,

you actually donated a hundred million dollars to your foundation. I also want to mention that Jose Andres has done amazing things, and he's going to be a future guest on my podcast as well. So I'm super excited to talk to him. Before we finish today, I want to go ahead and ask some open-ended questions. I call this part of my podcast, fill in the blank to excellence. You ready to play? I'm ready to play.

Let's do this. Let's do it. When I started my career, I wish I had known that everything would work out. The biggest lesson I've learned in my life is let go. Going forward, my professional goal is get to 500 billion under management.

You're on your way there. My biggest personal goal is? Make a huge difference in Puerto Rico. If President Biden were standing in front of me, I would tell him? Private equity is not what it used to be. Private equity is about growth. It's about job creation. It's about making American companies the best. It's about good corporate governance. It's about doing things right. It has nothing to do with big leverage and big risks and big layoffs and fighting off unis. That was in the 1980s. The person in the world that I admire the most is? My grandfather. My favorite thing to do for fun is?

Be on a boat in the water. The one question you wish I had asked you is? Did you ever beat Jim Currier? Did you? No. What was the closest score? I lost to him when I met him. We played in the finals of this 12 and under tournament in Florida, a pretty big tournament,

and I lost one and two. That was the closest? It was blank to the other times? Pretty much. Before we sign off today, I want to tell everyone how we met. You were speaking at the Milken Conference in front of a group of roughly 600 people. You got off the stage. I walked up to you. I gave you a 10-second history of my background and my podcast. I asked you to be on it and you said, yes, you didn't even hesitate. So that's awesome. Super nice guy. No hesitation. So thank you for that. As we finish, do you have any other advice for those listening and watching today 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? Stay positive. Can't underscore, and that's very hard to do. Stay positive and take really, really good risks. Those are the two things that I like to underscore. And I think we spoke about that. And nothing to promote. We're always here. Call me, text me. I'm on Twitter. And that's it. Orlando, you're a great role model, an incredible inspiration to thousands of people. You made a huge difference in the lives of millions of people. I'm very grateful for you to be here today. And thanks for sharing your story. Randy, thank you so much for having me. And the same thing applies to you.

It's been a pleasure. Thanks.