Bravo: Most software companies fail to segment costs for profitable growth
Orlando Bravo · Orlando Bravo: Raising Kids as a Billionaire; VC vs PE; Is Warren Buffet Wrong? | 20VC #974 · 20VC with Harry Stebbings · Feb 6, 2023 · at 6:23
Orlando Bravo is the Founder and Managing Partner of software buyout firm Thoma Bravo. He assesses how contemporary software companies manage their operations and cost structures.
0:00 / 0:20exact quote · 20.4s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“We see even today the world of software, which are much better innovators today than they were 10 years ago, than they were 20 years ago, but these businesses mainly have a big bucket of revenue and a big bucket of cost, and they don't really separate their activities and their efficiency in a way that leads to what we call profitable growth.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Orlando Bravo
Bravo: Every company is worth only its future cash flows
“Look, we believe every company in the world, Is worth its future cash flows. We just come from that world. We don't believe in multiples of revenue. We don't believe in, ah, a technology may be worth a trillion dollars or a billion dollars because it might do …”
Bravo: Supporting 40 to 50 portfolio companies operationally is impossible
“If you have an investor, private equity or venture firm, that claims that they make a big difference in their companies, that they're there with those companies operationally, that they change them in a positive way. And you have 40 or 50, there is no way you …”
Bravo: Lower tech market valuations represent the new normal for years
“So if I, if you really push me, I would say, yes, this is the new normal, because I don't see investors jumping in in mass To do the same thing that in the last 18 months lost them 80% of their money. At least not in the next few years.”
Bravo: PE firms cannot triage underperforming portfolio investments like VCs
“There's no such thing in buyouts and private equity as triaging your portfolio and deciding what you throw away and when you keep going, which in another way to put it is, is actually a big motivator to management teams to partner with you because you have no …”
Bravo: Thoma Bravo avoids IPOs because cash-generative companies avoid dilution
“I mean, in our history, we have mainly exited to strategics and other financial buyers. And there's a reason for that is the IPO for our companies doesn't give us that much in itself because our companies generate the cashflow that is needed to fund their inve…”