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What happens when private equity buys your competitor?

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Re: What happens when private equity buys your competitor?

#11

Post by dennyabraham »

padseeker wrote: post #8

So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use. We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew wha…

i had a very similar experience so i set up a git bridge for my part of engineering to use. it was not well-received by management, but it might be still running

Re: What happens when private equity buys your competitor?

#12

Post by [deleted] »

padseeker wrote: post #8

So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use. We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew wha…

[deleted]

Re: What happens when private equity buys your competitor?

#13

Post by blazespin »

ryandrake wrote: post #6

> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it. Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as…

Just curious, it sounds like you think this statement is either not true or just a coincidence: " In consumer technology, especially, there are very few success stories that don’t involve at least one founder in an active role. "

My past experience is that it's actually pretty true. Some individual from the beginning of the company needs to be in an active role until a certain degree of maturity sets in.

Sometimes they need to bring that guy back after he leaves and things fall apart.

I've never done a statistical analysis though, so maybe I and the lightspeed guy are wrong.

Re: What happens when private equity buys your competitor?

#14

Post by ryandrake »

blazespin wrote: post #13
ryandrake wrote: post #6

> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it. Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as…

Just curious, it sounds like you think this statement is either not true or just a coincidence: " In consumer technology, especially, there are very few success stories that don’t involve at least one founder in an active role. " My past experience is that it's actually pretty true. Some individual from the beginning of the company needs to be in an active role until a certain degree of maturity sets in. Sometimes th…

I think for sure that company success requires engaged, future-seeing leaders with vision, taking an active role. My argument is that "founders" are not the sole possessors of such leadership qualities. The "founder" title has much more to do with one's access to capital and connections than one's intrinsic personal qualities or product judgment.

Re: What happens when private equity buys your competitor?

#16

Post by padseeker »

dennyabraham wrote: post #11
padseeker wrote: post #8

So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use. We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew wha…

i had a very similar experience so i set up a git bridge for my part of engineering to use. it was not well-received by management, but it might be still running

You worked at BigMachines too. I know you! That's impressive, the whole git bridge.

Re: What happens when private equity buys your competitor?

#17

Post by ianbicking »

ryandrake wrote: post #6

> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it. Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as…

It seems like it would be sufficient to say that not everyone has the ability to glimpse the future, envision a product given that, and initiate and direct the implementation of that product. Not everyone has that ability, but probably many do: however, in an established business with specific fiscal goals, how many people have the ability to do those things? Founders don't just bring some evidence of talent, they also have an authority and influence to make things happen that other people don't. Another way of thinking about it is that an established company typically does not have the ability to develop and empower that kind of person within the company. A founder precedes the company, and so is not constrained by the company in the same way.

Re: What happens when private equity buys your competitor?

#18

Post by bigbossman »

If a PE shop buys your competitor, you should rejoice. PE firms primarily generate returns through (1) debt repayment from free cash flow, (2) multiple expansion, and (3) operating improvements.

Because of #1, PE firms like annuity-like businesses with predictable cash flow. A ventured-backed startup doesn't need to worry about #1, and therefore can focus all their internal efforts on #3. (If multiples expand, then that's even better.)

Here's an analogy. Venture-backed companies are busy building rockets, and rockets either take off or blow up. When PE takes over, your competitor has decided..."F this, let's go build a train instead."

Re: What happens when private equity buys your competitor?

#19

Post by ryandrake »

ianbicking wrote: post #17
ryandrake wrote: post #6

> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it. Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as…

It seems like it would be sufficient to say that not everyone has the ability to glimpse the future, envision a product given that, and initiate and direct the implementation of that product. Not everyone has that ability, but probably many do: however, in an established business with specific fiscal goals, how many people have the ability to do those things? Founders don't just bring some evidence of talent, they al…

My point is that "founder" is not some distinct species of human that uniquely and intrinsically possesses product sense, future-seeing vision, ability to execute, etc. etc. etc. There are many people out there with these abilities, and they could just as successfully found and grow companies. What sets apart founders is that they have these traits AND have the access to capital and connections that permit them to actually go out and do it.

For example, I would put forward as a basis of argument:

There are many people (thousands?) who, given $1 billion, could go off and build a space program. Elon Musk was actually able to do it though, not because he's a genius (he is), but because he ALSO is super-well-connected and actually could gain access to that $1 billion.

Re: What happens when private equity buys your competitor?

#20

Post by spullara »

zellyn wrote: post #15

"Ping Identity, for instance, disclosed a 40% annual growth rate in its acquisition announcement. That’s below the average growth rate for a 9 year old public SaaS company" Wow. It's crazy that 40% annual growth can be considered too low.

in that same paragraph the author says 15% quarter over quarter growth is slower but it is in fact 75% annualized growth.
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