Billionaire Tech Investor Robert Smith Says He Never Lost Money On A Buyout

Billionaire Tech Investor Robert Smith Says He Never Lost Money On A Buyout

As CEO of Vista Equity Partners, one of the world’s most successful investment firms, Smith said it’s his company’s philosophy to listen to every employee.

Corporations that make all the decisions at the top, without input from employees further down the chain of command, won’t grow like Vista has, Smith insisted while addressing Cornell University’s sixth Entrepreneurship Summit on Nov. 3 at the Times Center in Manhattan.

Vista Equity Partners oversees a portfolio of 50-plus software companies that employ at least 45,000 people around the world. Smith has overseen 294 buyout transactions since he founded Vista, totaling more than $73 billion in value. “We have never lost money in a buyout,” Smith told an audience of more than 500 people.
Under Smith’s guidance, Vista focuses on enterprise software, data- and tech-enabled solutions. For the second year in a row, Vista was named the world’s top performing private equity firm by the HEC-Dow Jones annual ranking, according to a Cornell report.

One of the ways Smith said he encourages an inclusive culture in the workplace is by holding a “best practices sharing summit.” Employees in various departments get to collaborate on ideas. He said he believes in giving each worker the space “to become their best selves.”Based in Austin, Texas, Vista manages $30 billion in assets and is one of the world’s most successful hedge funds, with consistent double-digit returns, according to Forbes.

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A Cornell graduate, Smith secured an internship at Bell Labs while he was a student by calling the company every week for five months. He pledged $50 million to the university in 2016.

Vista Equity Partners recently announced its acquisition of Datto, a leading provider of business data protection solutions. Vista plans to merge Datto with Autotask, another IT-services company already in its portfolio, according to a press release. The newly merged firm will offer a host of business IT services to managed service providers including backup and disaster recovery, remote network monitoring and management, and file sharing.

While the terms of the acquisition were not made public, merging Datto and Autotask results in a firm of 1,300 employees who service 500,000-plus small-to-mid-sized businesses in 125 countries, Black Enterprise reported.

In October, Vista made a majority investment in Jamf, which makes software to manage Apple devices. “Vista is a value-add investor,” said Zach Halmstad, Jamf co-founder, in a Volume One interview. “They have an incredible amount of expertise that they bring to the table. Jamf will now be in a family with almost 50 other high-performing software and technology companies that can be partners, customers, and allies.”

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When it comes to hiring new employees, Smith told the Cornell audience, “I would choose a Cornell engineer over any other student.” Smith said Vista looks for “intellectually curious executives who can take feedback and relate it into their markets.”

Companies that can’t pivot won’t survive, Smith told students from his alma mater: If you don’t have a continual climate that can accept refinement and changes in philosophies, “then you have a company subject to a quick death,” he said:

“That’s the hardest thing to teach, but if you get it right, it will last for decades,” Smith said. “There is no greater time to be an entrepreneur in software. … This is a wonderful time to be an entrepreneur.”

Smith combined his tech knowledge with finance early in his career. Before founding Vista, he worked for Kraft General Foods, earning four patents, and for Goldman Sachs, where he played a key role in mergers and acquisitions involving Apple, Microsoft and Texas Instruments, according to Cornell. Other clients early in his career included Yahoo and eBay.

When Smith was earning $42,000 as an engineer in the 1990s, he saw his friends on Wall Street earning $100,000-plus and decided he wanted to work in mergers and acquisitions. “No one was doing buyouts in tech startups,” Smith said.

His engineering skills continued to benefit him at Vitsa, where he said he is in his element creating order out of messes.

International business is starved for high-tech experts, Smith told the audience at Cornell. There are 7.6 billion people on the planet, but “only 19 million of them know how to write code,” he said.

Billionaire Robert F. Smith
(Photo by Amy Harris/Invision/AP)