Vista Equity Partners' Robert F. Smith - on who will benefit from AI

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode welcomes a pioneer and visionary in enterprise software investing to Alt Goes Mainstream.

Robert F. Smith is the Founder, Chairman, and CEO of $100B AUM Vista Equity Partners. He sits on the firm’s Investment Committees for Vista’s Flagship, Foundation, Endeavor, and Perennial Funds and serves as a member of Vista’s Executive committee. Vista’s portfolio spans 90 enterprise software, data, and technology-enabled companies that employ over 100,000 people worldwide.

He’s also heavily involved and committed to the firm’s wealth channel efforts, serving as the Chairman and Investment Committee member for VistaOne, the firm’s evergreen private equity vehicle. Since Vista’s founding, Robert has supervised on over 600 completed transactions that represent more than $330B in aggregate transaction value.

Robert founded Vista after a career at Goldman Sachs in tech investment banking, where he was Co-Head of Enterprise Systems and Storage, executing and advising on over $50B in M&A activity with companies that were foundational players in the early days of the internet and technology, including Apple, Microsoft, Texas Instruments, eBay, and Yahoo.

Robert has an innate understanding of technology and the trends that are shaping the way that companies and people interact with the world and conduct business. It’s no surprise that he was early in seeing the rise and impact of AI because he was early in seeing the dawn of the internet in the 1990s.

Robert and I had a fascinating and thought-provoking conversation about the evolution of both enterprise software and Vista as a firm. We covered:
  • The early days of enterprise software and what Robert saw then that gave him conviction to focus on enterprise software as a banker and then as an investor building Vista.
  • The investment characteristics of enterprise software.
  • The power of product superiority in enterprise software.
  • Why “sovereignty and dominion of data” are so important — and why it matters for AI.
  • Can the “Rule of 40” become the “Rule of 50, 60, 70” with AI?
  • What aspect of AI is most impactful for companies.
  • How Vista approaches value creation.
  • What it took to scale Vista to a $100B investment platform.
  • Why the wealth channel is core to Vista’s business and the firm’s DNA.
Thanks Robert for coming on the show to share your expertise, wisdom, and passion for enterprise software and building businesses.

Show Notes
00:00 Introduction to Ultimus, Our Sponsor
01:20 Welcome to the Alt Goes Mainstream Podcast
02:05 Robert F. Smith's Background and Career
04:33 Robert's Engineering Background
04:58 Chemical Engineering and Business Management
05:25 Early Career Projects and Productivity
06:42 Vista's Systemic Process Improvement
07:08 Enterprise Software Investment Strategy
11:11 Product Superiority and Execution Excellence
16:03 AI's Impact on Enterprise Software
22:58 Cultural Importance in Enterprise Software
28:05 Enterprise Software Investment Profile
28:45 Founding Vista and Early Market Insights
29:08 Mission Criticality in Enterprise Software
29:57 Economic Rent Capture Opportunities
30:36 Transitioning to Hosted Environments
31:37 Rule of 40 and Gen AI Efficiency
32:56 Cost Dynamics and Gen AI
33:35 Customer Support and Sales Efficiency
35:04 Agentic AI and Exponential Opportunities
36:37 Challenges in Enterprise AI Implementation
39:08 Internal Use of AI at Vista
43:49 Managing Agents vs. Human Interaction
44:31 Creative Uses of AI
45:00 Defining Gen AI and Agentic AI
46:28 Enterprise Software and Agentic AI
47:30 Impact of AI on Companies
50:17 Evolution of Vista and New Investors
50:42 Democratizing Investment Opportunities
51:47 AI in Wealth Management
52:55 Conclusion and Final Thoughts

Editing and post-production work for this episode was provided by The Podcast Consultant.
2021