S9E1: Orlando Bravo on Doing the Work, One Deal at a Time

28:09You can be entrepreneurial. Let's solve the problem. Let's get it done. And I think in the process we were able to hold together there's some communities that otherwise would have been in trouble. But you didn't stop just at relief. And Charlotte went with me on that first trip. You remember that? That was crazy. You didn't stop just at the relief and help. You kept going. What was the intention behind the Brawa Family Foundation and to create the opportunity in the island for the long run? I was going to the island every weekend, every four or five days, whatever, working there with communities.

28:49And I met so many good people. Like, it reminded me of the site of Puerto Rico that is incredible. People that were educated, talented, salespeople, a lot of salespeople that couldn't work for months because they didn't have any electricity, right? You can't call customers. And they're all commission-based, 100%. So they didn't have any other income. And I said, that's isolating. That's totally unfair. So we started six years ago the permanent programs that we have in Puerto Rico. And the center of it is entrepreneurship. It's a rising entrepreneurs program. We now have launched over 100 companies in Puerto Rico.

29:27We have a bunch of people from Tomo Bravo involved in those companies and one-on-one mentorship. CEOs from our companies go there. We give them free capital, free education. We've taken all the playbook from our firm. and applied it to how you build the business because there they can't raise any outside money. So you've got to get profitable very quickly and do the kind of things that we try to do with bigger companies. Leadership and that program, I really, really believe it's setting up an ecosystem in Puerto Rico that will entirely change the outcome for so many young adults. We have paired up with a high school program that we have where we have now two-thirds of the municipalities in Puerto Rico.

30:06those kids from public schools participate in those programs. And the kind of hope that I see and the kind of way that we take those kids off the street, off of just playing video games, now true opportunity. They think about solving problems of today, problems of their communities. It's incredibly uplifting. And, you know, coming back, it's so tied to what we do at Toma Bravo. We try to help a really big company that's super innovative and not making any money become also a great business by doing it with the existing people. when you see, when you try to help these entrepreneurs that have very little resources, you know, if you can do that, you can certainly do it at a billion-dollar company in Silicon Valley.

30:46This stuff is easy. So it gives you also a lot of hope for your business. Well, it's undeniable the impact you had on people in Puerto Rico multiplied because of that long-term mindset. And I want to talk more about that, but in the context of private equity. I hear a lot of my classmates here at GSB say that today private equity is too crowded, that the golden era is over, and that it's almost impossible to build the next Toma Bravo or become the next Orlando Bravo. Where do you think the critics are right? What's generally harder today? This is much easier today. I completely I believe some of you in this room that will choose that industry as a career you stay with it you will build the firm much bigger than Tomo Bravo and better the next generation is always better some generations below me but it's always better than the prior it's not even close the industry is tiny we feel ourselves that we're just getting started.

31:58I feel that I've been training with my team of partners for 30 years to now get the opportunity that I just spoke about. This is new. This is tiny versus the public market and other forms of ownership. When I was interviewing for a job, one of those many 500 jobs that I did not get, I met the head of a private equity firm, very large at the time. And that person in that interview told me private equity is taken. And I've mentioned that before in some other conversations. Private equity is taken. There's not much for young people to do in the business. That was 1997. Come on. Now our firm is much bigger than that firm.

32:39I kind of look at that. It makes me feel pretty good when I'm down and we have a lot of portfolio problems. But it's going to be the same thing. There is no substitute for somebody being able to buy a corporation, having full control of it, partnering with great leaders, solving problems, as Marcel Bernard would say, every business problem can be solved, health is another matter, and creating an entity that people thought was impossible to create. That opportunity for creativity, value creation, only exists when you can buy the whole company. Not a piece of paper, not pieces of that company, not credit in that company, not public stocks, absolutely nothing else.

33:21So I'm a firm believer, It just requires people to stay humble, keep their feet on the ground, be practical, and focus on the business, not on anything else. We would not have gotten into software if we were listening to the word at the time. Venture capitalists would say, these companies that you're addressing are too old, and new VC companies will put them out of business for sure. That was a scary comment from people that have done really well in VC, really good VCs that I highly respect. The big buyout firms at the time were saying, you're crazy to get into tech and software because that is too risky.

33:58Both of those were extremely general comments. When we would go into a company and look at all their files one by one, customer one, customer two, customer three, when we would sit there in their support center listening to all the calls that were going, all their salespeople that were working on the system, we'd say, this is an incredible business. What am I missing? What are they talking about? Now, when you look at today with AI, some people are doubting software. Of course, you can read an article that says, well, maybe the stack will do this and that. Theoretically, that makes sense. But when you go to a corporate environment and know how people work, clearly, it is a huge tailwind, but you just have to do the work.

34:43You can't be scared of it. You can't fall with whatever else everybody's saying. It's a place where you can do your own thing. That's the key. Looking ahead, when you think about the next generation of investors, entrepreneurs, builders who are with us here today in this room, what's the one lesson you hope they take away from your journey? Can I give you two? Go ahead. Do your thing. Do your own thing. There's a lot of pressure, and we even face it now. We have all this capital. or why don't we just go off and build all these AI data centers and people are making money on that stuff or do this, do that.

35:25There's a lot of pressure to do things where others that you highly respect say, yeah, you're doing the right thing or the great job to get or the type of company to form now. Do the work, focus on your business, focus on you and do your thing. That will pay huge, huge dividends. We'll make everything very, very clear. And the second piece is, and you spoke about it with challenges of today. Look, it won't be linear. We just walked through my good luck and how it wasn't linear. It was terrible in some places. It won't be linear, but you have to stay positive. Because all of you, if you apply to it and if you want to do it, you will build things that were much bigger and better than what anybody else had done before.

36:10Just don't be intimidated by it. If you look at the end result, you might not want to focus on it. Just focus on step by step and stay super positive in your journey. Orlando, we have a few students who submitted a couple of questions. Let's turn to them. Orlando, thank you for being with us here today. My name is Abdullah Al-Mutlaq and I'm an MBA too. You were actually one of the reasons why I chose to come to the GSB and you even made an appearance in my Why Stanford essay based on a meeting we had in 21. My question is about fundraising. Despite a pretty challenging LP fundraising environment, Tomba Bravo has consistently exceeded its fundraise targets.

36:53In a world where every GB claims top-quantile performance and mark-to-market figures are difficult to trust, I'm curious if there are any lessons or qualities to take away from every time of the GSB that you bring to your LP conversations that help differentiate Tomba Bravo further. Wow. Well, congrats. I'm honored. you have the two people right here in front of me that can probably answer that question better Jennifer James leads our fundraising and Bert has helped me so much in communication I've had to work on that so Carl Toma when we were starting Toma Bravo 1 which we called Toma Bravo 9 because we tried to promote as much as we could that we have been around for a while I was doing all these presentations one PowerPoint after the other.

37:43We're going to position ourselves as this and this and that and that. And he said, Orlando, stop. He said, in private equity, the only thing that matters is returns. Investors have incredible choices of where to put their money. And I go, okay. And we were getting turned down a lot by LPs at the time. And they were giving us all kinds of different excuses. One, I was walking down the street in New York and I called and said, hey, what are you coming into the fund? I said, we're not going to be doing the fund. I said, how come? He goes, because your numbers are not good enough. Wow. What a, okay.

38:21Note to self, my numbers have to be good to get some money. And I promise you that that's why we're step by step and deal by deal right now. So we have had, you know, good enough numbers to have our base of customers stay with us and stay the course. So you have to have a certain level of performance. And there are other great performers out there. But then the second thing, and this is what Jennifer James does so well, is we really attend to the customer. We know in our partner what they like, what they don't like, how their family is, who makes the decision. How does that organization make the decision?

39:01You're going to try to sell something. One person that decides, two people? Is this a group decision? Who do we need to talk to here? And we know which customer. Do they buy from the top? Does private equity buy here? And I see my peers making a bunch of mistakes. Some people go straight to the top because they have that access. And then the person asks the head of private equity, what do you think of these guys? And they go, nah, I have somebody else. That's us. Or we try to do this. Like that, there is getting the money, that one third. I say in private equity, get the money, improve the deal, and sell the deal.

39:34But getting the money is a really, really important skill of attention, right? Right after this, I'm headed out to Hong Kong, seeing some of our customers there being very, very close, because there are other ways that you can add value to them. Co-invest. When they have an issue with AI, how quickly do you have their back in front of their boards? So many things. It's kind of a day-to-day thing. And finally, Bert, I have to give you a lot of credit. And please take us class. If you haven't done it, you know, communication. At first, as we were getting a little bigger,

40:08I was imitating the goats of private equity from the 70s and 80s. Oh, this is the way you talk, and that's the way I have to seem, and this is what I have to pretend to be. And Bert said, you're funny, you're Puerto Rican, you don't take yourself seriously, be yourself. And I think that allows me to connect pretty decently and Jennifer James with other people. One of the best hits of sales that we've had at one of our companies, at Dynatrace, he said, remember, people don't want to buy your product. People want to buy from you. And that was very consistent with what Byrd was trying to have me understand.

40:43Thank you.

40:47Hi, my name is Owen, class of 2027. Thank you for coming here. My question is, you guys have built Tomo Bravo on the thesis that enterprise software has durable notes. But my question is, as generative AI decreases the cost of software creation, and some say commoditizes it, how is that impacting your investment thesis moving forward? Yeah. The software having a great, that's a phenomenal question that we're deep in now. And we've always been. The fact that software has a moat in general is not really true. Never been true, especially in dynamic spaces like cyber, that's a third of our investment.

41:33Infrastructure software, that's almost another third. And all these horizontals. You face constant changes, competition. And if you're not growing bookings, even if you had a moat around your customer base, if you're not growing new bookings, nobody's going to buy your company and you cannot take it public. It might seem like a decent financial investment if you got lucky on the price or something else prior. So it's always been a fast evolving space. Now, when we were doing our early deals in software, we were buying what seemed to be some old software companies with legacy code, legacy architecture.

42:07That's where venture capitalists would say new companies are going to put you out of business. A great engineer at Stanford could have built a much better product, faster, better code with newer architecture than many of the companies that we have bought in the past. No offense to those development teams. But those companies are about understanding the customer's process and about servicing that customer. The developing of code is a very, very small subset of what that company does to deliver value to that customer, to give them that five to one ROI over a year or that payback period of nine months.

42:47You have to really understand the function or the vertical or the process or all of it and be able to provide a custom solution, not custom code. But you take this code that you have, and how do you figure out the problem that the customer has, let them know that they have a big problem, allow them to re-engineer their organization to absorb this better way of doing things. You take Salesforce now,$41 billion in revenues, and there's thought that, oh, they can get commoditized. Not at all. There's no way. Because if you're a salesperson, You work, the way you get trained and the way you work is in stage one, there's an account.

43:34Stage two, they have money. Stage three, they have a champion. Stage four, I met with them. And that is the process of getting somebody to close. Now, if we get to a world where there's no longer process, where there's no longer organizational traditional structures in a company. Oh, maybe, you know, maybe, maybe way back in the future, if somebody invents a new way that we all organize ourselves in a totally different way, that could be a risk, but not if we remain organized the way we are. And I don't see that in the next 10 years. I really don't. I don't even know how you train a new salesperson to do their job.

44:11Oh, right. AI can give you more context on what accounts to go sell than Salesforce can. Yeah, because it gets all this unstructured data. It reads all the emails. It looks at the customer buying activity. It looks at their speed. It looks at much more rich information and can give you a better sense of where to go. And Salesforce then just becomes one of those pieces of information in the system. But how do you train that person of where to go and what to do and how to move that account along? I don't think so. I think it's still going to be okay. Same thing happened with SaaS 10 years ago. Of course, every change is different.

44:50This could be more transformative. But I think we'll be okay. At least I hope so.

44:59Thank you. I'm Daisuke, class of 2027. I'm originally from the Japan private equity. My question is about global expansion and challenge. I think you built a strong franchise in terms of the UOS software investment with a repeatable playbook. But as you see in the global expansion next beyond to Europe, where do you think is most likely a good place to apply your playbook and why? And also I would like to ask what kind of leadership capability is essential or required to achieve those success in that challenge? Thank you. Where could our playbook be applied globally? What are the best places for that?

45:53Everywhere. Thank you. Look, it's more than a playbook, right? Of course we have by sales, support, customer success, professional services, product. We have an entire playbook that we've built over buying 600 companies. So we add to it from people that we learned and Marcel Bernard and everything else, right? We can tell you the number of reps per manager and why and how many underperforming reps can you have on quota and territory. We have all that, all those metrics on some of the best ways. Now, how do you apply so much to a company? They cannot absorb all that. You don't have time to do all that.

46:35As Marcel would say, if you try to do it all, you'll get to none. Come up with the three biggest areas that will completely change that business that are also the easiest to do and give you the most money. That kind of combination of all. That's tough to do. Then align yourselves with management so that they lead them, so that they truly believe that this can be done. And so the CEO of that company can manage and lead her or his direct reports to go into that. That is about 80 % of it. And that leadership place is the most difficult. Now, there are country differences, regional differences, and whatever differences around.

47:18But people are people. And if you have leaders that want to make money, that care about numbers, and that are open-minded enough, this works. This is business 101 by far. Now, we diligence that because we usually start the deal by cost reduction. Before, people didn't like that in Silicon Valley. Now, Elon Musk has made that super popular. So now we hear a bunch of people going, yeah, I cut cost and everything else. But we start the deal because they're usually not very profitable companies by cutting 15%, maybe 20%. Marcel would say, if you try to cut more than 20, you're going to have to change the way that company works.

47:58That's too risky. No matter how unprofitable it is, but no matter how profitable you are, you can always cut 10%. And now the time to do that is when you close the deal because people are expecting that change. Don't go bother all these great workers and employees and colleagues and executives two years into the mission because a board member decided that you could be more profitable. Do it now, and then the CEO as a leader can stand up and say, this won't happen again, but we needed to do it once. From here, we're going to grow and do acquisitions. All that stuff and all that model of turning a great innovator into a great business applies everywhere.

48:33You just have to adjust yourselves to the local culture and the local laws. In Europe, you can't do that immediately, right? You have to go through labor council and a long process. And I'm glad that you're from private equity from Japan. I'm headed there after Hong Kong, and Japan is an unbelievable market. Just an unbelievable private equity market right now. That's another thing of opportunity, right? That's an obvious one. In software, though, it's a bit small for us, so that may be a place we get to in three years. Thank you. Thank you to the students. And Orlando, before we wrap it up, we have to do our view from the top tradition, and a few rapid fire questions.

49:18What is this? Just don't think too much. Say the first thing that comes to your mind. Okay, really? Okay, now. Cut it. Are you ready? Yes. Okay, let's go. San Francisco or Miami? Miami.

49:40I have to have the backs of my team. Half of them moved there. I'm not going to tell them I'm moving back. Don't worry. I'm moving to Miami after GSB as well. Okay. Lithuania to Miami. We like that. V-neck or crew neck? What? V-neck. Oh, V. Yeah. V. Oh, not too deep, but V. It's like a Saturday Night Live skit. I should come back like that. Most overused word in private equity? Escape velocity. Gosh, I really don't like that word. Wimbledon or US Open? Wimbledon. And finally, the best business advice you've ever received? That's not a rapid fire question. That's why it's the final one. That's a really, really deep question.

50:33I was in a meeting once with Carl Thoma in Denver. and there was this partner that was arguing with him about a deal. And he said, well, if you want to make money, you have to take risk. And Carl said, yes, but not that kind. And it's what fits you. Like we take big risk in turning around these companies and what we buy. Sometimes we put these equity checks that represent almost 20 % of the fund. We have to syndicate it. Those are huge risks that others would perceive as enormous. for us is something that we can do. So find the ones that are meant for you to take, but not others. And Orlando, with that, thank you very much.

51:15Thank you.

51:21I want to ask you a question that you asked Orlando, Miami or San Francisco? Miami. Why? Why? Because it is a place that I found the energy I have not personally found anywhere else in the U.S. thus far. I see a lot of construction. I see a lot of growth. I see people coming in and it's buzzing. And it's buzzing in a very different way from the buzz here in the Bay Area. Miami feels like the future. I do think so. I love that. So let's get into some of the fascinating things Orlando shared with you and the rest of the audience. Find the risks that are meant for you to take, not others. It hit me hard.

52:13Yeah. I think underneath that is focus on learning more about yourself. Understand what you're good at, what you're not so good at. understand that you can have many things in life but you can't have everything in life and pick accordingly i think he picked right he didn't go on and continue trying to become a pro tennis player he said you know what i got the data i'm now gonna go try do something else i'll go try wall street and then oh i learned private equity is a thing okay let's go try that out. Oh, I got it and I tried it and I'm actually good at it. Let's go double down. I think especially when he reflected on his first two deals being disasters.

53:04Yeah. I got the impression that if the third one went wrong and if that idea of software buyouts didn't work out, he would probably have divoted. What do you think entrepreneurship means to Orlando Bravo? The first thing that comes to my mind is innovation and that his job is to enable innovators to perform at the next level. He focuses on enabling great CEOs, great entrepreneurs to do better. How do you make your operations run more smoothly? How do you become more profitable? So, yeah, I think innovation is the word. Innovation is the word. I think in some ways what you shared just now is aligned with something he said in a different way, which is, I never created anything new.

54:00I just listened well. Yeah. Yeah. And I think he mentioned that part, I listened well, that's a superpower. But when you listen well, even though you don't create yourself, if you empower others, that's innovation too. Innovation, I think, by the meaning is bringing something new to the world. And I think it's impossible to deny the impact Orlando had on the software industry. Did you make any connections between things you learned at the GSB during your time here and what he shared on stage? Yes. And I think the answer is the things you get exposed to here at GSB truly give you a big picture of what leadership is, how it looks like.

54:55I think that's what I personally got from his message. And that's what I'm seeing here happening to me every single day. Just pure exposure to different leaders, to different perspectives. Fundamentally, they all go back to the question or give you the data to answer the question. What does leadership look like for me? I think that's a great place to leave it. Gintari, thank you so much. Thank you. Thank you, Maiko.

55:23You've been listening to View from the Top, the podcast, a production of Stanford Graduate School of Business. This interview was conducted by me, Gintare Zhukovskite, of the MBA class of 2026. Michael McDowell is our managing producer and Michael O 'Reilly edited and mixed this episode. Special thanks to Liz Walker. View from the Top is the Dean's Premier Speaker Series. It was started in 1978 and is supported in part by the F. Kirk Brennan Speaker Series Fund. During interviews led by students, leaders from around the world share insights on effective leadership, core values, and lessons learned along the way.

56:08You can find more episodes of View From The Top on our website, gsb.stanford.edu slash business dash podcast. Don't forget to rate, subscribe, and follow us on social media at Stanford GSB. And see you next time. Unview from the top.