Orlando Bravo & Heidi Messer on AI and the Future of Enterprise Software

Look, where we kind of the companies, it took them a while depending on the type of leader they were and their domain expertise to wake up, and with a lot of prodding from us. And even though we own the entire company, it's hard to kind of convince people, and they have to hit numbers, hit their numbers this quarter and next quarter, so they also have a business to run, to say, look, your entire future is automating human judgment. This thing is going to be so big. And how do you use your domain expertise even more for us, even more than the data or the installed base of customers and the relationships or being part of a community. Now, I do want to say that these domains, the way we look at them, are totally different than how Silicon Valley or a public investor will look at a domain. For example, a public investor will say sales is a domain, that's Salesforce. Ticketing is a domain, that's ServiceNow. Now for us, that's not really a defensible domain. Like Jeppesen is a domain. They've been 90 years collecting airline data. They have 80% market share routing and planning every single flight that exists. They have mapped out the 2,200 processes of the airlines and their 492 functions. They have trained and certified more dispatchers than ever. They live in there. So now they're actually, they're one of the companies that you would think, oh, that's kind of a very industrial space that's slower moving. They're probably the furthest ahead in AI that we have in our portfolio because you have these domain leaders that are very forward-looking. I think where we're having the most success is in eliminating the labor or enhancing it with AI by taking over the entire operation of a customer. Like Dayforce is in payroll. Payroll is a very mundane space. It's pretty mature. But the company at two billion in ARR is growing 50%. Because now they're going to customers and they're saying, we'll take over your whole payroll team. You don't need to have a payroll team. They shouldn't, because on the back end they can automate a lot of this working with AI and agent solutions that they've built. So we see that as a new managed service opportunity. There's an opportunity to deepen automation, and of course you have to do it really fast. In some companies you don't have that expertise even though you have 2,000 great developers and a great innovative community and domain. So sometimes you have to buy it. We've done about three billion dollars of add-on acquisitions, all AI companies, for some companies that we have to move fast and we're better buying it than building it. So I see it as an incredible opportunity and at the same time it's really scary because customers don't want to buy seats. They don't want to buy that much software right now. That's even if you have a high ROI proposition, the board wants them to really experiment and take this further. So you have to kind of transform your business very quickly while hitting your EBITDA numbers. And I call that, right now we're in an environment of super leadership. You look how hard you're working, every the work happens now in the weekends and at night because you're running the company during the day and you have to do the new stuff and find new hours in the day.

I'm open. Okay. It's okay.

Wow. Okay. So, we looked at both and they're both amazing companies and we have an amazing relationship with both of them, their leaders, their team, and we of course work with both in many different ways. First, part of the attractiveness of partnering with these deploy codes is that you know they have very limited time because they're in such high demand. So you can leverage their expertise across your portfolio potentially and get their attention and maybe come up with new ways of doing things. For us being a software automation investor, we thought we didn't need that. That we could get that attention from either the 20,000 engineers that get it or some of them that get it within our portfolio themselves or other places. So we weren't a person that's out of tech looking for that help. So that was one thing. Now the other thing is services is a tough business. It is not what we do and it's a brutal business. And I'm going to go back to 1998 when you started Linkshare. What year?

96. So in 98 when I joined our predecessor firm, I was doing rollups of IT service companies as the internet was being built. And literally you would hire a CEO. You would look to buy 100 person firms. You would look to hire as many consultants as possible to build people e-commerce. Okay? There was a huge boom in that. As long as you could hire 500 people very quickly, you were worth a million dollars a person. That's 500 million. You could do a small cap IPO. There were many companies in that field. Science, Viant, Razorfish, so many of them. Then the bubble burst. It all goes to zero including our investments. No more services. I have PTSD from that. I just cannot do it. So right now though the FOMO is there is you cannot see the stop of demand for forward deployed engineers that can do these $200 million projects at the Fortune 50. So you kind of say my gosh this thing is going to rip for a while. But from a business standpoint, it's a brutal business, a tough business. And that was our...