How Vista underwrites and de-risks investments

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.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.