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Feds probing Robert F. Smith, billionaire who pledged to pay off students' companies despite a slowdown in issuance in the vehicles that have gained. Robert F. Smith's 2014 divorce, which allowed him to marry a which had been providing software to car dealerships since the 1970s. With a net worth of $9 billion, Robert F. Smith is the richest black had been providing software to car dealerships since the 1970s.

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Robert f smith cars

Meet Robert F. Smith, the billionaire who paid off an entire class' student loans and reportedly will now pay $140 million to settle a four-year investigation into his taxes

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Robert F. Smith, CEO and founder of private equity firm Vista Equity Partners, will pay $140 million to settle to a four-year-long investigation into his personal taxes. 

Smith became one of the most recognizable members of the three-comma club after announcing during his May 2019 commencement address at Morehouse College in Georgia that he would pay off all the student loans owed by the entire graduating class. Smith later extended the gift, which Morehouse later said totaled $34 million, to cover the graduates' parents' loans, too.

Smith is worth an estimated $7.05 billion, according to the Bloomberg Billionaires Index. He founded Vista Equity Partners, which invests in software companies, in 2000.

As a high schooler, Smith convinced Bell Labs to give him an internship even though they were reserved for college students. He went on to study at Cornell and Columbia universities, and he worked at Goldman Sachs before starting his own investment firm. 

Here's a look at Smith's life and career.

Jonathan Marino contributed to an earlier version of this story.

Robert F. Smith, 57, was interested in working in Silicon Valley from the time he was in high school.

robert f smith
Ricky Carioti/The Washington Post via Getty Images

Smith gave a commencement speech at American University's 2015 graduation, where he spoke about his earliest attempts to get work in Silicon Valley while he was still in high school. 

"I dug up the phone number for Bell Labs to ask about summer internships," Smith said. "They said I could apply if I were a junior or senior in college. I said that was fantastic, because, while I was only a junior in high school, I was getting A's in computer science and my advanced math courses, so it was like I was in college. Much to my dismay, they disagreed."

But Smith said he kept calling back "every day for two weeks straight," and after an intern from MIT didn't show up, he was accepted as an intern.

Smith spent years working as an intern at Bell Labs and went on to study chemical engineering at Cornell University.

cornell
http://www.cornell.edu/visit/

Smith attended Cornell for undergrad but never lost touch with Bell Labs. He continued to work there as an intern during his summer and winter breaks before graduating Cornell with a chemical engineering degree. 

In 2016, Smith donated $50 million to his alma mater.

After Cornell, Smith got his MBA from Columbia University in New York City and then went on to work on Wall Robert f smith cars, taking a job at Goldman Sachs.

columbia university
meunierd/Shutterstock

"When I finished business school and decided to join the tumultuous world of investment banking, my family and friends spoke up with concerns about my sanity," Smith said in his American University commencement speech. 

Smith would rise to cohead of enterprise systems and storage-investment banking at Goldman Sachs, advising on $50 billion of deals from 1994 to 2000. 

Smith launched Vista Equity Partners after leaving Goldman Sachs.

Robert Smith
Stephen Lovekin/Getty Images the federal savings bank salaries

Smith left Goldman Sachs, where he worked on tech M&A, in 2000 and launched his own private equity firm.

Smith's former colleagues at Goldman Sachs were initially skeptical of his new venture.

"When I left my post at Goldman Sachs just after we had gone public to set up a private equity firm called Vista Equity Partners … my mentors and colleagues at Goldman thought I had lost it," he said in his speech at American University.

Vista has grown into one of the most successful private equity firms, with more than $46 billion in assets, according to Forbes.

robert f smith vista
REUTERS/Lucy Nicholson

In the years since its founding, the firm has generated bumper returns for investors and gradually increased assets under management.

Vista has posting annualized returns of 22% since its beginning, according to Forbes.

Smith's investing strategy is to back Silicon Valley's least-known companies.

Silicon Valley
Justin Sullivan/Getty Images

Silicon Valley may be best known for billion-dollar valuations and soaring real-estate prices, but Smith's strategy is practically contrarian: He's investing in software and technology companies that aren't in the least bit flashy.

Smith's company is known for its unconventional hiring methods.

robert f smith
Ricky Carioti/The Washington Post via Getty Images)

The New York Times called Vista's hiring strategy "decidedly unusual" for how it uses tests to whittle down candidate lists. 

Vista uses a personality test developed by IBM that measures social and technical skills, as well as applicants' interest in arts and humanities.

The Vista CEO has the respect of many of his Wall Street peers.

Robert F Smith
http://robertfsmith.org/post/118605075721/robert-f-smith-is-the-founder-chairman-and-ceo
Источник: https://www.businessinsider.com/ex-goldman-sachs-tech-dealmaker-robert-smith-american
How Robert F. Smith’s 2015 Marriage To A Playboy Playmate May Have Led To The Largest Tax Evasion Case In US History

The name Robert Brockman may not be ring a bell to CNW readers but if you’re even just a casual fan of our site, I bet you’ve heard the name Robert F. Smith.

With a net worth of $9 billion, Robert F. Smith is the richest black person in America, a title he re-claimed from Kanye West in July of this year. Robert is the guy who announced during his Morehouse College commencement speech in May 2019 that he was going to pay off all of the student loan debt carried by the graduating class. This pledge ultimately cost $34 million.

In 2014 Robert divorced his first wife so he could marry the 2010 Playmate of the Year, Hope Dworaczyk, a women 22 years his robert f smith cars. As it turns out, his divorce may have set in motion an investigation which ultimately became the largest tax evasion case in US history, ensnaring Robert and his one-time mentor/benefactor, Robert Brockman…

Earning A Fortune

Robert F. Smith earned his $9 billion fortune as the founder of Vista Equity Partners. Vista Equity Partners controls more than $50 billion in assets today and has delivered an average annual return north of 30% since its inception.

Vista is especially good at acquiring software companies that have large numbers of paying subscribers. A good example is fitness platform MINDBODY. MINDBODY is software that helps customers reserve classes and treatments at yoga studios, spas and gyms around the country. If you’ve ever checked into a class on an iPad at a yoga studio or gym, there’s a very good chance you’re using MINDBODY’s software. The studio/gym/spa loves the software because it enables them to have professional services for a relatively minimal annual fee that they never stop paying. Vista acquired MINDBODY for $1.9 billion in December 2018.

Vista-owned businesses employ more than 60,000 people worldwide, making it the fourth largest enterprise software company in the world after SAP, Oracle, then Microsoft.

Robert Brockman

Robert (Bob) Brockman met Robert Smith in 1997. At the time Robert was several years into a respectable job at Goldman Sachs and Bob was an under-the-radar software billionaire from Houston. They two quickly bonded. Robert was enthralled by the elder businessman’s software empire, Universal Computer Systems, which had been providing software to car dealerships since the 1970s. Bob was equally impressed by Robert’s intellect and ambition.

So, in 2000 Bob offered to stake Robert in launching his very own private equity firm. Bob gave Robert $1 billion to launch what became Vista Equity Partners.

Unfortunately, Bob’s investment had a few catches that would eventually land both men in extremely hot water with the Federal goverment. The main catch being that all of Bob’s earnings would be sent to an offshore account. Robert also set up offshore accounts for a portion of his earnings.

Divorce Tips Off The IRS

Their arrangement went very smoothly and quietly over the next decade or so. Both men squirreled away vast sums of money to their respective offshore accounts.

Robert apparently began suspecting something wasn’t right in late 2013. At that point he was advised by his bankers in Switzerland that he should apply to a voluntary IRS program that offered amnesty to people who disclosed money kept in foreign accounts. He applied and was swiftly rejected, which is known to be a sign that the IRS is already conducting a tax avoidance investigation.

Around this time Robert was in the midst of a divorce battle with his first wife, Suzanne McFayden. He was legally married to Suzanne from 1988 to 2014 but they must have separated at some point earlier because by most accounts he began dating Playmate Hope in 2011. Robert and Hope married in Italy in 2015. John Legend and Seal both performed at the ceremony.

Hope Dworaczyk and Robert Smith (Photo by Stephen Lovekin/Getty Images)

According to a recent Bloomberg report, Robert’s 2014 divorce may have been what first “piqued the interest of IRS agents.”

Two years later Vista received a grand jury subpoena demanding information on its investors, namely Bob Brockman and his offshore trusts.

The DOJ would later allege that between 2014 and 2019 Robert F. Smith, upon getting nervous about his tax situation, began using his offshore money to make big, public charitable donations, for example the Morehouse student debt donation.

Robert knew he was caught and did not resist the charges. He chose to cooperate.

When it was all said and done, Robert paid a $139 million fine, admitted to avoiding taxes on $200 million in income and agreed to assist the DOJ in prosecuting Bob Brockman.

The amount the DOJ alleged Bob earned without paying taxes?

$2 billion

It is the largest tax evasion case in US history. The indictment against Brockman included a total of 39 charges, including counts of tax evasion, wire fraud, robert f smith cars laundering, and more.

Earlier this week the case took an unusual twist. Bob’s legal team now claims that their client’s dementia excludes him from standing trial. Brockman has received several mental health evaluations, including one at Baylor College of Medicine in Houston… where he’s donated around $25 million in recent years.

This week a competency hearing began in Houston to determine whether or not Bob is mentally fit enough to stand trial. If he is declared incompetent, federal law requires that he be committed to a medical facility for further mental evaluation. Bob’s defense team claims this would be a violation of their client’s due process rights.

If Bob is determined mentally unfit, Robert F. Smith will not be forced to testify against his former mentor.

Prosecutors claim it’s all just a big charade to avoid the consequences of a 20-year multi-billion tax fraud.

What’s the lesson here? Obviously the primary lesson is divorcing your wife to marry a much younger Playmate of the Year aint gonna be cheap!

Source: Celebrity Net Worth

Источник: https://bbcgossip.com/celeb/how-robert-f-smiths-2015-marriage-to-a-playboy-playmate-may-have-led-to-the-largest-tax-evasion-case-in-us-history/

Billionaire Robert F. Smith says corporations need to consider reparations

Robert F. Smith reparations, corporations thegrio.com

Robert F. Smith wants corporations to pay up. In an interview with Reuters, the billionaire says that companies should acknowledge the role they’ve played in the nation’s slave trade.

Read More: 5 Savvy money moves to make when cash is flowing

“I think that’s going to be robert f smith cars political decision that’s going to have to be made and decided upon,” Smith, the owner and CEO of the private equity firm Vista Equity Partners, told Reuters. “But I think corporations have to also think about, well, what is the right thing to do?”

Morehouse College Robert Smith thegrio.com

Smith insisted that corporations are key to addressing some of the historic inequalities from the transatlantic slave trade that still impact African Americans, particularly when it comes to economic parity.

Since the deaths of George Floyd, Ahmaud Arbery and Breonna Taylor made national headlines and precipitated global protests, more corporations have aligned themselves with the Black Lives Matter movement– at least in words. But Smith says corporate America along with government entities need to foster partnerships to bring Black Americans to the economic table.

Read More: Billionaire Robert F. Smith also promises to pay off parents debt of Morehouse College graduates

“People are saying now, what can I do to make real systemic change and eliminate and eradicate racism in America?” Smith said. “That is an outgrowth of the protest and the realization that this racism is unjust and can’t stand.”

Smith added that corporations can do more to create change if they approach the situation thoughtfully given that they profit off of and are often impactful in Black communities.

“[They can] can bring their expertise and capital to repair the communities that they are directly associated with in the industries in which robert f smith cars cover,” Smith said.

Smith, the first African American to sign Bill and Melinda Gates‘ Giving Pledge to give away most of his money before he dies, has done his part. He promised to donate $34M to Morehouse graduates to eliminate their student debt at their graduation in 2019.

Smith said that while the average small business has two months of working capital, Black businesses have just two weeks. The coronavirus pandemic laid bare those inequities as Black businesses struggled for access to Paycheck Protection Loans (PPP) available via the CARES Act, and many already undercapitalized Black-owned businesses have been forced to close.

“How do we restore, repair and regenerate the economic activity in these communities utilizing the force of the U.S. government and business and partnerships?” Smith said to Reuters.

Because of the increased awareness of racial and economic inequities, Smith declared now may be the time.

Read More: Coronavirus pandemic has eliminated almost half of Black small businesses

“The allies weren’t as widespread,” the 57-year-old said of his own experience growing up Denver, Colorado. “Employees of companies are also going robert f smith cars hold the leaders accountable to do something about it. We have a chance for systemic change.”

Have you subscribed to theGrio’s podcast “Dear Culture”? Download our newest episodes now!

Источник: https://thegrio.com/2020/08/12/billionaire-robert-f-smith-corporations-reparations/

Obituary of Robert E. Smith

Robert Smith

Robert E. Smith

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Mr. Robert E. Smith, 67, of Hart Rd., Amsterdam, passed away Wednesday evening May 19, 2010 at Ellis Hospital in Schenectady with his family at his side. Born in Amsterdam, NY on April 25, 1943 a son of the late Edward F. and Frances Rusilas Smith. He was a lifelong area resident and was a 1961 graduate of the former Wilbur H. Lynch High School in Amsterdam. Mr. Smith served in the New York Army National Guard from robert f smith cars to 1970. He worked as an insurance appraiser for over 38 years and retired from AIG Insurance Company in Albany, NY. Robert was a communicant of the former St. Casimir's Roman Catholic Church in Amsterdam. He was an avid car enthusiast and entered his 1992 Corvette in car shows and won awards. Mr. Smith also enjoyed watching NASCAR especially his favorite driver Dale Earnhardt Jr. Robert also was a member of the Galway Fish and Game Club and the National Rifle Association. He married Debra L. McMullen Smith on June 15, 1985. In addition to his wife survivors include a daughter, Teri of Amsterdam, NY. and A son, Aaron R. Smith of Amsterdam. Friend, Jay of Amsterdam. Mother-in-law, Martha McMullen of Marlborough, NY. Brothers and sisters-in-law Ralph and Mary McMullen of Milton, NY and Abbe and Frank Hamill of Binghamton, NY. His Best Friend Ronald DeRocker of Broadalbin, NY. One niece, one nephew, cousins and many friends also survive. A Funeral Mass will be held on Monday May 24, 2010 at 11:00A.M. at St. Mary's Roman Catholic Church, East Main St. Amsterdam with Father Brian List as celebrant. Interment of Cremated Remains will follow in St. Casimir's Cemetery, Amsterdam. Memorial contributions may be made in Robert's memory to the American Heart and Stroke Association, 1 Union St. Suite 301 Robbinsville, New Jersey 08691 or to the National Stroke Association, 9707 E. Easter Lane, Suite B, Centennial, CO 80112. Arrangements have been entrusted to the Betz, Rossi & Bellinger Family Funeral Home, 171 Guy Park Ave, Amsterdam, NY 12010.

To send flowers to the family or plant a tree in memory of Robert Smith, please visit Tribute Store
Источник: https://brbsfuneral.com/tribute/details/63734/Robert-Smith/obituary.html

NBC brings on Robert Smith to offer financial tips, fails to mention he paid $139 million to settle tax probe

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Media top headlines November 15

In media news today, Kamala Harris' spokeswoman hits back at CNN, an MSNBC anchor gets slammed on Twitter for arguing Americans can afford more expensive groceries, and Axios warns about a 'reckoning' on news outlets that touted the Steele dossier

NBC’s flagship morning show, "Today," invited billionaire Robert F. Smith to offer financial advice to young people last week, but the Peacock Network failed to mention that Smith is caught up in one of the largest tax fraud cases in the history of the United States. 

Smith sat down with NBC’s Craig Melvin on Wednesday to educate young people how to handle money, but it appears NBC News doesn’t have a thorough vetting process. NBC painted Smith, the founder and CEO of Vista Equity, as a philanthropist but didn’t inform viewers of the billionaire’s significant legal woes. 

DOJ CHARGES TEXAS BILLIONAIRE IN $2 BILLION TAX FRAUD SCHEME

NBC’s flagship morning show, "Today," invited billionaire Robert F. Smith to offer financial advice to young people last week, but declined to mention his role in a massive tax fraud case.  (Simon Dawson/Bloomberg via Getty Images ( Simon Dawson/Bloomberg via Getty Images/Photo illustration)

On Monday, Robert Smith’s partner for a variety of tax issues, Robert Brockman, will be in a Houston court to face a competency hearing after being charged with evading taxes on $2 billion. 

"The stakes are high as well for billionaire Robert F. Smith and his firm, Vista Equity Partners. Smith was a subject of the same probe that led prosecutors to Brockman. As Smith’s original investor, Brockman put at least $1 billion into Vista funds. Smith’s $8.7-billion fortune makes him the wealthiest African-America," Bloomberg News reported on Friday.

"Smith avoided prosecution last year when he admitted evading taxes on $200 million of income, agreed to pay $139 million and to cooperate in the Brockman probe," Bloomberg added. "If Brockman is declared incompetent, Smith will avoid testifying at trial."

Indeed, Smith in 2020 paid $139 million to settle his own tax probe and agreed to cooperate in the investigation of Brockman – but "Today" viewers would have no idea because Melvin and NBC failed to disclose Smith’s tax issues. 

Melvin did inform viewers that NBC’s parent company Comcast is an investor in the app Smith uses for his philanthropic initiatives. 

CLICK HERE TO GET THE FOX NEWS APP

The "Today" show cast even sat around after Melvin’s segment and praised Smith while the show’s on-screen chyron said, "Billionaire philanthropist pays it forward." 

NBC’s parent robert f smith cars Comcast is an investor in the app Robert Smith uses for his philanthropic initiatives. 

Smith famously stunned a senior class in 2019 when he promised to wipe out the student loan debt of the entire graduating class at Morehouse, a historically Black all-male college.

NBC News did not immediately respond to a request for comment. 

Fox Business' Janie Har contributed to this report. 

Brian Flood covers the media for Fox News. Follow him on Twitter at @briansflood.

Источник: https://www.foxnews.com/media/nbc-news-today-robert-f-smith

DOJ charges Texas billionaire in $2 billion tax fraud scheme

SAN FRANCISCO (AP) — Federal prosecutors charged Texas billionaire Robert Brockman on Thursday with a $2 billion tax fraud scheme in what they say is the largest such case against an American.

Department of Justice officials said at a news conference that Brockman, 79, hid capital gains income over 20 years i was made for loving you cover a web of offshore entities in Bermuda and Nevis and secret bank accounts in Bermuda and Switzerland. Prosecutors announced that the CEO of a private equity firm that aided in the schemes would cooperate with the investigation.

The 39-count indictment unsealed Thursday charges Brockman, the chief executive officer of Ohio-based software company Reynolds and Reynolds Co., with tax evasion, wire fraud, money laundering, and other offenses.

Prosecutors also announced that Robert F. Smith, founder and chairman of Vista Equity Partners, will cooperate in the investigation and pay $139 million to settle his own tax probe. Smith, 57, stunned a senior class last year when he promised to wipe out the student loan debt of the entire graduating class at Morehouse, a historically Black all-male college.

“Complexity will not hide crime from law enforcement. Sophistication is not a defense to federal criminal charges,” said David L. Anderson, U.S. attorney for the Northern District of California. “We will not hesitate to prosecute the smartest guys in the room.”

Brockman appeared in federal court from Houston via Zoom Thursday. He entered a plea of not guilty to all counts and was released on $1 million bond, said Abraham Simmons, spokesman for the Northern District of California.

“Mr. Brockman has pled not guilty, and we look forward to defending him against these charges,” said his attorney, Kathryn Keneally, in an email.

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Prosecutors said Brockman used encrypted emails with code names, including Permit, Snapper, Redfish and Steelhead, to carry out the fraud and ordered evidence to be manipulated or destroyed.

Brockman, a resident of Houston and Pitkin County, Colorado, is chairman and CEO of Reynolds and Reynolds, a 4,300-employee company near Dayton, Ohio, that sells accounting, sales and management software to auto dealerships. The software helps set up websites, including live chats with potential customers, find loans and calculate customer payments, manage payroll and pay bills.

Reynolds & Reynolds issued a statement saying the allegations were outside Brockman’s work with the company and that the company is not alleged to have participated in any wrongdoing.

In 2013, a charitable trust set up by Brockman’s late father withdrew a pledged $250 million donation to Centre College, a small liberal arts school in Danville, Kentucky, where Brockman attended class and once served as chairman of the board of trustees.

At the time the school said it was due to a “significant capital market event” that didn’t pan out. A spokesman for Reynolds and Reynolds said in 2013 that the event was a proposed refinancing deal robert f smith cars Vista Equity Partners, Smith’s company.

According to the indictment, Brockman gave an unnamed individual detailed instructions regarding the proposed gift to the college, including talking points, and directed the person to threaten to pull out if his demands were not met. In August, he instructed the person to cancel the gift.

Prosecutors say that Smith used about $2.5 million in untaxed funds to buy and upgrade a vacation home in Sonoma, California; purchase two ski properties in France; and spend $13 million to buy a property and fund charitable activities at his property in Colorado.

Anderson applauded Smith for stepping up, despite the serious nature of his crimes, which occurred from 2000 to mid-2015.

“Smith’s agreement to cooperate has put him on a path away from indictment,” he said.

In 2019, Smith announced to the graduating class at Morehouse College that he would pay off the student loan debt of the entire class, saying that he expected the graduates to “pay it forward.” The estimated cost was $40 million.

Forbes lists Smith as #461 on its billionaires list, with a net worth of more than $5 billion.

He founded the tech investment firm Vista in 2000 and Forbes reports that it now has over $50 billion in assets and is “one of the best-performing private equity firms, posting annualized returns of 22% since inception.” Vista has offices in San Francisco and Oakland.

Vista did not immediately respond to a request for comment.

___

Associated Press writers Tom Krisher in Detroit, Juliet Williams in San Francisco and Jake Bleiberg in Dallas contributed to this story.

Источник: https://apnews.com/article/texas-41a427b03d4c5e65a32f011f5029acfa

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Robert Smith is the Founder, Chairman, and Chief Executive Officer of Vista Equity Partners. A March 2018 Forbes profile described Vista’s performance: “Since the firm’s inception unify financial credit union mobile deposit faq 2000, Vista’s private equity funds have returned 22% net of fees annually to limited partners, according to PitchBook data. Annual realized returns, which reflect exits, stand at a staggering 31% net. His funds have already made distributions of $14 billion, including $4 billion in the last year alone. Not surprisingly given those numbers, Vista has become America’s fastest-growing private equity firm, managing $31 billion across a range of buyout, credit and hedge funds.” Vista owns many businesses including Marketo, Tibco, Omnitracs and Infoblox to name just a few. You can find a full list on Vista’s web site.

  1. “We are very disciplined buyers.” “You think about Warren Buffett and Henry Kravis, and to a great extent, Columbia seems to mint a whole bunch of people who understand value investing and go about it in a different way.”

In addition to degree in chemical engineering from Cornell, Smith obtained an MBA from Columbia University Business School. There is little doubt that at Columbia Smith was taught that value investing as an analytical style is very different from value investing as a statistical factor in an index fund. When you hear someone say something in the news or on social media like “Value stocks were up [or down] today” they are either (1) talking about value as a statistical factor or (2) are confused about the difference. To illustrate, the difference, Charlie Munger was not talking jp morgan access value as a statistical factor when he said: “All intelligent investing is value investing — acquiring more that you are paying for. You must value the business in order to value the stock.” What Munger means is: are  there any types of intelligent investing where the objective is to pay more than an asset is worth? There are some assets for which an intrinsic value can’t be easily computed, but that is a different question than whether an asset should be purchased at a discount to its value. A business like Apple or Amazon can be a value stock if you are engaged in value investing as an analytical style.

A disciplined buyer like Vista only buys a security or asset when they can make the purchase at a price which represents a bargain when compared to its value. Buying an asset for more than it is worth hoping some greater fool will buy it for even more in the future, is neither disciplined nor investing. Another Columbia graduate named Warren Buffett believes: “The very term ‘value investing’ is redundant. What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value — in the hope that it can soon be sold for a still-higher price — should be labeled speculation.”

Another point that has been made by Munger is also relevant to what Smith is talking about in the first quote in bobby berk products above. Munger has made it clear several times that Berkshire is a buyer of moats. Munger has said: “We buy barriers. Building them is tough.” Vista is also a buyer and not a builder of moats from scratch. The skills and systems required to buy a moat at a bargain price are not the same as the skills and systems required to build one from scratch.

  1. “No one was doing buyouts in tech startups.” “These software companies were truly value plays, from my perspective.”

You must know one or more secrets in order to acquire something for less than it is worth. As Charlie Munger says: “Everyone has the idea of owning good companies. The problem is that they have high prices in relation to assets and earnings, and that takes all of the fun out of the game. If all you needed to do is to figure out what company is better than others, everyone would make a lot of money. But that is not the case.” Howard Marks puts it this way: “If you are investing based on a fact that everybody knows, it can’t possibly constitute an advantage and it can’t possibly have been omitted from the price. So, you must have some knowledge that is different from that of others.” Smith understood early in his career that “software is eating the world.” Unlike Buffett and Munger, Smith decided that he did have a circle of competence when it came to technology stocks and that conclusion has translated into superlative financial returns for Vista. Smith decided to “fish where the fish are” and to acquire some unique skills related to that type of fish he wanted to catch. Smith was trained as a chemical engineer but realized that he needed to become an expert in software.

  1. “Software companies taste like chicken. They’re selling different products, but 80 percent of what they do is pretty much the same.” “We exclusively focus on enterprise software.”

I suspect that in making his “software companies taste like chicken” comment, Smith is referring to systems which can be implemented that improve what Harvard Business School Professor Michael Porter calls the “operational effectiveness” of a business. Porter has said: “Operational effectiveness is about things that you really shouldn’t have to make choices on; it’s about what’s good for everybody and about what every business should be doing.” Of course, how a business is operated based on systems is very different from how it implements a strategy and develops products. I’m skeptical that Smith believes a successful business can have goals that are purely financial. People working in a business are most productive and fulfilled if they know their work has a purpose that isn’t just financial. My view is that without a purpose that is far greater than “let’s double EBITDA” the financial result of investing the business will be disappointing, even if the business is enterprise software. Even if doubling EBITDA is the primary purpose of the company, that business will not be very good for very long if there is not also a sense of purpose among the employees. For example, the best product development people are motivated by helping customers do something important that creates new value for customers. Without great “product people” the franchise of the business will inevitably deteriorate. In short, all financial engineering and no genuine product improvement makes for a shorter lifetime for any moat. Of course, just because Smith believes 80% of what these businesses do operationally can be the same, that does not mean that pay coned bill with debit card believes that the 20% that is different isn’t what drives the creation of most value at a business.

In any event it is clear that Smith has a strong robert f smith cars the value of the standard operational systems that Vista has developed:

“Nobody ever taught these guys the blocking and tackling of running a software company. And we do it better than any other institution on the planet.” “What we need to change, we have changed before, so we know how to do it.” “If you are a software executive, how do you build your commission structures or run your go-to-market strategy? How do you find and train talent? Who teaches you those things?” “Financial performance of a company is just a trail in the sand of the operational performance. “The more standardized the input, the more standardized the output. You have to design your system, and you have to believe in it.” Vista Standard Operating Procedures — “VSOPs” in the firm’s lingo. “We have applied VSOPs again and again successfully in software companies, no matter what sector they are in — from energy to healthcare.” “We capture what we have learned and transfer skills and know-how to our companies and, through a systemic approach, leverage our investment team, Vista Consulting Group, and our portfolio managers.”

This systems-based approach to improving operations at an enterprise software business is Smith’s first secret. If Vista can buy a software business at the right price Smith believes Vista can substantially improve operations and increase the value of that business. He points out that Vista’s acquisitions are a bargain “only if you actually know how to change the operations of those businesses.” Unlike Buffett and Munger, Smith does not insist on buying a business with management already in place. For example, Vista usually brings in new management and often a new sales team as part of its operating plan.  Vista may also buy other businesses in the same vertical as part of a roll up.

  1. “Software contracts are better than first-lien debt. You realize a company will not pay the interest payment on their first lien until after they pay their software maintenance or subscription fee. We get paid our money first. Who has the better credit? He can’t run his business without our software.”

This statement describes Smith’s second secret. Because the amounts enterprises pay to use their software are much more creditworthy than most people imagine, Vista has been able to buy companies at an attractive price and then use this secret to gain better financial terms from lenders and suppliers when it uses leverage to do so. Smith was one of the first people to buy enterprise software businesses with leverage and the results of what he has done speak for themselves.

  1. “Listen to who is the critical thinker about the platform as opposed to the product.

It is impossible to be in the technology business today and not understand the power of platforms. Platforms can generate network effects which are the most important source of competitive advantage in the business world today. What a business wants is a product or service that gets more valuable the more people use it. This causes what are called “demand-side economies of scale” to benefit the business. I have written an post on network effects that you can find in the index to this blog.

  1. “The fourth industrial revolution is real and it is global. It relies on the ability to harness the data that is captured from real-time interactions that are taking place within the networks of their customers.”

Most people have heard someone say that “data is the new oil.” What they mean is that due to the rise of cheaper storage and developments in artificial intelligence, data has become a key source of competitive advantage. This change in the business world means that a race is on to create continuous and near real time connections with every customer and every device and to create systems which can extract intelligence from that data which can be turned into more valuable products and services. Every business that has an attractive future is quickly becoming a SaaS business, even if the company sells some sort of device (see my recent blog post on “SaaS plus a box.”).

  1. “Moats have to be dug over time. It may take 15 years to create a moat.”

Especially in the world of enterprise software, the sales cycle can be so long/time consuming that generating network effects can take many years to accomplish. The good news though is that for the same reason the lifetime of the customers acquired can be far longer as a result. In other words, it can cost an enterprise software company much more in time and money to acquire a customer fifth third online banking login in a business in another sector of the economy, but the lifetime of that customer robert f smith cars and the moat in an enterprise software business tends to be longer.

  1. “The importance of developing intellectual property cannot be underestimated.”

Other than network effects, the ownership of key intellectual property is the next best way to create the sustainable differentiation necessary to acquire a moat. There are patents and then there are patents. They are not all created equal. I have many granite patent cubes in my office so I do believe they have value, but how much value they have is not completely clear.

  1. “The world is awash with capital and ambition which has led more PE tourists to invest in the highly specialized area of software.”

Vista’s success in the private equity world has attracted imitators. These competitors will only be successful if they have the right circle of competence. Some of these firms are doing very well in the private equity part of the technology 122000661 bank of america and some are not. The easy pickings that Vista once had in buying technology businesses are in no small part gone now that Smith’s two secrets are more widely known. Whether these competitors of Vista will be able to be financially successful in this part of the private equity business is unclear. Smith and Vista clearly know their way around the enterprise software business, but I am not so sure that the same thing can be said about many of the private equity firms that Smith calls “tourists.”  As Warren Buffett likes to say, risk comes from not knowing what you are doing.

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  1. “We don’t underwrite to hope. We underwrite based on critical factors for success under our control.”

Failure can happen for many reasons including situations that involve a business or investor: (1) taking a dependency on something that is within the control of someone else or (2) depending on a lucky break to happen. Smith wants to invest when he knows Vista can generate a positive return based on known capabilities. Smith has said: “I am most proud of our system being a loss-prevention mechanism.” Smith told the Financial Times: “We manage money for teachers and firemen and municipal workers. We have never lost money on any buyout investment. The last thing they want us to do is be irresponsible with capital and we take our fiduciary responsibilities very seriously.” You may have once seen a television special shown at Christmas entitled: “Rudolph the Red-Nosed Reindeer & the Island of Misfit Toys.” Sometimes there is value in finding a business that is “misfit” if you have the skills to fix it. There are some notable former misfits in the Vista portfolio. I suspect that Smith looks for “fixer uppers” rather that “turnarounds.” As Buffett has said: “Turnarounds seldom turn.” It can happen, but focusing on turnarounds would not have produced Smith’s “we have never lost money” record of success.

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  1. “The pace of change has accelerated.” 

What Smith is saying here is evident to anyone who has been involved in a real business over the last few decades. That there is some sort of stagnation going on in the business world is rubbish.  Sometimes during the business day I feel like the character Ned played by William Hurt in the movie Body Heat who says at one point: “Sometimes the shit comes down so heavy I feel like I should wear a hat.” If you are constantly amazed by the pace of change you see in your business, your brain is working correctly. That is really happening. If a professor tells you that the pace of change has slowed because “we are out of new ideas,” the best response is: “bullshit.”

  1. “Everyone asks this question around the world. How can we be the next Silicon Valley? You can’t.” What [a city like] Denver has to be is the next Denver. What Denver can do is figure out how to be the best Denver as opposed to be the next Silicon Valley. Denver has attributes that no other place on the planet has.” 

What a city or region should be searching for from an economic development standpoint is comparative advantage. Smith is correct that there will never be another Silicon Valley. The goal of any region should be to harvest the benefits of unique “agglomeration economies.” Michael Porter describes the objective: “clusters tend to attract specialized human resources to their region because the multiple firms in the cluster provide a deep local labor market in the skill-sets sought by employers.” A major research university is vitally important to a city’s economic vitality since they tend to be a key driver of unique regional capabilities. If a city does not have its own research university it should affiliate in some way with one or more research universities in other regions. My blog post on what a region or city can do to create a more vibrant and adaptable economy is here: “A Dozen things Seattle can teach others about jobs, economic development and building a better city.” https://www.geekwire.com/2016/12-things-seattle-can-teach-others-jobs-economic-development-building-better-city/

p.s., A few more thoughts from Smith:

“The important thing was the challenge from my mentor was more than to teach me something about this obscure integrated circuit. It’s a challenge that has reaped rich dividends for me over my entire career. It is the joy of figuring things out.”

“Running your own race demands trusting yourself even when others don’t.”

“With the process of discovery, you fail a lot. And you learn a great deal from those failures, so the next time you can avoid those mistakes.”

“This is not a lifestyle business. And if you want to make it a lifestyle business, this is the wrong business to be in.”

“You got to have grit. And grit mean getting turned away from thing 14, 16 times, calling someone every two weeks, every day for 5 months and then finally it bb&t check routing and account number in something that you want.”

“I started Vista because I knew no private equity firm would hire me. I saw what they were looking for… So I created my own firm.”

“The most important thing you can do as a young person is to become an expert. There is no substitute for becoming the best at your craft.”

Notes:

https://www8.gsb.columbia.edu/articles/columbia-business/private-equitys-philosopher

https://www.ft.com/content/0a51ff50-0d59-11e7-a88c-50ba212dce4d

https://www.forbes.com/sites/nathanvardi/2018/03/06/richer-than-oprah-how-the-nations-wealthiest-african-american-conquered-tech-and-wall-street/#5ac16cc43584

https://www.denverpost.com/2017/06/09/robert-smith-forbes-african-american-q-and-a/

http://news.cornell.edu/stories/2017/11/chemical-engineer-turned-ceo-wonderful-time-be-entrepreneur

https://www.pehub.com/2015/03/buyout-snapshot-vista-equitys-robert-smith-unapologetic-for-big-step-up-in-fund-size/

https://ru-clip.com/video/J3ETwGnvNEo/billionaire-robert-f-smith-investment-philosophy-mindset-and-life-2017.html

https://thegrio.com/2017/04/03/robert-f-smith-black-billionaire/

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Источник: https://25iq.com/2018/03/23/business-lessons-from-robert-smith-of-vista-equity-partners/
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