Leap to Scale
Leap to Scale is for technology curious leaders of service firms who want higher margins without adding headcount. Each week, Justin Davis and Greg Ross-Munro show how to turn firm expertise into repeatable, sellable technology products: SaaS, packaged workflows, and AI-powered tools clients can buy again and again. With AI, more of your know-how can be captured, standardized, and protected as IP instead of being rebuilt in every engagement.
We focus on practical decisions: what to productize, how to price it, when to build vs. buy, and how to use AI responsibly without risking delivery quality or margin. Clear steps, real tradeoffs, usable examples.
Leap to Scale
Investing in Innovation: How Technology Shapes PE Strategies
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In this episode, Sara Altenhoff is joined by Justin Davis, VP of UX at Sourcetoad, and Greg Ross-Munro, CEO of Sourcetoad. The three discuss the huge potential for technology to shape and transform the strategies of PE firms.
Key Takeaways:
- Understanding PE Firms: Explanation of the goals of PE firms and the complexities of managing holding companies.
- Value Growth through Operational Improvements: Learn how PE Firms can increase the value of their holdings through operational efficiencies.
- Why Tech is Table Stakes: Exploration of why technology is the best way to implement operational efficiencies and increase the value of holding companies.
Tune in today to hear actionable insights from fintech experts on increasing portfolio value through digital transformation.
Hi, and welcome to another episode of Decoder Podcast. I'm Sarah Altenhoff.
SPEAKER_02Hey there, I'm Justin Davis. And I'm Greg Rossman Row.
SPEAKER_00And today we're going to talk about a really interesting topic. Um, how technology can shape the strategies of PE firms.
SPEAKER_01Oh, private equity, exciting.
SPEAKER_00Yes. So to begin, Greg, why don't you walk us through what exactly a PE firm is?
SPEAKER_01Um thanks, Sarah, because uh I used to work in this field and I didn't love being an analyst in a PE firm. But you know, uh we I re I it was not I was not cut out for for that world. But um uh I have we have worked a lot, I've worked a lot with PE firms since. So uh private equity firms are basically uh they are investment companies and they're kind of like underwriters almost in a way. Uh and what they do is they invest money in companies that are mainly in like growth stages, so like $10 million are probably on the small side, and they invest money in uh, you know, up to billions of dollars in in companies, uh and they with the intention of having uh those companies increase in value and then they get to sell them. So rather than like a VC firm or something which is looking for is like you know, super high risk and they'll invest in like a hundred companies, and they want uh one of those, or they want like three of those companies to be unicorns and become worth a billion dollars, and the others are gonna go out of business. PE firms are more like they're gonna raise a fund of you know a couple hundred million dollars and they're gonna invest in like 10 companies, maybe, and they want those companies to only triple in value rather than a hundred times in value, 100x in value, and they want to do it over like five to seven years rather than where a VC might hold for be involved like for you know 10, 15 years and multiple rounds, etc. And the uh the other difference is like where the money comes from, who invests in the funds. So uh depending on the PE firm, it might be family offices, um, it could be organizations and companies, but a lot of it is like pension funds and 401ks and stuff like that. So uh, you know, if you're playing around with you know uh bus drivers unions uh pension money, you've got to be really responsible with it. And so uh you definitely can't take the kind of flies and the risks that's that VCs do. Does that answer the question?
SPEAKER_00Yeah.
SPEAKER_01Do you get what I'm saying?
SPEAKER_00Yeah, so uh what are maybe like another way to explain it would be like what are their goals? Um, how do they maximize their holdings?
SPEAKER_01Yeah, I mean, uh every every PE firm is a little different. Um, but you know, typically if you want to like you drew a child, a child's drawing of a PE firm that'd want to invest in a particular sector that they're ex they have expertise in, so like oil and gas companies or like uh medical technology or something like that, right? Because the people in the operating side like know about that world, and that's kind of why they're in that space. And there's PE firms that are like all over the place as well, but and they just look for good deals. But um the uh they're typically that they typically are like focused in some way, and they are looking generally to like get about somewhere between double their money and you know 5x their cash in in under what they call a horizon or a harvest schedule, right? So they're gonna harvest these companies like farmers over um in about five to seven years, depending on uh the and they so their goal is to triple the money basically for their uh shareholders and the or the their investors in the fund so that they can take that money back and pay for bus drivers to retire or for rich people to get richer. One of the so those those are mainly the two goals. So, like the idea is and and the only way you can do that is once you invest in the company or you buy the company outright, is to increase the value of the company. And you've got to so you've that's the main goal. How do you increase the value of the company?
SPEAKER_02And there's a few ways to increase the value of a company, right? Like, so you can increase the value of a company by simply expanding its markets, getting it in touch with more customers, and literally just increasing the revenue throughput, right? You can also increase the value of a company by increasing the value of what it does, like making its infrastructure more valuable, making its products more valuable, increasing the diversity of the products, things like that, right? You can also increase the value of the company by changing management, by installing different management teams, or also taking advantage, and this is one of the things about PE firms that comes up, right? Is you can, because of the structure of PE firms, you can inadvertently, one of the ways that you can increase the value of the companies is by, in some instances, consolidating some of the services into the shared service model inside the PE firm, which allows all of the companies in the portfolio to take advantage of it and sort of leach off of that value, but there's a single cost center. So you amortize that cost out, lift the tide for everybody in the portfolio in this kind of shared model. So there's a number of different levers I think that can be pulled there in terms of how that value gets increased, right?
SPEAKER_01Yeah, and the the the other big thing now that you when now you mentioned is is like um is like consolidation of actual of like competitors or you know, like down market like smaller firms that are competing. So in those situations, like you've got to maybe you bring somebody in whose technology is also not compatible with yours, and then that's the the PE, it's you know, if the PE firm put you put two companies together to like increase their value or their market share, whatever, um they're probably gonna be left holding the bag for helping out with that integration of those two companies as well. So that's something that I failed to mention, what I forgot to add in there.
SPEAKER_00So I think this is where the technology aspect uh can really come in. So um let's talk about how we can improve the value, increase the value of these holding companies through technology. Um, what are some ways that like different technological solutions can do that?
SPEAKER_01Well, Justin, Justin, you were talking about like shared services. Why don't you like, I mean, what do you mean by shared services? Like, how does what are we building franchise stuff here?
SPEAKER_02Yeah, so like so. One of the things that's interesting about that, right, is that there's probably a lot of different ways to use technology as a lever in these companies, both at the single company, right? Because you have to imagine, right, everybody's coming in with a different level of technology, different level of maturity, all kinds of different situations in terms of when somebody comes into the PE firm, and I mean come into the firm as in become a portfolio company, right? And so you can increase the value certainly at the individual level by simply like making the core piece of technology better in that company. And that shared model is interesting because you get to kind of take advantage of doing that, but at this kind of efficiency of scale kind of model, right? Where you might say, for example, you've got a porco of 10 companies or you have a portfolio of 10 different companies, right? And you might say, hey, y'all, you know, company A is using payroll solution one, company B is using payroll solution two, company like three, four, five, and six are using something else, whatever. We can consolidate payroll, back office administration, these kind of things. That's one way to do it, right? Um, in which you consolidate the the services, the stuff that the companies use to get their operations done. And now instead of each of them running their own little siloed version of that, they're all using this kind of shared resource, right, that everybody gets to pull from. And the the thing about that is you kind of get in that model, you get multiple benefits off of it in terms of cost and scale. The first thing is you don't have 10 companies all running their individual things, which they have to staff, they have to support, they have to pay for, they have to manage, right? That's a problem times 10. We have 10 problems, right? We can now have one problem that everybody kind of gets a little bit of the a piece of, right? The second thing is that you get to if fit, you get to make scale or operations a lot more efficient because now we only need one person or a couple people to know how this technology works in the organization because we're all sharing the same stuff. We're not across this disparate universe of things that we might be using, right? So we also get the operational efficiency, so simply it's easier to support, easier to manage, easier to deal with, because it's one thing that's being used in this kind of communal type of way, as opposed to everybody having their own little kind of snowflake version of that.
SPEAKER_01And not every not every PE firm runs the same way, right? Like they're they're they're different all over the board. So like the ones that I come into contact with is typically like on the technology consulting side. Yeah, they are um the reason we're talking is because they're consolidating something through technology, right? So like we we have um, I've seen things where uh you know the the PE firm owns like a bunch of uh holding company, a bunch of companies in their portfolio in a very specific space. And so let's say they own a bunch of car manufacturing spaces, right? Uh of car manufacturing companies that make widgets for cars. And um each one of those companies uh probably has like machinery inside their factory. Uh, and those machineries, those machines have tolerances and they have maintenance schedules and cycles. And so you can go out and like they could the PE company could buy a piece of software that handles maintenance schedules um and every force everyone to use it, or they could um buy a company that already does it because they're a P firm, they could just buy that company and then put that into the mix as well, or they could build that product themselves. And some not all, but like some PE firms have like a an actual shared services like IT department, which is responsible for the IT of like it's almost like their own MSP for all the portfolio companies, and those are really interesting places to be because um they are um they get to play with lots of different companies, uh, but all but like they don't have to worry about their paycheck, right? They don't have to worry about like finding them. So that's an interest that's interesting. And the so you know, and then the custom software development's exactly the same. Uh, you know, the the uh you know, a lot of these companies have built their own stuff already. And if you're gonna scale with a in a you know, you've got a 3x your your revenue in five years, it you probably so if you're already at like the PE level, you're probably not a brand new company, right? So you've been around a while, so you may have like old stuff flying around, and that old tech is probably not going to be what gets you to that next level. That's not gonna 3X you. And as a result, and the problem is that your team internally of that company is probably also not the team to build out that. So um, so sometimes the PE firms bring in uh like you know, they bring in tiger teams for management, but they also have to sometimes bring in tech teams to like refresh that stuff.
SPEAKER_02And you get like this kind of interesting, even if you don't have like a direct shared services model in the organization, you still get this kind of implicit efficiency, right, in that, insofar that everything is generally in that in how you're speaking, kind of coming through the the PE management team, if you will, and then being kind of distributed out to the port codes. And so while that may not be like, oh, you can use this system, you can use this system, you can use the system, all literally sharing the same thing. There is shared knowledge, there's shared trust, there's shared risk reduction, right? Because as those services, like for example, the PE firm hires a technology firm to build something, right, for one of the portfolio companies, right? Or maybe at the global level that many of them use, either direction. Now another one of the portfolio companies needs something that's very similar. We've de-risked the vendor selection process. We've de-risked a lot of the scoping and understanding process, right? And so instead of 10 companies all having to hire their own vendors and having to get and manage that process and all of that kind of thing, you are able to get this implicit efficiency just by the fact that the organization has gone through the reps of doing it and everybody gets the benefit from that.
SPEAKER_01That's interesting. I have never thought of it that way, really, which is that, like, oh, wait, you're like the PE firm basically becomes like a really good Angie's list, right? For like, hey, like we know that this is the law firm to use because we've used like 30 law firms over like 50 companies, and like these two are the best law firms, and like that's the same on the tech side as well.
SPEAKER_02And you see that a lot in the VC world. You see that also, you know, another place where you see that model often is like in the accelerator and incubator world, and to some degree the the venture capital world, where they will say, We've got the law firm partner that we use, we've got these folks right on hand that we have trusted and vetted. So by being part of our portfolio or being part of this program, et cetera, not only do you get access, but you also get to not have to worry about making that decision and all the static that comes along with that. And one of the things I think inherent to that is that those kind of decisions, right? Like when you're in a company, when you're building, right, every company has a core that it does. Every like, and this is every company, whether or not it's in a PE firm or it's uh VC backed or it's a bootstrap company, it doesn't matter, right? Everybody has a core of what they do. And you can kind of in a company, you can you you do actions in a in sort of broadly two different directions, which is one is moving forward, let's say east to west, right, as it were, which is moving ahead on your core value. That is building your core technology, delivering on your core value proposition, developing your markets, deepening your value, the things that you individually are good at, right? And then there are these north-south actions that you do. And those north-south actions are the things that you have to do, like operational support and payments and back office stuff and all of these other things that they don't necessarily move you ahead competitively in terms of deepening your value, but they are required in order to get to a baseline of value because you got to pay the people, you got to operate things efficiently, right? And so the more east-west actions you can do, then the faster you can move toward value development. And the more that you can sort of borrow or copy the north-south stuff, then you don't have to focus as much time on there and you can just spend it moving forward and innovating.
SPEAKER_01Yeah. That's a really good point.
SPEAKER_00So why don't we talk a little bit about the buy versus build decision here? So um, why would a PE company pay for like custom software for their holding companies rather than just buying something off the shelf? So, say I'm a PE company and I've invested in like five dog walking companies. Why wouldn't I just buy an off-the-shelf app that I can implement really quickly? It's a lot cheaper. Um, people can start using it right away. Why would I build something custom rather than just buying something off the shelf?
SPEAKER_01That's a really good question. And um other, I don't know, did I were we talking about dog walking companies? Because we can't. Oh yeah, because we've got the dog dog event. We've got the dog event later. Um no, it's actually funny. I I know I know a guy doing a um uh a like who's got a PE roll-up strategy for uh pet pet hoteling and stuff. So um no, so so it's it's a really good question. Um and we've actually worked on something very similar to that. Uh and the reason is because intellectual property creates value, right? And uh if you are if you can build something that has like that has value on uh in and of itself, it's almost like you're turning any company, you're turning like your dog walking company into a technology company, right? And the argument these days is every company is a technology company, right? So like you know, the dog walk, the secret source to the dog walking company, you know, they've they've had a really good run. They've you know, this dog walking company's got $15 million worth of uh I mean I can't imagine dog walking company getting $15 million without technology, but let's just say they've been running like a really solid back office with with Excel and stuff. You know, uh there's now like we're gonna give everybody an app. Every dog walker is gonna get an app, and like it's gonna have their schedule on it, and the uh payments are gonna be automated, and so we can reduce all the inefficiencies there. Like, yeah, you can build all that stuff off the shelf, but if any one of those pieces goes missing, it's not like it's not part of the company, right? Like the the value needs the value and the the intellectual property need to be inside the organization, um, which is challenging when you have legacy systems. It's much eas it's much easier if you're building something from scratch, right? The but there's kind of like two ways of looking at it. One one is if you are um if you have gotten to the like the level of PE, the the level of of revenue where a PE company is gonna be interested in you, or let's actually the level of profitability where a PE company is gonna be looking interesting you is you're in probably one of three situations. One, your technology is really good and you're a tech company, and great. They're gonna invest in they're gonna invest the capital into um improving that. Option two, they see opportunities for you to um build new uh new software, build new technology that will you know uh increase your value, leverage your what you've already got now, and then be able to scale it. Um and in that situation, if you didn't already build it, you don't have that function inside of your organization. And so they need to bring in somebody to do that at least at the beginning, because it's too painful to build a team um inside of a company that doesn't have any tech. Um but it is it is possible. It's it's probably easier if you've got no tech. And then the third version is uh if you have old tech, right? Like um you're uh um you know, we we've done this quite a few times where a PE firm uh invests or buys a an organization that's running really well, pretty profitable, and they're gonna run, they're gonna just ride that like revenue tail out into the sunset until the company's not worth anything anymore. Um, but they start to like seeing opportunities to um scale the organization with tech or like updating the technology. Maybe they've got like maybe they've got like so their secret sources, their data or like their processes, right? But it's just all running on like old mainframes in the back. And like you need to like get that data out and get that information out to make it valuable. And the problem is that anyone who's maintaining those old systems at that organization probably is not the same person, the same team who can modernize them. Those are probably two different like skill sets. So then you have to bring somebody in there as well.
SPEAKER_02I'd also argue that like the PE firm, um, you know, when it comes to developing technology for their companies, whether it's in a shared model or whether whether it comes through the PE firm and is kind of like federated out individually to the companies. The PE firm has a very unique view on the world, right? I I made this little sketch here just now of like some intersecting Venn diagrams, right? And like imagine each one of those circles is one of the is one of the companies. And that little middle black spot right there is kind of the locus of value, right? It's where the overlap of all of these different portfolio companies, which are often around a singular focus or market or area opportunity, that kind of thing, right? And there is a blend of all of these companies that can that overlaps in the middle, and to some degree represents potentially the PE firm's point of view on the world and on differentiation, right? And that represents a really valuable both competitive aspect for the PE firm itself, but also the companies involved with the PE firm kind of by association, right? And so developing technology with that locus of novelty kind of in mind, while you could do that with off-the-shelf stuff and you could piece things together, certainly you're not going to be able to get to really building that point of view in the middle that could probably create a competitive advantage for all of the companies and lift the entire tide or the tide lift all the boats, however, I've the right way to say that is, um uh uh all at once, right? So I think that there's like a hidden opportunity there in that overlap in terms of of driving a product strategy that creates differentiation.
SPEAKER_00Yeah, you'll have to scan in that diagram so we can provide it with the with the show.
SPEAKER_01Great work on an audio medium.
SPEAKER_00You'll have to find the the YouTube version of this.
SPEAKER_02You have to find the YouTube video for that. You have to watch this. Imagine a bunch of circles all overlapping with a like imagine a flower. It looked like a flower.
SPEAKER_00Perfect. Yes.
SPEAKER_01So there there. I mean, I just I if we can go back for one second to the um the legacy software, right? The or the legacy systems. There's um I saw this first done by a uh a bank here in in the Tampa Bay area, and they did it they did such a good job that it started like opening my eyes to how everyone else was doing it or what like some of the views that PE firms had on um uh on on technology and how it can be used. And we have since worked on this strategy with I don't know a couple of PE back firms and um and a couple of PE firms as well. And it kind of goes like this it's like, okay, we have some old soft, we have an old system in the back, right? And we have just bought this older company. Well, they've been around for 50 years, right? And they do something cool, and they're a really useful company, and all their data that they got locked locked up away, and they got like DB, DBAs, like database administrators like who work there, which is like a job that I don't understand anymore. But um yeah, so it is it's still still a job. Um, so uh you know what they really want is like they need to free that data up or like the processes that they have that are clanking through some old um technology. They want to like be able to expose that directly to their clients or their customers, right? And you'll see this a lot in like insurance tech, in you see this a lot in um like financial technology systems, medical technology systems, where you need to like open some open the doors up where your end users, your end, your end customers can like ingest that data or they can like interact with you directly. They don't want to send a fax anymore, they want to pick up the phone and call somebody, they need they want an API where they can interact with that thing. And so the the strategy that this bank here in Tampa like that I saw what they did was they bought an old bank and they um uh and it wasn't super exciting. And what they did was they started building, they built a piece of middleware in between the old legacy systems uh that connected to it, and then they it spat out some modern APIs. That's all it did. It translated some modern APIs into the language that the old system spoke. Not super difficult. What they did then is they released a ton of press releases about like, oh, we have this new API open to uh to the pup to like anybody who wants to use it in their applications or something like that, right? And what happens is the first time that happen the first time that hits like the the the industry rags and the wires and stuff is people see this and like huh, I thought that was like just a sleepy old bank. Look at this, they've they've they've they've got some technology stuff that's coming out, pe uh you know, on the PR wires. And and they're like, okay, well, pay attention. Now, in the in everyone's mind, the value of that bank has slightly gone up, right? That's cool that they did this. And so what they did as they do their digital transformation process, where they continue to build um new functions and new features onto that like external facing technology. They also replaced every time they put one thing, one new piece out, they replaced a piece of the old system. So they would take a module from whatever it was running on an AS400, they would rewrite it in, I don't know, Ruby on Rails or PHP or Java, even maybe probably newer. So, and then and then they would send out a press release about that particular new module. And those are internal modules that they have, uh, so uh they know how to do it, they know how the workings should work. And the outside world, when they're opening up these kind of this access to these systems, they all now everyone's like, oh wow, these guys are like super cool and technological. And all they're doing is they're replacing their old legacy systems in a uh robust manner, not like a fragile rewrite, right? Like you rewrite some piece of old software that's been working forever, you're gonna disaster. But if you rewrite it little bit by little bit, that's a safe way to do it, especially if you've got some like nice middleware in between. And then you can like use that to get press release wins out all the time. So when it comes harvest time, now you've got a cool reputation for being like a cool company that's like that's got all these APIs and SDKs and all these stuff that you've been pushing out, and you've already re-and you've got all this modern technology in the back, you're not the sleepy old little company anymore. And and that's like a super cool way to like build value and actually do digital transformation at the same time, like where you're changing people's percep perspective perception of you, but also actually improving all the business stuff. Um, because you know, there's not going to be any Fortran programmers left very soon. There won't be.
SPEAKER_00Yeah. That's a great point, Greg. That from improving the actual operations of the company and the way data is shared, etc., depending on the type of company, you're creating all this PR fodder at the same time. So you're like the perceived value of the company is increasing along with like the actual value. And it's all about like perceived value in optics, right? When you're exactly in the horizon.
SPEAKER_01Um let me let me ask you, let me not let me let me ask you guys a question there. Like, imagine this is the downside of that, right? So you're um you've you're you're a PE firm. You've you've you've you've bought this like um this older company. Uh you've got um uh I don't know, we I had laundromats on my mind in the uh on the um when we talked about French in the franchise episodes, but uh uh you're you you buy car dealerships or something, right? Um and they've all got this like old technology in the back. You've bought this old technology for um this car dealership. And now uh you you hire like a a cool uh technology team that will come in from the outside and work with the existing legacy teams and legacy software, and you build this new stuff and you start putting out the PR and uh messages, and the company's value starts going up in everyone's eyes, the systems become more modern and more and more and more modern. The old team that you've got there learns a little bit about the new stuff, but they're not like you know, they're not like learning the newest stuff as well, because the this other outside team is building it. What do you think the problem is there? What can you see a problem that is gonna come down the line though, eventually when it comes time for harvest? See a problem with this theory?
SPEAKER_02Well, one of the well, I mean, yes, one of the problems is like if you are relying on an external person to build all of that and it's harvest time, then come harvest time that company kind of gets held handing or gets is holding the bag a little bit, right? And is yes, is kind of very dependent on that external person, right? On on that help, and hasn't developed it internally necessarily, right?
SPEAKER_01Yeah, yeah, and and that's exactly what happens. Like uh we I've seen this time and time again where like I've gone in as part of a project, we've helped modernize the system, um, and then it the company started to grow, and they were not really a technology company before, but then like the digital transformation stuff, and I'm not sure I love that phrase, but you know, modernizing of all the systems that turned them into a tech company. And everyone looks around now and is like, we're actually a technology company, and this outside team built all of the stuff that like our value is built on. And now you go up in front of your board of investors and they're like, Well, what happens if like you know, Greg, Justin, and Sarah get hit by a bus? Like, who's gonna build all this stuff then? Right, right?
SPEAKER_02This is so risky, right? Because you basically have taken the value inside the company and you've moved it outside of the company, or if you at least have shared it outside the company, and so now you have this split value in a way, and and your job as a PE company, a PE firm, and a company in the portfolio is to internalize that value, capture that value, and have the value core to you because that increases your uh overall value, right?
SPEAKER_01Exactly. Yeah, I mean, the the the the way that you need to do it is you need you you can't build that stuff internally day one. It's not gonna happen. So you have to bring in the outside team. The outside team comes in, if they knock it out of the park, that builds value. The second you see that it starts building value, you need to like make sure that you've got a partner, that outside partner knows how to slowly start transitioning that stuff, or like helping to build some internal knowledge in the organization because they will eventually need to like stand up in front of a board of directors and say, Yeah, we know how to do this, we run all the stuff. We had to hire 20 people to do it. But the company we were working with understood that from day one. And they were not like, and I I've I've you know, it's it's like it's like Harry and the Henderson's where you like gotta let them go. I've you're like, you're we call it, we I call it graduation, graduating. Like I'll so like you you get a client to the point where they can graduate, they don't need you anymore, and but you have to like know that going in. And it is kind of heartbreaking because you feel so like attached to these projects, and especially if you've like seen the impact of the work you do as a technologist, and like you've like massively increased the value of something, um, and then you know, you know, from you know the second it starts to work, you you can see it before the company sees it. Like, you guys are gonna have to take this away from me one day, and I'll still be there for support, and I'll still come visit you on your birthdays, and you can still pick up the phone and call me, but I have to let you go off to college now. You know, it's like and it's it's heartbreaking, but it's also wonderful.
SPEAKER_02One of the things that you see happen sometimes with um with any company, whether it's a company that's been invested with it doesn't even matter if they have VC investment, PE investment, whatever. But a company that doesn't necessarily have technology at its core, right? That it's not built on technology, but obviously technology can be used to increase the value of the company. We know this, we do it all day, every day, right? Is that when you hire a vendor, a third-party vendor, a partner to help you with that, right? Is it oftentimes, unfortunately, I've seen it happen a lot of times. You can get held hostage by that, by that, um, by that partner, right? And now none of the knowledge has come in and you keep shipping more and more of your competitive value out to a partner who is really kind of holding it all, right? And that puts you in a really disadvantaged position and your risk profile actually goes up in that case, right? And so I think what you really want here, and what I think you're saying, Greg, is you want a partner who's gonna go, look, I acknowledge the fact that at some point this value's got to get shipped back inside the company. Because at the end of the day, the goal here is to create value for the company and to build that internally, that competency. Now that can take a while and that could be a thing, but you want to find a partner who really has a heart of a teacher and a coach who is not just gonna say, give me your stuff and I'll build it for you and whatever. And they don't tell you that you don't get to see behind the wall, you don't get to listen to the decisions, you don't, they don't explain to you why they're doing the things that they are. They just say, Oh, just trust us, trust us. This is what you should do, right? What you really want is you want a company who's going to explain, here's why we're doing the thing, here's why we're doing the decisions, let's do some sessions together so that we start to transfer the competency and knowledge slowly back inside of the company, the core company who's hiring the vendor, right? So that you don't become dependent on it. And because if that company goes away or they don't have time for you, all your value is now locked up in somewhere where you can't get to it. It's a very risky position to be in.
SPEAKER_01Yeah, pick your partners carefully.
SPEAKER_00Yes. Well, I think we can wrap it up. Um Wow. Well, this was a really interesting and expansive conversation about how technology can really shape the strategy of PE firms. Um, so just to recap, first we walked you through like what PE firms are and what their goals are and some ways that PE firms can improve the value of their portfolio companies. Um we reached the point where we're like ultimately technology is table sticks for any successful company who, if you're looking to increase value, that's one of the best things you can invest in. Um, there's a lot of nuances though. You want to make sure that you're working with the right development partner who understands the process, that they're gonna be building it for you, and then helping you make that transition so that you eventually do own that IP within your company and you're not held hostage by an external partner. Um, and yeah, and if you are looking to build your own internal development team, which is like the final step that you'll reach, we actually have another podcast episode all about the process of building your own development team, including who to hire first and what that process looks like for small to mid-sized to larger companies. So check out that episode. Uh, we'll link it in the description. How convenient. Yes, how convenient. So, Justin and Greg, thank you so much for joining me today. And thank you, listeners, for joining us. If you would like more insight into the world of software development and digital product development and all kinds of tech topics, then do subscribe and follow Decoder Podcast.
SPEAKER_01Thank you, Sarah.
SPEAKER_00Thank you.
SPEAKER_02Thank you all.
SPEAKER_00Bye.