Page 50 - Forbes - USA (March 2018)

Th e World’ s billio na ir e s

S
RoBeRt mitH To implement his playbook, Smith created an in-house
McKinsey: Vista Consulting Group. These employees, now

he became the first self-made Wall Street billionaire who 100 strong, help portfolio companies implement the best

wasn’t a white male. prac tices, also 100 strong, most of which run three to ten
pages, with reams of attachments and examples. Printed out,

WHEN VISTA SELLS a company, Smith reverts to engineer mode, they fill binders. They are stored in a password-protected
often giving its CEO an expensive Swiss or German watch. “It online library, available only to authorized portfolio compa-

is not about being generous,” Smith says. “It is a function of the ny managers.

process and focusing on the detail of finding the person who is “I just had an employee get a promotion,” says Kristin
going to be the best at making that Nimsger, CEO of Social Solutions,
one gear.” a cloud company providing data-
To Smith the watch represents To implement his management software for nonprof-

that “we created a system.” And it’s playbook, Smith created its like the United Way of Metro
that system that has allowed Vista an in-house McKinsey— Chicago. “He was super-excited to
to gobble up enterprise software Vista Consulting Group—to get a log-in.”

companies, confident that it can al- The playbook includes exhaus-

most always make them better. help portfolio companies tive details on things like contract
When Smith started shopping for learn best practices. administration and steps need-
software companies, he found that ed to ensure a company is being

many were run by former program- paid for all the code or services
mers and other technologists who its customers use. In one case, a
were not formally trained in business and grew rapidly by sheer company Vista bought charged customers only for inbound
strength of product launches, with little analysis of whether support calls, neglecting to charge a minimum amount for
they made sense. ongoing support. Vista canceled all the contracts and got
Drawing on his background as an engineer and a Gold- 100% of the customers to enter into new deals with higher
man vet, Smith began writing what amounted to user manu- minimum support payments.
als for running enterprise software companies. The manuals Another set of playbook commandments revolve around

weren’t just about efficiency but also incorporated cost-cut- sales, including incentives for salespeople cross-selling and

ting measures and fee-generating ideas. Eventually, Smith’s upselling additional products. In one case, a portfolio com-
playbook became the Vista Standard Operating Proce- pany was rewarding salespeople the same way whether they

dures—VSOPs. These were later renamed a more generic and brought in one-year contracts or longer-term ones.
user-friendly Vista Best Practices. In isolation, many of the playbook’s best practices seem
“If you are a software executive, how do you build your mundane. But software companies are often rife with ec-

commission structures or run your go-to-market strategy? centricities and legacy processes endemic to startup culture.
How do you find and train talent? Who teaches you those Things like weekly deal-pipeline meetings, commonplace at

things?” Smith asks. B-school-driven corporations like IBM and Procter & Gamble,
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Finastra makes
Tibco Software,
Tibco Software, Solera Holdings Cvent, which Finastra makes PowerSchool Marketo is a giant Ping Identity
Ping Identity
Marketo is a giant
Cvent, which
PowerSchool
Solera Holdings
which makes makes software makes software risk management makes education- in cloud-based makes identity-
software for banks
business-intelli- for auto and home for managing and software for banks management marketing auto- security software
for auto and home
gence software, insurers and was planning corporate and financial software. It was mation software. It and was pur-
mation software. It

planning corporate

was purchased by purchased by events, was pur- firms. It was cre- purchased in 2015 was purchased by chased by Vista
Vista in 2014 for Vista in 2015 in a chased by Vista ated by Vista in for $350 million. Vista in 2016 for for $600 million in
for $600 million in
$4.3 billion. $6.5 billion deal. in 2016 in a $1.7 2017 through the It’s spent another $1.8 billion. 2016.
billion deal. merger of D+H $1 billion on add-
and Misys. on acquisitions.
48 | FORBES MARCH 31, 2018