On the podcast: Investing in (and with) technology at Advent International

As a private equity industry stalwart, Advent International has invested in just about every industrial sector except tech—until recently, that is. As the East Coast firm builds up its tech practice, head of Advent Tech Bryan Taylor shares his thoughts on the firm's tech strategy, how it assembled its investing team and why recent turmoil in the market might affect buyout opportunities. Also, London Bureau Chief Andrew Woodman and senior analyst Dominick Mondesir join to discuss the European PE landscape, as well as findings from the 2021 European PE Breakdown.

In the Upwork segment of "Innovations in Private Equity," Tim Sanders is joined by Insight Partners Managing Director Hilary Gosher as she shares the impact of talent transformation on unlocking value and increasing speed to market.

Listen to all of Season 5, presented by Upwork, and subscribe to get future episodes of "In Visible Capital" on Apple Podcasts, Spotify, Google Podcasts or wherever you listen. For inquiries, please contact us at podcast@pitchbook.com.

Transcript

Alec Davis: All right. Welcome, Bryan Taylor from Advent. I'd like to start off with getting your take on the technology opportunity for your firm and your strategy.

Bryan Taylor: Well, we've been doing tech investing for a long time. We've noticed an evolution in the market, and it really started to accelerate five, six years ago. Then today, I think it's obvious to all of us, and it's this notion that tech is a horizontal. What we mean by that is technology, like how we consume digital information, is reshaping not just our lives as consumers, but more importantly, how we do commerce.

At Advent, we think we have a group of people who are great tech investors, tech specialists, but we also have sector teams in business services, healthcare, industrials, retail and consumer, who are experts in their fields, who are also seeing technology disrupt these industry segments. We partner with them to try and find interesting, compelling, oftentimes disruptive businesses in those spaces.

Alec: If people say to you, "What's a big private equity firm doing in early-stage venture deals?", how do you explain that?

Bryan: If tech is a horizontal is the first cornerstone of our strategy in technology investing, the second cornerstone is this notion that tech is one ecosystem. What we mean by that is at no other time in our 35 years, in no other geography in the four continents we serve, in ... [none] of our industry segments is it more true today that what large incumbent companies do so directly impacts young disrupted businesses and vice versa. They're the same customers. They have the same problems they're trying to solve. Oftentimes it's the same executives who move between large stand-alone companies to large divisions to then running young disruptive companies.

When we think about our tech strategy, we want to be world-class tech investors. We want to understand at a macro-level technology trends and how they're impacting people and commerce. We want to invest in the companies that we think are the right companies to invest in, regardless of whether they're earlier-stage minority investment or a later-stage majority investment.

Now for us, we try and separate and say we don't do venture. Venture is a very specific and very technical area of investing. We do do late-stage growth where companies have proven customers who have put oftentimes their careers on the line to purchase the company in which we're investing to use their technology inside the four walls of their enterprise. When we get to the point that we can talk to people like that and get confidence around momentum and product-market fit, then we're willing to take earlier-stage minority investment risk.

Alec: How do you differentiate yourselves from venture? I ask that, even though you just said you don't do venture. You have actually been involved in some pretty early-stage venture deals. You led a couple deals recently at a fairly early stage. What's going on there?

Bryan: Here's how I would describe it. I think venture capitalists are really good at finding teams and helping them get to the equivalent of zero to one. At Advent, we have this long history of helping businesses build as they become larger. The terminology we use both internally as well as with entrepreneurs and with management teams is that among private equity, we are among the best at helping companies scale at scale, at helping them go from medium-sized businesses that have been really successful in their earlier stages and scaling into what we call juggernauts, just industry-defining enduring thriving businesses.

That's where we feel like we can be a strong partner of choice. Not just to management teams, because often our co-investment partners are earlier-stage firms who are looking for a partner of choice to help take the company through its next chapter, to reach its next pinnacle of achievement. We work hard to build capabilities and experiences that we think can be really helpful to companies that are complementary to earlier-stage investors.

Alec: Maybe we could bring in a couple of specific examples of some venture-back companies that you recently invested in. Especially I'm interested in what stood out in terms of identifying that opportunity for you if it was an early-stage type of company. I understand the scaling and the growth-stage mentality. What I'm really curious about is when you look at a company like Big Panda, for example, or Salt maybe, what kinds of things did you guys see there where you said, "Okay, they are early-stage points of entry for us, but there's something here that distinguishes it from other early-stage technology companies that's a good fit for us and the value we bring"?

Bryan: That's a very good question, Alec. ... You're asking a question that I often get at our investment committees. Like, why us, why now? It's a really important question that we have to have a strong answer to. The first part of the answer is, do we know that market? Have we spent time in that end segment. ... Salt is a cybersecurity company. We've spent over a decade doing investments in cyber. We own a number of different businesses. The history of Salt goes back to [when] one of our portfolio companies had a breach. It had a breach in one of its APIs. The interface it uses to have some of its software talk to third-party software. These types of interfaces have grown by several orders of magnitudes in recent years as multiple SaaS businesses open up their business models so they can communicate.

We saw this problem firsthand. We saw Salt as one of the leading businesses solving specifically that problem with a great product that's been built by world-class engineers. It's still early and young because people are only starting to realize just how big a problem this is. That led us to a relationship with the management team and a lot of confidence in that particular company, its momentum and just the importance of the problem that they're going to solve.

Alec: You and I both know ... [there's] competition to get in on really promising, sought after companies. There's a lot of investors that can write the check, but founders and board members can be very, very selective about who they bring onto the cap table and who they want to work with. When you think about some of the more competitive types of opportunities that you've been in lately, probably all were pretty competitive, I'm guessing, what kinds of things are you guys really leaning in on to win those deals and to win the opportunity to actually become a partner basically?

Bryan: You're making a really good point. That point is that capital is cheap today and it is readily available, especially for the types of businesses that we want to invest in. We see that every day across the spectrum of things we invest in. What we try and focus on is, where do we really think that we are a strong partner of choice? Where can we bring an edge to the outcome? It could be specifically insights around that particular end market. It could be people that we can pull around the company to help accelerate its success, whether that's going to market, whether that's TAM expansion through M&A or organic development, or whether it's other opportunities we feel like we can actually bring to bear. Then the last piece is, do we actually resonate with the management team?

You're absolutely right. This is [an] incredibly competitive market out there, but I will just point out that all of the minority deals we've done, those have been proprietary dialogues and proprietary deal processes. In other words, they didn't hire a banker, run a process, pick the highest bid. That happens all the time. We sometimes look at companies like that. We've not yet prevailed in a situation like that, but in the last several years, all of our minority investments have been proprietary where like the Salt story, we found a company because we were looking already for a solution to a problem we knew existed, built a relationship with a management team and came to a mutual agreement that we could actually help accelerate the company. I think that's incredibly powerful when it all comes together.

On the other hand, we have to be incredibly selective to pursue that strategy because, it's not always going to all line-up and you just have to have the discipline to walk away when it doesn't as friends and as supporters of the company, which is not the right situation for us.

Alec: Yes. Let's talk about talent on your team for a minute and the growth that you have had to go after. You ... [have] 30 or more people that are making investment decisions. Is that right?

Bryan: Yes. That's right. We're over 30 people on the deal side inside of the tech group globally at Advent.

Alec: Yes. Could you walk us through what it's like to build a team like that? In this environment, to put together a winning team, what kinds of attributes you were looking for that you prize?

Bryan: That's a really heavy question. I really appreciate that question. The first thing I'd say is, it is a tight labor market in just about everywhere we look. That's true in just about every one of our portfolio companies, and it's also true in private equity and it's even more true in tech private equity. It's an incredibly competitive world to attract talented people to come work at your company or your firm. I just want to acknowledge just how big of a challenge that is. It's gotten a lot worse with COVID, because people are realizing that the barriers to exit have fallen, even geography doesn't really matter as much anymore.

A couple of things we try and focus on first, we have a culture here that most people who work at Advent cherish. It's a culture of consensus. It's a culture of cooperation. We also describe ourselves internally as blue-collar private equity. That probably means something a little bit different to each person, but to me it means just an acknowledgement that we're not the creators of these successes. We're just the people that are privileged to be a alongside the management teams who go and build these incredible successes, and we get to be part of that chapter. We try and work hard. We try and serve our management teams, but all of that comes together in this culture that I think a lot of people resonate with, not everyone, but some people.

The second thing is, at least for tech, we have the benefits of being [a] tech specialist with a tech focused fund, a tech focused group, global reach. One ecosystem means we can write checks as small as $20 million and as large as $2 billion. That's really attractive to a lot of people who you get that type of specialization. Plus you get a global platform with this incredible breadth and depth in these other industry sectors and other geographies that really unlock investment opportunity and growth opportunity.

I'd say those two things are probably the most two important parts of attracting and keeping really talented people.

Alec: How do you guys use data and technology yourselves to get an upper hand, or just make your lives easier to deal with all the noise out there in the tech global ecosystem, because there are zillions of opportunities out there, and the impulse is to see them all and make a meaningful assessment of where there is a fit for you, but we all know that there's only so much time in the day that 30 people can do that.

Bryan: Totally. Gratefully one of our biggest challenges in tech private equity investing is choosing which ones to say no to and which ones to really focus our time and energy on, and it's a constant battle. Having the discipline to say no, having the discipline to walk away; I think it's the most important characteristic of being a great investor. It's just the discipline to say, if it's not right in my strike zone I'm going to let this one go. That's true for not just the investment, but also how you manage your pipeline. We're very focused around that.

Now your second part of that question which is how do we use data? How do we use this digital world in our own business end? We have a dedicated group. We don't like to talk about it much. I should not mention much of it here, but we have a dedicated group who is very much focused on that. All they do is serve us and our portfolio companies, and we use it for all types of information, [including] ... a particular problem that a portfolio company has, like: I need sales people in the East Coast of the United States. The typical just quick LinkedIn profile recruiter's not working. What are some really creative ways we can use information to match the profile of the people who've been really successful in other parts of our business and go find them with a much higher hit rate? That's one example.

Another might be we're doing due diligence on the company. In emerging markets and emerging sectors, not just geographic markets but in emerging sectors of the economy, there's oftentimes a lot of fog of war, or poor signal to noise ratio, and you can use big data like the exhaust that comes off with the internet to actually sift through that very quickly and get to the point where you have a very strong view of this particular company relative to its competitors.
Those are just a couple of examples. It does feel a little bit like some of our secret sauce, so we try and keep a wrap on it a little bit, but it's become an increasing part of our world.

Alec: I was going to ask, because you hinted at how it can be a sensitive topic because it's part of the competitive landscape. And there's, I'm gathering, a certain amount of intelligence gathering basically as well as, like you said, the secret sauce that can give you a little bit of an edge that you don't want other people to have that compete with you.

Bryan: Yes. I just think as we become more digital, the amount of information available to all of us is growing exponentially, and really bright people with really expensive computers and access to those information flows are going to drive compelling insights that you just can't expect with one person ... We've been investing in that for a couple years now. It's a really important part of what we do, but we don't talk much about it.

Alec: Do your portfolio companies contribute to the insights you're getting along those lines. Is there any making of your own dog food from contributions from the portfolio companies?

Bryan: Sometimes, less so than you might think as making of the dog food. But where we really get insights from our portfolio companies is where there are customers of technology, whether that's consumer oriented or business oriented. We often tap into our portfolio to ask them what they do to solve a certain type of problem. Oftentimes we actually ask them who are your favorite vendors and why? Oftentimes we're actually looking at one or more of those vendors for an investment. I think that's incredibly valuable.

Then the flip side is with just a recent example, when you have really compelling, disruptive technology businesses, sometimes those solutions can become incredibly valuable and important to our portfolio companies. For example, in Log4j over the weekend ... a problem emerged. We had a bit of a fire drill of getting a solution from one of our portfolio companies out to the rest of our portfolio companies, and the ability to make everyone in our portfolio aware of this problem, offer them a very compelling solution, was beneficial to everyone.

There's a company in our portfolio called Wiz which is a cybersecurity [company] which Log4j has been right in the sweet spot of what it does, and the visibility it provides companies. We were able to help them into a number of our portfolio companies during that period of time. Wiz was unbelievably responsive to the needs that a lot of enterprises had including our own.

Alec: You're making the case I think, ... [from] a couple of points you've made, that you have your own Advent ecosystem just within your portfolio. Could you actually create a map where you map the connections from company to company at least in a few cases?

Bryan: Well, it is an ecosystem and it is a network, and like all networks power goes up by scale ... so long as you have low friction cost. What we spend a lot of time with is ,how do we lower that friction cost? We do that through informal gatherings. We do that through formal gatherings. We do that through information connectivity, and we do it through some of these automated means where we have flows of information that come out of these companies that we can use to draw insights and then provide hopefully actionable insights back to them on occasion. For example, with Log4j, where we knew quickly that most of our companies had an issue, ... we're able to offer a solution in relatively short order.

Alec: Let's talk for a minute about the current environment in the market. There's been a significant correction really, well, first of all, just in the public markets that's well documented. You [have] got all these venture-backed companies that are publicly traded who are 20% or more off just in the last month or so since the beginning of 2022.

Most of the technology companies that went public since 2021 are really taking hit on the chin. Many of them are even below their IPO price in some notable cases. In the private market there's a sense, and there's already signs as you're probably seeing, that this is softening the deal environment. So I'm wondering what you've noticed in your own team's assessment of opportunities right now, how some of those dynamics have affected the deals that are getting done or not done.

Bryan: Yes. Well, I have a couple thoughts on this, as you can imagine it's a big topic right now just with the uncertainty and the seesawing of public market performance and just people asking you, "Why is this happening? What does it mean? Where's it going?" What's interesting is we think the correction in tech started at the early days of Q4. There's this weird decoupling of the indices performance from the underlying company performance because the indices have become so heavily concentrated in a handful of names.

When we were talking to a number of our LPs—we have our annual general meeting of our customers in November—I was making the observation that we were already, in my mind, in a bear market in tech, that we already had a correction for most companies. On top of that, you pile in the poor IPO performance for the tech companies that went out in 2021. Especially as we got into early 2022, the point you made that a lot of them are trading off of their IPO prices. You pour on top of that SPACs, which have, by and large, been a completely terrible place to put money.

I think I saw a stat the other day that there were over 300 SPAC demergers in 2021 and less than 10 of them trade more than 10% above their demerging price, less than 10 out of 300 plus of them. The average is down 38% for SPACs. It just creates a really tough market environment. Anyway, the first point I'd make is, I think it's been going on for a while. It's been going on since October.

The second point I'd make is, I think it's healthy. The market needs to reset. There'd been a real spike around a lot of speculation, speculative companies, speculative valuations. The most important point I'd make is, we often talk about [how] we are company investors, not sector investors. For us, it's really important as investors to have the macro backdrop in mind but it's really, really important to know this company, these insights, this plan of how do we drive growth, drive value, at this price, are we investors.

I found over 20 years of doing this, if you really focus on the micro of the deal you're thinking about, and your ability to inflect the growth curve of that company, as markets go up or markets go down, you'll end up driving exceptional returns. If you just focus on, as we talked about earlier, these businesses that we know well, where we have strong conviction that we can inflect their performance. If we just do those deals, I think we'll be very successful as investors in up markets or down markets.

Alec: By that logic, a lot of companies that you're maybe excited about are not going to be necessarily affected by the downdraft that's affecting the larger group. ... They can stand on their own, to a certain extent, I guess. If they're really strong players, you'll still pay the same price today that you would have a year ago, and maybe even more because [of] the competition, so to speak, and maybe there's still a premium for a company like that.

Bryan: The first thing I'd say is, we hope we buy the businesses that withstand ups and downs, because we're buying them off of fundamental values, and that we are immune from short-term ups and downs of hypotheticals. We just like to think that that's how we buy. The second is, so long as we can drive an inflection point after we own the business, even as valuations go up or down, then we can create extraordinary returns for our investors by helping businesses succeed and thrive.

Alec: What's your time horizon typically?

Bryan: Our average hold is just under five years. Our average fund is a 10-year fund with two- or three-year extensions, so 13 years. But what's most important is we bring in a mindset that is constantly planning for a three-year forward window that we use every year. So we never take a mindset of, "Hey, let's try and optimize for an exit at this period of time." We're just focused on building great companies. Sometimes exits happen and sometimes that involves a public market offering, sometimes that could be a strategic take out, sometimes another private equity firm may approach us and say, "Hey, we'd love to become an investor and it's just the right time for us."

Alec: Do you think that you need to change any of your strategies under these conditions? In particular I'm thinking about just changing your expectations, maybe, about the exit opportunities. Like there's a case to be made that the IPO market is going to get compressed. We're already seeing signs of that. I don't even know what kind of effect that has on the M&A landscape, but where are you guys going with that?

Bryan: There are two parts of the answer. The first is, what do we do with our existing portfolio company? We just like to think we're building for longer, stronger for longer. If an IPO window closes, it just doesn't impact us much because we're just continuing to build what we think are going to be better businesses and exits will take care of exits.

The more interesting point is, it was a very rare occasion, that six months ago we were looking at public-to-private transactions because valuations were so high. We've done a couple, but it was a very small part of our pipeline. Today, it's a very big part of our pipeline, because [of] this reset that's happened in value. Like every correction or every exuberance, things just get out of whack, and that getting out of whack creates opportunity for people like us to say, "Oh, wait, this one is oversold. This one, we think we really know that market. We think we really have a plan for what we could do with that business. We think it lines up that we can pay a premium to public market shareholders and take a majority investment in a company and really reshape its future." That part of our pipeline hasn't been this full for some time now.

Alec: Would it be a reasonable expectation to predict that a firm like yours in 2022, provided this kind of trend holds, that maybe you will become more active buyers on the buyout side?

Bryan: Yes. Pulling off public-to-private transactions is very difficult. There are so many stakeholders and it's a very tough process to go through and you're trying to look for that Goldilocks moment of something you really like that the public doesn't, and you can actually pay a lot more for in order to have the right to be part of that company. They're very hard to pull off.

We've done a lot of them over our careers but they're very hard to pull off. I just think right now we have all of the ingredients for a healthy technology, private equity, public-to-private environment because you have entire segments [that] have traded down together. The correlation between different asset classes and different sectors with technology has gone from uncorrelated to highly correlated and they're all trading off. That type of environment creates really compelling investment opportunities.

Alec: Last topic before we go is on the fundraising side. [I'm] curious what you're seeing among limited partners, how they're reacting to what's happening in the public markets. Have you seen any indications that allocations or their particular strategies might be affected by it, and how in turn that might affect fundraising at your firm?

Bryan: For many LPs, they have an allocation to private equity, that is a percentage of the total amount to private equity divided by their total assets. When their total assets go through a correction, let's say their assets lost 20%, suddenly, that ratio can be off. They have a denominator problem, as we call it. I think for a lot of LPs who have been very heavily invested in private equity, they now have a denominator problem where they're now over-allocated, and they need to slow down their commitments to private equity.

Alec: Because the value of their public equities have dropped.

Bryan: Correct and because the value of their private equities haven't changed, and so the ratio gets off. It happens in corrections. We've seen it every correction cycle, there's a bit of that. Most LPs plan for it and it's not much of a factor but it's a really interesting development when it happens. Sometimes we see LPs who get a little bit stuck in that. The second thing that happens is oftentimes LPs have amounts they commit to funds and then they have amounts set aside to do co-investment with those funds, direct co-investment.

Often, when there's a correction like this, the first tightening happens in that direct co-investment amount. A big part of our industry has been LPs helping fund large deals through direct co-invest alongside their general partner private equity firm partners. Again, oftentimes in corrections like this, you see that flexibility evaporate in the market. We've seen a little of that, but not too much just yet. We've seen a little of it already.

Alec: You just closed a significant Fund II not that long ago. Is there a Fund III in the offing anytime soon?

Bryan: Correct. We just closed our Fund II on the tech side at the very end of 2021. Our typical fund investment horizon is every two to five years. And so, I think it's safe to say that fund ... is just now starting to be invested, and it'll be some time before we're back in the market to renew that fund.

Alec: All right, Bryan, I think we're all set. Thanks so much for joining us today. It's been great talking to you. Good luck with everything.

Bryan: Thanks, Alec. I really appreciate it.

In this episode
 

Bryan Taylor has worked on 12 Advent investments, including Assembly, BigID, BigPanda, EBANX, HYPR, Salt Security, Shift Technology and Wiz. Prior to Advent, Bryan worked on over 30 investments in the technology sector, including McAfee, Ellucian, Tanium, GreenSky, Box, Advent Software, Eze Software, CCC Intelligent Solutions, GlobeOp, Decision Insight, Vertafore and IQVIA (IMS Health).

Sponsored content

Tim Sanders: Hi, I'm Tim Sanders, vice president of client strategy at Upwork, and welcome to our segment of the show where we discuss innovations in private equity. In the case of today's installment, I'm talking to Hilary Gosher, managing director of Insight Partners, a leading venture capital and private equity firm. We struck a valuable partnership with them to fuel their talent innovations with our work marketplace, and as you'll hear, it's making a big difference across the portfolio. Let's tune into that conversation.

Tim: Hilary, talk to us a little bit about how you've seen the workforce at your portfolio companies evolve over the last year, year and a half.

Hilary Gosher: Well, Tim, the obvious thing is that most of the companies have been working remotely, and in doing so have recognized that there's benefits to having remote workers. Employees get more quality time to spend with their families. At the same time, they're much more committed to their jobs because they don't have to commute, there's no downtime.

And so, we've seen a lot of companies embrace that as we are starting, hopefully, fingers crossed, [to] move out of the COVID world. And so about 25% of our companies are saying they're going to be remote-first, which is an amazing about-face. About 70% of companies are saying that they're going to have some form of hybrid. So you can see pretty much everybody is going to have some form of hybrid, some remote employees, and some are actually going so far as to say they're being remote-first.

What this means in practice is that employees will have more flexibility, but the organization needs to be more flexible, more agile, more nimble, more capable of working with employees who are not co-located. And we think about it in two ways: One is work that's synchronous, so I need to be in the office because I'm going to collaborate and I'm going to be synchronous with my fellow team members.

Tim: Right, right.

Hilary: And then, asynchronous work. And [with] a lot of asynchronous work, we're seeing people are equally as productive working remotely.

Tim: So when I think a lot about the hybrid workforce, I think about two things: I think about the workplace, which we've just talked about, but I also think about the workforce, that combination of full-time and on-demand, or what we call independent professionals. Hilary, how have you seen that transformation come into play over the last year and a half at your portfolio companies?

Hilary: Yeah, Tim. Most of our companies are embracing both full-time and what you were alluding to, and I think yesterday when we talked you talked about it as the cloud workforce. So just as data is in the cloud, now people are sort of in the cloud. And the ability to embrace those people as and when you need in a burstable capacity, definitely companies are embracing that. And specifically scale-ups.

Tim: Yeah.

Hilary: When you're in that scale-up phase—which is exactly where we invest—what you really are running up against is the ability to hire people fast enough. And when you seek to hire people fast, the ability to have this flex capacity by companies like Upwork is exceptionally valuable. So about 58, I took a look, about 60 of our companies are actually using Upwork today in various capacities. Sales ops is a big factor. Marketing is a big factor, specifically areas around design, as well as engineering and development.

Tim: Value creation models have historically focused on things like top-line growth and cost transformation, but more recently they've also started to focus on geographical diversification and digital transformation. Going beyond scale-ups, what role does talent play, access to talent, in moving these levers?

Hilary: Yeah, talent is everything. Our companies grow revenue, but it's axiomatic that in order to grow revenue, they need to grow employees, and they need to grow the right employees. And the risk of having a failure really is an issue for most companies especially because in most scale-ups the recruiting process is not well set up, the interview process is not well set up, and we know that to hire an FTE it takes about 30 interviews to be screened, resumes to be screened, about five to six in interviews, candidates to be interviewed, and of that, three or four or five interviews per candidate at a minimum.

And so, what we see on the average company that we invest in is, they start with a 100 employees and by the time we exit, which is four, five years later, they have 500 to 600 employees. And to hire 500 to 600 employees, they probably need to have interviewed six, seven times that. And there's also natural attrition because people move out of the workforce. So the idea of saying, "I need to hire 600 people," is actually very daunting.

Tim: Yeah.

Hilary: Which is why, when you can't find the right resource, you don't want to compromise. You don't want to be hiring someone just for the sake of filling the role. And that's why [we have] ... this flex capacity and ... the understanding that we can get people on a temporary basis.

The one thing that we say to our companies is, "Talent is found everywhere, opportunity is not." And a lot of times the most unbelievable talent is in different geographic locations that are not co-located where you are or where your headquarters are. And being able to avail yourself of that, I think, is a huge benefit, and we've moved in this direction very quickly in the last year.

Tim: Yeah. For a long time the private equity talent focus has largely been on optimizing the C-suite, where executive search drove the process. But over the last few years, I've noticed that private equity firms, especially heads of talent, have begun to get more involved in total talent optimization of the workforce, especially as it drives delivery of action items in the plan. How have you made that adjustment at Insight Partners?

Hilary: Private equity is very much about managing efficiencies, which means having the right people to do the right work. And so, when we think about, do you need that full-time resource, or can this skill, or can this capability, be filled by a part-time resource or someone who's not 100% dedicated to the organization? The answer is most definitely, yes. And so, we've definitely encouraged organizations to both think through, what are the core skills I need to have internally? Let me give you a good example.

Tim: Okay.

Hilary: So a scaling-up company probably has five or six or seven salespeople. You do need sales operations. You need someone looking at territory management and sales force productivity and thinking about compensation plans, and things like that, but that is not a full-time resource when you only have five or seven or 10 salespeople.

When you have 20 salespeople, 30 salespeople, you need a full-time person. So as you start to think about scaling, sometimes you don't need all of that capability 100% dedicated to you initially, but you may, as you scale. And so, I think this is where we've been encouraging companies to think flexibly about their burn rate ... because in private equity and venture, we care about burn rate, which is effectively around how do we have the people internally being the most efficient, leveraging these external skill sets and competencies, on an ad hoc or on a part-time basis?

And so, private equity, yes, we very much care about the leaders, but what we're saying is those leaders need to hire people beneath them to work with them who themselves are empowered. Those leaders themselves we're very dedicated to making sure that they can fill their pipeline of open roles. And by filling the pipeline, there's a flexible way to do that. Obviously, you're filling with full-time resources, but equally you can fill with talent that's located anywhere, that's on a more temporary basis.

Tim: Final thoughts. How do you encourage people to embrace this new reality, especially as remote work has set in as an acceptable way of doing business?

Hilary: Yeah. When we did a survey of our companies recently and asked them about their attitude and their approaches to the new workforce, the employees themselves, more than 80% of them, want some kind of flexibility. I think that in and of itself speaks volumes. So it's not just those employees who are full-time employees who are looking for flexibility in where and how they work and how often they need to be in the office and to commute and how they collaborate, but there's another group of people who want 100% flexibility.

And I think the exciting frontier that we're at now is that the gig economy has become part of the overall labor market, in that people can flex in and out of the workforce, and I think we'll see them do this in this next generation, where folks are looking for more control over their lives, about the amount of time they work, the amount of time they're commuting, what they're working on, feeling connected to the mission.

So I think this is an exciting frontier, in terms of there are a lot of changers and our companies that embrace these faster, I think, will be the ones that succeed.

Tim: I couldn't agree with you more. I think that the theme here today is that the future is flexible. Thanks so much for being part of this conversation.

Hilary: Thanks, Tim.

Tim: Wow. That was a great discussion. And what I take away from my conversation with Hilary is that, given the demands for talent in such a fast-changing and ever-tightening market, it's critical for leaders to move from that talent acquisition mindset to a talent access mindset, where you have this combination of full-time team members and an ever-growing virtual talent bench.

It really is a matter of meeting the work market where they are and getting the best minds in the world to work on your portfolio companies problems. That is how you create value. That's it for me. I'm Tim Sanders from Upwork, and stay digitally tuned in next time where we'll discuss more innovations in private equity.

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Hilary Gosher - Managing Director, Insight Partners
Hilary Gosher leads Insight Onsite, the firm’s operators and growth experts who accelerate scale at portfolio companies. Hilary founded this team and has worked with more than 200 software companies. She leads Insight's due diligence, software Centers of Excellence, portfolio community, and Insight’s marketing and PR.

Tim Sanders - Vice President of Client Strategy, Upwork
New York Times best-selling author and his insights have been featured in the Financial Times, the Wall Street Journal, and the Money section of USA Today. Former chief solutions officer at Yahoo! and early-stage member of Mark Cuban's broadcast.com. Faculty member of the Global Institute of Leadership Development.