Permira’s Brian Rudder talks AI, the Squarespace acquisition, and the value of shared leadership

It was a Busy year In the field of private equity, With countless Big money Acquisitions Unfold. The private space specifically has seen some large transactions, led by private equity firms More than a dozen Multi-billion dollar deals for public technology companies.

Based in London Permira He was the main protagonist, and joined Blackstone To acquire European online classifieds group Adevinta for $13 billionIn October, the popular website building platform was seized Square area Especially in A A deal worth $7.2 billion in the end.

However, it’s not just billion-dollar acquisitions that excite Permira. In addition closing A new buyout fund worth €16.7 billion last year, the company It has separate funds Which takes the minority and Majority Shares in early-stage, high-growth companies. It was its first investment in Sweden Klarna back in 2017just this fintech giant It is now preparing to go public Eight years later.

“We remain invested in Klarna,” Permira’s new co-managing partner and co-CEO said Brian Rudder It was confirmed to TechCrunch. “In general, with these minority growth strategies, you can’t control the exit, and so we accept being in these companies for a long time. But we also have to be in these companies for a long time.

As we approach the end of 2024, TechCrunch caught up with Ruder to discuss some of these more recent deals, as well as Permira’s broader approach to the tech sector, AI, and having two people equally sharing power at the top.

Two two

While many organizations are adopting new models of leadership, including shared leadership, the idea has long been popular within Permira. actually, Kurt Bjorklund He co-manages Permira alongside Tom Lister Starting in 2008. When Leicester Step aside In 2021, Permira was left with just one person at the helm – an unusual position for a firm that has adopted a co-chair strategy across most of its investment teams, including technology, services, consumer and climate, with healthcare alone led by a single leader.

“We really like the shared leadership model – in part to counter the challenge of the loneliness of being a leader. It’s really helpful to have a co-thinker,” Rudder said. “The key thing in any leadership role is the speed with which you can make a good decision, and the sooner The faster you can make good decisions, the better you become. I would be slower to come to the same conclusion if I couldn’t engage in the thinking.

With both Roder and Deepan Patel Landing in the shared driving seat On September 1stBjorklund became CEO, and normal life resumed. But notably, in addition to co-managing partners, Ruder and Patel have also taken on the position of co-CEO – a new title at Permira. Was this a sign that the role had changed, or perhaps a sign that industry leadership titles were creeping into private equity? The truth is somewhat more mundane, albeit practical. It’s really to show who he is Actually managing things.

“The ‘managing partner’ title has been diluted at a lot of other firms,” ​​Rudder said. “This title inflation exists basically across the industry. There are companies we can count in our peer group that have multiple pages of managing partners.

“digital backbone”

When Tech Crunch I spoke with Ruder in 2017The primary focus of the conversation was the growing attraction of private equity to the technology sector. This was from behind Patch to High-profile special deals. In the intervening years, Permira itself has acquired a number of public technology companies in multibillion-dollar transactions. This includes email security company Mimecast, a Permira company It was purchased for $5.8 billion in 2022, and customer communications platform Zendesk, which went private the same year In a deal worth $10.2 billion Led by Permira, Hellman & Friedman.

Fast forward to today, Permira says its funds have invested about $28 billion in 80 technology companies over the years, covering everything from SaaS to… Cyber ​​securityTo financial technology and online markets. The company is now also led by Ruder – who has co-led the firm’s technology investment team since 2008 – and Patel, who was also a member of Permira’s technology team from 2009 to 2018 before moving to the consumer side.

So is Permira all about technology now?

“We have always been a private equity firm focused on growth and growth at scale,” Ruder said. “It’s not exclusively about technology, but technology – and I mean digital across the board – is a dominant share of this whole market, so it’s very natural, over the 40-year history of the company, that we’ve become very technology-centric. The way we put it is That we have this underlying digital backbone that runs through all of our strategies.

Therefore, although Permira separates its investment strategies by sector, “Every company is a software company“The slogan, although corny, rings truer than ever.

Take a luxury shoe brand Golden goosePurchased by Permira $1.3 billion In 2020. It wouldn’t be called a “technology company” per se, but technology is a key component of how it operates. As part of its quest to rely less on multi-brand retailers, its pursuit of direct-to-consumer (D2C) strategies is paying off for the company, which It has been attributed Increase sales for this new D2C approach.

“Most of what Golden Goose has focused on during our time investing with them is online,” Rudder said. “So, having access to online avenues and channels for companies that we don’t consider to be ‘tech’ companies, is a big part of what we do across the board.”

Permira’s largest private technology deal of 2024 is another example, and it involves a company that most people probably haven’t heard of. Adevinta, which is owned by Norwegian media group Schibsted weave In 2019, controls Dozens of online marketplaces across Europe and the Americas – a number that has since risen It acquired eBay’s classifieds business for $9.2 billion In 2020. There’s no doubt that Adevinta is a digital brand player, but how these consumer brands acquire new users requires a different level of expertise compared to, say, deep enterprise technology.

“It’s a collection of the best classified assets,” Rudder said. “The plan is to focus heavily on running the individual classifieds business in the best way possible for its geography and sector. I’ve built a management team capable of doing that, and I’ve been really pleased with the level of team we’ve been able to build with that in mind. These are long-term, high-stakes markets.” Very high double-digit growth.

Artificial intelligence with everything

Of course, Permira is also heavily focused on AI, but is unlikely to invest in some pre-IPO giants like OpenAI or Anthropic. Instead, it is focusing on how it can apply AI across its portfolio and learn from it.

Zendesk, for example, was Really embrace AI Before it was converted by Permira & Co. It went private a couple of years ago, but the boom in generative AI has really galvanized Zendesk To work. Earlier this year, Zendesk has acquired Ultimate To bring Artificial intelligence agents In the mix. He – she Also acquired AI-powered quality assurance startup Klaus. The company also replaced several senior executives, including co-founder and CEO Mikkel Savani, who made way for Permira partner Tom Egmire In 2022. Since then, Zendesk has done just that New appointment Head of Information Department and CFOwhile A New head Engineering and artificial intelligence, Shashi UpadhyayHe joined from Google this month.

“With Zendesk, we’ve really powered the world of generative AI.” Ryan LanferThe Zendesk board member and new co-chief technology officer at Permira told TechCrunch. “We are seeing tremendous adoption from our customer base. Zendesk’s traditional customer base has been digital natives and early adopters. We believe Zendesk is one of the fastest growing AI companies at this point.

It is impossible to discuss artificial intelligence without mentioning cloud computing, two fields that are largely intertwined and complementary. Just as cloud computing has enhanced software, enabling new business models with scale and higher margins, Ruder believes AI will also create similar tailwinds.

“We think AI will be another step like that,” Rudder said, adding that this will require companies to fully embrace the cloud.

“Across all industries, we see CEOs asking their CIOs what they are Ruder continued to talk about artificial intelligence. “And the answer that’s increasingly coming from these IT managers is that they want to do a lot more with AI, but their infrastructure isn’t ready yet to take advantage of all of that. We think there’s actually a lot of opportunity and pressure for a big upgrade wave to drive the software install base.” Continuous on-premise to the cloud, modernizing data infrastructure and architectures in order to enable AI in a way that has not happened in previous waves.”

Square deal

As with Zendesk, the Squarespace website builder was already getting started Embrace AI Before Permira comes along, it recently launched a new set of AI tools called “Design intelligence“.

Permira revealed for the first time plans to It acquired Squarespace in May With an enterprise valuation of $6.9 billion. Soon after, a consulting firm Recommended Squarespace shareholders rejected the offer, especially since Squarespace’s financial performance was on the rise and its prospects were strong. Ultimately, Permira was forced to raise its offer to about $7.2 billion.

However, about 18 months ago, Squarespace’s market cap was roughly half that, suggesting Permira may have missed out on a deal. But that’s not how large, publicly traded companies like this are treated.

“For a deal on the scale of Squarepace, this would have to be the right time for both us and the company,” Rudder said. “Especially for public companies – you can’t buy those companies at a low price, as it’s very difficult to convince boards to do business there. And that’s justifiable – it doesn’t make sense for boards to want to sell unless the company is in distress. And high-quality companies What we invest in rarely reaches the point where it is in distress.

Founder and original CEO of Squarespace, Anthony CasalinaAnd it also stays firmly in place. For a company that has been around for about 20 years, and is making a return trip to the public market, it may seem unusual for a private equity firm not to be looking to shake things up at the top. But this is where Rudder emphasizes that while some private equity firms focus on rescuing companies in trouble, their focus is on buying “high-quality assets” that are fundamentally healthy. As such, the majority of the investments it has made from its existing buyout fund involve the founder in some way.

“Our strategy is to find the best products in really good markets and support that,” Rudder said. “The vast majority of private equity on our scale is about maximizing size EBITDA Margins are in the near term, but we believe we can deliver a better return on the compounding power behind the great unit economics. This approach tends to be very attractive to people who care about where their business goes. And because of that, we’re kind of drawn to situations where we have founders.