Tony Robbins x Robert Smith: The Power of the Playbook - Making Great Companies Extraordinary

Welcome to the Holy Grail Investing Podcast.

Our guest today is the founder and CEO of Vista Partners, $100 billion company that has mastered enterprise SAS.

The ROI to date is 625% gen AI takes that to an order of magnitude. Wow.

You know more about this industry than anybody alive. But what does a person do so that they can become more valuable?

That is all going to get disrupted.

I'm going to help the audience out here a little bit. They're like, that's what I want to invest in, but I don't know how to do any of that.

Well, what do you tell your kids to study?

Three skills that they have to learn. Pattern recogn. Once you recognize patterns, there's no fear because you know it's not random.

Then they gotta learn. Now, hang on. You gotta save the punchline. You go from this control paradigm to this control paradigm, you succeed at a.

Level most humans will never dream of. When you began, you saw something no one else saw.

Here's where it all started.

Hello, everyone, and welcome to the Holy Grail of Investing Podcast with Tony Robbins and Christopher Zook. We're thrilled that you've tuned in because over the next couple of sessions we're going to talk about some of the most interesting things in all of the world of investing, from GP stakes to professional SP to energy to disruptive technology, and what our job is to add as much value to you as we can and to give you some things that will really be valuable to you as you go about your businesses and your investing. I'm Christopher Zook. I'm the founder and chief investment officer of CAS Investments. And I'm thrilled to be able to co host today with the one and only Tony Robbins. Tony, thank you for being here.

Thanks, Christopher. Listen, I'm very excited for you to join us as well, because our guest today is a very special individual. This is a person who's an unbelievable investor, incredible entrepreneur. This person that you would of if you said, who is the best in private equity, he's got to be in the top three or four or five. He's a philanthropist, he's an engineer. And most importantly, Robert Smith, of course, is the founder and CEO of Vista. I think you're going to find enormous amount of value out of this session. And this is a man who gave you an idea, has built $100 billion AUM company. He's done it by literally developing over 600 private equity transactions, over $300 billion. He's got 80 companies with over 90,000 employees now across one countries. Forbes called him one of the hundred great business mind in history. He's been on the Times 100 list. What I'm really touched by as a founder is that you've also been found for four years in a row, as you know, the founder friendly investor for Inc. Magazine for four years in a row. But it's such a pleasure to be with you and a pleasure and a privilege that we have the chance to invest directly in your company with you. So thank you for having us with Robert, good to see you again.

So it's great to be here. Good to see you. And Christopher, good to see you. As always, I'm excited to be here in advance. What is, I think an important topic for all investors to understand different aspects of the alternative space and investors who are doing unique things that actually make a difference and bring Alpha to their portfolio. So thank you all for doing this.

Well, we're thrilled. Absolutely. So let's start out. You have quite an amazing background. I come from early roots, challenging roots. I understand that your family was not super well to do either kind of humble roots for you. And yet you've risen to a level that most people would never dream of in a lifetime and added so much value to so many people's lives. Tell us a little bit, if you would, just about your kind of your origin story, how this all started, if you don't mind.

Yeah. And thank you for saying that. I mean, we all, I think in many cases come back to, you know, what our household was like when we grew up. I was fortunate in that I grew up in a household of two teachers, two school teachers, elementary school teachers, both of which were really inclined to think about how they could change the condition of their community at large. And they knew education was a fundamental part of that work. My mother grew up in Washington, D.C. she has a very interesting background. We can talk about that a bit later. In terms of her great, great grandfather and the work that he did and the towns that he built way back actually during Reconstruction. And my father, who was third generation from Colorado, I'm fourth generation and you know, his family being moved out of Tulsa, Oklahoma and they converging. My mother found that she was interested in teaching, wanted to get a master's degree, went to Colorado and got her master's degree, met my father and then, you know, produced my brother and I. But I think what was important was, you know, they, they created a bedrock in our community of educators and focused on building, call it the skillset and the capabilities of the children in our neighborhood. This was a time, of course, during segregation. And so we had to rely a lot on the infrastructure of our own community. If you wanted to learn carpentry, you went down the street to learn it from, you know, Mr. Robinson. If you wanted to learn piano, you went and got piano Lessons from Mrs. Buckner. So it's a very rich community where looked out for each other, fundamentally, education and community. And those are the things that kind of, you know, create the bedrock of who you are. And from that, you know, a curious mind hopefully leads to, you know, interesting ventures. And I had the great opportunity going to. I went to a public high school, same high school my father went to. And I had a teacher there who was. They brought computers in for the first time. So, you know, introducing this new technology.

What year would that have been?

So that was 1980.

Wow. Okay, great.

And, you know, I'm taking this computer class. I said, wow, this is really interesting. I asked the teacher, I said, well, hey, how does this thing actually work? And he said, well, it's run by this thing called a transistor. And I said, well, who invented that? And he said, well, these people in this place called bell laboratories. And I said, huh, I wonder if there's a bell laboratories in Colorado. So I went downstairs to the career center and talked to the career person and said, we looked in the, you know, in the book. Said, yeah, there's one in Broomfield. So I called them. I literally called him and I said, hey, you know, I'm interested in the summer internship. Do you have any summer internships? And I said, yeah, if you're between your junior and senior year in college. I said, well, that's great. I'm a junior in high school. I'm getting A's in my AP classes. It's the same thing. So where do I sign up?

Junior high school, junior college.

Same thing, same thing. Class, same thing. She's like, well, you know, listen, you know, you need to come back when you're junior in college. So this was in about January. So I literally called her every day for two weeks. And she stopped taking the call back then. There are no answering machines, that sort of a thing. And I'd have to leave a message. So then I called her every Monday. Okay, I had a calculus, because I called her every Monday for five months. And she called me back in June and she said, listen, she called, you know, my house, and, you know, my dad just happened to be home because they were out of school. She was elder. Elementary school. I was still in high school. He's like some woman called from Bell Laboratory. So I called her back. She said, hey, listen, a student from MIT didn't show up. We haven't met you. We're not offering you a job, but you can come and interview. So I had a 69 Plymouth satellite. I put $2 worth of gas in. I had one suit, my Sunday suit, and drove out there and got the job. But what was most fascinating about. How old are you then? 17 years old. So I'm working at Bell Labs. I'm 17. And the world just opens up to me at that point. Wow. My mentor. This is the importance of mentors. My mentor is a guy by the name of Vic Houser. You know, distinguished member of technical staff, like, 35 patents under his name. PhD in solid state physics, undergraduate chemical engineering, brilliant guy. And I shared an office with him. Wow. Okay. So this wasn't, you know, sitting in a cube. So I shared an office with him. And I walk in the first day, he kind of looks me up and down, and he's like, well, look, we've got this. It's called a, you know, an operational amplifier. It's failing in our Merlin systems out in the field. You know, your summer job is to now figure out why. And he says, you got the full resources. Bell Laboratories at your disposal. I'm here to answer any question. Let me know when you want to talk. And he turns his chair around. So now I'm, like, shocked. I'm like, this is the rudest guy I've ever known, right? But I finally understood what he was doing. So I marched myself down to the library and I talked to the librarian. I said, this thing called an operational amplifier, do you have any information on it? So he pulls out some books, and I start going through them, and I write down a bunch of questions. And I go back sheepishly into the mentor and to Vic, I said, hey, Vic, I said, I've got a couple questions. He turns around and says, what are they? And I ask a question. He gets on the whiteboard for two hours. Wow. As I ask questions. And he says, you have any more questions? I said, nope, I'll be back tomorrow. And so it created a whole process for me. And it's something I said. I tell my kids I'm going to leave them three things. The second thing is, I hope they discovered the joy of figuring things out.

Yes.

Because what he did for me was help me understand how to figure out problems. Not give me the answer, but how to take big, complex problems and break them into small increments and it was from that that I learned the joy of engineering and problem solving and created what I call elegant solutions to complex problems. So into the summer, I'm 17 years old, I win the best prize, the best project for the summer with all these college kids. And it's because I had the right mentor with the right attitude and, you know, with the curious mind. So all those are what I call the, you know, the origin story. And I think I approached my life that way today. I'm always interested in learning new things, in bringing, you call it new solutions to complex problems.

Well, you're also relentless.

Yeah, there's that too. There's that too, absolutely.

So often it's overused, but people just don't realize how important persistence is. When we interviewed 13 of the biggest players on earth in private equity, you being obviously one of them, we got a chance to visit with before that theme comes up over and over again. My own life, and I know your life as well, Christopher, the willingness to never give up and just keep going no matter what. The obstacle. I don't think there's a replacement for that. But I'm curious, when you look at your success in business and in life, besides your ability to solve problems, what do you think has caused you to raise to such a high level? Is it that persistence, that relentlessness? Is it the fact that you have both the financial and the technical, you're engineer and you had a brilliant financial mind and training? Is it focusing on the sector you did because no one was into SAS at the beginning. Right. Or SaaS, they didn't think it was worthwhile. I think when you started in 2000, what do you think has been the most important elements that have helped you to succeed? I know you're very humble, but pretty obvious you've succeeded a level most humans will never dream of.

I, I think it's a lot of what you said and you know, that, that, that relentless curiosity.

The curiosity.

And I bet if you talk to, you know, I know you do talk to, you know, thousands of people a year, you will find those who are successful in their field remain curious.

I agree.

They are those who know they don't always have the answer and they ask the next set of questions and from that they get informed and, and again, it brings insights and then they can bring their own intention and their energy against that problem they may be focused on or say, this is another problem that I can solve and it'd be interesting to solve it. So it's that, I think it's that curious Nature, which is essential.

That curious nature is so unusual because most people, they give it up, they get to that first wall, if you will, and they just stop. So how do you coach people to get through that wall and to just continue to persist, even when it gets.

Frustrating or question, or do you work to find people that just already have that in their nature?

I think so. It's a great question. Being a father, you want all your kids to have that.

Yes.

Not all of them do.

Yes.

And you have to think about, well, what is it that I can do? And to me, there are things like sports.

Yes.

Okay. Sports in some respects, you know. You know, when you have a child who's doing something, or my kids are, you know, play chess. Right. And. And you see them hit a wall, and so you can tell them the answer, or you can help them discover how they go about solving that problem. And that gives them a little more confidence.

Yes.

And each time they get a little more confidence, they get a little more confident.

Right.

And I think that's a big part of it. And we as parents, as, you know, part of our job is to prepare that child for that journey, not prepare that, you know, the path for them. And it's a hard thing to do. But when you find students, you know, employees who have that and you can recognize it, you ask the right questions, you figure out, you know, a lot of it is, tell me about your origin story. Tell me how you grew up, and you listen to how they describe what it is that got them to that place. That's when you start identifying, okay, okay, here's somebody with that spark who's not.

Gonna take no for an answer. We call it a lot in our firm. We call it grit. Right, Right. It's that grit. It's really hard to identify. But when you find somebody with grit, they usually will persist, and they usually will figure it out.

Yeah, Yeah, I agree. And so part of it is, you know, what are the things? And where do you need that grit in certain circumstances? Look, when. When all boats are rising in a marketplace. Yeah.

Everybody's making money and you think. Everybody thinks they're a genius. They're brilliant. Right.

Okay. Grit is when you see downturn. Okay. And when you see changes in market conditions, and when you see the introduction of new technologies into the theater in which you have been operating, and do you ignore it? Do you embrace it? Do you make it a part now of your DNA? And how do you do that? And so when you talk about, okay, what has made you successful, it's we, we have built, and I will say we have built an institution that evolves technology, enterprise software, it evolves the early days of this all on premise. Okay. And then we saw the recognition of SaaS or hosted, and I said, okay, there's a couple things you can do. You can ignore what is going to be the reality or you can build an infrastructure. So what we did, we built a factory, we built a conversion factory to convert from on premise to cloud. And as far as I know, today we have converted more businesses from on premise to cloud than any institution on the planet. Well, now we have a new technology, don't we? This new general purpose technology. We're calling, you know, artificial intelligence or generative artificial intelligence. So guess what we're doing now? We are building a factory, okay. To go from SaaS we're hosted to Agentic. And so we have 89 of our companies pivoting in that direction, understanding that this new technology changes everything again, but you've got to have an institution that can evolve.

But you know, I'm going to help the audience out here a little bit because most people have no idea what agentic means. So walk us through that and explain that.

Sure, that's good.

And how important is the adoption of AI for small businesses as well as big, large size businesses? Right?

Yeah, it's critical. So the way to think about, so artificial intelligence, there's kind of what we'll call traditional AI. So for instance, when, you know, a few years ago we would go and say, oh, I want to take a trip and I want to go to Paris and I want to go on a restaurant tour and go to museums and you could go online and a, what you would have is an artificial intelligence. Agents would actually identify places where you could go. Great. Okay, now it do it for you. Now not only will it do it for you, it will book it and it will make changes and adjust for you. So that's kind of the modern AI that's agentic. These agents now can do something.

They do stuff, actually they replace employees. And I was talking to Mark Minioff about this. He called me in the middle of the night about a year ago and said, this is it. This is the piece. I can't believe what this will do. I can take companies and they can have 500 new employees and doing things really effectively with this technology. Right, so how are you using that in your companies?

Right, so if you think about it again, we have now this is an interesting mass. So this is what we're working against. We have 750 million users of our software globally.

Wow.

Okay. So if you think about 89 software companies operate in 180 countries, we're in 70 different industries. 750 million users of our software initially there will, each of those users will have 2 to 5 agents. Ultimately they'll have 10 to 12 agents per user. So think about it. We're going from having 750 million users of our software to 8 to 10 billion agents.

Wow.

Okay, now these agents were 24, 7, 365. If you tune them properly and they.

Stay fully engaged, fully engaged all the.

Time, they don't have to, you know, go and, you know, pick up kids from school and all that sort of stuff, but which creates a whole nother set of issues that we're all going to have to think about.

I know that.

But, you know, as a fiduciary, my job is to bring maximum efficacy to the assets that we control and that we own. And so what our factory is doing is building all the infrastructure and the components to make, to convert users, in essence, to agentic solutions. So each agent will have specific tasks associated with it. And even within that construct, you have to have an agent that each agent has to be protected. You have to have cybersecurity around it. It has to operate in, in the enterprise. Consumer's very different. Okay. Because, you know, the three of us after this, we could say, hey, let's go to a Thai place, right? And we could go online and send an agent and they'll find 10 of them.

Yeah.

Nine of them will be open. One of them, one has been closed for three years. Right. And right now just kind of book the appointment, all that in the enterprise. No, you need 100% accuracy, certainty. Right. Because we have to go and say, I'm sure you wouldn't want your, your, your, you know, your check get wire transferred to someone else at 99.5% efficiency. You want 100%. So there's aspects that, that enterprise software brings to an agentic world that agentic can't do on its own. Remember, the enterprise software are the trusted, are they trusted providers of the infrastructure, the workflows and the data today?

Yes.

So you know, Benioff and we talk about this, we laughed about this a little bit. You know, people say, oh, is AI going to eat software? No, AI is going to feed software, enterprise software. Okay.

Mark said from Salesforce, this will transform Salesforce, as powerful as the company is, to a different level in terms of servicing their customers.

So let's do this, explain how it's going to feed software. How is that going to feed and actually help build software? Because I think people get really confused about the two.

Sure. There are aspects of it. So let's talk about just one aspect. One of the most important parts of running an enterprise software coding company is writing code.

Yes.

Okay. We already have deployed, you know, code generation across 100% of our companies. So the efficacy, how much faster is.

It, by the way? And how much effective.

More effective is 40% more effective today. But that's today, next week is probably going to be 80%. That's just one aspect where AI feeds software. That's just on a cost side. Okay. On a revenue side, you think of. We have some solutions today where we have in an orchestration agent with nine separate agents that do the work of a customer service person or a salesperson with 24, 7, 365 efficacy. So if you have a customer service person who's trying to understand some changes in their customer base, I. E. Somebody changed jobs and it was posted on LinkedIn that that job got changed. Well, your customer service agent may have 3, 400 clients that he's covering, has no idea. Our agents know immediately. Okay. And create an activity. So another set of agents now start kicking in and doing work in and around what it takes to support not only that client, but the impact and implications of whoever is moving in into that role and what the impact is on the companies that it serves. Okay, this works today. This works today. So that's part of. And that's why we partner with Microsoft. We want the foundry aspects. You've got to create environment, you've got to create cybersecurity, you've got to create telemetry, you've got to create all the aspects associated with ensuring that these agents do exactly what you want and not anything you don't want it to do. Okay. So that's an important part of this whole transformation. So that's what we've been doing the last couple of years. Alice is building this factory and so I'm really excited about it.

If you can, at least I can feel your energy.

If you can't tell.

First of all, you look like a million dollars. You've taken care of your body at a different level too. What have you done with your body? I mean you.

A lot of it. Like all things. I've got actually a wonderful service that actually has an AI engine we've been using. I've been using it for out eight years.

Wow.

Okay. And the supplements and I mean it's an amazing service. And these people are great. You know, they cost.

But did you also. As great as your business is, it seems like when you began, you saw something no one else saw.

Yeah.

I mean, what did you see back then? Was it recurring revenue? And you saw the direct. What was you saw. But also I see you like the level of animation. You're always excited, but it feels like a whole new level. And I can see why. Yeah. Tell me about what you saw in the beginning and then relate that to what other people need to be looking for in their own businesses as well.

Sure. Here's where it all started for me. I started, you know, I was a chemical engineer, Cornell University. I finished there and then I started working in a process plant. Right. And my. One of my first jobs is to actually automate one of the processes in the plant. So my generation of chem E, sure, we were, of course developing different unit operations, but we were bringing in process controls for the first time. Okay. So compute was still very expensive. It could only be, you know, could only be, you know, fairly afforded by the largest corporations, US Government and universities. Well, I worked for a very large corporation and we had a plant that was built in the 40s. I want you to think about this. Built in the 40s, had made components for tire making and plastic pipes. Okay. Said. All right. Implement this Honeywell TDC 3000 PLC. Okay. Programmable Logic controller. So implementing control systems. So the way to think about it, before then, processes were controlled by operators, you know. Yeah, yeah. You had somebody sitting there watching the reactions occur, looking at pressure and temperature and rates and flows, and it would go through some dynamic. And then they would observe it episodically when you weren't talking about who got drafted that week in football. Okay. And then you would. You would episodically intervene and say, oh, I need to change this. I need to add more this. Take more this away. And. And the reaction would move in this.

Sort of a form.

Okay, introduce compute. Now you go from episodic observation, you know, 60. Or now you're observing 60 times a second. Now I can observe 60 times second whether or not you're talking about football at all.

And the flag shows up to let you know you got it.

Oh, not just let you know, you can now intervene.

Right.

So the second part of that was, now make an intervention. Do the calculus, do the math. And what is the proper intervention. So you go from this sort of a control paradigm to this type of a control paradigm. Everything under the curve is waste. And so in that first Experience, Experience that I had increased the productivity of that plant by 26%. A plant built in the 40s.

Wow.

Increase of productivity by 26%. So we say, what should people look for? They should look for implementing solutions that create productivity output. So that's point one. Now, if you look at today, and I'm going to fast forward to today, okay, we measure the ROI of the products that our companies sell to our customers every day. We're in freight freight, we're in shipping, we're in automotive, we're in healthcare. We're, you know, 70 different industries.

Yeah.

The average ROI today that we measure is 625. That's the products that our pro. Our companies sell to our customers. 625 ROI. I don't know if any other business or product gives you that fantastic. Gen AI takes that to an order of magnitude.

Oh, my God. Nobody having a hard time sitting in your.

That's the impact. Okay, but the key is get there fast first. Get there fast first.

Yes.

That's what we're doing.

Well, I mean, what you said is everything under the curve is waste. I mean, that's a fantastic, you know, analogy for basically how do we streamline things and to eliminate all that waste. And with Gen AI, what I hear you saying is it just allows that pulse to be faster to where it's that much more responsive, and it can make those adjustments that much quicker and also be much more effective. And so, so everybody gets that, generally speaking. But how do you stay ahead of it? How do you make sure that others don't just take the place of what you're trying to accomplish?

So that's an important part of the enterprise software, okay. If you did enterprise software, right, in the past, you have sovereignty and dominion over workflows and data sets. You don't have to own them, but you have to have sovereignty own them. Where you are protecting a unique set of workflows that happen in an industry or in a company. And you have dominion over the data because that data will inform you as to what activities should be done and what are the outputs. And then of course, the outputs from that data to now circle back in a feedback or feed forward loop, depending upon what you're doing, okay, for the next activity or the next task or the next agentic action. Okay. You see the system, right? So part of what you have to do in an enterprise world is understand the workflows and the sovereignty and the dominion and what, what creates the outcomes that you want and have those agents identify those aspects and act according to what the outputs are. Because every business is different, every customer is different. And how do you ensure that you are delivering to that customer? And you have to tune these models and these agents, what it is that they're either expecting work when you do it, really do it well, you give them more than they're expecting and they're saying, wow, that actually is delighting me. So if someone is asking for a certain amount of information, lock into our investors. I want this information about the performance of your funds. Here it is. By the way, people like you have asked these four other questions, so let me give you that as well. They're like, oh, wow, that is a good set of questions to ask. That is a good narrative for me to evaluate. And so now they get more delighted because it makes their work easier. And what is the most efficient thing we're bringing to them? Their time back. Okay. And then from there, insights. I mean, that's right. This is our. I've got my own agent.

Right? Right, yes.

And we update it regularly, frequently. So we just had our annual general meeting. And so this is my agent's perspective of our annual general meeting. So now I am going through this. Okay. Line by line. Okay, what is their perspective, my agent's perspective? It's me, Right. If you think about it. Because it's informed by me.

Yes.

Right.

How did you load that data in of your insights, your history, your distinctions, your set of curiosity?

So first you have to create your data set, your data constructs. There's companies do that. And then we went through literally 25 years of the presentations done, the press, I figured. And you load it all in there, you know, this conversation will then go into it next. Yes. Okay.

And then.

And then when I'm about to have another conversation like this or talk to an investor, I can literally go in and type in, okay, here's. Here's the questions you're going to ask. And it basically says, robert, here's how you answer that. Here's how you should answer that. And you look at that and you say, okay, is this actually now I know something more.

I want to do a different.

Right. Or bring this out. Okay. And then you can say, well, this. And then you can start to load in what was effective.

Yes.

Okay. Like certain artists that would tell me, okay, these words that you use are effective. These words you use are a little too engineering and they aren't effective. Right. I'm like, oh, okay, So I get that. But those are the things that are important for me to continue to Load as this evolves as my AI agent.

Well, I mean, when I think about our audience right now, a, they're amazed. B, they're like, that's what I want to invest in because it's clearly going to change the world. But C, I don't know how to do any of that. So where do they start? How do they even begin to, you know, we talk to so many small business owners and they're like, I know I need to do this, but I don't have the ability to, you know, go hire a consultant for a lot, a lot of money every single year. Where do they start?

So this is where the enterprise is important again. Okay. Because the enterprise software vendor that they're currently using for any asset, their business.

Right. Sure.

Should be, if they're thinking about it, creating, which is why we, we're doing this, creating agents that actually deliver that to them. I've got agents for our business and mind body and classes mask working at gyms. Okay, how do you make that more effective? How do you make it effective so that, oh, gee, you know, you, we, okay, we're going to go work out. We're going, we're going to New York. We're going to go work out tomorrow. We, you and I do, you know, some spin class, whatever it is. But now we want to go do Pilates. So we sign up and we go, yeah, well, we're late because, you know, you want to get a last cup of coffee and we're late. And so the instructor gives the seat, our seats away to his friends. Now we're up. Okay, we want our money back or something. Our agents will say, hey, you guys are already dressed. Here's four other places you can go within walking distance and you'll get there on time. And I already booked it for you. Do you want that? Or the agents say, where do you want your money back? Okay. Or guess what you got, you know, you got a hard stop at 10:15, you could finish this at 10:10 and be back in time and all that sort of. Those are the things that we are, we have built today. Okay? So that's, you know, think about it. That's a gym. Okay? So small to medium businesses all have the capacity, okay. If they have the right vendors to utilize those.

Necron1, you have so many companies.