Nic Humphries, Executive Chairman at Hg, on firm’s unique approach to exits

Speaker A: Hello, my name is Steffen Powelts and I am the CEO and founder of Moonfair. Welcome to Dealtalk where we bring you face to face with the top minds in private equity. Moonfair is the largest digital platform for investing in private equity. We offer carefully curated funds with remarkable low minimums. Joining our community of world class investors is free and only takes a few minutes. @moonfair.com we do this to give more investors direct access to one of the most attractive global asset classes. With our Dealtalk webinars, we aim to democratize access to the knowledge surrounding it. Enjoy a very warm welcome. My name is Steffen Pauls and I am the founder and CEO of Moonfair. And welcome to Monferr's Deal Talk. Dealtalk is a series where I have the chance to interview some of the best private equity dealmakers in the world. And today we have a very special guest. I'm really excited to have one of Europe's most successful software investors with me today, Nick Humphries. Nick is the senior partner and Executive chairman of hg, which is a leading software investor, um, in enterprise software across Europe and the US HG manages over 75 billion in assets and has a portfolio of more than 50 companies employing over 120,000 employees worldwide. These numbers really show the impact of HG in the software ecosystem, which is even more remarkable if you think about how competitive this space became. Nick's investing career began back in the 90s, and for the past 30 years he has focused exclusively on software and technology. He joined HG in 2001, then served as a CEO of the firm for more than a decade. And since 2017, he continues to lead the company as a chairman. Nick, it's a real pleasure to be here in your office. And thanks so much for hosting us.

Speaker B: Not at all, Steven. It's a pleasure to be here. And uh, I mean, first of all, congratulations on the business you built. We're delighted to be one of your partners.

Speaker A: Thanks so much, Nick. Look, uh, we talked about it. You saw something, and this is really the recipe for great entrepreneurs that other people didn't see. Uh, back when you joined in 2001 and you started, as I said, your career solely focused on technology. What made you so convinced back in that point of time where tech was not what it is today, obviously, that this would be the right route for the company.

Speaker B: I guess two things came together. Um, so as you mentioned, I've been investing since 1990 in private equity with three I originally, um, my first three years. At three I was a generalist investor in any sector, any type of business and I was terrible at it. I blew up two of my first for investments completely. Um, that caused me in 93, well, first of all to kind of go home and say to my wife, uh, look, I may be fired anytime soon, so I'd better develop a strategy. And then as an engineer, uh, electronic engineer I guess I chose the classic engineer's approach of thinking about inch wide, mile deep, trying to think about one thing that was narrow enough that I could get my head around it and develop some kind of expertise. So the first point really was kind of necessity. I had to kind of figure out some strategy because the existing model wasn't working. Um, as I then focused on technology from roughly 93, 94 onwards, um, A, I obviously learned some things and B, it became pretty obvious that this was a sector with very long term secular growth characteristics. And that's really the second point which was um, being able to kind of pick a sector which would grow at multiples of GDP certainly for a decade I thought in the 90s and obviously the that's turned out to be 30, 40, 50 years. And I think trying to understand what was driving that, which is ultimately things like the power of hardware, Moore's Law, today it's AI. Those are underlying fundamental technology advances that enable software to be a very long term growth sector. So I was fortunate to have some inkling of that because I was an electronic engineer back in the 90s.

Speaker A: Yeah, look, I really have some admiration for it because when I think about the evolution of tech, uh, post, um, 9 11, 2001, everybody, everybody in the market was saying tech is dead. Then we had grand financial crisis risk off, everybody was saying tech is dead. You stayed on it and obviously very successful. I want to talk a little bit about your portfolio and some of your more recent investments include Empyrean risk management software, uh, focus group, which is a digital workplace Solution, and then iValure, a software that helps uh, companies to manage their spendings. When you think uh, about those three companies, what is it exactly what you are looking, what do they have in common and what makes them then finally a good fit for you for hg?

Speaker B: Yeah. So I think it goes all the way back to kind of like 20 years ago when we started to devise our strategy for investing in kind of software. Um, and look, it's a big space. Even though it feels kind of niche to some people, it's actually a very big space. There are lots of different types of software you could back consumer software, kind of purely, kind of web based software that is in the entertainment industry. Lots of things you could choose. What we believed our expertise and our DNA was most suited to was really software that is sold into businesses. So B2B software that's used to essentially enable people within those businesses, professionals, semi professionals, to do their job more productively every day. So workflow based software that removes kind of manual tasks enables people to be more productive and do higher value things. Um, that typically comes with lots of repeat revenue because businesses tend to buy on a subscription basis. It means it's very sticky. So the financial model for that software is good from our point of view as an investor. Um, uh, and really that's what runs through all of the businesses you mentioned and frankly the other 50 businesses in HG's portfolio. Um, I think what's particularly important though, and what we've probably focused on more than anybody else is ensuring that we're buying kind of software that is modern, what's today called cloud or SaaS software. And um, we'll get on, I'm sure, and talk about kind of AI. It's crucial to us that when we back a business, we're backing kind of entrepreneurs that have really developed very, very high class products. And that product is providing a huge amount of benefit to their end customers. So customers are choosing to use our product because it's the best in the market, because it provides the best features and solutions. There are other ways of doing software buyouts where you just pick some software that is so sticky that customers can't move and then you try and frankly exploit them with price increases. And really that's not what we do at all. What we're doing is trying to find great businesses with great software that customers like and therefore we get growth coming through because the software is very valuable.

Speaker A: Look, every investor on earth loves sticky, predictable revenues because you can calculate what you are paying. Um, I have two questions on this. Obviously uh, we are living in an efficient market. So if you have predictable cash, uh, flows ahead, everybody can calculate the price. How do you compete then on price? You said that you have already a view what you want to do with the companies in terms of growth, but where is the outperformance coming from? Um, that was um, one question and the other one is obviously it's from a risk return perspective, a very strong specific approach. Don't you think that you leave out some of the higher risk, less predictable chances or opportunities in the market?

Speaker B: Yeah. I'll answer the second Question first. Um, yes, we definitely do. Um, and we're not saying this is the only way that you're going to make a return. There are lots of different ways to make returns. There are lots of terrific investors out there that do different things. We've just had a very good dialogue with our clients over decades to say this is what we think we're capable of doing, which is essentially delivering very predictable returns, two to four, two to five times your money on a very predictable basis with very, very low volatility. That's what we provide to our customers, that's what they say they want and that's what we've provided consistently. So we don't tend to go for the riskier. Uh, it's ten times your money or zeros. That's not to say that other people shouldn't do that. There are probably other people that are very good at doing that. It's just not what we're good at. So that's the risk return equation. We're very clear about that internally and with our clients. And then in terms of sticky, um, kind of software. And do people like that? Yes, obviously they do. It's become more and more popular over the last 15, 20 years. Um, two I guess, kind of USPs that we have. The first is we've been doing this longer and we've been doing it at greater scale than anybody else in Europe for 20 plus years. That gives you a degree of experience and understanding, particularly because we apply that knowledge only in what we call eight clusters or eight subsectors. So again, even within that remit of B2B recurring revenue software, we're not trying to cover the whole universe. We're trying to cover only eight specific end clusters where we've been investing typically for 15 to 20 years. We developed a very particular view on what will happen in the kind of healthcare segment in Germany or what will happen in the tax and accounting segment in Denmark. And we've got views on that that is based on a huge amount of experience. So we think that experience gives us better quality, due diligence and ability to help those companies kind of grow faster than a generalist investor might have. And the second is we've then got 120 investment executives, 70 operators that are full time work for HG and they're essentially trying to help those businesses grow faster, develop better products, provide better quality customer interactions so that ultimately we help our businesses grow their top line better than they would have done without us investing.

Speaker A: Very helpful and very clear look, uh, HG Today is, you said it hyper focused on enterprise software, but that hasn't been the case from its origins. Uh, when we go back, so it was a multi sector, uh, investor, um, tell us a little bit how you, your partners, the firm decided to become so focused on one sector.

Speaker B: Yeah, so the brief history which we obviously talked through offline is um, so HD was originally a very small part of a very big asset management business called Mercury Asset Management. In the kind of 90s, um, Merrill lynch bought Mercury in 97 for its stocks, bonds and 401 s, et cetera. And I think frankly discovered that they had this kind of non core private equity division which was very small. Span it out in 2001. And so I joined in 01 and I joined about 30 other kind of executives, five partners. Um, at the time HG was investing in six sectors of which tech, the part that I ran was only one of those six. Um, so for the first kind of six years of HG's life as an independent business, from 01 to 07, we ran at all six of those sectors and the overall returns were good and clients were pretty happy. Um, but tech, the part that I ran became about half of that business. So it's about 50% of what we did over that period of time. And I think to answer your question more specifically, by that point in time it was also both the better returning sector, uh, but also the least volatility or the most predictable return. So we had kind of better results and lower volatility, which obviously from a client point of view, a customer point of view is the nirvana that they want better returns at lower volatility. So we used that ah, experience from that first six years in two funds to then kind of look deeply into our business in kind of 07, 08, when I took over as chief exec along with a uh, partner called Justin Von Simpson, who you know very well, and we looked very hard at our own business and said, you know, do we want to continue in five or six sectors where you've got good overall performance but frankly not best in class, or do we think there's an opportunity for us to kind of focus down on one or two of those sectors where we've got frankly an opportunity to be a leader in Europe. So it would be strategically a valuable thing for us to do and also we think would generate better returns at lower volatility for our clients. And when you work that through, it kind of feels like a bit of a no brainer. But it did take us about two years to work through that and ultimately to get to that decision.

Speaker A: You're uh, always smarter in retro perspective.

Speaker B: It's easy with retrospect.

Speaker A: I remember the times back in 06 07, you know, at KKR it was about regional expansion, it was about other asset classes, about growing the AOMs and so on. And you went the other direction. Look, there is an enormous dynamic in the tech sector and I would love to hear from you. What is it, what you are hearing from your CEOs, from the founders of the businesses, the entrepreneurs that you are backing, what are the trends, what are the themes, um, um, that are on top of their minds?

Speaker B: I think for the last five to 10 years it's been about cloud and what's called SaaS software. And that's not just a business model change to subscription. That's purely financial. It's actually about the ability to build modern born in the cloud software. And that's a very, very difficult shift. That kind of, what's called on premise businesses had to start to make kind of ten plus years ago. A number of those businesses have failed in that transition. Um, one or two in our portfolio, thankfully not very many at all, but quite a lot out there in the market. Um, and there's still a decent proportion of businesses that are basically on old legacy, on prem technology, which we think is going to be increasingly difficult for those businesses. So that's really the last 10 plus years and um, that's still on everybody's minds because we're not 100% satisfied or done with cloud software. Then obviously the new wave that's coming along, you won't be surprised to hear me say AI. AI is essentially going to be that next platform shift. That's going to be the next kind of 15 to 20 year uh, kind of journey. You can debate when we started, some people will say six, seven, eight years ago, others will say 20 years ago. For most of us it's probably kind of two to three years ago. With the advent of ChatGPT, we um, think that's the next platform. So that is front and center for every one of our chief executives in our portfolio at the moment.

Speaker A: Yeah, look, it's probably the one billion dollar question, but everybody of course is talking about AI and your job is, as you have done so in the past, to foresee the future. As I said, you have to see things that others don't see. When you think about AI, what are the applications, the real world, uh, applications you foresee which will really change the world and what themes or what, um, Companies put you back in the AI space.

Speaker B: Uh, so simply, when you're at the relatively early stages of these major platform transitions, the answer is nobody really knows. Nobody actually knows. Will we all be driving around in flying cars in 1990 or not? These were predictions that were made 20, 30 years ago. Some of them turn out to be true. You've got a supercomputer in your pocket and the idea that we'll all be flying around like the Jetsons turns out not to be true, uh, at this point in time. So nobody quite knows. I think what you can say is that it's going to be pervasive in just about every aspect of our personal, consumer and business lives. It's a sufficiently advanced technology that's providing huge potential productivity benefits for people and advantage for people that I think you can already say it is going to be this next platform shift and it's going to be very pervasive, um, in terms of what it means for B2B workflow software. We think it's going to provide both productivity benefits for the companies that we're backing. So you clearly can already see that there's going to be very major increases in productivity for research and development, product development, for customer support and customer service. And we're already seeing many examples of that in our portfolio. It's also going to be, I think, a major market expansion, revenue expansion opportunity. That is, the customer is going to get more value and ultimately the customer will be happy. They're going to pay for that value because they're getting huge productivity benefits from the software. Um, exactly where that value splits between the customer and the business, we don't really know at this point in time. And of course, whenever there's a big market expansion opportunity, you've got startups and new businesses that are going after that and you've got existing and incumbent businesses that are going after it. And so the job for the incumbents is obviously to make sure they make that transition successfully. We look back at our portfolio and cloud and say we were frankly pretty successful at making that transition in cloud. And we have to think about similar techniques and similar ways in which we can make this transition successful as well.

Speaker A: Many people and even many investors with Moonfare are asking us, what do you think about generative AI? And a few weeks ago there was, um, the incredible announcement from Deepseek. We all know this SoftBank invested 40 billion at a 300 billion post valuation, uh, in OpenAI. Um, and you have these emergence of platforms across the world. Uh, Europe is doing something with Mistral, et cetera. How do you see, uh, these platforms developing? Will there be national champions? So you have one or two anthropic OpenAI in the us you might have Sakana, an investment Khosla did recently in Japan, and then maybe, you know, a platform in Europe. Will this be like from geopolitical standpoint, regional platforms, or do you think there's a winner takes it all model?

Speaker B: I think I'm probably one of the least capable people to give you a geopolitical view. Honestly. Uh, it's not what I spend my time focused on. I spend my time trying to back businesses that avoid geopolitical risk and those macro factors that I can't control, uh, that's entire part of our strategy is to avoid those issues. My personal view, if you look back at what's happened in technology waves in the past, there's never been a national specific, uh, agenda. Now we have somewhat that agenda, I guess politically at this point in time. So perhaps that will happen. My personal best bet would be there will be four or five or six major platforms globally. There may be one or two regions, China being the obvious one, where there is more of a kind of walled garden and national approach. But uh, I think generally across the world, I don't see there being a Japanese champion, two European champions, three American champions. I think it's much more likely that three, four, five businesses will be pervasive across most of the world.

Speaker A: Let's talk about one of, I think the most successful investments he has done. Uh, I'm talking about Visma. Visma is a provider of accounting and payroll software from Norway. You acquired the company and I still remember this from my times at KKR, uh, back in 2006 for some 500 million. The company stands today as valued at 19 billion. Uh, that means you have been a partner for Visma for nearly 20 years now, uh, which is obviously much longer than the usual holding period in private equity. So how do you differentiate in your portfolio construction and thinking between those long term compounders and more, the short term success stories? Um, and what do the first half that others don't? And where do you see your investment approach evolving? We have all these continuation funds now and Visma is a great example. It made absolutely sense to keep the company, uh, in private hands in your portfolio.

Speaker B: Yes, I mean we're always looking to see if we can find businesses that have got this kind of like secular, decades long serial compounder kind of potential. Um, and unfortunately we're just not bright enough to find 20 of them. Per year. Um, but we have been fortunate over the last 20 years, we've probably found a dozen or so companies like that out of the probably 100 that we've backed. Um, and we've been fortunate that we've got our client support historically and today for when we see those businesses and we can justify that kind of multi decade kind of compounding, they've backed us to continue staying a kind of major shareholder of those businesses. So all those factors needed to kind of come together to kind of still be an investor, uh, 10, 15, 20 years down the line in Visma or Iris or PNI or Team Blue or Citation or a whole bunch of other businesses similar to this. Um, what's the difference between those businesses and the ones that are great investments but perhaps are three, five, seven year kind of holds? I think it goes back to a kind of Warren Buffett, um, idea which is the very best businesses are ones that have a great home market which they provide the best quality products and services and therefore customers can flock to them. In his world, it's Coca Cola or Amex or Apple or whatever it may be. But crucially, I think what most people focus on is that just that one statement that's not in itself sufficient to make a compounder, the thing that you need for a serial compounder is that business to also have a route to invest consistently excess capital and for that excess capital to be available, to be invested at good incremental returns. And so you get a lot of businesses that are the former and um, they're great in their own right, but essentially their market is limited and their ability to deploy lots of excess capital for decades is more limited. There are relatively few businesses that combine the first and then an almost infinite Runway for investing capital. So in Visma's case, Visma started as the leader in small business kind of tax accounting, kind of payroll software in a small number of countries. Denmark, Norway, Finland, Sweden, um, what we recognize is that we have that ability to transport that capability to lots of other countries. And that's nowhere near as easy said as done because you've got to understand the culture, the compliance rules, the tax rules, the regulation in all those other countries and be super sensitive to the entrepreneurs in those countries and actually to back them. So you have to have this ability to operate across 20 countries in a very kind of local way. But Visma had that from day one because they operated out of a relatively small local country, Norway, and they've therefore been able to export that now to 32 countries. And I hope it's going to be 40, 50, 60 countries in due course.

Speaker A: Look, Nick, I want to lean a little bit on your incredible experience as an investor over 30 years now. Um, I always say post financial crisis, what we've seen, 2010 or so until 21, I call it honeymoon time. Everything was great. Uh, no doubts about everything was going up. There's an investor, a very famous investor in the US who said to me, I don't even know whether I have a good investment team because everything went up. So not sure whether they are the best investors actually. Uh, but then things came, obviously 2021 to a sudden end and we are living in a very, very different reality. Uh, inflation, interest rates going down now, Trump's administration probably pushing again, inflation up in the us. In that environment, what do you see? How do you think private equity will have to adjust to this new reality?

Speaker B: Uh, I think it's pretty simple. You've got to be able to make a return when you've got higher inflation, higher interest rates, and for most of us, higher rates of competition as well. Um, and that fundamentally comes back to, I think, backing businesses that are an inherent right because of their quality to grow. Um, so you can no longer make returns from buying at the right price, leverage, cutting costs. If you don't fundamentally have a business that is growing top line revenues for good reasons, not because you're going to screw any customers, but for reasons that you've got more customers buying more products if you don't have those things, very difficult to make a good return in a higher inflation, higher interest rate environment. And so all the way back to 2001, our strategy has been about finding businesses that have products that delight our customers when more customers want to buy them and buy other modules around them. And therefore you've got high levels of organic revenue growth. So total hg portfolio if you aggregate it up is about 160 billion of enterprise value. Um, very. Those SAP guys are still a little bit larger than us, so we're number two in Europe. Um, but the thing that is really important is the 160 billion enterprise value business is growing revenues at high teens, kind of call it 15, 16% plus and EBITDA at 20% plus. And it's done that consistently for the last six, seven years in a row. So it's a relatively high growth kind of business. And that stems from products that customers want to. Ultimately, I think that's really the only way you can generate great returns in a tougher market environment.

Speaker A: I couldn't agree more. You will Know um, Nick, at Moonfair we are looking at some 500 investment opportunities a year. Only 20 make it uh, to the platform only. The best private equity managers, uh, we are backing. And what they have in common, all these 25% top quartile, top decile managers, is exactly what you have said. EBITDA expansion is the major source of value creation and not multiple arbitrage or financial engineering. So that resonates very, very well. Look, exit markets have slowed down and uh, obviously there's a lack of distributions, uh, which makes for some firms fundraising uh, more difficult. Um, you take a very almost mathematical approach when it comes to exit planning and you are pretty successful in returning capital to your uh, investors. So what is your strategy there? What is your thinking when it comes to exits?

Speaker B: Again, you know we, we were really fortunate. We had some clients that were um, I'm going to say very value added. You could say that they were very kind of um, clear and open minded with us. But 15, 20 years ago on what they liked and what they didn't like in our business at the time. And I guess our good fortune was we developed a culture of wanting to listen to them and being very open to continuously improve our own business. And one of the things they said about our uh fund in 2005, 2006 was essentially DPI quick cash returns wasn't good enough and m that the gap between gross and net wasn't good enough. And um, thankfully we can have listened. We understood over time what they meant. Frankly we weren't sure what they meant. First of all we had to go learn and listen. Um, and as a result we developed what we call a realization committee. So I mean it's kind of bizarre if you think about it like no private equity firm or investor, uh, just allows a deal partner to kind of run off and do whatever investments they want. They've got committee and processes and systems and all those kind of things. But when it comes to an exit, by and large most investors just let the individual deal or deal partners decide what to do. Um, and what you end up with is frankly what we had back in Cavoch 40506 which is some good behaviors and some good things, but generally where things aren't going as well. People through a genuinely positive desire trying to fix things. And the problem is most times they don't fix them. And so what happens in the average portfolio is you have some good exits early on and then you have some very poor investments that are left to the end and the fund kind of peaks in year three or four or five and then degrades to year 10 or 11 or 12. And if you want another buffettism that's like kind of cutting the flowers and watering the weeds, um, and basically what you've got to do to stop that happening is to reverse that. You've got to basically acknowledge that unfortunately some investments won't be as good and you should frankly sell them early to drive DPI and cash and you should keep your better investments till later. And so we have the benefit of frankly having realized that in 2005, 6, 7, implemented some processes that take a lot of time and effort to kind of put together and really make them work in practice. And, and then we've applied that very consistently since 2007 vintage onwards, which is why our DPI or cash return for every fund from 2010 onwards is basically top decile for the industry. Um, and we deliver 1x cash back DPI in 5 years versus the industry averages 8 years plus.

Speaker A: Look, in 2024 we saw that private equity was slowly bouncing back and we have an interesting, um, observation post Trump's election in November, we saw an incredible inflow on our Moonfare platform into private equity. So many private investors understood or have the conviction that now is a good time to invest into private equity. May I ask you about Your short term midterm 25, 26 outlook for the industry? Do you see things improving substantially? Is it this year? Do we still have to wait another year? EQT was uh, recently saying that they expect things to be back to normal in 26 and beyond. What is your view on the near term future of our industry?

Speaker B: I never know what normal is because. Was 2010 normal? Was 2015 normal? Was 2020 normal? Um, I think if we took a look back and said if you average the last decade or so back to 2010, 2012 and you took out the peak of 20 and 21, you said that's kind of normal. The average of that kind of like roughly decade long period. My guess is we're about a year away from us being in that kind of normal position where there's a roughly decent understanding between buyers and sellers. And so transactions can happen which need to happen. There's decent liquidity in the kind of debt markets. There's starting to be a better flow of exit opportunities. And so LP investors feel like they're getting a balance between cash invest and cash returned, which clearly they've not had in the last three or four years from the market. Yeah. So I think we're kind of in a, the bottom was maybe kind of like 12, 18 months ago. We're kind of rising, but you tend to rise in these early stages of market coming back relatively steadily. And then as we all know, six, seven, eight years from now, it tends to go a little bit crazy for a year or two. So I suspect we're in that kind of bottom of the S curve and it's getting a little bit better and things will feel better and more normal over the next year or two.

Speaker A: Nick we at Moonfair, we are in constant dialogue with our investors and uh, we have the privilege to talk to some of the smartest people in the industry. And what we are seeing is that post the election there is a clear shift or refocus on the US with the expectation that everything that the Trump administration does will foster will boost software investments in particular in the US we heard a few weeks ago about Trump's announcement of this Oracle and SoftBank and uh, 100 billion program just for AI. When you not now contrast and your focus is global, but more, as I understand in Europe, when you contrast the opportunities, Europe versus US, what is your view?

Speaker B: I think there's definitely going to be that kind of stimulus, um, no doubt on a kind of global kind of macro scale. Um, and again it's just a different type of investing. So if you're in later stage VC rounds, maybe even kind of startup kind of seed in a, I'm sure that's a big opportunity for you. That's not really what we do. And part of the reason we don't do that is in the same way that you may get stimulus. Now we all know that that stimulus kind of can't carry on for a decade. So at some point there's a drop off and there's the kind of corollary of that. And we just don't really want our returns to our investors to be subject to what happens politically because I can tell you for certain that's one thing we can't control. So we try and remove macroeconomics, political uncertainty, frankly, economic cyclicality from the investments we're making and try and find businesses where we've got underlying trends in German tax regulation or underlying trends in compliance in the health care industry that are not subject to frankly the vagaries of what any individual country or politician might do. Because I don't think we're getting paid to take that risk. Nobody's paying us to get the macroeconomics of a certain country. Right. Maybe there's other hedge funds that do that, but we definitely don't. What we're doing is backing businesses that consistently for decades have achieved 3, 4, 5, 6 times GDP type growth, 15% growth, whatever the economy's thrown at them. In 08 they delivered it. In 2010 they delivered it through the GFC, they delivered it through Covid, they delivered it through 22 and 23. When in theory there's a downturn, they deliver the same growth as well. That's what I think we're getting paid to provide to clients.

Speaker A: Thanks a ton. Look, I like to talk about a topic that is frankly on top of my mind, which is the future of Europe. And last year Nick, I had a very, very insightful deal talk with David Rubinstein, co founder of Carlyle. And he was very honest and open. He was very skeptical. He said that Europe has fallen behind as an entrepreneurial society and he was really concerned about uh, the status of the continent. And he said very clearly, look, he asked me, tell me one major global technology Europe really has produced in the last 10, 15 years. As a Europe based investor, what are your thoughts on it and where do you see Europe or how can Europe catch up versus uh, the US and of course then uh, versus China, which is more and more emerging.

Speaker B: Yeah, I mean David Rubenstein is a fantastic investor and an individual and probably three times smarter than me. So I'm definitely not going to try to argue with David. Um, if he wants a quick answer, uh, I'd go SAP, I'd go Dassault, I would go uh, ARM, which was developed in Cambridge about 50 miles from here, uh, Spotify, there's a few not bad fuel, there's a few not bad businesses. Um, so I think there is entrepreneurship and frankly even if you think slightly laterally, just outside the software sector, tech more generally, industrial technology, et cetera, there are some incredible Siemens, what it's doing in industrial automation software. From big companies to small entrepreneurial companies. There are lots and lots of examples where I think I don't subscribe to the kind of Europe's kind of gone backwards over the last 20, 30 years. I think it may be shed of focus. What I do think you have is a systemic advantage if you're in a single large homogeneous market that you can get to market typically with consumer orientated products, technology, products faster. So I think that's just systemic. I think if you think about, you know, the next Meta or the next Google or the Next kind of OpenAI, I think there is a systemic advantage that a US or a China has partly about the venture capital Communities and those kind of things. But actually it's about having 400 million people that all broadly speak the same language with the same governance, tax codes, and you can get to scale faster. And I think that's always for most of the countries, not just Europe, for most other countries on the planet, there are going to be barriers. As you move from Germany to France to Switzerland to the uk There are just barriers that you face. And so that's why some of those names we mentioned have tended to go to a larger market earlier, uh, to be able to kind of establish themselves as a consumer brand. So I think in that regard, that particular part of the technology market, it is less likely you won't have zero, but it's less likely that you'll have the same number in Europe that you do in America. Once you get below those kind of mega hyperscalers, I think there's a lot of innovation in Europe and there's plenty of examples. We just rattled five or six or seven off between us without thinking.

Speaker A: Look, Nick, uh, unfortunately we are approaching the end of, um, our conversation. Let me thank you really very much for all the insights. Fascinating also to hear the story and how you have shaped, uh, HG to what it became. But before we finish up, let me ask you two questions, uh, that I would really want to hear from you. Uh, the first one is which business leader do you admire most and why?

Speaker B: Uh, Buffett. Warren Buffett. Why? Um, deepest thinker, uh, most influential around how generically you think about investment over the long term, not over the short term. Um, and he hasn't applied that at all in software. So those lessons that he's applied in consumer markets, we've been able to take and apply to other markets. So, uh, number one on the investment side, but also as a human being, um, down to earth, humble, I think a guy that really understands people and has tried to understand people for his entire life and as an admirable human being as well.

Speaker A: Finally, there's one more question I have to ask you because I have four children. So I want them to learn from the, the best deal makers in the world. So what piece of advice would you give your younger self who would go back 20 or 30 years in time?

Speaker B: Um, there's lots of kind of personal advice you might give. But if it's going to be in a kind of semi career kind of business context, um, pick a growth sector, pick a sector that is going to be growing for the next 10, 20, 30 years, where the winds kind of in your sails and the winds not in your face. So I grew up in a mining town, went to the local state school. Lots of my friends at the age of 17 went to work down the local kind of pit. And what I say to my children is, look, I could have been the world's best miner. I could have been the Lionel Messi or the Ronaldo of mining and I still wouldn't have a job today. You can be a very, very average software investor for the last 30 years and you do okay.

Speaker A: Thanks so much. Thanks so much, Nick for your time today and for sharing your thoughts. It has been a fantastic conversation and to everybody listening, thanks for joining us to our dealtalk session today and we hope to see you of course at one of our next deal talks which are about to come. If you want to learn more about Moonfair or if you want to listen into our past deal talks, please Visit us on Moonfair.com Otherwise, hope to see you soon. Stay healthy.