Permira’s Brian Ruder talks AI, Squarespace acquisition, and the value of co-leadership

It has been a busy year in the private equity realm, with countless big-money acquisitions unfolding. The take-private space specifically has seen some sizable transactions, with private equity firms spearheading more than a dozen billion-dollar deals for public tech companies.

London-headquartered Permira was a key protagonist, joining Blackstone to acquire European online classifieds group Adevinta for $13 billion, and in October, taking the popular website building platform Squarespace private in a deal eventually worth $7.2 billion.

It’s not just billion-dollar acquisitions that interest Permira, though. In addition to closing a fresh €16.7 billion buyout fund last year, the company has separate funds that take minority and majority stakes in earlier-stage, high-growth companies. Its first such investment was in Sweden’s Klarna back in 2017, a fintech giant that’s only now preparing to IPO eight years later.

“We’re still invested in Klarna,” Permira’s new co-managing partner and co-CEO Brian Ruder confirmed to TechCrunch. “Generally speaking, with these minority growth strategies, you don’t control the exit, and therefore we embrace being in these companies for a long time. But we also kind of have to be in these companies for a long time.”

As we approach the tail 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 technology sector, AI, and having two people who equally share power at the top.

Two by two

While many organizations are embracing new models of leadership, including co-leadership, the idea has long been popular inside Permira. Indeed, Kurt Björklund co-managed Permira alongside Tom Lister beginning in 2008. When Lister stepped aside in 2021, it left Permira with just one person at the helm — an unusual position for a company that adopts a co-head strategy across most of its investment teams, including technology, services, consumer, and climate, with healthcare alone led by a solitary leader.

“We just really like the co-leadership model — partly to address the challenge of the loneliness of being the leader. It really helps to have a co-ideator,” Ruder said. “The key thing about any leadership role is the speed to a good decision, and the faster you can make really good decisions, the better you’re going to be. I would be slower to come to the same conclusion if I can’t co-ideate.”

With both Ruder and Dipan Patel landing in the co-driving seat on September 1, and Björklund becoming executive chairman, normalcy resumed. But notably, in addition to co-managing partners, Ruder and Patel also attained co-CEO status — a new title at Permira. Was this a sign that the role had changed, or perhaps a signal that industry leadership titles were infiltrating private equity? The truth is somewhat more mundane, albeit practical. It’s really to clarify who’s actually managing things.

“The title of ‘managing partner’ has been diluted at a lot of other firms,” Ruder said. “There’s basically this title inflation across the industry. There are firms that we would count in our peer group that have multiple pages of managing partners.”

‘Digital backbone’

When TechCrunch chatted with Ruder way back in 2017, a core focus of the conversation centered on private equity’s growing attraction to the tech sector. This was off the back of a swath of high-profile take-private deals. In the intervening years, Permira itself has snapped up a number of public tech firms in multi-billion dollar transactions. This includes email security company Mimecast, which Permira bought for $5.8 billion in 2022, and customer communication platform Zendesk, which went private the same year in a $10.2 billion deal led by Permira and Hellman & Friedman.

Fast forward to today, and Permira says its funds have invested some $28 billion in 80 technology companies through the years, spanning everything from SaaS and cybersecurity, to fintech and online marketplaces. The company is also now being led by Ruder — who co-led the company’s tech investment team from 2008 — and Patel, who was also on Permira’s technology team from 2009 to 2018 before moving to the consumer side.

So is Permira really all about tech now?

“We’ve always been a growth-centric, growth at scale, private equity firm,” Ruder said. “It’s not exclusively tech, but tech — and I mean digital across the board — is the predominant share of all that market, so very naturally, during the firm’s 40-year history we’ve become very tech-centric. The way we phrase it is that we have this core digital backbone that goes through all of our strategies.”

So even though Permira separates out its investment strategies by verticals, the “every company is a software company” mantra, while clichéd, rings truer than ever.

Take luxury footwear brand Golden Goose, which Permira aquired for $1.3 billion in 2020. You wouldn’t call it a “tech company” per se, but technology is central to how it operates. As part of its push to rely less on multi-brand retailers, its pursuit of direct-to-consumer (D2C) strategies is paying dividends for the company, which has attributed a sales surge to this new D2C approach.

“Much of what Golden Goose has pivoted to during our investment period with them is online,” Ruder said. “So even accessing the online avenues and channels for businesses that we wouldn’t consider to be ‘tech’ businesses, is a big part of what we’re doing across the board.”

Permira’s largest take-private tech deal of 2024 is another example, and it involves a company most people probably haven’t heard of. Adevinta, which the Norwegian media group Schibsted spun out in 2019, controls dozens of online marketplaces across Europe and the Americas — a figure boosted after it acquired eBay’s classifieds business for $9.2 billion in 2020. There’s little question Adevinta is an operator of digital brands, but how such consumer brands acquire new users requires a distinct level of expertise to that of, say, deep enterprise tech.

“It’s a collection of some of the best classifieds assets,” Ruder said. “And the plan is to very much focus on running the individual classifieds businesses in the best possible way for their geography and vertical. I have built a management team that’s able to do that, and been really happy with the caliber of team that we’ve been able to build with that in mind. These are long term, very high double-digit growth markets.”

AI with everything

Naturally, Permira is also very focused on AI, but it’s not likely to be investing in some pre-IPO juggernaut like OpenAI or Anthropic. Instead it’s focused on — and learning from — how AI is being applied across its portfolio.

Zendesk, for example, was already embracing AI before Permira & Co. took it private two years ago, but the surge in generative AI has really spurred Zendesk into action. Earlier this year, Zendesk acquired Ultimate to bring AI agents into the mix. It also acquired AI-enabled quality assurance (QA) startup Klaus. The company has also replaced many senior executives, including co-founder and CEO Mikkel Svane, who made way for Permira partner Tom Eggemeier in 2022. Since then, Zendesk has appointed a new CIO and CFO, while a new head of engineering and AI, Shashi Upadhyay, joined from Google this month.

“With Zendesk, we have really lent into the generative AI world,” Ryan Lanpher, Zendesk board member and Permira’s new co-head of tech, told TechCrunch. “We’re seeing tremendous adoption from our customer base. Zendesk’s traditional customer base were already digital native and early adopters. We think Zendesk is one of the fastest growing AI businesses out there at this point.”

It’s impossible to discuss AI without mentioning cloud computing, two domains that are highly synergistic and complementary. Just as cloud computing boosted software, enabling new business models with higher scale and margins, Ruder reckons AI will also create a similar tailwind.

“We think AI is going to be another step function like that,” Ruder said, adding that this will require companies to more fully embrace the cloud.

“Across all industries, we’re seeing CEOs asking their CIOs what they’re doing about AI,” Ruder continued. “And the answer increasingly coming from those CIOs is that they’d like to be doing a lot with AI, but their infrastructure isn’t yet ready to take advantage of it all. We think there’s actually a lot of opportunity and pressure for a significant upgrade wave to push that continued on-premise software install base into the cloud, modernizing data infrastructure and architectures in order to enable AI in a way that didn’t happen in prior waves.”

Square deal

As with Zendesk, website builder Squarespace was already starting to embrace AI before Permira came calling, recently launching a new suite generative AI tools dubbed “design intelligence.”

Permira first revealed plans to acquire Squarespace in May at an enterprise valuation of $6.9 billion. Soon after, an advisory firm recommended that Squarespace shareholders reject the offer, particularly as Squarespace’s financial performance was in the ascendency and its outlook was strong. Ultimately, Permira had to up its offer to around $7.2 billion.

Some 18 months previous, however, Squarespace’s market cap was roughly half that, suggesting that Permira might have missed out on a bargain. But that’s just not how it works with big, publicly-traded businesses such as this.

“To make a transaction at the scale of Squarepace, it’s got to be the right time both for us and the company,” Ruder said. “Especially for public companies — you can’t buy those companies at the low-end, as it’s very hard to get boards to transact there. And justifiably so — it doesn’t make a lot of sense for those boards to want to sell unless the company’s in distress. And the quality businesses that we invest in are very rarely at the point where they’re in distress.”

Squarespace’s original founder and CEO, Anthony Casalena, is also staying firmly in place. For a company that has been around for some 20 years, making a return trip to the public market, it would seem unusual that a private equity firm wouldn’t look to shake things up at the top. But this is where Ruder stresses that while some private equity firms are all about salvaging companies in trouble, its focus lies in procuring “quality assets” that are fundamentally healthy. As such, the majority of the investments it has made from its current buyout fund involve the founder in some way.

“Our strategy is to find best product in really good markets and back that,” Ruder said. “The vast majority of private equity on our scale is all about maximizing EBITDA margins in the near-term, but we are believers that we can generate better return to the power of compounding behind great unit economics. And that approach tends to be very appealing to people who care about where their businesses go. And for that reason, we kind of gravitate into situations where we’ve got founders.”