In this episode of Behind the Deal, Thoma Bravo Founder and Managing Partner, Orlando Bravo, and Partner, Chip Virnig, sit down with Ping Identity Founder & CEO, Andre Durand.
AIR DATE:
June 5, 2025
LENGTH:
30:57
DISCLAIMER:
This podcast is for informational purposes only and does not constitute an advertisement. Views expressed are those of the individuals and not necessarily the views of Thoma Bravo or its affiliates. Thoma Bravo funds generally hold interest in the companies discussed. This podcast should not be construed as an offer to solicit the purchase of any interest of any Thoma Bravo fund.
Transcript
[COLD OPEN]
ANDRE DURAND:
Moments in time where companies go through nonlinear change, whether its market conditions or by their own doing, meaning disrupting themselves. We are entering the chicanes. In those situations, better to be private. So the decision in this particular case was, I said I wanted to play offense in the private markets rather than defense in the public markets.
[DISCLAIMER]
This podcast is for informational purposes only and does not constitute an advertisement. Views expressed are those of the individuals and not necessarily the views of Thoma Bravo or its affiliates. Toma bravo funds generally hold interest in the companies discussed. This podcast should not be construed as an offer to solicit the purchase of any interest in any Thoma Bravo fund.
ORLANDO BRAVO:
Welcome to Thoma Bravo's Behind the Deal. I'm Orlando Bravo, founder and managing partner at Thoma Bravo. That was Ping Identity CEO, Andre Durand, speaking with Thoma Bravo partner, Chip Virnig and me. Ping Identity helps the largest enterprises in the world secure their logins of their employees and customers, helping to keep systems secure, prevent fraud, and decrease friction. As companies undergo digital transformations. Thoma Bravo has been heavily invested in cybersecurity since 2008. We have a team fully focused on cyber, which is a big differentiator for us. We now have one of the largest cybersecurity portfolios in private equity, representing approximately $58 billion in total enterprise value, with total annual revenue exceeding $6.5 billion.
Thoma Bravo acquired Ping Identity in October 2022 for $2.8 billion in a take-private transaction. Subsequently, in August 2023, Ping Identity acquired ForgeRock, creating the market leader for access management solutions. The combined company is quickly approaching $1 billion in annual recurring revenue and generates significant free cash flow. While also maintaining robust growth and product innovation. So today, we'll uncover everything that went on behind the deal with a conversation between me, Thoma Bravo partner Chip Vrinig, who co-led the Ping Identity deal, and Ping Identity founder and CEO Andre Durant.
MUSIC TRANSITION
ORLANDO BRAVO:
Hey Chip, how you doing? It's good to see you man.
CHIP VIRNIG:
I'm doing quite well Orlando. Thank you.
ORLANDO BRAVO:
Chip, can we start by you giving us a high-level overview of Ping Identity?
CHIP VIRNIG:
Absolutely. So, Ping Identity is a leading provider of digital identity solutions for the largest companies in the world. Whether you're a large retailer, a bank, a hospital, or a government agency, you have two things: employees and customers. In an increasingly digital world where everything is connected by software and applications, these employees and customers constantly need to log in and access applications in a seamless way so they can pursue transactions, access data, et cetera, and Ping allows us to be done securely to protect against data breaches, fraud, and also empowering digital success.
ORLANDO BRAVO:
And Chip, when did you and our team start tracking Ping Identity and start reaching out to the company?
CHIP VIRNIG:
We first met Andre back in 2014 when he was exploring at the time a growth round. And then we also participated in his larger buyout in 2016. We watched his IPO in 2019. And we really got interested in the company thematically in kind of late 2020 during COVID. Ping was originally built on the premise of allowing the workforce – the employees of large companies to access applications in a secure manner – enabling those logins and those transactions to be secure and efficient. And that was their primary use case, this workforce use case. And they had a lot of success doing this. But what really got us interested was when they applied their same directory that houses all the identities of employees in an organization that had tremendous scalability for enterprises, but when they apply this to a more complex, higher growth TAM with customer use case, is what got us excited.
So to give it a simple analogy, you know, Orlando and I are just one employee and one identity at Thoma Bravo. We'll never be multiple identities at Thoma Bravo. Employee growth is what it is. It's not a booming growth area of the economy, but when you think about when we go home and we leave Thoma Bravo, we're hundreds of identities. With everything that we have digitally that we access, healthcare records, credit cards, banks, airlines, retailers, anywhere you shop, that's an identity. So if you think about all of the listeners, all of you, you go home, you have hundreds of identities. I'm sure five years ago you had half that, and I'm five years from now you'll have double that. And that customer use case was what really got us excited to pursue Ping because they had a high-growth customer use-case business within their 400 million of revenue when we acquired it that was growing way faster and thematically, that was what was most tangential to digital transformations that got us really excited about owning this asset in the end of 2022.
And one of the things that we were a little bit reluctant to do something more aggressive earlier, we wanted to get more traction on this use case, which we think is incredibly exciting. What we mean by this is digital transformations are everywhere. Our thesis on Dynatrace, one of our best deals of all time, was thematically centered around digital transformations are everywhere, every company is becoming a software company and software has to run perfectly to allow these digital journeys to thrive, and similarly with Ping, all these digital transactions and interactions not only need to run, perfectly, which was the Dynatrace thesis, but they need to be secured. And that was really what got us excited about Ping as more and more of their revenue shifted towards that use case during COVID. And we started really spending time with Andre to kind of shake this deal loose.
ORLANDO BRAVO:
I love hearing all that because one of the things for our listeners is how long it takes us to develop a thesis and a relationship with a company and how long we need to watch it over time. And when you talk about Dynatrace and also SailPoint, which we have had such a long history with, this asset was extremely strategic to us. It's like right down the middle for what we do.
CHIP VIRNIG:
Yeah, and I think that's great because SailPoint, we learned so much from the first journey with SailPoint leading to their first IPO. And that got us a lot smarter in identity and allowed us to really appreciate kind of the value proposition and the value of the customer base for Ping through that transaction and that journey with SailPoint, coupled with our learnings on the broader digital transformations with Dynatrace that really led more to this emerging customer use case, which we'll talk about more on this podcast. That really got us ready and well positioned versus our competition to uniquely view this asset and opportunity.
ORLANDO BRAVO:
We've owned companies around this space that have been hugely successful for our investors. You have a deep thesis on the company. You've known the company, you've tried to buy the company before. How did this culminate? Why did it happen now? How did that come together?
CHIP VIRNIG:
It took a lot of patience. We were very active with Andre, and he was always willing to take a call, but didn't quite see why now. I mean, he had only been public for a few years. Things were going well. They were accelerating. But I thought their stock was underappreciated. And I think what really clicked was Andre being a founder, hearing about our experiences and our views on what we did with SailPoint, the learnings with Dynatrace, and once he kind of realized that we had done real work here and we knew the market, and we weren't just financial operators chasing something on value –when that clicked, he got bought in. And he realized that we could do something bigger together. And, you know, look what we did with ForgeRock and the company, it's almost a billion dollars. So it took a while, but honestly that –it was the buy-in from him really thinking we were the great partners to kind of take him to where he wanted to be as a founder and a visionary, and I don't think we could have gotten there without our prior track record of these other deals you mentioned.
ORLANDO BRAVO:
Absolutely. It's incredible. One of the things that I'm the most proud of, of Thoma Bravo, is how our colleagues collaborate to form a deal and improve a company. But this was an entire team effort because I knew that you had a relationship with Andre and you were always reaching out. Our partner Seth Borough had a relationship with Andre, and he was always reaching out, and the two of you were setting up Zoom calls with him and Zoom calls with Andre and me overtime I remember having that one in New York When I'm in the middle of other deals and and the two of you call me and say, “Hey, why don't we set up a Zoom with Andre?” And that went great and we were able to over time develop this momentum to create a great opportunity and it's what you said, the catalyst at the time is that he got to the point as a founder of a great company where he wanted to do something transformative and what makes me so unbelievably happy about that is that you were able to put that in place on our team for him. And you mentioned ForgeRock, now that was transformative and as a public company, there was no way that could have ever been done.
CHIP VIRNIG:
No way. And, you know, everything I said about getting his buy-in and him seeing the work that our team had done and our knowledge of the market and our track record, but the icing on the cake to really seal the deal and get him there was all that great work and background but then putting you on top of all that and just showing that we as a partnership, we are all in it together and having our founder Orlando personally take the lead on the deal at the end and spending time with Andre, also a founder. That really kind of made him feel like we were unique because we were getting it from all angles, as you mentioned. And I think that was the icing on the cake. And that is what Thoma Bravo was all about. You know, we're one organization, we all help out on deals in our own way, and getting you involved there and your attention and a moment's notice really got his attention because I think that was unique and he was not used to that. Dealing with all the financial institutions that he had the privilege of working with over his 20 plus years as a founder and CEO of this company.
ORLANDO BRAVO:
It's the ability of you, our partners, and our organization to connect with the best companies and the best founders, the best leaders, to do something transformative. When Andre said that, I wanna do –I'm at the stage in my career when I wanna do something really big, we were like, so do we. We've been doing software buyouts for 25 years. You think we just wanna do another plain vanilla buyout? No way. And that is what our firm is about. Look what you did with Dynatrace, look what we did with SailPoint, look what our partners did with Adenza, creating a completely new company that has been hugely transformative, even to NASDAQ. And this is such a good, good, excellent case study about that. Chip, can we talk a little bit about ForgeRock? Most industry participants, either financial buyers, strategic buyers, people who watch this space, including that specific identity, cybersecurity space. They thought that putting these two companies together was impossible. How do we do that?
CHIP VIRNIG:
This was where the deal got really fun, right? This was –it wasn't a prerequisite of buying Ping. You know, we bought Ping as a public company and that was step one. In our kind of dreamy aspirations of what we could do with the business, you know, as far as M&A and consolidation, ForgeRock was our top target. You are right, I think a lot of our peers probably wouldn't have been willing to make as an aggressive of a move in M&A because this was almost a merger of equals. It was a very sizable investment and a very complicated integration. You know, taking two companies that kind of play in a similar field and dealing with all those customers, all those products, all that, you know, how you articulate that to the community of customers and analysts and industry veterans. That was very complicated, but that is what's unique about us. We were willing to do it. And we had an exceptional management team at PING, including a founder and visionary, Andre Duran, who created this entire market, you know, 20 plus years ago.
So, I think having him and his knowledge, having the unique ability to partner with someone that created a market category, doubling down with a formidable competitor that creates a lot of new paths to growth for us got us really excited. And when we talk about the use case that I mentioned earlier, ForgeRock, almost all of their revenue was tied to this higher growth customer use case, which is also very exciting for us at Ping because at the time, Ping only had about a third of its revenue, albeit growing very fast in this customer use case. So combining the two companies allowed us to double down on our favorite part of the deal thematically.
ORLANDO BRAVO:
Just so much value was created by this merger between the two companies. In essence, we created a new company that didn't exist before that is a huge leader in identity. And for the listeners out there, this comes from two perspectives. Number one is organizationally. Doing a deal and buying a company is extremely hard. Look at Ping standalone. We just talked about it, we had to convince Andre to work with us, convince Andre why being private was much better than being public, convince the board that this was good for all the public shareholders. Get to a price that led to a good outcome for the shareholders and worked for our investors and our firm. That is a lifetime worth of work and it's very, very, very difficult to do. But we did that twice and our team did it twice and to convince Ford Rock that while doing a deal with them with all those prerequisites, they were also gonna be merged into Ping Identity. It really is one of our best case studies of integration and creating value and creating something transformative and new. Really, really proud of the team on that.
CHIP VIRNIG:
The deal was incredibly unique from start to finish, obviously the combination with ForgeRock, but anytime you get to work with an innovator and a founder, makes the process and what we do incredibly unique. So, working with Andre, seeing eye to eye and what he wanted to build, it reminded me a lot of what we experienced with working with Dynatrace that also had a founder element to it, as well as SailPoint, which had a founder element to it, and the other thing that made it unique is there was really little to no competition from any of our peers. And our industry is full of amazingly brilliant investors. So when no one else is around something, it's unique, but it makes you nervous because you're like, why is anyone else, what are they not seeing? But it also, it pushes you to really trust your diligence and the theme that you're pursuing, and I really think that was very rewarding to kind of secure a pretty much a proprietary deal, which is always some of our best work.
Not just do it once, but to do it twice with a ForgeRock combination and really trust your diligence, the learnings we had from SailPoint, which is in a similar area of identity, the learnings that we had on Dynatrace to really make us feel conviction that digital transformations were big and now they needed to be secure, and essentially double down on the thesis and on the diligence with the ForgeRock deal. So, it was very unique for those reasons to me personally, and I'd love to hear Orlando's view of what was unique to him.
ORLANDO BRAVO:
You know, I haven't told you this, but what was unique for me about the deal was working with you on it. At Thoma Bravo, we always work in at least pairs. So you have another senior partner that you can bounce off your thoughts, your ideas, your decisions, and they kind of let you know whether you're on the right track or not. In this deal, Chip was the lead, but we had Seth Boro, who runs our entire infrastructure and cybersecurity practice, who I've worked with for over 20 years, and I was heavily involved in the deal as well because I love deals and I love working with companies and that's what I do for most of the time.
There were so many important decisions to make on this deal. So many of them, and you took the lead and you had just come off a very difficult sale of Imperva & Thales. It was a great deal for Thales, it was a good deal for us, and it took a lot of time and a lot of effort, and Seth and I were there watching you at every turn, making the right decisions, and these were huge corporate decisions. For example, the decision of leading Andre and working with Andre, who had never done a deal like this, most people haven't, so it's nothing about experience or not, but what team does he select out of these two companies to take the new combined company forward? And you make the right calls at every time. Integration. How do you run an integration process in every functional area of this company? How much cost do you reduce? How much do you invest? How do you set the right priorities on what to do? Do you integrate the products? Do you not? How do offer customers the best solution and the best value long-term. So many, many decisions, and you led it with the CEO of the company just in an exceptional way. That is transformative and that was – from my perspective – that is the coolest thing by far for me about the deal.
MUSIC TRANSITION
CHIP VIRNIG:
I really appreciate that, I know it's not a [chuckles]– it’s not meant to be a bromance on this podcast. That hit hard. Thank you.
ORLANDO BRAVO:
It's a bromance. We got the bromance here in Miami.
Up next, Chip and I have a conversation with Andre Duran.
Welcome to all of our listeners. I am joined here by my partner, Chip Vernig, and our guest of honor, Andre Durand, the founder and CEO of Ping Identity. Andre, how are you?
ANDRE DURAND:
I'm doing great Orlando. It's great to be here.
CHIP VIRNIG:
I can kick this off. First question, Andre, as a founder, every founder has to continue to innovate, but there's probably not a single-sector category in the world that has more competition and more consistent needs to innovate than cybersecurity. Incredibly complex. How do you balance disrupting yourself continuously while also kind of keeping your edge in the core that created Ping? I'd just love you to walk us through as a founder and just the big milestones along the way.
ANDRE DURAND:
You know, there was definitely an evolution or a stair-step function, if you will, organizationally, where you had to recognize that when we were two products, call it one that was the cash cow and one that was new, that we needed to learn how to walk and chew gum at the same time. And just even the move from one to two products – the first product, which had become mature and well-respected and was generating a lot of cash and then the new product, which either, you know, expanded the market in an adjacency way, or in some ways, even did what our old product did in a new deployment model. Call it cloud versus software.
It was exceptionally challenging to get the organization into that dual thinking, if you will. But once you understand that you have different products at different levels in their maturity, and the goal of those products over time are to, you know, the more mature products to generate the cash that then funds and fuels the innovation and growth. There's no end to that model. Your new product today becomes your mature product three, four years from today, generates the cash with which you then get to expand your market, invest in innovation for growth.
CHIP VIRNIG:
What was the original thesis that created Ping 20 plus years ago?
ANDRE DURAND:
In 2002, that famous cartoon of a dog, and it says, “Nobody knows you're a dog on the internet,” which is today probably a 40-year-old cartoon, it did occur to me that we can't transact on the internet with anything of value if the entity with which we're dealing with on the other end is either unknown or untrusted or a dog. That everything of meaning of value, and even then you could see that –this was during the dot com boom –everything was gonna become digital over time. So the original insight, if you were, was that we needed to move from people on the internet who were inherently anonymous by default to people that were connecting to the internet who were inherently identified by default. And it was in the identification of everyone and everything on the internet that we could begin to transact in confidence.
CHIP VIRNIG:
So Andre, I think it'd be helpful for the listeners if you can just give a kind of a simple use case at scale of Ping and the value proposition for some customers.
ANDRE DURAND:
Yeah, happy to do it. And there's so many exciting use cases going on right now. I'll just touch upon two that I think are super interesting. Many of our retail customers have identified that log-in friction keeps them from sales. And so they might run a promotion or a sale, someone might click on a link, put something in the cart, maybe not have the conviction to purchase at that moment in time and leave and essentially abandon the cart and come back some weeks or months later with some other promotion, and so what they wanna do is something pretty simple. They just wanted to keep their customers signed in, and so we've all experienced this on Amazon and other retailers where you open your browser and you're logged in.
To do that, to stay signed in, turns out there's a lot of identity security under the covers there. We want to make sure your account hasn't been compromised, that your session hasn't been hijacked, because obviously there's possible retail fraud there that would cost them physical goods. So this whole notion of Keep Me Signed In, which is a user experience thing for retail, but obviously pretty important, and while minimizing the implication of the exposure to fraud is something that we've done now for a lot of retailers. It sounds so simple, but under the covers, it's actually pretty sophisticated but has massive implications for both the experience that customers have interacting with their favorite brands, but as well as for the upside, meaning the amount of sales that they actually get.
We've seen some phenomenal numbers where all of a sudden once Keep Me Signed In is enabled for their customers, customers are happier, but they buy a lot more. So just a great example. Another great example we've had is of one of our banks. Now, many in the IT industry are now dealing with essentially either interview or in some ways call it onboarding fraud, meaning people that they interview remotely are not the people that show up. It's a little bit more rampant in certain industries, but obviously the integrity of the individuals that we interview in the human supply chain of companies is pretty important. And what this company has figured out, leveraging some of our new technology is they — during the interview process — they do a very quick self-service identity verification using our technology in a mobile phone. And on every subsequent interview — again, leveraging our technology — they have a way to be certain that the person who did the first interview is the person who did the second interview, the third interview, is the same person who shows up and ultimately becomes employed, and I just think when we talk about the integrity of people in our organizations, we have to do that. We have to know that the people that we're interviewing and the people that are showing up to work are the same individuals. Sounds simple, but there were a lot of gaps in that process through COVID, where a lot of onboarding was remote and not in person.
CHIP VIRNIG:
Well, that's a good segue to the topic that's front and center to everybody, which is AI, and that example just made me think about deepfakes.
ANDRE DURAND:
Yes.
CHIP VIRNIG:
And think about AI in your business – you know, we look at AI at Thoma Bravo and then cyber just simply makes the bad actors more bad more easily – and a tailwind for kind of the use case and the need for cybersecurity solutions. Can you walk the viewers through how you're using AI both within your products and then also what you're seeing for your use cases and if there's any tailwinds that are helping those use cases because of AI and fraud and bots and things like that?
ANDRE DURAND:
Such a massive topic and so exciting and so dynamic right now. I've come to appreciate that all technology, and especially transformative technology, has a for good and a for bad or for evil use case. And AI is no different. So in our world, AI powering deepfakes and essentially attacking human recognition. What I see, can I believe it? So my eyes and ears no longer are trustworthy sensors of real versus not real, the deepfakes have gotten so good. So there's an element of AI where we need to leverage AI to detect the deepfakes so that the recognition technology which sits underneath securing everything is actually trustworthy and the integrity of those interactions. And so we're doing that, right? We're leveraging AI to detect deep fakes.
There's another component of this where agentic technology is going to allow us to automate a lot of things that are otherwise pretty expensive and pretty manual in the management of an identity life cycle, meaning employees coming on board, customers coming on board, gaining access to systems appropriately, and then ultimately off-boarding those systems. There's a lot of manual tasks in that. And agentic AI is gonna allow us to create micro automations, which takes a lot of that manual work out.
There's a third dimension here, which is also super interesting. It’s this notion falls into the category of personal AI agents or agentic, where we as either individuals or as employees or as administrators will have admin helpers. Think about them as like good bots versus bad bots. We normally talk about bots in like a bad sense. We're trying to detect humans from bots because the bots are presumed malicious, but we're not far away from where the bot is an agent of a human rightfully doing things, you know what I mean, that the humans task that AI agent to do. And we have to recognize a good bot from a bad bot, so to speak. And we have to authorize those good bots.
So everything related to can we authenticate the bots, do we properly authorize the bots to inherit permissions that they should have if they're doing work for us, so to speak? And there's this whole element of how are we going to identify, authenticate, authorize and govern the good bots, the helper bots, and recognize the difference between the good bots and the bad bots. So Ping is actually working on all of these fronts, recognizing deepfakes, building infrastructure that will help us govern, if you will, all of this emerging helper bots AI and agentic technologies that will work on our behalf, you know, 24/7 to get tasks done, and then automate a bunch of things that were manual.
ORLANDO BRAVO:
We had that great meeting in New York. You remember that?
ANDRE DURAND:
Yes.
ORLANDO BRAVO:
When we were starting to discuss your business and a potential partnership with you. There you shared so many great insights on founding a company. Can you share with the listeners, was there a particular moment where it was either make or break for you and your company at the beginning?
ANDRE DURAND:
I've had many make or break moments, as you'd imagine. Ping is now my third company, so thankfully fewer in my third than there was in my first company, but there was certainly a definitive moment where we had made the decision to shift from a perpetual software license to a subscription model. And in that shift, it became evident that the cash flow, the money that we were collecting up front under a perpetual license, when you make the shift to subscription, divide by three, roughly, roughly. And so, all of a sudden now, the need for a capital cash infusion to fund the business model shift from the perpetual license to subscription was necessary.
Those are hard conditions under which to fund a company when you've decided to make the change and you've actually rolled out the new pricing model and then the realization that you're not gonna have all three-year deals, and you're not going to collect all three years –three years up front, right, which would have been equal –that the better model is you bill annually, you collect annually, and you build that recurring cash flow into the business model. That was certainly a moment where we were vulnerable to needing to go raise money to fund that shift, and it was under pretty tough circumstances. We had fully committed to the shift, so there was really no backing out of that.
And we got it done but those were one of those moments where you bet the farm on a conviction that the recurring business model, from a cash flow and other reasons, just aligning yourselves with earning your customer's business every day, which you have to do in the subscription model, versus the old days where you sold them something and then it was, you know, they had to implement all the risk was on the customer. That was probably one of the biggest ones that I had at Ping.
ORLANDO BRAVO:
I appreciate you saying that. Chip, you’re looking at me because you know I'm a big believer in funding your operations with the business you have. And you're absolutely right, you have to pay for your cost. Your costs don't change. Your costs are the same. And all of a sudden, subscription is great and all, and that's all we do now. But then, instead of getting paid 100 cents by your customers, you get paid a third, and you have to fund all that, and the way you did it was remarkable. Andre, you've gone from literally the entire life cycle of a company, founding it, seed investment, venture investment, private equity investment, being public. Which has been your favorite?
ANDRE DURAND:
You know, I've enjoyed all phases. They're all different. And I think there's an appropriate capital structure and an appropriate risk to market conditions that if you are lucky enough or good enough to kind of time mapping the amount of risk the company needs to take, the amount of change that it needs to undergo, mapping that to the capital structure matters. So, public markets love it –to draw an analogy here –when you're in the chicanes, meaning undergoing business model change or maybe disrupting your core product, and the predictability through the change is not as clear, there's not a great time to be in the public markets because there's a lot of value in predictability and being smooth in the public markets. So if we were on a race track, best to be on the public markets as you enter the straightaway and you're on the gas, full stop. And it's nothing but a straight line with your foot on the grass. Moments in time where companies go through nonlinear change, whether it's market conditions or by their own doing — meaning disrupting themselves — we are entering the chicanes. And in those situations, better to be private. So the decision in this particular case was, I said I wanted to play offense in the private markets rather than defense in the public markets. And it was acknowledgement that there was a moment in time with changing market conditions for us to put ourselves in sync with the market, meaning valuations would be depressed. It was an opportunity for us to grow through inorganic acquisition where the prices might be favorable, if you will. And you wanna do that as quickly as possible, and you want to do it really under the — out of the scrutiny of the public markets where so much value is placed upon the linearity of the business. And this was a moment in time where we're going through a nonlinear growth spurt.
ORLANDO BRAVO:
Now, Chip had been calling you for a long time, Seth Boro, my partner, had been calling you for a long time. Then I started calling you and had that Zoom with you before we met in New York. Did we just — over time, were we patient then, and it was the right time for you, or was it something that our team did, or what was that aha moment that said, ‘okay, let's pursue and take private with our firm, with Thoma Bravo’.
ANDRE DURAND:
So the persistence mattered, right? At some point as a founder or an owner, obviously my fiduciary was to investors, both short and long term, right. So you're always kind of judging what are the short term, what are long term trade-offs. Obviously, we had to clear a hurdle on that front, but the bigger ultimate decision was I could see through the conviction that a desire to make a non-linear change in the business was evident and that couldn't have happened with one outreach. There had to be a series of outreaches which basically was an indication of the level of commitment to want to do something pretty significant. And then of course our dinner cemented that. I mean to see that you were personally involved and then see, okay, we now have a moment of opportunity together, where privately, we can do some things together that Ping didn't have the balance sheet for, nor were we capable of that level of risk appetite, obviously, to combine companies as we did post the, take private, if you will.
But that enticed me, right? I'm looking for non-linear ways in which to progress. And you know there's a bit of stars alignment in that but ultimately it was not a people in conviction and the risk appetite and the skill set to actually go make good on that and, and I could see that through the determination and the follow through that you had.
CHIP VIRNIG:
So two years into this relationship now, how have we lived up to expectations?
ANDRE DURAND:
Yeah, so exceeded on every front, honestly.
CHIP VIRNIG:
Did you hear that? I haven't screwed up yet.
ORLANDO BRAVO:
I'm just in awe right now listening to you two. Please continue. This is just great.
ANDRE DURAND:
Yeah, so, and this will be one of my questions to you later on, right? The conviction that maps to the risk appetite and where do you get the conviction that maps ultimately to the risky appetite? And obviously, great skillset lowers both perceived and real risk and there was great skillset here. The appetite then to make changes fast and – look, I didn't even fully appreciate what fast looked like until I kind of came into this environment — I'm sure I'll get some questions now about, you know, subsequent transactions that we made in the speed of which they took place, but I've come to believe that when you do want to move fast and you do you want to move decisively, it's not a group think. The group think will get you to the most diluted acceptable answer, but it won't get you into the extraordinary answer. And the extraordinary answer to me isn't delivering the inevitable on time. The extraordinary answer are things that compress time. That's how you change markets, not evolve with the markets. It takes singular, if you will, conviction, typically, to set goals that are extraordinary, not based in normal time frames, if you will, and being private actually is the optimal, I'd say, ownership structure in which you're not diluted by multiple interests, if you will, all trying to figure out what the common denominator is, because that common denominator typically is diluted. We're going here, we're going on this time frame, and I appreciate that.
ORLANDO BRAVO:
That's great to hear. For us, we really were very clear on your message that we were aligned on the nonlinear aspect. You said, if we're going to do something, it has to be transformative, and then from our side, these relationships have to be transformative because, I really want listeners to understand this, you said, I have a fiduciary duty to my shareholders short and long term. That means that groups like us, including our transaction, we have to pay a big premium to the stock given your fiduciary duty. So in order for us to overcome that premium, we by definition have to do something non-linear because you have a public stock, in order then for us to meet our return to our investors. So we were aligned, but very important that personal promise. We heard you loud and clear that it had to be nonlinear and transformative, so on our side we're putting a lot of pressure on our system to make sure we can deliver something like ForgeRock. And that clear communication and that implied promise matter so much to us and I'm glad we're here and we made that work.
CHIP VIRNIG:
So let's talk a little bit more about ForgeRock. So for the listener's benefit, I mean, we did our deal with you and Ping, and we closed it kind of Fall of 2022 for around a little over $3 billion. You were around $450 million top line at the time. And as we were closing, and all the processes and all that work to get ready to go back private, come up with a business plan to support our investment, we tell you it's time to buy ForgeRock for over $2.5 billion, and we had just closed our original deal. What went through your head when you heard us call you and tell you that we were gonna announce that with you running the whole company?
ANDRE DURAND:
Well, there's only one emotion associated with non-linear moves that big, right? And it's both excitement and a little bit of fear at the same time. But to me, those are the indications that we're spending our time on the right things. Like that is the emotion that goes along with it. I think in this particular case, we are at a time in this market where scale matters. We serve the global 5,000. There is implied stability to the customers that we serve, that are we gonna be around? Because they wanna make this decision for the foundation of their security and identity once a decade at best. And so our ability to serve them in these mission critical tier zero global markets, weekends 24/7, 365 days a year, planes have to fly, money needs to transact at banks, scale matters in this particular case.
And so I was excited about the opportunity that you would take two leading companies, independently substantial but together more than substantial for the global $5,000 market that we serve, and do something really extraordinary. The combined innovation and experience of the two companies and the markets we serve is unmatched. And it was a scenario where you really put two companies that are meaningful –don’t get me wrong, but maybe not the most meaningful by default in a market segment. And this represented that move, a lot of hard work, but it singularly represented a step up opportunity that we couldn't have done ourselves.
CHIP VIRNIG:
And maybe for the benefit of our listeners, you know, most mergers are, you're a big company buying a smaller company. This is basically a merger of equals, which is innately more complicated. But most of the time when you buy a company, even another take private like ForgeRock was, you know you have three- four months to get the deal closed, you have full transparency, open communication with the team, and to do your business plan so that when you close a deal you're ready. We had a unique situation here, this public knowledge, that we had a lengthy close between announcing ForgeRock and closing ForgeRock. There was a government review process, that's public knowledge. And that three-month process took almost a year and we had no visibility and zero access. And then one day we were told, you have 24 hours and you're closing. And then we just had to go, what went through your head at that moment? Because we were not expecting that originally, and I think we told you, we gotta get this thing closed tomorrow. And then we need a business plan enacted in less than 100 days.
ANDRE DURAND:
Yeah, that was an interesting time. And look, I vividly remember it. It was a Monday afternoon that we got clearance that we could merge. And then it was essentially communicated that we would close and announce by Wednesday at 8 a.m. So, we'd like close in a day and announce the following morning at 8 am. So we got — and given the nature of the transaction and the review that was going on, as you said, we couldn't do any pre-integration planning. So we essentially did the press release at eight o'clock and we were 10 miles behind the eight ball at eight o’one. It was — we had to start from a dead standstill and essentially create on the fly the entire integration plan as we were essentially doing it. So it obviously was a crazy time. We made the decision, and Orlando, thank you, as I kind of look back, right, on this one, it was a little crazy, but absolutely right decision. You know, a lot of people contemplate a more thoughtful integration that takes a little bit more time to assess everything, or essentially a rip the bandaid off and go. And the assessment there is option A, option B, and which one is gonna get you to the optimal outcome? I am absolutely convinced now on this one, speed mattered. And there is a moment in time, not forever, where organizations, when they come together, expect change. And if the change doesn't occur in that window, things, essentially, things solidify in ways that you don't want them to solidify because they haven't been converged, you have to take advantage of that window. So in our particular case, from eight o’one Wednesday morning, you might as well say through the end of the year, we essentially did about 100% of the hard restructuring and organizational integration under some really tight timelines, like Orlando, “Andre, you have nine days to pick your team.”
CHIP VIRNIG:
I remember that.
ANDRE DURAND:
And then you have two weeks or ten days beyond that to pick the next level of the team. So obviously it was a lot of extreme, and you don't get it 100% right, but by and large, speed matters.
ORLANDO BRAVO:
That is just great for our listeners. You mentioned it, Andre, the deal. People expect change in the deal, I've had many, many debates with phenomenal private equity firms that all of them to a T tell us, why is your group so focused on making the changes at closing or soon to closing if you're not gonna sell the company or take it public for many years after, but what is this? And one of the true people-related reasons and operational reasons is that employees, and colleagues, and workers, and management, they expect changes now because there's a new owner, there's new structure, there's a new company coming together. If you surprise them two years later, then that's not really cool for them, unless there's a big change in the economy. So it's kind of nice using the opportunity of a deal to make that transformative change, and you were just the best partner in doing that. There's nothing like an open communication and very collaborative and good debates to get to the right decision. Maybe we should talk about some of the fears that we all had in doing the integration. You said something before, it was exciting to look at this deal or to get it done, but also scary. We're also scared all the time. We've done so many deals and that scary component hasn't gone away. We've just gotten comfortable in living with it so that you can actually do the work. But it's equally scary to us when doing these things, no matter how many times you do them. But maybe we can talk about two or three of the things that worried us that I feel, in whatever comes up, that weren't issues at all, that we got through very quickly.
ANDRE DURAND:
Taking myself back to that moment, right? I would say, you know, you have initially, you have two leaders in a box, and you want to make the right decision, but as always, you don't have perfect information. I had history with one group of people, I didn't have history with another group of people. So how do you make a fair assessment, a fair choice? How do we get enough eyes on who are the right go-forward people in this particular case? And so while speed is the mandate, accuracy also matters. And do we make the decisions right or mostly make them right? I think initially it was all about that. The focus was on, we knew that if we could find what we feel were the appropriate go-forward team, and it was balanced, obviously, between the two organizations. That was also immensely important. Speed and accuracy became the mandate.
In hindsight, I think we largely did it right. And again, that adds to my conviction that we didn't give up a lot on accuracy for the speed, and I would take the speed. I'd take whatever mistakes were made in speed over the alternative. I think the alternative would be much less. I would say that that was the number one thing. You get the people right. The second thing is that one is a selection that we make on individuals, but there's the counterpoint, which is the individuals making the selection on us. And there's also the reality that the company doubled. So it wasn't the same company that we were managing. So you have multiple things kind of going on under the covers. You have the initial assessment of who we feel are the right go-forward individuals. You have to make that one. And then you have a subsequent moment in time which individuals are moving from, ‘I'll wait and see’, is this now the new thing I wanna be a part of? They're not fully emotionally engaged, there's a bit of reservation there as they have to figure out, are they gonna emotionally engage to this new thing? And then you compound that with, you have a company that's twice as big and the skill sets to succeed here are not the same as what they were before. So there is a secondary set of things which have to normalize in order for the company to actually be standing on firm ground. From which to succeed as call it twice as big on forward. But again, I'll kind of go back to saying I wouldn't change anything about what occurred. I just have more awareness now of the steps, but I think the actions that we took were the appropriate actions.
ORLANDO BRAVO:
Carl Thoma — I remember like yesterday in 1998 — we were trying to put two little companies together. And I remember exactly where I was in a conference room and he told the leader of our company, remember, now you're gonna be the leader of both so you owe both people the same amount of loyalty and respect. And what was nice about working with you on this, I had that in the back of my mind, but I didn't need to mention it. You were ahead of that. You actually mentioned it to me, and I was like, “Okay, we are in the right place.” And that is such a huge leadership concept. It requires a lot of experience to do that.
CHIP VIRNIG:
Yeah, for me, a big memory, and something we definitely got right, that simplified the complexities of this merger of equals was we had a simple unified product vision because both companies served a similar market, similar use case, similar customers, but we had pretty complex product portfolio even though it was all going towards one thing because you're both fairly mature companies. You have modern SaaS, multi-tenant, growing really fast. You had older on prem environments that were kind of stable. Loyal customer base that's been on for over a decade. And I remember a meeting in Denver, one of our big ops reviews around integration at your headquarters once we did the merger, and Orlando was asking me how it was going, and half of your business and your revenue was on prem subscriptions, not growing that fast, and half multi-tenant SaaS growing fast. The same for ForgeRock. And we had hours of meetings with your head of R&D, had a project on how we're gonna unify the past, unify these more stagnant on-prem businesses. In one combined product portfolio to simplify the story. And I think Orlando said it so well. He's like, why are you spending so much money on this plan and so much time and energy worrying about unifying the past when all the customers and our investors, we should care about the future? And put all that time and energy in building the newest, greatest, most scalable, innovative cloud solution in the market. And I thought that was like such a basic kind of piece of advice, but it served us so well because it solved two problems.
It allowed us to accelerate our cloud story and simplify one of the biggest things with the merger that gave customers angst is we had a lot of customers wondering, are you gonna end-to-life this product? Are you gonna end-to-life this product? And Orlando's advice saved us time and money, got us to advance the roadmap on the cloud, but also allowed us to keep the customers calm, which is priority number one, because it's like why — we would never turn that off. You're happy there. When you're ready to go here, we have the best product for you and it's gonna get even better to put more money in it now that we're combined. And I thought that was great advice because it simplified the product portfolio story and allowed us to double down innovation.
ANDRE DURAND:
Yeah, 100%. So maybe this is now the second item outside of the people comment that I just made. In January, when we were essentially kind of through the go-to-market org redesign, so we were one selling team, not two selling teams as we entered the year, became very evident that fear and certainty and doubt by our customer base, many times propagated by our competitors around what's going to happen to this technology or that technology. Are they going to end-to-life it, to your point? That we needed to provide clarity. In the enterprise market, they hugely value stability and insight in the future. You don't wanna pull the rug out from a core infrastructure that sits underneath how the entire company runs. And authentication is one of those technologies. It is tier zero. It sits underneath access to every application, for every worker, for every contractor, for every customer, and so we decided we needed to go on the road. And we needed to do it as quickly as possible.
As a forcing function, in March, we did a 24-city road show in March. Put it together in six weeks. And the goal of that was to, in essence, provide visibility and stability that we were not gonna pull the rug out from any of our customers on either side. But that we would build a unified vision where every customer will benefit now from the unique innovation, meaning non-overlapping innovation, of these two companies combined. So it was a two-part message. You're safe, and there's a brighter future. And coming out of that roadmap, 24 cities in March, done from scratch in about six weeks, Q2 and then [Q]4 just accelerated. There was, you could tell, reservation from about the time of the announcement, August timeframe roughly, through that period of time where people rightfully were wondering were they on the right or wrong side of a bet that was now happening with two companies combining? And that was critical that we got in front of customers and told our story of how we would allow them to grow from where they're at.
ORLANDO BRAVO:
You really focused from the beginning on the two most important things, what is right for the people and what is right for the customers. And notice that that's what we've been talking about. It was who are the right leaders here for the combined company going forward that can serve all these employees and lead them correctly and let's go see all the customers, let's make sure we're doing all the right things for them because we have so many tools now to be so much more competitive and add so much more value. And those are really special things that you get from being a founder. You're so close to both of those. You've been in this environment for a very long time, and you know it inside and out, and you've made a lot of really, really close relationships through it, and you gain it through a lot experience. And that's one of the reasons we paid for what we paid, for the company, and allowed to work for your former shareholders of the deal. So it's employees, your people, and your customers.
Well, thank you so much, Andre, for coming on today. It's great to see you and it's great to revisit kind of what we've done, and I know we have just an incredible bright future together.
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And thanks as well, Chip, for getting this deal and making every right decision. Thanks for closing it.
CHIP VIRNIG:
Thanks for closing it and advising us along the way. Thanks to Andre Durand for sitting down with us today. To learn more about Ping Identity, visit pingidentity.com. If you liked this episode, be sure to subscribe to Thoma Bravo's Behind the Deal, wherever you get your podcasts. Andre is also going to join Orlando and I on next week's episode of Beyond the Deal. Our mini series where we get to ask him anything. Catch it on YouTube and in this feed next week. I'm Chip Virnig, thanks for joining us.
ORLANDO BRAVO:
Behind the Deal is brought to you by Thoma Bravo in partnership with Audacy’s Pineapple Street Studios. Join us next week for more stories behind the deal. Thanks for listening.
MUSIC OUT
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