Medallia

And you've got now Thoma Bravo.

Obviously you had Medallia, which is obviously quite a, you know-

Right

... well-known return the keys situation.

And, you know, when cracks started to appear with Tricolor and, uh, you know, other, uh...

Medallia especially, which was a big private, uh, equity, uh, deal, uh, go, uh, uh, Thoma Bravo, Thoma, Thoma Bravo, whatever they are, um, that came a cropper and they lost 5 billion of equity, and now it's owned by its private credit lenders, KKR, Apollo, a- and Blackstone.

Um, you know, a lot of, uh, retail investors have been pushed into these funds because of, as you said, the, the higher yields that have been promised.

And, you know, when the cracks started to appear, like, late last year, earlier this year, they tried to redeem more than they were allowed to.

It wouldn't surprise me one bit if it occurred in the private credit market, which has grown to be huge with much less regulation than there is in the Wall Street banking sector.

And who knows what the risks are.

I mean, Medallia was a cautionary tale as far as I was concerned.

Yeah.

I guess it's hard to ignore there's been a lot of noise recently, both in public and and the Saskapelips that we've heard a lot about.

At the time of this recording, we've seen, for example, Medallia, Atoma Bravo-owned software company being taken over by lenders in one of private equity's biggest losses.

How do you read that situation from the viewpoint of an investor focused on downside protection?

Yeah.

In Q1, if you recall, Bcred took extra measures to fulfill elevated redemption requests.

Bcred's year-to-date performance has underperformed peers due to some idiosyncratic write-downs, such as those from Medallia and Affordable Care.

But fundamentals from EBITDA growth to interest coverage appear healthy, according to Glenn Shore of Evercore ISI.

Shore saying in a note this morning, quote, with the alts catching a bit in recent weeks, there was some hope that the negative private credit headlines and wealth channel concerns were starting to fade further.

But it was very much driven by what the company needed at the time.

When I left that company, so now I had been running marketing and product, and I went to a company called Medallia, it was actually a similar driver where I met the CEO and founder there.

His name was Berger Hald.

And we had lunch and I was introduced to them through Sequoia.

Company winds up, can't make its payments, can't make its interest obligation, winds up owned by the lenders.

Now, you might sound like, hey, Patrick, does that ever really happen? That just happened to a company called Medallia that was owned by Toma Bravo.

for like $5 billion.

So like, if you want a good case study for your crew, even though it's not cyber, on like why I worry about this stuff, that's a really good example.

Ended up going to business school, joined GE, learning more about commercial functions.

Like, how do you actually bring things to market? How do you actually talk to consumers and add value to those conversations? Then, you know, moved from GE to Medallia, a tech company.

There, speed of innovation.

How do you move quickly in an agile way? Then Wells Fargo, which was more about like, okay, now you're doing it.