Investing in enterprise software might not sound like the world’s sexiest career choice, but it has worked out pretty well for Robert F. Smith, the founder of Vista Equity Partners. With a net worth of $6.7 billion, Smith is currently the wealthiest Black person in the U.S. and the 451st richest person in the world.
For a billionaire, Smith keeps a pretty low profile, rarely granting interviews and quietly growing his firm. But when he does make headlines, two sides of Smith reveal themselves: the first, an ardent philanthropist who is committed to giving back to his community, and the second, a player in what authorities call the largest-ever tax evasion scheme, which involves the very investor who first took a chance on Smith and Vista.
So, how did he get where he is today? Smarts and tenacity certainly don’t hurt, and Smith displayed both from an early age. As a high school student in Denver, Colorado, Smith, the son of two high school principals with PhDs, set his sights on an internship at Bell Labs. There was only one problem: the internship was for college students only. Undaunted, Smith called the company every single day for five months to present the reasons why he should get the job instead. When a student from MIT didn’t show up, Bell Labs called Smith and offered him the internship. It worked out for the company – Smith developed a reliability test for semiconductors during that internship.
Armed with the lessons from that early work experience, Smith got a degree from Cornell University in chemical engineering and later started working for food giant Kraft. While there, Smith secured two patents to make coffee brewing more efficient before heading to Columbia University to score an MBA.
After graduation, Smith took a job in the mergers and acquisitions department of Goldman Sachs, and stayed for six years. This was the job that led Smith to the world of enterprise software. In 2000, he struck out on his own after Robert Brockman, a Texan who made a fortune off automotive software, offered to stake his first private equity fund. Brockman ultimately ponied up $1 billion for the fund. Though Smith would later tell federal prosecutors that there were strings attached to that money inherent in the way the deal was structured, Vista was born.
Although it is a private equity firm, Vista has been described as the fourth largest software company, trailing only Microsoft, Oracle and SAP. Vista’s companies deal in enterprise software, including some that make blood tests more accurate (perhaps Theranos’ Elizabeth Holmes should have consulted with Smith) and oil wells more efficient.
From 2000 to 2020, Vista routinely generated a 30% return for its investors annually. As of June 2021, Vista had more than $81 billion in assets under management.
What keeps Vista humming along at the top of its game? It could be Smith’s unique approach to hiring. Vista’s employees are not typical for private equity or for enterprise software companies. Rather than seeking out candidates from top colleges, Smith prefers to hire based on personality traits. Vista has a proprietary assessment test that potential employees must take. The standards are high: Roughly 125,000 people have taken Vista’s aptitude test and just 6,000 have been hired.
Smith’s company is no less systematic in its deal-making. Vista has boiled down its buyout process into 110 steps known as the Vista Best Practices. Applying these practices is the key to maximizing profits at the software companies it acquires.
The firm’s success has put Smith in an elite group of Black billionaires in the U.S. According to Forbes, Smith’s $6.7 billion sits atop the list, followed by David Steward, founder of World Wide Technology, with $3.7 billion, Oprah Winfrey with $2.7 billion, Kanye West with $1.8 billion, and Michael Jordan rounding out the top five with $1.6 billion.
As his personal wealth grew, Smith distinguished himself as a philanthropist. He has signed on to The Giving Pledge, making a commitment to contribute the majority of his wealth to charitable causes during his lifetime.
He hasn’t been shy about making major donations. In 2015, he committed to paying for the education of all of the Nigerian girls rescued from the Boko Haram. In 2016, Smith’s charitable foundation pledged $27 million to the Susan G. Komen foundation, $39 million to preserve the Harriet Tubman National Historical Park and other Black heritage sites, and $48 to the United Negro College Fund. He has also been the chairman of Carnegie Hall since 2016.
In 2019, Smith gave the commencement address to the graduating class at Georgia’s Morehouse College. During that speech, he told the roughly 400 graduates that he was paying off their student loans so they could enter the workforce unburdened by debt. In total, Smith’s gift to the graduates came out to around $40 million. A few months later, Smith also committed to paying off their parents’ student debt.
But in 2020, the other side of Smith became public for the first time when the IRS accused Smith of tax evasion on $200 million in income that he held in offshore accounts. Smith reached an agreement with the U.S. Department of Justice to avoid prosecution, admitting to filing false tax returns for a decade and agreeing to pay a $139 million fine.
As part of the deal, Smith agreed to help the DOJ build a case against Brockman, the one who helped make Vista happen. Brockman now stands accused of hiding $2 billion in income in an offshore trust. (He has pleaded not guilty and continues to battle the charges.)
In a statement to prosecutors that refers to Brockman as “Individual A,” Smith described efforts to conceal money offshore as baked into the original deal the two struck back in 2000 to launch a private equity firm – though Vista itself has not been accused of wrongdoing. Smith and Brockman were also subsequently named in the Panama Papers detailing offshore tax havens.
When the news broke, many who knew Smith struggled to reconcile the generous man they knew with the one described in the government’s allegations, but one thing is clear: Smith’s commitment to giving back remains steadfast despite the controversy. Smith, his wife, Playboy Playmate of the Year Hope Dworaczyk, and their children (Smith has four with Dworaczyk and three with his ex-wife) rode out the pandemic at their vast ranch outside of Denver. From there, Smith coordinated an effort to ensure that low income students had access to the online learning they needed. Smith is a 50% owner of the educational software provider PowerSchool, and he saw to it that schools in need were given free licenses. He then appealed to AT&T and Apple for help in making sure low income families had access to the internet and smartphones, so kids wouldn’t fall behind in their educations.
Smith is focused on putting the matter behind him. According to the New York Times, he said in November “I’m moving forward. I made right with the government. I’m absolutely committed to continuing my important work, my philanthropy, returns to all stakeholders.”
