Startups & Venture · August 2026
O'Driscoll was picking apart the Silverlake bid for Workday as a leveraged buyout, where the whole return depends on precise entry pricing and a modest overpayment drops it from acceptable to regrettable. He set that against his own business, where being in the right company swamps what you paid to get in. He named Cursor and OpenRouter as the cases that make the point, and called the buyout the exact opposite kind of bet.
Transcript
Yeah, it's just a lot of change. I don't know anything inside. I just think Greg Brockman took over, right? And brought in the Wiz guy. Just had enough of this Salesforce crap, right or wrong. Actually, if you look across all of AI, a ton of Salesforce executives have been recruited, right, to come in and help. And you can make fun of it. Like I used to make fun of how back in the day Salesforce hired Oracle executives because they took shots at Oracle, but you need folks to know how to scale. What is Salesforce at 45 billion run rate, 50 billion run rate? I mean, Anthropic's past that now, right? Open AI is past that. So you don't want to hire kids. You want to hire someone that has some idea how to play. So Salesforce is about it, right? But if you step back from it, I'd rather have someone from Wiz that is close to technology, that is in a hyper-competitive space rather than asking how many seats of Slack you want. It's just a very different go-to-market motion, right? It's very different.
Jason, you said if you have not already hit your end of the year goal in terms of product and you're not well into 2027, you're behind. I'm making assumptions. I don't imagine workdays quite at the cutting edge like two of your companies at 2027. Already hitting those goals. And Silverlake circles a $43 billion take-private bid for Workday, one of the biggest SaaS buyouts ever. We've got two of the best SaaS minds in the business here. Guys, what should we take from this? SaaS isn't dead. One of the biggest firms, one of the biggest buyouts. The stock popped 18% afterwards. Wow.
I think what you can take from this, because the SaaS isn't dead thing is just too simplistic. I think what you can take to this is a very financially oriented, wily savvy buyer is willing to bet money that they can buy this at a constrained price, lever it, and generate a return because the revenues are sticky enough to allow them to pay down the debt over five years and with reasonable multiple stability, sell it on and make a 20% IRR plus or minus. I mean, I ran the numbers. That's the bet. So it's not, quote, dead, but what it is not is wildly exciting. What it says is, this is the mature phase of an industry when it's not about wild growth. It's not even about untempered growth. It's literally about someone saying, this thing is growing at 13% year on year. We can buy this thing for, was it roughly five times revenues, 16 times trailing EBITDA. We'll probably leverage it, you know, two or three times and four or five times in EBITDA, but it's going to be a big equity check. And then you run the LBO model and you say, you know, you keep it at 35% operating margins for five years. You use all that cash. It's roughly 10 billion a year in revenue. So it's like 3 billion a year of cash. You pay down the debt and the interest. And, you know, provided you buy right, you can make 20% and almost a 2x over four or five years. I look at that deal and I go, I'm torn. Because first of all, I think Silverlake are wildly smart. It's very interesting when you run the sensitivities. If you pay like 20% too much, it dips down into the mid-teens. It's almost the exact opposite of venture. In venture deals, if you're in the right thing, it almost doesn't matter what you paid. You see cursor for details, see open router for details, right? This is the exact opposite. This is fine, precise financial engineering. If you're wrong by 20%, 30% on price, you know, your IRR dips from 20, which is totally acceptable at scale, to low teens, in which case you wish you hadn't done the deal.
Can I ask a question? Precise financial engineering for a four to six year hold period. Six years ago, ChatGPT didn't exist. Are you able to do fine, precise financial engineering in a world where we move so fast?
I don't think system of record is, I think it's a moat, but I don't think it's a ticket to growth. This is, I think, super important. And it's something that everyone on X gets wrong. It's great to have a system of record, which Workday has, even with AI and LM's help. It's very hard to churn or you just don't want to churn. But it sure as hell doesn't mean I want to spend more money with that vendor. That's their challenge. But it sure as hell means the five years are far more predictable than 95% than poor Monday, which we love or others. We have no idea where Monday or even HubSpot will be in five years at the SMB level. We know pretty much where Workday is going to be. 10 years, right? And so I think this growth versus retention is misunderstood. There is a little bit of upside in this deal, which I don't know if it's part of Silverlake's calculation. The CEO came back. One of the co-founders came back. Anil came back. He came back. He hired his successor when times were easy, just before AI. He brought in a great knobs and dials co-CO, you know, like our friends at Daniel at UiPath and others and realized if I ain't going to work today, came back. So I don't think Silverlake is planning on Anil like radically changing it, but I think if he does, there's real upside to this. Maybe instead of their 20% IR, it could be a game changer. If he creates the agentic version of Workday, they at least have the founder back in the saddle doing it. And that would make me feel a lot better if I were Silverlake that I have upside.
But it wouldn't be in the damn base case. Jason, you framed the base case exactly correctly. It's 5.3 times 200. In other words, what this says is financial minds will pay five times revenues for system of record growing at 13%. Anything that's not a system of record, anything that's not going as fast, price accordingly. Because you're right. There's no way you'd apply the same kind of leverage to, for example, a to-do or a task management or project management software or a website building software. What this gives you is a sense of what the baseline is for best in class LBO takeouts. If the Airtable bending spoons give you an idea of what it is, if you just, you know, if you don't have that kind of system of record, you get 2.7. If you're vaguely profitable and in a space where, as Jason says, you can predict five years, you get 2.7. And what Workday says is if you've got 30% operating margins, modest growth, but you have a system of record where you really can believe in the next five years, then if you're lucky, you get 5.3 times revenues. That's the bid-ass spread right now. Contrast that with the game for Open Router where they're going to get, I think they're trailing revenues, plus or minus 100. You know, they're going to get 70 times trailing revenues. Which game would you prefer to play?