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AI & Digital Transformation Drives Value Across Private Equity – Part I
by Eric Walczykowski
A new approach is emerging in how organizations - particularly private equity backed software and SaaS firms - evaluate and optimize their technology investments. Recent years have seen business efficiency and technological differentiation become key factors in investment thesis outcomes, alongside the more traditional value creation levers.
I recently had the pleasure of chatting with Faros AI founder and CEO Vitaly Gordon, former leader of Salesforce Einstein, about how data-driven insights are reshaping digital transformation strategies and creating new opportunities for value creation in private equity portfolio companies.
Be sure to catch Part I of the interview here. Below is a summary of key points from my conversation with Vitaly.
The Origin of Faros AI
After leading Salesforce Einstein's AI practice, Vitaly founded Faros AI to address the lack of data-driven approaches in engineering teams - an ironic gap given engineers' natural mathematical strength. Faros AI optimizes software development by treating code production as a manufacturing process. The platform reveals development lifecycle bottlenecks, preventing misguided solutions like hiring more engineers when quality assurance is the true constraint. This approach improves development speed, quality, and overall return on investment.
“Think about it like a factory that produces code, even though code is an intangible good,” Vitaly told me. “That process is like manufacturing. You have development, then quality assurance, then you build and deploy. Each of these stages can be optimized, observed, and monitored for possible bottlenecks in each stage of the process.”
Targeting Inefficiencies with Data Analysis
Faros AI identifies bottlenecks by analyzing engineering metrics based on DevOps Research and Assessment across 1,000 companies, connecting over 100 disparate systems into a unified dashboard.
Like an ERP, this dashboard collects and standardizes data from fragmented engineering tech stacks. The platform tracks key indicators like deployment frequency, change failure rates, and resolution time, enabling organizations to identify problems and optimize engineering investment returns.
As Vitaly describes it, analyzing engineering metrics provides private equity firms with crucial insights for both due diligence and value creation - helping evaluate true team efficiency, identify technical debt, and assess the true source of developmental delays before acquisition.
Post-deal, this data enables firms to target specific inefficiencies rather than blindly increasing headcount, accelerate product development without proportional cost increases, and drive valuation through quantifiable engineering improvements, creating new opportunities for value creation across portfolios.
Focus on AI Adoption Over Choosing the Perfect AI Tool
Leaders should prioritize widespread over finding perfect tools.
Vitaly offers up a great analogy: Just as no CEO would tolerate hiring dozens of interns only to have them sit idle at their desks, organizations can't afford to ignore AI tools that offer intern-level capabilities at a fraction of the cost. These digital assistants are ready 24/7 to multiply your team's productivity across every department.
Give teams freedom to choose tools within budget and commit to using them, rather than endlessly comparing options. Through practice, teams will discover which tools suit specific needs. Broad adoption of any AI tool beats limited use of the "perfect" solution.
“PE firms partner with us because they understand the importance of maximizing every dollar,” Vitaly told me. “The traditional PE playbook focused on digital transformation and best practices for sales and customer success. Now, technology differentiation has become critical, with quality technology, velocity, and innovation driving organizational success.”
Top Takeaways
Success in today's digital transformation landscape depends on data-driven decisions and rapid AI adoption. This is particularly crucial for private equity backed companies, where technology differentiation and innovation velocity have become key drivers of value creation, moving beyond traditional operational improvements.
Bespoke knows what it takes to find the right CTO who embraces AI and leverages data to make value driven decisions.
Organizations that embrace this approach are best positioned to maximize returns and lead in an increasingly tech-driven future.
Look out for Part II where I continue my conversation with Vitaly diving deeper into the importance of AI adoption and how AI can help with your 2025 strategic planning.
About Faros AI
Faros AI helps companies like Discord, Vimeo, and Coursera improve engineering productivity and optimize the developer experience. Powered by the cutting-edge Lighthouse AI engine, Faros AI delivers real-time insights, uncovers bottlenecks and their root causes, and offers personalized recommendations to boost velocity and quality.
Connect with Faros AI to learn more:
About Bespoke Partners
Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors. Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.
Connect with Bespoke Partners to learn more:
Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.
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