Engineering Alpha in Private Equity

Paul Karner and Dave Mangot · engineeringalpha.fm

Engineering Alpha in Private Equity is a podcast about how software engineering and data science excellence create operational alpha. Hosted by Dave Mangot, the author of _DevOps Patterns for Private Equity_, who has worked with operating teams at Thoma Bravo, Hg Capital, and other top-tier PE firms.Co-hosted by Paul Karner, PhD, an economist with two decades inside PE-backed companies. Each episode explores the intersection of technology decisions and investment outcomes.

14 episodes

13d ago latest

weekly cadence

English language

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Episodes 14

Engineering Alpha in Private Equity Trailer
4mo ago · 3:58
Welcome to Engineering Alpha in Private Equity, the podcast about how software engineering and data science excellence create operational alpha in private equity. In this trailer, Dave and Paul discuss the founding thesis of the show and what listeners can expect. ## Topics covered - What "operational alpha" actually means - Who are Paul Karner and Dave Mangot - What you can expect from the show - The best ways to engage [Learn more](https://engineeringalpha.fm)
What's Engineering Alpha & Why You Can’t Just Rub AI on It
3mo ago · 28:05
Welcome to the first official episode of the Engineering Alpha and Private Equity podcast! Hosts Paul Karner (economist and data scientist) and Dave Mangot (DevOps expert) break down what "Engineering Alpha" actually means for middle-market PE firms. Moving past the old world of financial engineering, Paul and Dave explore how true operational excellence within engineering organizations drives outsized returns and high EBITDA. They also tackle the elephant in the room: AI. They explain why it's a tool, not a magic product, and why failing to build the right foundations will amplify your proble
Finding “Free EBITDA” in Cloud Contracts & The AI Optionality Playbook
3mo ago · 17:42
In this news review episode, we break down the recent wave of partnerships between major cloud vendors and private equity firms, starting with the Thoma Bravo and Google Cloud announcement. These partnerships highlight an immediate lever for value creation: enterprise cloud agreements that can drastically reduce operating expenses and instantly boost P&L. Beyond the immediate cost savings, we explore the strategic necessity of maintaining “optionality” in a highly uncertain AI landscape. We also issue a warning to CTOs: stop isolating your solutions architects in “innovation labs” and expectin
Uber COO questions tokenmaxxing
3mo ago · 6:12
In this hot-take episode, Paul Karner and Dave Mangot analyze a massive red flag in the current tech landscape: Uber's COO recently admitted it's getting harder to justify the money spent on AI "token maxing," while the company is slowing hiring to fund these AI investments. Dave and Paul break down why high token consumption often just creates stranded "inventory" rather than revenue-generating features, and why cutting your engineering labor force before AI proves its actual ROI is a massive mistake. Key Takeaways: - The "Token Maxing" Illusion: Why an increase in AI token consumption does n
Measuring the ROI of Tech Transformations
3mo ago · 23:48
How do you actually prove that a massive technology transformation is working? In Episode 4, we flip the script and dive into Paul Karner’s world of data science and causal inference. Using a real-world example of a private equity portfolio company that implemented machine learning to automate manual document review, Paul explains the critical process of tracking tech ROI. Dave and Paul break down why a tech transformation shouldn't just be a cost-saving measure, the nightmare (and necessity) of tying operational tech data directly to your ERP, and how to start with your financial end-goals an
The AI Amplifier Effect & Why Rework is Killing Your EBITDA
2mo ago · 50:02
In our first dedicated research episode, Dave and Paul are joined by Nathen Harvey, who leads the DORA (DevOps Research and Assessment) program at Google Cloud. For over a decade, DORA has proven that elite software delivery performance is a leading predictor of organizational performance, including profitability and market share. In this episode, we unpack DORA's latest findings on Artificial Intelligence to show operating partners exactly why "rubbing AI" on a portfolio company won't work without the right foundational capabilities. Nathen breaks down the dangerous reality of AI as an amplif
The 'Maintenance Window' Red Flag & The AI Death Spiral
2mo ago · 15:48
If a software company still uses "maintenance windows" to release updates, it is a glaring operational warning sign. In this explainer episode, Dave and Paul break down why maintenance windows indicate a broken software delivery culture that relies on subjective feelings rather than automated data. For private equity operating partners evaluating a new acquisition or monitoring a portfolio company, Dave explains why legacy practices like Change Advisory Boards (CABs) actually decrease stability. More importantly, the hosts reveal why trying to force AI tools into an organization that deploys s
Double-Speed Baseball and the new SaaS Multiple
2mo ago · 14:16
In Episode 7, Paul Karner and Dave Mangot unpack a core thesis of the show: why "agentic proficiency" is the modern equivalent of the SaaS multiple. While the ultimate goal of any portfolio company remains the same — satisfying user needs to generate revenue and EBITDA— the mechanics of how we deliver that value have fundamentally changed. Dave and Paul break down how AI agents drastically lower the marginal cost of delivering software and why achieving daily deployment is the absolute prerequisite for Product-Led Growth (PLG). The message is clear: if your portfolio companies aren't using age
Token Economics, Data Moats, and the Future of Tech Due Diligence
2mo ago · 48:59
In Episode 8, Paul Karner and Dave Mangot are joined by Dan Bender, Kirby Montgomery, and Jason Langenauer from the global tech due diligence firm Code & Co. (https://www.codeandco.com/) The team breaks down how the rise of AI has fundamentally changed the diligence process for private equity investors. The conversation shifts away from the hype of AI and dives straight into the P&L consequences of "token economics". The Code & Co. team explains why blindly throwing AI at a problem will wreck a software company's gross margins, why proprietary data is the only genuine moat left in the age of c
The AI "Hoax," Economic Accounting, and Nobel-Winning ROI
2mo ago · 12:57
In Episode 9 Paul Karner and Dave Mangot tackle a recent Fortune interview (https://fortune.com/2026/06/21/nobel-laureate-daron-acemoglu-ai-productivity-capitalism-democracy/) with Nobel Prize-winning economist Daron Acemoglu, who argues that the massive productivity gains promised by AI are harder to achieve than presumed. Paul puts on his PhD economist hat to break down what this skepticism means for private equity deal teams trying to manage their AI budgets. He introduces the concept of "economic accounting"—understanding the counterfactual of what a company could achieve without AI simply
The 85% Inventory Trap: What 28 Million Workflows Reveal About AI ROI
1mo ago · 29:05
In Episode 10 of Engineering Alpha in Private Equity, Paul Karner and Dave Mangot dive into the hard data from the 2026 CircleCI State of Software Delivery Report, which analyzed over 28 million CI workflows. While the tech world is celebrating a 59% increase in code throughput due to AI, Dave and Paul reveal a massive P&L red flag: 85% of that new code is getting stuck in "feature branches". This means the AI isn't generating operational alpha; it is generating expensive, unsold inventory. They break down why only the top 5% of elite engineering teams are actually pushing this code to product
3 a.m., the 2x Productivity Cap, and the ceiling of AI Automation
1mo ago · 23:48
In Episode 11 of Engineering Alpha in Private Equity, Paul Karner and Dave Mangot react to a recent Anthropic ad showcasing Claude Code automatically fixing a production bug at 3 a.m. While the ad promises a "find it, fix it, and ship it" utopia, Dave and Paul deconstruct why this is a dangerous fantasy for most mid-market PE-backed companies. They reveal why CTOs who have trained their engineering teams on AI are hitting a hard "2x productivity cap" — generating code faster, but failing to actually ship it. This episode is a roadmap for the actual systemic changes (like platform engineering a
Doing Math on Opinions: Why Bug Counts Aren't Science
25d ago · 45:12
Paul and Dave sit down with tech veteran and quality pioneer Elisabeth Hendrickson (former VP of R&D for Data Products at Pivotal). Together, they shatter one of the most common metrics used in private equity boardrooms: the bug count. Elisabeth explains why tracking and graphing bugs is actually just a statistical illusion—doing "math on human opinions" rather than measuring actual technical quality. The team discusses how quality directly impacts EBITDA through customer churn and outages, why your executive leadership team is your real "head of quality," and how automated testing serves as t
The 15x Fallacy: Why Coding Speed Isn't Your AI Bottleneck
13d ago · 46:41
In Episode 13, Paul Karner and Dave Mangot sit down with tech veteran Michael Frendo, the current CTO of New Relic (a Francisco Partners and TPG company) and former executive at Proofpoint (a Thoma Bravo company). Michael strips away the hype of "vibe coding" and shares the hard operational realities of leading a thousand-person engineering organization through the AI revolution. He reveals why a 5x increase in coding speed only yields a 15% overall efficiency gain, why Agile has created "bad habits" that are actively hurting AI deployments, and why the true P&L winners of the next 18 months w

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Episodes 14