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What's Engineering Alpha & Why You Can’t Just Rub AI on It
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 problems rather than your profits.
Key Takeaways:
- Defining Engineering Alpha: Why optimization and efficiency inside the engineering organization are the true drivers of operational leverage and higher ROI.
- The Deming Philosophy: How W. Edwards Deming’s statement that 94% of problems are systemic (and thus management's responsibility) applies directly to PE investors and C-suite executives.
- AI Reality Check: Why AI is an amplifier for both good and bad processes, and why you shouldn't just mandate an "AI story" from the board without establishing the foundations in the DORA research.
- The CircleCI Report: Exploring recent data showing that while AI helps developers write more code, it's often trapped in feature branches, has longer outages, higher customer churn, and negative ROI.
- The New Valuation Metric: Why "agentic proficiency is the new SaaS multiple" and how building scalable foundations improves unit economics and drives higher valuations.
Links & Resources Mentioned:
Podcast theme music by J-KIND.
Connect with Paul and Dave on LinkedIn to join the conversation.
Learn more
View all episodes
By Paul Karner and Dave MangotWelcome 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 problems rather than your profits.
Key Takeaways:
- Defining Engineering Alpha: Why optimization and efficiency inside the engineering organization are the true drivers of operational leverage and higher ROI.
- The Deming Philosophy: How W. Edwards Deming’s statement that 94% of problems are systemic (and thus management's responsibility) applies directly to PE investors and C-suite executives.
- AI Reality Check: Why AI is an amplifier for both good and bad processes, and why you shouldn't just mandate an "AI story" from the board without establishing the foundations in the DORA research.
- The CircleCI Report: Exploring recent data showing that while AI helps developers write more code, it's often trapped in feature branches, has longer outages, higher customer churn, and negative ROI.
- The New Valuation Metric: Why "agentic proficiency is the new SaaS multiple" and how building scalable foundations improves unit economics and drives higher valuations.
Links & Resources Mentioned:
Podcast theme music by J-KIND.
Connect with Paul and Dave on LinkedIn to join the conversation.
Learn more