Software Costs Collapse While AI Maintenance Remains Unknown
Code & Co's Dan Bender and Kirby Montgomery explain why dark factories and AI code generation create unmeasured technical debt for buyout sponsors.
Measure Engineering Like You Measure Sales (w/ Dan Bender & Kirby Montgomery, Code & Co.)
Jim Milbery hosts Dan Bender and Kirby Montgomery from Code & Co. to explore how private equity investors can measure software engineering with the same rigor as sales and finance. The conversation covers the evolution of technical due diligence shifting left before LOI, the risks of 'dark factories' and vibe coding, why classic metrics like lines of code and story points fail, and how investors can evaluate AI resilience, DORA metrics, and unit economics during the hold period.
Key takeaways
- Dan Bender and Kirby Montgomery at Code & Co. track the rise of dark factories, where automated AI agents generate software without human oversight or verified test suites. Read more →
- Dan Bender of Code & Co. points out that middle-market software targets often rely on Delphi fat clients where presentation and business logic layers intertwine, making standard continuous deployment impossible without a complete rewrite. Read more →
- Less than 30% of enterprise production tokens (roughly 28%) now run through proprietary frontier models, with open-weight models absorbing the rest. Read more →
- Raw volume metrics punish efficient developers: Dan Bender notes that strong engineers routinely delete code to refactor systems, making gross code output an inverse signal of software health. Read more →
- Technical diligence shifted from a confirmatory check three weeks before signing to a pre-LOI gating item focused on software durability. Read more →
5 articles from this episode
DORA Metrics Break When Applied to Legacy Private Equity Assets
Code & Co. explains why DORA metrics fail on legacy Delphi codebases, regulated pharma software, and acquisitions without user adoption tracking.
Frontier Models Now Handle Under 30% of Enterprise Tokens
Enterprise AI costs are forcing workloads to open-weight models. Dan Bender and Jim Milbery debate model routing, gross margins, and CTO accountability.
Why Engineering Metrics Fail From Lines of Code to Tokens
Code & Co.'s Dan Bender and Kirby Montgomery explain why output metrics like lines of code and token spend fail private equity diligence.
Pre-LOI Tech Diligence Is Exposing Vibe-Coded Platforms
Sponsors are moving technical diligence before LOI as sellers pitch vibe-coded prototypes and fake cloud artifacts to inflate software deal multiples.
More Private Equity Funcast episodes
- Trust Over Transactions: The Heart of Private Equity (w/ Nori Welles-Gertz, ParkerGale)Oct 25 · 0 articles
- Building a Med Spa Roll-Up from Scratch (w/ Amanda Blank, Founders Beauty Group)Oct 18 · 4 articles
- The Deal Closed. Now What?Oct 18 · 5 articles
- They Don't Teach You This in IB Training (w/ Katie Yuan, Hg Capital)Oct 11 · 1 articles