Across industries, the prevailing conversation about artificial intelligence tends to revolve around its potential to transform the economics of labor—either by reducing payroll expenses or by enabling smaller teams to achieve greater productivity through automation. Speculative predictions often dominate the discourse: high-profile executives such as Jamie Dimon publicly foresee an era in which employees might work only three and a half days per week; countless chief executives claim that AI will empower their teams to accomplish more with fewer resources; and analysts publish models anticipating the potential displacement of vast segments of the white-collar workforce. Beneath all these varying ambitions lies a common assumption—that the ultimate value of AI lies in efficiency and cost optimization.
Yet within this landscape of economized ambitions, there exists at least one notable outlier. Tide Rock, an investment firm with bases in San Diego and New York, has deliberately charted a path that rejects the conventional wisdom of cost-cutting as the main goal of technological advancement. Its CEO, Ryan Peddycord, articulated this contrarian stance in a conversation with *Business Insider*, emphasizing that the company’s internal directive is unequivocal: under no circumstances are employees to frame AI or technological innovation as tools designed to reduce headcount or compress budgets. Instead, every mention of AI inside Tide Rock’s walls is tied to the pursuit of growth, expansion, and opportunity creation.
For two years, Tide Rock has maintained a team of AI engineers whose mission diverges sharply from that of their peers in other firms. Their mandate is to use artificial intelligence not as a mechanism to trim expenses, but as a catalyst for scaling operations, increasing customer reach, and enhancing the vitality of acquired businesses. This growth-oriented strategy reflects the firm’s broader investment philosophy. Tide Rock specializes in acquiring smaller, founder-led companies—businesses that often fall below the investment thresholds of the behemoths of private equity. Distinctively, Tide Rock avoids leverage-driven financing; rather than accumulating debt to fund acquisitions, it relies on the prudent management of its roughly one billion dollars in assets, which includes both active investments and unused capital. Since its founding thirteen years ago, Tide Rock has executed over fifty acquisitions, guided not by the pursuit of financial engineering but by the principle of organic and sustainable development.
Peddycord summarizes the ethos succinctly: the company is founded upon the belief that its role is to serve as a ‘growth engine’ for its portfolio businesses. Every dollar, hour, and ounce of analytical power is devoted to helping these organizations prosper and expand. This ideal is not theoretical. In his discussion with *Business Insider*, Peddycord described concrete cases in which Tide Rock’s application of AI has already enhanced business outcomes, illustrating how the technology seamlessly aligns with its long-standing operating model.
Tide Rock’s acquisition strategy reveals how this philosophy manifests in practice. The firm typically seeks founder-operated companies where the owners are experiencing a “catalyst to change”—such as an impending retirement or a major personal event like a family illness—that prompts them to sell. These founders are often deeply emotionally invested in their enterprises, protective of their brands, their teams, and their legacies. Consequently, they prefer buyers who will nurture what they’ve built rather than dismantle it in the name of cost efficiency. Tide Rock positions itself as that type of partner, stressing its dedication to long-term prosperity over short-term savings. To execute this vision, the firm appoints seasoned operational leaders, such as chief marketing and revenue officers with hands-on experience in running and expanding real businesses, replacing the standard model of financial-only oversight typical in private equity.
The results, according to Peddycord, speak for themselves. Since its inception, Tide Rock’s portfolio companies have achieved an average annual organic revenue growth of 24 percent—a striking metric in an industry where value creation often relies on financial restructuring rather than genuine business improvement. Equally impressive is the firm’s track record of resilience, having suffered losses in only one transaction during its thirteen-year history. This success underscores the importance of its approach to founders, who care not only about monetizing their life’s work but also about ensuring continuity for their employees and the endurance of their company’s brand identity. For such individuals, any hint that AI might be used to slash staff or minimize expenses would undermine trust; by contrast, the promise of AI as a force for growth and innovation strengthens their confidence that Tide Rock will safeguard their legacy.
AI has thus become interwoven into the very fabric of the firm’s business model. Long before large language models transformed public awareness of AI, Tide Rock had already incorporated systematic tools and best practices for operational excellence, assembled into a well-documented internal library containing more than one hundred instructional videos and five hundred pages of procedural guidance. These materials ensure that knowledge is shared efficiently across the firm’s network of businesses. As Peddycord explained, employees at different management levels—whether a CEO, controller, or vice president of sales—gain access to specialized information tailored to their roles. Within this ecosystem, AI tools have emerged as yet another layer of these best practices, enabling faster learning, more consistent execution, and a stronger foundation for each portfolio company.
To further support its enterprises, Tide Rock maintains centralized resources that act as “bridges” to independence. These shared services include dedicated teams for talent acquisition and leadership, as well as marketing and revenue officers who help guide younger organizations through their critical stages of growth. This integrated structure significantly accelerates implementation timelines; for instance, Tide Rock’s portfolio firms have managed to deploy entire customer relationship management systems in as little as thirty to forty-five days—a process that might otherwise take over a year without such centralized assistance.
When asked how AI fits within this framework, Peddycord offered a pragmatic viewpoint. While the company is open to leveraging third-party AI solutions that reduce costs, it sees little value in dedicating its own engineering resources to areas where external companies already compete heavily. He believes that the market’s obsession with cost-reduction will inevitably lead specialized vendors to dominate that space, capturing all the straightforward, “low-hanging fruit.” Instead, Tide Rock prefers to invest its internal AI development in areas that directly enhance its strategic capabilities and uncover unique opportunities.
One of the firm’s earliest and most significant AI investments was in the process of identifying potential acquisition targets. For Tide Rock, traditional data platforms such as Pitchbook and Crunchbase proved incomplete and unreliable when researching companies earning less than ten million dollars in annual EBITDA—the precise segment in which the firm operates. As a result, Tide Rock invested substantially in methods and algorithms to locate these under-the-radar businesses and engage their founders. This innovation not only streamlined Tide Rock’s own deal sourcing but also revealed opportunities for cross-application: the same systems capable of finding acquisition targets could be used by portfolio companies to identify likely new customers.
Peddycord shared an example that illustrates the power of this approach. Some of Tide Rock’s manufacturing portfolio firms sell their products and components to clients in the aerospace, defense, and government sectors—industries in which contracts and supply relationships often depend on timing and information. When a major contractor such as Blue Origin secures a new contract, certain related details become publicly accessible. Tide Rock’s AI systems can analyze that data to deduce which subcomponent parts or specialized services will be necessary to fulfill the contract. With that intelligence, portfolio companies can proactively reach out to prime contractors early in the procurement cycle, positioning themselves as qualified partners before competitors even appear on the radar. In these high-demand industries, where prime contractors are as eager to locate trustworthy suppliers as Tide Rock’s firms are to find customers, this capability creates a mutual acceleration of opportunity and trust.
Through every facet of its model, Tide Rock exemplifies an alternative narrative for AI in business. Rather than viewing artificial intelligence through the narrow lens of downsizing and efficiency, the firm treats it as an instrument of discovery, growth, and human collaboration. In doing so, it reframes the entire conversation—transforming AI from a cost-cutting device into a means of amplifying vision and unlocking possibilities.
Sourse: https://www.businessinsider.com/tide-rock-buy-out-firm-ai-cost-cutting-2025-12
