1
00:00:00,720 --> 00:00:02,537
You are the reason that Nasdaq exists.

2
00:00:02,620 --> 00:00:06,837
[music] >> They went from zero to $1
billion in revenue in just 10 years.

3
00:00:06,920 --> 00:00:09,357
>> Bending Spoon's CEO, Luca Ferrari.

4
00:00:09,440 --> 00:00:11,477
>> We have never lost a bid before.

5
00:00:11,560 --> 00:00:13,677
>> Well, AOL has a new parent again.

6
00:00:13,760 --> 00:00:16,197
[music] >> Milan-based
tech company Bending Spoons

7
00:00:16,280 --> 00:00:18,917
announced it will buy
ticketing platform Eventbrite.

8
00:00:19,000 --> 00:00:21,157
>> Bending Spoons is stirring
up the market. [music]

9
00:00:21,240 --> 00:00:24,677
>> They go from fixing one
zombie app to reviving 20 of them.

10
00:00:24,760 --> 00:00:26,557
>> Half a million people use our products.

11
00:00:26,640 --> 00:00:28,517
We're trying to build a generational

12
00:00:28,600 --> 00:00:30,757
company.

13
00:00:30,840 --> 00:00:35,287
>> Please welcome Luca Ferrari.

14
00:00:35,370 --> 00:00:37,390
>> [music]

15
00:00:42,960 --> 00:00:45,197
>> Hey, here he is. Nice to see you.

16
00:00:45,280 --> 00:00:48,677
>> Ciao, Luca. >> You got fans.

17
00:00:48,760 --> 00:00:53,677
>> All right, Luca.
And you have a great company.

18
00:00:53,760 --> 00:00:55,597
>> Don't make fun of Luca Ferrari.

19
00:00:55,680 --> 00:00:59,317
>> I'm not. I'm just >> This is a great
Italian entrepreneur, so shut the up.

20
00:00:59,400 --> 00:01:02,437
>> Absolutely.
>> Absolutely. I I asked Luca

21
00:01:02,520 --> 00:01:05,517
>> yelling like a Super Mario
Brothers in the audience.

22
00:01:05,600 --> 00:01:08,197
>> We could have another presidential
moment here at the All-In podcast. So,

23
00:01:08,280 --> 00:01:11,277
if she picks it if she if she calls
you, then just run the phone over.

24
00:01:11,360 --> 00:01:12,237
>> I've [laughter] got my phone here.

25
00:01:12,320 --> 00:01:14,117
>> Okay, just in case. >> It's ready.

26
00:01:14,200 --> 00:01:17,637
>> Um I mean, there's a lot
of us that have actually

27
00:01:17,720 --> 00:01:19,597
been tracking you for a while.

28
00:01:19,680 --> 00:01:24,077
Um I I originally heard about you because
you were in Milano, uh where, you know,

29
00:01:24,160 --> 00:01:27,997
my wife's family's from.
Uh and you had this incredibly

30
00:01:28,080 --> 00:01:30,837
progressive, methodical approach to

31
00:01:30,920 --> 00:01:36,197
growth. You did this fantastic
um podcast with um

32
00:01:36,280 --> 00:01:39,117
uh Patrick O'Shaughnessy, which was great.
I encourage all of you to listen

33
00:01:39,200 --> 00:01:42,357
to it. And you explained uh

34
00:01:42,440 --> 00:01:45,317
the arc of Bending Spoons. And I'd love

35
00:01:45,400 --> 00:01:49,957
for you to explain to folks the first
few years and just all the misery and

36
00:01:50,040 --> 00:01:53,437
failure, the the nadir
of the company, and then

37
00:01:53,520 --> 00:01:57,397
the beginning of the ascent.
>> Yeah, so the you know, most of the I

38
00:01:57,480 --> 00:02:01,317
mean, the pain, there's been plenty
of pain throughout as for most

39
00:02:01,400 --> 00:02:05,117
entrepreneurs, I think, but the
the the biggest failures were in the

40
00:02:05,200 --> 00:02:06,557
previous startup. So, with my

41
00:02:06,640 --> 00:02:09,637
co-founders, we launched an AI company

42
00:02:09,720 --> 00:02:12,677
in 2010, very early, too early, clearly.

43
00:02:12,760 --> 00:02:15,077
Uh crashed and burned um

44
00:02:15,160 --> 00:02:16,637
3 years later.

45
00:02:16,720 --> 00:02:22,877
Uh we're left with about $40,000
in capital we'd raised from the VC and um

46
00:02:22,960 --> 00:02:25,677
um we you know, clearly,
there wasn't a lot

47
00:02:25,760 --> 00:02:27,597
to salvage other than

48
00:02:27,680 --> 00:02:30,437
our relationship being stronger

49
00:02:30,520 --> 00:02:34,037
uh and uh and and that money that the VC

50
00:02:34,120 --> 00:02:38,437
uh pretty much uh
gifted to us as they, you

51
00:02:38,520 --> 00:02:41,877
know, didn't want to go through the
liquidation process to to much in legal

52
00:02:41,960 --> 00:02:45,397
fees and too many headaches.
They had seen us work pretty hard

53
00:02:45,480 --> 00:02:49,517
uh and so they told us, "You guys keep it.
We'll sell our shares to you for $1,

54
00:02:49,600 --> 00:02:53,877
like uh nominal value,
and you go and get a nice vacation."

55
00:02:53,960 --> 00:02:57,597
Uh we're clearly a little bit sick
in the head, and so we took the money and

56
00:02:57,680 --> 00:03:02,037
enthusiastically turned it into uh
seed financing for Benny's Foods. And

57
00:03:02,120 --> 00:03:04,317
and we, you know, we came
up with >> with $40,000.

58
00:03:04,400 --> 00:03:09,037
>> $40,000 exactly in 2013, and we we had
this strategy, which has remained pretty

59
00:03:09,120 --> 00:03:13,357
much the same, obviously. You get
smarter, you refine it in time. Uh but

60
00:03:13,440 --> 00:03:17,797
that was The idea was we we are not very
good at finding product market fit, or

61
00:03:17,880 --> 00:03:21,877
maybe, you know, luck plays a big role,
probably both things are true. Uh but we

62
00:03:21,960 --> 00:03:26,997
have become pretty good at engineering,
uh design, monetization, marketing in

63
00:03:27,080 --> 00:03:30,197
just 3 years of hard work, and so we
should be able to be among the best in

64
00:03:30,280 --> 00:03:33,157
the world at that.
And we should be able to buy product

65
00:03:33,240 --> 00:03:37,517
market fit from people, and uh
and and you know, they get a good price,

66
00:03:37,600 --> 00:03:41,077
we get a good asset we can make more
valuable, and then we we deploy more

67
00:03:41,160 --> 00:03:44,077
capital into making our our
platform more competitive.

68
00:03:44,160 --> 00:03:47,997
>> acquisition, and how much did you pay,
and how did you get the deal done?

69
00:03:48,080 --> 00:03:53,837
>> So, the first acquisition uh was uh
we paid $10,000, give or take and it was

70
00:03:53,920 --> 00:03:58,317
a um a mobile app for iPhone specifically

71
00:03:58,400 --> 00:04:02,797
that you used to personalize
your your keyboard. Very simple.

72
00:04:02,880 --> 00:04:07,517
One uh one uh uh man kind
of developer uh sold it to

73
00:04:07,600 --> 00:04:11,237
us obviously a very amateurish operation.

74
00:04:11,320 --> 00:04:15,357
Not that difficult at the time
to to make it better and more successful.

75
00:04:15,440 --> 00:04:16,957
Uh but you know >> What were
you buying? Like you're buying

76
00:04:17,040 --> 00:04:20,037
one times revenue? You're buying
the revenue? You're buying the app?

77
00:04:20,120 --> 00:04:24,237
>> That one specifically I think had
a negligible revenue. It wasn't even

78
00:04:24,320 --> 00:04:27,557
really monetized. >> Okay. >> Uh
which of course is never the case for

79
00:04:27,640 --> 00:04:28,677
for scaled businesses whatever.

80
00:04:28,760 --> 00:04:31,557
>> but it had users. >> It had users.
So what we bought at the

81
00:04:31,640 --> 00:04:34,317
time was uh an app with a bunch of users

82
00:04:34,400 --> 00:04:38,717
and a good positioning on the app store
so they it would get an influx of new

83
00:04:38,800 --> 00:04:42,037
users. Um and that's
you know remained broadly

84
00:04:42,120 --> 00:04:46,797
speaking similar over time and you know
we keep looking for great brands, user

85
00:04:46,880 --> 00:04:51,957
and customer bases where we can uh
uh you know improve everything ideally

86
00:04:52,040 --> 00:04:55,397
and make those assets even more valuable
over over time. We just do it at a much

87
00:04:55,480 --> 00:04:58,957
bigger scale these days but the the
underlying concepts have not changed.

88
00:04:59,040 --> 00:05:03,437
>> Did Did you rebuild that app? Did
you take over the code base and redo it?

89
00:05:03,520 --> 00:05:06,717
Just help us understand technically
what's going on in the organization from

90
00:05:06,800 --> 00:05:10,557
that business through to some
of the bigger ones today.

91
00:05:10,640 --> 00:05:12,877
>> Yeah. >> Is it a Is it
a code base Are you Are

92
00:05:12,960 --> 00:05:15,917
you doing engineering, product design,
marketing, all of the above?

93
00:05:16,000 --> 00:05:19,237
>> Yeah, most of what we do is is
engineering and product. We have a core

94
00:05:19,320 --> 00:05:23,517
team of this point about 800 people and uh

95
00:05:23,600 --> 00:05:27,117
I would say probably three
quarters of them are either

96
00:05:27,200 --> 00:05:31,477
engineers or yeah researchers or product
designers, product managers. Most of

97
00:05:31,560 --> 00:05:36,437
what we do is actually improving
technologies and products. Uh and and of

98
00:05:36,520 --> 00:05:40,357
course you know that yes that app we
we wrote it completely and but it's you

99
00:05:40,440 --> 00:05:43,797
know it's very early days.
Today we're much more sophisticated. We we

100
00:05:43,880 --> 00:05:46,037
So what we do is we we bring in a call

101
00:05:46,120 --> 00:05:50,877
it an operating system of 50 plus
proprietary technologies we built kind

102
00:05:50,960 --> 00:05:53,957
of an engine to run technology
businesses very effectively and

103
00:05:54,040 --> 00:05:58,397
efficiently and really our core
product. We swap out the

104
00:05:58,480 --> 00:06:01,557
technological foundation of the
businesses we buy with that one so we

105
00:06:01,640 --> 00:06:05,957
can run it much better and also
the people we transition across our

106
00:06:06,040 --> 00:06:08,957
various businesses always play by the
same rules. They're more efficient cuz

107
00:06:09,040 --> 00:06:12,277
they find the same tool.
>> these tools cut across what like HR,

108
00:06:12,360 --> 00:06:16,837
finance, tech ops, dev ops?
>> Pretty much everything. Yeah, I mean

109
00:06:16,920 --> 00:06:20,517
orchestration of AI models check,
recruiting tools check, AB testing

110
00:06:20,600 --> 00:06:23,237
platforms check.
>> And then do you bring all of the

111
00:06:23,320 --> 00:06:27,557
technology spend up to the top co so
that you're doing one deal with AWS, one

112
00:06:27,640 --> 00:06:30,597
all the licensing becomes
scaled across one entity?

113
00:06:30,680 --> 00:06:33,357
>> Yeah, that's a that's a lever
for quality creation. I'd say that's a

114
00:06:33,440 --> 00:06:36,517
relatively small one and probably adds
I don't know one to percentage points in

115
00:06:36,600 --> 00:06:40,077
EBITDA margins. The you know,
the more important aspects

116
00:06:40,160 --> 00:06:43,797
are being able to drive revenue
increases through better product tech

117
00:06:43,880 --> 00:06:45,997
and monetization, sometimes marketing,

118
00:06:46,080 --> 00:06:48,517
cost reduction through leaner teams so

119
00:06:48,600 --> 00:06:53,717
more talent dense teams and but yes,
vendor optimization is is

120
00:06:53,800 --> 00:06:56,037
helpful. >> You were
doing the Elon X playbook

121
00:06:56,120 --> 00:06:59,957
before he did it. I mean like there's
some stories that were written about how

122
00:07:00,040 --> 00:07:02,997
you right-sized Vimeo's workforce,
you right-sized Brightcove.

123
00:07:03,080 --> 00:07:05,157
>> He called me before doing the X.

124
00:07:05,240 --> 00:07:06,397
No, I'm joking. >> Oh, he did?

125
00:07:06,480 --> 00:07:08,277
>> Oh, no. Okay. >> [laughter] >> Advice?

126
00:07:08,360 --> 00:07:11,077
>> But explain explain >>
How do I cut all the people?

127
00:07:11,160 --> 00:07:13,437
>> No, no, he didn't [laughter] he
didn't do that. I don't know Elon so.

128
00:07:13,520 --> 00:07:17,197
>> Luka, how did you figure out that you
could cut 80% of a team and it still

129
00:07:17,280 --> 00:07:20,517
works? How do how do you figure that out?
Is that accidental where you just

130
00:07:20,600 --> 00:07:22,717
pushing to a threshold?

131
00:07:22,800 --> 00:07:24,957
>> I think it's it's something we

132
00:07:25,040 --> 00:07:29,957
we learned partially because early early
days where we were acquiring smaller

133
00:07:30,040 --> 00:07:33,397
businesses typically these
people would sell us the

134
00:07:33,480 --> 00:07:37,197
assets say the product but not the team
cuz for them it was very small teams

135
00:07:37,280 --> 00:07:40,397
they you know, wanted to move on to
whatever other project they had and so

136
00:07:40,480 --> 00:07:43,837
we didn't really know any better.
We were establishing teams internally to

137
00:07:43,920 --> 00:07:49,117
carry on the work and the number
of FTEs was much smaller than

138
00:07:49,200 --> 00:07:51,837
>> In the original footprint?
>> No, no, no. Well, also that, but then

139
00:07:51,920 --> 00:07:54,317
when we ended up buying businesses with

140
00:07:54,400 --> 00:07:59,277
established teams, we had perhaps
naively built teams to run comparable

141
00:07:59,360 --> 00:08:02,077
businesses that were much smaller.
And so we couldn't explain why you

142
00:08:02,160 --> 00:08:06,597
necessarily needed more people. Partly,
yes, through experimentation we have

143
00:08:06,680 --> 00:08:10,877
found call it the sweet spot.
Obviously, it's never perfect. We we

144
00:08:10,960 --> 00:08:14,797
Overall, let's say the the key thing for
us is we want our businesses to be, you

145
00:08:14,880 --> 00:08:18,437
know, run at a 10 out of 10 level.
And we find that generally you're more

146
00:08:18,520 --> 00:08:21,917
likely to get that that level
of performance if you have

147
00:08:22,000 --> 00:08:25,757
very very small teams, super high bar
for talent, and sensible ownership.

148
00:08:25,840 --> 00:08:30,317
>> a 40-odd billion-dollar market cap-ish
right now, I think, plus or minus. Um

149
00:08:30,400 --> 00:08:32,837
>> I don't know, actually. I haven't
checked the the ticker since we IPO'd.

150
00:08:32,920 --> 00:08:34,997
>> it's roughly roughly in that zone.

151
00:08:35,080 --> 00:08:38,877
Um which is incredible from starting
with a $10,000 acquisition. When do you

152
00:08:38,960 --> 00:08:41,677
trans- when did you transition from

153
00:08:41,760 --> 00:08:46,637
uh scaling on cash flow to then using
debt and using more sophisticated

154
00:08:46,720 --> 00:08:49,597
financial engineering so you can go
after these bigger fish? And how how has

155
00:08:49,680 --> 00:08:52,717
it gone so far? >> So, historically,

156
00:08:52,800 --> 00:08:54,237
uh

157
00:08:54,320 --> 00:08:57,197
we started using debt in 2017, I

158
00:08:57,280 --> 00:09:00,197
believe, either 2017 or 2018. Uh very

159
00:09:00,280 --> 00:09:04,077
basic bank loans, TLAs. And then as we

160
00:09:04,160 --> 00:09:07,997
So, free cash flow, their investment
of free cash flow had always been a thing

161
00:09:08,080 --> 00:09:11,277
for us. We have redeployed pretty
much 100% of our free cash flow toward

162
00:09:11,360 --> 00:09:14,197
acquisitions since the beginning. Uh

163
00:09:14,280 --> 00:09:19,117
that from 2017, and you know, and and as
we as we scaled, we got more credible, a

164
00:09:19,200 --> 00:09:22,397
little bit wiser, and more
sophisticated, we went for, you know,

165
00:09:22,480 --> 00:09:26,757
TLBs. And maybe in the future there'll
be bond issuances and other more complex

166
00:09:26,840 --> 00:09:30,197
instruments. We haven't
used a whole lot of equity.

167
00:09:30,280 --> 00:09:35,197
Actually, when we IPO'd, we had only
{quote} only raised about half a billion

168
00:09:35,280 --> 00:09:38,957
dollar in primary equity. And we were at
roughly 20 billion in valuation and even

169
00:09:39,040 --> 00:09:43,957
that half a billion dollar we had raised
pretty much all of it in the previous 6

170
00:09:44,040 --> 00:09:47,837
months or so. So, almost all of our
track record we've achieved through

171
00:09:47,920 --> 00:09:50,757
reinvestment of free cash flows
and and that. But, going forward I think

172
00:09:50,840 --> 00:09:53,997
particularly as a public company using
equity tactically here and there could

173
00:09:54,080 --> 00:09:57,117
be a good good >> So, with that equity um

174
00:09:57,200 --> 00:10:00,197
you are taking loans, I guess,

175
00:10:00,280 --> 00:10:03,677
five, six points over LIBOR, so 10%, 12%

176
00:10:03,760 --> 00:10:08,237
loans, and then you buy a business like
Airtable, but that that means you have

177
00:10:08,320 --> 00:10:11,757
to pay a hundred million
dollars in a debt payments per

178
00:10:11,840 --> 00:10:16,077
year. If interest rates go up and it's
a 90-some-odd chance they're going to

179
00:10:16,160 --> 00:10:19,237
start going up, what what does that do
with the business? Does it throttle a

180
00:10:19,320 --> 00:10:23,717
little bit? And then my second question,
people have been pretty enamored by the

181
00:10:23,800 --> 00:10:28,997
progress you're making, uh and I think
you're now facing uh some Bending Spoons

182
00:10:29,080 --> 00:10:32,357
competitors. So, maybe you could talk
Are you seeing more people show up at

183
00:10:32,440 --> 00:10:36,317
these auctions and it's not just
you and like two other players?

184
00:10:36,400 --> 00:10:41,317
>> Yeah, so um debt is an
an accelerant to our growth.

185
00:10:41,400 --> 00:10:45,077
Uh we would still grow up pretty fast
if we only use free cash flows, but our

186
00:10:45,160 --> 00:10:49,317
free cash flows, but definitely being
able to use that is is a good thing. Uh

187
00:10:49,400 --> 00:10:54,117
prudent levels of that. And and and I
would say uh I will give you like two

188
00:10:54,200 --> 00:10:57,837
parts. Uh first, the the risk
with the existing indebtedness. So,

189
00:10:57,920 --> 00:11:02,877
all of our debt currently the the average
cost of blended cost is about 9%

190
00:11:02,960 --> 00:11:04,557
give or take and it's fully hedged. So,

191
00:11:04,640 --> 00:11:06,877
increases in interest rates would not uh

192
00:11:06,960 --> 00:11:10,277
impact our cost of debt. Uh it matures

193
00:11:10,360 --> 00:11:15,437
in 2031. So, we are in a position to pay
pay back completely before maturity. We're

194
00:11:15,520 --> 00:11:18,557
currently at two and a half
times leverage approximately.

195
00:11:18,640 --> 00:11:23,157
Now, if uh interest rates were to go
up substantially, then new debt would be

196
00:11:23,240 --> 00:11:27,077
would be more expensive.
Um I think that would be

197
00:11:27,160 --> 00:11:30,877
under most scenarios a net positive
for us for a couple of reasons.

198
00:11:30,960 --> 00:11:34,317
Uh our returns unlevered
historically have been pretty high

199
00:11:34,400 --> 00:11:39,757
consistently above 25%. Again,
unlevered. So, whether we pay 9% or 12%

200
00:11:39,840 --> 00:11:43,797
of course I'd rather pay nine,
but it's not it doesn't break the model.

201
00:11:43,880 --> 00:11:47,637
And you know, in the second one aspect
is typically when interest rates go up

202
00:11:47,720 --> 00:11:51,917
the value of of of assets
go goes down and so as a

203
00:11:52,000 --> 00:11:55,277
serial acquirer I think we're more
likely to benefit more from the lower

204
00:11:55,360 --> 00:11:59,157
valuations than the higher that now that
depends I'm generalizing and simplifying

205
00:11:59,240 --> 00:12:02,797
a bit, but uh overall
we feel we are fairly

206
00:12:02,880 --> 00:12:06,877
well protected and you know,
robust when it comes to to

207
00:12:06,960 --> 00:12:10,037
indebtedness. When it comes
to competition for acquisitions,

208
00:12:10,120 --> 00:12:13,597
we have all of the processes we have
participated in have had other other

209
00:12:13,680 --> 00:12:16,117
buyers or almost all of them.

210
00:12:16,200 --> 00:12:20,917
I'm sure competition will intensify
or I'm sure it may intensify who knows.

211
00:12:21,000 --> 00:12:23,717
It could also get weaker.
We're seeing private equity

212
00:12:23,800 --> 00:12:26,917
we have historically downsized after
actually raised less capital to do the

213
00:12:27,000 --> 00:12:31,157
same and so on balance we
may be better off. It's also

214
00:12:31,240 --> 00:12:35,277
I think important to to note that it's
it's really painful and time consuming

215
00:12:35,360 --> 00:12:38,837
to replicate what we've built cuz
a lot of it is based on you know, those

216
00:12:38,920 --> 00:12:42,437
technologies which you can't build
overnight. You don't even know what to

217
00:12:42,520 --> 00:12:45,837
build really if you haven't gone through
many years of painful experimentation

218
00:12:45,920 --> 00:12:47,757
mistakes trying to repeat.

219
00:12:47,840 --> 00:12:50,437
Um you a lot of the value we create is

220
00:12:50,520 --> 00:12:55,357
thanks to those $800 people we have
painstakingly selected over time the

221
00:12:55,440 --> 00:12:58,957
culture of high performance and and a
scientific approach to business we have

222
00:12:59,040 --> 00:13:02,917
developed. Those things are there's no
shortcut. I still remember hiring the

223
00:13:03,000 --> 00:13:06,037
first one person and then two people and
then four people. You could probably do

224
00:13:06,120 --> 00:13:09,957
it in five years rather than 13, but not
in two months. So, I I think we will

225
00:13:10,040 --> 00:13:11,757
face competition,
but I'm pretty optimistic.

226
00:13:11,840 --> 00:13:15,877
>> Follow up if I may.
In our industry, the venture capital

227
00:13:15,960 --> 00:13:20,517
industry and even going into public
markets, we covet the founder. And if a

228
00:13:20,600 --> 00:13:24,837
company loses its founder and the founder
authority they have like Elon to

229
00:13:24,920 --> 00:13:27,677
say hey, we're not going to make
the Model X. We're not going to make the

230
00:13:27,760 --> 00:13:31,277
Model S. We're going to convert those
to Optimus." Those kind of bold bets only

231
00:13:31,360 --> 00:13:34,837
made by founders. You have
a slightly different philosophy

232
00:13:34,920 --> 00:13:39,837
here. You don't want founders inside
the company. You're not looking for that

233
00:13:39,920 --> 00:13:42,837
founder authority in each of these
brands based on what I've I've heard you

234
00:13:42,920 --> 00:13:46,677
say. Um so, what is the expectation
for your brands? Do you want to create

235
00:13:46,760 --> 00:13:49,477
cutting-edge, you know, version twos of

236
00:13:49,560 --> 00:13:53,837
Eventbrite's and Vimeo, or do you just
want them to grow at a predictable rate

237
00:13:53,920 --> 00:13:57,397
and throw off that cash flow.
So, talk about the founder role.

238
00:13:57,480 --> 00:14:00,157
>> Yeah, so I think if if you can have a

239
00:14:00,240 --> 00:14:03,357
founder with that, you know, level of of

240
00:14:03,440 --> 00:14:06,437
passion and and that mentality is, you

241
00:14:06,520 --> 00:14:10,837
know, nine times [clears throat] out
of 10 will be a major net positive. Uh the

242
00:14:10,920 --> 00:14:14,717
generally when we end up acquiring
companies, these are businesses that

243
00:14:14,800 --> 00:14:18,677
that have been around for 10, 20 years,
even more than 20 years in some cases.

244
00:14:18,760 --> 00:14:21,677
And and for the founders, if they're
still on board, sometimes they aren't on

245
00:14:21,760 --> 00:14:26,037
board, for them it's really a moment of,
"Okay, this is a chapter I'm closing.

246
00:14:26,120 --> 00:14:30,197
I'm I'm I'm going to move on." So, the
the the real question there, for for us

247
00:14:30,280 --> 00:14:33,477
we win if that business
does better with us

248
00:14:33,560 --> 00:14:37,237
than it would have uh under previous
ownership. Uh obviously, if we could

249
00:14:37,320 --> 00:14:40,797
have uh exceptional founders stay
on board and pour their hearts into it, it

250
00:14:40,880 --> 00:14:45,077
it would be even better, but we can
still do well by being a better home for

251
00:14:45,160 --> 00:14:49,157
that business than that business
staying with the same uh

252
00:14:49,240 --> 00:14:52,677
ownership group and maybe losing the
founder anyway. Um so, it's not that we

253
00:14:52,760 --> 00:14:55,717
don't want founders, but what once you
know, companies are sold, the people are

254
00:14:55,800 --> 00:14:59,597
generally looking to move on. >> Can
you bring us into the M&A deal desk?

255
00:14:59,680 --> 00:15:03,477
So, like in the room, walk us
through your screening process.

256
00:15:03,560 --> 00:15:05,397
Are we How do we How are we doing this?

257
00:15:05,480 --> 00:15:08,637
What are we looking for? Are we looking
for synergy and integration with the

258
00:15:08,720 --> 00:15:12,717
assets that we've bought before? Are we
looking purely at cash flow? How do we

259
00:15:12,800 --> 00:15:15,917
stack rank these things?
Just walk us through the deal desk.

260
00:15:16,000 --> 00:15:20,437
>> Yeah, so I think there's a qualitative
criteria we use to uh slim down the the

261
00:15:20,520 --> 00:15:25,597
long list of businesses that we would be
interesting targets. Uh one is scale. We

262
00:15:25,680 --> 00:15:28,637
the that process of any
very deep integration

263
00:15:28,720 --> 00:15:33,277
uh and and and profound transformation
takes a lot of operational effort, so we

264
00:15:33,360 --> 00:15:36,237
can't do a million of these. And by the
way, the amount of time and effort it

265
00:15:36,320 --> 00:15:39,757
takes to transform a business we found
it doesn't really scale linearly with

266
00:15:39,840 --> 00:15:42,837
revenue, so we're much better off
acquiring relatively few sizable

267
00:15:42,920 --> 00:15:47,157
companies than a million small ones.
So, we look we look for scale. We look for

268
00:15:47,240 --> 00:15:51,517
predictability in in earnings, and it's
a big topic in and of itself, but we

269
00:15:51,600 --> 00:15:55,397
like businesses where we are pretty
confident we can project at least you

270
00:15:55,480 --> 00:15:59,557
know, the next 5 or 6 years directionally.
Um and then we look for

271
00:15:59,640 --> 00:16:04,437
businesses where we can create a lot
of value. It could be technology, org, uh

272
00:16:04,520 --> 00:16:06,157
product, monetization, marketing.

273
00:16:06,240 --> 00:16:09,037
Ideally, most of these.
>> Does value include the integration with

274
00:16:09,120 --> 00:16:12,597
these other assets that you have, or value
just means economic value operating?

275
00:16:12,680 --> 00:16:15,757
>> Well, let me just ask
a detailed point of that. Like if

276
00:16:15,840 --> 00:16:21,797
if you own AOL, you can put ads
for Vimeo or Eventbrite or Miro on AOL.

277
00:16:21,880 --> 00:16:26,077
Um if you own Vimeo, you could probably
have a sales team that's selling ads on

278
00:16:26,160 --> 00:16:29,717
AOL that you can use. How much
synergistic effect is there? And if

279
00:16:29,800 --> 00:16:32,317
there is synergistic effect

280
00:16:32,400 --> 00:16:34,077
and you've got all this capacity to do

281
00:16:34,160 --> 00:16:37,437
design, build, product management,

282
00:16:37,520 --> 00:16:42,877
agentic orchestration, testing,
AB testing, why not also build organically

283
00:16:42,960 --> 00:16:46,397
at the same time and leverage the network
effects of the existing businesses?

284
00:16:46,480 --> 00:16:50,677
>> So, historically, we have created
almost no value from let's say

285
00:16:50,760 --> 00:16:54,437
customer-facing synergies,
what what you described. Uh plenty of

286
00:16:54,520 --> 00:16:57,317
behind-the-scenes synergies.
Like I said, it's all built on the same

287
00:16:57,400 --> 00:17:01,277
technological foundations and then
there's there's this large core team of

288
00:17:01,360 --> 00:17:03,277
people we move around fluidly.

289
00:17:03,360 --> 00:17:06,117
Uh going forward and and by the way, the
reason why we haven't unlocked a lot of

290
00:17:06,200 --> 00:17:10,237
value through customer-facing synergies
has been that um we I think the

291
00:17:10,320 --> 00:17:14,557
portfolio wasn't necessarily large
enough for good overlaps to materialize,

292
00:17:14,640 --> 00:17:19,317
but as it grows more and more, for
example, now Airtable and Miro are both

293
00:17:19,400 --> 00:17:21,117
quite appealing to a lot of enterprises.

294
00:17:21,200 --> 00:17:26,157
I think what you are describing could
become an additional value creation uh uh

295
00:17:26,240 --> 00:17:29,517
dimension. >> You haven't tried
or you've tried and it hasn't worked.

296
00:17:29,600 --> 00:17:33,277
>> No, we've we've tried and it's worked,
but marginally. So, maybe it's helped uh

297
00:17:33,360 --> 00:17:36,797
3%, but not like the bulk
of it has been bringing

298
00:17:36,880 --> 00:17:42,757
uh 10 out of 10 excellence in operations,
product, monetization, uh technology.

299
00:17:42,840 --> 00:17:44,637
>> Look at when >> On an
individual business basis.

300
00:17:44,720 --> 00:17:47,077
>> And if Why not build
organically products? Yeah.

301
00:17:47,160 --> 00:17:50,277
>> Yeah, so the First of all, you can't do

302
00:17:50,360 --> 00:17:55,957
everything. I mean, Elon can't I I you
know, my colleagues colleagues and I

303
00:17:56,040 --> 00:17:59,957
we don't think we can. Maybe we should
be more ambitious with ourselves, but um

304
00:18:00,040 --> 00:18:01,397
And so >> a lot on your plate.

305
00:18:01,480 --> 00:18:04,197
>> Yeah, yeah. >> There's so many
different kinds of products already.

306
00:18:04,280 --> 00:18:08,557
>> We we launch a lot of new things on top
of existing brands, but it's not like

307
00:18:08,640 --> 00:18:12,197
completely radical innovation. We don't
do a lot of that. We try to stay focused

308
00:18:12,280 --> 00:18:16,757
on on one thing to try to be the very
best in the world at it. Also, the at

309
00:18:16,840 --> 00:18:21,397
the scale we are at at this point where,
you know, on a pro forma with Miro close

310
00:18:21,480 --> 00:18:25,877
to a run rate of $4 billion in revenue,
it's difficult. Like if you look at the

311
00:18:25,960 --> 00:18:29,717
percentage of new startups or products
being launched that would move the

312
00:18:29,800 --> 00:18:33,037
needle, it's it's very
very small. So, what's

313
00:18:33,120 --> 00:18:35,997
the you know, we would have to deploy
a lot of our resources and very unlikely

314
00:18:36,080 --> 00:18:37,877
to work. >> I I Sorry,
let me just Can you just talk

315
00:18:37,960 --> 00:18:39,757
about the thing you and I talked about

316
00:18:39,840 --> 00:18:43,397
this um point on the talent exodus that

317
00:18:43,480 --> 00:18:47,197
happens in Silicon Valley companies when
they start to stall out. And that the

318
00:18:47,280 --> 00:18:50,557
talent maybe that's working
on the business isn't

319
00:18:50,640 --> 00:18:54,597
the quality of the talent that you've
built in your your core platform. How

320
00:18:54,680 --> 00:18:58,917
much of that is assessed in that M&A
process that you might have mentioned?

321
00:18:59,000 --> 00:19:02,117
>> Uh well, it's it's I mean, it's
difficult to assess from the outside in,

322
00:19:02,200 --> 00:19:06,437
but you can form a uh
first principles opinions.

323
00:19:06,520 --> 00:19:10,077
Uh businesses that again are more in a
saturation phase, they tend not to be as

324
00:19:10,160 --> 00:19:15,277
appealing to some of the entrepreneurial
engineers or designers. Um

325
00:19:15,360 --> 00:19:17,997
And [clears throat] so you can assume
that the level of talent will be maybe

326
00:19:18,080 --> 00:19:21,517
good, but perhaps not, you know,
what Anthropic would have. Not saying

327
00:19:21,600 --> 00:19:24,477
anything shocking here.
>> They have a very unique kind of talent,

328
00:19:24,560 --> 00:19:25,997
but we'll talk about that another time.

329
00:19:26,080 --> 00:19:29,157
>> Yeah, okay. We we have
a big advantage in attracting

330
00:19:29,240 --> 00:19:32,477
talent cuz if you work
at Bending Spoons, it may be

331
00:19:32,560 --> 00:19:35,477
one of the very few places in the world
where you can spend say one year

332
00:19:35,560 --> 00:19:40,797
rebuilding the email infrastructure
for AOL and then 7 months helping

333
00:19:40,880 --> 00:19:45,397
rethink subscriptions on on the email and
then build a platform technology to manage

334
00:19:45,480 --> 00:19:49,077
payments all with the same employer,
mostly the same colleagues, same culture.

335
00:19:49,160 --> 00:19:50,637
>> You get broad technical scope.

336
00:19:50,720 --> 00:19:55,517
>> Exactly. So career opportunities just
stay motivated because it's fun and new.

337
00:19:55,600 --> 00:19:58,717
Very high talent density begets high
talent density, so there is an element

338
00:19:58,800 --> 00:20:01,477
of virtual cycle. So we have been able
to attract ton of people last year,

339
00:20:01,560 --> 00:20:04,117
800,000 applications,
we hired fewer than 300 people.

340
00:20:04,200 --> 00:20:05,717
>> Are they all in Milan? Where are they?

341
00:20:05,800 --> 00:20:10,597
>> No, no. We we are fully, you know,
very international as a company. Milan for

342
00:20:10,680 --> 00:20:15,357
historical reasons remains like
the biggest pool of of talent, but London

343
00:20:15,440 --> 00:20:17,437
for example is coming up faster, Madrid.

344
00:20:17,520 --> 00:20:20,277
We'll we'll be hiring people, plenty
of people in the States, I think starting

345
00:20:20,360 --> 00:20:23,757
starting next year.
>> Bring up an interesting question.

346
00:20:23,840 --> 00:20:26,277
Europe as a tech center

347
00:20:26,360 --> 00:20:30,037
isn't exactly something that venture

348
00:20:30,120 --> 00:20:34,317
capitalists, even late stage investors
are pursuing. They kind of look at the

349
00:20:34,400 --> 00:20:38,757
market there as maybe slower
and maybe just not as good of an

350
00:20:38,840 --> 00:20:43,157
opportunity. It's I think their decision.
Rather be in Silicon Valley or

351
00:20:43,240 --> 00:20:44,797
American companies

352
00:20:44,880 --> 00:20:48,877
or perhaps Asia. So what's it like being

353
00:20:48,960 --> 00:20:53,357
the most aggressive, successful
company then in Europe or one of them?

354
00:20:53,440 --> 00:20:55,837
Is there >> I think you're right.
No, I think it is the

355
00:20:55,920 --> 00:20:59,837
>> I mean I Well, I mean Spotify obviously
is much better, but Klarna. You're

356
00:20:59,920 --> 00:21:03,797
you're in the top 10 probably.
Clearly in the top 10, so

357
00:21:03,880 --> 00:21:07,797
what's the talent pool like there? How
is it different? Specifically Italy. I I

358
00:21:07,880 --> 00:21:11,157
notice when Chamath goes to Italy, maybe
the there's a little bit less working

359
00:21:11,240 --> 00:21:15,077
going on. >> An extra button he he
goes from three on buttons to four.

360
00:21:15,160 --> 00:21:17,397
>> Yeah, the buttons
go down and the number

361
00:21:17,480 --> 00:21:19,877
of hours in front of a
laptop goes down as well.

362
00:21:19,960 --> 00:21:22,997
>> Chamath, we see it.
>> you keep these Italians working? How do

363
00:21:23,080 --> 00:21:25,397
you do What's the secret? >> No,
but tell us about the talent pool in

364
00:21:25,480 --> 00:21:29,077
running a company in Europe. >> So,
I I think I think Europe has a lot

365
00:21:29,160 --> 00:21:32,597
of problems, but I think
there's a pretty good talent

366
00:21:32,680 --> 00:21:36,517
half a billion people living
let's say the main part of

367
00:21:36,600 --> 00:21:38,597
Europe. So, it's a lot of people
with pretty good education. It's not

368
00:21:38,680 --> 00:21:42,477
Stanford, but it's solid
and and a lot of these people have a

369
00:21:42,560 --> 00:21:46,117
chip on their shoulder to prove we're
not necessarily less smart or capable.

370
00:21:46,200 --> 00:21:48,997
So, you do find a lot of good people. I

371
00:21:49,080 --> 00:21:51,597
I do think there is a the fact that

372
00:21:51,680 --> 00:21:56,317
Italians don't want work hard
is mostly a false stereotype.

373
00:21:56,400 --> 00:22:00,997
>> Yes. >> I we find that I mean
my wife she doesn't work with me.

374
00:22:01,080 --> 00:22:05,717
She works in another company. She works
a lot long hours. At our company we work

375
00:22:05,800 --> 00:22:09,477
pretty hard. We generally find that when
we acquire companies and we work with

376
00:22:09,560 --> 00:22:12,037
existing teams more often than not

377
00:22:12,120 --> 00:22:16,957
the team we we bring in works
substantially harder. So, um

378
00:22:17,040 --> 00:22:19,837
I don't know. We just try to hire people
who are intrinsically motivated, very

379
00:22:19,920 --> 00:22:23,037
ambitious, you're just hungry,
entrepreneurial and

380
00:22:23,120 --> 00:22:26,997
and then give them you know a good
reason to to do their best work because

381
00:22:27,080 --> 00:22:29,757
they see that they can
have a unique career.

382
00:22:29,840 --> 00:22:32,717
>> anywhere other than Milan and that it
might be an accelerant for the business?

383
00:22:32,800 --> 00:22:35,997
New York City where the banking capital
is, Silicon Valley the tech capital.

384
00:22:36,080 --> 00:22:37,437
Have you thought about
moving the headquarters?

385
00:22:37,520 --> 00:22:41,557
>> Why? Lucas totally right. You get like
these people the problem with people in

386
00:22:41,640 --> 00:22:45,597
in the like you go to these typical
places, typical schools, they think

387
00:22:45,680 --> 00:22:48,717
they're geniuses and it's like when you
actually like just look even just look

388
00:22:48,800 --> 00:22:50,437
at AI. Who are the major contributors?

389
00:22:50,520 --> 00:22:55,397
These are not like the they're not from
MIT, Stanford per se, you know? They're

390
00:22:55,480 --> 00:22:58,757
at UFT. >> It's like McGill.
>> It's like CMU.

391
00:22:58,840 --> 00:23:01,117
>> It could well it could be an advantage.

392
00:23:01,200 --> 00:23:03,797
>> Well, that's sort of what I'm getting
at. It's a huge advantage. I mean, when

393
00:23:03,880 --> 00:23:07,877
I when I interviewed Charles Koch, you
know, I talked about this. What I found

394
00:23:07,960 --> 00:23:11,357
so fascinating is he built
that business, probably the most

395
00:23:11,440 --> 00:23:13,157
extraordinary wholly-owned business on

396
00:23:13,240 --> 00:23:16,277
Earth, from nothing effectively, in

397
00:23:16,360 --> 00:23:20,197
Wichita, Kansas. And I say it's like the
Wichita mindset cuz he basically kind of

398
00:23:20,280 --> 00:23:23,237
ignored everything that was conventional,
and he was able to do

399
00:23:23,320 --> 00:23:26,837
things his own way. I don't know anyone
that thinks and does things the way you

400
00:23:26,920 --> 00:23:30,477
do them that are based in Silicon Valley,
and that might be the reason cuz

401
00:23:30,560 --> 00:23:34,197
you're in Milan and you're not kind
of indoctrinated into cultural thinking.

402
00:23:34,280 --> 00:23:37,517
>> look, I'll just say what's what what
I find so incredibly interesting about

403
00:23:37,600 --> 00:23:39,757
your company and what you're building is

404
00:23:39,840 --> 00:23:41,717
in in all of our generations, we've seen

405
00:23:41,800 --> 00:23:44,677
this these incredible examples of

406
00:23:44,760 --> 00:23:47,397
companies that have run your playbook

407
00:23:47,480 --> 00:23:49,757
but in traditional industries. Um

408
00:23:49,840 --> 00:23:53,437
Amphenol, Roper, Danaher, Berkshire.

409
00:23:53,520 --> 00:23:58,317
And we've never seen a successful
implementation of it in tech. And uh I

410
00:23:58,400 --> 00:24:01,797
think you're the best-scaled example.
I mean, Expedia tried, Barry tried. I

411
00:24:01,880 --> 00:24:05,277
think it was a little complicated.
Um so, it's really exciting to see that

412
00:24:05,360 --> 00:24:09,197
this thing can work because the the the
structural issue was always how do you

413
00:24:09,280 --> 00:24:11,477
underwrite these cash flows?
And I think you're proving that they're

414
00:24:11,560 --> 00:24:15,557
underwritable, that these things can
go out for 7, 8, 9 years. And especially

415
00:24:15,640 --> 00:24:19,157
now, if you look at PE, the PE guys are
basically like, "We don't know what the

416
00:24:19,240 --> 00:24:22,757
going on." Right? Yet, you're
still able to go and transact, and

417
00:24:22,840 --> 00:24:26,077
you're announcing deals at a pace where
these, you know, a lot of the PE folks

418
00:24:26,160 --> 00:24:30,077
are So, how how do you how do you manage
this risk? Like, it's clearly not a

419
00:24:30,160 --> 00:24:31,677
risk. You think it's a tailwind for you.

420
00:24:31,760 --> 00:24:34,317
>> Yeah, I think the you know,
the private equity is

421
00:24:34,400 --> 00:24:37,637
completely different cuz they keep these
companies separate for the most part to

422
00:24:37,720 --> 00:24:40,957
sell them, and so they could never have
that technological foundation because

423
00:24:41,040 --> 00:24:43,997
once you plug it in in a company,
what do you do when you sell it to to your

424
00:24:44,080 --> 00:24:47,277
private equity competitor?
Do you license it to them? So, that's,

425
00:24:47,360 --> 00:24:51,157
you know, remove that. They can't have
a pooled team of engineers, designers

426
00:24:51,240 --> 00:24:54,397
because if they put them on the on the
on a business and then they sell it,

427
00:24:54,480 --> 00:24:57,397
what do they do? They they the team out,
and that means the team the the business

428
00:24:57,480 --> 00:25:01,437
is almost worthless or do they sell
the team with it? So, it just the model is

429
00:25:01,520 --> 00:25:05,357
completely different and and I believe
these structural differences are a big

430
00:25:05,440 --> 00:25:09,997
reason why we have been I
I'd like to say successful.

431
00:25:10,080 --> 00:25:12,597
So, it will never work with the
traditional private equity which has

432
00:25:12,680 --> 00:25:15,597
other advantages. You can deploy maybe
a lot more capital cuz it's a little bit

433
00:25:15,680 --> 00:25:19,357
more, you know, hands-off. But but you
can never achieve the returns I think we

434
00:25:19,440 --> 00:25:21,437
we have. >> Look,
I wanted to say thank you. An

435
00:25:21,520 --> 00:25:22,477
incredible business you're building.

436
00:25:22,560 --> 00:25:25,760
Congratulations. >> Well done.