WEBVTT 00:00:00.720 --> 00:00:02.537 You are the reason that Nasdaq exists. 00:00:02.620 --> 00:00:06.837 [music] >> They went from zero to $1 billion in revenue in just 10 years. 00:00:06.920 --> 00:00:09.357 >> Bending Spoon's CEO, Luca Ferrari. 00:00:09.440 --> 00:00:11.477 >> We have never lost a bid before. 00:00:11.560 --> 00:00:13.677 >> Well, AOL has a new parent again. 00:00:13.760 --> 00:00:16.197 [music] >> Milan-based tech company Bending Spoons 00:00:16.280 --> 00:00:18.917 announced it will buy ticketing platform Eventbrite. 00:00:19.000 --> 00:00:21.157 >> Bending Spoons is stirring up the market. [music] 00:00:21.240 --> 00:00:24.677 >> They go from fixing one zombie app to reviving 20 of them. 00:00:24.760 --> 00:00:26.557 >> Half a million people use our products. 00:00:26.640 --> 00:00:28.517 We're trying to build a generational 00:00:28.600 --> 00:00:30.757 company. 00:00:30.840 --> 00:00:35.287 >> Please welcome Luca Ferrari. 00:00:35.370 --> 00:00:37.390 >> [music] 00:00:42.960 --> 00:00:45.197 >> Hey, here he is. Nice to see you. 00:00:45.280 --> 00:00:48.677 >> Ciao, Luca. >> You got fans. 00:00:48.760 --> 00:00:53.677 >> All right, Luca. And you have a great company. 00:00:53.760 --> 00:00:55.597 >> Don't make fun of Luca Ferrari. 00:00:55.680 --> 00:00:59.317 >> I'm not. I'm just >> This is a great Italian entrepreneur, so shut the up. 00:00:59.400 --> 00:01:02.437 >> Absolutely. >> Absolutely. I I asked Luca 00:01:02.520 --> 00:01:05.517 >> yelling like a Super Mario Brothers in the audience. 00:01:05.600 --> 00:01:08.197 >> We could have another presidential moment here at the All-In podcast. So, 00:01:08.280 --> 00:01:11.277 if she picks it if she if she calls you, then just run the phone over. 00:01:11.360 --> 00:01:12.237 >> I've [laughter] got my phone here. 00:01:12.320 --> 00:01:14.117 >> Okay, just in case. >> It's ready. 00:01:14.200 --> 00:01:17.637 >> Um I mean, there's a lot of us that have actually 00:01:17.720 --> 00:01:19.597 been tracking you for a while. 00:01:19.680 --> 00:01:24.077 Um I I originally heard about you because you were in Milano, uh where, you know, 00:01:24.160 --> 00:01:27.997 my wife's family's from. Uh and you had this incredibly 00:01:28.080 --> 00:01:30.837 progressive, methodical approach to 00:01:30.920 --> 00:01:36.197 growth. You did this fantastic um podcast with um 00:01:36.280 --> 00:01:39.117 uh Patrick O'Shaughnessy, which was great. I encourage all of you to listen 00:01:39.200 --> 00:01:42.357 to it. And you explained uh 00:01:42.440 --> 00:01:45.317 the arc of Bending Spoons. And I'd love 00:01:45.400 --> 00:01:49.957 for you to explain to folks the first few years and just all the misery and 00:01:50.040 --> 00:01:53.437 failure, the the nadir of the company, and then 00:01:53.520 --> 00:01:57.397 the beginning of the ascent. >> Yeah, so the you know, most of the I 00:01:57.480 --> 00:02:01.317 mean, the pain, there's been plenty of pain throughout as for most 00:02:01.400 --> 00:02:05.117 entrepreneurs, I think, but the the the biggest failures were in the 00:02:05.200 --> 00:02:06.557 previous startup. So, with my 00:02:06.640 --> 00:02:09.637 co-founders, we launched an AI company 00:02:09.720 --> 00:02:12.677 in 2010, very early, too early, clearly. 00:02:12.760 --> 00:02:15.077 Uh crashed and burned um 00:02:15.160 --> 00:02:16.637 3 years later. 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 00:02:22.960 --> 00:02:25.677 um we you know, clearly, there wasn't a lot 00:02:25.760 --> 00:02:27.597 to salvage other than 00:02:27.680 --> 00:02:30.437 our relationship being stronger 00:02:30.520 --> 00:02:34.037 uh and uh and and that money that the VC 00:02:34.120 --> 00:02:38.437 uh pretty much uh gifted to us as they, you 00:02:38.520 --> 00:02:41.877 know, didn't want to go through the liquidation process to to much in legal 00:02:41.960 --> 00:02:45.397 fees and too many headaches. They had seen us work pretty hard 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, 00:02:49.600 --> 00:02:53.877 like uh nominal value, and you go and get a nice vacation." 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 00:02:57.680 --> 00:03:02.037 enthusiastically turned it into uh seed financing for Benny's Foods. And 00:03:02.120 --> 00:03:04.317 and we, you know, we came up with >> with $40,000. 00:03:04.400 --> 00:03:09.037 >> $40,000 exactly in 2013, and we we had this strategy, which has remained pretty 00:03:09.120 --> 00:03:13.357 much the same, obviously. You get smarter, you refine it in time. Uh but 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 00:03:17.880 --> 00:03:21.877 maybe, you know, luck plays a big role, probably both things are true. Uh but we 00:03:21.960 --> 00:03:26.997 have become pretty good at engineering, uh design, monetization, marketing in 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 00:03:30.280 --> 00:03:33.157 the world at that. And we should be able to buy product 00:03:33.240 --> 00:03:37.517 market fit from people, and uh and and you know, they get a good price, 00:03:37.600 --> 00:03:41.077 we get a good asset we can make more valuable, and then we we deploy more 00:03:41.160 --> 00:03:44.077 capital into making our our platform more competitive. 00:03:44.160 --> 00:03:47.997 >> acquisition, and how much did you pay, and how did you get the deal done? 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 00:03:53.920 --> 00:03:58.317 a um a mobile app for iPhone specifically 00:03:58.400 --> 00:04:02.797 that you used to personalize your your keyboard. Very simple. 00:04:02.880 --> 00:04:07.517 One uh one uh uh man kind of developer uh sold it to 00:04:07.600 --> 00:04:11.237 us obviously a very amateurish operation. 00:04:11.320 --> 00:04:15.357 Not that difficult at the time to to make it better and more successful. 00:04:15.440 --> 00:04:16.957 Uh but you know >> What were you buying? Like you're buying 00:04:17.040 --> 00:04:20.037 one times revenue? You're buying the revenue? You're buying the app? 00:04:20.120 --> 00:04:24.237 >> That one specifically I think had a negligible revenue. It wasn't even 00:04:24.320 --> 00:04:27.557 really monetized. >> Okay. >> Uh which of course is never the case for 00:04:27.640 --> 00:04:28.677 for scaled businesses whatever. 00:04:28.760 --> 00:04:31.557 >> but it had users. >> It had users. So what we bought at the 00:04:31.640 --> 00:04:34.317 time was uh an app with a bunch of users 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 00:04:38.800 --> 00:04:42.037 users. Um and that's you know remained broadly 00:04:42.120 --> 00:04:46.797 speaking similar over time and you know we keep looking for great brands, user 00:04:46.880 --> 00:04:51.957 and customer bases where we can uh uh you know improve everything ideally 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 00:04:55.480 --> 00:04:58.957 bigger scale these days but the the underlying concepts have not changed. 00:04:59.040 --> 00:05:03.437 >> Did Did you rebuild that app? Did you take over the code base and redo it? 00:05:03.520 --> 00:05:06.717 Just help us understand technically what's going on in the organization from 00:05:06.800 --> 00:05:10.557 that business through to some of the bigger ones today. 00:05:10.640 --> 00:05:12.877 >> Yeah. >> Is it a Is it a code base Are you Are 00:05:12.960 --> 00:05:15.917 you doing engineering, product design, marketing, all of the above? 00:05:16.000 --> 00:05:19.237 >> Yeah, most of what we do is is engineering and product. We have a core 00:05:19.320 --> 00:05:23.517 team of this point about 800 people and uh 00:05:23.600 --> 00:05:27.117 I would say probably three quarters of them are either 00:05:27.200 --> 00:05:31.477 engineers or yeah researchers or product designers, product managers. Most of 00:05:31.560 --> 00:05:36.437 what we do is actually improving technologies and products. Uh and and of 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 00:05:40.440 --> 00:05:43.797 know it's very early days. Today we're much more sophisticated. We we 00:05:43.880 --> 00:05:46.037 So what we do is we we bring in a call 00:05:46.120 --> 00:05:50.877 it an operating system of 50 plus proprietary technologies we built kind 00:05:50.960 --> 00:05:53.957 of an engine to run technology businesses very effectively and 00:05:54.040 --> 00:05:58.397 efficiently and really our core product. We swap out the 00:05:58.480 --> 00:06:01.557 technological foundation of the businesses we buy with that one so we 00:06:01.640 --> 00:06:05.957 can run it much better and also the people we transition across our 00:06:06.040 --> 00:06:08.957 various businesses always play by the same rules. They're more efficient cuz 00:06:09.040 --> 00:06:12.277 they find the same tool. >> these tools cut across what like HR, 00:06:12.360 --> 00:06:16.837 finance, tech ops, dev ops? >> Pretty much everything. Yeah, I mean 00:06:16.920 --> 00:06:20.517 orchestration of AI models check, recruiting tools check, AB testing 00:06:20.600 --> 00:06:23.237 platforms check. >> And then do you bring all of the 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 00:06:27.640 --> 00:06:30.597 all the licensing becomes scaled across one entity? 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 00:06:33.440 --> 00:06:36.517 relatively small one and probably adds I don't know one to percentage points in 00:06:36.600 --> 00:06:40.077 EBITDA margins. The you know, the more important aspects 00:06:40.160 --> 00:06:43.797 are being able to drive revenue increases through better product tech 00:06:43.880 --> 00:06:45.997 and monetization, sometimes marketing, 00:06:46.080 --> 00:06:48.517 cost reduction through leaner teams so 00:06:48.600 --> 00:06:53.717 more talent dense teams and but yes, vendor optimization is is 00:06:53.800 --> 00:06:56.037 helpful. >> You were doing the Elon X playbook 00:06:56.120 --> 00:06:59.957 before he did it. I mean like there's some stories that were written about how 00:07:00.040 --> 00:07:02.997 you right-sized Vimeo's workforce, you right-sized Brightcove. 00:07:03.080 --> 00:07:05.157 >> He called me before doing the X. 00:07:05.240 --> 00:07:06.397 No, I'm joking. >> Oh, he did? 00:07:06.480 --> 00:07:08.277 >> Oh, no. Okay. >> [laughter] >> Advice? 00:07:08.360 --> 00:07:11.077 >> But explain explain >> How do I cut all the people? 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. 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 00:07:17.280 --> 00:07:20.517 works? How do how do you figure that out? Is that accidental where you just 00:07:20.600 --> 00:07:22.717 pushing to a threshold? 00:07:22.800 --> 00:07:24.957 >> I think it's it's something we 00:07:25.040 --> 00:07:29.957 we learned partially because early early days where we were acquiring smaller 00:07:30.040 --> 00:07:33.397 businesses typically these people would sell us the 00:07:33.480 --> 00:07:37.197 assets say the product but not the team cuz for them it was very small teams 00:07:37.280 --> 00:07:40.397 they you know, wanted to move on to whatever other project they had and so 00:07:40.480 --> 00:07:43.837 we didn't really know any better. We were establishing teams internally to 00:07:43.920 --> 00:07:49.117 carry on the work and the number of FTEs was much smaller than 00:07:49.200 --> 00:07:51.837 >> In the original footprint? >> No, no, no. Well, also that, but then 00:07:51.920 --> 00:07:54.317 when we ended up buying businesses with 00:07:54.400 --> 00:07:59.277 established teams, we had perhaps naively built teams to run comparable 00:07:59.360 --> 00:08:02.077 businesses that were much smaller. And so we couldn't explain why you 00:08:02.160 --> 00:08:06.597 necessarily needed more people. Partly, yes, through experimentation we have 00:08:06.680 --> 00:08:10.877 found call it the sweet spot. Obviously, it's never perfect. We we 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 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 00:08:18.520 --> 00:08:21.917 likely to get that that level of performance if you have 00:08:22.000 --> 00:08:25.757 very very small teams, super high bar for talent, and sensible ownership. 00:08:25.840 --> 00:08:30.317 >> a 40-odd billion-dollar market cap-ish right now, I think, plus or minus. Um 00:08:30.400 --> 00:08:32.837 >> I don't know, actually. I haven't checked the the ticker since we IPO'd. 00:08:32.920 --> 00:08:34.997 >> it's roughly roughly in that zone. 00:08:35.080 --> 00:08:38.877 Um which is incredible from starting with a $10,000 acquisition. When do you 00:08:38.960 --> 00:08:41.677 trans- when did you transition from 00:08:41.760 --> 00:08:46.637 uh scaling on cash flow to then using debt and using more sophisticated 00:08:46.720 --> 00:08:49.597 financial engineering so you can go after these bigger fish? And how how has 00:08:49.680 --> 00:08:52.717 it gone so far? >> So, historically, 00:08:52.800 --> 00:08:54.237 uh 00:08:54.320 --> 00:08:57.197 we started using debt in 2017, I 00:08:57.280 --> 00:09:00.197 believe, either 2017 or 2018. Uh very 00:09:00.280 --> 00:09:04.077 basic bank loans, TLAs. And then as we 00:09:04.160 --> 00:09:07.997 So, free cash flow, their investment of free cash flow had always been a thing 00:09:08.080 --> 00:09:11.277 for us. We have redeployed pretty much 100% of our free cash flow toward 00:09:11.360 --> 00:09:14.197 acquisitions since the beginning. Uh 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 00:09:19.200 --> 00:09:22.397 little bit wiser, and more sophisticated, we went for, you know, 00:09:22.480 --> 00:09:26.757 TLBs. And maybe in the future there'll be bond issuances and other more complex 00:09:26.840 --> 00:09:30.197 instruments. We haven't used a whole lot of equity. 00:09:30.280 --> 00:09:35.197 Actually, when we IPO'd, we had only {quote} only raised about half a billion 00:09:35.280 --> 00:09:38.957 dollar in primary equity. And we were at roughly 20 billion in valuation and even 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 00:09:44.040 --> 00:09:47.837 months or so. So, almost all of our track record we've achieved through 00:09:47.920 --> 00:09:50.757 reinvestment of free cash flows and and that. But, going forward I think 00:09:50.840 --> 00:09:53.997 particularly as a public company using equity tactically here and there could 00:09:54.080 --> 00:09:57.117 be a good good >> So, with that equity um 00:09:57.200 --> 00:10:00.197 you are taking loans, I guess, 00:10:00.280 --> 00:10:03.677 five, six points over LIBOR, so 10%, 12% 00:10:03.760 --> 00:10:08.237 loans, and then you buy a business like Airtable, but that that means you have 00:10:08.320 --> 00:10:11.757 to pay a hundred million dollars in a debt payments per 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 00:10:16.160 --> 00:10:19.237 start going up, what what does that do with the business? Does it throttle a 00:10:19.320 --> 00:10:23.717 little bit? And then my second question, people have been pretty enamored by the 00:10:23.800 --> 00:10:28.997 progress you're making, uh and I think you're now facing uh some Bending Spoons 00:10:29.080 --> 00:10:32.357 competitors. So, maybe you could talk Are you seeing more people show up at 00:10:32.440 --> 00:10:36.317 these auctions and it's not just you and like two other players? 00:10:36.400 --> 00:10:41.317 >> Yeah, so um debt is an an accelerant to our growth. 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 00:10:45.160 --> 00:10:49.317 free cash flows, but definitely being able to use that is is a good thing. Uh 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 00:10:54.200 --> 00:10:57.837 parts. Uh first, the the risk with the existing indebtedness. So, 00:10:57.920 --> 00:11:02.877 all of our debt currently the the average cost of blended cost is about 9% 00:11:02.960 --> 00:11:04.557 give or take and it's fully hedged. So, 00:11:04.640 --> 00:11:06.877 increases in interest rates would not uh 00:11:06.960 --> 00:11:10.277 impact our cost of debt. Uh it matures 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 00:11:15.520 --> 00:11:18.557 currently at two and a half times leverage approximately. 00:11:18.640 --> 00:11:23.157 Now, if uh interest rates were to go up substantially, then new debt would be 00:11:23.240 --> 00:11:27.077 would be more expensive. Um I think that would be 00:11:27.160 --> 00:11:30.877 under most scenarios a net positive for us for a couple of reasons. 00:11:30.960 --> 00:11:34.317 Uh our returns unlevered historically have been pretty high 00:11:34.400 --> 00:11:39.757 consistently above 25%. Again, unlevered. So, whether we pay 9% or 12% 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. 00:11:43.880 --> 00:11:47.637 And you know, in the second one aspect is typically when interest rates go up 00:11:47.720 --> 00:11:51.917 the value of of of assets go goes down and so as a 00:11:52.000 --> 00:11:55.277 serial acquirer I think we're more likely to benefit more from the lower 00:11:55.360 --> 00:11:59.157 valuations than the higher that now that depends I'm generalizing and simplifying 00:11:59.240 --> 00:12:02.797 a bit, but uh overall we feel we are fairly 00:12:02.880 --> 00:12:06.877 well protected and you know, robust when it comes to to 00:12:06.960 --> 00:12:10.037 indebtedness. When it comes to competition for acquisitions, 00:12:10.120 --> 00:12:13.597 we have all of the processes we have participated in have had other other 00:12:13.680 --> 00:12:16.117 buyers or almost all of them. 00:12:16.200 --> 00:12:20.917 I'm sure competition will intensify or I'm sure it may intensify who knows. 00:12:21.000 --> 00:12:23.717 It could also get weaker. We're seeing private equity 00:12:23.800 --> 00:12:26.917 we have historically downsized after actually raised less capital to do the 00:12:27.000 --> 00:12:31.157 same and so on balance we may be better off. It's also 00:12:31.240 --> 00:12:35.277 I think important to to note that it's it's really painful and time consuming 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 00:12:38.920 --> 00:12:42.437 technologies which you can't build overnight. You don't even know what to 00:12:42.520 --> 00:12:45.837 build really if you haven't gone through many years of painful experimentation 00:12:45.920 --> 00:12:47.757 mistakes trying to repeat. 00:12:47.840 --> 00:12:50.437 Um you a lot of the value we create is 00:12:50.520 --> 00:12:55.357 thanks to those $800 people we have painstakingly selected over time the 00:12:55.440 --> 00:12:58.957 culture of high performance and and a scientific approach to business we have 00:12:59.040 --> 00:13:02.917 developed. Those things are there's no shortcut. I still remember hiring the 00:13:03.000 --> 00:13:06.037 first one person and then two people and then four people. You could probably do 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 00:13:10.040 --> 00:13:11.757 face competition, but I'm pretty optimistic. 00:13:11.840 --> 00:13:15.877 >> Follow up if I may. In our industry, the venture capital 00:13:15.960 --> 00:13:20.517 industry and even going into public markets, we covet the founder. And if a 00:13:20.600 --> 00:13:24.837 company loses its founder and the founder authority they have like Elon to 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 00:13:27.760 --> 00:13:31.277 Model S. We're going to convert those to Optimus." Those kind of bold bets only 00:13:31.360 --> 00:13:34.837 made by founders. You have a slightly different philosophy 00:13:34.920 --> 00:13:39.837 here. You don't want founders inside the company. You're not looking for that 00:13:39.920 --> 00:13:42.837 founder authority in each of these brands based on what I've I've heard you 00:13:42.920 --> 00:13:46.677 say. Um so, what is the expectation for your brands? Do you want to create 00:13:46.760 --> 00:13:49.477 cutting-edge, you know, version twos of 00:13:49.560 --> 00:13:53.837 Eventbrite's and Vimeo, or do you just want them to grow at a predictable rate 00:13:53.920 --> 00:13:57.397 and throw off that cash flow. So, talk about the founder role. 00:13:57.480 --> 00:14:00.157 >> Yeah, so I think if if you can have a 00:14:00.240 --> 00:14:03.357 founder with that, you know, level of of 00:14:03.440 --> 00:14:06.437 passion and and that mentality is, you 00:14:06.520 --> 00:14:10.837 know, nine times [clears throat] out of 10 will be a major net positive. Uh the 00:14:10.920 --> 00:14:14.717 generally when we end up acquiring companies, these are businesses that 00:14:14.800 --> 00:14:18.677 that have been around for 10, 20 years, even more than 20 years in some cases. 00:14:18.760 --> 00:14:21.677 And and for the founders, if they're still on board, sometimes they aren't on 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. 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 00:14:30.280 --> 00:14:33.477 we win if that business does better with us 00:14:33.560 --> 00:14:37.237 than it would have uh under previous ownership. Uh obviously, if we could 00:14:37.320 --> 00:14:40.797 have uh exceptional founders stay on board and pour their hearts into it, it 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 00:14:45.160 --> 00:14:49.157 that business than that business staying with the same uh 00:14:49.240 --> 00:14:52.677 ownership group and maybe losing the founder anyway. Um so, it's not that we 00:14:52.760 --> 00:14:55.717 don't want founders, but what once you know, companies are sold, the people are 00:14:55.800 --> 00:14:59.597 generally looking to move on. >> Can you bring us into the M&A deal desk? 00:14:59.680 --> 00:15:03.477 So, like in the room, walk us through your screening process. 00:15:03.560 --> 00:15:05.397 Are we How do we How are we doing this? 00:15:05.480 --> 00:15:08.637 What are we looking for? Are we looking for synergy and integration with the 00:15:08.720 --> 00:15:12.717 assets that we've bought before? Are we looking purely at cash flow? How do we 00:15:12.800 --> 00:15:15.917 stack rank these things? Just walk us through the deal desk. 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 00:15:20.520 --> 00:15:25.597 long list of businesses that we would be interesting targets. Uh one is scale. We 00:15:25.680 --> 00:15:28.637 the that process of any very deep integration 00:15:28.720 --> 00:15:33.277 uh and and and profound transformation takes a lot of operational effort, so we 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 00:15:36.320 --> 00:15:39.757 takes to transform a business we found it doesn't really scale linearly with 00:15:39.840 --> 00:15:42.837 revenue, so we're much better off acquiring relatively few sizable 00:15:42.920 --> 00:15:47.157 companies than a million small ones. So, we look we look for scale. We look for 00:15:47.240 --> 00:15:51.517 predictability in in earnings, and it's a big topic in and of itself, but we 00:15:51.600 --> 00:15:55.397 like businesses where we are pretty confident we can project at least you 00:15:55.480 --> 00:15:59.557 know, the next 5 or 6 years directionally. Um and then we look for 00:15:59.640 --> 00:16:04.437 businesses where we can create a lot of value. It could be technology, org, uh 00:16:04.520 --> 00:16:06.157 product, monetization, marketing. 00:16:06.240 --> 00:16:09.037 Ideally, most of these. >> Does value include the integration with 00:16:09.120 --> 00:16:12.597 these other assets that you have, or value just means economic value operating? 00:16:12.680 --> 00:16:15.757 >> Well, let me just ask a detailed point of that. Like if 00:16:15.840 --> 00:16:21.797 if you own AOL, you can put ads for Vimeo or Eventbrite or Miro on AOL. 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 00:16:26.160 --> 00:16:29.717 AOL that you can use. How much synergistic effect is there? And if 00:16:29.800 --> 00:16:32.317 there is synergistic effect 00:16:32.400 --> 00:16:34.077 and you've got all this capacity to do 00:16:34.160 --> 00:16:37.437 design, build, product management, 00:16:37.520 --> 00:16:42.877 agentic orchestration, testing, AB testing, why not also build organically 00:16:42.960 --> 00:16:46.397 at the same time and leverage the network effects of the existing businesses? 00:16:46.480 --> 00:16:50.677 >> So, historically, we have created almost no value from let's say 00:16:50.760 --> 00:16:54.437 customer-facing synergies, what what you described. Uh plenty of 00:16:54.520 --> 00:16:57.317 behind-the-scenes synergies. Like I said, it's all built on the same 00:16:57.400 --> 00:17:01.277 technological foundations and then there's there's this large core team of 00:17:01.360 --> 00:17:03.277 people we move around fluidly. 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 00:17:06.200 --> 00:17:10.237 value through customer-facing synergies has been that um we I think the 00:17:10.320 --> 00:17:14.557 portfolio wasn't necessarily large enough for good overlaps to materialize, 00:17:14.640 --> 00:17:19.317 but as it grows more and more, for example, now Airtable and Miro are both 00:17:19.400 --> 00:17:21.117 quite appealing to a lot of enterprises. 00:17:21.200 --> 00:17:26.157 I think what you are describing could become an additional value creation uh uh 00:17:26.240 --> 00:17:29.517 dimension. >> You haven't tried or you've tried and it hasn't worked. 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 00:17:33.360 --> 00:17:36.797 3%, but not like the bulk of it has been bringing 00:17:36.880 --> 00:17:42.757 uh 10 out of 10 excellence in operations, product, monetization, uh technology. 00:17:42.840 --> 00:17:44.637 >> Look at when >> On an individual business basis. 00:17:44.720 --> 00:17:47.077 >> And if Why not build organically products? Yeah. 00:17:47.160 --> 00:17:50.277 >> Yeah, so the First of all, you can't do 00:17:50.360 --> 00:17:55.957 everything. I mean, Elon can't I I you know, my colleagues colleagues and I 00:17:56.040 --> 00:17:59.957 we don't think we can. Maybe we should be more ambitious with ourselves, but um 00:18:00.040 --> 00:18:01.397 And so >> a lot on your plate. 00:18:01.480 --> 00:18:04.197 >> Yeah, yeah. >> There's so many different kinds of products already. 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 00:18:08.640 --> 00:18:12.197 completely radical innovation. We don't do a lot of that. We try to stay focused 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 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 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 00:18:25.960 --> 00:18:29.717 percentage of new startups or products being launched that would move the 00:18:29.800 --> 00:18:33.037 needle, it's it's very very small. So, what's 00:18:33.120 --> 00:18:35.997 the you know, we would have to deploy a lot of our resources and very unlikely 00:18:36.080 --> 00:18:37.877 to work. >> I I Sorry, let me just Can you just talk 00:18:37.960 --> 00:18:39.757 about the thing you and I talked about 00:18:39.840 --> 00:18:43.397 this um point on the talent exodus that 00:18:43.480 --> 00:18:47.197 happens in Silicon Valley companies when they start to stall out. And that the 00:18:47.280 --> 00:18:50.557 talent maybe that's working on the business isn't 00:18:50.640 --> 00:18:54.597 the quality of the talent that you've built in your your core platform. How 00:18:54.680 --> 00:18:58.917 much of that is assessed in that M&A process that you might have mentioned? 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, 00:19:02.200 --> 00:19:06.437 but you can form a uh first principles opinions. 00:19:06.520 --> 00:19:10.077 Uh businesses that again are more in a saturation phase, they tend not to be as 00:19:10.160 --> 00:19:15.277 appealing to some of the entrepreneurial engineers or designers. Um 00:19:15.360 --> 00:19:17.997 And [clears throat] so you can assume that the level of talent will be maybe 00:19:18.080 --> 00:19:21.517 good, but perhaps not, you know, what Anthropic would have. Not saying 00:19:21.600 --> 00:19:24.477 anything shocking here. >> They have a very unique kind of talent, 00:19:24.560 --> 00:19:25.997 but we'll talk about that another time. 00:19:26.080 --> 00:19:29.157 >> Yeah, okay. We we have a big advantage in attracting 00:19:29.240 --> 00:19:32.477 talent cuz if you work at Bending Spoons, it may be 00:19:32.560 --> 00:19:35.477 one of the very few places in the world where you can spend say one year 00:19:35.560 --> 00:19:40.797 rebuilding the email infrastructure for AOL and then 7 months helping 00:19:40.880 --> 00:19:45.397 rethink subscriptions on on the email and then build a platform technology to manage 00:19:45.480 --> 00:19:49.077 payments all with the same employer, mostly the same colleagues, same culture. 00:19:49.160 --> 00:19:50.637 >> You get broad technical scope. 00:19:50.720 --> 00:19:55.517 >> Exactly. So career opportunities just stay motivated because it's fun and new. 00:19:55.600 --> 00:19:58.717 Very high talent density begets high talent density, so there is an element 00:19:58.800 --> 00:20:01.477 of virtual cycle. So we have been able to attract ton of people last year, 00:20:01.560 --> 00:20:04.117 800,000 applications, we hired fewer than 300 people. 00:20:04.200 --> 00:20:05.717 >> Are they all in Milan? Where are they? 00:20:05.800 --> 00:20:10.597 >> No, no. We we are fully, you know, very international as a company. Milan for 00:20:10.680 --> 00:20:15.357 historical reasons remains like the biggest pool of of talent, but London 00:20:15.440 --> 00:20:17.437 for example is coming up faster, Madrid. 00:20:17.520 --> 00:20:20.277 We'll we'll be hiring people, plenty of people in the States, I think starting 00:20:20.360 --> 00:20:23.757 starting next year. >> Bring up an interesting question. 00:20:23.840 --> 00:20:26.277 Europe as a tech center 00:20:26.360 --> 00:20:30.037 isn't exactly something that venture 00:20:30.120 --> 00:20:34.317 capitalists, even late stage investors are pursuing. They kind of look at the 00:20:34.400 --> 00:20:38.757 market there as maybe slower and maybe just not as good of an 00:20:38.840 --> 00:20:43.157 opportunity. It's I think their decision. Rather be in Silicon Valley or 00:20:43.240 --> 00:20:44.797 American companies 00:20:44.880 --> 00:20:48.877 or perhaps Asia. So what's it like being 00:20:48.960 --> 00:20:53.357 the most aggressive, successful company then in Europe or one of them? 00:20:53.440 --> 00:20:55.837 Is there >> I think you're right. No, I think it is the 00:20:55.920 --> 00:20:59.837 >> I mean I Well, I mean Spotify obviously is much better, but Klarna. You're 00:20:59.920 --> 00:21:03.797 you're in the top 10 probably. Clearly in the top 10, so 00:21:03.880 --> 00:21:07.797 what's the talent pool like there? How is it different? Specifically Italy. I I 00:21:07.880 --> 00:21:11.157 notice when Chamath goes to Italy, maybe the there's a little bit less working 00:21:11.240 --> 00:21:15.077 going on. >> An extra button he he goes from three on buttons to four. 00:21:15.160 --> 00:21:17.397 >> Yeah, the buttons go down and the number 00:21:17.480 --> 00:21:19.877 of hours in front of a laptop goes down as well. 00:21:19.960 --> 00:21:22.997 >> Chamath, we see it. >> you keep these Italians working? How do 00:21:23.080 --> 00:21:25.397 you do What's the secret? >> No, but tell us about the talent pool in 00:21:25.480 --> 00:21:29.077 running a company in Europe. >> So, I I think I think Europe has a lot 00:21:29.160 --> 00:21:32.597 of problems, but I think there's a pretty good talent 00:21:32.680 --> 00:21:36.517 half a billion people living let's say the main part of 00:21:36.600 --> 00:21:38.597 Europe. So, it's a lot of people with pretty good education. It's not 00:21:38.680 --> 00:21:42.477 Stanford, but it's solid and and a lot of these people have a 00:21:42.560 --> 00:21:46.117 chip on their shoulder to prove we're not necessarily less smart or capable. 00:21:46.200 --> 00:21:48.997 So, you do find a lot of good people. I 00:21:49.080 --> 00:21:51.597 I do think there is a the fact that 00:21:51.680 --> 00:21:56.317 Italians don't want work hard is mostly a false stereotype. 00:21:56.400 --> 00:22:00.997 >> Yes. >> I we find that I mean my wife she doesn't work with me. 00:22:01.080 --> 00:22:05.717 She works in another company. She works a lot long hours. At our company we work 00:22:05.800 --> 00:22:09.477 pretty hard. We generally find that when we acquire companies and we work with 00:22:09.560 --> 00:22:12.037 existing teams more often than not 00:22:12.120 --> 00:22:16.957 the team we we bring in works substantially harder. So, um 00:22:17.040 --> 00:22:19.837 I don't know. We just try to hire people who are intrinsically motivated, very 00:22:19.920 --> 00:22:23.037 ambitious, you're just hungry, entrepreneurial and 00:22:23.120 --> 00:22:26.997 and then give them you know a good reason to to do their best work because 00:22:27.080 --> 00:22:29.757 they see that they can have a unique career. 00:22:29.840 --> 00:22:32.717 >> anywhere other than Milan and that it might be an accelerant for the business? 00:22:32.800 --> 00:22:35.997 New York City where the banking capital is, Silicon Valley the tech capital. 00:22:36.080 --> 00:22:37.437 Have you thought about moving the headquarters? 00:22:37.520 --> 00:22:41.557 >> Why? Lucas totally right. You get like these people the problem with people in 00:22:41.640 --> 00:22:45.597 in the like you go to these typical places, typical schools, they think 00:22:45.680 --> 00:22:48.717 they're geniuses and it's like when you actually like just look even just look 00:22:48.800 --> 00:22:50.437 at AI. Who are the major contributors? 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 00:22:55.480 --> 00:22:58.757 at UFT. >> It's like McGill. >> It's like CMU. 00:22:58.840 --> 00:23:01.117 >> It could well it could be an advantage. 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 00:23:03.880 --> 00:23:07.877 I when I interviewed Charles Koch, you know, I talked about this. What I found 00:23:07.960 --> 00:23:11.357 so fascinating is he built that business, probably the most 00:23:11.440 --> 00:23:13.157 extraordinary wholly-owned business on 00:23:13.240 --> 00:23:16.277 Earth, from nothing effectively, in 00:23:16.360 --> 00:23:20.197 Wichita, Kansas. And I say it's like the Wichita mindset cuz he basically kind of 00:23:20.280 --> 00:23:23.237 ignored everything that was conventional, and he was able to do 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 00:23:26.920 --> 00:23:30.477 do them that are based in Silicon Valley, and that might be the reason cuz 00:23:30.560 --> 00:23:34.197 you're in Milan and you're not kind of indoctrinated into cultural thinking. 00:23:34.280 --> 00:23:37.517 >> look, I'll just say what's what what I find so incredibly interesting about 00:23:37.600 --> 00:23:39.757 your company and what you're building is 00:23:39.840 --> 00:23:41.717 in in all of our generations, we've seen 00:23:41.800 --> 00:23:44.677 this these incredible examples of 00:23:44.760 --> 00:23:47.397 companies that have run your playbook 00:23:47.480 --> 00:23:49.757 but in traditional industries. Um 00:23:49.840 --> 00:23:53.437 Amphenol, Roper, Danaher, Berkshire. 00:23:53.520 --> 00:23:58.317 And we've never seen a successful implementation of it in tech. And uh I 00:23:58.400 --> 00:24:01.797 think you're the best-scaled example. I mean, Expedia tried, Barry tried. I 00:24:01.880 --> 00:24:05.277 think it was a little complicated. Um so, it's really exciting to see that 00:24:05.360 --> 00:24:09.197 this thing can work because the the the structural issue was always how do you 00:24:09.280 --> 00:24:11.477 underwrite these cash flows? And I think you're proving that they're 00:24:11.560 --> 00:24:15.557 underwritable, that these things can go out for 7, 8, 9 years. And especially 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 00:24:19.240 --> 00:24:22.757 going on." Right? Yet, you're still able to go and transact, and 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 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 00:24:30.160 --> 00:24:31.677 risk. You think it's a tailwind for you. 00:24:31.760 --> 00:24:34.317 >> Yeah, I think the you know, the private equity is 00:24:34.400 --> 00:24:37.637 completely different cuz they keep these companies separate for the most part to 00:24:37.720 --> 00:24:40.957 sell them, and so they could never have that technological foundation because 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 00:24:44.080 --> 00:24:47.277 private equity competitor? Do you license it to them? So, that's, 00:24:47.360 --> 00:24:51.157 you know, remove that. They can't have a pooled team of engineers, designers 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, 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 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 00:25:01.520 --> 00:25:05.357 completely different and and I believe these structural differences are a big 00:25:05.440 --> 00:25:09.997 reason why we have been I I'd like to say successful. 00:25:10.080 --> 00:25:12.597 So, it will never work with the traditional private equity which has 00:25:12.680 --> 00:25:15.597 other advantages. You can deploy maybe a lot more capital cuz it's a little bit 00:25:15.680 --> 00:25:19.357 more, you know, hands-off. But but you can never achieve the returns I think we 00:25:19.440 --> 00:25:21.437 we have. >> Look, I wanted to say thank you. An 00:25:21.520 --> 00:25:22.477 incredible business you're building. 00:25:22.560 --> 00:25:25.760 Congratulations. >> Well done.