Luca Ferrari says Bending Spoons compounds capital by becoming elite operators of digital businesses, then buying companies with the cash they generate.
Ferrari says the company would have to reach at least $500m in revenue for a new launch to be worth building, given its roughly $4bn run-rate revenue base.
Ferrari argues that investors discount the stock because others might, so Bending Spoons evaluates deals on IRR and NPV from its own free cash flow projections rather than organic growth.
Bending Spoons' CEO on compounding through operations and acquisitions
Bending Spoons compounds capital by being an exceptional operator of acquired digital businesses. Buying companies with moats and product-market fit is easier than building them, so the real work is the talent, culture and technology that make owners' cash flows grow. Ferrari argues the market overweights organic growth, while the company's returns on acquisitions are what drive value.
Takeaways
Operations, not deal-making, drive the compounding. The thesis formed about thirteen years ago. Becoming among the best operators of digital businesses lets Bending Spoons buy at prices owners like and still earn high cash returns to redeploy. Acquisitions are the easier part once the platform exists.
Scarce early capital built durable advantages. Ferrari says the company was lucky nobody gave it $100m early, because scarcity forced frugality. Talent, culture and proprietary technology took thirteen years and cannot be bought quickly. A conventional VC playbook, he says, will not produce a Berkshire Hathaway.
Caring and extreme ownership define the culture. Ferrari says culture is almost all about caring. It comes from hiring people who care, keeping them, and leaders visibly embodying it. His analogy is that shooting 45% beats teams shooting 38%.
Decentralization and AI decouple revenue from headcount. Teams make almost all decisions, with only items like pricing escalated, and the technology toolkit is standardized. Revenue per core team member rose from about $1m to over $4m in three years. Ferrari predicts revenue could grow 10 times with headcount up at most 3 times.
Buying companies beats building them from scratch. Startups rarely reach scale, and even successful ones typically reach about $1bn in revenue in ten years. With about $4bn in run-rate revenue, assuming Miro closes, a launch would need to be very large to matter.
Deals are judged on IRR, not organic growth. Ferrari says most investors pattern-follow, and astute ones discount the stock because others might. Bending Spoons values deals by IRR and NPV on its own free cash flow projections, like Teledyne under Harry Singleton, which aggregated businesses before focus was fashionable.
What comes next
Bending Spoons is widening its addressable market early, starting with hardware and enterprise software such as Airtable.
Ferrari accepts that returns may compress as more capital is deployed, though he would sign for twenty years of purchases of shrinking companies at a 65% levered IRR.
Going public was worthwhile for cheaper debt and an equity currency for acquisitions, and he expects a buyback opportunity within ten years.
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On this episode 3
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His drivers are competitiveness, learning and building something great that could reset the bar for excellent operations, especially in Europe.