Bending Spoons funds its acquisitions with its own money rather than outside investor capital, and Luca Ferrari says it will make unpopular layoffs when it believes they secure the business for the next five or ten years.
Bending Spoons reports roughly $700m in revenue, profitability every year since founding, and about 1% unwanted churn annually, against an industry average Gergely Orosz puts at seven to 10 percent.
After acquiring Evernote in early 2023, Bending Spoons replaced a Java monolith on about 750 manually provisioned virtual machines with managed databases and an event-driven sync system, making sync actions ten to twenty times faster.
Self-funded Bending Spoons profitably runs over 100 digital products
Bending Spoons is a self-funded acquirer that buys digital products and runs them indefinitely with a small, highly selected team. A shared platform and a habit of radical simplicity let few people operate over 100 products profitably. The price is a hard culture that accepts layoffs and fixed pay in return for very low unwanted attrition.
Takeaways
Bending Spoons buys with its own money. Ferrari says it is not a fund and uses its own capital, not investor money, to own and operate companies forever. After each deal it spends weeks to two months learning before forming a vision.
Layoffs are defended as positioning for the long term. Ferrari says the company will make unpopular decisions that set a business up for the next five to ten years, and supports people who leave. Orosz adds that surviving a painful transition beats slowly dying.
A strict excellence bar keeps unwanted churn near 1%. Applicants receive the Controversial Principles document, and the company wants a near-best performer in every position. Ferrari claims unwanted churn of about 1% a year, against an industry average Orosz puts at seven to 10 percent.
Profitable at scale with a small team. Revenue is about $700m, with profit every year for eleven years. Over 200m monthly users span more than 100 products, on roughly 450 staff, or over 800 with WeTransfer.
Flat structure, fixed pay, and young hires. Autonomous business units share one platform. There are no titles, few levels and no bonuses, since Ferrari sees weak evidence they drive performance. He prefers new graduates because talent cannot be taught while experience can.
Evernote ships fast by ranking value against effort. Simionato says the team ranks backlog items by customer value and build effort. Collapsible sections arrived in a couple of weeks, 100 updates are promised for 2024, and a one-click AI transcription feature has launched.
Ferrari says rivals would need about six years. He says a competitor with unlimited capital would still need roughly six years to match the company, which has built more than 50 technologies. Simionato says it was seven years ahead of what others now try to build.
From failed app to serial acquirer
Ferrari and two friends start Evertale in Copenhagen, an AI diary app, and raise about $1m in VC money.
The app fails commercially, and the VC firm sells its shares to the founders for $1.
The remaining $40,000 seeds Bending Spoons in 2013 with five people, since raising equity in Italy was borderline impossible.
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On this episode 4
Show 1
The first acquisition is an iOS keyboard app, bought for $10,000 from a one-man developer.
More than $1bn has since gone into deals including Meetup, Hopin, StreamYard, WeTransfer and Splice.
Rebuilding Evernote after the 2023 deal
The deal closes in early January 2023, after talks in late 2022.
Mancone inherits a Java 11 monolith on about 750 manually provisioned Google Cloud machines, with uneven data sharding that forced on-call.
Data moves to managed databases, guided by a principle of radical simplicity that aims to avoid on-call.
Microservices head toward planned consolidation, and the NSYNC event-driven system replaces client polling, making sync actions ten to twenty times faster.
Self-hosted Jenkins gives way to CircleCI, with a goal to sunset the monolith by year end.