02:26:42 · Luca Ferrari, John Coogan
[02:26:42] S5: Yeah. So it's actually say that we're kind of 25% private equity, 75% tech company. Yeah. So we do have an m and a team. It's actually pretty small, probably eight, nine people. Mhmm. And and they they do what you would imagine a private equity firm would do. They they create a pipeline, scout the deals, negotiate the deals. And then really probably 95% of the of the team here are software engineers, product designers, growth managers, AI researchers. And once we close a a transaction, we add a call a task force of experts to get, you know, get in the trenches with the acquired team and study things in fine detail and help with those kind of radical transformations I was describing earlier. So that's the tech tech technology company part. We almost all we do is writing software, developing and refining technologies, user experiences. And we we buy to hold and operate forever. We're not a fund, to be clear. Mhmm. More like a Berkshire Hathaway. We buy off the balance sheet if you've sold a business nor doing ten two. [02:27:40] S0: So you so is it is it fair to think yeah. You'll you you imagine AOL and Vimeo existing as companies in fifty years or brands is fifty years or both? Like, what what is the critical Business units, I will call it. Business units. Okay.
02:27:40 · John Coogan, Luca Ferrari, Jordi Hays
[02:27:40] S0: So you so is it is it fair to think yeah. You'll you you imagine AOL and Vimeo existing as companies in fifty years or brands is fifty years or both? Like, what what is the critical Business units, I will call it. Business units. Okay. [02:27:56] S5: So the the the the if a company is more a kind of a legal entity, that that may be dissolved in the future. Maybe yes, maybe no depending on considerations. But there there will be a business unit with its dedicated management team and engineers and designers. And sorry. I don't know why [02:28:16] S0: That's on our side. [02:28:17] S5: Zoomed in. [02:28:17] S0: We we we just zoomed you in a little bit for the sorry. [02:28:21] S5: Okay. I can see my baby's cradle just in the background. [02:28:25] S1: Oh, nice. [02:28:26] S0: Congrats. Have we have five kids on our side. It's amazing. Yeah. [02:28:32] S5: Mine is two and a half months old. So it's [02:28:35] S0: today in Tennessee Station. Well, thank you so much for taking the time to come talk to us. We really appreciate it. [02:28:39] S5: My pleasure. Thank you for having me.
02:28:39 · Luca Ferrari, John Coogan
[02:28:39] S5: My pleasure. Thank you for having me. [02:28:41] S0: I'd I'd love to know, like, what what what what is it actually like buying a 5,000 person company? Or like, because I imagine, like, if I'm, like, if you buy a company and you can actually go interview everyone, but with 5,000 people, you're, like, layers and layers and layers deep into everything. Like, how do you actually go and start rightsizing? We've seen a little bit of what happens through the stories of Twitter, what Elon did there. Obviously, that was a that was a company that it seemed like post Elon was massively overstaffed. But, but even even even if your the staffing is correct, I mean, Apollo's owned AOL for a while, so I imagine that it's not wildly overstaffed. How do you actually go in and and just get your handle on everything that's happening within the business because it's such an such a huge entity? [02:29:35] S5: Right. So we we have never acquired a 5,000 person company. The largest is about a thousand people. [02:29:40] S0: Okay. Thousand.
02:29:40 · Luca Ferrari
[02:29:40] S5: I think your your point stands. I mean, but Sure. Just to for accuracy sake. Yeah. Yeah. Well, I I think it's very difficult, perhaps impossible to do if you are, again, a private equity and you have a small investment team. Mhmm. In our case, we will add a task force that's sized in relation to the size of the organization we're trying to study. And so if we acquire a 1,000 person company, we'll probably have, say, 50 people. Okay. If it's a 100 person company, maybe as few as 10. Mhmm. And then over the course of couple of months, you know, we will split the work so everyone is in charge of understanding a piece of the organization that's not not too big for like, the right size for them and and specific to their capabilities and expertise. So if there is a more technical part of maybe an engineer, if it's something has to do with design or marketing, you know, and so on and so forth. And then those people will be talking to each individual in in that part of the organization multiple times. They will be looking at the code base. They'll be contributing on ongoing projects. So we take our time to learn. I mean, was about to say everything there is to know. Of course, that's not entirely true. Like, you don't learn everything in two months. True truly learn the vast majority of what matters. And only then do we come up with the say a a new vision for the company, a new road map, the a new design for the updated organization. It is extremely time consuming and only feasible you have if you have a large, call it corporate staff of of experts, like in our case, only only then can you do it at scale. Otherwise, yeah, you couldn't. I agree.
02:31:17 · Jordi Hays
[02:31:17] S1: Yeah. What how how much is, I'm assuming when you're thinking evaluating potential acquisition, you're thinking how much can this company benefit from AI and what is kind of the AI disruption risk? Oftentimes, it could be both. I can I can, you know, imagine with AOL, you're saying, like, better content recommendation that you could roll out maybe with with less resources invested? But at the same time, there's risk of new companies entering the market. But what's your any framework that you're using to evaluate what companies are going to do well? Because nightmare scenario is you buy a great business today, and that becomes less relevant. But there's also think Silicon Valley also maybe again, going back to my earlier point around durability. There's companies that have been disrupted multiple times that can still continue to produce cash flow, but I'm I'm curious what your framework is.
02:32:18 · Luca Ferrari
[02:32:18] S5: Yeah. So I think there's I believe you can come up with plausible visions for the future. I mentioned earlier, we were working with AI in 2010 where I I I didn't know a single other person who was interested in AI back then. So, I mean, I'm sure there were many in the world, but it was not mainstream. So, you know, we did have a big vision for AI in the long in the long run. It turned out to be way too early, maybe a decade or more. So I'm I'm I'm a big believer in, yes, you wanna have a vision for the future, but at the same time, if you think you know what's gonna happen and especially over what timeline, you're very likely to be disappointed. So I would never wanna bet our future on those sort of assessments. What we try to do is evaluate whether a company is more or less likely to be disrupted and, of course, also enhanced through AI, and that that's basically a qualitative assessment. We try to embed that in our acquisition thesis, but also we all always need a a contingency plan in case there is a very aggressive rapid disruption. So we need to make sure that we have ways to get back our investment in case we end up in that or most of our investment in if we end up in that scenario. So you some businesses are structured in a way that if things don't go well, you you may be able to trade long term health for short term returns and at least salvage your investment overall. I mean, it's not gonna be a stellar investment, but still the breakeven. So we we try to have a an escape route just in case things don't turn out the way we we think it will. And of course, the fact that we're so diversified, the biggest business we own contributes about 15% to our revenue, and they are across many different segments. We are massively less exposed to sort of disruption than any company running a just one product, no matter how successful that one product may be today.