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.
02:34:10 · Jordi Hays, Luca Ferrari, John Coogan
[02:34:10] S1: Yeah. Makes sense. Any any plans to create a Neo Cloud or anything of the sort? Or you guys like staying at the product level? [02:34:20] S5: No. No such plans for for none. [02:34:24] S0: What's the Italian early [02:34:28] S1: I stage wanna dig I I wanna dig into that a bit more just just out of curiosity because I'm I'm I'm assuming there's a lot of different players that would love to give you guys capital to help deploy, cloud given that you're running a lot of, you know, companies that are gonna be, buyers of of compute and you have a track record of being able to deploy large amounts of capital, is the decision to you like you the strategy is you're you're invested in a bunch of different companies, but do you like them to be the same kinds of companies? And that, like, again, is it just a mandate around digital products? Or would you one day branch out? Because again, if you use the Berkshire Hathaway comp, it's like you've seen them buy everything from Coca Cola to Google. Right? And operate a bunch of different businesses.
02:35:16 · Luca Ferrari, Jordi Hays
[02:35:16] S5: Yeah. Look, I I think there's a trade off between let's say there is a meet you know, going back to Warren Buffett, a circle of competence, as he calls it, where you you're proven you're good or very good, better than most. And so on the one hand, if you stay within that circle of competence, you're more likely to do well. But at the same time, if you venture outside of it, you extend your toolkit, your capabilities, and the TAM grows with it too. So there is a trade off between expanding that circle over time while seizing the opportunity at hand with what's already have proven that works. In our case, we'll we'll be next year will probably be at about 2,500,000,000.0 in revenue. And the overall the overall digital technology market is about $2,000,000,000,000. Yeah. So it's not exactly we're saturating the opportunity here. So before we get into something we know very little about other than on a high level, I I I think we should make sure that we are accelerating the core opportunity. But, yeah, maybe in five or ten years, if we ever feel that we're getting too big for for the TAM, maybe we'll look beyond that. We'll we'll know what will be appealing then. [02:36:33] S1: Do you think it's funny that the The US venture capital ecosystem is somewhat like off balance sheet r and d for you guys? It's like they can deploy a bunch of capital into these categories, create good products like Evernote, then you guys can come in and and, own them for the long term?
02:36:33 · Jordi Hays, Luca Ferrari, Stacy Rasgon, John Coogan, John Tennant
[02:36:33] S1: Do you think it's funny that the The US venture capital ecosystem is somewhat like off balance sheet r and d for you guys? It's like they can deploy a bunch of capital into these categories, create good products like Evernote, then you guys can come in and and, own them for the long term? [02:36:53] S5: Look. We when it comes to acquisitions, we're opportunistic. I don't you know, whatever the market offers, if we think we can deliver great returns, we'll be happy to buy it regardless of the particular history. Usually, I don't know. I don't have a other gratitude or any particular opinion on on that. Know, VCs have many have done really well. I guess it's normal that at least in some cases, their investment didn't turn out to be the [02:37:19] S1: Yeah. [02:37:19] S5: Exceptional success that could have been. [02:37:22] S6: Well, in [02:37:22] S0: many cases, some of [02:37:22] S4: those firms [02:37:23] S0: have IPO ed, and, you know, delivered a bunch of returns for the LPs in the venture fund. Yep. I I am interested in now you you've you've acquired Evernote's probably a good example. Yeah. But any any example of acquiring a company that's already publicly traded, how does that work? How how do you work through those that process? Are you going directly to the board? Like, are there are there best practices around, like, when a company or or a group of shareholders might be more receptive to a to a takeover? Or or do you see yourself ever getting into more of like a hostile takeover scenario? Does that does that does that matter to your strategy?
02:37:23 · John Coogan, Luca Ferrari
[02:37:23] S0: have IPO ed, and, you know, delivered a bunch of returns for the LPs in the venture fund. Yep. I I am interested in now you you've you've acquired Evernote's probably a good example. Yeah. But any any example of acquiring a company that's already publicly traded, how does that work? How how do you work through those that process? Are you going directly to the board? Like, are there are there best practices around, like, when a company or or a group of shareholders might be more receptive to a to a takeover? Or or do you see yourself ever getting into more of like a hostile takeover scenario? Does that does that does that matter to your strategy? [02:38:12] S5: We've done two take privates [02:38:15] S0: Yeah. [02:38:15] S5: So far. One is Brightcove Yep. Early this year, and the second one is Vimeo. [02:38:20] S0: Yeah.
02:38:21 · Luca Ferrari
[02:38:21] S5: So I know like, I wouldn't consider myself a world expert in Sure. Private, but I've seen a couple of them, so I can probably provide at least some some input here. We have done it quite collaboratively reaching out to the board and and just saying, look, we'd be interested and we will make an offer. The I would say the the the negotiation is not massively different from what you would do in a private deal, but the there is a lot more pressure on a board of a public company to to to to act in the best interests of the broader shareholder base because the liability is a lot more legally speaking, it's probably not very different different, but of course, the transparency of that process makes it really difficult to say, I don't like it. Fuck you. You know, if it's a good offer, you have to entertain it. So on the bright side, if you have a great offer relative to the stock price, you have, I think, better certainty that it'll be at least entertained than with private companies where sometimes you find you you're absolutely confident you're making a an incredible offer, but say the founder is just not not gonna sell or a particular investor maybe invested at a really high valuation and they're now maybe even delusional in thinking, oh, we'll get back to 3,000,000,000 if we wait for, you know, long enough. And so there, you don't really have any leverage. It's like, okay. End of end of the conversation with a public company that can't really happen or at least is quite rare. On the on the you know, so that that's the positive. On on the negative, the process is a little bit more uncertain because with with a private deal, typically, if you have a handshake agreement with the two, three decision makers, then it's quite unlikely that the deal falls through. The public company, basically, at any point in time, if someone comes with a better offer, and it can be quite public, so everything is, you know, back to square to square one. Mhmm. You need to show all their votes. So you only know after multiple months, and so you're kind of keeping your fingers crossed. But overall, I love public deals. I think they're in many ways more straightforward. There's no hiding behind delusions. I mean, your stock price speaks volumes and if it's been at a certain level for a long time, that is it, you know, for the most part.