two & a half gamers
00:07:06 · Felix Braberg, Darius Mora, Matej Lancaric
[00:07:06] S3: Exactly. Yeah. He joined McKinsey where he worked for sixteen months while the other founders developed simple apps for the app stores. They had some moderate success, but no breakthrough success. [00:07:19] S0: This is basically like what a shitty deal. It's the smartest guy that has to do the boring shit while everybody else is having fun and not paying rent and just working. [00:07:27] S3: It's a great deal, [00:07:28] S2: Yeah, of course. [00:07:29] S3: So after no breakthrough success, this is when they decided to buy their first app, a keyboard app, which they bought for $15,000 and they then rewrote the software, changed the design and were able to drastically improve the revenue metrics. They then took the profits from this app and made the next purchase, which was larger and they managed to turn it around for a bigger profit. So this laid the grounds for the Bending Spoons business model, which focuses on buying assets, overhauling them and they describe it themselves as a mix between being a technology company and a private equity firm. The only [00:08:09] S2: difference Yeah, I'm very here close to Genesis, right? That sounds like them. [00:08:13] S3: No, no. The key difference between Genesis and here is that they take a very long term view and they never sell their assets. So Genesis sells their I don't know if they have actually, but yeah, I don't know. Darius, do you know if Genesis sells No, assets as well or [00:08:29] S2: I don't think so. It's just I think that they don't just buy them, but they invest.
00:08:29 · Matej Lancaric, Jakub Remiar, Darius Mora, Felix Braberg
[00:08:29] S2: I don't think so. It's just I think that they don't just buy them, but they invest. [00:08:34] S1: Genesis was like voodoo voodoo style Yes, exactly. [00:08:37] S2: Yeah, yeah, yeah. It's not exactly the same, but very similar. [00:08:40] S0: Was Genesis building their own products from scratch as well? [00:08:43] S1: Genesis was... [00:08:45] S2: They were. [00:08:45] S1: Yeah, this is the game industry model that we use during the hyper casual era where you are pretty much financing the teams mainly, and they build you prototypes and then you kind of run with them as much kind of shots on goal as possible. [00:08:57] S2: It's Before kind of they've done that, built few apps on there, but they built something on their end as well. [00:09:04] S3: Yeah, so this was wildly profitable for Bending Spoons and has been and in 2024, the revenue is rumored to have surpassed $500,000,000 And it's also rumored that Bending Spoons is planning to go public soon. So I guess it's the first company kind of in this business model that is actually willing to go public. [00:09:27] S2: My friend here. So Bending Spoons bootstrap, But in September 2022, they raised $340,000,000 from investors. And this round attracted names like Ryan Reynolds or ex Vimeo CEO or a former Google CEO, Eric Schmidt as well. So and some Italian bankers. See Italian Yeah. That [00:09:53] S1: sounds sexy. [00:09:55] S2: You know, then they actually in early twenty twenty four raised additional 155 at valuation 2,500,000,000. So not bad. [00:10:06] S1: What was the date of that last Sorry.
00:10:06 · Jakub Remiar, Matej Lancaric, Darius Mora, Felix Braberg
[00:10:06] S1: What was the date of that last Sorry. [00:10:08] S2: Early twenty twenty four. [00:10:11] S1: Okay. [00:10:11] S0: And apparently they said that all of that money was used to do the acquisitions because they bought a lot of stuff in the last few years. So this wasn't like they're not burning, they're making cash. This was just to make the big acquisitions, which I'm sure you're going to talk about what they bought. Yeah. They're going outside of the app space as well. If they do want to go for an IPO and they talked about The US listing, then I wonder if it makes sense to also diversify outside of the App Store, because then there's a question about long term feasibility with AI and with OpenAI announcing their own hardware next year. Who knows what the App Store will look like in five years, if there will be one. [00:10:47] S3: Yeah. Yeah. Very good point. [00:10:49] S1: Just want to add one tidbit here. This model was actually already tried in the gaming industry. Maybe you have heard of things like Embracer or Steel Front, which are our very famous names here, which ended up horribly. I'm sorry. [00:11:03] S2: Yeah, but look. [00:11:04] S1: Look, whatever they're doing, they're pretty much just raising the value of their stock and buying the companies for the stock and [00:11:11] S2: At some point, pretty [00:11:13] S1: much went all crumbling down as a Ponzi scheme. So that's like the idea. Even though they own like the right to Lord of the Rings and stuff like that now. But yeah, it went very, very bad.
00:11:13 · Jakub Remiar, Matej Lancaric, Darius Mora
[00:11:13] S1: much went all crumbling down as a Ponzi scheme. So that's like the idea. Even though they own like the right to Lord of the Rings and stuff like that now. But yeah, it went very, very bad. [00:11:23] S2: But more we talk about apps, it's actually, I'm seeing way more differences between games and the business model versus apps and their business model and how it actually works and how it actually is more consumer driven rather than just like gamers. It's slightly different. [00:11:40] S1: No, it's utilities. Like it's not, you know, most of these things are utilities. It's not like a game that you need to compete with some other Chinese company, which copies you one to one and then what? [00:11:49] S2: Sure, but then in this, like all of these different categories, they have millions of clones, obviously. And it's like, some of them are making millions and you have never heard of these apps before. And you look at it like, no way, what the fuck is happening? And then you open TikTok, YouTube, Reel, Instagram, it's all over the place. So it's slightly different business model, but still like all these subscription based offerings. Yeah, it's an interesting thing. So I'm very glad that we are actually talking about [00:12:18] S0: A lot of the... Not just utilities, but a lot of the apps have a really long LTV. People just use something. You'll use the same alarm app for fucking ten years, right? Or whatever that might be, or fitness app. My favorite category is all these trackers, like any tracking app, something that people use for years and years and years.
00:12:18 · Darius Mora, Matej Lancaric, Jakub Remiar, Felix Braberg
[00:12:18] S0: A lot of the... Not just utilities, but a lot of the apps have a really long LTV. People just use something. You'll use the same alarm app for fucking ten years, right? Or whatever that might be, or fitness app. My favorite category is all these trackers, like any tracking app, something that people use for years and years and years. [00:12:37] S2: Yeah, and especially in January. [00:12:41] S0: January I is good one for know companies that'll do 40% of their annual revenue comes in January alone. If you're having like and some of these [00:12:52] S1: You use resolution apps. [00:12:54] S0: Yeah. Our own apps will triple in January, but not doing anything. [00:12:59] S2: Yeah. There's a seasonality. [00:13:01] S3: Super interesting. And I remember you told me one time before Darius about how Bending Spoons hires. It's also very different from pretty much any company that I've actually heard of. [00:13:13] S0: Yeah, yeah. So they have, mean, they have a very rigorous process and there are also a lot of interesting changes they made. And I think the first... They're very confident in their own team. So when they did some of these big acquisitions, their note that we transfer and a bunch of the other ones, one of the first things they do is fire everybody. That's a big way to lower costs because these are based in San Francisco and Amsterdam and other places. So they fire everybody and then bring it in house. And you still pay really well, but it's cheaper in Italy and Milan than most of the other places.
00:13:13 · Darius Mora, Matej Lancaric, Jakub Remiar, Felix Braberg
[00:13:13] S0: Yeah, yeah. So they have, mean, they have a very rigorous process and there are also a lot of interesting changes they made. And I think the first... They're very confident in their own team. So when they did some of these big acquisitions, their note that we transfer and a bunch of the other ones, one of the first things they do is fire everybody. That's a big way to lower costs because these are based in San Francisco and Amsterdam and other places. So they fire everybody and then bring it in house. And you still pay really well, but it's cheaper in Italy and Milan than most of the other places. [00:13:45] S2: That's what I read. Transfer bought the company, laid off 75% of people. Bye bye. Yeah. It's amazing. Mean, mean, they're they're giving giving out... Obviously. [00:13:58] S0: Yeah. They're giving out, I think, pretty comfortable packages, like sixteen weeks of salary, €1 health insurance, all this stuff that like, you know, pretty cushy transition. But of course, it's not ideal. [00:14:08] S2: Yeah. But if you compare San Francisco or US based salaries and then Italy... [00:14:13] S1: But the mobile wouldn't work Exactly. That [00:14:14] S2: Yeah. Exactly. There's no way. Like, that's why you see so many, at least, gaming companies coming out of Turkey or Vietnam or... Well, not really US that much because it's really expensive. [00:14:25] S3: I mean,