All-In with Chamath, Jason, Sacks & Friedberg
00:13:57 · Luca Ferrari, Chamath Palihapitiya
[00:13:57] S0: Yeah. So I think if if you can have a founder with that, you know, level of of passion and and that mentality is, you know, nine times out of 10 will be a major net positive. The... Generally, when we end up acquiring companies, these are businesses that that have been around for ten, twenty years, even more than twenty years in some cases. And and for the founders, if they're still on board, sometimes they aren't on board, for them it's really a moment of, okay, this is a chapter on closing, I I wanna move on. So the the the real question there, for for us, we win if that business does better with us than it would have under previous ownership. Obviously, if we could have exceptional founders stay on board and pour their hearts into it, it be even better. But we can still do well by being a better home for that business than that business staying with the same ownership group and maybe losing the founder anyway. So it's not that we don't want founders, but once, you know, companies are sold, the people are generally looking to move on. [00:14:57] S3: If you bring us to the m and a deal desk? So, like, in the room, walk us through your screening process. Are we... How do we... How are we doing this? What are we looking for? Are we looking for synergy and integration with the assets that we've bought before? Are we looking purely at cash flow? How do we stack rank these things? Just walk us through the deal desk.
00:14:57 · Chamath Palihapitiya, Luca Ferrari
[00:14:57] S3: If you bring us to the m and a deal desk? So, like, in the room, walk us through your screening process. Are we... How do we... How are we doing this? What are we looking for? Are we looking for synergy and integration with the assets that we've bought before? Are we looking purely at cash flow? How do we stack rank these things? Just walk us through the deal desk. [00:15:15] S0: Yeah. So I think there's qualitative criteria we use to slim down the the long list of businesses that would be interesting targets. One is scale. We... The the... That process of very deep integration and and and profound transformation takes a lot of operational effort. So we can do a million of these. And by the way, the amount of time and effort it takes to transform a business we have found, it doesn't really scale linearly with revenue. So we're much better off acquiring relatively few sizable companies than a million small ones. So we like... We look for scale. We look for predictability in in earnings, and it's a big topic in and of itself, but we like businesses where we are pretty confident we can project there at least, you know, the next five or six years directionally. And then we look for businesses where we can create a lot of value. It could be technology, org, product, monetization, marketing, ideally most of these. [00:16:07] S3: Does value include the integration with these other assets that you have or value just means economic value operation?
00:16:07 · Chamath Palihapitiya, S4, Luca Ferrari
[00:16:07] S3: Does value include the integration with these other assets that you have or value just means economic value operation? [00:16:12] S4: Well, let let me just ask a detailed point of that. Like, if you own AOL, you could put ads for Vimeo or Eventbrite or Miro on AOL. If you own Vimeo, you could probably have a sales team that's selling ads on AOL that you can use. How much synergistic effect is there? And if there is synergistic effect and you've got all this capacity to do design, build, product management, agentic orchestration, testing, a b testing, why not also build organically at the same time and leverage the network effects of the existing businesses? [00:16:46] S0: So historically, we have created almost no value from, let's say, customer facing synergies, what what you described. Plenty of behind the scenes synergies. Like I said, it's all built on the same technological foundations, and then there's there's this large core team of people we move around fluidly. Going forward... And and by the way, the reason why we haven't unlocked a lot of value through customer facing synergies has been that we... I think the portfolio wasn't necessarily large enough for good overlaps to materialize, but as it grows more and more, for example, Airtable and Miro are both quite appealing to a lot of enterprises. I think what you are describing could become an additional value creation dimension. [00:17:27] S4: You haven't tried or you've tried and it hasn't worked?
00:17:27 · S4, Luca Ferrari, Chamath Palihapitiya
[00:17:27] S4: You haven't tried or you've tried and it hasn't worked? [00:17:29] S0: No. We've we've tried and it's worked with marginally. So maybe it's helped 3%, but now, like, the bulk of it has been bringing 10 out of 10 excellence in operations, product, monetization, technology [00:17:42] S3: Luca, when... [00:17:43] S0: On an individual business basis. [00:17:44] S4: And then why not build organically products? Yeah. [00:17:47] S0: So the... First of all, you can't do everything. I mean, Elon can't. I I... You know, my colleagues colleagues and I, we don't think we can. Maybe we should be more ambitious with ourselves. So... [00:18:00] S4: Got a lot on your plate. Yeah. Yeah. There's so many different kinds of products already. [00:18:04] S0: We we launch a lot of new things on top of existing brands I see. But it's not like completely radical innovation. We don't do a lot of that. We try to stay focused on on one thing to try to be the very best in the world at it. Also, at scale we are at at this point where, you know, on a pro form a with Miro close to a run rate of $4,000,000,000 in revenue, it's difficult. Like, if you look at the percentage of new startups or products being launched that would move the needle, it's it's very, very small. So what's the... You know, we would have to deploy a lot of our resources and very unlikely to work.
00:18:04 · Luca Ferrari, S4
[00:18:04] S0: We we launch a lot of new things on top of existing brands I see. But it's not like completely radical innovation. We don't do a lot of that. We try to stay focused on on one thing to try to be the very best in the world at it. Also, at scale we are at at this point where, you know, on a pro form a with Miro close to a run rate of $4,000,000,000 in revenue, it's difficult. Like, if you look at the percentage of new startups or products being launched that would move the needle, it's it's very, very small. So what's the... You know, we would have to deploy a lot of our resources and very unlikely to work. [00:18:36] S4: Can you can you... Sorry. Let me just... Can you just talk about the thing... You and I talked about this point on the talent exodus that happens in Silicon Valley companies when they start to stall out, and that the talent maybe that's working on the business isn't the quality of the talent that you've built in your your core platform. How much of that is assessed in that m and a process that Chamath was mentioning? [00:18:59] S0: Well, it's it's... I mean, it's difficult to assess from the outside in, you can form first principles opinions. Businesses that, again, are more in a saturation phase, they tend not to be as appealing to some of the most entrepreneurial engineers or designers. And so you can assume that the level of talent will be maybe good, but perhaps not, you know, anthropic would have. I'm I'm not saying anything shocking here. They have very unique kind [00:19:24] S4: of talent, but we'll talk about that another time.
00:19:24 · S4, Luca Ferrari, Chamath Palihapitiya
[00:19:24] S4: of talent, but we'll talk about that another time. [00:19:26] S0: Yeah. Okay. We we have a big advantage in attracting talent because if you work at Bending Spoons, it may be one of the very few places in the world where you can spend say one year rebuilding the email infrastructure for AOL and then seven months helping rethink subscriptions on on Vimeo and then build a platform technology to manage payments all with the same employer, mostly the same colleagues, same culture. [00:19:49] S3: You get broad technical scope. Exactly. [00:19:51] S0: So career opportunities, just staying motivated because it's fun and new. Yeah. Very high talent density begets high talent density, so there is an element of virtuous cycle. So we have been able to attract some of people. Last year, 800,000 applications. We hired fewer than 300 people. [00:20:04] S4: Are they all in Milan? Where are they? [00:20:05] S0: No. No. We we are fully, you know, very international as a company. Milan, for historical reasons, remains like the biggest pool of of talent, but London, for example, is coming up faster. Madrid, we'll we'll be hiring people... Plenty of people in The States, I think, starting starting next year.