00:11:45 · Francesco Patarnello
[00:11:45] S3: Well, so historically we have relied primarily on debt and we started, I think our first loan was in end of twenty seventeen, so very early in, in Denispoons history. I think we raised like $12,000,000. And the evolution of the debt financing for Benin Spoons was gradual because it was developing relationship with banks and lending slightly more every time paying back the debt because it was fully amortized and showing the banks that we deliver on the promises and then raising a little bit more and then paying back and showing again. And so there was a gradual path. The big unlock was moving from just simple bank loans to term loan agreements with US lenders and that happened at the beginning of twenty twenty five and that had to go through rating agencies giving you a rating and that's something new, as well as talking with different lenders that never actually worked with you and so you didn't have that relationship of delivering against your promises, paying back, raising more, that allow you to build a very strong track record and so allow you to raise faster at better terms. So we kind of had to start almost from the beginning with lenders at that time. Equity was slightly different because we basically never raised primary equity all the way to 2023. That was our very first big institutional round. We raised a little bit, it was more secondary rounds with smaller, investors, primarily from Italy in previous years, but 2023 was the first big round with Billie Effort coming in Cox Enterprises Durable. That was again, something new starting from scratch, having to educate investors about what we do and our story almost, I mean, by construction is a counterintuitive story. You need to learn and study bending spoons a little bit before really understanding the way it works and so also for equity investors, was a little bit of kind of showing them and teaching them before fully making them understand the way it worked. So I think that was an important moment.
00:14:24 · Francesco Patarnello, Molly O'Shea
And then becoming public, it was a continuation on that also because many of the investors, the big institutional investors that are part of Bending Spoons' Comp table today either were already part of that as previous institutional rounds or were investors that we talked to many times in the past and we showed them, okay, we think we're going to do this Then we show them after six months, we have done that better and then we show them again our plan for the following six, twelve months and so they had already learned about Bending Spoons so it wasn't something new for them. And so it wasn't, you know, starting from scratch, it felt like a natural continuation of where we were before as a private company. [00:15:21] S5: On the acquisition side, you have a thousand potential targets and you're doing five to 10 a year? How do you think about the categories that you want and the ones you will not touch?
00:15:33 · Francesco Patarnello
[00:15:33] S3: We've always been very agnostic to the vertical and the category. We try to do things in different worlds and constantly expand the capabilities of the things that we can do. Obviously there was a gradual process at the very beginning when we started Bending Spoons, were much more, I would say, we had a lot more knowledge on how to manage, let's say a mobile B2C product and then we timed that expanded into broader B2B, B2C ecosystem and then to the B2B world, but first self serve and then more recently enterprise. WeTractive, we have done our first acquisition of a hardware enabled digital business. This to say that we don't want to focus in one specific vertical, we want to keep our scope relatively broad. Within this broad scope, the focus is to look for businesses that have a lot of potential to be unlocked. So we want to see our platform to be able to unlock a lot of value if applied to that business. That can mean different things. Sometimes it's our ability to attract talent, sometimes it's ability to process data and get insights, sometimes it's our ability to attract new users. Every time we look at a business and we think, how is our platform going to unlock value if applied to that business? The second thing is we want to see a big revenue scale. Every transformation almost has a fixed cost that is independent of the revenue size and so we want to do few acquisitions every year of bigger and bigger size because we don't want to invest a team of 50 Spooners into transforming a $20,000,000 revenue business because now that wouldn't move the needle. So the size continuously grow with Bending Spoons growth. And then the last thing is we want predictability. That doesn't necessarily mean a specific growth rate. We have seen predictability in businesses that were growing 20% year over year, as well as businesses that were flat, as well as businesses that were shrinking 5% year over year. We will judge predictability based on the data that we have about the company, based on the data that we have about other businesses that we own. We have a very data driven process, but then once we see predictability, we value that a lot. We build a model around that to predict how the business will evolve with Bending Spoons platform behind its back.
00:18:27 · Molly O'Shea, Francesco Patarnello
[00:18:27] S5: And why are you an attractive acquirer for the seller? [00:18:31] S3: We are a very peculiar company and we offer something that many acquirers are not able to. First of all, if you are a founder and you decided to sell your company, often it means that you want to do something else. You want to start a new project, spend more time with your family. And if a private equity comes in and buys a business, generally that means that the founder needs to be involved for the next three, four or five years. And with Bending Spoons, we can take care of it from closing date and that's very valued by the founders because they know that once they sell, then they can move on to the next project. And the second thing is they know that their product legacy will be preserved with Bending Spoons because of our ability to reignite innovation, put all the spoons behind the development of the product, the technology. And we started receiving more and more feedback from founders about this specifically and coming to us almost proactively saying, okay, look, now I would like to entertain a discussion with you and I'm doing it only with you because I know that you can take care of this aspect that otherwise I wouldn't know how it wouldn't be handled by a private equity. And also we are fast, we're very straightforward. I think we start building a reputation of being very transparent, So you know what we get. We're just very open and transparent about the whole process. [00:20:11] S5: What was the best question someone asked you during the roadshow?
00:20:11 · Molly O'Shea, Francesco Patarnello
[00:20:11] S5: What was the best question someone asked you during the roadshow? [00:20:15] S3: I don't know if it's not specifically a question, but it's a topic. I think most of the people have been focusing on the standard, what's your organic growth, what's your attention, how you do this and how you do that. And very, very few fully understood the fact that the really secret sauce of Bending Spoons is the talent and triple dig into that. And I remember this specific investor almost spent like an hour and a half only focusing on that and really asked thoughtful questions about our hiring process, how we retain talent, what the culture is, how we develop the culture, why is it different? And it wasn't a specific question but it was like a topic that made me understand and he understood really, really well why Bending Spoons works the way it works. And so I would say probably was the only time that happened and so that made me think very highly of that specific investor because they probably understood well how it worked. [00:21:30] S5: We were talking about talent a lot with Luca, with Valley, with Matteo, it's ever present. We talked about it at lunch, and one of the peculiar things that I came across was that you've been running tenders, you're public now, but you'd been running tenders for many years, every year for your spooners. So why did you make that decision? Also, why do they get vested on day one?
00:21:55 · Francesco Patarnello
[00:21:55] S3: Dropping the vesting, it was something that we introduced more recently. I'll get to that in a second. The reason why we started offering, let's say, secondary transaction for team members to sell some of their share if they wanted to, was to really show the value of their ownership of Bending Spoons. Also showing that they were now locked into that until a specific event in the far future that they didn't know when and how it would have unlocked. And so that really allowed them to fully understand the power of being part of Bending Spoons as a shareholder and then make better decisions when it comes to how to convert their compensation into equity versus cash. And that links well into how we actually do compensation. Is you get specific yearly compensation fixed, now variable components, and then you decide how much to convert into equity and how much to convert into cash and also that specific decision is very linked to the fact that we want to show you that your equity component has a specific value. At that point in time, you actually can decide to get it all in cash if you wanted to. So you know that at that point in time, it's precisely that the value that you're unlocking. So that plus the fact that you can then, let's say within a year, a year and a half convert that back into cash and showing the appreciation of that because every year, year and a half when the new round was coming, then you could see that your ownership increased in value. That allowed to create a sense of ownership almost as a public company while being private and I think that was very important and allowed us to then become a public company without that big of a step change that maybe private company feel because everyone is super invested and everyone feels oh now I'm going to be able to then sell my shares. That was already possible before, so there wasn't that big of a change. Same thing with not creating a vesting structure that created like some weird kind of incentives, similar to now creating variable components. We want everything to be simple and straightforward. I mean, you created a value within a certain year and you're going to be rewarded for that and then if you leave the day after, you're still being rewarded because of the work you've done before. That's the reason for dropping the vesting and that has no impact on retention.