00:17:44 · Luca Ferrari, Roman Kirsch
[00:17:44] S2: Exactly. Initially nobody cares either way and then either they love you too much or they hate you too much. Like there's no middle ground. [00:17:53] S0: Yeah, but I couldn't kind of agree more and also emphasize how important it is to have those role models because Milan is actually, like a lot of other cities in Europe, a center for entrepreneurship just in different industries. Like so, there's a lot of fashion entrepreneurs, like it's high end luxury and so on and so forth, but kind of having a bit of inspiration for the young kids that you can also do it in tech is probably worth the risk. Like every big decision, know, there's pros, as you said, with ease of hiring and kind of leaving some sort of legacy, but also challenges because you had the lack of ecosystem. There's probably not a lot of people that you can chat over coffee who go through the same challenges. [00:18:33] S2: Especially at the time. [00:18:34] S0: At the time, yeah. [00:18:35] S2: The city has made major strides since, but at the time certainly... [00:18:40] S0: Yeah, at the time, exactly. So how did you... Did you just accept that or did you make an extra effort to reach out to other people in other cities to kind of share best practices? So how did you approach that?
00:18:40 · Roman Kirsch, Luca Ferrari
[00:18:40] S0: Yeah, at the time, exactly. So how did you... Did you just accept that or did you make an extra effort to reach out to other people in other cities to kind of share best practices? So how did you approach that? [00:18:54] S2: I'd say at the beginning we didn't really have any coaches, mentors, advisors partly because we were nobodies and very talented, knowledgeable people generally don't coach nobodies but they coach people they already believe can go places. And even access tend to follow that also even if someone wanted to give back to people who don't necessarily deserve it, still you would struggle to find those people. And the location didn't help. And I frankly don't think we even sought that out very much. We could have done more. I don't know why. It's hard to remember. But we were quite self reliant. Thought perhaps arrogantly we've got to figure it out on our own. And I think that was both good and bad. The good part is that we came up with a lot of non obvious insights, ways of doing things that are proven powerful for us. On the baddies, of course, sometimes we reinvented the wheel or made mistakes that others had made for us in theory, but we didn't pick up on those lessons.
00:19:59 · Matteo Danieli, Roman Kirsch, Luca Ferrari
[00:19:59] S1: Yeah. We did have pretty early on a pretty unique strategy. So it was kind of hard to find companies or founders or mentors that could tell us something about that. So that also is part of the equation. Yes, I totally agree that it just made us work harder to find out how to apply this strategy in the best possible way. I'm also sure that a lot of the things that apply to our company would apply to a lot of other companies. And, yeah, we did reinvent the wheel a lot of times. At the same time, if you reach out to get some advice, you cannot really filter the one that applies to you and then makes you grow and the one that instead you should discard. So I guess in a way it was okay to be isolated like that because it gave us a lot of self reliance and resilience. [00:20:56] S0: Cool. So I mean, your first acquisition was I think 10,000 US dollars approximately. [00:21:02] S2: Give or take, yeah. [00:21:03] S0: Now you're writing 9 figure checks. I don't know what the most expensive acquisition is, maybe you can share, but you've come [00:21:09] S2: a I long can't say which one it is, but I can say it's 500,000,000. [00:21:14] S0: 500,000,000, wow. So it's fair to say that you've come a long way as a company, it's very impressive. What changed in how you evaluate, how buy companies from this $10,000 acquisition to now?
00:21:32 · Luca Ferrari
[00:21:32] S2: I'd say the fundamentals haven't changed. We still look at, you know, for digital technology businesses, we still look for businesses that are big relative to our size at the time. And we still look for businesses whose future performance we can project with reasonably good level of accuracy. And we still look for businesses that we feel we can make a lot more successful. We can improve substantially. But of course, over a decade of massive investment, our platform, so to say so all of our proprietary technologies, our expertise, our employer brand have made massive leaps and bounds. We now have I mean, depends on how you count them more than 50 proprietary technologies, some of which could easily be sold as a B2B business and maybe worth hundreds of millions. Very sophisticated stuff. Lots of insights on how to run this business. There's plenty of first party data out. In 2025 we expect more than 600,000 unique job applications. So that's big tech levels pretty much almost. And we'll only hire 200 people. So that's a new seemingly selective application process. And of course, that couldn't have been the case ten years ago. We have a lot more resources. Like you said, we're able to deploy more capital, more people. We expect to invest at least $1,500,000,000 in acquisitions in 'twenty five alone. Again, was, I wouldn't say, unthinkable, but certainly very far through... When looked at through the lens of 2015 or 2014 when we were moving the first steps. So the nature of it hasn't dramatically changed. It's just that we've gotten much, much better at it and the scale is unimaginably larger.
00:23:33 · Roman Kirsch, Luca Ferrari
[00:23:33] S0: Okay. And then in in terms of risk and how you look at risk, because obviously, initially, you have only to gain and almost nothing to lose, right? Now you can't really screw up too many $500,000,000 acquisitions, right? So how did your perspective with respect to risk taking when you acquire those companies change? Do you take a longer time? Do you have more data now where you say, you know, we kind of know better now and that's where the risk reduction is coming in? [00:24:10] S2: Well, I would argue that at the time we had $40,000 let's say, it was actually euros but very close. And we had to pay for rent and living wages. So we couldn't have screwed up many $10,000 acquisition either, maybe one at most. Today we could screw up a $500,000,000 acquisition, one or two, then it would be difficult. So I think the risk profile has remained similar. It's just we've been adding zeros. But as a general rule, we try to be extremely thorough, always have been in our assessments. We think probabilities, scenarios. When we assess an acquisition, run fairly sophisticated Monte Carlo simulations. We will not acquire a business where the median case is not very appealing or where a pretty pessimistic case is such that it would be ruinous or even close to ruinous for us. [00:25:18] S0: I'll be, by the way, curious. What's your base case when you acquire a company? Do you think of a 10x return on the asset value
00:25:18 · Roman Kirsch, Luca Ferrari
[00:25:18] S0: I'll be, by the way, curious. What's your base case when you acquire a company? Do you think of a 10x return on the asset value [00:25:29] S2: We an open don't disclose that for competitive reasons. But at this scale, it would be completely unreasonable to aim for 10x. It's very good returns but not as crazy as you just said. But we have been able to generate very good returns for share owners for sure. [00:25:50] S0: Amazing. So I mean, you basically pioneered I don't want to say pioneer, but in a way you did pioneer this big trend of business school students going into roll ups, which is now happening all over industries in The US and Europe. You did it in tech, which not too many people do, but some do. Like you had the roll ups with Amazon, sellers with Razio, Razer Group, Sellex and D2C brands and a lot of them actually did fall flat, right? So is that because they're missing something that you're nailing or what is your take on those unsuccessful roll ups and other tech verticals?