Joys of Compounding
00:53:10 · Luca Ferrari
[00:53:10] S3: I think it's actually easier. I mean, there's personal tastes. Some people like some products more than others. That's part of that. I think it's generally a minor aspect. At least at Bending Spoons where we try to have a culture that's not passion driven, but more impact driven. We want people who are excited when their work matters, they improve product for a customer or improve monetization for the business. The main factor determining level of motivation that people feel that extreme ownership in our experience is or factors they'll give you to. One is how much responsibility you have. The more productive people are, the more responsibility they have naturally. Mean, it's running a business, it's a fixed set of responsibility. If you're running with 10 people rather than 50, you could argue very simplistically, they have roughly five times as much as responsibility. Two, by the level of talent density in the team they are part of, because we don't want to be the lesser performer. If everybody around us is very good, we want to be at least as good. Most of us have a level of competitiveness and just as desired not to let people down. And so if we have smaller teams managing the same surface of product or business or tooling or whatever that is, we automatically get higher levels of response, average levels of responsibility and higher time and density, both of which I think if anything breed a sense of ownership and a desire to make an impact. So I think AI makes our job easier in that regard, not harder. How do
00:54:32 · Paul Buser
[00:54:32] S1: you think just knowing how quickly this is all changing the second decade could be profoundly different than the first and then beyond? How do you cultivate the right shareholder base who gets on board with the way you're thinking? You've done that internally. Be kind of fun to think about. Could you use the mechanism to go from 800,000 applications to a couple 100 hires on the shareholder side? We first heard about you through our friends, Henry and Anuk and Corey over at Durable. You spent time before going public, bringing together an amazing crew of shareholders. That has been unleashed now. How do you maintain that set of people around you that allow you to continue to do what you're doing?
00:55:13 · Luca Ferrari
[00:55:13] S3: When you're a public company, you don't really get to choose your shareholders. People can buy and sell more or less as they please. Of course, you have some control. Maybe if you have a private placement, you can favor some investors, broadly speaking, you don't control it. What you can do is you very clearly articulate what you're about, what you want to accomplish and how we try to do that. And you do that honestly. First of all, you need to know that and some people have, they're confused, but assuming you have a clear idea of what you want to build and how you need to articulate that honestly and clearly that will tend to attract people. It's not dissimilar from recruiting we talked about before. You laid out your vision and the mechanics of what you do well, you're more likely than not to attract people who are aligned with that, but it could attract people who misunderstand it or they're for speculative reasons. There's not much you can do in that regard, but hopefully over time as you keep preaching and telling the same story and conduct yourself consistently with that, a bigger and bigger percentage of your shareholder base will be aligned with your views. I do have full control of that. And so I just think control what you can control. There are so many problems to solve, and this is not one of them, I think.
00:56:21 · Paul Buser
[00:56:21] S1: Mitch has said it took ten or fifteen years to get that message out, cultivate the shareholder base, but it's a never ending battle. But we were talking, I think, before recording too about how going public also creates so many positive tools for the company. Can you just describe that a little bit for internally, externally, how it's helpful?
00:56:38 · Luca Ferrari
[00:56:38] S3: For us as a serial acquirer, access to plenty of capital and at good terms is paramount. We learned that public companies in general, especially those who do well as a public company, tend to have access to more debt, cheaper debt. So that's great for us. It was a no brainer to unlock that benefit. It's also easier to raise equity if you find that there's an opportunity, especially at a big scale. Although some of these AI companies are now defying what we thought was reasonable in the private markets. For most companies, I think very clearly there's a semi cap as a private company. I don't think we would have been there yet, but also you don't want to wake up one morning having left a lot of growth on the table for two years and go public. You want to go public when it's not a problem yet that you're not public. So we try to do that a bit early. Obviously there are other advantages that could be interesting. You can issue equity to the seller to pay for some acquisitions in ways that don't trigger immediate tax consequences, which can be appealing for some sellers. It's not impossible as a private company, but then people generally don't want to own illiquid equity. It gets much more difficult to use it or use it in a way that's not discounted by the seller. You can do buybacks more easily. It's not something we have done in recent years. I'd be surprised if we didn't find a great opportunity for a buyback in the next ten years. There will be a point where the stock is stupidly cheap. Maybe, you know, a buyback is even more appealing than the next acquisition. So there are all sorts of advantages, but also obviously some headaches that you'd rather do without.
00:58:13 · Paul Buser
[00:58:13] S1: Well, we'll see on this chapter of the outsiders that's written. I know when you think about Singleton, he's known for buying back shares. Bill Anders, General Dynamics only held the helm for a few years and sold the f 16 project. Seemed like essentially gutted the entire company but turned a completely failing company into an incredible stock. So it'll be fun to see what twists and turns this take. I love as we come to a close here just to try to unpack why you're doing all this. And I mean, like you, Luca. What is it about this that makes it your life's work? Why do you wanna spend your time doing this? I know you have a one year old at home and you've talked about how you wanna be 10 out of 10 with your wife and family too. But what is it that drives you to wanna spend your life doing this?