Joys of Compounding
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?
00:58:57 · Luca Ferrari
[00:58:57] S3: My answer changes depending on when you ask me. I wake up in the morning? But broadly speaking, there have been three drivers for me. The weight of each changes a little bit and fluctuates. One is I'm just very competitive and I think business in general is one of the most competitive arenas. You can really test yourself against half of humanity in many ways. And I find that exciting, interesting. Two, I love learning. I'm pathologically interested in learning, not just notions, although that too, but also just expanding my skill set. I struggle to imagine a situation where I would be able to learn as much as quickly because we, in what we do, we are surrounded by amazing people and you learn a lot from people. You get to learn skills and experiment in relation to human psychology, finance, engineering, science, organization, all sorts of things, even legal aspects, which is maybe not as interesting, but sometimes it's interesting. The breadth and depth, particularly my position, I feel I'm privileged, but I think in general at Bending Spoons where we have such broad mandates and such high levels of responsibility and autonomy is truly staggering. I don't know that I'll be able to learn as much in almost any other pursuits that I could realistically go after. And then the third one, I like the idea of building something great and generally positive. I'd like to think that with Bending Spoons, can reset the bar for what it looks like to run a business optimally. And I know that it's controversial because we often part ways with many team members that acquire companies. And I do believe that the world is a better place if businesses are run exceptionally well, even though there are sometimes disruptive, painful short term consequences. And so we're trying to reset the bar for what excellent looks like in the areas where we operate. And I believe that having built this with roots in Europe, particularly Italy, places where we haven't seen almost any truly world beating companies coming out of in decades, probably. If we can succeed in a big way, that would probably inspire. And we're seeing that a little bit these days, more companies, more people to try and more investment to come here. And I believe that the world is a much better place if knowledge, wealth, opportunity are more broadly distributed.
01:01:15 · Luca Ferrari, Paul Buser
I'm perfectly fine with say, Silicon Valley or the East Coast in The US being the hubs and one or two notches above. But I think when that gap becomes a vast ocean, it's a big problem, including for the people who live there, because ultimately there's no stability in the world without a level of inclusion and what's perceived as a fair distribution of these assets. And so if we can tilt the scales there even slightly in a good way, think that'd be important. So that gets me up in the morning and again, depending on [01:01:46] S1: the day, it could be one or the other. It's beautiful. I loved the conversation you had with our friend, David Senra. There was one thing he said at the end, struck me. It was understandable that he he said it, but I think I would have a different take. He mentioned that every time he speaks with you, it's amongst the most unpredictable set of responses he could get amongst a founder. I feel the complete opposite. When you think about how you've talked about what you're aiming at, how you're trying to live this integrative life by building this company with no other pursuit than excellence, everything seems extremely rational and fits really well together and just knowing the essence that kinda you exude and then walking around these halls, you can sense it. So congrats on everything you've built and so good to spend time with you. Thank you. My pleasure.