Invest Like the Best with Patrick O'Shaughnessy
00:04:40 · Patrick O'Shaughnessy
[00:04:40] S0: Can you say a little bit about the vision you have for the business? Not in terms of how big it will be or the number of acquisitions or anything, but five years hence, I know you care very deeply about the culture of the people here, what the home office looks like and feels like. You have a huge ambition for what you're building. Maybe describe that ambition and that vision a little bit.
00:04:59 · Luca Ferrari
[00:04:59] S2: We felt inspired at the prospect of building the company being our product. Building an institution, Berkshire Hathaway, that sort of company that people look at and think was a defining company of its generation. And so to do that scale is important. I think it's unlikely that you can be in that conversation unless the company is large and dominant. But also there needs to be some level of excellence along certain dimensions where the company really stands out vis a vis the others. And for us it's always been, besides being absolutely exceptional at the functional things, like being incredible at running these businesses, one part that we really want to be awesome at is spotting some of the best inexperienced talent in the world and being the ideal place for that talent to just skyrocket toward the maximum realization of their potential as quickly as possible. We want to be the ultimate testing and training ground for incredibly talented and motivated people. And so the company five or ten years out, I think will still be conglomerate of very interesting digital technology businesses, hopefully much more and generally the company would be bigger. And I hope we can be much stronger at everything we do and have even higher levels of talent density and hopefully inspire others to try to raise the bar in how they run their businesses. And by the way, we started in Europe. We like the idea that Europe... It's fascinating that if you think about most of the very large super successful companies globally, you think about almost entirely US or Chinese companies, historically US, now China is more. Europe has very little to offer in that regard, but it's 700,000,000 person continent. Very good education. I'm not saying we should have $10,000,000,000,000 companies, but we don't have a single one pretty much, I think last time I checked. We hope we can be part of that movement showing that you can actually build such a company. We're an international company with operations in The US too, but the deeper roots, the original roots can be here too. We are not a periphery of the empire.
00:06:51 · Patrick O'Shaughnessy, Luca Ferrari
[00:06:51] S0: It was actually Daniel at Spotify who introduced us originally. Obviously he's built one of the great European origin businesses. Why do you think there are not more of them? Like obviously you're seeking to change this, but there's not that many. What do you think the deep reasons are? [00:07:04] S2: I think the main reason is a matter of default. Why does California has had so much success over the decades? One of the reason is you have seen incredible companies being created and grown in California. You just assume that's where you go and do it. Especially as a founder, you don't know much like you are ultimately, at least I was, I think that's true of many founders, you are a passionate, determined, maybe talented idiot essentially. You don't know the world enough to actually determine what the ideal location will be. If you even think about it, because typically how many times have you heard of founders doing a location study, where should I start my company? It tends to be Momentum. I happen to study here. I know people are there. I should probably just do it. And so a lot of talented Europeans, many of the most talented Europeans who have an entrepreneurial streak, I think they just default to building in The US, which has been fantastic for The US of course. But there is a gap I think. And if we had more virtuous examples of people who have built incredible businesses, again, with a seed in Europe, I think more people would not default to that and think, oh, I could actually build such a business from France or Portugal or Italy.
00:07:04 · Luca Ferrari, Patrick O'Shaughnessy
[00:07:04] S2: I think the main reason is a matter of default. Why does California has had so much success over the decades? One of the reason is you have seen incredible companies being created and grown in California. You just assume that's where you go and do it. Especially as a founder, you don't know much like you are ultimately, at least I was, I think that's true of many founders, you are a passionate, determined, maybe talented idiot essentially. You don't know the world enough to actually determine what the ideal location will be. If you even think about it, because typically how many times have you heard of founders doing a location study, where should I start my company? It tends to be Momentum. I happen to study here. I know people are there. I should probably just do it. And so a lot of talented Europeans, many of the most talented Europeans who have an entrepreneurial streak, I think they just default to building in The US, which has been fantastic for The US of course. But there is a gap I think. And if we had more virtuous examples of people who have built incredible businesses, again, with a seed in Europe, I think more people would not default to that and think, oh, I could actually build such a business from France or Portugal or Italy. [00:08:14] S0: Was that a key part of the original vision that you wanted it to be a beacon for European talent to show the world that a company like this could exist here? And if so, why? Why did you care so much? Why not just go to California?
00:08:14 · Patrick O'Shaughnessy, Luca Ferrari
[00:08:14] S0: Was that a key part of the original vision that you wanted it to be a beacon for European talent to show the world that a company like this could exist here? And if so, why? Why did you care so much? Why not just go to California? [00:08:25] S2: It's difficult when you talk about the sense of purpose, what inspires you. I think we can try to rationalize it, but there's something comes from the gut. We just felt that there was a mission there that was worth pursuing and that turned on our drive, our passion. And ultimately we figured we love to build a business because we love learning, we love challenge. And I think the business arena is arguably the most competitive field in which you can test yourself of any field, even more than sports, academia. So we liked it to start with. Whether we fail in Italy, Denmark, Canada, The US, nobody cares. But if we build something remarkable from a country that doesn't see as many successes, that means something extra. It can be an inspiration like I just said, it can help local businesses aim a little bit higher, raise their standards. It can create competencies locally that can have a positive effect. And so we just chose to do it that way. We don't regret it. There were very good arguments for us to maybe start in California for sure. That was a very reasonable point to make. [00:09:22] S0: You said this idea of test yourself. If you think back on Bending Spoons history, what was the first example of you really testing your own limits?
00:09:31 · Luca Ferrari
[00:09:31] S2: That happened constantly. At the very beginning, we actually had another startup called Evernote and that was a failure. We learned a lot and actually the strategy for Bending Spoons we came up with it through the failure of Evernote. At the time with Evertail, we raised about €1,000,000 all in all and VC money and ultimately the company was about to go bankrupt. We had about €40,000 left. That money belonged to the VC because of liquidation preferences, but it was too little for the size of that fund. And they told us, look, it's just too much hassle and legal cost for us to go through this administrative process of liquidation. You guys worked, you were honest, worked as hard as anyone could demand of you. You keep the money. We'll sell our shares to you for a nominal €1 and you'll probably get something after taxes from it and just go and get a nice vacation. We're sick in the brain and so rather than going on vacation, we took whatever we could and that was a seed capital for Bending Spoons twenty thirteen. It wasn't a lot of money. All of us lived in the same apartment, very low burn rate, very low, as low as it gets still. 40,000 you don't do much. Particularly as our vision was to acquire companies, CapEx intensive, at the beginning. You can't use debt because you are nobody and you don't have a track record of cash flow. And so we figured we need a source of cash to kickstart our acquisitive strategy. We figured certainly the easiest way is to just write software, build products for third parties. We are decent at programming and design. We should be able to do that. It seems like an easy business to start, maybe not to scale to gigantic