00:13:41 · Luca Ferrari
If anything, it's mostly, if we agree that that was perhaps excessive, think most people would, but the business was great. It just was too much. And that was not true of Veritable alone, but pretty much every business. If if any... Anybody made a mistake there was the investor, certainly not the company. As a company, you will try to take capital at the best valuation you can. That's the responsible thing to do for your shareholders. And if anything, how we and the team were incredibly disciplined. They actually didn't raise all that much money. They could have raised more, and they they stayed profitable and burned to very little of that money, if any. And in fact, if you look at the acquisition price, you know, the enterprise value was approximately $1,300,000,000 but then they still had plenty of that cash on balance sheet. So investors ultimately got back approximately all the money they had put in plus more. And the valuation at which Airtable exited was very much in line with the SaaS businesses of comparable quality on the public markets. So they got a very reasonable deal in my view, obviously I'm biased, but I believe that to be true. So there's a lot of good there. I think our table has done a very good job and, but yes, the internet will have to debate and when, when you go from being perceived as the ultimate winner and the poster child of success to an exit that would be considered amazing by almost any measure, I mean, a billion dollars, how many companies are started that ultimately exit at over a billion dollars? We have one in a thousand. I don't know the stats, but it must be very, very few.
00:15:30 · S1, Luca Ferrari
[00:15:30] S1: People forget how hard it is to get to a billion dollars. It's crazy. And a $100,000,000,000, let alone this whole trillion dollar company thing is is really disorienting. [00:15:39] S0: It is. Exactly. There's been literally a handful in the history of humanity at that scale. But... So a billion dollars plus is unbelievable. It's definitely and it's achieved based on real economics, plenty of revenue, real customers, real growth, excellent brand. So I really applaud Airtable, Howie and everybody there. So I think the business model for Silicon Valley overall makes sense and funding a company early, even at a loss makes sense, but it doesn't mean that things couldn't be done better. I'm sure sometimes there's too much enthusiasm, pouring money into businesses that don't make sense, or too much money in businesses that do make sense, but should use less. [00:16:17] S1: So what are the key characteristics that you look for when you're acquiring companies? Yeah, so basically
00:16:17 · S1, Luca Ferrari
[00:16:17] S1: So what are the key characteristics that you look for when you're acquiring companies? Yeah, so basically [00:16:25] S0: the most important thing is that we can predict where our business is going. We buy to hold and operate forever, not to sell three or five years down the line. And so we need to feel comfortable with our investment, with a long term view. We prefer businesses that are robust and maybe growing. We're not opposed to buying businesses that are shrinking. We have done that before, but we need to know how much they're shrinking. We need to be able to plot out their trajectory at least five years, a little more into the future. So that's a non negotiable. And then I would say the second most important thing is that we need to be convinced that we'll be able to add a lot of value to that business, essentially improve revenue, lower costs, certainly both through technology, product, talent. Otherwise, we are unlikely to be able to offer a price that's appealing to sellers while at the same time delivering very high returns for ourselves and our shareholders. [00:17:25] S1: Because there's a proliferation now of all these AI application companies that are dependent on token spend and lots of tokens, they're somewhat... Sometimes negative gross margins. Would those at all be of interest for you guys? Like where do you see those companies getting acquired or exiting?
00:17:44 · Luca Ferrari
[00:17:44] S0: I think we use AI as much as anybody. As far as I can tell, we're probably in the ninety ninth percentile by aggressive deployment of AI in our operations to improve our products, we have developed a lot of technologies powered by AI internally. So I'm very bullish on AI overall also concerned, it doesn't mean I'm bullish about all or even most of the startups that are coming up. I'm pretty sure that some of the most valuable companies of all time, sustainably valuable companies of all time will be coming out of these broader cohort of businesses. Businesses built over the last, let's say five years with AI the center of the thesis, but I'm equally confident that most of these companies will fail or at least basically fade away because everybody it's a gold rush. When you see people raising massive amounts of money at billion dollar valuations with pretty much nothing other than any idea, maybe a good track record in academia or elsewhere, anybody who's half credible because they were a great student or they did well at a big company, was not too worried about their reputation. We'll just run and try to raise money because you know, what do you have to lose other than your credibility and reputation? So a lot of this is just fluff, but there is real substance here and there. Have been as many as from side, right now we're not considering acquiring any of these companies. I think we, I said earlier, key criteria for us is being able to predict how things will go in the medium to long run. And it's very difficult to know, not just because some of these businesses are up and coming, growing super fast and when something is growing a 100% a year, it's very difficult and you only have one or two years of history. It's very difficult to know whether there'll be growing at a 100 in three years or at 12% in three years, and that changes everything. So plus valuations are very high, often irrationally high. So we don't think we can compete there and deliver good returns for our shareholders. You know, but, maybe later down the line, when the market is a little bit more mature, we'll look again and find something interesting.
00:20:07 · S1
[00:20:07] S1: Well, I want to go into your centralized platform because you guys, to your point use AI a lot, it's core to the business. I think 95% of your code is AI. It's written by AI. So can you walk me through the centralized platform, how you built that out and kind of, I mean, you made various different types of acquisitions from Evernote to AOL to Vimeo.
00:20:31 · Luca Ferrari
[00:20:31] S0: Yeah. So we, because we, at our core, we try to be the most capable operators of digital businesses on the planet and part of achieving that vision is to have access to the best toolkit possible. It's almost like if you wanna be a great cyclist, obviously that's not all there is to it, but you wanna have a great bike. I'm not saying anything shocking here. So we have invested into this operating system, into this technologies for a long time because of, it was strategically critical to us also my co founders and I are all engineers, so perhaps there is a bit of a passion angle too, so for the past decade, have tried to develop the best technologies we could. We buy from vendors when relevant, we use Slack, for example, we don't need a more sophisticated version of Slack. Slack is a wonderful product. So we buy Slack them and use it, but a lot of the tools we need to maximize our potential, we need them to be more sophisticated than almost any other companies out there would need them to be and providers of business tools that generally optimize for the mass market of enterprises. It makes sense. You don't wanna, like if someone were to build what we need, then they have a market of one or two, I don't know, like it's not a very appealing market to go after. And so, most of the tools out there are relatively simple. Need more sophistication, so we have to build it ourselves. And also we, by building all or most of these tools in house, we can make them natively integrated with one another, and that creates a lot of efficiencies effectiveness. So everything kinda like every tool talks to every other tool as relevant, which is impossible or very difficult to do if you buy from different vendors and then they change something and you have to change everything else. And last but not least, we get to save on costs. Potentially it's difficult to know exactly much we're saving by building this in house but I'd wager it's at least a $100,000,000 a year in costs. So it's pretty significant. But yes, it's key source of competitive advantage and building these tools would be uneconomical for pretty much any one of the businesses we acquire as they exist as standalone companies. It would be too much money to be poured into R and D to build these tools.