00:06:12 · Luca Ferrari
[00:06:12] S2: It's just a problem to solve like old problems. You want to understand what your objective is, what the boundary conditions are and then once those are those are clear, you creatively list all the options and pick the best one. So if your goal is to say make much as much money as possible, then it may be smart to again accept or or play along with those with those expectations. As long as you know what you're trying to accomplish and why you're doing it, then you're fine. But there are alternatives and they may not necessarily lead to the greatest financial outcome or sometimes they may, it depends on the specifics. So you could choose to run a business without necessarily relying on issuing equity or selling your stake and trying to make it in the long run a great cash generative enterprise that will ultimately create value for you through for example dividends or alternatively you may work to maximize free cash flow and free cash cash flows in the in the long run-in a way that does not get you the biggest valuation today, but will in the very long run. I think you could argue this is a little bit what we did with Bending Spoons. There have been multiple instances where we knew that we could do things differently to get a better valuation in the moment. Do things that would please investors more, buy a certain type of asset, manage that asset in a different way, but we knew with at least we were very confident and I think so far history have proven us right that if we continue to optimize for the rate of compounding of free cash flows in the long run those would be much higher than they would have been following the other path and then if even if the multiple were to turn out to be lower, know, ultimately the multiple is just one factor in a multiplication. If the other factor is 10 times bigger than, you know, rest assured the overall result is gonna be bigger too. So again, just trying to understand what you're trying to accomplish, understand the boundary conditions, and then work back... Backward from those.
00:08:23 · Anish Acharya, Luca Ferrari
[00:08:23] S1: Yeah. It's interesting how much alpha there tends to be in being long dated in your thinking. No? Oh, yeah. We're... [00:08:29] S2: I mean TikTok shows you how we're not exactly as a species inclined to being patient and and attentive and and and long term oriented. Right. You can do that, that already sets you apart, I think. [00:08:46] S1: So I've got a few other questions for you maybe on behalf of our CEO founders out there. You know, at any incremental moment, you can sort of bet on invention or optimization. When you guys acquire something like a Miro or an Evernote, how do you decide? You know, do you have a rule of thumb? How do you tiebreak,
00:09:04 · Luca Ferrari
[00:09:04] S2: etcetera? Yeah. So I think that the the type of qualities and and the mindset you need to max out innovation or at least radical invention because I think you can be very innovative as you optimize, but I think, you know, like more radical step change innovation versus optimization incremental innovation are quite different. I would say that any company that's all in on one at the expense of the other is probably not doing as well as you can take. I think Apple, for example, historically has tried to be more of the on the big inventions of the things, but but not to the detriment of optimization excessively. I mean, famously, you know, team Cook was great at making sure operations were efficient. And so you wanna know... But but because the the qualities that you need and the mindset and the culture you need are different, I think you need to choose your camp. Like, we more like the radical innovators or more the incremental innovators? And I and I think both are very fine. Just know a pick one side and and stick to it. More radical innovation will lead to higher peaks faster potentially if you come up again with the iPhone and it can deliver on it, it could transform your company close to overnight. Or, you know, Google search back in the day. Still to this day, Google is vastly Google search. It's unbelievable. I mean, we're talking thirty years later and it's still 80% that's still what it is and they've invested tens of billions of dollars in all sorts of stuff acquisitions and it's still mostly search. That's right. So that's how powerful radical innovation is when it works, but it's highly it's not dependable. It's very difficult to like the median case is super awful, basically lose everything, but occasionally you're right and you win massively. I think incremental innovation is more dependable, more measurable, and if applied in the right with the right strategy in the right context, like I think Bending Spoons can compound over a very long period of time. So if you for example run a one a single product SaaS, I think incrementally optimizing ultimately there's only so much you can do. But if you do it in the context of Bending Spoons where you get a 100 in EBITDA, you turn it into 200 Yeah. And then you lever up three times and then you buy more that compounds exponentially into potentially a 100 x over time. Right?
00:11:30 · Luca Ferrari, Anish Acharya
So whether you choose radical innovation as your primary pursuit or incremental innovation depends on the broader strategy or you're you're implementing, I believe. [00:11:40] S1: It's interesting because we lionize radical innovation, but to your point about Google, it's almost as if once you've invented Google, it's so hard to do that. It's rational to just optimize it forever, actually. [00:11:52] S2: Oh, yeah. You could make... I I think Google is one of the best comp... Overall, one of the most impressive companies to to to to ever have been created. So, you know, we start from a place of incredible admiration. There... You could make a reasonable argument that overall shareholders would be even better off had they, you know, had the company focused fully on search and optimized search to the max. Because obviously Google is bigger and better because it's done more but you have to compare that with what the different shareholders would have been able to accomplish redeploying the excess capital into other pursuits. Yes. And I don't know that you can make I did the math a couple years ago, I think it was at least debate. Which of the two would have been better? [00:12:42] S1: Yeah, really interesting. Though we got the transformer paper out of Google. Oh, yeah. Which is the foundation of everything that's happening now, so I could definitely take the other side. As you think about managing your product portfolio, how much does customer feedback and customer love play into your thinking?
00:12:58 · Luca Ferrari
[00:12:58] S2: I mean, it's critical ultimately, you know, you build products for customers and that's... You know, it's customers who pay you and give you a business. So listening to what customers want is is paramount. Ironically, I think that Bending Spoons does so more than most companies while our reputation often it's it's more like we're more ruthless in optimizing and sometimes do things that piss off some customers. A lot of companies in my experience actually don't build things primarily because they think customers really need them, but because they think they are interesting, exciting, they are more passion driven. We try to be 100% focused on creating value for users and customers and then monetizing as a separate, let's say, pursuit obviously. There... You're... Think you're never gonna be wrong if you spend time with customers and really understand what they're trying to accomplish and try to to give them that. It doesn't mean that you take the how from them because sometimes customers haven't put a lot of thought into it or they don't have the skills to tell you what the ideal user experience would be like, but the their goals, excites them, what they need, they tend to know better than you do if you ask and listen carefully, I think.
00:14:13 · Anish Acharya, Luca Ferrari, Erik Torenberg
[00:14:13] S1: Yeah. Really interesting. I agree. A lot of things tend to get built. They get... The story gets told as if they're built for customers, but in truth founders build things that are intellectually compelling to them. Has your taste in problems changed over the years or taste in opportunities the type of company you want to acquire your intuition for it? [00:14:32] S2: Maybe. I mean, I suppose so. We all learn as we go through life and do things and reflect on on what we fail at and what we we we succeed at. Yeah. I guess not not in any extremely concrete way that I can that I can think of. Right now, I I tend to get excited about problems in general and and finding creative solutions to problems. I'm I'm not as motivated by what let's say broader society may perceive to be to be cool. So my taste in companies if that's what you mean has not really ever been oh, this is a sexy brand or... But if the problem is complex and solving it would create a lot of value then I I get excited. Even if the company itself, like AOL, feels old and legacy, I actually find the AOL acquisition incredibly exciting, one of the most exciting frankly [00:15:36] S0: for us. [00:15:36] S1: Amazing. Well, let's talk about the portfolio. You know, you had mentioned acquiring 50 companies. That right? [00:15:42] S2: Yeah. 50 acquisitions approximately. Yeah. Maybe 60 at this point.