Prof G Markets
00:28:54 · Ed Elson, Luca Ferrari
[00:28:54] S1: You mentioned Warren Buffett and that's exactly who I was gonna bring up because there seem to be a lot of parallels here. You talk about you're not flipping companies, you're not trading companies, you're buying companies, and the plan is to hold them forever. And I have to say, I mean, the the first company that comes to mind when I think about this business model is Berkshire Hathaway. And I look at what Warren Buffett did starting with very, very small companies. Sounds like I think he took a less strategic position in a lot of those companies, but he still took some strategic positions as well. But it sounds like that's quite similar to what you're doing, but you're doing it in a tech and software enabled world. Is that kind of the vision for Bending Spoons or do you think that is an apt comparison? [00:29:40] S2: I'm a big fan of of Buffett and and and his colleagues, Ted Wechler. I think they're amazing. So I I think you all just wanna be careful with comparing because we're talking, it's almost like you're asking an aspiring [00:29:51] S1: Comparing you to Michael Jordan.
00:29:51 · Ed Elson, Luca Ferrari
[00:29:51] S1: Comparing you to Michael Jordan. [00:29:53] S2: Exactly, it's like, sure. Obviously, yes, it'd be great, but at the same time, we need to stay humble acknowledge that we have done, you know, 1% of what they did. But broadly speaking, I think it's snap comparison that forever ownership mindset, rational investing, trying not to let the trends of the moment sway you, unless there's a good reason for it. I think a huge difference would be that that, you know, Berkshire has historically been a more passive acquirer, like they try to be very good at selecting the right companies and then letting them operate, doing more of the same, where on that particular dimension, we're almost at the exact opposite end of the spectrum, where we like companies where our ability to make big changes and the very integration into our technological and people platform will make a difference. But yes, it would be a dream to be able to build a company that's almost an institution of that scale. We'll see. We're certainly here to try.
00:30:47 · Ed Elson
[00:30:47] S1: So you you start in Copenhagen, then you move to Milan, you are in Italy. I think that this this IPO put Italy on the map in terms of business news. We rarely hear about Italian companies unless we're talking about luxury cars or storied storied brand names. To what extent does being in Europe play a role in your business? There are a lot of European companies that have decided we're gonna move to The US because there's more opportunity here. We're gonna... I had, like, the CEO of Salonis on recently who tried to move a lot of his operations to America. Tell us a little bit about operating in Europe and the extent that it has impacted your business and your strategy.
00:31:31 · Luca Ferrari
[00:31:31] S2: First of currently, yes, we're headquartered in Milan, Italy, but most of our people, and actually more than 50% of our team is in The US, and 60% of our revenue. And most of the businesses that we're acquiring are in The US, so we're definitely very international with a huge US footprint, but we we continue to be a European company, let's say, at least formally, and certainly a big chunk of our R and D and our headquarters. We decided to build a company in Italy specifically, quite consciously, our startups, in my experience, are built out of inertia, like we'd happen to graduate here, let's launch a startup. We... That's what we did with the failed AI startup, or machine learning, or whatever you wanna call it. Once we decided to start Bending Spoons in Copenhagen, we we put some thought into where we should be building the company and chose Milan, Italy quite consciously for two reasons. One was just a, let's say just a commercial selfish reason, that was Italy, 60,000,000 people, good education actually. Lots of people with a chip on their shoulder to prove, you know, that we we're not less intelligent or or less capable. We thought we... And but very few great job opportunities. We thought we could find a lot of capable talent, and it would be a win win for them to join an ambitious project, so hopefully would be a huge company one day. And for us, we would be able to surround ourselves and create people, create strong teams, and hopefully have better chances of succeeding. So that was a one reason. The other reason was we just had this idea that, and I still have it, the world is a better place if knowledge, opportunity, wealth is better distributed. I think it's totally fine that you have one or two hubs where those are off the charts, you know, Silicon Valley, you're never gonna have a uniform distribution and that's okay. But I think if you have a just a gigantic gap and a growing gap, I don't think that's a stable world, a world where ultimately anybody wins. And we wanna improve it, you could build a company of global caliber and absolutely kinda kick ass company in technology, which was our passion from... With roots in an unlikely place like Italy, but it could have been Portugal or Greece. It just happened to be Italian. It was easier for us, plus the other thing I just told you.
00:33:50 · Luca Ferrari, Ed Elson
So we moved there and built it there and I think it's being good and bad. Look, the good part is the talent part I just described. The bad part is Europe has truly incredibly high levels of oppressing regulation. I'm a I'm a big fan of a... I'm not a libertarian or anything like that. I wanna be clear. I'm actually a fan of a... An extremely generous, supportive welfare state, a society that helps people. I just don't think that a good way to do it is by imposing massive encumbrances on companies, would say, you know, have us pay lots of taxes and help people, but don't make getting a permit for building something impossible, getting, you know, being able to fire a team member because you can hire someone higher performance impossible. So I make it easy to deploy, to launch projects and allocate resources efficiently, and then use taxes to provide us a generous safety net for those who are left behind. I'm actually in favor of wealth taxes and more taxes for rich people. Just think we're doing it the wrong way, but Europe is good, but it could be a lot better if I think changed in this regard. [00:34:57] S1: I was gonna ask you what you think the gap is between US entrepreneurship and European entrepreneurship, and there is a gigantic gap. And there is a gigantic gap in productivity, in GDP, in overall wealth creation, I assume you believe it is a result of overly burdensome regulation in Europe or is there anything else?
00:35:20 · Luca Ferrari
[00:35:20] S2: No. There's more. That that would be reductive. I think that's a very big reason. One of the main reasons, I'd say another big reason is culture. I think Europe has historically, and this changes by country, Europe is quite, people who have traveled Europe and spent a lot of time in Europe, it's quite a heterogeneous country, like the people can be quite different. But I think on average, compared to my understanding of The US, which I think I know visionably well at this point, there's a greater tendency to fear and criticize failure. People can be stigmatized for failing, and when they succeed, they they're often criticized for being too ambitious, and maybe there's a sort of a... The default is to be suspicious. Maybe someone, you know, helped them too much, or they got lucky, or... Which obviously doesn't breed... You can still be a successful entrepreneur, but it doesn't help. And and then the the... I think that another factor is the the market is, especially historically, being more fragmented, whereas The US has done a fantastic job at basically unifying the market, and so winners got bigger faster, and in a global in a global world, that's a huge advantage. None of these things is huge in and of itself. They're all marginal frictions. But the way, in my opinion, the economy works is that when a certain location in this case is even 20% more appealing, you know, resources start trickling from the less appealing location to the other location, whether it's human resources, capital resources, and over time that builds an advantage in the more appealing location that can be massive. And I think The US today, you know, in my estimation, if I look at... If I take up the 1,000 of the best Broadway's from Italian universities every year, or let's actually take the top 100. Let's really go at the top of the best of the best, or really the people who tend to have breakthroughs in R and D or launch successful companies. My estimation is that probably a good three out of four end up in The US, and early, often even before graduating. And and and that's, you know, difficult to capture in the statistics, but down the line, if I were ten years, that compounds to a major disadvantage to Italy or Europe, and that's been going on for decades at this point.