01:08:56 · Luca Ferrari
2% of people use it, it's adding complexity to code base, bugs, issues, and sure, someone will be disappointed, but the 98% of people who don't use it, you can serve them so much better that one year on down the line, you'll be two x as as well off. Just do that. Don't slowly transition out a million migrations, headaches, issues.
01:09:15 · David Senra
[01:09:15] S0: I found one of my all time favorite quotes when I was reading the book Zero to One. The quote says, the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas. That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers inside mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full screen video ads that are watched for an average of thirty five seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal and AppLovin achieves it. There's no complex setup, no expertise needed, and AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So you wanna get started quickly before all of your competitors are on Applovin. And you can do that by going to applovin.com. That's applovin.com. Before we go back to these other cultural tenants of you, tell me what this automated system you just described that's like running the company in the background. What is this?
01:10:33 · Luca Ferrari
[01:10:33] S1: Yeah, wouldn't say it runs the company in the background, but we are pretty fanatical about technology in general. I personally was involved with AI in 2010, which at the time, it looked weird because it wasn't a thing really today. Obviously, if you're now building a startup with AI, people look look you at What the heck are you doing? Of course, you should be building a startup. You know? Carried with us this passion for using technology and cutting edge tools to be more productive, more effective. We have invested pretty heavily at Bending Spoons over this point, over a decade to develop basically you can look at it as an operating system, at this point over 50 proprietary tools that run almost everything that we do or at least supported through automation. And then we buy companies and it's almost like installing them on this operating system and a lot of the operations are subsequently run homogeneously, consistently and very efficiently through it. For example, we have one system to manage payments. We have one system to run AB tests. We have one system to predict user lifetime value. We have one system for recruiting and talent predictions. We have one system to orchestrate the many AI models we use internally to run our operations, so we always use the ideal one in terms of cost, quality. We have one system to authorize different colleagues to have access to different systems, let's say credentials management, one system for data aggregation and processing, and the list goes on and on. And we keep refining them and we have kind of an open source community internally whereby we have platform teams who own these different tools and make them better by the day. But then each of our businesses, as they use them, they find ways that they come up short. They can add features, fixed bugs, and as they improve them, these improvements are propagated and automatically made available to the entire portfolio of businesses. So adding businesses actually makes us better as a whole, not just because we're adding some revenue, but because we are adding another entry point for innovation, improvement ideas on this kind of operating system. And it's been a boon for us. It's hard to estimate exactly how much in terms of efficiency effectiveness it's added, but it's certainly trustworthy, I'd say.
01:12:54 · David Senra, Luca Ferrari
[01:12:54] S0: Adding more businesses is better for you, but then is that not in conflict with, I think, you're now, for your acquisitions, you want to do fewer and bigger? [01:13:04] S1: Yeah. I mean, there's a trade off, obviously, like in almost everything in life. If fewer bigger acquisitions is better for us to the extent that it means we can focus our limited operational capacity onto those transformations and those and and and and getting those right. We have seen that the in terms of of of time and effort, it doesn't take a lot more time to transform a company that's bigger in terms of revenue than a company that's smaller. [01:13:34] S0: So same amount of time invested. [01:13:35] S1: Roughly speaking, Evernote in 2023, early twenty three, we had a team, a task force of Spoons, these people from the core team. You know, we've been talking about probably all 50 people who joined Evernote and and really drove that transformation. We're writing the code base, we architect the cloud infrastructure, rethinking monetization, reorganizing the company and all that. That was a business generating a little less than $100,000,000 in revenue. [01:14:03] S0: At the time you acquired it?
01:14:03 · David Senra, Luca Ferrari
[01:14:03] S0: At the time you acquired it? [01:14:04] S1: Yeah, at the time we acquired it. And then in the first half of this year, we did, broadly speaking, same thing with Bmail, with roughly the same number of people, 50 to 60. But Bmail is roughly $400,000,000 in revenue. So approximately four times as large and and the team originally was over a thousand people. Evernote was a little over 300 people. So three to four x the scale, you wanna look at revenue or headcount, roughly the same number of spoons introduced into the business to change it. That's incredible. Part of that is, I believe, intrinsically the complexity of transforming a business doesn't scale linearly with the revenue of that business. Partly is in the meantime, we have gotten a lot better, example, expanded and improved that operating system, so we were getting more productive. But... So because of that, we prefer to acquire a relatively few businesses and make sure each counts. So get... It has to be larger and larger as we scale as a company. Currently, we're roughly $3,000,000,000 in run rate revenue, so the business that moves the needle for us today needs to be a lot bigger than than when we acquired Evernote. In terms purely of that operating system of technologies, we do benefit from more diversification because the more teams we have who adopt these technologies, the more likely we are we are to find ways that could be made better, innovated on. So we we have... So how do [01:15:21] S0: you reconcile the two? You want...
01:15:21 · David Senra, Luca Ferrari
[01:15:21] S0: you reconcile the two? You want... [01:15:22] S1: We we tend to to to prioritize the former because I think it does so bigger businesses Because you developed [01:15:28] S0: this operating system over how many years? Decade and a half? [01:15:30] S1: Yeah, we started thirteen years ago, obviously. When we kicked off the project, five people, we didn't have the luxury of investing in R and D, in our technology. I think we started in earnest with significant investments maybe ten years ago, something like that. [01:15:44] S0: And has anybody I don't think you would do this would anybody try to come and buy these tools from you?