01:36:40 · Luca Ferrari, David Senra
[01:36:40] S1: that small teams of very capable people with extreme ownership who really care can do, can outwork and outproduce vast organizations where either not enough people care or they do, but there are so many feet to tap onto and so many hurdles to overcome to get stuff done that they they fail to do so. And it's not... Mean, nobody wants that to be the case. It's more like frog in the boiling water kind of phenomenon where you keep adding teams and and and and processes and rules. And then at at some point, it's very difficult to it's very difficult to care, and it's very difficult to get stuff done. This is what [01:37:17] S0: I meant about, like, it goes back to how I've been describing to other founders that it's just like this Galapagos island of entrepreneurship. Because I know you mentioned, like, being influenced by Henry Singleton, for example, and he would do this too. He was like, over and over again, says, hey. I think at one time he owned 130 different businesses and 129 of them were profitable, but he wanted to break business units into the smallest possible parts. Difference was, between you and him, you like breaking things down to smaller parts, less people, more efficient, but he didn't he essentially kept kept the business units separate. Yeah. Where you're actually studying them all and then using insights and spreading across your entire organization. It's very similar to like what Mark Lender did with Constellation. Is there anybody else that you've been influenced by or do you take an idea or two from?
01:38:01 · Luca Ferrari, David Senra
[01:38:01] S1: Frankly, not a lot. Going back to what we were discussing earlier, we were growing up as a business in no man's land in Italy, purposefully chose to stay a little bit isolated to try to, at the risk of reinventing the wheel, also coming up with some real powerful innovations. So not not so much. I'd say maybe Netflix, I think. I don't really know Netflix from the inside. I don't know anyone who works there, but, you know, their their famous deck, cultural deck, and then there have been a couple of books that have been written about it. I think some of those ideas that you wanna beat complexity with talent, not process, and keep rules to a minimum, I think some of that, I think, rub rubbed off on us. But other than that, I think we've tried to be quite autonomous in coming up with our [01:38:49] S0: own ideas. Do you describe Bending Spoons as a conglomerate or no? [01:38:52] S1: I It's a conglomerate to the extent that [01:38:54] S0: But do actually use that word? [01:38:56] S1: No. I've never [01:38:56] S0: used I don't think so. [01:38:57] S1: It bother me, but I think it's more... At least in my mind, a conglomerate is a set of relatively distinct and separate parts. In our case, we try to make everything as homogenous and integrated as possible, as [01:39:12] S0: I described. So Berkshire and Teledyne would be much more conglomerate
01:39:12 · David Senra, Luca Ferrari
[01:39:12] S0: I described. So Berkshire and Teledyne would be much more conglomerate [01:39:15] S1: Yeah, than exactly. And I think what Singleton and Buffett did well, well, better than almost anybody in history, is quite different from what I think we've been doing really well. They were, and in the case of Buffett, it still is, exceptional at selecting, at picking companies, management teams that should be worth more than the market was valuing them. I wouldn't say either... Certainly not Berkshire, think, by their own admission would... That most people wouldn't consider them exceptional operators. They generally, in fact, would avoid buying businesses where they thought a lot had to be fixed. They didn't like that. They liked business. [01:39:54] S0: For the people listening to this, they haven't studied Singleton. I just did an episode on him on my other podcast. It's remarkable how many ideas that we've heard from Buffett and Munger that Singleton discovered like twenty years before them. They both [01:40:07] S1: Munger and Buffett. [01:40:07] S0: Yeah. Buffett and Munger were both saying, this is
01:40:07 · David Senra, Luca Ferrari
[01:40:07] S0: Yeah. Buffett and Munger were both saying, this is [01:40:11] S1: where we got these ideas from. If I have to think about all the people who did exceptional things in business and investing, if I had to take their achievement and assuming we can quantify it and divide it by their level of popularity, or just not meaning they are liked or disliked, but how well known they are, it would be at the top of the rank. He's been one of the most successful investors and business people ever by any measure, and yet very few people know him, actually. I think if you ask 100 people, even in business, 95 will now know who he was.
01:40:42 · David Senra
[01:40:42] S0: One of the things that Buffett and Singleton had in common is they essentially primarily saw their job as they were the ones to allocate capital. Their main talent was capital allocation. Singleton, I think you might have said this, and I could be wrong, this is what I'm going ask you. After he stopped acquiring companies, right, he bought, like, a 160 in ten years, something like that. I forgot the number... Exact number. And then he's like, oh, now we're gonna reverse course. We're not gonna... He he didn't make another acquisition... Material acquisition for the rest of his career. And then he just focused on capital allocation, improving the business unit he's had, and then just discovering, like, where's the best dollar I could spend? And is it improving operation of this company? Is it buying another company? And then he discovered it... I was actually buying back his own shares. Yeah. So I think I heard you say before that out of all the investment opportunities you see in the future, it might be buying back Bending Spoons shares.
01:41:31 · Luca Ferrari
[01:41:31] S1: Yeah. Not imminently. I think we see a runway. Right now, allocating capital toward acquisitions is is... Has been an expected to continue being way too... Like, returns, I think, will be way too appealing for that that not to be the the priority. But I think if you ask me, in the very long run, that could be an appealing way of of creating shareholder value. I I think what what Singleton did incredibly well, it was acutely aware of the circumstances and boundary conditions, and very creative and made fully rational decisions. For a decade or more, even the market was affording its stock a good multiple, and it was aggregating a lot of businesses, it was buying at a lower multiple. And it was on top of that exploiting the arbitrage, also very astute at selecting those businesses, kind of double dipped business that was undervalued regardless, people didn't see the potential in the medium to long term. I'd add to that the fact that that business would then join a conglomerate with a higher multiple, so double value creation. And then later, the market changed its preferences as the markets often do, so you've got to stay open minded about it, and started appreciating more vertical businesses. And so he worked on improving those businesses and spinning them off so they could be maximally appreciated. So he was never opinionated on opinionated on the on the how this should be done. He just looked... I believe... I've never met him, of course, but I I believe that looked at investing and running a business as as a puzzle and try to find the best solution. He was also a great engineer. Like, he he could have been one of the best engineers that he wanted to pursue that, and almost a grandmaster in chess, I believe, where he listened to. He had played