Bending Spoons is Eating Silicon Valley | CEO Luca Ferrari

We have half a billion monthly active users. I mean, that's a lot. We've built over the past decade an operating system of over 50 proprietary technologies. We buy these companies and then we install them on this shared operating system. At Bending Spoons we've been able to attract, I think, extremely strong talent. We had 800,000 job applications in 2025. We hired fewer than 300 people.

Luca Ferrari, thank you for having me at Bending Spoons.

I don't know that we're eating anything, but I think you're probably referring to the announcement of the acquisition of Airtable, I suppose. Yeah, I guess I mean Airtable is a great business, a great product, and you can say of Airtable something you can't say of a lot of different businesses, which is that they really were identified as a high-flying, you know, key company in Silicon Valley for quite a while. And that's very difficult to do. So, you know, great job Howie and everybody else who built that business. And so, I think once the announcement of the acquisition came, that was a lot more newsworthy and interesting than maybe some other acquisitions we've done before.

Well, you pick each other when it comes to acquisitions because it's something that has to be bidirectional. But we look at a lot of companies. I would say actively we may look at hundreds of companies in any one year and then we try to establish a dialogue with dozens where we see the best match. And if you know some of these are interested in selling then the conversation can progress. We look for businesses where we believe we can bring a lot of value. We are a very active acquirer. And so for us, for us to be absolutely confident we can offer a kick-ass price while delivering strong returns for our shareholders, we need to be able to bring a lot of value, whether it's by improving the product or the technology or monetization, the organization, ideally all of these. So that's a key criterion. Then we look for businesses that we believe we can, you know, whose trajectory we can predict with confidence multiple years into the future, otherwise it's difficult to underwrite big investments. And it's typically being digital businesses. So we've done consumer internet, SaaS, these are the key areas for us. We also did, recently we acquired a hardware company called Tractive in spring, which is very interesting. Pet tracking and also health monitoring for pets. Pet industry is booming. So that was a very nice acquisition, a little bit outside of our usual comfort zone.

I mean, not a lot clearly. Silicon Valley has built, I don't know, 70% of the most successful technology businesses of the past 25 to 50 years. So I think Silicon Valley gets almost everything right. I believe we have been able to do well acquiring a tiny fraction of the businesses that have come out of Silicon Valley because we bring something different and new to the table in both the way we're structured and the platform we've built. That's for the most part unavailable to these businesses on a standalone basis. So for people who don't know Bending Spoons very well, unlike most serial acquirers out there, most serial acquirers out there will either buy a business because they think it's basically good as it is and they can't really improve it but you know the price is low enough that they can get good returns and then they'll basically leave it alone and that model can work. I don't think it will ever give you exceptional returns, but it can deliver reliable, potentially appealing returns if you're very good at picking businesses that are slightly undervalued. Others are more active, but they will still keep these businesses separate as they were before, but they, you know, these acquirers may have an opinion on how to price the product or how to build the org. So, they will go in and make changes. We are even more extreme on the being active end of the spectrum and we integrate all of these businesses together quite tightly. So we've built over the past decade an operating system of over 50 proprietary technologies to take care of almost everything you need to run a digital business whether it's, you know, data storage and processing, A/B testing, payment management, everything related to recruiting, credentials management, the orchestration for all the AI models used in operations, so on and so forth. And so we buy these companies and then it's almost like we install them on this shared operating system. So they can be much more efficient and also we have a core team for R&D, marketing, at this point approaching a thousand people. We can deploy very fluidly and rapidly across these various businesses to go after R&D opportunities and when the R&D opportunities are not as exciting any longer we can take out the talent and move it elsewhere so we stay very efficient. So these are aspects that I believe none of the teams running these companies on a standalone basis really could access. And so it's not that a lot of the value we create is because other people are myopic. They're doing the best they can with the resources available to them. But I do think we bring also something extra in terms of culture. We have developed a culture of extreme rationality, almost a scientific approach to running businesses whereby we are not afraid of making unpopular choices when we believe it's for the benefit of the business in the long run. We tend to run these businesses very leanly, using data extensively. Sometimes we joke about taking more established companies and bringing them back to startup mode. Small team, very talent-dense teams, removing red tape, giving these people plenty of room to maneuver, to experiment, to move fast and we have found that that generally delivers a lot of value for customers and for the business.

Oh, I think it's just that I think people just try to frame things in a way that will get clicks. But I'll give you a stat. We have half a billion monthly active users. I mean, that's a lot. Short of being, you know, Google or Meta, you know, many companies, so if half a billion people using these products every month is a graveyard then sure let's call it that.

Where, which, of course AOL is a quote-unquote old brand and company. No doubt about it. It's been around for what, like 40 years, something like that. However, to this day AOL is used as a, especially as an email inbox by tens of millions of people. For many it's their primary email inbox. It's the best knowledge, it's the fifth most used email provider in the western world. You could imagine that, you know, the four above it. And so and at the same time you will see if you go to, you know, the online media you will find so many over the past five or 10 years so many email startups which people who don't actually have the data will assume are far more relevant just because they got more coverage and they sound a lot sexier but really if you look at the data these in aggregate these don't probably add up to even 5% of what AOL means in terms of email sent, received, activity, people who rely on it. So, we just we don't care too much about being cool. I say we probably don't care at all about being cool. We care about being good at our jobs and creating value. So, if we find a business that's perceived as slightly less cool, if anything, that's a good thing for us because it means it's probably also going to be priced a little bit more accessibly. So, it is what it is.

So I think there's a lot to unpack here. Number one, there's a lot of value in that model that relies on generous funding early. Many amazing companies have come to exist, often from Silicon Valley, because precisely because of that abundant availability of capital. Plenty of companies you could probably not take off the ground at all without that. And even once they're well off the ground and generating substantial revenue, there's often a very good reason, you know, it's often wise to inject more capital in them so they can grow faster, get to a position of greater market power, whether it's scale economies, network economies, brand. So again I think that model overall has been incredibly effective. I believe there's no doubt that if you look at the overall capital that's been deployed in Silicon Valley by Silicon Valley into technology over the past many decades and the real tangible, non-hyped business value of the companies that came out of that, the ROI is excellent in general. It doesn't mean it's, you know, every investment decision is perfect. But so I don't think that the fact that Bending Spoons is doing well should in any way undermine that model. I think it's a great model. And but like everything, especially when there are sometimes perverse incentives involved, there will be cycles of excess. And so yes, in 2021, I think valuations were out of whack completely. But you know when investors are ultimately incentivized by managing as much capital as possible as opposed to actually delivering strong returns and when returns are primarily delivered through exits where all that matters is the multiple not actually the cash that the business will generate in the long run, at least not it's not the primary reason why you got a certain price then you will get hype cycles and stuff like that. But I think there overall when I look at Silicon Valley and its investment philosophy over, you know, the past many decades, I would say that's a relatively small price to pay for a model that overall has been incredibly successful. Airtable specifically I think deserves a lot of credit because yes their valuation was very high in 2021. You know that's not anybody's fault. If anything it's mostly if we agree that that was perhaps excessive. I think most people would, the business was great, just was too much. And that was not true of Airtable alone but pretty much every business. If anybody made a mistake there it 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 Howie and the team were incredibly disciplined, they actually didn't raise all that much money, they could have raised more and they stayed profitable and burnt very little of that money if any. And in fact if you look at the acquisition price we, you know, the enterprise value was approximately $1.3 billion 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 market. 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 Airtable has done a very good job and but yes the internet pulled out to debate and you know 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 over a billion dollars. How many companies are started that ultimately exit at over a billion dollars? One in a thousand. I don't know the stats, but must be very very few. That's...

It's crazy. I mean...

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.

Yeah, so basically the most important thing is that we can predict where a 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 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.

I think we use AI as much as anybody. As far as I can tell, we're probably in the 99th 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, but 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 this broader cohort of businesses built over the last say five years with AI at the center of the thesis. But I'm equally confident that most of these companies will fail or at least, you know, basically fade away. Because everybody, it's a gold rush when you see people raising massive, massive amounts of money at billion dollar valuations with pretty much nothing other than an 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 who's not too worried about their reputation will 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. For us as Bending Spoons right now we're not considering acquiring any of these companies. I think we, I said earlier a key criterion 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 100% a year it's very difficult and you only have one or two years of history it's very difficult to know whether it'll be growing at 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.

It's written by AI. Yes.

Yeah. So, because we, you know, 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, right? It's almost like if you want to be a great cyclist, obviously that's not all there is to it, but you want to have a great bike. I'm not saying anything shocking here. So we have invested into this operating system, into these technologies for a long time. Because, you know, 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 but so for the past decade we 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 from 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, they generally optimize for the mass market of enterprises. It makes sense. You don't want to, 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. We need more sophistication. So we have to build it ourselves and also 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 and effectiveness. So everything kind of 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 got to save on costs substantially. It's difficult to know exactly how much we're saving by building this in house, but I'd wager it's at least $100 million a year in costs. So, it's pretty significant. But yes, it's a key source of competitive advantage. And this is, 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&D to build these tools. The returns will be on an excessively long time frame whereas we can amortize those investments across the entire portfolio and also the portfolio, our expectations of the portfolio expanding in the future. So it's just a scale advantage that's unavailable. And another big advantage in building this operating system is that as all of our businesses use all of these tools, when they find that one of these tools does not serve their needs as it should, perhaps there is a bug or a certain corner case is not handled or an entire area of need is not fully covered, that business can improve the tool almost like if it were an in-house open source community and then those improvements are propagated to benefit all the other businesses. And so as we expand our portfolio and our organization grows, our ability to make these tools effective expands with it.

A lot of iteration. You know, one of the big lessons as an entrepreneur my colleagues and I learned early at a failed startup in between 2010 and 2013. And some lessons we learned there were instrumental to building Bending Spoons was that you need to be intellectually humble. It's good to have a vision. At the same time, it's good to assume you're probably wrong. And so for technologies, we operate in a similar manner. We try to be opinionated on what ideal looks like. But then we never make multi-year investments. And before we test them on the ground, we like to identify smaller pieces we can build, put in the hands of our different businesses to see if they're useful and depending on adoption, reception, we will further develop or rethink. And also while we have platform teams who own all of these technologies, we have found that it's never a good idea to take a platform team and task them with building something entirely new. It's much better to have the people who need it build it. So we will identify one of our businesses where that particular tool will be especially important and then they will build it themselves. And if it's, once it's successful or if it's successful it'll be handed over to our platform teams to be further refined, expanded. And the reason why this works is that when you need something, when you have experienced the pain of a certain problem you're far more likely to develop an actually useful solution as opposed to taking a more academic angle where you think you know what the problem is and then you get more excited about the engineering challenge than actually solving the problem. So these are probably the two main principles. Iterate with small iteration cycles, quick iteration cycles with high levels of intellectual humility, assuming you're wrong. So you want to constantly test and confirm you are in fact right. And if not, you know, just and to always start building with people who have faced the problem, people in the trenches as opposed to with centralized teams who are in an ivory tower and haven't actually gotten their hands dirty with that particular issue. They are fine later to refine, expand and manage. But I think when you go from zero to one with a new technology, it's better to have it built if you have that possibility by the people who understand the issue very very well. And for us, it's fine because ultimately we have engineers in our businesses and in the platform. So it's, you know, it's not that we lack the capabilities that way and we can move them around all the time.

Well, I think you ultimately you want to get to the truth. If you had a perfect understanding of the truth of your relevant context, life broadly, your business and the market more narrowly, you would be almost guaranteed to succeed because you would not set objectives for yourself that are impossible. And those you set, which would presumably be possible unless you're, you know, you're a pessimist, you would be almost guaranteed to reach them because you would know exactly. It's almost like if you're a physicist and you need to compute the trajectory of a ball and we have the formula, we have the math. It's basically you're always going to get it right assuming you don't do, you know, calculation mistakes. Now the point is it's very difficult to know the truth. It was very difficult to figure out how physical bodies behave, you know, through physics thanks Newton and others but it's in many ways equally difficult sometimes more difficult to figure out how a business works, how the market works because there are so many variables, it's a fast changing context. So I think it starts with taking a scientific approach of doing everything you can to probe the world, learn from those experiments, those observations, adjust your model of reality and then execute accordingly. So be highly disciplined and deliberate in improving your level of understanding of the truth. Again it takes a level of intellectual humility, intellectual honesty. If you think your vision is right, you're perfect, you already got the whole thing figured out, you know, let me break the news, you haven't, not even Steve Jobs or maybe one of the best to ever do it, not even him had it all figured out. He failed repeatedly. So you haven't either. So you want to again probe things, figure things out and through that process I think of approximation toward the truth, you will expand your competitive advantage basically because most people don't have almost any understanding of the truth. Most people don't actually seek the truth. They seek pleasure or comfort and they want to just confirm that they're right and they're good. Just that mindset, that scientific process of approximation toward the truth will set you apart and give you very good chances of succeeding. Now in our particular context developing this again operating system or this technological platform is just an instance of that process at work but it's not the root cause or where our culture originates. It's just a manifestation of it. And our attention to talent, our acquisition strategy, everything follows from the same root approach. Again seeking the truth, refining that model of the truth all the time and adjusting our strategy and execution accordingly.

Some of the ways we are most different from private equity are number one, we're not a fund. We don't buy to sell companies. We've never sold a material business. We intend to own and operate these businesses forever. Whereas private equity, for those among the audience who don't know, generally these are funds. They raise money from third parties, from limited partners and then they hold the companies for on average five years and then they sell them. And so it's a completely different approach and mindset to what you do, what you do not do. The second big difference is that private equity is typically, they are a financial place where there is a small group of very capable financial operators and they'll buy these companies, they'll make changes, often they change the management team, again they may touch prices occasionally, operations, it's a relatively hands-off approach. I'm not aware of many instances in which the underlying technology for that business was rebuilt, the product was dramatically changed, the organization was dramatically changed. At Bending Spoons, we, and again and of course that's the case because at private equity you have a small team of financial operators, financial specialists, so you just don't have the workforce and expertise to make some of these changes. If you look at the Bending Spoons organization, at this point approaching a thousand people in the core team, over 2,000 including all the acquired teams, most people, probably 60-70% of this pretty large team are software engineers, AI research engineers, product designers, product managers, growth managers. And so obviously these people are not sitting around doing nothing. What does a software engineer do? What does a product manager do? What does a product designer do? They build product, technology. So that's almost all we do. And we implement these very deep transformations in the acquired businesses where we rebuild big chunks of the codebase. We re-architect the cloud infrastructure. We launch a lot of features or if we think they're useful change the user experience trying to make it more intuitive. We experiment tremendously with monetization and often reinvent monetization in pretty significant ways. What's premium, what's available for free, the prices, the different segments of customers. We rethink marketing from scratch or at least in very major ways. And these transformations are very time-consuming and challenging. They're also some of the most fun parts of what we do. And that's where a lot of our returns originate. So difference number one we don't sell businesses, number two we transform them pretty deeply at the core. And the third major difference is that we try to integrate these businesses pretty deeply all together on top of that shared platform operating system and we have this core team or centrally let's say managed and then they are deployed into the different businesses and they move very fluidly across the businesses and this is unavailable to private equity structurally because as a private equity you want to buy a business and then sell it. If you integrate it with all the other businesses you bought or most of them it's going to be extremely difficult if not impossible to sell it to someone else. So yeah there are similarities but there are also pretty glaring differences between what a typical private equity does, whatever typical means because again private equity is a very diverse world, and what Bending Spoons does.