Inside Bending Spoons: Finding Talent, Leveraging AI & Driving Operational Excellence | Luca Ferrari

Well, it's great. I mean, uniquely focused, ruthless, and I mean it in a positive way. When there's a goal, goes for it. Very rational, effective. I mean 10 out of 10 on that in those areas I think.

I've always been kind of polarized in my interests. I either choose to do something and then I'll try to max that out, try to be the best or part of the best team or I will try not to do it at all or if it really has to be done then I'll literally try to kind of just check the boxes for minimum commitment. All sorts of rewards emotional and material are at the extremes. I think I have a close to 10 out of 10 relationship with my wife. I think to me that's worth 100 times more than having an adequate relationship with my wife. Same with my job and my colleagues trying to build the best company there ever was. And we understand that's aspirational and likely nearly impossible. But I think if we get close to that accomplishment, the rewards, the fulfillment, the satisfaction, the learning along the way, financial rewards will be just exponentially greater than just doing well enough. And so I think you have limited time and energy. You want to find one or very few pursuits to try to go all out and everything else keep it eliminated if you can or keep it at the bare minimum.

Yeah. Just again aspirationally don't take it it's not meant to be arrogant. I know we have a very slim chance but just you know the waking up in the morning and thinking we're not building a nice church or trying to build the greatest cathedral that anybody has ever built. That's a lot more exciting to me. Gets you further. It's more fun, energizing. Better people will want to work with you. And I think one of the big ways in which life is interesting is surrounding yourself with amazing people, better people than you are if possible.

I mean, you'd have to ask them. I think we probably for the most part, I'd say. Yeah.

We're not big on founders. I know this is maybe ironic to say, you know, given your podcast, but we try to eliminate the idea of founder from this company as much as possible. We think it distracts people from the company. The company is the center and whether you're a founder or you joined a little bit later all that matters is your contribution, your trajectory, the people at the company, those at least I know the best and with whom I work the closest regardless of whether they're founders I think broadly they share this ambition so yes but it's not necessarily a founder thing it's more of a Bending Spoons thing.

Yeah. I think part of that is I don't know how much the audience knows about Bending Spoons, but we started in Copenhagen, Denmark, quickly thereafter moved to Milan, Italy. These are not exactly especially Milan not exactly and certainly not at the time over a decade ago a center of entrepreneurial pursuit and an ecosystem where you turn left and right and you have all these other startups or advisers and whatnot. So and of course we were absolute nobodies so it's not that we could pick up the phone and call Jeff Bezos right. So we just had to figure things out on our own. We were trying to build aspirationally speaking the best company in the world. If you emulate what most people are doing, you're pretty much guaranteed to, you know, at best be mediocre, mediocre plus, maybe you execute a little bit better, but if you want to try to be the best of the best, you need to take some risks and rethink things. And so we figured, okay, let's try to experiment, invent, think from first principles. And we will make more mistakes. It will take longer than if we copied some of the tried and tested approaches, but we should be able to find at least a few insights, a few new ways that will set us apart. And I think being more isolated geographically has probably played to our advantage in that regard so that we weren't under the influence of the mantras that everybody, you know, the big startup hubs over time was preaching.

Yeah.

Yeah. So that was called Evertale. It went on from 2010 to 2013. We were using AI to write diaries automatically. So you would install an app and then it would collect data and figure out what you'd done, where you had gone and whatnot. It was actually pretty cool but never managed to make it scale. Commercial failure. Some of the most crucial lessons were one the importance of talent. So we had a very small team at peak maybe 12 people but we saw that the contribution of the best person we had on the team relative to like the say the median person forget about the bottom but was easily 10 times as great like literally worlds apart. So that taught us okay the range of productivity at least in our field in digital technology is massive. So the value of having on board that sort of individual is gigantic and also that person who was performing at the peak in that group was actually one of the least experienced people. And so that showed us okay maybe experience you know certainly valuable but not as critical as people sometimes tell you it is. If you have someone who's really smart and really cares, often they'll be able to deliver as much value, if not a lot more value, than someone with a lot more experience.

Why talent let's say over experience? I think there are a few reasons for that. Number one, most of the things we do and I mean broadly in most industries probably certainly in the technology industry are not rocket science. They do not require immense amounts of notional knowledge and repeated extensive track records. They require actually a good brain and a desire to do well to achieve first and foremost and also our field technologically but also in terms of customer expectations evolves very quickly. So experience gets stale relatively fast.

Yeah, I think you know I'm not sure how it works if you sell SaaS, but when it comes to selling technical tools, what people consider excellent today or an intuitive interface or you know effective monetization are very different from what things looked like 10 or 15 years ago. Completely different. I mean, if I'm sure at least, you know, people in the audience who were at least, I don't know, 35 years old will remember what software looked like in the early 2000s. And, you know, by today's standards, that's primitive and almost unacceptably bad and people would never use it or buy it and the ways you build that software. And by the way, that's just the customer-facing layer. But then behind the scenes how and this is only something that probably people can understand if they've built software before or work with AI the way you efficiently wrote software in 2010 bears very little resemblance to how you do that today in 2026. Whatever people learned back then yes some of it will port. I'm sure you know you are more mature emotionally, you know how to work with others and whatnot, but a lot of that experience basically you can throw it away. The value of accumulating many years of experience is not as great I believe as some people think it is. And additionally, not all experience is created equal. You can actually get worse through experience. If you're exposed to low standards, for example, of performance, you'll normalize those over time and you'll actually be a less capable team member than someone who has never been exposed to any standards and maybe you know naturally is inclined to believe idealistically perhaps that the bar should be held higher. Or if you've been working for a long time in an organization where the way to progress and succeed is by pleasing others and doing what they tell you to do even though you don't necessarily think it's optimal for the organization call it politics I don't know that that experience will make you a lot more capable necessarily if you for example join a company like Bending Spoons where I'd like to think we're a radical meritocracy and we try to be rational in deciding and do what's right for the company. So for all these reasons, experience can be extremely valuable, but it's not necessarily extremely valuable. But talent, meaning a good brain and a massive eagerness to excel, grow, make an impact, those never fail to be valuable. And so, you know, in a competitive labor market where you can't have everything at the same time, you need to prioritize. We tend to favor talent also because experience, we can give it to you. You know, we just have to be a little bit patient. Make sure we expose you to good challenges and surround you with amazing colleagues. You'll accumulate experience very quickly. First principles really and based on those anecdotes and observations during the first company I co-founded but also at Bending Spoons in the early days we repeatedly saw that that thesis was supported by facts and so we kept investing in first of all attracting excellent talent and then creating ideally the perfect conditions for that talent to flourish very very quickly because of course you need to establish your structure and operations to get the most out of the human capital you have. I would build a company differently if I had to work with inferior talent than we do because we believe we have amazing colleagues.

Yeah. So, for example, I think if you have and maybe there's nothing you can do about it. If you have mediocre talent, then I think the appeal of process and procedures becomes greater. Checks, rules, because you need to guide more. You can't count on people to problem solve, autonomy as well. You can't count on them coming to work with the fire in their belly as much. You know process and procedures sometimes we say they are terrible but honestly they can be the lesser evil if you are in that situation. If you are lucky enough or good enough for whatever reason to have a very strong team then I think generally speaking you want to have as few rules as possible. It's not that process and procedures are always bad. There are cases where you want to have some of those but to the extent possible get rid of them. And give people massive leeway to express and develop their talent. Make them feel trusted so that they will bring the best of themselves to work. And that will be good for everybody. They get to do better work. They get to learn a lot faster. Their careers can be turbocharged. But again, that only works if you have a very good team. I suppose it's probably similar with sports. I would imagine that how you coach, and I'm going to the extreme. I'm not saying Bending Spoons is that, but if you were coaching the Team USA dream team with Jordan and Barkley and those guys, you would do it a certain way that would be different the way you would optimally coach a team of kind of modest talents. You can probably win with both. It's a lot easier to win with Jordan, but certainly you're not going to tell your more modest talents, okay, go and figure it out. You will try to give them a system that's a lot more guiding. So we try to approximate as much as possible like the dream team aspirationally and then give a lot of space for those people to live up to expectations.

I think you can think about life in general as when it comes to people and accomplishments as you control certain inputs you know how much you work what you do when you work for example to make it super simple and then there's a bunch of elements you don't control them boundary conditions sometimes knowable sometimes unknowable sometimes fixed sometimes shifting and the combination of those ingredients leads to outputs or results call it what you will. Outputs results are fairly easily observable. Sometimes there is a gigantic amount of inputs that go into achieving a certain output and those inputs go into it for a long period of time. Whereas the output can be very simple. You know, the company achieved a certain amount of revenue whatever you won a certain tournament you know no matter the field. And so it's a lot easier to just look at the results the outputs. It's the convenient sometimes lazy way. But life typically in most pursuits most endeavors is so complicated. The amount of inputs, the amount of people contributing different inputs, the amount of variables you don't control, those boundary conditions are such that if you just look at the outputs, sometimes you get a massively distorted picture of what the person contributed. A lot of it could be luck. A lot of it could be actual human performance, but not by that individual, someone else who just you know you failed to know was involved, maybe wasn't as front-facing. Now the more extensive someone's track record is, the more results likely correlate with actual talent, take an investor. You can get lucky one year, two years, four years, but unlikely 30 years. I don't think anybody would question that Warren Buffett is almost certainly insanely good at investing. You can never prove it definitively. You could have been lucky for decades, but that's astronomically unlikely, right? But if you find any hedge fund who delivered 50% performance in any given year, it could easily be they got lucky with two stock picks. Maybe those were terrible ideas. Maybe they picked them for the wrong reasons, but you know, whatever. The boundary conditions changed and they made a lot of money. So, when you pick someone who's very experienced, decades of work, probably you can get away with just looking at the results, maybe some reference calls, very likely you'll get a reasonably accurate assessment. But if you have to pick someone who hasn't even graduated yet or maybe he's been in the workforce for a year or two then you don't have the luxury of using this like the sample is too small and so you need to find different ways and something we do is making extensive use of testing. So we develop tests that people go through that we have found over time proxy pretty well their same mental capacity and faculties. For example, we have over time developed we've really built a science out of studying people's track records including academic records and personal projects and similar things whereby in some application we identify over 100 different signals and through those we predict their long-term potential. It's not entirely dissimilar for what a stock trader who's algorithmically oriented would do. You know the more quantitative hedge funds they would identify and test hundreds or even thousands of signals. Many of these are only very marginally predictive but in aggregate they make you predictive enough that you can succeed because you're just better than others. And so we have all these signals some of which are completely obvious. You know someone's GPA tells you something. You know higher GPA is better than lower GPA. It doesn't prove anything. It's not definitive but it's a good sign. Some are more subtle and we keep working and investing scientifically in identifying and measuring these signals. So over time I think we have developed a competitive advantage in finding people who despite their minimal track record are very likely to excel.

Yeah, it's a very unusual but and by the way the signals are not just from the CV but they could be from email exchanges with our recruiting team from the tasks we ask a candidate to go through anything really anything qualifies as a signal and we just care that it's predictive. It doesn't have to be something that let's say intuitively immediately makes sense as long as we can prove it's likely not a statistical fluke but actually give me an example that I'm a little confused. Well, I mean, for example, one of the qualities that we value in people is because what we do is such a team sport. You need to be somewhat collaborative. You don't have to be the nicest person in the world, you know, like but if you are arrogant or dismissive of others or just an jerk that doesn't work typically unless you're a freaking genius, we might, you know, accept it occasionally, but it's almost nobody is. So, for most people, you need to be nice enough. And we find though that when they're interviewing even especially because these are smart because they've already passed the more cognitive oriented test, they are generally quite nice because they know that if they come across as super arrogant, they're not going to get an offer. We found that whether the interviewer felt that the interviewee was open to criticism and reasonably pleasant to talk to wasn't a good predictor of whether they were actually collaborative on the job. So we have a role call it like a it's almost like customer support people who help you with the more the logistics of your application process of you know scheduling interviews or so it's more of a support role which clearly does not come across as in any way connected to the final assessment how people interact with those is a lot more predictive of how they actually are as human beings. And so we found that people who were hurt and sometimes of course even disrespectful occasionally that's rare ultimately that predicted poor behavior in a social context much better than how they interacted in an interview. You know, again, one of hundreds of signals in and of itself is not definitive, but it helps form an accurate picture at the end of the day. And that would be for collaboration, but then we would have others for hardworking attitude, whether you're creative, whether you're logical in your thinking, perseverance, you know, the important things that identifying what's important is not rocket science. You could imagine what's important to performance. The difficult part is spotting it through these kind of subtle signals.

We bought a little over 50 businesses over time.

I was going to say maybe the most important. So you just said it's almost all that matters. So it is the most important. So I'm going to centralize this. Are you also then the centralization allows you to kind of take the insights that you learn from one of the 50 and disperse it to the other ones. Is that what happens?

Well, there's none. Just trust. They don't have any bonuses, any variable pay. We just tell them we trust them to build the best organizations they possibly can and then that's it. And we find that if we hire people who are intrinsically motivated and who like the project and you work with them and you're deserving of their friendship and admiration then they will do their very best to achieve the common goals. In fact, we find that setting highly specific concrete objectives to which career progression or pay are tied almost invariably leads to bad outcomes or inferior outcomes. Meaning maybe people will occasionally try a little bit harder in the short term, but then there's all sorts of deviations from what would be optimal holistically for the company and that's instead optimal for specifically checking the boxes of that particular incentive system you created. And so we just tell them we trust you to create the best teams you can. So hire well, part ways. We don't need to part ways with a lot of people but when it's necessary please do that. Let's talk if you need help. Let's discuss. But ultimately it's as simple as that. And by the way it shouldn't come as a shock. I mean most of us I think when we worked in projects where we thought we were doing incredibly well and everybody was pushing in the same direction. How frequently were there super mechanistic KPIs with our pay tied to it? I've never seen it. I mean generally in startups for example, yes there's a broader idea if we do really well maybe our equity will be worth more but it's highly indirect and ambiguous and when and how much people work hard and try their best because you know they feel a sense of ownership. They like working with one another. They care about the project. So we try to recreate that same setup. We give them full trust in leading hiring and by the way because this is centralized they also have a much bigger sample and much better information both in terms of what's available out there and what works and what doesn't. Again if you're a hiring manager in a team of 10 it's probably bigger than most teams. At best you're going to hire three people a year. I know I'm just making it up. Something like that. It's not a huge sample to learn from and you're not focused on it. So you're not going to wake up in the morning thinking how can I be a better interviewer. Obviously it's not your core problem. For our centralized talent team that's all they do. So you know there is no professional pride other than we're good at this. They do it at scale. So they have massive sample size and they get to see what kind of talent we can attract across all different roles and positions. Therefore, they're much better positioned to understand whether someone is the right hire for a particular role because they've seen what's coming in time across the board. And so, they know they're better positioned to know, okay, if we wait a little bit longer, statistically speaking, we're likely or are we not likely to find someone who can be even better. So they have all sorts of advantages in terms of their focus, the informational sample that supports their decision making and also this efficiency that they are basically yes they're hiring for a particular role but nothing prevents them from picking from other pipelines potentially and swapping as needed. Again maybe someone applied as a product manager but they see that they could actually be amazing as a growth manager. They can easily make the swap because they are looking at the entire thing, not just that particular.

Oh, yeah.

Yeah, completely. And look, I think in general having sharp job descriptions is bad. You want to have a there is a blob of work that needs to be done and different things are differently important, urgent. And if you have a team where people don't feel siloed, they're just responsible for the company success. Again, just like a startup, if you're failing to hire someone who's supposed to take care of like a little part of this blob of potential work, it's not that that blob is ignored if it's really important. Someone will basically postpone something that's a little bit less important to take care of it, right? And so I always say I generally talk to new hires. We have sessions where we discuss some of our cultural principles and other things. And one of the things I sometimes say is that we all have the same job at Bending Spoons. All of us starting with me and that's helping the company succeed on a daily basis. It's helpful to say you're a software engineer, I'm a product manager just so we don't step on each other's toes too much, but essentially everybody's job is the same. Do whatever is needed to help the company succeed. And so I'm not worried about a seat being empty because I don't think the concept of seat even exists really. We'll just adapt and take over and complete the work that needs completion and you know we'll just not do some other work at the end of the day. Very little work in a company, especially a digital business, is strictly necessary. Almost all of it is elective, optional. It's just a matter of what's higher priority and lower priority.

Well, I mean almost everything you do, you could also not be doing almost all of it. And so winning starts with doing what's ROI positive, which is only a small portion actually of the complete universe of possible projects and tasks. And then doing things in order of priority. So from say highest ROI again the risk of being a little bit simplistic and your resources will be limited. I think most companies do things that are ROI negative. You know there is 100 things they could be doing but only 10 are ROI positive. Many companies are doing 40 things. Hopefully at least they do the 10 that are ROI positive too. In some cases tragically they're not doing some of the ROI positive things despite doing so many other things.

Oh, I mean all sorts of reasons for the companies you buy because obviously you're buying things that are there's a brand that's well-known, there's a customer, there's a product there, but in almost I think every single example, you've massively improved everything you've purchased. So what are like the most common mistakes that people previously under previous management were making? A lot of the reasons for those opportunities not being seized frankly lay outside of their control. Some of it is perverse incentives. If you're running a business on a standalone basis, especially if you're a public company, but also private companies ultimately they're aiming to go public. So it's kind of the same. You'll be judged on what I often you'll be judged on what I would let's say consider ultimately secondary if not even vanity metrics rather than let's say value creation through cash generation. For instance, if you are running a business where most of the revenue comes from subscriptions and you know maybe the optimal price is a higher price like in every pretty much with any product in a free market if you raise prices you're going to have fewer customers which can be fine. You know, maybe you have 30% fewer customers, but each ultimately contributes twice as much. You're better off, right? However, often the markets will punish you dramatically if you do that because when they see that the number of subscribers has gone down, even if revenue has gone up, they will not like it. And we could debate why that's the case. It's an interesting discussion. But if you're a management team ultimately in that particular context you will have to heed the opinion or expectations of the market and you will not do that pricing change even if you know that it's going to be positive. However, if a company, a business is run within the broader Bending Spoons where none of the businesses let's say ends with itself, but it's a piece of a broader puzzle, a source of cash for further deployment and growth, then it's much easier to make those otherwise unpopular decisions and even investors would potentially support them because they're not focused any longer on I want say Evernote to have as many subscribers as possible. Yeah, all else being equal. I want to have more subscribers, but I would rather have an Evernote that generates more revenue, more cash flow, so that it's more accretive to the bigger Bending Spoons and we can go after bigger acquisitions and thrive. So there are incentives and this is one example. Another one is talent. Sometimes businesses when they have matured and you know everybody understands and sees they've somewhat saturated their opportunity, you know, maybe they're growing 15%, maybe they're flat but they're not doubling every year or something. Often they have long stopped attracting some of the most hungry, ambitious talent. And so these executive teams have access to perfectly valid talent, but maybe not standout talent.

Exactly. Okay. So I you know I did consulting like you know the big strategy consulting companies McKinsey, BCG, Bain.

I got hired I got hired because we had so in parallel with the startup we were talking about.

So I have a background in engineering, physics and with two friends of mine also engineers. We had this idea of building that company that AI self-writing diary I was describing earlier Evertale but we had no money you know all of us you know coming from countryside in the northeast of Italy.

At least at the time yeah fewer than a thousand.

They are retired now but yes they used to.

Well it's all virtual. I haven't sold a whole lot of stuff. So anyway we wanted to build that startup but we had no money and it wasn't at least we thought it wouldn't be easy to raise seed capital either and maybe it's easier or was easier and certainly is easier in the states. It wasn't for us. And so we figured how do we do this? And so the three of us very good friends in the time and even more so today because we've gone through so much over the following 15 plus years. We figured okay we all of us look for a job and whoever gets the most lucrative offer accepts it and pays for rent and food for the other two. The other two would work on a prototype and basically the startup until we can convince someone to give us some money so the whoever is working can quit and we can all focus on the startup. We all look for a job and well frankly one of us was doing a PhD already so that was our backup plan but not a super lucrative job so that you know we were hoping to do better than that and I happened to get an offer from McKinsey for a consulting job as strategy consultant and so that was the best offer we got and I remember I was terrified because I'm close to incapable of lying or being opaque I always want to be honest and transparent. But that's why I decided I would tell the partner from McKinsey who extended an offer to me that yes, I was going to work there if they wanted me give it my 100% but the plan was as soon as possible for me to quit to go do the startup. And I was so convinced that they would withdraw the offer, you know, because who wants to hire someone who's not planning to be here for a little bit. I'm trying to leave as fast as possible. Exactly. Incredibly, that partner was enthusiastic about the project and said, 'Yeah, it's great. You know, well, we want to have you here.' So, very grateful, very inspired, worked very hard, as hard as I could. Was working on the startup basically during the night but not like when people say during the night they mean from 7:00 p.m. to 9:00 p.m. I mean like from midnight to 2 in the morning and then on the weekends and then I remember after the one year at McKinsey I had my I don't know 3 weeks of vacation or something like that I spent to work like full-time on the startup. Anyway about a year later we managed to raise about half a million dollars and so I quit. I mean I finished a project another two three months and then I left. So yes, that's my stint in consulting. And I think I saw something there that I think has some similarities to Bending Spoons most of the time. Most of the people who applied to work at McKinsey and I'm pretty sure it was the same for BCG and these other consultancies were very excited to be working there. They got some of the best graduates at least from business, maybe not as much from engineering. But then you would end up serving telcos, banks, insurance companies to which you would never have sent your CV. And I think Bending Spoons is kind of similar for software engineers, product designers, product managers. I believe we got some exceptionally good talent, especially students, new graduates for reasons we can discuss, but talent density is one of them. Career opportunities and then end up working on AOL or you know again Evernote. Some of these businesses these people would then have applied if the whole prospect had been to work there for five years or 10 years but they're incredibly excited and rightfully so to spend say 12 months or 18 months on AOL rebuilding the technological foundation rethinking the customer experience, monetization that's a very interesting challenge because you get to change a lot of stuff on a very large user and customer base. So you get the best of a startup and a big corp. From the big corp, you get we're working on big user and customer bases. This is not we're not trying to find product market fit. We have a lot of resources. But from a startup, you have a tiny team, lots of responsibility, and we're actually making big changes. So it's not we're not refining a button or trying to add the next 0.5% in revenue. We're trying to rebuild almost from the ground up in many cases. And so going back to what are some of these executive teams from the acquired companies getting wrong? Well, they're actually often doing well, but they can only work with the teams that realistically they can attract. And we are often able to bring in a lot of fresh talent with the new perspectives and some excellent skills. And so, it's a lot easier to rethink and rebuild these companies when you have access to this talent pool.

Yeah. I don't know their industry well, but it sounds possible. I tend to agree with that.

Yeah. Everybody at the company, certainly the people who have shown promise, they should have way more on their plate than feels even remotely comfortable. And the reason why you should do that is manifold. The first reason is every time you choose what to work on, whether you do it consciously or unconsciously, you're prioritizing a set of work items, each with its own return attached. Again, you may be unaware of potential returns or very deliberate. But either way, that's what's happening. The bigger the universe of let's say work items that you can prioritize from, mathematically the higher the returns on your time you'll deliver. Let's say you have 10 possible tasks and each with a certain let's say ROI attached. If I add the 11th, it's impossible assuming that you select well, it's impossible that adding an 11th task will lower the ROI of what you choose to do because you still have the other 10. So if this is lower ROI than the others, you're still going to do the others. But it's possible that it happens to be the highest ROI of all and so you end up doing something more valuable. So the more work you give people, the better the opportunity for them to create value. Now that's especially true if they choose well and therefore it's very important to work with people who are smart and it's very important for managers, for leads, probably the number one thing they can do or certainly one of the most important things you can do, and we try to coach them in this regard, is to help the report select well. So that's the most important thing.

The other very important thing that you accomplish when you give people a lot more work than feels comfortable is you're really forcing them to come to terms with the immensity of the possible. We find that sometimes people as they grow and their aperture for them professionally expands, they get overwhelmed or there's too much to do. 'We need more people for example on the team.' And I think that's generally a terrible way of looking at life or the world. Generally speaking, there's always a lot more you could be doing than you can do in terms of your capacity. It's just that some people don't realize it. It's not that if you're a student and you're done studying for an exam, there's nothing else you can do. There's plenty you could do. You could launch a startup. You could take a second degree on the side. It's just that you may not be sufficiently proactive and imaginative to figure it out. And so as people jump in a job and if you give them just a relatively short task list so that they'll be done within their eight hours and there's nothing on their mind, that initially feels easy and comfortable but you're failing to train them at a massively important skill which is handling that immensity of the possible. And once you become really good at being comfortable with having 100 times more things you could be doing than you can actually do, that's an insane superpower to have because it enables you again to handle a vast array of possibilities and surgically select those with insanely high returns. And it's something you can only do if you're not thoroughly overwhelmed. So, is it better to have someone become overwhelmed by that immensity once they're 10 years in and they're running a 100% organization and a billion dollars in revenue or is it better to test them at that and coach them at that, I wouldn't say on day one but maybe day seven and for the first year so that first of all you only promote to that higher level of responsibility people who have proven that they can do that and if they actually can do that they begin benefiting from it much earlier even if their scope is more limited. But you need to completely eradicate the concept of 'I'm only good at my job if I exhaust my checklist, my task list.' There's no such thing. You're always going to have at least at Bending Spoons. But I think again life if you look through the veil is like that anyway. You're just unconscious about this. You really want to be able to handle that enormous amount of possibilities and surgically identify those that have insanely attractive returns and then be laser focused on those and disregard everything else.

No, no, you do, there, yes we do rotate people all the time. There are various reasons for that. Part is I think at some point when you have looked at the same thing for a long time you stop having good ideas. So it's good to get new people in to maybe take a fresh look. Part of it is we just find that if people keep working with the same people you risk developing subcultures and we're highly opinionated on what the optimal culture looks like. We want it to be uniform across the company and so if someone comes up with a better idea that's awesome but that has to be spread across the company. We don't want to have subcultures and so you want to move people and mix and match so that they don't get used to a different way of working at least on the important aspects. Another one is that they get to learn more. So that goes back to what you were discussing. It's slightly different from having an immense set of possible tasks. There is an element of diversity there. You need new challenges and diverse challenges to keep honing your craft and finding new ways of growing. So that helps too and it keeps also enthusiasm levels higher because humans tend to get bored and so we want to try new things to stay motivated. And last but not least, as we keep acquiring new things as an organization, the universe of the things we could be doing expands with new acquisitions and often working on those new things yields the highest expected returns. And so regrettably, we have to remove resources from businesses that would still have plenty of opportunity in them. But relatively speaking, it's better to work on a new business. So for all these reasons we do rotate people all the time and I think it's been quite successful for us to do it that way.

The main quality we look for in people we call it extreme ownership. We try to work with people who care tremendously about being the best in the world at what they do, about bringing value to the team.

Actually the name, yes. The concept is not exactly the same. There are similarities, but I thought the terminology extreme ownership was so immediately evocative of what you look for that I said, 'Okay, we need to use that for sure.'

Yes.

Yeah. Extreme ownership. And we I think we define it a little bit differently. But the...

Extreme ownership is caring in your belly tremendously about being the best at what you do, about helping the team and the company succeed. It's a matter of priority and intent. It's a priority. And we want to work with people who feel that way about their work at Bending Spoons. We'd rather not work with someone who's really really smart, very competent, but for whom doing well here would only be priority number three or four. You know, we have seen it time and again we've had people who were probably close to genius level IQ fail here because ultimately they saw their job as a way to earn a living, to make ends meet rather than actually transcending apparent limitations and winning and being amazing at what they do.

Yeah. I mean it's never going to be, I mean we understand obviously if you have a family that will be number one but if you start telling me after my family then there's being a great gamer at night plus...

Yeah. So I think there's first of all you try to, I mean I don't want to give too much away but let's say...

No, no, but I would say first of all you want to see if there is a capacity to express extreme ownership. There's a bunch of people, well I suppose every human being in theory has it but I find there are a lot of people who don't seem to be at least inclined to develop extreme ownership or for almost anything. So they just struggle to care tremendously about things in life and there's no moral judgment but I'm just saying I want to be a part of a team that has a real chance of redefining what's possible and succeeding at a really high level. Of course that type of profile is not going to be highly appealing. I don't think I'm saying anything shocking here. So you look for signs in someone's past of that extreme ownership at work. Maybe they were fully focused on their studies. Okay, did they do incredibly well? Maybe they did a lot of work next to studying because maybe they didn't have the financial means or they wanted to learn a craft. Maybe they were into open source. Is their contribution extremely small or is there something just in terms of it looks like they put in a lot of effort? Maybe they didn't have a breakthrough but you can tell through the sheer volume of contributions that they really care. Did they launch a startup? Was it because it's cool for a few months, it didn't work out, too bad, or they ground at it for 3 years and it was incredibly unsuccessful but you can tell they wouldn't let up. Something that shows they are capable of putting their passion into something.

I think sometimes of course one of the greatest entrepreneurs, right, to ever do it. And I think a lot of people focus on the eye for detail. Certainly had that. The perception of what consumers would want. Certainly good at it. I think maybe that wasn't even like his main thing, but I believe what we would call extreme ownership in his case, just we'll probably call it differently, but I think deep down it would be the same thing. He cared so badly about seeing Apple succeed the way he thought it should, by building those amazing products. And when you want something so badly, you're not guaranteed to win obviously but it just sets you apart.

Oh yeah.

Completely. Look, what we found is that there is a level of let's call it intelligence broadly speaking not just purely let's say logical analytical that's necessary in at least in our endeavors. So but after you pass a certain threshold which is admittedly a fairly high threshold but we're not talking about again genius level, then it's almost all about how badly you want it. Like you really want to be amazing. I was talking about this with again some new joiners yesterday or the day before. I brought up the example of Rafa Nadal in tennis. I think I've said this before. Most experts I've talked to believe he wasn't even probably a top 50 talent in his generation, but went down as one of the three best for sure. Some say the best or second best to ever do it. And where he really stood out was that extreme ownership. He just woke up in the morning and he was like, I'm going to be the best tennis player I can possibly be. I'll give it my all 100%.

I haven't.

Unbelievable. Absolutely. Like what I said to those new joiners, I told them, I don't believe there is almost any chance you will fail to have an amazing career at least at Bending Spoons. Probably almost anywhere. Certainly business where we try to be extremely meritocratic. If you really bring it, like if you are an extreme owner, I would bet there's less than 1% chance you fail to have an amazing career because we know you're smart, we tested that, we're unlikely unless you cheated somehow, unlikely to be wrong. You studied what you needed to study so you have some of the foundations. It's almost all about do you come to work to be amazing, to be better today than you were yesterday, to see your team be better, to see the company take a step in the right direction or you come to work basically waiting for the day to be over. You know, of course you're going to try to be okay at it, but you don't really care too much as long as you have a job and you're in your mind. And if you're part of the former group, you'll do extremely well for sure. So that's really a key cultural tenet for us. We select for it. We try to foster it. We will much rather have a smaller team of people feel that way than vice versa. And by the way, it's contagious. So if you have a high density of people who feel like that, highly accountable, proactive because if you're an extreme owner, so you care tremendously, you're going to be entrepreneurial because you'll be paranoid about things that could go wrong and enthusiastic about new ideas and how you can improve things. If I ask you to do something, you will not forget, you get it done, more so you'll even come back and do more things than I expected you to and that will be incredibly exciting for me and I don't want to show you that I can be just as good. So it's just there is an escalation of positive reinforcement that you accomplish if there is a high density of that feeling within the team and as soon as you dilute that, the people who feel that either leave or lose it. You can't have an extreme, like Steve Jobs famously was looking for A players and I think he was looking for people who had that desire, that drive to do something amazing even before looking for people who are brilliant. Obviously you want to have both if you can but you can never have I think a high performance team where more than a small fraction of people lack extreme ownership. So that's really number one and then there's many other things that are important but secondary to this.

Yeah, one thing that we call relentless simplification. We believe that most things don't matter. Most things do more harm than good. However, humans have a tendency to add complexity, do things and do those things that destroy value. So if you leave an organization, almost any environment, let's say unattended and you don't provide guidance in this regard it will tend to become more complicated. People will be adding parts and when I say parts I mean it could be expanding a team, it could be adding a step to a process, adding an entire new process, if it's a product adding a feature to the product, new rules. It really, I'm making a general point but it applies to almost any human endeavor, people will tend to add pieces, very rarely remove pieces. And with every piece you're adding to this ensemble, this system, you're not adding complexity linearly because you're not just adding with the piece, you're also adding interdependencies, interconnections with some and sometimes all of the other pieces. So if you go from three to four pieces, you're not only getting, the system is not getting say 33% more complicated, it's maybe getting 40% more complicated or 50 depending on the connections and how these new connections impact the other connections. Most human reorganizations if you don't make a conscious effort to achieve simplicity, so avoiding this increasing complexity and embodying complexity, will go down that path and that's how we got to our modern society with all the bureaucracy and complicated regulation. And a lot of it or almost all of it probably when it was introduced it was meant to be a good thing and maybe in a vacuum it was but then people failed to account for the cost of these net connections and frictions. And so we have this value or this principle whereby we ask everyone who works here to first of all every time someone is suggesting that we should be adding complexity the burden of proof is on those making that suggestion. The people who support the thesis that we shouldn't be adding that complexity don't need to prove it. They're done. It's just to raise a flag and say I don't think we should. So the burden of proof is on those who want to add complexity which helps reduce the addition of complexity dramatically and the complexity you add tends to be hopefully more often than not good complexity because you have to prove it. And so hopefully if you're intellectually honest that should be a good idea. Then the other part of relentless simplification is that we want people to be on the lookout for existing complexity and suggest that we should be removing it. Understanding how we operate and the biases that accompany us throughout our lives is very important. Charlie Munger famously studied biases and I think knowing your weaknesses or likely weaknesses is 50% of avoiding them or overcoming them. So knowing that we as humans tend to be, there's this thing called consistency bias but also inertia bias, I mean I've heard it slightly different things called with slightly different names but essentially we tend to assume the status quo is fine and we focus on deltas that happen, new things that are added or changes, we stop seeing, we become blind to our surroundings as they stay the same day after day and so we ask our colleagues and all of us to make a conscious effort to question what's already there and the longer it's been there the more we should be questioning it whether it's still net positive so we can look for things we can get rid of.

Maybe, maybe not.

It got super simple.

It is a superpower, super super powerful. Because yes, it breeds speed, scalability also besides which is a slightly different thing.

For example, I mean you just said Elon is a master at that. In our context I remember we were banging our heads against the wall a decade ago approximately with job titles. So we like pretty much every company we had, we were very small but still enough people that job titles were a thing. So you wanted to maybe have a senior this, staff that, or director and we were trying to develop definitions who should be a director, you know like if that exists, if it's a thing you probably need to define it. So spending time trying to define it and then you assign someone that title whether it's senior engineer and then the other guy who's not senior engineer is disappointed, it's like why is she senior engineer, not senior engineer? Well because of this or that so you need to have that conversation and then it's emotional drain, it takes so at some point we were looking for ways to streamline it and simplifying it and someone said why do we even have titles? What's the benefit of titles? And someone else is like well you need titles or everybody has titles and why do people have titles? Let's really try to dig deep into the root cause because I agree I mean everybody has said probably there's some benefit, let's not be arrogant, there's probably some benefit. What's that benefit? And we ultimately determined that the benefit was that people really needed titles for let's say bragging rights, it feels good to be able to show progress in one's career and they're useful if you need to find a new job to be able to very conveniently and efficiently convey a level of experience or capability you have achieved. And so we were like, 'Okay, but all we're saying here is probably true, but also not something that the company needs to be involved with, right?' And so we just got rid of titles. And we told people, you can pick your title for your CV, LinkedIn, whatever. We don't need to know. We don't want to know. We don't need to approve it. We don't want to see it. Just don't embarrass us. Like, you know, don't, you're a new hire, don't say you're the CTO because then people will question our integrity as a company. But as long as it's broadly reasonable, we're good. We have never reintroduced them again. We don't have any titles. I mean the person who runs product which technically would be called a CPO, we have an algorithm, it's just product management lead. As simple as that. It's completely automated.

The organization is based on algorithmic rules. So that if you have direct reports and if these reports are product managers automatically this tool will call you product management lead. But whether you have two or 200, you're a product management lead. So there's no discussion. We don't need to agree whether you are or aren't. There's no senior, junior, director, VP. And I just made the example of the topmost leader in product. For us, it's just has the same quote unquote job title as a person leading one person. And if he needs to do something with his LinkedIn, he could put whatever he wants out there. And it's just we never have to have this discussion. So we never looked back. We probably saved easily hundreds if not thousands of person hours in terms of defining terms and having emotionally draining discussions with people. Never had a problem, not a single instance of someone complaining that we didn't formally assign to them a title ever, ever out of at this point many hundreds actually multiple thousands of people. So that's an example of something that everybody does a certain way that if you are trying to simplify incrementally maybe you achieve a little bit of uplift, maybe 5% but if you get rid of it completely it's liberating, it's a 10x improvement potentially or whatever the baseline you want to, however you want to measure it. And often, not always, but often you find these opportunities on a product, get rid of an entire part of the product, 2% of people use it, it's adding complexity to codebase, 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 2x as well off. Just do that. Don't slowly transition out, a million migrations, headaches, issues.

Yeah, I mean I wouldn't say it runs the company in the background, but we are pretty fanatical about technology in general. Again, I personally was involved with AI in 2010, which at the time nobody, I mean it looked weird because it wasn't a thing really. Today, obviously, if you're now building a startup with AI, people look at you like what the heck are you doing? Of course, you should be building a startup. You know, we carried with us this passion for using technology and cutting edge tools to be more productive, more effective. As we have invested pretty heavily at Bending Spoons over this point over a decade to develop basically you could 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 A/B 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, credential 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, fix bugs and as they improve them these improvements are propagated and automatically made available to the entire portfolio of businesses. So we 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 transformative let's say.

Yeah. I mean there's a trade-off obviously, like in almost everything in life. Fewer bigger acquisitions is better for us to the extent that it means we can focus our limited operational capacity onto those transformations and getting those right. We have seen that in terms 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. So same amount of time invested roughly speaking. Evernote in 2023, early 23, we had a team, a task force of Spooners, these people from the core team, you know we've been talking about, probably about 50 people who joined Evernote and really drove that transformation, rewriting the codebase, rearchitected cloud infrastructure, rethinking monetization and reorganizing the company and all that and that was a business generating a little less than $100 million in revenue.

Yeah, at the time we acquired it. And then in the first half of this year, we did broadly speaking the same thing with Vmail with roughly the same number of people, 50 to 60, but Vmail is roughly $400 million in revenue. So approximately four times as large and the team originally was over 1,000 people. Evernote was a little over 300 people. So three to fourx the scale whether you want to look at revenue or headcount. Roughly the same number of Spooners introduced into the business to change it. So...

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've gotten a lot better. For example, expanded and improved that operating system. So we're getting more productive but so because of that we prefer to acquire relatively few businesses and make sure each counts. So it has to be larger and larger as we scale as a company. Currently we're at roughly $3 billion in run rate revenue. So the business that moves the needle for us today needs to be a lot bigger 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 to find ways that could be made better, innovated on. So we have...