Luca Ferrari, Bending Spoons CEO: The $40K Origin Story, Buying Product-Market Fit & Why Private Equity Can't Compete

All-In with Chamath, Jason, Sacks & Friedberg

Luca Ferrari, CEO of Bending Spoons, discusses the company's unique strategy of acquiring established digital brands and revitalizing them through a

Key takeaways

• Bending Spoons utilizes a proprietary 'operating system' of 50+ technologies to optimize engineering, design, and monetization across all acquisitions.
• The company's core strategy is to 'buy product-market fit' rather than attempting to build it organically from scratch.

Main topics

• M&A Strategy
• Product-Market Fit

Notable quotes

We should be able to buy product market fit from people.

Conclusion

The episode provides a deep dive into how operational excellence and s

Transcript preview

Speaker 3 (0:00) You are the reason that NASDAQ exists. Speaker 2 (0:02) They went from zero to one billion dollars in revenue in just 10 years. Speaker 5 (0:06) Bending Spoons CEO Luca Ferrari. Speaker 2 (0:09) We Speaker 1 (0:09) have never lost a bid before. Speaker 5 (0:11) Well, AOL has a new parent again. Milan-based tech company Bending Spoons announced it will buy ticketing platform Eventbrite. Bending Spoons is stirring Speaker 4 (0:20) up the market. They go from fixing one zombie app to reviving 20 of them. Speaker 1 (0:24) Half a billion people use our products. We're trying to build a generational company. Speaker 2 (0:30) Please welcome Luca Ferrari. Here Speaker 4 (0:43) he is. Nice to see you. Ciao, Luca. Speaker 4 (0:47) You Speaker 3 (0:47) got fans. All right. Luca. Speaker 4 (0:50) Andiamo, Luca. Speaker 3 (0:51) You have Speaker 4 (0:51) a great company. Don't make fun of Luca Ferrari. I'm not. I'm just... This is a great Italian entrepreneur, so shut the f*** up. Absolutely. Luca, Speaker 3 (1:00) I asked... No, I got somebody yelling like it's Super Mario Brothers in the audience. Speaker 4 (1:05) We could have another presidential moment here at the All In podcast. So if she picks it, if she calls you, then just run the phone over. I've Speaker 1 (1:11) got my phone here. Okay, just in case. Yeah, it's ready. Speaker 4 (1:14) I mean... There's a lot of us that have actually been tracking you for a while. I originally heard about you because you were in Milano, where my wife's family is from. And you had this incredibly progressive, methodical approach to growth. You did this fantastic podcast with Patrick O'Shaughnessy, which was great. I encourage all of you to listen to it. And you explained the arc of bending spoons. And I'd love for you to explain to folks the first few years and just all the misery and failure, the nadir of the company, and then the beginning of the ascent. Speaker 1 (1:55) Yeah, so the, you know, most of the, I mean, the pain, there's been plenty of pain throughout for most entrepreneurs, I think. But the biggest failures were in the previous startup. So with my co-founders, we launched an AI company in 2010, very early, too early, clearly. crashed and burned. Three years later, we're left with about $40,000 in capital we'd raised from the VC. Clearly, there wasn't a lot to salvage other than our relationship being stronger and that money that the VC... Speaker 1 (2:35) Pretty much gifted to us as they didn't want to go through the liquidation process too much in legal fees and too many headaches. They had seen us work pretty hard. And so they told us, you guys keep it. We'll sell our shares to you for $1 like nominal value and you go and get a nice vacation. We're clearly a little bit sick in the head. And so we took the money and enthusiastically turned it into seed financing for Benny's Foods. And we came up with this. You started Speaker 4 (3:03) with $40,000. Speaker 1 (3:04) $40,000, exactly, in 2013. And we had this strategy, which has remained pretty much the same. Obviously, you get smarter, you refine it in time. The idea was we are not very good at finding product market fit. Or maybe lock plays a big role. Probably both things are true. But we have become pretty good at engineering. design, monetization, marketing in just three years of hard work. And so we should be able to be among the best in the world at that. And we should be able to buy product market fit from people and they get a good price, we get a good asset, we can make more valuable and then we deploy more capital into making our platform more comprehensive. What Speaker 4 (3:43) was the Speaker 1 (3:43) first Speaker 4 (3:43) acquisition and how much did you pay and how did you get the deal done? Speaker 1 (3:47) So the first acquisition was we paid $10,000 give or take and it was a mobile app for iPhone specifically that you used to personalize your keyboard. Very simple. One man kind of developer sold it to us. Obviously a very amateurish operation. Not that difficult at the time to make it better and more successful. But you know, what were you buying like you're buying one times Speaker 4 (4:17) revenue you were buying the revenue you were buying the Speaker 1 (4:19) app like that one Specifically, I think had negligible revenue. It wasn't even really monetized Okay, which of course is never the case for for scale businesses, but it had Speaker 2 (4:29) users it Speaker 1 (4:29) had users so what we bought at the time was an app with a bunch of users and Good positioning on the app store so they would get an influx of new users And that's you know remained broadly speaking similar over time and we keep looking for great brands, user and customer bases where we can improve everything ideally and make those assets even more valuable over time. We just do it at a much bigger scale these days, but the underlying concepts have not changed. Did you Speaker 2 (4:59) rebuild that app? Did you take over the code base and redo it? Just help us understand technically what's going on in the organization from that business through to some of the bigger ones today. Is it a code business? Are you doing engineering, product, design, marketing, all of the above? Speaker 1 (5:15) Yeah, most of what we do is engineering and product. We have a core team of, at this point, about 800 people. And I would say probably three-quarters of them are either engineers or AI researchers or product designers, product managers. Most of what we do is actually improving technologies and products. And, of course, you know, that... Yes, that app, we wrote it completely, but it's very early days. Today, we're much more sophisticated. What we do is we bring in a quality and operating system of 50-plus proprietary technologies. We build kind of an engine to run technology businesses very effectively and efficiently. really our core product. We swap out the technological foundation of the businesses we buy with Batman so we can run it much better and also the people we transition across our various businesses always play by the same rules. They're more efficient because they find the same toolkit. Speaker 4 (6:10) And so these tools cut across what, like HR, finance, tech ops, dev ops? Pretty much everything. Speaker 1 (6:15) Yeah, I mean, orchestration of AI models, check. Recruiting tools, check. A-B testing platforms, check. And Speaker 4 (6:21) then do you bring all of the technology spend up to the top coast so that you're doing one deal with AWS, all the licensing becomes scaled across one entity? Speaker 1 (6:30) Yeah, that's a lever for quality creation. I'd say that's a relatively small one. It probably adds, I don't know, one, two percentage points in EBITDA margins. The more important aspects are... being able