This EU Firm Made Billions Buying Up Forgotten Tech

Prof G Markets

Ed Elson interviews Luca Ferrari, co-founder and CEO of Bending Spoons, about the company's unique acquisition strategy, its recent $18B NASDAQ

Key takeaways

• Luca Ferrari launched Bending Spoons in 2013 with $40,000 after a failed AI diary startup in Copenhagen taught him the value of scaling existing products rather than chasing zero-to-one product-market fit.
• The company recently went public on the NASDAQ at an $18 billion valuation, with its stock jumping 40% on day one and generating nearly $4 billion in run-rate revenue.

Main topics

• Bending Spoons acquisition model vs private equity
• Deep operational & technological integration of acquired software companies

Notable quotes

"We buy to hold and operate forever."

Conclusion

The episode offers founders and investors a blueprint for building capital-efficient,

Transcript preview

Speaker 1 (0:00) Support for the show comes from Enjin. Running a small business means every dollar has to work hard. But if your team is still booking travel the old way, it's costing you more than you think. Enjin is the fastest growing travel and spend platform in the country, built specifically for businesses like yours. Book a trip in as little as two and a half minutes, earn up to 10 % back on hotels, and in 2025, Enjin customers save more than $300 million on travel with zero booking fees, no contracts, and no BS. More than 1,000 businesses join Engine every month. Join them and get $500 when your business signs up and starts traveling at engine.com slash founders. Speaker 3 (0:38) Hey guys, it's Ed. Just so you know, we recorded this conversation live on Substack last week. So if you would like to catch the next live stream and tune in in real time, make sure to head over to profgmedia.com where you can subscribe and I'll see you on the next live stream. Speaker 3 (1:00) Welcome to the Prof G Markets Founder Series. What do you do with a software company that was once a household name but has fallen on hard times? Our next guest has built a business around answering that question. His company acquires struggling businesses like Vimeo, like AOL, Airtable, and Eventbrite with the goal of overhauling how they operate, cutting costs, and making them profitable again. And over the summer... This company went public on the NASDAQ at a valuation of more than $18 billion, with the stock jumping 40 % on its first day of trading. That IPO turned what was once a relatively obscure Italian company into a public market story that investors around the world were suddenly paying attention to. So we wanted to understand how this model actually works, what the company does to turn struggling software businesses around, and what it's like. to take the strategy from a private company to a public one. This is my conversation with Luca Ferrari, the co-founder and CEO of Bending Spoons. Luca, thank you so much for joining us on this episode of the Profit Markets Founders Series. I'd like to start at the very beginning in 2013, where you're not actually in Italy, you're actually in Copenhagen, you're in Denmark, and that's where... Bending Spoons begins. Tell us the origin story of this company. Very Speaker 2 (2:29) few people know this, but with my co-founders, almost the same people, we launched a startup in 2010, also in Copenhagen. We were using AI clearly too early to automatically write diaries for people. And we did that for three years, raised a million dollars and failed miserably. Couldn't make it scale. Although I'm pretty proud of the product we built, but sometimes that's not enough. And so in the ashes of that company, we were left with about $40,000. The VC who had given us the money basically sold their shares back to us for a nominal $1. And they apparently appreciated we'd worked hard and being honest, and they didn't want to go through the liquidation process. And we ended up liquidating the company ourselves and basically got those $40,000. out of it almost completely. And that was a seed capital for Benichpons. So that's 2013, again, Copenhagen. Moved the company to Italy about a year later, but that's where we were at the time. And the strategy we're still running these days and the key insights behind it, for the most part, had originated from that failure. Obviously, it got smarter in time, but most of it was in place back then. Speaker 3 (3:45) So you had a tech company, you say an AI company, I would assume that they're calling it machine learning back then. I assume that there was not a lot of hype around that sector. That's obviously changed. It doesn't work. Then you have $40,000 left over, which you take out of that to start this other company called Bending Spoons. What actually was the idea behind Bending Spoons? And also, I think people will probably want to know, what's with this name, Speaker 2 (4:12) Bending Spoons? So over those first three years of that failed startup, we saw our skills in engineering, marketing, product design improved tremendously. Obviously, we didn't feel we were anywhere near world-class, but certainly much better. And so we thought, okay, if we work on this skill set and other relevant skills and build our own tools, we should be able to get to world-class levels at some point. And at the same time, we saw that... Finding product market fit, going from zero to one, so to say, seemed to require a lot of stars to align because we met so many startup teams where people worked really hard and we thought they were brilliant and still couldn't make it work. And sometimes in other cases, it didn't work. And so we figured we should be able to find people who are maybe tired of running a business or maybe they don't have the skills to go from one to 10 who will sell to us. And if you're really, really good at doing this, we should be able to pay a price that's appealing to them and still... be able to create enough value to generate strong returns and be able to compound capital efficiently. So those were the relatively simplistic ideas we had back then. And because we knew we were going to grow a vast, hopefully vast portfolio, diversified portfolio of different products, we had to find a name for the company that wasn't related to the particular product. And so one of my co-founders, Matteo, is a big fan of the movie The Matrix. And I think he had watched it the night prior or something. And in the morning, he came all excited and said, we should call the company Bending Spoons, inspired by there is this scene in the movie of a little guy bending a spoon with his mind, supposedly. And we liked it because it reminds us of, you know, the mind is powerful. If you set your mind to something, you know, maybe you can do the seemingly impossible. So we just found it kind of inspirational. We like the idea of making a little bit of fun. of poking a bit of fun of ourselves, you know, and not taking ourselves too seriously. So that was also a cool name in our view and it stuck. So Speaker 3 (6:13) we'll get to what you guys do today, which is you are essentially buying a lot of these different software companies and we'll get to that. But in the early days, my understanding is you guys are building tools, you're building software products. You're kind of like an app studio in the early days. Speaker 3 (6:32) So tell us a little bit about how, what you were actually building back then and how it eventually led to this seemingly slightly different business model where you're actually going out and buying companies with money that, you know, now you have. But back then, I assume $40,000 is not much you can buy with that. Speaker 2 (6:53) We've always acquired companies. The first acquisition happened. Very quickly, I think. So we started Benichrooms in the summer of 2013. The first acquisition was in 2014. I don't think... From that point onward, there's ever been one year where less than 90 % of our revenue came from businesses we had acquired. So I'm not sure where the studio thing comes from, but I think it's just that the first acquisition we did that people recognized was Evernote in 2023. So people just assumed that what we were doing before was launched from scratch, but nearly all we have done over the past 13 years was acquire. existing businesses and I'd like to think make them better, more successful. We have launched, occasionally we have launched products from scratch, more so in the early days because we had no money. And so, you know, it was both the only thing we could do, but also it was more likely to move the needle. At this point, you know, we're at a run rate in terms of revenue of almost $4 billion. It's more difficult to launch something that can, you know, reasonably move the needle. The first acquisition happened, like I said, very early and we paid $10,000 for it. So very small. But the power of compounding is such that it turned 10 into 20 and then 20 into 40. Fast forward 13 years, we are where we are. We actually had very modest injections of equity, mostly other than the IPO a few months ago, we had a significant injection of equity. Speaker 2 (8:24) about a quarter, a billion dollars toward the end of 2025. So really up to that point in time, most of the growth was through the reinvestment of our free cash flows and then debt, which we have used for almost 10 years at this point. So Speaker 3 (8:39) tell us a little bit about that first acquisition. How did you identify this company that was worth $10,000, same amount of money that a lot of people would pay for a car? Speaker 3 (8:52) What did you do with this company to turn it around? What were you bringing to the table? That Speaker 2 (8:58) one was a lot easier than things today because it wasn't even a company, really. This was a mobile app for iOS. I still remember quite distinctly that it was an app to personalize your iPhone's keyboard. I don't even know if such apps exist these days. But in 2014, I think, or around that time, Apple launched a... opened up APIs to be able to do that and a bunch of apps came out and we saw this one and we thought it had a bunch of users and we thought it could be both the product was not that good maybe had users because it was a first mover and had achieved a good positioning on the app store we could we believe we could improve the user experience monetization was almost non-existent and so we bought it we rewrote the software completely redesigned the UI and introduced monetization. And, and I, it was built, the app had been developed by an individual, like a single, single developer. So kind of an amateurish operation. Obviously these days we buy sizable companies with professional management teams and institutional investors, but the key principles trying to be superior at the key functional expertise necessary to run that business. superior relative to whoever is selling it to you, stood. Obviously, the bar to be stronger today is much higher, but the idea is pretty much the same. Speaker 3 (10:25) So this gets to the heart of what Bending Spoons actually is. And I think there's a lot of confusion as to what this company is, because on the one hand, there's this software element where you guys are using AI, you have this software background, you kind of come from this... not Silicon Valley culture, but certainly a startup culture. But at the same time, you're doing what many other asset management firms and private equity firms have done for decades, which is you're finding companies, you're buying them, you're acquiring them, you're taking up large positions, and then you're taking up a strategic stake in the company and then turning those companies around. This is what... investors have been doing for decades. This exists. This is an entire industry, which I think I would call it private equity. So in your mind, what actually is Bending Spoons? Because to me, it seems like it is, at the end of the day, it's an asset management firm. Speaker 2 (11:26) The investment part of what we do is absolutely important. Clearly, we grow primarily through acquisitions for serial acquirer. The part that would distinguish us from any private equity I've seen, I would say there are three very important differences. And one is that we are not a fund. We don't buy to sell. We've never sold a material business. So we buy to hold and operate forever. The second, perhaps more important difference is that when we acquire a company, At least the private equities I'm aware of or I've seen operate, they do intervene. Obviously, they may cut costs, maybe intervene on monetization. They may change the executive team, but the interventions are relatively superficial. And you can tell by looking at the team at private equity firms. It's mostly small teams of financial professionals. Benny Spoon takes a different route. We do those things as well, but we take a different route. In that we rebuild the org often completely or in large part. We may re-architect the cloud infrastructure completely, rewrite big chunks of the code base, accelerate product development, reimagine monetization from the ground up, marketing. So it's a much, much deeper transformation to the point that sometimes it's almost like we buy brand, customer base, user base, and try to overhaul everything else very deeply. And again, that's represented. in the team we have, which is, even if you look just at the core team, forget for a second the acquired teams, that's roughly 800 people and overwhelmingly they're software engineers, data scientists, product managers, product designers. So naturally, most of the work we do is that sort of work. We also have our own team of financial professionals because we need that too, but there's this additional piece. And the third big difference is that while... Pretty much all private equities buy businesses and they keep them separate to sell them down the line. Sometimes they put a couple of synergistic businesses together, but that's the extent to which they put things together. We integrate everything super deeply onto the same platform. An investor some time ago told me that after due diligence in Venice, that they found that it's almost like we buy companies and then they get stripped down to a product installed on a shared operating system. And I think it's... It's a bit of a simplistic metaphor, but there is truth to it. So if you look at how we do things, generally within a few months from the moment the acquisition closes, we swap out the entire technological foundation. We've built dozens of proprietary technologies, whether it's AI orchestration, data processing, A-B testing, recruiting, payment management, credentials management, like basically every component of running a digital business we've built in house, natively integrated. And that's... swapped out for whatever third-party vendor things the business is using. We have this core centralized team for R &D, G &A, marketing, who we redeploy very fluidly across all of our businesses to go after R &D opportunities. And when they're exhausted, we withdraw them so we keep cost efficient. So to the point that it would be almost impossible to sell one of our businesses even if we wanted to. So that's a downside of our model. So there are similarities with private equities. first and foremost, to focus on acquisitions. But I think the day-to-day operational approach in integration and transformation is quite different. So it's a bit of a hybrid, I'd say. One Speaker 3 (14:58) of the cliches, but it's also true about the private equity strategy, is that you buy a company and then you dramatically cut the costs of the company, which usually comes in the form of layoffs. And that is something that you guys have demonstrated as well. This is a pattern that is... pretty consistent across the companies that you acquire. It's also something I think that some people criticize you guys for, rightly or wrongly. But when you look at some of the strategic decisions you've made, like we transfer staff, for example, two months after you bought it, 75 % of the employees had been cut. I mean, how central is headcount reduction to the strategy? And what do you make of one? The fact that that does sound very, also very similar to the private equity model and to the criticisms that people might have that, well, you're cutting headcount. If Speaker 2 (15:53) it's a moral judgment, if someone thinks that trying to make a business as successful as possible is bad, I don't have any defense against that. Speaker 2 (16:06) valid point of view. I disagree, obviously, or I wouldn't do it. I think in general, the world tends to work better. The economic pie tends to grow larger if businesses are run at an excellent level. But, you know, it's a Speaker 1 (16:19) perfectly, I respect the fact that someone would disagree with me on that point. We Speaker 2 (16:23) definitely, we have done it almost every single