Fireside Chat, Interview
Luca Ferrari: Scaling to 500M Downloads, $360M in Reported 2023 Sales and a $2.55BN Valuation |E1127
- Bending Spoons adopted an acquisition-first strategy to avoid the "arrogance trap" of building products without market fit, having "crashed and burned" once previously with their failed startup, Evertail.
- The company's founders funded the early days by having Luca Zaninotto work full-time at McKinsey while his co-founders worked full-time, with the highest earner covering shared living expenses.
- The initial $40,000 capital for Bending Spoons was leftover from Evertail's liquidation, where the founders purchased the VC's shares for €1 to avoid the administrative cost of liquidation.
- Bending Spoons has operated for roughly 11 years without significant external equity funding, relying primarily on retained earnings and debt until raising approximately $200 million in equity over the past 10 months.
- The company characterizes itself as a hybrid between a product/technology company (Google) and a private equity firm, employing over 300 software engineers, AI researchers, and data scientists out of a 400-person team.
- Unlike traditional private equity, Bending Spoons takes a "hands-on" operational approach, rewriting code bases, redesigning user experiences, and revamping marketing and monetization strategies after acquisition.
- The firm values acquisitions based on projected free cash flows and IRR/MNPV calculations rather than speculation on future exit multiples or EBITDA multiples, with a stated intent to hold assets indefinitely.
- The company recently killed the "PlayOn" mobile gaming subscription project after investing $6–7 million, citing over-optimistic predictions regarding user acquisition rates for a novel market concept.
- A key lesson from the PlayOn failure is the necessity of intellectual humility and assuming a "margin of safety" when predicting user acquisition rates, which remain the hardest KPI to project accurately.
- Luca Zaninotto acknowledges a past tendency toward excessive caution in fundraising and scaling, admitting he was too concerned with disappointing others, which he now views as a missed opportunity to create more shareholder value.
- Bending Spoons' hiring framework prioritizes "talent" and "motivation" over experience, utilizing practical tests over traditional interviews to assess problem-solving abilities and work ethic.
- The company offers standardized salaries to all employees regardless of geographic location, despite the complexity of managing a global remote-first team.
- A critical "immovable term" in their fundraising process has been the elimination of liquidation preferences for investors to ensure all shareholders, including employees with equity, remain on equal economic footing.
- Luca Zaninotto predicts that artificial intelligence will result in a net destruction of jobs in the medium-to-long term, contradicting the common view that AI will create more roles than it eliminates.
- The company's long-term ambition is to scale their current model to accumulate the resources and credibility necessary to tackle massive global problems, inspired by organizations like the Gates Foundation.