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

1. 0:00 – 1:23

   Fanatical founders building enduring companies

   1. DSDavid Senra0:00

      [reeling sound] So we're gonna start this episode in a locked in stance because-

   2. LFLuca Ferrari0:04

      Okay

   3. DSDavid Senra0:04

      ... we've just been talking off camera, and I was like, "Goddammit, we need to start recording immediately." I didn't really even wanna think to start here, but, uh, you noticed the AppLovin mug, and then you're like-

   4. LFLuca Ferrari0:12

      Oh.

   5. DSDavid Senra0:13

      "Oh, Foroughi," and then you laughed. What do you think of Adam Foroughi?

   6. LFLuca Ferrari0:16

      Well, he's great. I mean, uniquely focused, uh, ruthless, and I mean it in a com- you know, in a positive way when there's a goal, goes for it, very rational, effective. I mean, ten out of ten on that in, in those areas, I think.

   7. DSDavid Senra0:33

      So when I published the episode that I did with him, I think I titled it, like, "The Best Founder No One's Ever Heard Of," because at the time he was running, like, I don't know, like, a hundred and fifty billion dollar market cap company with, like, four hundred employees, and they were printing, like, six billion in cash, and he kinda lays out exactly, like, his-- We were talking about fanaticism before we started recording. It's like he's just fanatical. It's like success of his company goes before almost anything. Or no, it does go before almost any-anything in his, uh, life. He's just completely obsessed and committed, you know, to essentially, like, excellence. I think you share that trait with him. So we had lunch together probably six months ago. I talked to you right after. I was like, "Man, you gotta do the show because I know a lot of founders. I don't know any other founders that think like you." One of the things that you said that I think everything else that all the othe-uh, other ideas flow from this is that you wanna be the best in the world at what you do, even if that's not possible. Can you talk a little bit more about that?

2. 1:23 – 4:22

   Luca on building the best company there ever was

   1. LFLuca Ferrari1:23

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

   2. DSDavid Senra2:43

      So you just said you're trying to build the best company there ever was?

   3. LFLuca Ferrari2:47

      Yeah. Just, again, aspirationally. Don't take it-- It's not, it's not meant to be arrogant. Uh, I, 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, we're 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 wanna 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, than, than you are, if possible, so.

   4. DSDavid Senra3:14

      Do your co-founders feel the same way?

   5. LFLuca Ferrari3:16

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

   6. DSDavid Senra3:21

      But is this something that you guys repeat to each other, like, throughout the company? You're trying to build the best company ever.

   7. LFLuca Ferrari3:25

      We're not big on founders. I know this is maybe, uh, ironic to say, you know, given your, your, your podcast, but we, we try to eliminate the idea of founder from this company as much as possible. We, we think it distracts people from, from the company. The company is the center, and, and whether you're a founder or you joined a little bit later, all that matters is your contribution, your trajectory. The people at, 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.

   8. DSDavid Senra4:01

      The way I've been describing, uh, you to other founders is, like, it's almost like Luca is like the Galapagos Island of, like, entrepreneurship, right?

   9. LFLuca Ferrari4:10

      [laughs]

   10. DSDavid Senra4:10

       Because if I'm not mistaken, when we were talking, you were like, "Well, I don't really listen to, like, podcasts. I didn't read books. I didn't study other entrepreneurs." You've kind of evolved the way you build your company, like, completely independent of anything going on around

3. 4:22 – 5:47

   The origins of Bending Spoons

   1. DSDavid Senra4:22

      you.

   2. LFLuca Ferrari4:23

      Yeah, I think part, part of that is, I don't know how much the audience knows about Bending Spoons, but we, we started in Copenhagen, Denmark, quickly thereafter moved it to Milan, Italy. These are not exactly, especially Milan, not exactly, and certainly not at the time, over a decade ago, a center of, uh, entrepreneurial pursuit and an ecosystem where you've, you know, you turn left and right, and you have all these other startup, startups or, or advisors 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 wanna try to be the best of the best, you need to take some risks and, uh, 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, uh, geographically has probably played to our advantage in that regard, uh, so that we weren't under the influence of, uh, of, uh, of the mantras that everybody, you know, in the big startup hubs over time was, was preaching.

4. 5:47 – 15:05

   Talent and why experience is overrated

   1. DSDavid Senra5:47

      Let's give a little bit of background of Bending Spoons. You had a startup before Bending Spoons that failed, right?

   2. LFLuca Ferrari5:52

      Yeah.

   3. DSDavid Senra5:53

      Okay. What did you learn from that failure, and then what lessons did you learn from that that helped you start Bending Spoons then?

   4. LFLuca Ferrari6:00

      Yeah, so that was called, uh, Everytail. We were- It went on from 2010 to 2013. We were using AI to write, uh, diaries automatically. So you would install an app, and then it would collect data and figure out what, 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, uh, crucial lessons were, one, the importance of, of talent. So we had a very small team. At peak, maybe 12 people, but we saw that the contribution, uh, of the, the best person we had on the team relative to, like, the, say, the medium person, forget about the, the, you know, the bottom, but was easily 10 times as great, like literally worlds apart. So that taught, taught us, okay, the range of productivity, at least in our field, in digital technology, is massive. So the value of having on board, uh, that sort of, uh, individual, uh, 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, that showed us, uh, okay, maybe experience, you know, certainly valuable, but not as critical as people sometimes, uh, tell you it is. If you have someone who's really smart and, 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.

   5. DSDavid Senra7:22

      Let's give a concrete example. So I'm just gonna pull up the notes. When we were having lunch, I was like, "Oh, this is too good," and I started just texting you on WhatsApp. I'm like-- And I think at the bottom, I say, like, "These are notes for when you do the show," even though this was, like eight months ago or whenever it was. And you, you mentioned that. You're like, "Hey, um..." You said something interesting. You're like, "I'd rather hire young graduates." Let's talk about the Evernote story in one second. You said most executives are overvalued or overrated in your opinion. "I'd rather hire young graduates. Graduates. Find someone good and then saturate their capacity." Can you give examples of how you've done this?

   6. LFLuca Ferrari7:54

      Why talent, let's say, over experience? Uh, I think there are a few, 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, uh, notional knowledge, uh, and, and repeated, uh, you know, uh, extensive track records. They, they require, um, uh, actually a, a good brain and a desire to do well, to achieve, um, first and foremost. And also, our field technologically, but also in terms of customer expectations, uh, evolves very quickly. So experience, uh, gets stale relatively fast.

   7. DSDavid Senra8:38

      Wait, before you go on, sorry, I'm gonna interrupt you. E-explain more about customer ex-expectations evolve rapidly in your field.

   8. LFLuca Ferrari8:45

      Yeah, I think, you know, I, I'm not sure how it works if you, mm, sell salt, but when it comes to selling-

   9. DSDavid Senra8:51

      [laughs]

   10. LFLuca Ferrari8:52

       ... uh, technical tools, what people consider excellent today or an intuitive, uh, interface or, you know, effective monetization, uh, are very different from what, uh, uh, things looked like, uh, 10 or 15 years ago. Completely different. I mean, if, uh, uh, I'm sure at least, you know, uh, people in the audience who are at least, I don't know, 35 years old will remember what software looked like in, 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'd build that software... And by the way, that's just the, say, customer-facing layer. But then behind the scenes, how, and this is only something that pr-probably people can understand if you-- if they've built software before, uh, or worked with AI, the way you ef-efficiently wrote software in the, you know, in the-- in 2010 bears very little resemblance to how you do that today in 2026. Whatever people learned back then, yes, some of it will, will, will port. I'm sure you know you're 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, as some people think it is. And additionally, not all experience is created equal. Uh, 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're-- if you've been working for a long time in an organization where the way to progress and succeed is by pleasing others and, uh, doing what they tell you to do, even though you don't necessarily think it's optimal for the organization, call it politics, uh, I don't know that that experience will make you a lot more capable, uh, 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, in deciding and, and do what's right for the company. So f-for all these reasons, experience can be extremely valuable, but, 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, 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, uh, 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, uh, was supported by facts. And, and so we kept investing in, first of all, attracting excellent talent and then creating, uh, ideally the perfect conditions for that talent to, to flourish very, very quickly. 'Cause of course you need to establish your structural operations to get the, the, the most out of, uh, the human capital you have. I would build a company, uh, differently if I had, uh- To work with, uh, inferior talent than, than, than we do because we believe we have amazing colleagues.

   11. DSDavid Senra12:08

       Well, say more about that. So how did you build the company?

   12. LFLuca Ferrari12:10

       Yeah, so for example, I think if you, if you have, uh... And, and maybe there's nothing you can do about it. If you have, uh, mediocre talent, then I think the appeal of, uh, of process and procedures becomes greater. Checks, rules, 'cause you need to guide more. You can't count on people to problem solve autonomously as well. You can't count on them coming to work with a fire in their belly as much. You know, process and procedures, sometimes we say they are terrible, but honestly they can be, you know, the, the lesser evil if you're in that situation. If you are, uh, lucky enough or good enough for whatever reason to have a very strong team, then I think generally speaking, you wanna have as few rules as possible. It's not that process and procedures are always bad. There are cases where you wanna have some of those, but to the extent possible, get rid of them, uh, and give people massive leeway to expr- express and develop their talent, makes them feel trusted, uh, so that they will bring the best of themselves to work, uh, and that will be good for everybody. They, 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, uh, with sports. I would imagine that how you coach, and I'm going to the extreme, I'm not saying Bending Spoons is, you know, is that. But if you, if you were coaching the, you know, the, uh, Team USA dream team with, uh, with Jordan, uh, and Barkley and, and those guys, you, you would do it a certain way that, that would be different if th- th- the way you would optimally coach a team of kinda modest talents. Uh, you can probably win with both. It's a lot easier to win with Jordan, but certainly you're not gonna tell your mo- 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, uh, aspirationally, um, and then, uh, give a lot of space for, for those people to, to live up to expectations.

   13. DSDavid Senra14:01

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5. 15:05 – 23:30

   Turning hiring into a science

   1. DSDavid Senra15:05

      Okay, but go back. How do you identify talent when that talent doesn't have experience? How have you done that?

   2. LFLuca Ferrari15:10

      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, uh, elements you don't control, call them boundary conditions, sometimes knowable, sometimes unknowable, sometimes fixed, sometimes shifting. And the combination of those ingredients leads to outputs or results, or call it what you will. Outputs, results are fairly easily observable. Sometimes there is a gigantic amount of inputs and, that go into achieving a certain output and, and those inputs go into it for a long period of time, whereas the output can be very simple. You know, you, 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, uh, look at the, at the results, the outputs. It's the convenient, uh, sometimes lazy way. But life typically in most pursuits, most, most endeavors is so complicated. The amount of inputs, the amount of people contributing different inputs, the amount of, uh, 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. Uh, a lot of, a lot of it could be actual human performance, but not by that individual, someone else who just you, 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. He 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 they were... They, 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, of work, probably you can get away with just looking at the results, uh, maybe some reference calls. Uh, very likely you'll get a reasonably accurate, uh, uh, assessment. But if you have to pick someone who hasn't even graduated yet, or maybe he's been in the w- you know, in the workforce for a year or two, then you don't have the luxury of using this. Like the, the, the, the sample is too small. And so you-

   3. DSDavid Senra17:34

      Exactly

   4. LFLuca Ferrari17:35

      ... you need to find different ways. Um, and, and something we, we do is, uh, making extensive use of testing. So we, we develop tests that people go through, um, that, um, we have found over time, uh, proxy pretty well their, say, mental f- capacity and faculties. For example, uh, we have, uh, over time developed, uh... We've really built a science out of, uh, studying, uh, people's track records, including academic records and personal projects and, and similar things, whereby in someone's application we identify over 100 different signals, and through those, we predict their long-term potential. It's not entirely dissimilar for what a, say, a stock trader who's, uh- algorithmically oriented would do. You know, uh, the more quantitative hedge funds, they would, uh, identify and test hundreds or even thousands of signals. Many of these are only very marginally predictive, but in aggregate, they, they, you know, they make you predictive enough that you can succeed because you're just better than others. And so we, 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, and we keep working and investing scientifically in, in identifying and, and, and measuring these signals. So over time, I think we have developed a competitive advantage in finding people who, despite their minimal track record, have-- are very likely to excel.

   5. DSDavid Senra19:08

      Okay, so this is one of the notes that we talked about at lunch, and this is one of the things I text you, where you essentially said you need a lot of other companies kind of, uh, like they don't really... Not many companies have brilliant people in HR, and you're like, "No, you actually need brilliant people in HR." You said that you've-- you can make hiring a science, that you had, at the time, a team of like fifty, and you actually-- these are engineers. These are not typical people that you find, right? And then you say you compare one to several years of performance, the signals from their CV, which is what you just described, or these hundred signals, signals rather, and that you centralized hiring and firing. And I guess these are, you call them talent managers, and they're in charge of both entries and exits. The hiring and firing is centralized for all the companies that you own.

   6. LFLuca Ferrari19:51

      Yeah. It's, uh, very unusual. But-- And by the way, the, the signals are, are not just from the CV, but they could be from email exchanges with our recruiting team, from, uh, the tasks we ask a candidate to go through. Anything, really. A-anything qu-qualifies as, as a signal, and we just care that it's predictive. It doesn't have to be something that, uh, let's say, intuitively, immediately makes sense, as long as we can prove it's likely not a statistical fluke, but actually-

   7. DSDavid Senra20:15

      Gi-give me an example of that. I'm a little confused.

   8. LFLuca Ferrari20:16

      Well, I mean, for example, one of the qualities that we value in people is, uh, because w-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're arrogant or, uh, dismissive of others or just an asshole, that, that doesn't work typically. Unless you're a freaking genius, we might, you know, accept it occasionally, but it's, uh, almost nobody is. So for most people, [chuckles] you need to be nice enough. And, uh, we find, though, that when they're interviewing even assholes, especially 'cause these are smart assholes-

   9. DSDavid Senra20:49

      [laughs]

   10. LFLuca Ferrari20:49

       - 'cause they've already passed the more cognitive-oriented tests-

   11. DSDavid Senra20:52

       [laughs]

   12. LFLuca Ferrari20:52

       - they are generally quite nice. 'Cause they know that if they come across as super arrogant, they're not gonna get an offer. We found that whether the interviewer felt that the interviewee was, uh, you know, open to criticism and reasonably pleasant to, to, to talk to wasn't a good predictor of whether they were actually collaborative on the job. So we, we have a role, ca-call it like a-- it's almost like cu-customer support. People help you with the more the logistics of your application process of, of, you know, scheduling interviews or, uh... So it's more of a support role, uh, 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 curt and sometimes, of course, even disrespectful occasionally, that's rare, uh, ultimately, that, that predicted, uh, poor behavior in a social context, uh, much better than how they interacted in an interview. You know, again, one of hundreds of signals, uh, in and of itself is not definitive, but, uh, it helps, uh, form a, an accurate picture at the end of the day. And that, that would be for collaboration, but then we would have others for, uh, hardworking attitude, uh, whether you're creative, uh, whether you're logical in your thinking, uh, perseverance, you know, the, the important things that... Identifying what's important is not rocket science. You could imagine what's important to performance. The difficult part is s-spotting it through these kind of subtle signals.

   13. DSDavid Senra22:16

       And the interesting part is that you just said, how many companies do you own right now?

   14. LFLuca Ferrari22:20

       We've bought, um, a little over fifty businesses over time.

   15. DSDavid Senra22:24

       But you could see, uh, like if you own fifty businesses, there's multiple different ways. You're kind of like a conglomerate, you know? Like the hiring could be pushed down to the actual individual company level, and you're like, "No, no, this is so important." In, in the talk I had, we had-

   16. LFLuca Ferrari22:37

       It's almost all that matters.

   17. DSDavid Senra22:38

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

   18. LFLuca Ferrari22:51

       I firmly believe that in business, entrepreneurship, the number one thing is, call it strategy, meaning what we're trying to do, how and why do we think it's gonna work. That is, if you have a terrible strategy, you can have, you know, the best team, you're not gonna go anywhere. Um, but once you have a strategy that makes sense, the team is almost all that matters. I'd say the team and the culture, which is like the, the rules of how we engage with one another, uh, it's basically almost all that matters. And so I don't think there's over-investing in creating a great team within Vision. And we try to be, uh, generous in our time and resources

6. 23:30 – 29:26

   Why Bending Spoons doesn't use bonuses

   1. LFLuca Ferrari23:30

      when it comes to that. So why, why centralizing hiring and parting ways with people? I think there are plenty of good reasons for it. Uh, one is that team managers... In most-- By the way, in most companies, it's, say you are-- you run a team of ten people, most companies you'd be deciding maybe there's a budget, like, you know, you can hire two people, but once that's in place, you'd be deciding who gets hired. Probably HR will screen CVs and send you, and maybe pre-interview a bunch of people and send you maybe five candidates, and then you pick the one you prefer, end of story. We think that system is bad for a few reasons. First of all, hiring managers, meaning that, that person who runs the team, have almost all the wrong incentives in hiring. For instance, uh, they probably don't wanna work late or week-- or on the weekends. They, they feel they, they need help, uh, so they will try to fill the, uh, position As quickly as possible. I'm sure they will not hire someone who they think is a net negative for the team, but as long as they find someone who they think can get the job done, somehow they'll probably get that person. Obviously, as a far-sighted, ambitious organization, you don't wanna have-- you don't wanna hire the first person who's adequate. You wanna hire someone who can be amazing over time. So first, uh, bad incentive. The second problem, and it's co-connected to that, is if you are running the team, probably most people, although they would be willing to coach if they-- it comes down to it, they would much rather hire someone who's already fully mature and competent, so they, again, they can either do other stuff or work less. If you leave it to a hiring manager to decide, they'll favor very experienced candidates over green, immature, but potentially much over time, much better contributors.

   2. DSDavid Senra25:18

      I like that you identified the incentive misalignment, right, that you find in typical companies. What's the incentive structure for your hiring managers in your company then?

   3. LFLuca Ferrari25:25

      Well, there's none, just trust. So they don't have any, any, 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, and you work with them and you're deserving of their, uh, friendship and, and admiration, then they will do their very best to achieve the common goals. In fact, we find that setting highly specific, concrete, um, objectives to which career progression or pay are tied, uh, 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, uh, there's all sorts of, uh, deviations from what would be optimal holistically for the company, and that's instead optimal for specifically checking the boxes of that particular, uh, 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 with-- hopefully, we don't need to part ways with a lot of people, but when it's necessary, please do that. Uh, let's talk if you need help, let's discuss." But, uh, but ultimately, it's as simple as that. And by the way, it's-- 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 incred-incredibly well and, uh, everybody was pushing in the same direction, how frequently were there super mechanistic KPIs with our pay tied to it? I-I've never seen it. I mean, generally in startups, for example, yes, there is a broader idea if we do really well, maybe our equity will be worth more, but it's highly indirect and ambiguous in when and how much. People work hard and try their best because, you know, they feel a sense of ownership. They like working with, with one another. They care about the project. So we try to recreate that, that same setup. We give them full trust in leading hiring. And, and by the way, because the, the cen-- this is centralized, they also have a much bigger sample and much better information, both in terms of, uh, what's available out there and what works and what doesn't. Again, if you're a hiring manager in a team of ten, it's probably bigger than most teams. Uh, at best, you're gonna hire three people a year. I don't know, I'm just making it up, something like that. It's not a huge sample to learn from, and, and you, you're not focused on it. So you, you're not gonna wake up in the morning thinking, "How can I be a better interviewer?" Obviously, like, it's not, it's not your core problem. Uh, for our, for our centralized talent team, that's all they do. So, you know, they-- there is no professional pride other than we're, we're good at this. They do it at scale, so they have massive, a massive sample size, and they get to see what kind of talent we can attract across all different, uh, let's say roles and positions. Therefore, they're much better positioned to understand whether someone is the right hire for a particular role because they, 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, just statistically speaking, we're likely or, or are we not likely to find someone who can be even better. So they, they are-- they have all sorts of advantages in terms of, uh, their focus, their, you know, the informational sample, uh, that supports their decision-making, uh, and also this efficiency that they, they are basically, yes, they're hiring for a particular role, but, uh, nothing prevents them from, from picking from other pipelines potentially and switch-- you know, swapping, uh, as, as needed. Again, maybe someone applied as a product manager, but they see that they could actually be amazing as a growth manager. They, they can easily make the swap because they are looking at the entire thing, not just that particular, uh-

   4. DSDavid Senra28:53

      I really love your insight. It's like, well, if you're, you're running the team and you feel the pain, you might just take the first candidate that comes along. But your whole thing is like, we know our strategy works, so now we're just gonna spend all of our time on talent. You're-- The conclusion you just shared here reminds me of Brad Jacobs, who was on this show last year. He says he has a great maxim where he's like, uh, "An empty seat is less damaging than a poor fit."

   5. LFLuca Ferrari29:15

      Oh, yeah.

   6. DSDavid Senra29:15

      He's just like, "I'll leave the position empty." Like, "It's gonna be painful, but it's gonna be not-- it's gonna be way worse than if we hire the wrong person," and he'll just leave it inde-indefinitely till they find the right person. It's very similar to what you're saying.

   7. LFLuca Ferrari29:25

      Yeah, completely.

7. 29:26 – 42:41

   Why everyone in the company has the same job

   1. LFLuca Ferrari29:26

      And look, I, I, I think in general, having sharp job descriptions is bad. You wanna have a-- There is a, 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, for the company's success, again, just as like a startup, uh, 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, to take care of it, right? And so I always say I generally talk to new hires. Uh, 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 or a product manager just to-- 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. Uh, we'll just adapt and take over and, and complete the work that needs completion and, you know, we'll just, uh, not do some other work at the end of the-- Like, very little work in a company, especially 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.

   2. DSDavid Senra30:54

      Say more about this.

   3. LFLuca Ferrari30:55

      Well, I mean, it-- almost everything you do, you could also not be doing, almost all of it. Uh, 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, I mean, the risk of being a little bit simplistic, and, and your resources will be limited. I think most companies do things that are ROI negative. You know, if there is a hundred things they could be doing, but only ten are ROI positive, many companies are doing forty things. Hopefully, at least they do the ten 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.

   4. DSDavid Senra31:38

      Wait, so why, why do you think they're doing this? Is this a, a lack of talent, an issue of focus, not understanding prioritization? Like, what's going on there?

   5. LFLuca Ferrari31:44

      Oh, I mean, all sorts of reasons.

   6. DSDavid Senra31:46

      For the companies you, 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?

   7. LFLuca Ferrari32:03

      A lot of the, the reasons for those opportunities not being seized, uh, uh, frankly lay outside of their control. Some of it is perverse incentives. If you're running a business on a standalone basis, especially for a p-public company, but also private companies, ultimately they're aiming to, 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, uh, let's say, consider ultimately secondary, if not even vanity metrics, uh, rather than, uh, let's say, uh, value creation through, through cash generation. For instance, if you are running, um, a business where most of the revenue comes from subscriptions, um, and you, you, you, you know maybe that, uh, 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 gonna have fewer customers, which can be fine. You know, maybe you have thirty percent fewer customers, but each ultimately contributes twice as much, you're better off, right? However, often the markets will, will punish you ha-d-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. Uh, 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, or, of the market, and you will not do that, uh, pricing change even if you know that it's gonna be positive. However, if a company, a business is run within the broader Bending Spoons where, uh, none of the businesses, uh, let's say, ends with itself, but it's a piece of a broader puzzle, a, a, a source of cash for further deployment and, 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, all else being equal, I wanna have more subscribers, but I would rather have an Evernote that generates more revenue, more cash flow so that, uh, it's, it's more attractive to the, to the bigger Bending Spoons, and we can go after bigger acquisitions and thrive. So there, there are incentives, and this is one example. Um, another one is talent. Uh, sometimes businesses, when they have matured and, you know, everybody understands and sees they're somewhat, they've somewhat saturated their opportunity, you know, maybe they are growing fifteen percent, maybe they're flat, but they're not doubling every year or something. Often, they have long stopped attracting some of the most hungry, uh, ambitious talent. And so these executive teams, um, have access to perfectly valid talent, but maybe not, again, standout talent. And-

   8. DSDavid Senra34:42

      Wait a minute. So I just-- I think it just clicked on one of the, the, like, unex-expected benefits of what you're doing. It's like you buy AOL, and I'm working on AOL. I don't think I'm working for AOL. I think I'm working for Bending Spoons.

   9. LFLuca Ferrari34:54

      Exactly. So I, some-- You know, I, I don't know, co-co-consulting, like, um, you know, the big strategy consulting companies, McKinsey, BCG, Bain.

   10. DSDavid Senra35:03

       Did you have a-- You got hired there, right?

   11. LFLuca Ferrari35:05

       I got hired, it's-- I got hired because we had-- we-- So in parallel with the startup we were talking about-

   12. DSDavid Senra35:10

       Yeah. [laughs]

   13. LFLuca Ferrari35:10

       So I have a, I have a background-

   14. DSDavid Senra35:11

       Tell, tell the story. We're gonna go back on Bending Spoons. This is a hilarious story, dude.

   15. LFLuca Ferrari35:15

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

   16. DSDavid Senra35:32

       You come from like a town of what, nine hundred people or something like that?

   17. LFLuca Ferrari35:35

       Yeah, at least at the time. Yeah, fewer than a thousand at the time.

   18. DSDavid Senra35:37

       I don't think anybody in your family went to college.

   19. LFLuca Ferrari35:39

       No.

   20. DSDavid Senra35:39

       I think your parents cut hair.

   21. LFLuca Ferrari35:41

       Yes.

   22. DSDavid Senra35:41

       Right? Okay.

   23. LFLuca Ferrari35:42

       Although they are retired now, but yes, they, they were-

   24. DSDavid Senra35:44

       [laughs]

   25. LFLuca Ferrari35:44

       They, they used to, uh, to, to-

   26. DSDavid Senra35:46

       Maybe some of those billions you got in your pockets are helping them retire. [laughs]

   27. LFLuca Ferrari35:50

       [laughs] Uh, well, it's all virtual. I own so little, a little stock. Um, so, um, so anyway, we, we wanted to, to build that, that, that startup, but we had no money and, uh, it wasn't-- at least we thought it would-wouldn't be easy to raise seed capital either, and maybe it's easier or it was, 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 at the time and even more so today because we have gone through so much over the following fifteen plus years, we, we figured, okay, we all th-- all of us look for a job, and whoever gets the most, uh, 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 start. We all look for a job and, uh... Well, frankly, one of us, uh, was, uh, doing a PhD, uh, already, so that was, uh, you know, our, uh, backup plan, but not a super lucrative job so that, you know, we were hoping to do better than that. And I, I happened to get a, an offer from McKinsey for a consulting job as strategy consultant, and so that was the best, uh, offer we got. And I remember I was terrified because I, I'm in- I, I'm close to incapable of lying or being opaque. I, uh, I always wanna be, uh, honest and transparent, but that's why I decided I would tell the partner from McKinsey who extended an offer to me that, uh, yes, I was gonna work there if they wanted me, uh, give it my 100%, but the plan was as soon as possible for me to quit-

   28. DSDavid Senra37:26

       [laughs]

   29. LFLuca Ferrari37:26

       ... to go to the startup. Um, and I was so convinced that they would, uh, withdraw the offer, you know, 'cause who wants to hire someone who, uh, was kind of as, uh, who's, who's not planning to be here-

   30. DSDavid Senra37:38

       Who's saying, "I'm gonna be here for a little bit, and I'm trying to leave as fast as possible." [laughs]
8. 42:41 – 49:50

   On finding great potential and saturating their capacity

   1. DSDavid Senra42:42

      I want to go back to this idea of saturating their capacity because it's still one of the most interesting things you to- you told me when we had lunch. So, like, can you give me an example? Okay, you've had-- you talked about, you know, it's better to have no habits than bad habits. So I'm going to find graduates or in some cases, people that haven't even graduated yet. They might start as, like, an intern or very entry-level at Bending Spoons, and then you're like, "Oh, we identified this talented person." And what do you mean by saturating their capacity? Like, give, give, like, concrete examples of how you've done this.

   2. LFLuca Ferrari43:07

      Yeah. Everybody at the company, certainly the people who have shown promise, they should have way more on their plate that than feels even remotely comfortable. And the reason why you should do that is, 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. Uh, the bigger the universe of, uh, 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 ten possible tasks. If I add, and each with a certain, let's say, ROI attached, if I add the eleventh, it's, it's impossible, assuming that you select well, it's impossible that adding an eleventh task will lower the R-ROI of what you choose to do because you're, you still have the other ten, so if this is lower R-ROI than the others, you're still gonna do the others. But it's, 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, to create value. Now, that's especially true if they s-choose well, and therefore it's very important to work with people who are smart, and it's very important for, for, for managers, for leads. Probably the number one thing they can do, or certainly, you know, one of the most important things they can do, and we try to coach them in this regard, is just help their reports select well. So that's the most important thing. The other, uh, very important thing, uh, in, uh, that, that you accomplish when you give people a lot more work than, than, than feels comfortable is you're really forcing them to, uh, come to terms with the immensity of, of the, of the possible. We find that sometimes people, as they, as they grow and, uh, and the, and their, the aperture for them professionally expands, they get overwhelmed. "Oh, there's too much to do. Uh, we need more people," for example, on the team. And, uh, and I think that's, uh, generally a, a terrible way of looking at, at life or the world. Uh, generally speaking, there's always a lot more you could be doing than, uh, than you can do in terms of your capacity. It's just that some people don't, don't realize it. It's not that if you're a student and you comp-- you, 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, uh, take a second degree on the side. Uh, it's just that you may not be sufficiently proactive and imaginative to, to figure it out. And so as people jump in a job, and if you give them, uh, just a, you know, relatively short task list so that they'll, they'll be done within their eight hours and there's nothing in their, on their mind, uh, that initially feels easy and, and comfortable, but you're failing to train them at a, a massively important skill, which is handling that immensity of the, of the possible. And once you become really good at, 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, to handle a vast array of possibilities and, and select, surgically select those with insanely high returns. And it's something you can only do if you're not, uh, thoroughly overwhelmed. So is it better to have someone become overwhelmed by that immensity once, you know, they're ten years in and they're running a 100-person 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, that higher level of responsibility people who have proven that they can do that. And if they actually can do that, they begin benefiting, benefiting from it much earlier, even if their, their, their scope is, is more limited. But you need to completely eradicate the concept of, "I'm only good at my job if I, uh, if I exhaust my checklist, my, my task list." There's no such thing. You're always gonna 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 a-about this sometimes. You really want to be able to handle that enormous amount of possibilities and, and surgically identify those that, uh, have insanely attractive returns and then be laser focused on those and disregard everything else.

   3. DSDavid Senra47:32

      Is this related to what you were saying earlier, where you're like, "Listen, they're not gonna be the AOLs. If it was standalone brand, they're not gonna get the talent that we are gonna get at Bending Spoons. Uh, we can have a massive impact 'cause they have a huge customer base, but then we can treat it like a startup." But then you said something about, like, if they can work on this for ten to, or 12 to 18 months, so then you rotate teams throughout the different companies. Is that part of saturating their capacity was like, "Okay, this opportunity on this business, this person is really talented, but there's no other ways to utilize that talent to a higher degree here, so let's move them to another team"? Am I understanding that correctly? Or another company?

   4. LFLuca Ferrari48:02

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

9. 49:50 – 59:28

   Insisting on a culture of extreme ownership

   1. DSDavid Senra49:50

      You just said you're high- you have, uh, very strong and you're highly opinionated on the culture that you should have. Do you want to share some of those opinions?

   2. LFLuca Ferrari49:56

      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, at, about bringing value to the team.

   3. DSDavid Senra50:08

      Hold on. Did you get that from Jocko's book?

   4. LFLuca Ferrari50:10

      Actually, the-

   5. DSDavid Senra50:11

      [laughs]

   6. LFLuca Ferrari50:11

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

   7. DSDavid Senra50:25

      Uh, obviously, you know I only read biographies and, and history, but... And I read business books, but I, I always tell people, it's like, that's one of the few business books I'd actually recommend reading.

   8. LFLuca Ferrari50:33

      That's good.

   9. DSDavid Senra50:33

      You can read it in a weekend. And yeah, it's very direct. It's just like Jocko is in... I've met him in real life. He's the exact same [laughs] person.

   10. LFLuca Ferrari50:39

       Yes. Um-

   11. DSDavid Senra50:40

       So extreme ownership.

   12. LFLuca Ferrari50:41

       Yeah, extreme ownership. Again, we, I think we define it a little bit differently, but the, uh-

   13. DSDavid Senra50:44

       So how do you define it, then?

   14. LFLuca Ferrari50:45

       Extreme ownership is, is caring in your belly tremendously about being the best at what you do, about helping the team and the company succeed. Uh, it's a matter of priority and intensity of priority. Um, and we wanna work with people who feel that way about their work at Management. 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, like, uh, uh, 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 make, uh, you know, to earn a living, to, to make ends meet rather than actually transcending apparent limitations and, uh, and, and winning and, and being amazing at work.

   15. DSDavid Senra51:29

       Okay, hold on. You just got done saying, "Hey, we're gonna centralize hiring. We have a bunch of engineers. You need to have brilliant people in HR." We went through this, like, very unique way that you think about this, right? But how do you screen for that? How do you screen for being successful here and helping this company be successful is that their top, one of their top priorities, you know, maybe the top priority in their life?

   16. LFLuca Ferrari51:49

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

   17. DSDavid Senra52:01

       Yeah, but people aren't gonna apply for a job and say that, so, like-

   18. LFLuca Ferrari52:03

       No, no, I mean-

   19. DSDavid Senra52:03

       ... what are, what are the actual things that you're-

   20. LFLuca Ferrari52:05

       Yeah, so I think there's... First of all, you try to... I mean, I, I don't wanna give too much away, but let's say you-

   21. DSDavid Senra52:10

       All right. If it's a [laughs] -

   22. LFLuca Ferrari52:11

       No, no, no, no, no

   23. DSDavid Senra52:11

       ... if it's proprietary, don't. [laughs]

   24. LFLuca Ferrari52:13

       No, no, but I, I would say the... First of all, you wanna see if there's a capacity to express extreme ownership. There's a bunch of pe- uh, well, I suppose every human being in theory has it, but I find there, uh, s- a lot of people are... They don't seem to be at least not inclined to developing extreme ownership or, or for almost anything, so they just struggle to care tremendously about things in life. And, uh, 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, and succeeding at, at a really high level. Of course, that type of profile is not gonna be highly appealing. I don't think I'm saying anything shocking here. So you look for signs in someone's past of, of that extreme ownership at work. Uh, maybe they, you know, they, they were fully focused on their studies. Okay. Did they do incredibly well at least, you know? Uh, maybe they, um, they did a lot of work next to studying 'cause maybe they didn't have the financial means or they wanted to learn a craft. Maybe they were into open source. Did they... Is, is their contribution extremely, you know, dismal, or is there something, a- again, just in terms of it looks like they put in a lot, 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, uh, because it's cool? Four months, it didn't work out, too bad, or they ground at it for three years and it was incredibly unsuccessful, but you can tell they wouldn't let up. You know, something that shows they are capable of, of, of putting their passion into something.

   25. DSDavid Senra53:44

       So in your S1, I think you reference Singleton, Henry Singleton-

   26. LFLuca Ferrari53:48

       Yeah

   27. DSDavid Senra53:48

       ... and Tom Murphy.

   28. LFLuca Ferrari53:49

       Yeah.

   29. DSDavid Senra53:49

       I just read... I did another episode on my other podcast, Founders, on Singleton, and what was remarkable, Singleton made a very early investment in Apple, right? And then he wound up joining the board. And he was asked by his partner, he says, "Well, there's a million companies." It's not a million, but there's a bunch of companies trying to make the personal computer. Like, "Why'd you choose Apple? Like, how... You, you picked the best one of the bunch, and there's a bunch of them." And he said two things. One, he thought that people were gonna be intimidated because they'd never dealt... There was no such thing as a personal computer. These things could be intimidated, less likely to be intimidated by a computer name, a computer called Apple. But more important than that, he's like, "The fo- the founders of Apple had..." He goes, "There's a lot of these founders that I've met of other computer companies that they wanted to start a computer company, but if it didn't work out, they'd be okay." He goes, "The founders of Apple had to make it work. They had nothing else. There was no way that Steve Jobs was gonna give up." And the idea that Singleton, being the genius that he was, identified that in a 19 or 20-year-old Steve Jobs is incredible

   30. LFLuca Ferrari54:49

       I think sometimes, but 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. Cer-certainly had that. Um, 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 is... We'll probably call it differently, but I think, uh, deep down it would be the same thing. Just he cared so badly about seeing Apple succeed, uh, the way he, he thought it should, like, by building those amazing products. And, and when you want something so badly, uh, you're not guaranteed to win, obviously, but it just sets you apart, um-
10. 59:28 – 1:05:15

    Luca's principle of relentless simplification

    1. LFLuca Ferrari59:28

       Yeah. One thing that we, we call relentless simplification. Um, we believe that most, most things don't matter. Uh, most things do more harm than good. However, humans have a tendency to, to add the complexity to things and do those things that destroy value. So if you leave an organization, almost any environment, uh, uh, let's say, uh, unattended, and you don't provide guidance in this regard, it will tend to, 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, a step to a process, adding an entire new process, if it's a product, adding a feature to the product. New rules. Uh, it really... You know, 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, to, that you're adding to this ensemble, this, this system, you're not adding complexity linearly, because you're not just adding the piece, you're also adding interdependencies, interconnect, in-interconnections with some and sometimes all of the other pieces. And so if you go from three to four pieces, you're not only get... You know, the, the system is not getting, say, 33% more complicated. It's maybe getting 40% more complicated or 50, depending on, on, again, the connections and how these new connections impact the other connections. Most human organizations, if you don't make a conscious effort to achieve simplicity, so Uh, uh, uh, avoiding these, these, uh, uh, this inc-increasing complexity and, and value strength complexity will, will go down that, that path, and that's how we got to, you know, 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 had-- it was meant to be a good thing, and maybe in a vacuum it was, but then, uh, people failed to account for this, the cost of these net connections and, 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. They just have 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, uh, the addition of complexity dramatically, and the, the complexity add tends to be awfully more often than not good complexity because we have to prove it, and so hopefully, if you're intellectually honest, that, that should be a good, a good idea. Then the other part of, uh, relentless simplification is that we want people to be on the lookout for existing complexity and, and suggest that we should be removing it. Understanding how we operate and the biases that accompany us throughout, throughout our lives is very important. Charlie Munger famously studied biases, and I think knowing your weaknesses or likely weaknesses is, you know, fifty percent of, of, of, uh, avoiding them or, or overcoming them. So knowing that we as humans tend to be, uh, this cons-cons-called, this thing called, uh, consistency bias-

    2. DSDavid Senra1:02:29

       Mm.

    3. LFLuca Ferrari1:02:29

       -uh, but also inertia bias, I mean, I've heard it, you know, slightly different things called with, uh, 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, we stop seeing, we, we, 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, the longer it's been there, the more we should be questioning it whether it's still a net positive. So we can look for things we can get rid of.

    4. DSDavid Senra1:03:01

       Have you paid attention to how Elon talks about this at all?

    5. LFLuca Ferrari1:03:03

       Maybe, maybe not.

    6. DSDavid Senra1:03:04

       Okay. I mean, it's one of the things that he probably repeats the most. Obviously, he's-- has that famous, like, four-part, uh, algorithm that he applies to every company he do-does, but there's, like, emails from him, and I think he might even have tweeted this. He's just like, "Go ultra-hardcore on deletion." He is obsessed with exactly what you're saying. You call it relentless-

    7. LFLuca Ferrari1:03:21

       Simplification.

    8. DSDavid Senra1:03:23

       -simplification.

    9. LFLuca Ferrari1:03:23

       Yeah.

    10. DSDavid Senra1:03:23

        His is just like he wants to, to delete, delete, delete, delete as much as possible. Simplify, simplify, simplify. We had, uh, Toby Lucat on the podcast a few months ago, and he said something that was very interesting. He's like, "Well, in technology, the world belongs to the fast. It's to these teams that actually c-actually can get ahead by reduction." He's like, "Very few teams have-- understand the skill and the genius of getting ahead by reducing." And the, the illustration of his point, which he did beautifully, he's like, "Well, you know, the modern-day Picasso would be the, the picture of the Raptor engine that SpaceX designed, where it's like you see the first one-"

    11. LFLuca Ferrari1:03:55

        It got super simple.

    12. DSDavid Senra1:03:56

        Yeah, it's got all kinds of weird shit and wires coming out of there, and then the second version's a little less, and then the third one's just, like, beautiful. And I accident-- I actually posted the clip, like, two days ago of Toby saying this on the podcast, and then I just quote tweeted it with the picture of the, the Raptor, and then somebody asked for Elon's explanation. He goes into and responds to, like, how he thinks about this process, but he's completely obsessed with the going ultra hold-- hardcore on simplification, on deletion.

    13. LFLuca Ferrari1:04:21

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

    14. DSDavid Senra1:04:30

        But even you just nailed it. He's like, he even goes into, like, well, if I have, uh, like, the, the, the comp-- the complexity is nonlinear, like you just said. If I have a hundred parts in this engine compared to if I have five, like, what does the supply chain look like? What does the manufacturing look like? What is the repairing it, figuring out what actually went wrong? Like, there's just a million other things that, uh, get more complicated with more complexity.

    15. LFLuca Ferrari1:04:50

        So it's both people don't focus on simplification. For some reason, I think it's really probably, uh, uh, there are anthropologic reasons, there are certainly societal reasons, but people do not focus on simplification unless, uh, again, they're, you know, uh, unusual, you know, radical, lateral thinkers like Elon or, or you teach them. Uh, but when they do, the second problem, they tend to be incremental in it. But often by far the biggest wins in terms of simplification is complete removal.

11. 1:05:15 – 1:10:27

    Why Bending Spoons doesn't use job titles

    1. LFLuca Ferrari1:05:15

       Uh, for example, uh, I mean, you just said, you know, Elon is a master at that. In our context, I remember we were, uh, banging our heads against the wall a decade ago approximately with the, 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, you know, maybe have a senior this, uh, staff that or director. B- And [clears throat] we were trying to develop, uh, definitions. Who, who should be a director? You know, like, you need to-- if, if that exists, if it's a thing, you probably need to define it, you know? Uh, 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. He's like, "Why, why is she senior engineer? I'm not senior engineer." Well, because of this or that, so you need to have that conversation, and then it's emotional drain. It takes time. So at some point, we were looking for ways to streamline it and simplify it, and someone said, "Why do we even have titles? What's the benefit of titles?" And, and someone else is like, "Well, you need titles. Well, 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. I mean, let's not be arrogant. There's probably some benefit. What, what, what's that benefit? And we ultimately determined that the benefit was that people really needed titles, uh, for, let's say, bragging rights. It feels good to be able to, to show progress in one's career, and they're useful if you need to find a new job to, to be able to, um, very conveniently and efficiently convey a level of experience or capability you have, you have achieved. And so we were like, okay, but all we're saying here is probably true, but also not something that, uh, the company needs to be involved with, right? And so we, we just got rid of titles, and we told people, "You can pick your title For your CV, LinkedIn, whatever. We j- we don't need to know. We don't wanna know. We don't need to approve it. We don't wanna see it. Uh, 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.

    2. DSDavid Senra1:07:11

       Yeah.

    3. LFLuca Ferrari1:07:12

       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, uh, we have an algorithm, it's just product management lead, as simple as that. It's completely automated, and, and i- is-

    4. DSDavid Senra1:07:28

       What do you mean it's completely automated?

    5. LFLuca Ferrari1:07:29

       The organization is based on algorith-al-algorithmic rules so that if you have direct reports, and if these reports are, um, product managers, automatically this tool will call you product management lead. But whether you have two or two hundred, 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. Uh, and I just made the example of the, let's say, topmost leader in product. For us, it's just the-- has the same, quote-unquote, "job title" as a person leading one person. And if he needs to, you know, do something with his LinkedIn, he could put whatever he wants out there, and it's just, uh, I've-- we never have to have these discussions. Like, we never look back. We probably saved, uh, easily hundreds if not thousands of person-hours in terms of, uh, defining different, you know, terms and, 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 up-up-uplift, you know, maybe five percent. But if you get rid of it completely, it's liberating. It's a 10X improvement potentially of whatever the baseline you wanna, uh, however you wanna measure it. Um, and often, often, not always, but often, you find these opportunities on a product. Get rid of an entire part of the product. Two percent of people use it. It's adding complexity to code base, bugs, issues. And sure, someone will be disappointed, but, you know, the, the ninety-eight percent of people who don't use it, you can serve them so much better that one year on down the line you'll be t-two X as, as well off. Uh, just do that. Don't slowly transition out a million migrations, headaches, issues.

    6. DSDavid Senra1:09:15

       I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers inside mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen video ads that are watched for an average of thirty-five seconds. That is retention that blows other ad platforms out of the water, and you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. There's no complex setup, no expertise needed, and AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So you wanna get started quickly before all of your competitors are on AppLovin, and you can do that by going to applovin.com. That's applovin.com.

12. 1:10:27 – 1:17:07

    The proprietary operating system behind Bending Spoons

    1. DSDavid Senra1:10:27

       Before we go back to these other cultural tenets of you, tell me about this, like, automated system you just described. It's, like, running the company in the background. What is this?

    2. LFLuca Ferrari1:10:33

       Yeah, I mean, I wouldn't say it runs the company in the background, but we, we are pretty, uh, fanatical about technology in general. Again, I personally was involved with AI in twenty ten, which, uh, at the time, nobody... I mean, it looked, uh, weird because it was nothing really. Today, obviously, if you're now building a startup with AI, people look, uh, look you, uh, "What the heck are you doing? Of course, we should be building a startup in AI." We carried, uh, with us this passion for using technology and cutting-edge tools to, to be more productive, more and more effective, uh, and so we have invested pretty heavily at Bending Spoons over this point over a decade to, to develop, uh, basically, you could, you could, you could look at it as an operating system. At this point, over fifty proprietary tools that run almost everything that we do or at least support it through automation. And then we buy companies, and they-- it's almost like installing them on this operating system, and a lot of, uh, 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 o-one system for, for recruiting and talent, uh, uh, predictions. We have one system to orchestrate the many AI models we use internally to, to, to run our operations, so we always use the, the ideal one in terms of cost, uh, quality. Um, we have one system to, uh, authorize different colleagues to have access to different systems, so let's say credentials management. Uh, one system for, uh, data aggregation and processing, and the list goes on and on, and we keep refining them, and we have kind of a, an open source community internally whereby we have platform teams who o- uh, 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, they, they, they come up short. They can add features, fix bugs, and as they improve them, they, these improvements are propagated and automatically made available to, to the entire portfolio of businesses. So we-- adding businesses actually makes us better as a whole, not just because we're adding s-some revenue, but because we are adding another entry point for, for innovation, uh, improvement ideas on this kind of operating system. Uh, and it's been a, a boon for us. I-- it's hard to estimate exactly how much in terms of efficiency, effectiveness it's added, but it's certainly transformative, I'd say.

    3. DSDavid Senra1:12:54

       So adding bi-- more businesses is better for you. But then is that not in conflict with, I think you're now, for your acquisitions, you want to do fewer and bigger?

    4. LFLuca Ferrari1:13:04

       Yeah, I mean, it's, there's a trade-off, obviously, the, the, like in almost everything in life. F-fewer, bigger acquisitions is better for us to the extent that, uh, it means we can focus our limited operational capacity, uh, onto those transformations and those... And, and, and, and, and getting those right. Uh, we have seen that the... In terms of, of, 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.

    5. DSDavid Senra1:13:34

       So same amount of time invested.

    6. LFLuca Ferrari1:13:35

       Right. Roughly speaking. Ev-Evernote, uh, in 2023, early '23, we, uh, we had a team, a task force of Spooners, these people from the core team, you know, we've been talking about, uh, probably of 50 people who joined Evernote and, and really drove that transformation, re-rewriting the code base, re-architected cloud infrastructure, rethinking monetization, and re-reorganizing the company and, and all that. And, and that was, uh, you know, business generating a little less than $100 million in revenue.

    7. DSDavid Senra1:14:03

       At the time you acquired it?

    8. LFLuca Ferrari1:14:04

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

    9. DSDavid Senra1:14:34

       That's incredible.

    10. LFLuca Ferrari1:14:35

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

    11. DSDavid Senra1:15:21

        So how do you reconcile the two? You want-

    12. LFLuca Ferrari1:15:22

        Uh, we, we tend to, to, to prioritize the former 'cause I think it... So bigger businesses, uh, that-

    13. DSDavid Senra1:15:27

        Because you developed this operating system over how many years? Decade and a half, something like that?

    14. LFLuca Ferrari1:15:30

        Yeah. Uh, yeah, we started 13 years ago, obviously, you know, when we, when we kicked off the project, five per- five people, we didn't have the luxury of investing in R&D, in our technology. I think we started in earnest with significant investments maybe 10 years ago, something like that.

    15. DSDavid Senra1:15:44

        And has anybody... I don't think you would do this, but has anybody tried to come and, like, buy these tools from you?

    16. LFLuca Ferrari1:15:49

        First of all, we, we like to, to keep them for ourselves-

    17. DSDavid Senra1:15:51

        Yeah

    18. LFLuca Ferrari1:15:51

        ... 'cause they're a competitive advantage. Also, you can't do everything, you know, in life. You need to, like, we ta-talked about prioritization and focus, and we just decided that we, we use these tools for our own benefit to, to run this, this business as well as we can. Also, I don't think they would be all that appreciated by the broader market for a couple of reasons. Number one, they tend to be very, very advanced. M-most people out there running digital business, they actually don't want... Maybe they think they do, but they don't want the most sophisticated AB-A/B testing platform. Overwhelming. They're not obsessive a-about A/B testing. They want something that's a little bit more approachable. So it wouldn't actually necessarily take full advantage of, of the, the real... There are solutions out there on the market that are more mass market, a little bit more intuitive, easier, that I would recommend to them rather than, than our own, which is again meant for high level of sophistication. And lastly, a lot of these technologies are doubly powerful because they're fully natively integrated with one another. They're all built to function together. Uh, and so it's very difficult for a business out there to choose to adopt 50 different things. They're gonna scrap everything they're doing. And so a lot of the value fades away if I'm only giving you one thing. So I don't even think that the, the business opportunity would be all that great to, to, to market this

13. 1:17:07 – 1:19:32

    Why Bending Spoons isn't private equity

    1. LFLuca Ferrari1:17:07

       stuff.

    2. DSDavid Senra1:17:07

       I've heard people that I don't think pay attention to Bending Spoons, they're like, "Oh, this is just like another, like, PE play." And it's like, that's... I don't think that's it at all. Can you... So let's, I think, walk through one of the acquisitions, right?

    3. LFLuca Ferrari1:17:18

       Mm-hmm.

    4. DSDavid Senra1:17:18

       You mentioned earlier, I don't know if this is a term you put on it, but, like, you know, when you're starting a company, you're... It's kind of you have to, like, luck your way into product market fit. You don't wanna do that. You wanna buy, you know, a working product. So let's take Evernote, for example. I was an Evernote customer for, I don't know, eight years. So, like, what did you see in Evernote? What was the state of the business, and then what happened after the fact, I guess?

    5. LFLuca Ferrari1:17:39

       And by the way, I, I think people who compare Bending Spoons to, to private equity, yeah, they're, they're, they maybe have a simplistic, superficial view of the world and they're like, "Okay, they acquire companies, uh, and, you know, they've raised prices." Okay, like, okay. But then, uh, you know, Google acquires companies. Acquired, acquired hundreds of companies and has raised prices hundreds of times. So it's a little bit of a pretty limited, um, set of criteria to, to compare. I'll give you, like, the highlights on a high level, and then I'll translate to the very specifics of Evernote or any business you want me to, to talk about. First major difference, we're not a fund. We don't buy to sell. We have never sold a material business. We buy to hold and operate forever. The second, uh, very big difference is that our interventions on the business require are very, very deep. Uh, again, I'll be very clear as I describe Evernote, but we, we transform them sometimes. Uh, sometimes beyond recognition, I'd like to think for the better. That's what we try to do here. Uh, and the third aspect is we integrate these businesses very, very deeply, uh, into a shared platform, including the technological operating system we were discussing, but also this core team of, of, uh, we call them Spooners, who run the businesses. You know, a lot of the R&D marketing, we move them around, uh, fluidly across businesses. And none of this is, bears any resemblance to what, uh, private equity does, 'cause those are fund, they buy to sell after, say, five years. They generally intervene, yeah, maybe on some costs or more price, but they... I've never seen a private equity reinvent a product or, or, um, or rebuild the org, um- Uh, or we build the technological infrastructure, and they generally don't integrate the businesses together under a shared platform because they don't have the platform, and even if they did, uh, they need to sell them piecemeal. So if you integrate them, you can't sell them, or at least it would be much more difficult to sell them. So we are almost as, as different as it gets, uh, other than we acquire stuff for a living. Um, so that's for sure, uh, in common.

14. 1:19:32 – 1:28:01

    How Bending Spoons acquired & transformed Evernote

    1. LFLuca Ferrari1:19:32

       Now, Evernote specifically, so, um, what we saw in it... Well, Evernote i- in its history has been used by a quarter of a billion people.

    2. DSDavid Senra1:19:41

       How many?

    3. LFLuca Ferrari1:19:41

       A quarter of a billion people.

    4. DSDavid Senra1:19:43

       Wow.

    5. LFLuca Ferrari1:19:43

       Extensive reach and usage ultimately build a brand. Naturally, there's that, plus the experience needs to be good, which often was, especially for the first, uh, many years. Uh, but it's certainly-- it's, it's a brand that almost everybody has heard of, is familiar with, m- often is perceived positively, sometimes not as much, but certainly not negatively, more sometimes as, well, it's something from the past, it's probably not that relevant, but nobody has a negative association with Evernote, or very few people. So a, a very well-known, powerful brand, pretty sizable user and customer base. Several million active users and customers at the time of acquisition, a- and to this day. And, uh, and we believe that a substantial opportunity for, for improvement across the board, I'll describe the improvements in a moment. Uh, and lastly, something we, we always seek in acquisitions is predictability. We like to buy stuff where we have a good sense of where it's going at least five years out, at least under management, once it, it's installed, uh, into our platform. And, and in that case, um, a, a few factors enabled us to, to predict the future. One, uh, uh, the, the user and customer base was, was highly tenured. On average, I think a paying customer had been on the, uh, on the platform using Evernote for, uh, five to ten years, I don't remember exactly, but a similarly long period of time. Um, the, um, most of revenue was from subsc- subscriptions, which we tend to be able to, uh, predict, uh, in terms of their future performance better than, uh, more volatile revenue streams like advertising. Uh, most of the value, uh, lay with the existing users and customers, as opposed to hypothetical new users and customers we'd have to acquire out there, and, uh, we find that it's much easier to bet on existing customer bases than new acquisition, because new acquisition of user and customers, uh, tends to be much more volatile with the changes in competition, advertising, uh, uh, dynamics, in terms of advertising for acquire, for acquiring customers. Uh, so we, we liked the whole package. We thought the price was, uh, was reasonable.

    6. DSDavid Senra1:21:44

       Did you disclose what you bought it for?

    7. LFLuca Ferrari1:21:46

       Uh, well, it can be, it can be seen directionally from our financial statements. It was about $200 million give or take.

    8. DSDavid Senra1:21:52

       Say that number again.

    9. LFLuca Ferrari1:21:53

       200 million.

    10. DSDavid Senra1:21:53

        200. Okay.

    11. LFLuca Ferrari1:21:54

        Uh, more or less.

    12. DSDavid Senra1:21:54

        About, okay.

    13. LFLuca Ferrari1:21:55

        203, something like that.

    14. DSDavid Senra1:21:56

        So wait, they were doing 100 million in revenue, right?

    15. LFLuca Ferrari1:21:59

        A little less, like 90.

    16. DSDavid Senra1:22:01

        90, and they... Were they making any money or no?

    17. LFLuca Ferrari1:22:03

        Uh, I would say roughly break even.

    18. DSDavid Senra1:22:05

        Okay.

    19. LFLuca Ferrari1:22:06

        Roughly break even. Slightly profitable.

    20. DSDavid Senra1:22:09

        And it's doing what now?

    21. LFLuca Ferrari1:22:11

        So we don't disclose profits by, by individual business, but, uh, I, I would say it's, it's very, very profitable. You can see our overall profitability as a group. Um, adjusted operating income margin, we're at around fifty-four, fifty-five percent. Individual businesses are-- tend to be more profitable, uh, especially if you've owned them for more than a couple of years.

    22. DSDavid Senra1:22:35

        So hold on, before you go into there. So in, like, an Evernote case, right? You drastically increased the profitability based on these rough numbers.

    23. LFLuca Ferrari1:22:42

        Also revenue. Revenue went up substantially.

    24. DSDavid Senra1:22:43

        That's, well, that's what I was gonna ask. Does the revenue also have to go up, or you were just fine if you just make it-

    25. LFLuca Ferrari1:22:48

        We, we try to improve revenue and improve costs.

    26. DSDavid Senra1:22:50

        Okay.

    27. LFLuca Ferrari1:22:50

        Uh, sometimes we're successful on both fronts. Generally, I would say some- sometimes more on one than, than the other, but, uh-

    28. DSDavid Senra1:22:59

        But-

    29. LFLuca Ferrari1:22:59

        In Evernote, we both increased revenue and reduced costs.

    30. DSDavid Senra1:23:01

        Explain the difference of what you were doing compared to they were doing, whatever, 90 million and not making any money or breaking even.
15. 1:28:01 – 1:40:42

    How Bending Spoons uses AI

    1. LFLuca Ferrari1:28:01

       Uh, with, especially with AI, we have had some, uh, close to breakthroughs in productivity.

    2. DSDavid Senra1:28:07

       Can you talk about that?

    3. LFLuca Ferrari1:28:08

       Yeah. Uh, sure. Um-

    4. DSDavid Senra1:28:10

       Everybody's interested in this right now. There's a bunch of founders that have already been on the show that are coming back on, and we're just gonna do, like, an hour of how literally they're redesigning their, their, uh, entire organizations with AI.

    5. LFLuca Ferrari1:28:19

       Yeah, we've been using AI pretty aggressively for as long as I can remember. Certainly in twenty eighteen, I'd like to say we're using it to predict, uh, user lifetime, basically, uh, to inform our, um, AB testing. But, uh, but I would say over the past two years, especially with very rapid progress in LLMs, we've been able to have some, some major breakthroughs in, uh, in various areas, especially software engineering and data analysis and, and product design. I'll give you a couple of examples. So for, for, for design, um, we recently actually deployed a, a tool we built in-house called Diagram. Whether you're a designer or a product manager or a growth manager, you go to this tool. It looks a little bit like cloud design, just, uh, broadly speaking, but it's specialized in our particular context and fully integrated with everything else at Bending Spoons. And you can just tell the tool to pull up, uh, screens for the app you're working on, say it's Evernote, uh, uh, for the relevant features, and then you guide it as it pro-produces new versions of those, of those interfaces. Uh, and it will do so v-by automatically following the design guidelines that the, say, the head designer for that tool has laid out in some document somewhere. You don't have to know where they are, like the tool knows. So you just tell it what, what you need, and it'll give you work that the, the head designer would typically approve. It will automatically look into the code base to know how the different interfaces interact functionally, so it will make proposals that make sense from that point of view. And then once you're happy with your proposal, it will develop the code for you, and then the, say, lead engineer will be able to review and approve it if it's fine. And, uh, and then automatically, 'cause it's in-it's integrated with our AB testing system, you'll have a new segment where you-you're gonna test that new, say, onboarding flow or whatever. If you had the skills before, you're a product designer, now you can do it sometimes in maybe one percent of the time. In many cases, it's actually a better result 'cause it's so precise, and you know, just humans, we, we tend to miss things. Uh, but interestingly, it, uh, it enables doing design work for people who before couldn't, like product managers to software engineers, growth managers. So now a lot of the inefficiencies that stem from, "I'm a product manager, I have an idea, I wanna test something, but I need to wait for the product designer to be available, then I need to explain to them what I have in mind. I fail to explain it properly. I get... Three days later, I get, uh, work back, and it's not what I meant. I need to explain it." The inefficiencies stemming from this exchange of information, we humans are insanely inefficient at exchanging information. We're quite efficient at abs-absorbing information. But when we, when we, when we have to articulate ideas, you know, language is very, very... It's better than not having language, but it's very inefficient. Um, and more so when it's with another human, uh, with whom the iteration cycle will be slow 'cause they may not be able to, to, to do the task immediately. Even if they do, it will take them time. But with a machine, we can tell it, it'll do it right away, uh, and it will take them fraction of the time, so you can actually iterate very quickly. So overall, you get to the result in a tiny fraction of the time, but interestingly, you can do it even if you can't design. So this overall makes our teams a lot more, uh, efficient. This is an example. Another example is something we call Alt Spooner, um, for-- it stands for alter ego or alternative Spooner, and it's basically an agent that lives in Slack, we use Slack for communications, that has, by design, the very same access you do as an individual in the company. So it has access to the same tools to the same degree. So if you have, uh, full access, partial access, it's, it mimics you. It's meant to be you basically, but artificial. And you can instruct it to do pretty much anything you could do, it, it could do. Some, some things it will do better, some things it will do worse. So we have Evernote. We, we have a channel on Slack where we can report feedback on things we think could be improved, bugs or new features. And I was there to, to provide input on something. I, I was just using the tool, the tool, and it failed at something, and I wanted to, to, to relay that. And I, I saw live one of the best uses of Alt Spooner by one of my colleagues. She runs Evernote, and, and she wrote, uh, uh, you know, she... In this channel, she tagged Alt Spooner and said, "I, I noticed this bug. Could you please go to Moros," which is, again, back to the integration of our tools, it's, it's our customer support tool that collects feedback from users, "to check whether it's just I got unlucky or if it's a, a widespread phenomenon or issue, and then, uh, report back so we know how to prioritize it. And separately, can you look into the code base for root causes for this issue, and if you can find them, propose a fix, and then ping, um, uh, uh, Marco, who's lead engineer for that particular, uh, product, uh, so that he, he can review the code and push it to production if it's fine." And so she, the general manager for Evernote, in maybe three minutes, essentially fixed, identified and fixed a ba- a bug, something that would have taken-

    6. DSDavid Senra1:33:15

       If this is human-to-human coordination-

    7. LFLuca Ferrari1:33:17

       Yeah, but I think-

    8. DSDavid Senra1:33:18

       Weeks maybe

    9. LFLuca Ferrari1:33:18

       ... forever. Like exactly.

    10. DSDavid Senra1:33:20

        Yeah.

    11. LFLuca Ferrari1:33:20

        There are many more examples. I mean, I, I had to... I wanted to, to know the, the, the, you know, the, the trajectory of, uh, monthly active users on, on, on Meetup. It's not one of our properties. Recently for an analysis I was doing, and, and generally would have to ask a data analyst, uh, and they'd be busy. I would either interrupt them or they would get back to me a couple of days later. It would take them presumably a couple hours to give me that. Uh, I actually interacted with my Alt Spooner, went back and forth, uh, asking for further cuts. "Okay, just show me just for the US, just for, for users on-

    12. DSDavid Senra1:33:56

        Mm-hmm

    13. LFLuca Ferrari1:33:56

        ... uh, on iPhone. Just on..." And, uh, you know, I got all the answers, all the graphs in a few minutes. Perfect. Done.

    14. DSDavid Senra1:34:05

        I need to go back to this because you just blew my mind. So I know you're not telling us exact numbers, but everyone knows it's doing probably a couple hundred million or thereabouts in revenue.

    15. LFLuca Ferrari1:34:13

        Let's say more than a hundred, less than two hundred.

    16. DSDavid Senra1:34:15

        Okay. So there you go. Uh, that's the range of revenue. It ha-- it is profitable, and you just gave a hint as to what, like the operating profit percentage might look like, right? And you're doing this for twenty people.

    17. LFLuca Ferrari1:34:27

        Yes. That's right. Yeah. Plus the help, uh, uh, slightly unquantifiable help of that platform that keeps pumping out technological improvements, you know, like those automatically benefit everybody. So it's, you know, you cannot allocate it, uh, by dollars in re-revenue, whatever. But yes, people wake up in the morning and fix bugs for Evernote, launch features, op-optimize monetization. That's about twenty people right now.

    18. DSDavid Senra1:34:50

        Okay. So this kind of efficiency, are you seeing that in the rest of the businesses that you own as well?

    19. LFLuca Ferrari1:34:55

        Yeah, for the most part. I think the, the, not all functions are equally-

    20. DSDavid Senra1:34:57

        Are you optimizing for that? Like what, what-

    21. LFLuca Ferrari1:34:59

        No, I mean, we, we just try to make each business as successful as possible. It's not like we don't-- we wanna have, like, the smallest number of people that we can. I mean, if more people create more value for customers and for Bending Spoons, we would, uh, assuming we can, we can hire enough, you know, and fast enough, we would certainly, uh, deploy them. Sometimes we have situations where we would want to have more people, we just don't have them. So okay, that's a separate issue. But, uh, we don't aim to minimize the number of pe- at all, uh, just to run these businesses as well as possible. And we often find that, uh, some of these businesses, when you, when we, when you take them back to startup mode, so they had been large, slightly bureaucratic, sometimes political organizations for a while. Things tend to grind to a halt. It's difficult to be entrepreneurial, enthusiastic, move fast, uh, move, work on what matters. If we bring them back to a much smaller size, much higher talent density, we get rid of a lot of red tape, then even though the team is smaller, or per- perhaps precisely because the team is smaller, product development and, and optimization of monetization pick up again. And, and Evernote is a good example. If you look at the... It's difficult to precisely quantify innovation, but if you look at the timeline of, uh, say, product improvements, features before we acquired it in the, say, two, three years before and after, it's night and day. Uh, I, I feel very conf-comfortable saying it's at least three times as fast under almost any frame of measurement, despite the team being much smaller. But it's really, m- I think despite is the wrong word. In many ways, it's because it's a lot smaller, and so they, these people are... Again, startups, Instagram was built by, I suppose, I don't know, like ten people, I'm not sure. Something like that.

    22. DSDavid Senra1:36:36

        Yeah.

    23. LFLuca Ferrari1:36:36

        WhatsApp-

    24. DSDavid Senra1:36:37

        I think it was like twelve when they got acquired for some crazy amount of cash.

    25. LFLuca Ferrari1:36:39

        There is plenty of proof that small teams of very capable people with extreme ownership who, who, who really care can do, can outwork and outproduce vast organizations where either not enough people care, or they do, but there are so many feet to step onto and, you know, and so many hurdles to overcome to get stuff done that they, they, they, they fail to do so. And it's not-- I mean, nobody wants that to be the case. It's more like frog in the boiling water kind of phenomenon, where you keep adding teams to, and, and, and, and processes and rules, and then at, at some point it's very difficult to, it's very difficult to care and it's very difficult to get stuff done.

    26. DSDavid Senra1:37:17

        This is what I meant about, like, the, it goes back to how I've been describing you to other founders, that you're just like this Galapagos Island of entrepreneurship. Because I know you mentioned, like, being influenced by Henry Singleton, for example, and he would do this too. He was like, over and over again, he says, "Hey," you know, I think at one time he owned a hundred and thirty different businesses, and a hundred and twenty-nine of them were profitable. But he wanted to break business units into the smallest part, possible parts. Different was-- difference was between you and him, you like breaking things down to smaller parts, less people, more efficient. But he didn't Uh, he's kept, kept the business units separate-

    27. LFLuca Ferrari1:37:47

        Yeah

    28. DSDavid Senra1:37:48

        ... um, where you're actually studying them all and then using insights and spreading it across your, uh, your entire organization. It's very similar to, like, what Mark Leonard did with Constellation. Is there anybody else that you've been influenced by or that you take, like, an idea or two from?

    29. LFLuca Ferrari1:38:01

        Frankly, not a lot. Going back to what we were discussing earlier, that we, we, we were growing up as a business in no man's land-

    30. DSDavid Senra1:38:08

        Yeah
16. 1:40:42 – 1:43:50

    How Bending Spoons thinks about capital allocation

    1. LFLuca Ferrari1:40:42

       was.

    2. DSDavid Senra1:40:42

       One of the things that Buffett and Singleton had in common is they essentially primarily saw their job as, um, they were the ones ca- uh, allocate capital. Like, their main-

    3. LFLuca Ferrari1:40:50

       Yeah

    4. DSDavid Senra1:40:50

       ... talent was capital allocation, right? And Singleton, I think you might have said this, and I could be wrong, but this is why I'm gonna ask you. It's like, uh, well, after he started acquiring, stopped acquiring com- companies, right? He bought like a hundred and sixty in ten years, something like that. I forgot the number, exact number. And then he's like, "Oh, now we're gonna reverse course. We're not gonna..." He, he didn't make another acquisition, material acquisition for the rest of his career, and then he just focused on capital allocation, improving the business units he had, and then just discovering, like, where's the best dollar I could spend? And is it improving operation of this company? Is it buying another company? And then he discovered it w- it was actually buying back his own shares.

    5. LFLuca Ferrari1:41:23

       Yeah.

    6. DSDavid Senra1:41:24

       So I think I heard you say before that out of all the investment opportunities you see in the future, it might be bu- buying back Bending Spoons shares.

    7. LFLuca Ferrari1:41:32

       Yeah, not imminently. I think, uh, we see a runway right now allocating capital toward acquisitions as, as, a- as being an expected, continue being way to, uh... Like, returns, uh, I think will be way too appealing for that, that not, uh, to be the, the priority. But I think if you ask me, in the very long run, uh, that could be an appealing way of, uh, of creating, um, shareholder value. I, I think what, what Singleton did incredibly well, he was acutely aware of the circumstances and boundary conditions and, uh, very creative and made, uh, fully rational decisions. So for a decade or more even, the market was, uh, g- you know, affording, uh, his stock a good multiple, and he was, uh, uh, aggregating a lot of businesses, he was, uh, buying at a lower multiple, and he was on top of that, uh, exploiting the arbitrage but also very, uh, astute at selecting those businesses. He kind of double-dipped a business that was undervalued, uh, regardless, uh, like people didn't see the, the potential in the medium to long term. And, and add to that the fact that it, it, that business would that, then join a conglomerate with a higher multiple, so double value creation. And then later the market, uh, changed its, uh, preferences, as the markets often do, so you've got to stay open-minded about it, and started appreciating more vertical businesses, and so he worked on im- improving those businesses and spinning them off so they could be maximally appreciated. So he was never opinionated on, o- opinionated on the, on the how this should be done. Uh, he just, uh, looked, I believe... Uh, I've never met him, of course, but I, I believe that looked at investing and running a business as, as a puzzle and tried to find the best solution. He was also a great engineer. Like, he could have been one of the best engineers had he wanted to pursue that, and, uh, almost a grandmaster in chess, I believe, or at least-

    8. DSDavid Senra1:43:15

       Yeah, he could play chess blindfolded. There's a story-

    9. LFLuca Ferrari1:43:18

       Yeah

    10. DSDavid Senra1:43:18

        ... in, I think, the episode I just did, where he's, like, playing with his back turned, and he goes, "Hold on, you told me the wrong move three moves again." I mean, uh, he's obviously genius level IQ. Charlie Munger's on record saying he was the smartest single human he ever met in his entire life, and imagine all the people that Munger met in his entire life. Singleton took Teledyne public almost immediately. Did you know when you started Bending Spoons and you were, "Okay, we're not gonna stick with one company, we're gonna keep acquiring." You, you started having... You did really small acquisitions. They were successful. You kept on that path. Was the plan for you and your co-founders, like, this is gonna be a public company

17. 1:43:50 – 1:46:46

    Why procrastination without laziness is good

    1. DSDavid Senra1:43:50

       one day?

    2. LFLuca Ferrari1:43:50

       I'd say when we talked about public versus private, I think more often than not, we thought this would at some point be a public company. There are advantages and disadvantages in be- being a public company. I'd say for most companies, the, the advantage is Uh, are greater than the disadvantages. And for a company like Bending Spoons that requires capital to grow fast, uh, the, I think the advantages are, are way too large. I mean, it's not really a discussion that it should be public. But yes, it's not all roses. Obviously, there are new pressures and incentives and noise that you'd be better off without, for sure.

    3. DSDavid Senra1:44:23

       How long it lasts when, okay, we know we're gonna go public to you actually went public.

    4. LFLuca Ferrari1:44:27

       We like to make decisions as, as late as possible. I think that, uh, it... Procrastination is awesome if it doesn't come from laziness, because if you postpone decisions, you often have more information when you actually get to make them.

    5. DSDavid Senra1:44:42

       Singleton said something like this, where he's like, "If you don't make a decision, so in many cases, it resolves itself."

    6. LFLuca Ferrari1:44:47

       Yeah, I think it just-

    7. DSDavid Senra1:44:48

       So it removes the, the, the, the need to make a decision.

    8. LFLuca Ferrari1:44:50

       It's a, it's a slightly different thing. It's, it's another reason why, uh, it's a subset of, uh, of what I said, meaning, so there, there are some decisions that there is the only advantage of making them now is that you can forget about them. So there's something to say about that, and I think if the decision is not particularly important, sometimes the moment you bring it up, just make it so that, you know, you can free up the, your RAM, uh, to, to, to, to tackle other tasks. But if the decision is so critical as to whether you should be a public company or not, or whether you wanna buy a company or another, uh, generally speaking, you're better off delaying it as much as possible, or at least there's almost no cost to delaying it other than the slight discomfort that you know it's still on your shelf. You need, still need to make it. Uh, and there are advantages, or at least no, I mean, worst case scenario, you'll be just as well off when you eventually make it as you were early, but often you have more information. Maybe as we're, as we're just saying, the boundary conditions shift, and you just don't need to make it any longer 'cause it's irrelevant. Or maybe you would have made a decision one way, but then as the world changes or you learn something else that you had failed to, to spot earlier, you, you end up with a different option. And so with the IPO, we decided relatively early, probably something like first half of twenty twenty-five, that we would, uh, wanna prepare to go public in the n- near to medium term, and so probably late '25, uh, mid '26, late '26. But we would delay the decision as to whether actually to pull the trigger to as late as possible in the process. So we knew that we were probably gonna be a public company at some point, let's say certainly by late '25, no doubt about it. But we, we didn't know if we would go public necessarily in, uh, in early July '26. We just said, "Okay, let's get r- ready, and then we'll see." I think the definitive decision of, okay, uh, we will go public as soon as possible, definitively, we made that decision in the spring of '26.

18. 1:46:46 – 1:49:07

    Operational excellence is not optional

    1. DSDavid Senra1:46:46

       Earlier, you said that assuming that the comp-- the first thing a company has to do is have a strategy. Assuming that strategy's good, then the most important thing is talent acquisition. How do you articulate the strategy at Bending Spoons?

    2. LFLuca Ferrari1:46:58

       Well, basically, we want to achieve the maximum level of operational excellence, which means getting the most out of a business possible by any means necessary, both, in our case, structural means, such as integrating everything on the same platform so that we eliminate all redundancies, and we can achieve all sorts of scale advantages and network advantages, uh, and, uh, by sheer investment in talent and, and technology. By any means possible, we wanna achieve the greatest advantage as an operator. And once you have that, meaning you are... a business is better off with you than with almost anybody else, once you have that for a sufficiently large number of businesses, then you're almost guaranteed to be able to compound capital very efficiently through acquisitions. 'Cause by definition, by definition, mathematical, you'll be... if a business is better off with you, with, with, than, than with everybody else, if there is, if there are enough of those out there, you should be the best, uh, you know, the highest bidder when it's on sale. And, and so be- And the seller should s- still get excellent returns from, from their sale, and you get excellent returns. So we probably focus ninety-nine percent of our resources and, and, and efforts in, in, in being the best operator, building up that platform, unlocking as much of these structural advantages as we possibly can, and, and remarkably little, uh, in, in actually in the acquisition side of things. Like, we, we are very deliberate, highly sophisticated, but, but once we have a powerful platform and, and, and these structural advantages, then it, it actually gets pretty easy to deliver very high returns through acquisitions. It's not that we see necessarily things in businesses that nobody else saw. It's just that we know those businesses are gonna do so much better with us than with almost anybody else, so we can offer more.

    3. DSDavid Senra1:48:38

       And that operational excellence allows you to bid higher as well.

    4. LFLuca Ferrari1:48:41

       It should.

    5. DSDavid Senra1:48:42

       'Cause you, I think, yeah, I think you said, like, you're pretty sure that you bid maybe fifty percent higher than the next highest bid on, like, Evernote, for example.

    6. LFLuca Ferrari1:48:48

       Yeah, I mean, I mean, I don't know if... I cannot never know for absolutely su- sure because you don't, you know, obviously, the sell side only tells you so much. But I, I'm pretty confident that our offer was, uh, was way, way higher than the s- which, by the way, in hindsight, we should have negotiated better. Uh, but, but-

    7. DSDavid Senra1:49:05

       No, but no, we, we talked about this at lunch.

19. 1:49:07 – 1:54:47

    How Bending Spoons negotiates acquisitions

    1. DSDavid Senra1:49:07

       Um, you, I think you have a very unique... Let's talk about this now. Like, you had a very unique approach to negotiation. Like, I, I'm pretty sure you explicitly said, like, you don't wanna come in as like, like how most people do. It's like, "Let me just put a really low number right now," and then you say a higher one, and then we go back and forth and back and forth and back and forth.

    2. LFLuca Ferrari1:49:24

       I think in time, uh, you wanna be known as a, I won't say generous because obviously nobody buys a company out of generosity. But, uh, the, you, you wanna come across or establish a reputation as someone who's trying to, you know, get the last penny out of a negotiation. You wanna m- help the seller get good value from the transaction, but at the same time, you, you, you wanna be known as pretty firm. Like, I put a number that I think is absolutely fair and highly competitive on the table. I probably think I could have gotten lower, but again, I'm not trying to get all the value out of this transaction at all. I wanted to, to, to get a lot of the value, but at the same time, I'm not gonna be available for a lot of back and forth and, uh, you know-

    3. DSDavid Senra1:50:10

       Do you tell them up, that upfront?

    4. LFLuca Ferrari1:50:11

       Uh, generally, no. Uh, if they, if they ask us, sure, but hopefully, they do their research. I, I can only think of one case in recent memory, which was actually qui- quite recent, um- Where we ended up raising our offer substantially, uh, because... A- and, and but the reason is su- so in that case, we, we were asked, forced really, by the seller to put a number on the table before we had the data we needed.

    5. DSDavid Senra1:50:36

       Mm-hmm.

    6. LFLuca Ferrari1:50:37

       And so, you know, between not even participating or risking having to change it a lot later, we said, "Okay, look, we don't know a whole lot. Based on what we know, we think we'd be happy to do this at, uh, between X and Y." A- and then later as we progressed into, you know, the sales, sales process and, and we got more data and we finally could form a somewhat complete opinion, we found that we could offer a lot more. And so we, we increased that offer substantially. But it's really rare-

    7. DSDavid Senra1:51:07

       On- you, you increased the offer on your own or they said, "That's way too low"?

    8. LFLuca Ferrari1:51:10

       You know, I don't actually remember exactly how it played out. Uh-

    9. DSDavid Senra1:51:15

       How would you do that today?

    10. LFLuca Ferrari1:51:15

        Probably a mix of the two.

    11. DSDavid Senra1:51:16

        How would you, yeah, how would you do that today? I would imagine if you think this is an asset you'd want, you'd-

    12. LFLuca Ferrari1:51:20

        I think I would, frankly, I think I would do it similarly because we just didn't, we didn't have the data and the, we, the data wouldn't be forthcoming unless we put a number on the table. I don't... We're not trying to prove a point and be dogmatic and say we only put a number on the table if we have absolute certainty.

    13. DSDavid Senra1:51:34

        Yeah.

    14. LFLuca Ferrari1:51:34

        So we said, "Look, we are not highly confident in this number 'cause we don't have a lot of data, but this is the number."

    15. DSDavid Senra1:51:38

        Okay, so let's say in a different example, you have the numbers that you need. You put the number out. Is that number pretty firm?

    16. LFLuca Ferrari1:51:45

        Yeah. Generally, yes. I don't think may- we increased it, uh, almost ever by more than 5 or 10%.

    17. DSDavid Senra1:51:51

        So did you ever, uh, hear about the way Buffett bid for Clayton Homes?

    18. LFLuca Ferrari1:51:54

        No, I don't think I-

    19. DSDavid Senra1:51:55

        The, the founder of Clayton Homes wrote an autobiography. I can't remem- I can't remember, um, what it's called, but I think his name's Jim Clayton, and his son was handling the negotiations 'cause he had stepped down and his son is the CEO. And so his son goes to Buffett, he's like, "Yeah, we'd uh..." They were, are, they were debating on, like, pr- uh, what do you... price per share. He's like, "Uh, the board would entertain an offer at 17." And Buffett goes, "$12.50 bid." And then the guy comes back, he's like, "All right, we've talked it over. We'll, we'll take 15." Buffett goes, "12.50." [laughs] He goes, "All right." Went back, "We're gonna do 14." And he goes, "12.50 is my final offer." And then his closer was, "I can assure you if every capital market in the world closed tomorrow, and when..." He's like, "You can still rely on this offer." And they're like, "We'll take 12.50." [laughs]

    20. LFLuca Ferrari1:52:40

        I will not name names, but we ha- we have had, uh, one or two situations a little bit like that. [laughs]

    21. DSDavid Senra1:52:46

        [laughs]

    22. LFLuca Ferrari1:52:46

        And look, I think it's easier to do 'cause we're so confident. I don't believe to this day that we have ever been outbid. I don't remember a single case, at least not in the f- last five years, in which we put forth an offer and then the seller sold to someone else. We've had cases where they chose not to sell. Uh, maybe they thought it was too... I suppose they thought the offer was too low, but we have never seen that business being sold to someone else. A- and that, and we have been able to deliver the extremely high returns we have while winning, uh, essentially all winnable sales processes because of that massive advantage of an, a- as an operator where we can deliver such a, an improved performance vis-a-vis private equities primarily and most other people. When you have that, uh, ability to basically bid higher than, I mean, it's, I can't say ev- everybody else every single time, of course there will be exceptions, but almost everybody else almost every time, then you can be confident in your offer. And, uh, we've seen that sometimes we put forth the offer and the, the sales party thought they, they could get more and they choose not to engage further, and then maybe we hear back from them, say nine months later or six months later, and they, then they're willing to transact at that price 'cause they, they needed to convince themselves that actually that's what you can get. It's harder to do if you think your offer is weak. Then you need to be much more persuasive and, uh, and try to get it done before, uh, people shop it around. But in our case, we always say, "Do you wanna shop it around?" You know, often people try to look for exclusives. They're like, "Okay, okay, this is my offer, but unless I get ex- exclusivity within five days or w- w- the, the offer is gone." Because they know that their best chance is to win on timing. Like, "I'm here now." They know the offer is not that great. In our case, when we're asked, we almost always say, "Look, if you want to, we, we encourage you to go and shop it around." Because in fact, once you convince yourself that this is the best offer, it'll be easier for us too. Like, it'll be a lot smoother from, we'll sign faster, we'll close more easily. Like, we want you to be fully satisfied that this is the best value for, for you and your shareholders that you can get. So that's been, generally speaking, our approach.

20. 1:54:47 – 2:01:28

    Logic over numbers

    1. DSDavid Senra1:54:47

       So I think from the outside, I, I would ask, like, how much of your business is run by numbers? Remember the discussion we had on jujitsu and MMA?

    2. LFLuca Ferrari1:54:58

       Uh, uh, vaguely.

    3. DSDavid Senra1:54:59

       Okay.

    4. LFLuca Ferrari1:54:59

       Which part?

    5. DSDavid Senra1:55:00

       You mentioned, you ma- named some people that you were fans of in the sport of jujitsu and MMA, and then you said the weird-

    6. LFLuca Ferrari1:55:07

       Yeah, John Danaher, we discussed, uh, yeah

    7. DSDavid Senra1:55:08

       ... but then you said, "One of the weirdest shit anybody's ever said to me in my life," and you're like, "Oh, by the way, I don't know what they look like."

    8. LFLuca Ferrari1:55:14

       Oh, yeah, yeah, yeah.

    9. DSDavid Senra1:55:15

       And I'm like, "How can you be a fan-

    10. LFLuca Ferrari1:55:16

        Now I remember. Yes. Yeah, yeah.

    11. DSDavid Senra1:55:17

        How can you be a fan of a sport and not know what the person looks like?

    12. LFLuca Ferrari1:55:21

        I wouldn't, I wouldn't say I'm a fan of the sport, but I know, I, I knew something about the sp- I'm a little bit of a, a geek for, uh, stats, numbers, um, um... And so yeah, uh, same for, for a lot of sports. Like, uh, for example, CrossFit, I don't practice CrossFit. I barely ever, I've, I've probably seen-

    13. DSDavid Senra1:55:43

        You don't watch the sports.

    14. LFLuca Ferrari1:55:45

        No, but I-

    15. DSDavid Senra1:55:45

        You study the data that comes off the sport.

    16. LFLuca Ferrari1:55:47

        But I will tell you-

    17. DSDavid Senra1:55:47

        That's what I'm trying to get to [laughs]

    18. LFLuca Ferrari1:55:49

        ... I will tell you that means to me she's the greatest CrossFit of all time. She probably won like eight CrossFit games. She only missed once when she was pregnant, I think, uh, a couple of years ago, and then she came back and won again. So I don't know, I just love to... the stats.

    19. DSDavid Senra1:56:01

        But you don't know what she looks like.

    20. LFLuca Ferrari1:56:03

        I-

    21. DSDavid Senra1:56:03

        If she's walking down the street, would you-

    22. LFLuca Ferrari1:56:05

        No, I, I don't think I've ever seen her. Uh, if I've seen her, it's maybe as I was Googling, I, I guess, the picture, but-

    23. DSDavid Senra1:56:10

        So help, help me understand this. So, like, this part of you, which is one of the most memorable things you've ever said to me, right? Where you have, like, this... You had a bunch of knowledge about these people. Like-

    24. LFLuca Ferrari1:56:18

        Mm

    25. DSDavid Senra1:56:18

        ... so clearly you, you retain these, these numbers. Are you running your business the same way?

    26. LFLuca Ferrari1:56:23

        I would say- I'm a strong believer in, in logic and rational-- I think logic and rationality properly defined are perfect. They're always good for you. I'm, uh, skeptical about numbers actually, meaning numbers can be very dangerous 'cause they are an, a, an approximation of reality, and if you take numbers at face value, if you're not, uh, sufficiently skeptical and inquisitive, you risk being misguided. So numbers are wonderful and very useful, but they need to be held with care. What we try to preach at Bending Spoons is there's never a decision that you have to make where being logical and rational isn't the optimal strategy, ever. No matter how quantifiable or unquantifiable the matter at hand is, you're gonna be as logical and as rational as you can. Whether you should be data-driven, uh, let's see. I mean, uh, some things are very clearly well-informed by numbers. Other things are probably... It's useful to bring numbers to the table, but they don't tell you everything. Some things are somewhat dangerous. For example, today we, we generate well over four, four, four million dollars in revenue per spooner. So we-

    27. DSDavid Senra1:57:36

        Four million dollars per revenue per employee.

    28. LFLuca Ferrari1:57:38

        Per, yeah, per, like, core team employee.

    29. DSDavid Senra1:57:40

        Yeah.

    30. LFLuca Ferrari1:57:40

        Like, um, so in, technically, we, and we pay some of the highest compensation in the markets where we operate because we wanna work with some of the best people. Um, and that's not the main thing, but we, we wanna make sure it, it doesn't become a thing. Like, we wanna want them to feel that they're highly valued and, and so that we focus on, on the, the things that are actually more e-exciting and, and motivating than, you know, the extra dollar. So pay needs to be high enough that, um, nobody forgets about it, but it's not front and center, let's say. Having said that, we, as, as is only natural, we don't wanna waste money and compensation if it doesn't bring better talent, right? I think I'm not saying anything shocking here. And so I remember having this discussion with some of my colleagues whether we should, uh, raise salaries or pay in general, and I was firmly of the opinion that we should, and we have, by the way, and we will further in the future. And, and someone suggested that we run a, an experiment, and that was, uh, we would, uh, put out their job descriptions with the higher salary number than we would typically pay at the company and see whether that would get us more applications, better applications, more conversion rates. I was in favor of running that experiment 'cause had we seen m-major uplifts, that would have very strongly supported the view that we should be increasing salaries. But I told the team before we ran the experiment that I thought even if we didn't see any uplift, I would still be of the opinion that we should raise salaries. And the reason why I, I, I believe so is that I think that the people who c-click on a job ad and actually then decide what to do is actually a, a fraction of the people, uh, that could be clicking on that ad. And, uh, and by the way, a lot of those people will have already decided whether they're inclined to apply or they're just curious. And if you look at conversion from a piece of information you're, you're changing so late in the funnel, essentially, and running an experiment that's gonna last two months, you're gonna fail to observe all the compounding effects of you establishing a reputation as an extremely high-paying company. Those will never show up immediately. You need people to spread the word at universities and workplaces. You need to start showing up in the job boards. As you know, there are websites comparing.

Episode duration: 2:01:28