Luca Ferrari: The Operating System Behind Bending Spoons

Luca Ferrari (0:00)

I think people will be surprised by how poorly graduating from Harvard or Stanford predicts performance. Like people think, oh, you must be a genius. No, actually, yeah, you're probably a little bit stronger than people graduating in other universities, but not so much stronger.

And often we find that people tend to lose some of that potential raw talent edge by being a bit more entitled and thinking too highly of themselves.

Brian Halligan (0:44)

Okay, today we have Luca Ferrari on. I wanted him to have him on for a long time because he runs Bending Spoons, which is this fascinating company. It's like a little bit of a private equity roll up company, but it's really a tech platform company and it's unique. I can't find any other company that sort of rhymes with it. He is very unique in the way he thinks, in the way he builds, in the way he CEOs. Hope you like it.

Okay, Luca, welcome to Long Strange Trip. Thanks for coming on.

Luca Ferrari (1:12)

Thank you for having me. My pleasure.

Brian Halligan (1:14)

Okay. I think by this point, most of the listeners have heard of Bending Spoons, but I doubt they understand the model in what the magic is.

If you wouldn't mind educating us like two, three minutes on how it works and what's special about it.

Luca Ferrari (1:31)

Yeah, sure. The entire thesis on which the company is built is that, if we can build a machine, a system whereby we can operate digital technology businesses better than almost anybody else, then we are pretty much guaranteed to be able to compound capital efficiently for a very long time through acquisitions. The reason is that if a lot of businesses are basically better off once they're integrated into the system, what we call our platform, then being operated as standalone companies by someone else, then we should be able to offer prices to people that are appealing, and so they will sell their businesses to us and we still deliver a high return for shareholders. So that's the thinking behind it. Of course, the difficult part is to build that system, that platform so that we can operate businesses better than almost anybody else, and that's what we have poured our hearts and minds for into over the past, well, 13 years technically. So we have tried to have an amazing team of people, strong culture, powerful proprietary technologies, lots of proprietary data. What we do, we buy these businesses, we integrate them very deeply into this platform. So we have a shared R&D, marketing, DNA team that can fluidly move across all of our businesses. We basically re-platform the acquired businesses so that they based on the same technological foundation. We, as an investor at some point, called it an operating system. I think it's a pretty apt comparison or metaphor.

And then we transform them pretty deeply so we can rebuild the org, rewrite big chunks of the code base, re-acquire the cloud infrastructure. We try to launch useful new features, fix bugs, improve performance. We think when it's decision and marketing. So there is a serial acquire component that you will find in private equity, you'll find in companies like Berkshire Hathaway or Transdine. The big difference certainly vis-a-vis private equity is that we are not a fund, we buy off our balance sheet, we have never sold a material business, we don't intend to sell one in the future.

We buy to hold and operate forever. The other very big difference is definitely vis-a-vis private equity, but also certainly the Berkshire of the world is that we transform these businesses pretty deeply and we integrate them all together. So they're much simplified, a bit like they go from being a company to being a product installed on the same foundation basically. So that's the model and we've been doing it for 13 years at this point.

Brian Halligan (4:07)

Yeah, it's going remarkably well. You went public. What's roughly the market cap?

Luca Ferrari (4:13)

At the time of IPO a few months ago, $18 billion, I think, equity value.

Brian Halligan (4:19)

Congratulations. I'm a huge fan of the model. It's really unique. I was comparing it in my head to Berkshire Hathaway, but when I was in my 20s, I worked for a US company called PTC and they moved me to Japan to set up the Japanese operations when I was very young. My office was inside of Mitsubishi headquarters. I dealt with Mitsubishi headquarters people, but all the different divisions. It feels more like Mitsubishi or Samsung than it does some big PE firm or Berkshire.

How would you describe it?

Luca Ferrari (4:56)