This EU Firm Made Billions Buying Up Forgotten Tech

SPEAKER_1 (0:01)

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Ed Elson (0:38)

Hey guys, it's Ed. Just so you know, we recorded this conversation live on Substack last week. So if you would like to catch the next live stream and tune in in real time, make sure to head over to profgmedia.com where you can subscribe, and I'll see you on the next live stream.

Welcome to the Prof G Markets Founder Series.

What do you do with a software company that was once a household name but has fallen on hard times? Our next guest has built a business around answering that question. His company acquires struggling businesses like Vimeo, like AOL, Airtable, and Eventbrite with the goal of overhauling how they operate, cutting costs, and making them profitable again. And over the summer, this company went public on the NASDAQ at evaluation of more than $18 billion, with the stock jumping 40% on its first day of trading. That IPO turned what was once a relatively obscure Italian company into a public market story that investors around the world were suddenly paying attention to. So we wanted to understand how this model actually works, what the company does to turn the struggling software businesses around, and what it's like to take this strategy from a private company to a public one. This is my conversation with Luca Ferrari, the co-founder and CEO of Bending Spoons. Luca, thank you so much for joining us on this episode of the Prof G Markets Founder Series. I'd like to start at the very beginning in 2013, where you're not actually in Italy, you're actually in Copenhagen, you're in Denmark. And that's where Bending Spoons begins. Tell us the origin story of this company.

Luca Ferrari (2:29)

Very few people know this, but with my co-founders, almost the same people, we launched Startup in 2010, also in Copenhagen.

We were using AI, clearly too early, to automatically write diaries for people. And we did that for three years, raised a million dollars and failed miserably. We couldn't make it scale. Although I'm pretty proud of the product we built, but sometimes that's not enough. And so on the ashes of that company, we were left with about $40,000. The VC who had given us the money basically sold their shares back to us for a nominal $1. And they apparently appreciated. We worked hard and being honest, and they didn't want to go through the liquidation process. And we ended up liquidating the company ourselves and basically got those $40,000 out of it almost completely.

And that was the seed capital for Bending Spoons. So that's 2013, again, Copenhagen. Moved the company to Italy about a year later, but that's where we were at the time. And the strategy we're still running these days and the key insights behind it, for the most part, had originated from that failure. Obviously, you get smarter in time, but most of it was in place back then.

Ed Elson (3:45)

So you had a tech company, you say an AI company, I would assume that they're calling it machine learning back then. I assume that there was not a lot of hype around that sector. That's obviously changed.

It doesn't work. Then you have $40,000 left over, which you take out of that to start this other company called Bending Spoons. What actually was the idea behind Bending Spoons? And also, I think people probably want to know, what's with this name, Bending Spoons?

Luca Ferrari (4:13)

So over those first three years of that failed startup, we saw our skills in engineering, marketing, product design improve tremendously. Obviously, we didn't feel we were anywhere near world class, but certainly much better. And so we thought, okay, if we work on this skill set and other relevant skills and build our own tools, we should be able to get to world class levels at some point.

And at the same time, we saw that finding product market fit, going from zero to one, so to say, seemed to require a lot of stars to align because we met so many startup teams where people worked really hard and we thought they were brilliant and still couldn't make it work. And sometimes in other cases, it did work. And so we figured we should be able to find people who are maybe tired of running a business or maybe they don't have the skills to go from one to 10, who will sell to us. And if you're really, really good at doing this, we should be able to pay a price that's appealing to them and still be able to create enough value to generate strong returns and be able to compound capital efficiently. So those were the relatively simplistic ideas we had back then. And because we knew we were going to grow a vast, hopefully vast portfolio, diversified portfolio, different products, we had to find a name for the company that wasn't related to the particular product. And so one of my co-founders, Matteo, is a big fan of the movie The Matrix. And I think he had watched it the night prior or something. And in the morning, he came all excited and said, we should call the company Bending Spoons, inspired by, there is this scene in the movie of a little guy bending a spoon with his mind supposedly. And we liked it because it reminds us of, the mind is powerful. If you set your mind to something, maybe you can do the seemingly impossible. So we just found it kind of inspirational.