Luca Ferrari: Scaling to 500M Downloads, $360M in Reported 2023 Sales and a $2.55BN Valuation |E1127

0:00 the moment you think you're very smart the likelihood that you make very dumb mistakes skyrockets in my opinion we let others seek Market fit and then we if they will sell it to us we will acquire their company and try to make it even better than they they have made it up to that point the reason why we we took that route I think is precisely because we crashed and burned by being arrogant in thinking we knew what the market

0:23 would want and we could build it for them Luka I am so excited for this I think bending spoons is one of the coolest stories that uh we've seen in recent times in startup land so first thank you so much for joining me thank you for having me it's a pleasure I would love to start with a little bit of context what would your parents and your teachers have said about the young Luca growing up how would they have described

0:47 you well parents are probably not a good uh a good source it seems to me they tend to be biased uh I would say my teachers probably would say that I was incredibly shy some may even say I was pathologically shy uh weird I think they was probably probably weird and gentle I think I was considerate kind of very careful not to hurt people's feelings yeah probably

1:17 those three I would have been described as weird too can did you feel like an outsider when you were growing up I I didn't have many friends at school and it shaped a lot of how I do what I do yeah probably I really wanted to to to make friends I couldn't for the first probably 10 or 12 years of my life yeah I would say 10 years uh I major struggles socially um not that I'm

1:40 incredibly well versed with the socializing these days but I definitely improved a lot um so yeah I guess you could say an outsider but an outsider who wanted to be an Insider who was an outsider because he was incompetent uh at uh being part of uh you know of of people's groups sorry for this weird tangent did you would you say you've become an Insider or you just accepted being an outsider no I think I I had

2:09 different phases so I was by you know your definition I was really an outsider initially who really wanted to be an Insider then I became you know kind of average so make it an Insider like I started having friends and being invited to to doing things with others and then As I Grew Older particularly the last five or six years I think I've become a little bit more of an outsider again uh mostly because I find my bandwidth and

2:39 my patience uh have become more limited or perhaps I've been tested more aggressively and so I learned to build more walls and more protections one of your friends told me one of your points for improvement could be a willingness to accept more dinners and social events so maybe they were maybe they were on to something uh I would love to start I heard that you you were at McKenzie and you were essentially sharing your salary with

3:07 your co-founders to fund the early days of bending spoons can you just take me to that and those early days of bending spoons like tell me a little bit about that yeah that's that's almost true but I would say it wasn't Ben spons it was another company called um evertale which I founded before funding men spoon it only lasted for about two and a half years so that was a failed startup pretty you know by the book failure um

3:34 and um and I had two I had two co-founders there and all three of us also you know founded bending SPS plus two other people can I just jump in and ask I didn't know that what did you learn from the failing of that company I think we learn a lot from failings what did you learn from that failing oh well many things I I would probably say two in particular one is the importance of building a good team we were at the time

3:59 we were qu quite naive and superficial in that regard um and we got lucky with some people but overall I think we were pretty uh unsophisticated and the second one was to be very thoughtful as to what you build or more broadly what you do and why I feel we we had this idea and we just thought we were right and arrogantly got into execution mode and of course we crashed and burned um and you know you can still Crash and Burn

4:28 even if you're thoughtful but but your odds are better so I would say we learn to be more um to do our homework a lot more and iterate more and faster and how did bending spoons come to be then so this company failed and the three of you went and go hm what now yeah so connecting to your previous question uh so the three of us we started it um we didn't have any money um so we had this agreement

4:55 whereby we all all three of us would look for a job and then whoever got the most job would uh work and pay for food and rent and the others would work fulltime and then once we we get uh an investment or some sort of a you know ability to do without the financing from the person working you know that this person would join full-time so I I ended up getting this offer from McKenzie which I took I told them before

5:20 accepting that you know or as I accepted that I meant to work and start up uh part-time and then resign as soon as we hopefully got this investment and they I thought it would basically kick me in the in the ass and tell me to go away but they were great actually they told me this is awesome I we love the ambition and sure you know this works for us and so I worked there for about a

5:42 year I think a year and three months give or take um and then I was working uh nights and weekends in my vacation also on uh on evertale I I like to joke that once I joined full-time I made it fail very quickly and then uh we immediately pretty much uh started bending spoon uh right there and then on the ashes of of that startup can I ask what was the Insight with bending spoons it was a

6:09 straight off transition to finding bending spoons what did you believe what did you see what was that opportunity set with every T we went the usual path you have an idea for a product you focus on building that you hope it you know it uh finds say they fit with the market it grows and you're successful and the rest follows we we took the opposite direction as in we focus on building a platform of Technologies knoow company

6:34 culture uh employer brand fully optimized not for launching a product or specifically a technology product because that's that's what you know we love doing but acquiring a product that has shown fit with the market but where we feel there is a some you know substantial U untp potential and then we we work to try to unlock that additional potential so that's a very different approach Ro we let others seek Market fit and then we if they will sell it to

7:05 us we will acquire their company and or you know um product and try to make it even better than they they have made it up to that point the reason why we we took that route I think is precisely because we crashed and burned by being arrogant in thinking we knew what the market would want and we could build it for them and it turned out we were wrong uh and so we we decided to see

7:31 whether a different direction was more efficient for us can I ask a weird question which is how do you determine what has product Market fit or enough signal to be interesting because things can be volatile things can be transient short-term how do you determine whether an asset has enough signal to be interesting to partner with the assessment process is fairly more method is fairly sophisticated but you know the very simple way of summarizing it is to say

8:01 we like a user base a customer base a recognizable brand or uh good positioning in a distribution Channel That's the short of it what was the first product and how did you acquire it given you didn't have funding or money the the company we funded it with around $40,000 which was the leftover uh capital from evertale and then the venture capital for uh at the time prefer to sell their the

8:33 money would have been theirs cuz they had uh liquidation preferences it's be pretty typical for a BC deal but they for them it was more of the hassle of going through the liquidation process for $40,000 and paying for lawyers and all that and so they sold their shares to us for I don't know a Euro I think or something and then we liquidated every tail and then we founded with a different group of people as I mentioned

8:57 the same three founders plus two employees we had at evertale we found at Benny spoons um the first product wasn't AC wasn't an acquisition I think the first two or three were not were very simple apps uh the first one I remember CU I coded it myself with one of my co-founder co-founders I think it was called fony uh it's not it's not it it hasn't been on the app store for like probably almost 10 years um uh but um it

9:24 was a very basic Font app we built it in like a few days and you know neither of of us was an expert software engineer so long story short I think we made around $10,000 in alltime revenues from that s app uh launched another one or two maybe one slightly more successful maybe made $100,000 from it but soon enough we uh made our first acquisition I think early 2014 so we're talking maybe six or seven months into the the startup at the time

9:54 and it was for a keyboard app uh paid $155,000 for it um and uh we managed to make it grow a little bit and then I reinvested the proceeds into building you know team and learning a few more things and building some in-house tools bought a new a new slightly more know high potential larger app and you know R and repeat compounding all those things over a decade now I mean we're going for 11 years in a few months we've gotten to

10:24 a much bigger scale Luka when did you know that you had something when did you sit down with your other two co-founders and go hm this is working we have enough signal yeah it's a good question I so on the one hand we were pretty confident early on but it was mostly based on some observation and first principles we didn't have a track record uh on the other hand I tend to be paranoid by Nature so I always second

10:49 guess myself and and wonder if there isn't some huge risk lurking the Shadows so I I don't know I'm never not even today am I massively confident so I think our level at least my level of confidence I can't really say for the others but has more or less remained between uh you know decent and good but it was never super high or super low for for the whole of this decade do you think that's a European mindset and I

11:15 don't mean that rudely LCA but I spend so much time with you know us Founders and it's just we're going to dominate from day one we're going to change the world it's all going to work do you think that's an inherently European mindset of being much more even so I don't I would say the level of ambition has been wild since the beginning we pretty much day one I remember I was sending emails to people we wanted to

11:38 hire and we were claiming our and it was really honestly so that our goal was to build one of the best companies of all time one of the largest most admired and positively envied this was when we had nothing okay so that was I mean of course ambition is quite subjective at least from my perspective as high a level of ambition almost as you can have so we didn't lack ition but yes maybe we were not bullish about our ability to

12:03 together there uh which might be European trade I'm not sure I really don't have a benchmark in terms of the bootstrapping nature why did you decide to bootstrap you were three very smart guys I'm sure you could have raised why did you in those kind of in between periods 2014 20 to 2019 why did you not raise so I don't know we could have I guess you can always raise but I don't know that we could have at sufficiently

12:28 appealing terms consider that we founded the company well we we founded it in Copenhagen Denmark but we moved it to Italy pretty soon after um and so we were three people with a failed startup behind us uh building a technology company in Italy which had a negligible VC scene and attracted absolutely no interest from International Venture Capital firms um with a strategy that was as far as I can tell unheard of to

13:00 this day I don't really have a comparable company I mean there are of course you can come up with examples but nothing that's really spot on like what exactly what we do and so we felt our likelihood of attracting Capital at sufficiently appealing terms was very low to this you have to add we really wanted to build this for with a multi- deade decade View and we felt that it was quite dangerous to relinquish control so early uh of course we would

13:26 have done it had the terms being sufficiently appealing or but and lastly we could afford not to I mean that's a big factor if you if you are building a business that's losing money and you expect it to lose money for for a while then there's no other way right we for better worse we had a model that uh you know maybe was more it's not the fastest growing model we never grew by 300% in a

13:47 year ever you know like so it was more uh of steady Pace uh on the flip side we were cash flow positive early on at least you know we made it so and so we could afford that to raise luuka how would you respond to me saying it's like a PE model buying kind of distressed assets potentially turning them around and having a rollup play is that wrong I would say yes uh but again it depends on

14:15 the level of depth and sophistication one is looking to categorize us with um and I would say the main differences are we private equities typically they focus on on you know Finding sufficiently cheap financing and then making some relatively high level improvements uh and then make a profit a few years down the line in our case we uh are incredibly Hands-On so unlike a private Equity we generally rewrite the

14:47 whole software or at least the most critical parts of the of the code base we completely changed the it architecture we uh redesign the user experience and the user interface uh we add lots of of features remove other features revise uh the marketing and monetization dramatically so you could say we almost it's almost like as if we built a product to launch it but we do so on the foundation of an existing customer base or brand so incredibly

15:14 hands on in fact if you look at us you know a private equity in their team they will have the almost all of the people will be you know in investment managers for lack of better word in our case out of 400 people at least 300 are software Engineers AI researchers data analyst data scientist a product manager so we are a product and technology company operationally speak speaking but we do have a second soul and it's the capital

15:42 allocation Soul which is the soul of a private Equity so we're I think we're hybrid it's almost like a private Equity at a baby baby with Google or something like that you know that's the closest metaphor I can come up with I by the way we don't acquire we don't necessarily acquire distressed ass it's I know that people some people have characterized it that way after Evernote because Evernote some people thought would qualify as such but we have acquired a lot of

16:07 products that were on the way up some that were flat some that were on the way down we really don't have an opinion in that regard just we just need the price to be right and the opportunity to improve the product to be significant enough can I ask you in terms of capital allocation how does Capital allocation and bending spoons work because you have you know several different products um you know Meetup you have evote you have

16:28 reminy you have have a lot how does that work is it like cash sits in topco and then is allocated by you into sub products I'm just intrigued yeah the yeah the cash is managed at the top company level yes uh not just that all resources also or our team team members uh know we we're very fluid in that regard um the the principle is simply to apply our resources to the next most valuable opportunity so in other words

16:59 we will ask ourselves the question if we were to allocate our resources both capital and and the talent we have available uh to this product or that product based on the backlog of ideas we have to improve the product and the marketing of the product where would these resources unlock the most value on a per unit basis um and of course that's an assessment that remains um fairly noisy it's not that you you know you have it very precise but uh that is the

17:26 principle we try to implement in practice do you have a kill projects yeah yeah absolutely um if we feel that it's not working I remember one particularly we built a few years ago that cost us a lot I think we invested uh six or seven million dollars in it and we we we completely eliminated it whoa whoa talk to me about that that's unbelievable yeah yeah uh so that was um prob four years ago you were take it was

17:53 called play on and the vision was to build a kind of a Netflix of mobile games so Netflix not not in the sense of streaming but in the sense of uh you pay one subscription you have unlimited access to basically as much content as you can possibly consume uh at least that was the vision and we we built a team we licensed uh many games 50 to 100 games some of which pretty significant games on mobile uh the licensing was

18:24 quite expensive uh and we built an app to for the user to be able to subscribe and then access to the the library of games and uh and uh we really thought it would be that's exactly case of us thinking okay this is this cannot possibly fail because it's such a good deal there's plenty of players spending hundreds of dollars a month to try many many different games uh most of which are pay up front you don't even know if you like

18:51 it in the end and we only ask for you know we had different price points and we tested those sort of things but you know even the most expensive month is subscription was maybe $10 or12 so relatively inexpensive for someone who looks to play maybe at 1 hour per day that's a very good uh value for money and but it never flew I mean the kpi were terrible we could never make it work and then roughly at the same time

19:13 Apple released uh Apple arcade which uh is almost the same thing and we were like oh my God this is so unlucky but you know what I think it really didn't play a role in our product failing I think arcade is not a great success either no it's not but what did you learn from that failing I'm intrigued again there well I think it reinforced the lesson we had with the the ever tale startup I mentioned earlier that um you have to at

19:41 least we we we feel we have to be intellectually humble when it comes to our ability to predict what the market will want particularly when it comes to very new things you know if you're replicating say something that works in the US and you do the same in Germany I think you can be more uh sure that it will work still not certain but uh it's more likely to succeed but if it's something very new and at the time to my knowledge what I

20:09 just described was unique and I'm sure someone will have seen something similar and I'll claim uh I'm uninformed but based on our research at the time there was nothing uh like it uh certainly not a mobile and and so when it's something so new the likelihood that you are uh delusion know as to the chances of success is pretty high so I always suggest lower the odds in your equation assume you're being positively biased War your idea uh the truth is probably

20:40 worse than you think it is I love that um can I ask you then if we switch tax because that's like creation of a product and again thinking that you can create product Market fit with a new one if we then switch I'm sorry you must be really [ __ ] bored of hearing it but then you switch to ever node which is a very well-known brand and a very significant customer base what was the thingy around that acquisition because I

21:04 just call a spade a spade people were like that's a turnaround of brand is going down and declining but you saw value there can you talk to me what you saw that others didn't and how you thought about that acquisition well I I don't know what others saw in it or didn't see in it but we we thought we could uh improve the product monetize it more efficiently and also run the compan more efficiently in terms of costs so we felt all three uh

21:33 levers were offered a little bit of space for improvement um I so very excited to to acquire it and work on it it's also I won't deny it it's it's it's especially exciting when you get to as a tech person you know someone who's loved uh working on digital technology products for now almost 14 years it's particularly exciting to exciting to be able to work on something that is so relevant sometimes people have uh

22:03 characterized every note as as you said kind of uh on a deine and it can be true in some ways but it's still as used or more used than a lot other brands that people think are more successful or cooler and I I don't want to name names but every know is very important I mean there are millions of people who have built their professional workflows on it use it every single day and have thousands upon thousands of

22:32 notes um so it was very motivating for us to be able to at least try to make it better and I think we we have we've done the team I haven't done much but the team has done a lot of work in that regard in just one year how do you think about pricing these assets because you know I'm in early stage V where we all lie and say that price doesn't matter where it still does matter by the way

22:51 but price really matters when you're you how do you price these assets the theory is simple now applying it successfully is difficult but the theory is that you try to project in our case well before you were asking me how are you different from a private equity and I said the biggest difference is that we are incredibly Hands-On product technology operators so it's not just a financial play the other big difference is that we acquire to hold forever we never sell I

23:21 willon say it will never happen it may occasionally but it's it's never happened to any of our significant assets and so we we buy to came for potentially decades and so the the way we value these assets is consistent with this we now speculate as a private Equity typically would on what the you know price earnings multiples or eida multiples could be once I sell it in four years you know um we literally just look at um free cash flows so we project

23:49 free cash flows for as far in the future as we can discount them uh and so it's an irr MPV calculation uh that informs our willingness to pay a certain price now again that's Financial Theory that's pretty straightforward the difficult part is how do you project that accurately that is devilishly difficult of course and the hard thing is you've got to make the seller want to sell at the price and actually you know it's like secondaries today which is

24:17 there's a big Chasm between what what the buyer willing to pay and what the sell is willing to sell at how do you find seller response to your pricing analysis so we we don't really convince anybody to I I think people are these people are always adults generally highly competent intelligent professionals who have their own clear view of value what we try to do is be quick uh and decisive in determining our price we try to make an offer that's not

24:46 a bluff it's an actual you know very good offer and close to the maximum we are reasonably willing to offer and then they decide I mean we if if they don't like it we we walk away but historically uh we have never lost a process meaning every single time there was willingness to sell and we had a chance to bid because sometimes you don't get to know about the opportunity and you only hear about it after uh the

25:14 deal is done every single time to my knowledge our offer ended up being the highest um and I think the reason is well one reason could be we're terrible negotiators uh another reason is we because of our model and being so operationally involved and trying to improve the product the operations the marketing demonetization everything so deeply it's a lot of work it doesn't uh you don't scale it as quickly as buying just from a financial

25:46 point of view would but you can unlock more efficiencies and therefore you can offer a better price in terms of I'm I'm a venture investor for my sins I quite enjoy Financial engineering when you think about like the the weight of capital how do you finance the Acquisitions is it on like raised Capital now obviously you've raised is it on debt Capital that then you have like you very low cost of capital on how do you think about efficient use of cash

26:09 for Acquisitions so that certainly it's pretty you know Common Playbook uh equity for sure most of it has been uh retained earnings we have raised I think a remarkably little Equity relative to our financials and our valuation um so that has helped but really up until ever note included which is a year ago I can on first approximation I can say that all

26:41 what we have done we have done through our own earnings and debt when we raised we hadii prior to Evernote we had raised a little bit of equity but it was almost immaterial in the ground scheme of things now more recently we have raised more Equity uh roughly um $200 million over the past 10 months um but again I think most of it is our own cash flows and and that when you think about the deals that you've done

27:11 without sing back have you mispriced any and in the ones that you mispriced or misjudged what did you not see that you should have seen or would like to have seen there hasn't been a single one we have priced correctly thankfully we have made uh mistakes in both directions so sometimes things went better than we thought sometimes they they went less well um I think the more probably the most significant problem or or error we've made in particularly from the let's say

27:39 the downside negative point of view has been to project future rates of user acquisition too optimistically of all the important kpis and determining the success of a product an internet product at least um I would say rate of user acquisition is the hardest to project accurately by a huge margin at least in our experience and based on what we know today so at

28:10 least once it's happened multiple times at least once we were way too optimistic with that and the ultimately the returns from the acquisition turned out to be much much worse than uh we had anticipated why is rate of user acquisition so tough I'm sorry to ask but they T they tend to be quite bait down sets you've got got historical data you've got very bait customer acquisition channels why is it so variable and volatile to predict few

28:35 factors one is it depends on more drivers than other key um let's say inputs to the success of a product and these drivers tend to be outside of your control more than than drivers the hard behind other other key key factors and so the combination of more basically if it's an equation you have more variables uh and you control them less

29:06 and so your ability to then uh Force the future the direction you want it to go is lower so when you make a mistake there you generally you don't have a a an opportunity to to fix it um whereas in other cases maybe you thought something you could you could something um and you thought it would be easier it turns out to be harder but you can go the extra mile allocate a few more resources somehow you get there but if uh the rate

29:39 at which you're acquiring users isn't where it needs to be often there isn't much you can do uh I mean you can spend more in advertising but uh you're going to lose money uh otherwise you would be spending it already right so the problem is you can't find ways of acquiring users efficiently and that has to be the end of it uh you just just accept the trajectory do you find scale Network effects and what I mean by that is given

30:02 the portfolio of products there's cross promotion referrals the ability to increase On's distri not a factor not a factor no at least maybe it's because we we we we have failed to to leverage it but um in our case no no value coming from that in the one that worked out really well what were the lessons from that we spoke about kind of the challenge of predicting us acquisition in the one that went to the upside what

30:31 was the lesson from that yeah there there are some small tactical lessons I I don't think they're even that interesting but the the the bigger lesson I don't I don't teach it I think you know Warren Buffett teaches it and other great investors is acknowledging the incredibly high level of unpredictability of some of this and bake in appropriate uh safeguards particularly a sufficiently large margin of safety so when you are wrong as long as you're not

31:00 massively wrong you it doesn't destroy you maybe you won't be happy with that investment but it doesn't destroy you entirely and you can move on to you know live to fight another day as they say how do you build margins of safety is that in diversification of product lines is that in pricing well that helps yeah probably want to do it both on the individual let's say capital allocations for example and acquisition but the same Concepts would work if you allocate

31:24 capital in R&D marketing because you know that's that that is still cash it's no less real than if you buy a company so you probably want to bake in a good margin safety as you do that and then naturally if you if you have a broader portfolio of initiatives whether it's multiple products like we do or you know multiple R&D projects then you further projected um statistics are are on your side but risk risk assessment and

31:53 mitigation is a fairly complex topic I think it we could talk about it for hours but I think that's the high level concept that I would recommend uh following what do you know about risk and risk mitigation today that you wish You' known 10 years ago well again the bigger lesson is assume you're not as smart as you think you are that is the more that that's probably the most valuable the issue here is that most

32:18 people who end up making significant Capital allocation calls generally those people tend to they wouldn't be there if they hadn't been somewhat Successful by most measures um sometimes you know acade academically and then professionally but at least professionally right otherwise it's unlikely to imagine that someone would be managing $50 billion do or you know a scale up worth billions and so if that's the case uh it's very easy

32:50 to think too highly of yourself and that is very dangerous the moment you think you're very smart the likelihood that you make very dumb mistakes skyrockets in my opinion so now you need to retain a little bit of self-confidence otherwise you won't make any moves but I think a healthy level of the second guessing yourself uh assuming you're biased in favor of your ideas um uh that you're lazy and don't want to

33:20 look into a certain risk factor because you know it's going to take you 50 hours of grinding through benchmarks and analyzing data that you should assume that's a case and adjust your aim uh accordingly LCA when did you take too much risk on an asset too much that you shouldn't have taken it's difficult in hindsight you know it's it's like if you play a hand of Poker it's quite dangerous to assess whether you played it well based

33:46 on the results um so I'm thinking based on what I knew at the time and what I could have possibly known yeah I think we we did buy I mean maybe multiple times one that's obvious to me we did buy this this app I'd rather not mention it by name but um a pretty significant product we made the mistake I mentioned earlier so we we were quite bullish that our projections of user acquisition rates were conservative and I think we were a

34:17 little bit lazy in really studying the underlying factors driving user acquisition historically we just looked at it in Aggregate and uh bit naively had we done our homework more thoroughly I think we would have spotted that some of the underlying factors were waning and dropping quickly and that consequently the rate of user acquisition was likely to to shrink uh faster than we had anticipated because we had actually projected it to decline but not nearly

34:50 fast enough and so you know um that's certainly a case where I feel I'm not very proud of the way we handled ourselves I think we did a mediocre job there did it change how you do it like did you review the process every year or so we we try to spend an hour reminiscing that particular situation like a a repeated retrospective we have diss dissected our mistakes at now so it's not that we're going to learn

35:19 anything new but I think it's healthy to remind yourself just how lazy and dumb you were at some point so you don't assume you have become hardworking and smart all over sudden I did love your humility um can I ask you on the flip side was there a time when you didn't take enough risk and you're like come on Luca you should have done more that we could have been more aggressive I think so yeah I think it's probably one of my

35:40 greatest shortcomings as an entrepreneur and U and manager I feel I I'm too concerned scared even of disappointing others colleagues investors and and as such I believe we have waited a little bit too long to raise Capital we've waited a little bit too long to push on the you know on the accelerator to implement our strategy at the fastest speed we were capable of I feel our

36:12 level of caution has been generally speaking excessive uh and uh I think had we been more aggressive we would have made more mistakes but overall I believe we would have created more value for our share owners our colleagues you can't really AB test life and so maybe it's not the case uh who knows but that that's my reading hindsight do you care unfortunately yes that's the second it's part of the I was just mentioning I'm too concerned about disappointing others

36:42 I think it's basically that I well I thought about this quite a lot I don't think I want others to think highly of me I I don't think I'm egocentric in that way but it really bothers me if they hate me or think poorly of me so it's more like the the downside that I or the negative end of the strum that really annoys me or or or frustrates me the I don't necessarily seek to be on the

37:06 other end of the spectrum and be ple and praised but but I hate it when they really don't like me and that's a major handicap in in my role if you many of the best CEOs they don't give a [ __ ] to to a to a to a fault even um I think it's a superpower to have I've tried to be more resilient emotional in that regard over time I've gotten more fatalistic can you grow a thicker skin you know

37:29 when you get criticized a lot then at some point you either die or or or give up or grow a thicker skin so I've been able to grow a thicker skin but that's an issue for sure for me I was walking in the park with a friend of mine who's the found of a 20 billion business and I was moaning about something and he was like Harry shut up your job is to get punched in the face 50 times a year and

37:52 just get up every time that that's life as an entrepreneur like get on with it my question to you is what do you tell yourself when you do get punched when you do get that hit down what does that voice in your head say well I think I'm um very s self-critical to to a point where maybe it's unhealthy um I wouldn't recommend that necessarily to others but I I don't I don't think it's part of my character to

38:19 to give up now at least in the situations have been so far because there's always something harder and maybe there's a point where you break down but and I I know I I don't think I can claim to have to have gone through you know the truly difficult things in life that some people have to go through my my challenges have been business related which I find are frankly luxury problems to have it's almost uh I've

38:42 been you know I've been in a situation where I was complaining to particularly to other people in similar roles and then in Hinds like you were just uh telling about you and your friend and but in hindsight I think it's irritating that people like you and I complain about these sort of things cuz we really are privileged I mean come on we we were born and raised in somewhat affluent countries and and clearly had a chance to to try our hand

39:08 at at things that are certainly not um not terrible I mean it's a privilege to be able to do what at least what I do I think you probably feel the same way about what you do so maybe we should just uh we should probably just take a step back and have a laugh you know the real problems in life are not these ones absolutely not the life of Aventure capitalist is brutal Luka we we are

39:34 positively uh suppressed as as a class of people uh no I I completely I completely agree with you um my grandfather I found out earned like7 pound an hour shoveling gravel on a golf course at 82 and I was like you know what a little bit of um perspective is important I I want to touch on and there's worse than that I mean that's a thing that's not even as as bad as it gets you know so um anyway I think we

40:02 agree I I do want to touch on the people around you because so many people told me about the talent density that you built and you mentioned before to me about talent and motivation density it's quite a specific use of words actually it's not like oh we have great people what did you mean by talent and motivation density yeah I I think so we we built a framework internally to describe exactly the sort of things um

40:27 but the short of it is that three important components are Talent which is how good you can be in our definition I'm not saying this is you know kind of a standard definition then there is experience which is the the exposure cumulative exposure to relevant experiences which will help you based on your talent uh unlock your potential and then there's motivation which is kind of a multiplier Factor goes going from zero let's say to

40:57 uh to one where based on how much you care to be great in that particular context you'll do better or worse within the range determined by your talent and and experience it's a trade-off when you hire people you can say I want to hire for experience Talent motivation you can but um you're going to do worse at any one of these than if you focus on just one or two in our case we chose to focus

41:23 on talent and motivation uh almost entirely disregarding experience uh because we experience we can provide Talent we can't motivation we we can try to create the conditions for it but you don't change what what someone wants and cares about and and this is the way in the long term we have the best team we can let's just unpack this like Talent what what does that mean and how do you test for it is it raw skills and how do

41:50 you test for them we we try to test people as much as possible PR ially and measurably we have come to to be wary of interviews at least the more traditional and structured interview where the interviewer will just ask a bunch of questions and then tell you how they feel about the candidate we Fel we we discovered that is not a good predictor and so we try to have practical tests or releas tests that simulate or require the

42:21 underlying abilities that the actual job will require and we try to go more toward General problem solving abilities than as I said before acquired knowledge so we're fine to have someone who doesn't know the things as yet as long as they show us that they have the work ethic or the the ability to learn the right uh teamwork and mentality to to then be great at our company so that's talent

42:51 motivation how do you test motivation you need to try to understand uh what triggers the person in a good way what are the factors which when present Drive the person to really give their best with recruiting like I I should say everything in life the goal is not to be perfect it's just to be less bad and so it's not that we are great and all of a sudden can predict get people to to be as motivated as possible we just aim to

43:21 be a little bit better than most companies are a little bit better than we were yesterday uh and I think we have improved substantially but it's still wildly um inaccurate our prediction but better and that that's worth something what have been the biggest mistakes you've made in Talent identification and hiring yeah I mean many too many to count but I would say broadly speaking the biggest one was to assign too much weight to experience in that in that tradeoff I mentioned

43:52 earlier ultimately if you assign a lot of value to experience to get someone who's more valuable immediately or early on but then because you you've had to trade to trade talent and motivation potential off for more experience you'll have a lower level of contribution in the long run and so we and we saw that quite clearly um we heard multiple experienced people which are not to be absolutely amazing it's not you know it's just on

44:23 average that I think we did that a little bit too much but we have since adjust their our our aim accordingly in terms of density how important is it for you that people are together that there's a physical collocation yeah huge topic I I don't know I we have seen that um working together physically tends to drive uh well I won't say tends to drive tends to correlate with the higher perform levels of performance it's really hard to tell whether that's

44:54 because people are in the same place on on site or it's a consequence of the fact that people who are intrinsically more motivated about working at the company or doing what they do they also want to be with others because if you really care you typically tend to want to be where the action is and so it's simply that it s selected that sample I don't really know but we have incredibly High performers who work remotely all

45:19 the time too it's just on average slightly less probable our decision has been to fully support remote work um because we you know we get to attract Talent from a broader pool of candidates and again we do have some of our best performers are working almost entirely remotely or completely remotely but we do pay a price for that it's not clearcut I when a company decides to only do on site I don't feel I can say it's a stupid move I don't

45:48 have I don't have enough information I could see how that could ultimately prove to be the right move for us it's kind of TOS of a coin we're not sure so we we just keep all options open and again we're very happy with our remote colleagues they are great and again some of them are some of the best colleagues we have do you pay remote different to normal standardized pricing is a hard thing to get in terms of remote Talent

46:13 depending on where they are different prices currently we have the same salaries regardless of where you are can I obviously being in Italy and in Europe I suffer from this assumption too but a lot of our American friends and counterparts say are you you lack the ambition the young people don't live to work they work to live um do you agree with that assumption on Europe I know it's a general statement but do you think it's fair well I don't think

46:40 anybody should live to work I I don't know that you should even try to make a distinction between life and work to me you know life includes work includes play includes love includes exploration includes sorrow happiness it's so I think they're just on two different dimensions and it's just illogical to to compare them but having said that I I will I I will say I believe I I don't have a lot of certainties in life but

47:12 this is one of the strongest opinions I have and that's that if you want to have a chance to be the best or one of the very best at what you do not only do you need to be very talented whatever means for relevant to that particular Pursuit you have but but also you need to work your ass off for a very long time in a competitive world this seems pretty straightforward to me and I've seen it proven out with almost

47:43 100% uh um uh uh let's say with a truck record of Almost 100% in in the people I've seen being great and what they do it is very rare that they haven't tried very hard to be great for a very long time um so if you know so that's my general appreciation for hard work and I think it should be imposed on anybody I don't think it's either morally good or morally bad to want to try hard to be

48:10 great I think it's really arbitrary whatever you want to do with your life now I don't know if Europeans are more ambitious with themselves and or more willing to put in the hard work that's needed to them fulfill that ambition than say Americans or Asians or Africans or people from more oania um I I have no idea to be honest I found lazy as well as hardworking people from pretty much every conceivable geography I'm not really sure there's a correlation there

48:39 but there could be I mean these things have a strong cultural route to to them as well so I wouldn't be shocked if we found that different populations tend to to behave differently in in this regard I don't mean this route so forgive me if this is too direct you feel like you're quite hard on yourself people say the same to me do you ever give yourself a bit of a break maybe I am maybe I'm not I think

49:03 as I said before I feel very privileged um so I I I don't want to sound like I pity myself for being hard on myself it's okay I'm basically I am as lucky as it gets I have a big dream I've been very fortunate to find and and be found by amazing people I love working and Liv living with I get to pursue my dream to be part of a team with you know with a big ambition love my job and yes it's

49:35 it's it's a sacrifice often including the the hard truth of not being great at many things and trying to be better but yeah I think I wouldn't want any other any other way to be honest so final one for you before we do a quick fight but many mutual friends said I had to ask about your co-founder relationship saying that it's a very unique pairing what have been some of your biggest lessons on what it takes to have a great

49:58 relationship with your co-founders in the way that you do if you were Italian I would I would tell you that it takes a lot of kulo you know what it means no so that that translates to to ass um like the body part and it means a lot of luck a lot of luck I I um I could tell you that I was you know very thoughtful and I engineered my co-founder relationship but the the truth is I got

50:24 lucky I I had been friends particularly with one of them for the longest time before we even started the first startup and then uh we went through again from the entrepreneural perspective quite a bit of hardship together a failed startup in which we had poured our hearts and souls for multiple years and the relationship didn't fracture but actually got stronger in those lowest moments um and that is the best proof

50:54 that you have something to build upon how did how did you choose your investors they're another form of partner Capital Partner how did you choose your investors oh I mean it was easy nobody else would give us money so we no sorry I'm joking no no um I mean there have been different moments in which we welcomed you investors and the the answer would change a bit but for the sake of brevity I will say we we

51:18 have some advisors we we trust one for example is called Allen and Company it's a an equity m&a financing advisor from the US excellent I guess it changes from partner to partner but I think the firm is great in general and the partners we work with are awesome so they you know they know a lot of investors they've seen them in different situations particularly the the shitty ones where you really see what sort of principles they abide by because it's easy to be

51:43 lovely when uh you have been generating great returns but um it's a lot harder to be professional and fair when things uh aren't going that well so they provided us with a short list of firms they uh thought highly of uh and then we we had a few relationships so we added a few names that list and then we went through a process of they studying us us studying them and talking to people who had had them as investors for a long

52:11 time and had uh had um difficult moments with them on board and ultimately you know it was a mutual selection is there anything you could do differently about the fundraising processes having been through them different things on negotiation on price on length anything that you would do differently yeah I think you want to create a certain level of competition if you can I think we were I'm very happy with the investors we have I will say we could have

52:39 obtained better terms I mean I think we had good terms but better terms early on and we could have closed faster and we created a little bit more competition because often what they tell you and they might actually mean it um the initial enthusiasm you always hear this is awesome we definitely going to invest we're going to cover the whole round you don't need to talk to anybody else this would be amazing and then once due

53:01 diligence starts there's always a tendency to then commit a little bit less Capital try to walk back on a few of the key terms and uh and if you don't have any competitive tension it's hard to avoid that from happening but if you have a reasonable amount of competitive pressure then and and you keep it up all the way to the end big mistake is to just base your selection on the early feedback and then wave goodbye to all

53:28 those you don't plan to take on board and pro and proceed only with the one or two that you plan to take on board uh you shouldn't do that just keep a broader spectrum of parties involved up to the very end when you're signing if you can um that's my probably my most useful piece of advice on that regard what's the immovable term for you you mentioned terms that are important is there one that's like hey no no Mass not

53:54 going to budge on that one well it Chang uh each time but I would say one that's stayed the same throughout our rounds was liquidation preferences we never all our share owners myself our institutional investors are colleagues who got Equity through they're working at the company nobody has any liquidation preferences so we're all on equal terms economically the reason why we fought very hard to avoid that uh is we didn't want our colleagues who

54:26 despite our efforts to educate them financially of course are not as financially Savvy as an investor and unlike an investor which has maybe dozens or even hundreds of Investments uh many of them better metaphorically speaking their house on the company we really didn't want to be in a situation where had things gone poorly uh then everybody would be left empty ended uh but one or two investors

54:58 that was something we really pushed against well done that that's a good thing to be able to push against and that's not an easy one with the scale of cash you raised uh I do want to move into a quick fire Luca so I say a short statement you give me your immediate thoughts does that sound okay yeah let's do that what have you changed your mind on in the last 12 months I should try to

55:17 read as many books as possible ended up uh changing it to quantity I wouldn't say is irrelevant but not so important what's really valuable is to select them well and try to read each and analyze each in depth really ponder it you learn a lot more it's a lot more useful that way what three books would you most recommend someone listening our mathematical Universe by Marx stmark um so I read a lot of books so I

55:46 could probably come up with many many but um I said the selfish Gene by um um Richard Dawkins and then maybe to go nonfic fiction uh versus non-fiction just to make it a little bit more varied list I would say a gentleman in Moscow by Amor towels I believe that's how you pronounce it wonderful wonderful novel maybe the best novel I've ever I've ever read one of the best

56:19 they really great I was going to suggest Venture deals by Brad Feld and so you have a lot more diversity than me Luca so don't worry uh uh some people tell me I need to get out of venture I I probably agree with them what does a day look like for you dude do you have a routine I'm just intrigued like you you look like a fit dude I mean I don't think I have anything incredibly surprising on him

56:40 wake up around 7 7:30 walk my dogs go to the gym you know can run maybe lift weights I try to mix it up a little bit uh then I have breakfast and read the same time that's my half an hour of uh um let's say meditation not like proper medit meditation but to me reading uh and eating a light breakfast is really recharging and then I have my my work day I try to have a lot of time to do

57:03 individual work I think you'd be surprised by how few meetings and external meetings particularly this is what we're doing here is quite rare for me I maybe do two of these three per year Max so most of the time I spend it doing individual work we promote individual work a lot at the company at all levels we want all of our managers to be incredibly Hands-On do you not have direct reports that report to you LCA yeah I do I do we do one once once

57:29 uh every two weeks so that doesn't take uh you know maybe it takes about five hours a week and then I have other meetings but I would say I probably have no more than 20 hours of meeting a week and and I squeeze in maybe 40 50 hours of individual work each week doing those sorts of things yeah and then I try tend to be done uh around maybe 8:30 9 in the evening um I spend an hour with my my f

57:56 say with with my dogs again um you know we was just chatting watching a part of a movie eating dinner um then walk the dogs again read a book fall asleep pretty simple uh tell me if you could choose one person as a board member who would it be can be anyone I will pick sidarta the the fictional character from the book by Herman hes I think it'd be great

58:26 as a board member well I wasn't expecting that you know most say Bill Gurley so you know good that that works that works for me that works for me too what's the biggest piece of BS advice that you hear most often L well there's a lot of BS in the world that seems to be the norm but I will say maybe I don't it doesn't qualify as advice but uh the opinion I hear most often that I think

58:54 is really well poorly informed and poorly thought out is that artificial intelligence will create more jobs then it will eliminate I believe and again the future will you know we'll we will see I might be very wrong but I think I'm quite confident that it will prove to be otherwise destruction of jobs yeah if far in excess of job creation in the medium long term I don't know if it's a few years or few decades but I'm quite

59:24 convinc of that P ultimate one what's the kindest thing anyone's done for you uh this is easy I've been asked before um as two friends from middle school or classmates they it would take a long time to explain but the short of it is they I told you it was almost pathologically shy at the time they went out of their way to pull me out of my shell and teach me how to socialize with others they for

59:58 for two kids of you know 10 years of age both of them to to to do that showed a level of uh I think selflessness and maturity that I still remember today with Incredible gratitude and it changed my life for Real uh incredible moment and as moment I mean it lasted for months it was an effort they did they they made for months and it was very meaning to me I'm very grateful to this day and you gave them 10% of bending

60:29 spoons to thank them in gratitude I did not but maybe I should you it's a $230 million gift I'd help you socialize more if that was on the cards uh final one for you Luca the most ambitious that you can be for bending spoons 10 years out what is bending spoons then like if everything goes right I do think and hope we we can continue doing roughly what we do we we like what we do we think has potential

60:57 and uh we have fun doing it I think we can do it at a much bigger scale we can do it a lot better and I hope that we have developed a level of competence and accumulated enough resources that we can increasingly tackle or in increasingly find ways of uh of making a positive difference I think it's quite difficult in business everybody talks about it but it's very it's very few businesses that can you can really say you know they're making a

61:27 very positive difference um I don't think we we make a very positive difference nor do 99% of the businesses as far as I can tell but I would like to be in a position to to to make that difference um without a doubt you know I love I love to see you know the things like the Gates Foundation it's very inspiring to me being able to tackle uh polio and almost eradicated I mean they failed but they got close and they

61:52 probably succeed at some point that is incredibly inspiring to me so being in a in a position to to do something like that maybe maybe it doesn't have to be you know charity can be many ways maybe it's charity maybe not but but have that level of resources and credibility and access to tackle some of those problems at that level that would be a dream contr you mentioned that you do you know two or three of these a year thank you

62:16 so much for agreeing to do this with me I I've long been an admirer of the model that you have I've wanted to do it for a long time so thank you so much for the time today LCA thank you Harry my pleasure and congrats on all you do