Why Does Bending Spoons Optimize Free Cash Flow?

Luca Ferrari says Bending Spoons kept optimizing the rate at which free cash flow compounds, passing up choices that would please investors and produce a better valuation in the moment.

More than once, the company knew a different move would raise the valuation immediately: buy a certain type of asset, or manage an asset in a different way. The team was very confident, and in his view history so far has proven the choice right, because staying with free-cash-flow compounding would make the cash flows much higher in the long run than the other path. A multiple is only one factor in a multiplication. If the other factor is 10 times bigger, the overall result is bigger even when the multiple is lower. One separate route is to run a business without issuing equity or selling a stake, build a cash-generative enterprise, and create value through dividends. The Bending Spoons route is to maximize free cash flow over the very long run without chasing the biggest valuation today. The method is to know the goal and the boundary conditions, then work backward from them.

TikTok shows people are not inclined to stay patient, attentive, and long-term oriented, so a company able to do so already stands apart. Anish Acharya had just called that long-dated thinking an advantage.