Luca Ferrari
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a16z · How Bending Spoons Built a $20 Billion Compounder | Luca Ferrari
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How Does Bending Spoons Use Debt Without Risking the Company?
Luca Ferrari says debt lets Bending Spoons do more sooner, and it is smart when the expected return beats the cost of the debt and the chance of default stays negligible. If that chance becomes significant, the extra risk stops being an easy yes. Companies that later went bust would have sounded bullish about their debt beforehand. Bending Spoons has not come close to trouble, and he still treats that as a reason to stay paranoid.
The limits they set keep leverage well below 3 times. It is about 2.4 to 2.5, and historically closer to 2 than to 3. They want to be able to repay 100 percent of the debt before maturity even in a severely bad scenario. Most of the debt is refinanced every year o
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When Is Optimization a Better Bet Than Invention?
Luca Ferrari says optimization is the better bet when the strategy can compound small gains, because radical invention's usual outcome is losing everything. Anish Acharya asks how Bending Spoons chooses when it buys a company such as Miro or Evernote. The mindsets are different, and a company that goes all in on one at the expense of the other is leaving results behind. Apple has leaned toward big inventions without ignoring operations, and Tim Cook made those operations efficient. You still pick a camp.
Radical invention can raise the peak faster. A new iPhone can change a company close to overnight, and Google is still mostly search about 30 years later, around 80 percent of the business,
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How Does Bending Spoons Improve the Companies It Buys?
Luca Ferrari says Bending Spoons buys technology companies where it sees a chance to make them much more successful, then puts them on one platform with the same foundational technology and the same core team. The aim is to make each business more cash generative on a 10-year view. If that works, the extra earnings are levered up to buy larger companies, and the loop repeats.
The better-known deals he names are Airtable, AOL, Vimeo, Eventbrite, Komoot, and WeTransfer. The count is more than 50 acquisitions, and maybe 60. Anish Acharya quotes Mark Andreessen's line that there is no such thing as equities, only a bond that throws off cash or an option that may never pay. Luca calls that a bit
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How Much of Bending Spoons Code Is Written by AI?
Luca Ferrari says Bending Spoons code was 0% written by AI two years ago and, last time he checked, is at 94%. Customer support tickets are pretty much 100% handled by AI or, for the residual portion, by external vendors. He does not have a precise figure, but he is pretty confident at least 90% of fetching data, cleaning data, and plotting data is done by AI.
Customer support managers now work more like product managers. They architect the response process, response rules, and the user experience. The company is investing heavily and will include support via phone calls and via WhatsApp. Data scientists do more architectural work, write software, and build tooling and processes for the bud
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How Does Bending Spoons Use an AI Agent in Slack?
Luca Ferrari says Bending Spoons uses an AI agent in Slack, which he calls the alternative spooner. People talk to it, and it already has the same tools and files they do, including the same GitHub repos, folders, and drive. Anything a person could do in theory, the agent can do, and it does more of the work over time.
An employee can tell it to run a data analysis and it fetches the data. If access is missing, it escalates a request to the credentials management team and, when relevant, the IT security team. It processes the data, shows a graph and commentary, and returns the result in five minutes. Nobody else has to be asked.
In a channel used for product feedback, a general manager of
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What Does Bending Spoons Build In-house?
Luca Ferrari says Bending Spoons builds nearly everything required to run a digital business in-house, and the count comes to over 50 different tools. Saving on vendor costs is quite large, but the savings are not a game changer. The two game changers are making the tools super fit for purpose and natively integrated with one another.
The build list covers data processing, the A-B testing platform, marketing automations, user lifetime prediction, credentials management, and recruiting tools. Gmail, Slack, and Google Drive stay outside the set, because the needs are universal and Bending Spoons is happy to use what others build. Each internal tool is better for the exact job, and the tools w
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Is AI Really a Threat to SaaS Companies?
Luca Ferrari says AI is not a reason large SaaS companies are finished. Lower costs will hurt them on the margin, and easier writing of software does not mean they are screwed. Buying software has been reasonably cheap for a long time.
Historical software valuations were absurdly high because they did not match reasonable expectations of free cash flow over the long run. Justifying them meant betting a buyer would later pay the same multiple after growth of 50 percent, often by treating 12 percent organic growth as if it would last 15 years. Organic growth almost never rises and typically falls. AI gave people an excuse to doubt the assumptions and be more cautious, and the reset prices wer
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Why Do Founders Avoid a 100x or Nothing Bet?
Luca Ferrari says founders and professional managers avoid a 100x or nothing bet because they hate a median case of ending with nothing, not because they got the odds wrong by 20%. They should. They only have one life and one career.
A venture firm that invests in about 50 companies cares about the portfolio. It may want each company to go 100 miles per hour against the wall. Four or five get through a very narrow door and win 100x, and the others crash. Taken more slowly, they lose the chance of that win and have a better chance of a decent business. For the firm, caution makes the expected outcome worse and barely helps the median. For one company, going that fast improves the expected ou
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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 i