Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We've got Luca Ferrari, the co founder, CEO and chair
Speaker 2: of Bending Spoons, joining us from the Nasdaq. Also with
Speaker 2: us Bailey Lipschaltz, Bloomberg News IPO reporter who joins us
Speaker 2: here in the studio. Look, I want to start with
Speaker 2: what exactly the portfolio is and sort of how you
Speaker 2: want to communicate to investors what you're going to do
Speaker 2: with assets that many people remember from the world of
Speaker 2: web one point zero.
Speaker 1: Thank you for having me. First of all, let me
Speaker 1: explain how we operate, because it's a quite unusual, perhaps unique.
Speaker 1: We've spent the last thirteen years building what I consider
Speaker 1: an exceptional platform, a very high time in density, a
Speaker 1: culture of high performance and rationality, fifty plus proprietary technologies
Speaker 1: and operating system for running digital businesses as effectively and
Speaker 1: as efficiently as possible, and a lot of data that
Speaker 1: helps us make better decisions at the stage of acquisition
Speaker 1: and operations. Now, what we do with this engine as
Speaker 1: we go and acquire digital business design, express potential, and
Speaker 1: we integrate them very deeply onto this platform in a
Speaker 1: way that I haven't seen anybody do before. They share
Speaker 1: the entirely the same technological layer. We have a core
Speaker 1: team that moves fluidly across all our businesses and we
Speaker 1: transform them deeply. We rebuild the ORGA technology, the monetization,
Speaker 1: We accelerate innovation, latching the features. So, let's say, pretty
Speaker 1: unique model. And as you were describing, we have established
Speaker 1: over time a portfolio of brands, some of which are
Speaker 1: very well known and some of which are more dated.
Speaker 1: We also have bought more up and coming companies, but
Speaker 1: there's a bit of both. We win. We do well,
Speaker 1: not necessarily when the company we buy is a young
Speaker 1: or old, growing fast or more stagnating, but and we
Speaker 1: can make that trajectory a lot better. So that's what
Speaker 1: we try to excel.
Speaker 3: Look at we were talking earlier about this and I
Speaker 3: just am interested if you can explain for viewers kind
Speaker 3: of the path to better monetization. Again, you have about
Speaker 3: a half a billion monthly active users, but only a
Speaker 3: small fraction of that are actually deriving value from What
Speaker 3: does that mean for the company going forward? And how
Speaker 3: do you grow that?
Speaker 1: Yeah, exactly, help a billion people use our products quote
Speaker 1: unquote only a nine million people, so roughly two percent
Speaker 1: pay for them, which obviously is an opportunity. We also
Speaker 1: believe that it's important to provide excellent value to our customers,
Speaker 1: so we're not looking to monetize as much as possible,
Speaker 1: and we're happy to have a vast population of users
Speaker 1: who use our products without paying and they bring value
Speaker 1: through word of mouth and that will probably continue to
Speaker 1: be the case. But yes, we have an opportunity to
Speaker 1: monetize better and we have a history of doing that
Speaker 1: I think quite successfully, So yes, going forward, hopefully we
Speaker 1: can improve the percentage of our users to to pay
Speaker 1: for our products.
Speaker 3: And yeah, look at no, just thinking through though kind
Speaker 3: of what changes when companies go public? Now you have
Speaker 3: to answer to public investors and obviously that draws the
Speaker 3: potential towards, you know, partnering with AI companies, letting them
Speaker 3: train their ll ms off of their data. How are
Speaker 3: you guys thinking about the potential partnership opportunities? Again, it's
Speaker 3: no longer a company where you and your friends are
Speaker 3: running it. Now you have to answer to the public investors.
Speaker 3: Is there any sense of pressure from them that you
Speaker 3: would need to better monetize and therefore partner with say
Speaker 3: a open AI or anthropic.
Speaker 1: I think managed points as in being a company run
Speaker 1: like friends like that in a long time. We feel
Speaker 1: we are a highly professional organization. We've had a blue
Speaker 1: chip investors on board for many years. We will Bailey
Speaker 1: give for a durable capital have been with us for
Speaker 1: many years at this point, so we have operated you know,
Speaker 1: as regrossly and seriously as it gets for as long
Speaker 1: as I can't remember. Obviously, the constituents will be a
Speaker 1: little bit different as a public company, but we are well.
Speaker 1: I don't think we're going to change our views. We're
Speaker 1: trying to maximize value ten or twenty years out and
Speaker 1: we'll continue doing that. In terms of data, we have
Speaker 1: never sold any data. We've never enabled any third party
Speaker 1: to train their models on our data. We don't have
Speaker 1: any plans to do that and un less, you know
Speaker 1: if that changes, but right now that's our sins.
Speaker 4: Look, I'm trying to understand that a little bit more too,
Speaker 4: about the business model. You guys have identified more than
Speaker 4: a thousand digital businesses in Europe and North America that
Speaker 4: could be a track of acquisitions over the next few years.
Speaker 4: That's according to your listing document. It feels like, are
Speaker 4: you just buying your way to growth and masking perhaps
Speaker 4: a slowdown and retention. Is that the strategy?
Speaker 1: I mean, yes, we are buying as a key engine
Speaker 1: of growth. I think there's no difference in putting dollars
Speaker 1: against marketing driven growth or RND driven growth or m
Speaker 1: and AH driven growth. They're just different livers you can pull.
Speaker 1: We found that with our platform, m and A has
Speaker 1: been by far the most efficient. We have doubled the
Speaker 1: company roughly speaking, every year for as long as I
Speaker 1: can remember, so not too shabby. We've barely raised any
Speaker 1: equity in the past, certainly much more efficient than we
Speaker 1: would have achieved through more conventional means. And having side that,
Speaker 1: almost every time the companies we've owned we have improved
Speaker 1: the retention, unitization, organic growth. So we're managing these assets
Speaker 1: for the long run. We have never sold a company
Speaker 1: we bought, nor do we plan to. We try to
Speaker 1: be excellent stewards of these businesses. Again with a ten
Speaker 1: twenty interview as long as we can project out. But yes,
Speaker 1: we do anticipate that the vast majority of our growth
Speaker 1: will come from acquisitions, and as long as that's where
Speaker 1: the highest returns come, we'll take it.
Speaker 2: We like it a lot Luka, the next acquisition. Look,
Speaker 2: tell us what it'll be. I'm going to give you
Speaker 2: a gimme or you're going to give me a gimmey,
Speaker 2: I guess what's the theme and the theme that you're
Speaker 2: looking for.
Speaker 1: We're not thematic as an acquired If you look at
Speaker 1: our portfolio, we have enterprise businesses with consumer businesses. We've
Speaker 1: got ticketing, we've got video platforms, a little bit of everything.
Speaker 1: So what we what we look for is businesses that
Speaker 1: we can improve tremendously. Whether it's the product as a
Speaker 1: loyal customer base, but it's a bit data that you
Speaker 1: could overhaul, the user experience, out features, improve the technology,
Speaker 1: whether it's the monetization isn't isn't efficient, maybe the cost
Speaker 1: base is blotted. Maybe a bunch of these at the
Speaker 1: same time, and the let's say the customer facing side
Speaker 1: of things can vary, but those fundamentals that have to
Speaker 1: be at least one or two of these have to
Speaker 1: be in place for us to be interested. So we're
Speaker 1: always looking at a bunch of companies. Hopefully will acquire
Speaker 1: additional companies in the in the rest during the rest
Speaker 1: of the year. But but yeah, even if I wanted to,
Speaker 1: I could and share any theme that we don't think
Speaker 1: that way.
Speaker 3: Yeah, we aren't surprised by that. Good one by Tim
Speaker 3: dough Luca. One question, though, when you hear SaaS apocalypse,
Speaker 3: does that present opportunity or does that present risks? Just
Speaker 3: thinking through the portfolios of companies doesn't seem that difficult
Speaker 3: to me, as someone who's not that smart, to replicate
Speaker 3: some of the portfolio companies using a claud for example.
Speaker 1: Oh, I totally agree. I mean it's very easy. I'd
Speaker 1: say it's been very easy for at least ten fifteen
Speaker 1: years replicating take all writing a mobile or desktop email app.
Speaker 1: You know, there's probably setal hundreds of them out there.
Speaker 1: Event Pride has been copied a million times. AI doesn't
Speaker 1: change that. If it was already very easy, it makes
Speaker 1: it even easier. But there's so many clones at this
Speaker 1: point that it doesn't make any difference. There's a world
Speaker 1: not the world we're living. We're building a ticketing platform
Speaker 1: is possibly difficult, and event Pride is the only one
Speaker 1: to exist, and it's maybe worth a billion dollars or
Speaker 1: fifty billion dollars, And now with AI becomes easy, and
Speaker 1: that's a bad news, but again, that's not the world
Speaker 1: we live in. It's been very easy to replicate product
Speaker 1: like event Pride for a decade. So any success that
Speaker 1: these companies are having right now, it is not based
Speaker 1: on a lack of technically viable alternatives. They win because
Speaker 1: they have a brand, or a network effect or switching costs,
Speaker 1: and so I don't think that will really change going forward.
Speaker 1: We haven't seen any degradation whatsoever in any metrics. If anything,
Speaker 1: AI has been a major tailwind for us. Ultimately, the
Speaker 1: main disadvantage of our model is that these transformations are
Speaker 1: very operationally intensive. We need a lot of excellent people
Speaker 1: to work really hard to rebuild. Again, the software features monetization,
Speaker 1: so we can do a million of these acquisitions per year.
Speaker 1: AI solves that entirely, but it loses that bottleneck substantially.
Speaker 1: Our revenue Perspooner Spoonery is like our core team or
Speaker 1: people will help us transform the companies right went up
Speaker 1: from about a million dollars in twenty twenty three to
Speaker 1: a round rate of roughly four million dollars in Q
Speaker 1: one twenty twenty six, with AI being clearly the main
Speaker 1: reason for for that massive growth.
Speaker 2: Well, look, we don't have a ton of time left
Speaker 2: and Max a few more questions we want to get to.
Speaker 2: I want to focus in on the AOL part of this.
Speaker 2: You bought that from Apollo one and a half billion
Speaker 2: dollars approximately last year AOL In full disclosure, many years ago,
Speaker 2: I worked at a version of AOL. It's known for
Speaker 2: still having people who actually pay for it, but it's
Speaker 2: just a shadow of what it once was. When you
Speaker 2: say you're trying to get more people to pay for
Speaker 2: the products and services that you own, how do you
Speaker 2: get more people to pay for AOL?
Speaker 1: So AOL currently has approximately thirty million monthplick to users
Speaker 1: only as more percentage of these pay or others are
Speaker 1: monetized through advertising, unlike most of our user base, where
Speaker 1: often we don't use ads at all, unlike people think. Actually,
Speaker 1: oil has been growing for several years. I can't really
Speaker 1: speak as to what happened ten or two years ago,
Speaker 1: but at least the last three or four years it's
Speaker 1: been on a slow growth trajectory. We expect it to continue,
Speaker 1: maybe accelerate a little bit going forward. There are multiple
Speaker 1: opportunities to improve this business. As you could imagine the product,
Speaker 1: I think the product is better than people think it is,
Speaker 1: but it's not on par with some of the competitions,
Speaker 1: so we look forward to improving it substantially. Both the
Speaker 1: email client and the web portal. Will believe that there
Speaker 1: is plenty of opportunity to improve the underlying technological foundations,
Speaker 1: especially the advertising tech stack and the recommender system that
Speaker 1: chooses what content you see on the web platform. I
Speaker 1: think it's one of the most exciting acquisitions we've carried
Speaker 1: out in recent years.
Speaker 4: Hey, listen, you and your co founders Luca hold one
Speaker 4: hundred percent of the Class A shares and almost eighty
Speaker 4: three percent of the voting rights. We've seen this with
Speaker 4: some other tech companies. You're coming to market with a
Speaker 4: controlled company structure and a highly acquisitive strategy. What decisions,
Speaker 4: if any, should public minority shareholders realistically expect to influence
Speaker 4: over time?
Speaker 1: I think we will take input to heart. I'd like
Speaker 1: to think we have a history of intellectual honesty and
Speaker 1: open mindedness. These are key values internally and externally for us. Naturally,
Speaker 1: if someone chooses to invest right now, we'd.
Speaker 3: Have to.
Speaker 1: Trust that you know, will make the right call. That's
Speaker 1: what it is with this sort of governance, but I
Speaker 1: certainly can promise we'll be will be listening, honestarily agreeing
Speaker 1: with everything we're told, but listening for sure.
Speaker 4: Hey listen, As you know, it's very different to be
Speaker 4: a private entity and a publicly held company. What's top
Speaker 4: of mind the pressures you think you might feel though
Speaker 4: now as a publicly held company.
Speaker 1: I don't know. I haven't done it before. I don't
Speaker 1: presume to know. I'm sure it's gonna suck in many ways.
Speaker 1: We'll try to do our best not to succumb to
Speaker 1: the pressure and a noise and stay focused on execution.
Speaker 1: We have a plan for the next ten or twenty
Speaker 1: years and it's going to be a challenge. We can't
Speaker 1: afford to lose focus, so that that's the goal here. Stay,
Speaker 1: you know, head down, work hard, stay rational. We'll see
Speaker 1: we're optimistic, but I'm sure we could make mistakes, so
Speaker 1: we gotta be careful.
Speaker 4: Well, I'll just tell you every quarter, those earnings reports,
Speaker 4: we love to go over them. So we're looking forward
Speaker 4: to your first earnings.
Speaker 2: Look, are you going to go check out a World
Speaker 2: Cup game while you're here?
Speaker 1: I'd love to. I don't think i'll have time, but
Speaker 1: I hear it's been great. People are talking about repeating
Speaker 1: you know again in the States in four years, so
Speaker 1: maybe that's yeah.
Speaker 2: I think the folks have something to say about that, Lucas,
Speaker 2: thanks for joining us. Appreciate your time. Luca CEO of
Speaker 2: Bending Spoons, the company going public today. Luca joining us
Speaker 2: live from the Nasdaq