Mar 15, 2024 · 1h 2m · news
Luca Ferrari: Scaling to 500M Downloads, $360M in Reported 2023 Sales and a $2.55BN Valuation |E1127 · 20VC with Harry Stebbings
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In this 20VC episode, Bending Spoons co-founder Luca Ferrari explains how leveraging lessons from a failed early startup shaped their unique model of acquiring and operationally optimizing validated software products. He outlines the company's rigorous approach to capital allocation, intellectual humility, and highly unconventional talent acquisition that propelled them to a $2.55 billion valuation.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 15.6% of the talking time here. How this is scored →
Harry as informed peer 2.4 Guest teaching 3.0 Guest disagreement 1.3 Harry pushing back 1.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:12 Luca rejects the PE roll-up label
Luca firmly rejects Harry's framing that Bending Spoons is a private equity roll-up buying distressed assets, arguing that rewrite efforts and 300+ engineers make it an operational hybrid akin to PE crossed with Google.
Hardest push from Harry ▶ 13:59 Harry challenges Bending Spoons' model as PEHarry directly challenges Luca by asking if Bending Spoons is simply a private equity roll-up play buying distressed assets to flip.
Biggest teaching moment ▶ 14:40 Luca educates on operational depth vs financial engineeringLuca educates Harry on why financial PE metrics fail to capture Bending Spoons' deep engineering focus, explaining how rewriting codebases and product redesigns drive their value creation.
Harry holds his own ▶ 52:29 Harry presses on fundraising leverage tacticsHarry draws on his venture capital experience to press Luca on deal terms, prompting a tactical explanation of how investors walk back commitments during diligence without competitive tension.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Luca Ferrari to the Show | 1 | 1 | 0 | 0 | Harry introduces Luca and asks light biographical questions about his childhood, shyness, and feeling like an outsider. Luca answers warmly and thoughtfully without any tension. | |
| The Failed Startup and McKinsey Days | 1 | 2 | 1 | 1 | Harry asks about Luca's early startup failure Ebertale and time at McKinsey. Luca shares lessons on team building and avoiding arrogance in product execution. | |
| The Birth and Strategy of Bending Spoons | 2 | 3 | 1 | 1 | Luca explains the core strategy of Bending Spoons: acquiring products with proven market fit rather than inventing from scratch. Harry asks clarifying questions on assessing signal. | |
| Ambition, Confidence, and the European Mindset | 2 | 4 | 2 | 2 | Harry suggests Luca's measured confidence reflects a European mindset compared to US founder swagger. Luca refutes the premise, emphasizing that Bending Spoons had massive ambition from day one. | |
| Bending Spoons vs Private Equity | 3 | 5 | 3 | 4 | Harry challenges Luca by asking if Bending Spoons is just a PE roll-up play buying distressed assets. Luca directly refutes this, detailing how their 300+ engineers rewrite codebases and operate like a hybrid of PE and Google. | |
| Resource and Capital Allocation | 2 | 3 | 1 | 2 | Luca outlines capital allocation across products and candidly recounts losing over $6 million on Playond, a failed gaming subscription platform. | |
| Acquiring Evernote | 3 | 3 | 2 | 3 | Harry brings up Evernote and notes that public opinion saw it as a declining brand. Luca explains the rationale behind the acquisition, highlighting Evernote's massive daily active user base. | |
| Pricing and Valuation Methodology | 3 | 3 | 1 | 2 | Luca explains their valuation model, focusing on long-term discounted free cash flows rather than PE exit multiples since they buy assets to hold indefinitely. | |
| Financing Acquisitions | 4 | 4 | 1 | 2 | Harry presses on financing mechanics and pricing errors. Luca admits that predicting user acquisition growth rates is their most common and difficult analytical mistake. | |
| Exploring Portfolio Network Effects | 3 | 3 | 2 | 2 | Harry asks if cross-portfolio network effects drive value, but Luca plainly denies it as a factor. Luca emphasizes margin of safety in capital allocation. | |
| What Luca Knows About Risk Today | 2 | 3 | 1 | 1 | Luca discusses risk management and how prior professional success can breed arrogance that leads to careless acquisition mistakes. | |
| Not Taking Enough Risk | 3 | 2 | 1 | 2 | Luca admits his biggest flaw is excessive caution driven by a fear of disappointing others. Harry probes into entrepreneurial resilience and keeping perspective. | |
| The Talent, Experience, and Motivation Framework | 2 | 4 | 1 | 1 | Luca details Bending Spoons' hiring equation evaluating Talent, Experience, and Motivation, explaining why they intentionally ignore experience to maximize talent and motivation. | |
| Testing Motivation and Hiring Mistakes | 3 | 3 | 1 | 2 | Harry asks how to test motivation and identify hiring mistakes. Luca explains replacing traditional subjective interviews with practical task testing. | |
| Hard Work and the European vs American Ambition | 2 | 4 | 2 | 2 | Harry presents the stereotype that Europeans lack work ethic compared to Americans. Luca refutes the framing, explaining that extreme dedication is required for world-class success regardless of geography. | |
| Being Hard on Oneself | 1 | 2 | 1 | 1 | Harry asks if Luca gives himself a break and probes his co-founder dynamics. Luca humorously credits luck ('culo') and shared adversity for their strong bond. | |
| Selecting Partners and Creating Fundraising Competition | 4 | 3 | 1 | 2 | Harry asks about investor selection and negotiation tactics. Luca offers advice on maintaining competitive tension across multiple investors all the way until signing. | |
| Immovable Deal Terms | 3 | 3 | 1 | 2 | Luca reveals his deal dealbreaker: insisting on zero liquidation preferences so institutional investors remain pari passu with employees. | |
| Luca's Daily Routine and Deep Individual Work | 2 | 3 | 2 | 1 | In the quickfire round, Luca outlines his daily schedule, rejects the popular consensus that AI will create more jobs than it destroys, and shares a childhood story about kindness. |
Statements from this episode (33)
Bending Spoons acquires companies post-product-market fit to optimize them
“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 have made it up to that point.”
Bending Spoons' acquisition strategy stems from founders' previous startup failure
“The reason why 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.”
Bending Spoons launched with $40,000 in leftover capital from Evertail
“The company, we funded it with around 40,000 dollars, which was the leftover capital from Evertail.”
Evertail VCs sold equity back for €1 to avoid liquidation hassle
“The venture capital firm at the time preferred to sell their, the money would have been theirs because they had liquidation preferences. It would be pretty typical for a VC deal, but they, for them, it was more of the hassle of going through the liquidation pr…”
Bending Spoons made its first acquisition for $15,000 in 2014
“Made our first acquisition, I think early 2014, so we're talking maybe six or seven months into The startup at the time, it was for a keyboard app paid 15,000 dollars for it”
Bending Spoons completely rewrites codebases and redesigns UX of acquired products
“In our case, we are incredibly hands-on, so unlike a private equity, we generally rewrite the whole software, or at least the most critical parts of the code base. We completely change the IT architecture, we redesign the user experience and the user interface…”
At least 300 of Bending Spoons' 400 employees are technical
“In our case, out of 400 people, at least 300 are software engineers, AI researchers, data analysts, data scientists, a product manager.”
Bending Spoons acquires growing, flat, or declining assets, not just distressed
“By the way, we don't acquire I don't necessarily acquire distressed assets. 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 products that …”
Bending Spoons manages all cash and talent centrally at the TopCo level
“The, yeah, the cash is managed at the top company level. Yes. Not just that all resources also, or our team team members and, you know, we were very fluid in that regard.”
Bending Spoons shut down mobile game subscription Playond after investing $7M
“I think we invested six or seven million dollars in it, and we completely eliminated it.”
Ferrari believes Apple Arcade has not been a great success
“I think Arcade is not a great success either.”
Bending Spoons acquired Evernote to optimize its product, monetization, and costs
“We thought we could improve the product. Monetize it more efficiently and also run the company more efficiently in terms of costs. So we felt all three levers were offered a little bit of space for improvement.”
Ferrari claims Evernote usage equals or exceeds that of cooler apps
“Sometimes people have characterized Evernote as you said, kind of on a decline, 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.”
Bending Spoons acquires software assets to hold for decades, never selling
“The other big difference is that we acquire to hold forever. We never sell. I won't say it will never happen. It may occasionally, but it's never happened to any of our significant assets. And so we buy to retain for potentially decades.”
Bending Spoons has never lost a competitive acquisition bidding process
“Historically 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 the deal is done. Every single time T…”
Bending Spoons funded all pre-Evernote acquisitions exclusively with earnings and debt
“Up until Evernote included, which is a year ago, I can, on first approximation, I can say that All of what we have done through our own earnings and debt.”
Bending Spoons raised roughly $200M in equity over the past 10 months
“Now, more recently, we have raised more equity roughly two hundred million dollars over the past 10 months.”
Ferrari admits Bending Spoons has never priced an acquisition deal correctly
“There hasn't been a single one we have priced correctly.”
User acquisition rate is by far the hardest KPI to project accurately
“Of all the important KPIs in determining the success of a product, an internet product at least 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.”
Cross-promoting users across Bending Spoons' app portfolio yields zero value
“No, not a factor. No, at least maybe it's because we have failed to leverage it, but in our case, no, no value coming from that.”
Lazy due diligence caused Bending Spoons to misjudge an acquired app's growth
“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 shrink faster than we had anticipated.”
Bending Spoons holds annual retrospectives on past acquisition mistakes
“Every year or so, we try to spend an hour reminiscing that particular situation, like a repeated retrospective. We have dissect, dissected our mistakes, ad nauseum, so it's not that we're gonna learn anything new, but I think it's healthy to remind yourself ju…”
Ferrari regrets not raising capital earlier to pursue more aggressive growth
“I feel I am too concerned, scared even of disappointing others, colleagues, investors, 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…”
Optimizing for experience, talent, and motivation simultaneously degrades hiring quality
“It's a trade-off when you hire people. You can say, I want to hire for experience, talent, motivation. You can, but you're gonna do worse at any one of these than if you focused on just one or two.”
Bending Spoons hires almost entirely for talent and motivation, disregarding experience
“In our case, we chose to focus on talent and motivation almost entirely disregarding experience.”
Bending Spoons pays identical salaries regardless of an employee's geographic location
“Currently we have the same salaries regardless of where you are.”
Enduring startup failure together is the best proof of co-founder strength
“And the relationship didn't fracture, but actually got stronger in those lowest moments. And that is the best proof that you have something to build upon.”
Keep fundraising competition active until signing final investor terms
“Big mistake is to just base your selection on the early feedback. And then wave goodbye to all those who don't plan to take on board and proceed only with the one or two that you plan to take on board. You shouldn't do that. Just keep a broader spectrum of par…”
No shareholders in Bending Spoons have liquidation preferences
“All our share owners, myself, our institutional investors, our colleagues who got equity through their working at the company, nobody has any liquidation preferences, so we're all on equal terms economically.”
Ferrari caps meetings at 20 hours, spending 50 hours on individual work
“I probably have no more than 20 hours of meeting a week. And I squeeze in maybe 40, 50 hours of individual work each week doing those sorts of things.”
Ferrari predicts AI will eliminate far more jobs than it creates
“But I will say, maybe, no, I don't, it doesn't qualify as advice, but the opinion I hear most often that I think is really poorly informed and poorly thought out is that Artificial intelligence will create more jobs than it will eliminate. I believe, and again…”