Luca Ferrari, Bending Spoons CEO: The $40K Start, Buying Product-Market Fit & Beating Private Equity
In a Nutshell
Bending Spoons turned a failed $40K AI startup into a $40B company by acquiring underperforming apps, then using a centralized "operating system" of tools, teams, and infrastructure to boost revenue and cut costs. The model relies on high-talent-density teams, debt-funded acquisitions, and deep operational integration that private equity cannot replicate due to its buy-and-sell structure. This approach has produced 25%+ returns, zero lost bids, and consistent outperformance over traditional private equity.
These notes were generated by AI and may contain inaccuracies.
Bending Spoons is a Milan-based technology company that went from fixing one discontinued app to reviving 20 apps. Half a million people use their products. The company has never lost a bid in acquisitions. They announced the purchase of ticketing platform Eventbrite. The company went from zero to $1 billion in revenue in just 10 years. The company is trying to build for generations.
Luca Ferrari's co-founders launched an artificial intelligence company in 2010. The company collapsed completely after three years. They were left with only about $40,000 of the capital they had raised from the venture capital firm. The venture capital firm sold them their shares for one dollar nominal value rather than going through liquidation processes. They took the $40,000 and turned it into seed funding for Bending Spoons in 2013.
The founders recognized they were not very good at finding product-market fit. They became adept at engineering, design, profitability, and marketing through three years of hard work. The strategy shifted to purchasing product-market compatibility from others rather than building it themselves. They acquire assets at a good price, make them more valuable through their capabilities, then invest more capital to improve the platform.
Their first acquisition was a mobile application for iPhones used to customize the keyboard. They paid around $10,000. The app was sold by one developer. It was generating minimal revenue and was not profitable. The value came from the existing users and good position in app stores. They bought an app with a large number of users that helped attract more new users.
Bending Spoons has a core team of about 800 people, with three-quarters being engineers, AI specialists, researchers, or product designers. Most of their work is improving technologies and products. They have written the first acquired app completely from scratch. They provide what they call an "operating system" for over 50 of their own technologies. They built an engine to run technology companies with high efficiency and effectiveness. Their core product replaces the technological infrastructure of acquired companies.
People transferred between different companies work according to the same rules and are more efficient because they use the same tools. These tools cover human resources, finance, technology operations, and development processes. The format of AI models exists, recruitment tools are available, and A/B testing platforms exist. They raise all technology spending to the highest level, making a single deal with AWS so all licenses become scalable through a single entity.
The centralized purchasing adds 1 to 10 percentage points to EBITDA margins. The most important aspects are the ability to increase revenue through better monetizable products, sometimes through marketing, and to reduce costs through smaller teams with higher talent density. Supplier improvements provide additional value.
When acquiring small companies, the sellers were typically selling the product, not the team, because their teams were very small. They created internal teams to continue the work, with the number of full-time employees much lower than initially expected. When buying companies with existing teams, they found they could manage much smaller, similar companies with fewer people than the acquired companies had. The optimal point is small teams with high quality standards and sound management.
The company's market capitalization is currently around $40 billion. They started using debt in 2017 or 2018 with simple bank loans. Since 2017, they have redirected almost 100% of free cash flows towards acquisitions. They moved towards debt securities as they gained credibility, experience, and efficiency. When they went public, they had raised only about half a billion dollars in initial equity while the company was valued at about $20 billion, with most of that raised in the previous six months. Most of their track record has been achieved through reinvesting free cash flows.
They take out loans at interest rates five or six points above the Libor rate, meaning loans at 10% or 12%. The average cost of all current debt is approximately 9%, and it is fully covered. These debts are due in 2031, and they can repay them in full before the due date. Their leverage ratio is currently around 2.5 times. Historically, their unfunded returns have consistently exceeded 25%. When interest rates rise, asset values fall, which benefits them as frequent acquirers through lower valuations.
They have participated in almost all or most transactions with other buyers. Private equity firms have raised less capital to do the same thing, potentially putting Bending Spoons in a better position. Replicating what they have built is painful and time-consuming because it relies on techniques that cannot be built overnight. Much of the value comes from their 800 people and the high-performance culture and scientific approach developed over years. They received 800,000 job applications last year and employed fewer than 300 people.
When acquiring companies that have been around for 10 or 20 years, founders may or may not still be on board. The goal is for the company to perform better with Bending Spoons than under previous management. If they can retain outstanding founders and have them do their best, that would be better, but success can still be achieved by providing a better environment compared to keeping the company with the same ownership group.
Quality criteria used to narrow down potential targets include size, since deep integration and radical transformation require huge operational effort and cannot be done at scale with many small companies. The time and effort required to transform a company is not directly proportional to revenue, so acquiring fewer large companies is better than many small ones. They look for predictability of earnings, preferring companies whose performance they can confidently predict for at least the next five or six years. They look for companies through which they can create significant value in technology, organization, product, revenue generation, or marketing, ideally including most of these aspects.
Historically, they have not created much value from customer-oriented synergies. The reason is that their product portfolio has not been large enough to achieve good overlaps. As products like Airtable and Miro grew, they became very attractive to many companies, potentially creating additional dimensions for value creation. They tried customer-oriented synergies and it worked slightly, helping by about 3%, but the greater part of value comes from achieving complete excellence in operations, product, revenue generation, and technology. They do not build organic products because they cannot do everything, and at their current scale with Miro approaching $4 billion in annual revenue rate, launching completely radical innovations is unlikely to succeed and would require employing many resources.
Companies in a saturated phase tend not to be attractive to entrepreneurial engineers or designers. The talent level may be good but not at the level of Bending Spoons. Bending Spoons offers unique career opportunities where people can spend one year rebuilding AOL's email architecture, then seven months helping rethink subscriptions on Vevo, then building platform technology for managing payments, all with the same employer, colleagues, and culture. They are a global company with Milan as the biggest talent center for historical reasons, London developing at a faster pace, Madrid expanding, and plans to hire a lot of people in the United States starting next year.
Europe has 500 million people in the main part with many well-educated individuals. Many have strong motivation to prove they are not less intelligent or competent. The idea that Italians don't work hard is mostly a false stereotype. When acquiring companies and working with existing teams, the teams they recruit often work harder. They hire self-motivated, highly ambitious people with entrepreneurial spirit and give them reason to give their best because they see they can build a unique career.
Private equity firms keep portfolio companies separate because they intend to sell them later. This structure prevents them from owning technological infrastructure across their holdings. If technology is integrated into one company, selling it to another private equity-owned competitor creates licensing complications. They cannot maintain a full team of engineers and designers because transferring a company would require either withdrawing the team (leaving the company nearly worthless) or selling the team along with it.
The structural differences between private equity and Bending Spoons' integrated model explain the performance gap. Traditional private investing allows deploying more capital with less operational involvement, but cannot achieve comparable returns due to these inherent limitations.
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