Bending Spoons CEO: ‘We hope to invest well over $1bn this year’

In the past 12 months, Italian software unicorn Bending Spoons has bought six other startups; most recently, German outdoors app Komoot. Over the next nine months, it hopes to buy another three, CEO Luca Ferrari tells Sifted — and has over $1bn to invest in those acquisitions. 

Once acquired, Bending Spoons gets to work quickly trying to turn those businesses around, frequently laying off the majority of their teams, and figuring out ways to dramatically boost growth. The strategy seems to be working: the company is expecting to make revenue north of $1.1bn this year, says Ferrari — and all of its businesses are profitable.

That makes it a very interesting company in the eyes of investors — and something of a bad guy in certain corners of the developer community. 

“Will people copy them? Yes. Is it easy? No,” says Peter Singlehurst, head of private companies at investment firm Baillie Gifford and a Bending Spoons board observer. “They’ve found a way to take really great products and, bringing to bear their technological excellence running these apps, with a more optimised cost structure, turn them into great businesses.”  

Inside the M&A machine

Bending Spoons’ 10-person M&A team has looked at over 1,000 companies in the past year, says Ferrari. They’re on the hunt for digital technology businesses which they believe can “bring in pretty substantial revenue” — but aren’t fussy when it comes to sectors.

“We need to believe that thanks to our platform — including our first party data, access to talent, scale — we can make the business’ trajectory a lot better. If it’s a declining business, make it closer to flat. If it’s flat, grow. If it’s already growing, grow faster.”

The team will likely look at about 15 companies in depth this year, says Ferrari, most of which will likely be actively looking for a buyer.

“Then once we get very serious with an acquisition, we bring in experts — people who are actually operating our businesses, functional leaders who advise on product, technology and marketing — to validate the thesis once we’re about to make an offer.” 

Bending Spoons has not been outbid to date — “price has not been a problem” — and has only once withdrawn an offer as a result of something discovered during due diligence, says Ferrari.  

Once a deal is done, Bending Spoons tends to move quickly — and “reorganise the company quite substantially”. Just over a month after acquiring streaming platform Brightcove, Bending Spoons announced plans to lay off 198 US employees (around two-thirds of its US workforce). 75% of file transfer platform WeTransfer’s staff were laid off last summer, just over one month post-acquisition. 

“We are very active and quite radical in our transformation. We often rewrite most of the code base, re-architecture the IT infrastructure, add a ton of features, even remove features, change the UI, optimise the monetisation, change the marketing strategy,“ says Ferrari.

“Often the change in direction is so substantial that it’s easier for us to impart the new direction if we also change the leadership team quite clearly, as opposed to trying to first align on the entirely new direction with people who’ve done it a different way — potentially an equally good one — for a while. So we’ve typically parted ways [with leadership teams] very amicably and on good terms, but quite fast.”

Ferrari declines to share details of the kinds of severance packages teams tend to receive, but says they are “well in excess of anything that’s market standard or contractually or  legally required”. 

It’s not a part of the job he enjoys, he says, leaning back in his chair and running his hands through his hair. “I don’t know that there’s a great way of breaking bad news. In my opinion, the least bad way is to be honest about it, and frank.” 

Working at Bending Spoons

The layoffs might have earned Bending Spoons criticism in some corners of the internet — but it’s also won accolades as an employer. It has a 4.7 star rating on employee review platform Glassdoor, and certified as a ‘Great Place To Work’ by the organisation of the same name. 

“It’s the place where everyone wants to work,” one early investor in the company who asked not to be named told Sifted. “I get five or six people per week asking me to help them apply for a position there. That doesn’t happen with any of my other portfolio companies.” 

The Milan-HQd company also sets a high bar for its 1,000 “spooners” — most of whom are hired straight out of university, “by design”, and warns on its job adverts that “Bending Spoons is a demanding environment”. 

“We’re extremely ambitious and we ask a lot of ourselves and one another. While this tends to lead to fantastic learning, achievements, and career growth, it also requires a significant commitment,” the adverts say. 

“They are maniacs when it comes to hiring what they consider the top talent,” says Simone Riva, another early investor in the company. “If you visit their office, it’s amazing and there’s a lot of flexibility and perks — but at the same time employees are expected to deliver.” 

Case in point: Bending Spoons recently posted a job ad for a ‘head of blank (not a typo)’, which Ferrari insists was “not a marketing stunt”. 

“One of our key values is meritocracy,” Ferrari says. “We have different processes internally to keep making sure that each position is staffed with the most deserving candidate.” 

That includes the CEO, he says. “I run an anonymous survey once a year with each of our institutional investors, each of my direct reports, and a selection of senior people from the company, as well as our board, in which they get to answer only two questions: should we look for a new CEO? And then why? The rule is that if more than a couple of people say yes, we’ll start the search.” 

The job ad has been “wildly successful” so far, he says, with heaps of external applicants — “but it’s too early to tell if we’ll hire someone”. 

“And you know, if we need to change CEO or CFO, it’s too bad for the person who’s in that position, but good for the company,” he jokes. 

It sounds unlikely that person would be Ferrari, however. “Luca is one of the smartest minds that I’ve met,” says the early investor. “His ability to be really focused and consistent over the years is admirable.” 

“The guy is working an insane amount of hours,” says Riva. “He could easily slow down now, but he’s not.” 

“He has a huge ambition, and would never sell the company [to a big tech giant],” he adds. “The way to go is to go public — and he wants to go public on the NASDAQ. For them, the IPO will be the main target for the next four or five years.” 

Next steps

An IPO is on the cards — but no time soon, Ferrari says. “We could IPO if we wanted today; we’re definitely large enough, with a lot of interest from investment banks and the stock exchanges, but we don’t have any plans in the immediate future. It’s a possibility, but nobody’s working on it at the moment.”

Instead, he has a far more ambitious focus. “We’re trying to build one of the most successful companies of all time. We want to set a new benchmark for excellence when it comes to building and running a business in general, and a technology business in particular. 

“And we are particularly motivated by the prospect of building one of the most successful, remarkable companies in the world with roots in Europe. We think we don’t have very many champions, in fact, maybe literally a couple, which is a pity, and way too few, considering that we’ve got a population that’s much greater than the United States. We don’t know that we’ll get there necessarily, but we’re trying.” 

So who, I wonder, does Ferrari turn to for advice? 

“I don’t really think there is another company out there doing what we do. I talk about this all the time with investors. There is no clear benchmark. I sometimes say we are a bit like if Google and a private equity firm had a baby.” 

Ferrari says he problem-solves with colleagues and his board members, who include: his three cofounders, Matteo Danieli, Francesco Patarnello and Luca Querella; Bending Spoons’ CFO  Davide Scarpazza and head of talent Anna Lami; two institutional investors, Fabio Canè of NB Renaissance and Tommaso Paoli of NUO Capital; and two independent board members, Bob Mylod, former CFO at Booking.com, and Leah Schwartz, managing director at US investment bank Allen & Company.

But to help him stay “calm and collected”, he turns to his wife, his dogs and a slightly unconventional mentor.

“I often think about — and this may sound funny — but I often think about Siddhartha, the fictional character from the novel, by the same title, by Hesse.” 

Published in the 1920s, Herman Hesse’s Siddhartha deals with the spiritual journey of a young man seeking enlightenment in a world of misguided teachers. 

“I like Siddhartha a lot because he’s a smart guy, very patient, emotionally mature, so sometimes, when I feel riled up, I wonder what Siddhartha would do, and it helps me.”