Luca Ferrari on Building Bending Spoons: Extreme Ownership, Talent Science & Relentless Simplification

Luca Ferrari is a co-founder of Bending Spoons, the technology company he built with his partners by rethinking how software businesses should hire, operate and allocate capital. He explains why Bending Spoons aspires to build “the best company there ever was,” why it favors raw talent and drive over experience and how a centralized talent team uses testing and more than 100 signals to identify exceptional people early. Luca describes the company’s culture of extreme ownership and relentless simplification, including why employees are given more work than they can possibly complete, why teams rotate across businesses and why Bending Spoons eliminated traditional job titles. He also details the proprietary operating system and AI tools that allow small teams to run acquired products such as Evernote, why Bending Spoons buys businesses to hold and transform rather than sell and how operational excellence gives it an advantage in acquisitions. Luca closes by discussing going public, his approach to negotiation and capital allocation and why he believes logic and rationality are more reliable than blindly following data. Show notes: https://davidsenra.com/episode/luca-ferrari Made possible by Ramp: https://ramp.com Deel: https://deel.com/senra AppLovin: https://applovin.com/senra Chapters (00:00:00) Fanatical founders building enduring companies (00:01:23) Luca on building the best company there ever was (00:04:22) The origins of Bending Spoons (00:05:47) Talent and why experience is overrated (00:15:05) Turning hiring into a science (00:23:30) Why Bending Spoons doesn't use bonuses (00:29:26) Why everyone in the company has the same job (00:42:41) On finding great potential and saturating their capacity (00:49:50) Insisting on a culture of extreme ownership (00:59:28) Luca's principle of relentless simplification (01:05:15) Why Bending Spoons doesn't use job titles (01:10:27) The proprietary operating system behind Bending Spoons (01:17:07) Why Bending Spoons isn't private equity (01:19:32) How Bending Spoons acquired & transformed Evernote (01:28:01) How Bending Spoons uses AI (01:40:42) How Bending Spoons thinks about capital allocation (01:43:50) Why procrastination without laziness is good (01:46:46) Operational excellence is not optional (01:49:07) How Bending Spoons negotiates acquisitions (01:54:47) Logic over numbers Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02David Senra?

  So we're gonna start this episode in a locked-in stance, because we've just been talking off-camera, and I was like, "God damn it, we need to start recording immediately." I didn't even want to think to start here, but you noticed the Apple oven mug, and then you're like, "Oh, Ferrari," and then you laughed. What do you think of Adam Ferrari?

• 0:16Speaker 01

  Well, he's great. I mean, uniquely focused, ruthless, and I mean it in a positive way when there is a goal. Goes for it, very rational, effective. I mean, 10 out of 10 on that, in those areas, I think.

• 0:33David Senra?

  So when I published the episode that I did with him, I think I titled it like "The Best Founder No One's Ever Heard Of", because at the time, he was running like, I don't know, like $150 billion market cap company with like 400 employees, and they were printing like $6 billion in cash. And he kind of lays out exactly like his... We were talking about fanaticism before we started recording. It's like, he's just fanatical. It's like, the success of his company goes before almost anything... No, it does, go before almost anything in his life. He's just completely obsessed and committed, you know, to essentially like excellence. I think you share that trait with him. So we had lunch together probably six months ago. I talked to you right after, I was like, "Man, you gotta do the show, because I know a lot of founders. I don't know any other founders that think like you." One of the things that you said, that I think... Everything else, all the other ideas flow from this,

• 1:16David Senra?

  is that you want to be the best in the world at what you do, even if that's not possible. Can you talk a little bit more about that?

• 1:23Speaker 01

  I've always been kind of polarized in my interests. I either choose to do something, and then I'll try to match that out, try to be the best or part of the best team, or I will try not to do it at all. Or if it really has to be done, then I'll literally try to kind of just check the boxes for, you know, minimum commitment. All sorts of rewards, emotional and material, are at extremes. I think I have a close to 10 out of 10 relationship with my wife. I think to me, that's worth 100 times more than having an adequate relationship with my wife.

• 2:06Speaker 01

  Same with my job and my colleagues, trying to build the best company there ever was. And we understand that's aspirational and likely nearly impossible, but I think that if we get close to that accomplishment, the rewards, the fulfillment, the satisfaction, the learning along the way, financial rewards will be just exponentially greater than just doing well enough. And so I think you have limited time and energy. You want to find one or very few pursuits, or to try to go all out, and everything else, keep it, you know, eliminated if you can, or keep it at the bare minimum.

• 2:43David Senra?

  So you just said you're trying to build the best company there ever was?

• 2:47Speaker 01

  Yeah, just again, aspirationally. Don't take it... It's not meant to be arrogant. I know we have a very slim chance, but just, you know, the waking up in the morning and thinking, "We're not building a nice church," or "trying to build the greatest cathedral" that anybody has ever built. That's a lot more exciting to me. Gets you further, it's more fun, energizing. Better people will want to work with you, and I think one of the big ways in which life is interesting is surrounding yourself with amazing people, better people than you are, if possible, so.

• 3:14David Senra?

  Do your co-founders feel the same way?

• 3:16Speaker 01

  I mean, you'd have to ask them. I think we, probably for the most part, I'd say, yeah.

• 3:21David Senra?

  But is this something that you guys repeat to each other, like throughout the company, you're trying to build the best company ever?

• 3:25Speaker 01

  We're not big on founders. I know this is maybe ironic to say, you know, even your podcast, but we try to eliminate the idea of founder from this company as much as possible. We think it distracts people from the company. The company is the center, and whether you're a founder or you joined a little bit later, all that matters is your contribution, your trajectory. The people at the company, those at least I know the best and with whom I work the closest, regardless of whether they're founders, I think broadly they share this ambition. So yes, but it's not necessarily a founder thing. It's more of a Benning Spoons thing.

• 4:01David Senra?

  The way I've been describing you to other founders is like... It's almost like Luca is like the Galapagos island of like entrepreneurship, right? Because if I'm not mistaken, when we were talking, you're like, "Well, I don't really listen to like podcasts. I didn't read books. I didn't study other entrepreneurs." You've kind of evolved the way you build your company, like completely independent of anything going on around you.

• 4:23Speaker 01

  Yeah, I think part of that is... I don't know how much the audience knows about Benning Spoons, but we started in Copenhagen, Denmark, quickly. Thereafter, moved it to Milan, Italy. These are not exactly, especially Milan, not exactly, and certainly not at the time, over a decade ago, a center of entrepreneurial pursuit and an ecosystem where you've, you know, you turn left and right, and you have all these other startups, startups or advisors and whatnot. So, and of course, we were absolute nobodies, so it's not that we could pick up the phone and call Jeff Bezos, right? So we just had to figure things out on our own. We were trying to build, aspirationally speaking, the best company in the world. If you emulate what most people are doing, you're pretty much guaranteed to, you know, at best be mediocre, mediocre plus, maybe you execute a little bit better.

• 5:08Speaker 01

  But if you want to try to be the best of the best, you need to take some risks and rethink things. And so we figured, okay, let's try to experiment, invent, think from first principles. And we will make more mistakes. It will take longer than if we copied some of the tried and tested approaches, but we should be able to find at least a few insights, a few new ways that will set us apart. And I think being more isolated geographically has probably played to our advantage in that regard, so that we weren't under the influence of the mantras that everybody, you know, the big startup hubs, over time, was preaching.

• 5:47David Senra?

  Let's give a little bit of background of Benning Spoons. You had a startup before Benning Spoons that failed, right?

• 5:52Speaker 01

  Yeah.

• 5:53David Senra?

  Okay. What did you learn from that failure? And then what lessons did you learn from that that helped you start Benning Spoons then?

• 5:59Speaker 01

  Yeah, so that was called EverTale. We were... It went on from 2010 to 2013. We were using AI to write diaries automatically. So you would install an app, and then it would collect data and figure out what you'd done, where you had gone and whatnot. It was actually pretty cool, but never managed to make it scale. Commercial failure. Some of the most crucial lessons were, one, the importance of talent. So we had a very small team at peak, maybe 12 people, but we saw that the contribution of the best person we had on the team relative to, like, say, the median person, forget about the, you know, the bottom, but was easily 10 times, that's great.

• 6:43Speaker 01

  Like, literally worlds apart. So that taught us, okay, the range of productivity, at least in our field in digital technology, is massive. So the value of having on board that sort of individual is gigantic. And also, that person who was performing at the peak in that group was actually one of the least experienced people. And so that showed us, okay, maybe experience, you know, certainly valuable, but not as critical as people sometimes tell you it is. If you have someone who's really smart and really cares, often they'll be able to deliver as much value, if not a lot more, value than someone with a lot more experience.

• 7:22David Senra?

  Let's give a concrete example. So I'm just gonna pull up the notes. When we were having lunch, I was like, "Oh, this is too good." And I started just texting on WhatsApp. I'm like, and I think at the bottom, I say, like, "These are notes for when you do the show," even though this was like eight months ago, or whenever it was. And you mentioned that, you're like, "Hey, you said something interesting. You're like, 'I'd rather hire young graduates.'" Let's talk about the EverNote story in one second. You said, "Most executives are overvalued or overrated in your opinion. I'd rather hire young graduates. Find someone good, and then saturate their capacity." Can you give examples of how you've done this?

• 7:54Speaker 01

  Why talent, let's say, over experience? I think there are a few reasons for that. Number one, most of the things you do, and I mean broadly, in most industries probably, certainly in the technology industry, are not rocket science. They do not require immense amounts of notional knowledge and repeated, you know, extensive track records. They require actually a good brain and a desire to do well, to achieve, first and foremost. And also, our field technologically, but also in terms of customer expectations, evolves very quickly. So experience gets stale relatively fast.

• 8:38David Senra?

  Wait, before you go on, sorry, I'm gonna interrupt you. Explain more about customer expectations evolve rapidly in your field.

• 8:44Speaker 01

  Yeah, I think, you know, I'm not sure how it works if you sell salt, but when it comes to selling technical tools, what people consider excellent today, or an intuitive interface, or, you know, effective monetization, are very different from what things looked like 10 or 15 years ago. Completely different. I mean, if... I'm sure at least, you know, people in the audience who are at least thirty-five years old will remember what software looked like in the early 2000s. And, you know, by today's standards, that's primitive and almost unacceptably bad. And people would never use it or buy it. And the ways you build that software, and by the way, that's just the, say, customer-facing

• 9:28Speaker 01

  layer, but then behind the scenes, how, and this is only something that probably people can understand if they've built software before or work with AI. The way you efficiently wrote software in the, you know, in 2010 bears very little resemblance to how you do that today in 2026. Whatever people learned back then, yes, some of it will port. I'm sure, you know, you are more mature emotionally, you know how to work with others and whatnot, but a lot of that experience, basically, you can throw it away. The value of accumulating many years of experience is not as great, I believe, as some people think it is. And additionally, not all experience is created equal. You can actually get worse through experience.

• 10:10Speaker 01

  If you're exposed to low standards, for example, of performance, you'll normalize those over time and you'll actually be a less capable team member than someone who has never been exposed to any standards. And maybe, you know, naturally is inclined to believe ideologically perhaps that the bar should be held higher. Or if you've been working for a long time in an organization where the way to progress and succeed is by pleasing others and doing what they tell you to do, even though you don't necessarily think it's optimal for the organization, call it politics, I don't know that that experience will make you a lot more capable necessarily. If you, for example, join a company like Ben's Puns, where I'd like to think we're a radical meritocracy and we try to be rational in deciding and do what's right for the company.

• 10:54Speaker 01

  So for all these reasons, experience can be extremely valuable, but it's not necessarily extremely valuable. But talent, meaning a good brain and a massive eagerness to excel, grow, make an impact, those never fail to be valuable. And so, you know, in a competitive labor market where you can't have everything at the same time, you need to prioritize, we tend to favor talent, also because experience, we can give it to you. You know, we just have to be a little bit patient, make sure we expose you to good challenges and surround you with amazing colleagues, you'll accumulate experience very quickly. First principles, really, and based on those anecdotes and observations during the first company I co-founded, but also at Ben's Puns in the early days, we repeatedly saw that that thesis was supported by facts.

• 11:39Speaker 01

  And so we kept investing in, first of all, attracting excellent talent and then creating, ideally, the perfect conditions for that talent to flourish very, very quickly. Because of course, you need to establish your structural operations to get the most out of the human capital you have. I would build a company differently if I had to work with inferior talent than we do because we believe we have amazing colleagues.

• 12:07David Senra?

  Well, say more about that. So how did you build the company?

• 12:10Speaker 01

  Yeah, so for example, I think if you have, and maybe there's nothing you can do about it, if you have mediocre talent, then I think the appeal of process and procedures becomes greater. Checks, rules, because you need to guide more. You can't count on people to problem-solve autonomously as well. You can't count on them coming to work with fire in their belly as much. You know, process and procedures, sometimes we say they are terrible, but honestly, they can be, you know, the lesser evil if you're in that situation. If you are lucky enough or good enough for whatever reason to have a very strong team, then I think generally speaking, you want to have as few rules as possible. It's not that process and procedures are always bad. There are cases where you want to have some of those, but to the extent possible, get

• 12:55Speaker 01

  rid of them and give people massive leeway to express and develop their talent, makes them feel trusted so that they will bring the best of themselves to work and that will be good for everybody. They get to do better work, they get to learn a lot faster, their careers can be turbocharged. But again, that only works if you have a very good team. I suppose it's probably similar with sports. I would imagine that how you coach, and I'm going to the extreme, I'm not saying Ben's Puns is, you know, is bad, but if you were coaching the, you know, the Team USA, Dream Team with Jordan and Barclays and those guys, you would do it a certain way that would be different, the way you would optimally coach a team of kind of modest talents.

• 13:39Speaker 01

  You can probably win with both, it's a lot easier to win with Jordan, but certainly you're not going to tell your more modest talents, okay, go and figure it out. You will try to give them a system that's a lot more guiding. So we try to approximate as much as possible, like the Dream Team aspirationally, and then give a lot of space for those people to live up to expectations.

• 14:00David Senra?

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• 14:43David Senra?

  massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp and you should too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. Okay, but go back. How do you identify talent when talent doesn't have experience? Have you done that?

• 15:10Speaker 01

  I think you can think about life in general as, when it comes to people and accomplishments, as you control certain inputs, you know, how much you work, what you do when you work, for example, to make it super simple. And then there is a bunch of elements you don't control, call them boundary conditions, sometimes knowable, sometimes unknowable, sometimes fixed, sometimes shifting. And the combination of those ingredients leads to outputs or results, or call it what you will. Outputs, results are fairly easily observable. Sometimes there is a gigantic amount of inputs that go into achieving a certain output and those inputs go into it for a long period of time, whereas the output can be very simple. You know, the company achieved a certain amount of revenue, whatever.

• 15:55Speaker 01

  You won a certain tournament, you know, no matter the field. And so it's a lot easier to just look at the results, the outputs. It's the convenient, sometimes lazy way. But life typically, in most pursuits, most endeavors, is so complicated. The amount of inputs, the amount of people contributing, different inputs, the amount of variables you don't control, those boundary conditions are such that if you just look at the outputs, sometimes you get a massively distorted picture of what the person contributed. A lot of it could be luck, a lot of it could be actual human performance, but not by that individual, someone else, who just, you know, you fail to know was involved, maybe wasn't as front-facing. Now, the more extensive someone's track record is, the more results likely correlate with actual talent.

• 16:40Speaker 01

  Take an investor. You can get lucky one year, two years, four years, but unlikely 30 years. I don't think anybody would question that Warren Buffett is almost certainly insanely good at investing. You can never prove it definitively. It could have been lucky for decades, but that's astronomically unlikely, right? But if you find any hedge fund who delivered 50% performance in any given year, it could easily be they got lucky with two stock picks. Maybe they were, those were terrible ideas, maybe they picked them for the wrong reasons, but you know, whatever, the boundary conditions changed and they made a lot of money. So when you pick someone who's very experienced, decades of work, probably you can get away with just looking at the results, maybe some reference calls, very likely you'll get a reasonably accurate assessment.

• 17:24Speaker 01

  But if you have to pick someone who hasn't even graduated yet, or maybe he's been in the workforce for a year or two, then you don't have the luxury of using this, like the sample is too small.

• 17:34David Senra?

  Exactly.

• 17:35Speaker 01

  You need to find different ways. And something we do is making extensive use of testing. So we develop tests that people go through that we have found over time proxy pretty well their same mental capacity and faculties. For example, we have, over time, developed, we've really built a science out of studying people's track records, including academic records and personal projects and similar things, whereby in someone's application, we identify over a hundred different signals. And through those, we predict their long-term potential.

• 18:16Speaker 01

  It's not entirely dissimilar for what a stock trader who's algorithmically oriented would do. You know, the more quantitative hedge funds, they would identify and test hundreds, thousands of signals. Many of these are only very marginally predictive, but in aggregate, they, you know, they make you predictive enough that you can succeed because you're just better than others. So we have all these signals, some of which are completely obvious, you know, someone's GPA tells you something, you know, higher GPA is better than lower GPA. It doesn't prove anything, it's not definitive, but it's a good sign. Some are more subtle and we keep working and investing scientifically in identifying and measuring these signals.

• 18:56Speaker 01

  So over time, I think we have developed a competitive advantage in finding people who, despite their minimal track record, are very likely to excel.

• 19:08David Senra?

  Okay, so this is one of the notes that we talked about at lunch, and this is one of the things I texted you, where you essentially said you need, a lot of other companies kind of, like, they don't really, not many companies have brilliant people in HR. And you're like, no, you actually need brilliant people in HR. You said that you can make hiring a science, that you had at the time, a team of like 50, and you actually, these are engineers, these are not typical people that you find, right? And then you say you compare one to several years of performance, the signals from their CV, which is what you just described, or these hundred signals, signals rather, and that you've centralized hiring and firing. And I guess these are, you call them talent managers, and they're in charge of both Entries and exits. The hiring firing is centralized for all the companies that you own.

• 19:51Speaker 01

  Yeah, it's a very unusual. But by the way, the signals are not just from the CV, but they could be from email exchanges with our recruiting team. From the tasks, we ask a candidate to go through anything, really. Anything qualifies as a signal and we just care that it's predictive. It doesn't have to be something that, let's say, intuitively immediately makes sense, as long as we can prove it's likely not a statistical fluke.

• 20:14David Senra?

  But actually. Give me an example of that. I'm a little confused.

• 20:16Speaker 01

  Well, I mean, for example, one of the qualities that we value in people is, because what we do is such a team sport. You need to be somewhat collaborative. You don't have to be the nicest person in the world, you know, like, but if you are arrogant or dismissive of others or just an asshole, that that doesn't work typically. Unless you're a freaking genius, we might, you know, accept it occasionally, but it's almost nobody is. So for most people, you need to be nice enough. And we find, though, that when they're interviewing even assholes, especially because these are smart assholes, because they've already passed a more cognitive oriented test, they're generally quite nice. Because they know that if they come across as super arrogant, they're not going to get an offer.

• 20:58Speaker 01

  We found that whether the interviewer felt that the interviewee was, you know, open to criticism and reasonably pleasant to talk to, wasn't a good predictor of whether they were actually collaborative on the job. So we have a role, call it like a, it's almost like customer support. People will help you with the more logistics of your application process of, you know, scheduling interviews or, so it's more of a support role, which clearly does not come across as in any way connected to the final assessment. How people interact with those is a lot more predictive of how they actually are as human beings. And so we found that people who were curt and sometimes, of course, even disrespectful occasionally,

• 21:40Speaker 01

  that's rare, ultimately that predicted poor behavior in a social context, much better than how they interacted in an interview. You know, again, one of hundreds of signals in and of itself is not definitive, but it helps form an accurate picture at the end of the day. And that that would be for collaboration, but then we would have others for hardworking attitude, whether you're creative, whether you're logical in your thinking, perseverant, you know. The important things that, identifying what's important is not rocket science. You could imagine what's important to performance. The difficult part is spotting it through these kind of subtle signals.

• 22:16David Senra?

  And the interesting part is that you just said, how many companies do you own right now?

• 22:19Speaker 01

  We've bought a little over fifty businesses over time.

• 22:24David Senra?

  But you could see, like, if you own fifty businesses, there's multiple different ways. You're kind of like a conglomerate, you know? Like, the hiring could be pushed down to the actual individual company level. And you're like, no, no, this is so important in the talk I had.

• 22:37Speaker 01

  Almost all that matters.

• 22:38David Senra?

  I was gonna say, maybe the most important. So you just said it's almost all that matters, so it is the most important. So I'm going to centralize this. Are you also then, the centralization allows you to kind of take the insights that you learn from one of the fifty and disperse it to the other ones? Is that what happens?

• 22:51Speaker 01

  I firmly believe that in business entrepreneurship, the number one thing is call it a strategy, meaning what we're trying to do, how and why do we think it's going to work? That is, if you have a terrible strategy, you can have, you know, the best team, you're not going to go anywhere.

• 23:11Speaker 01

  But once you have a strategy that makes sense, the team is almost all that matters. I'd say the team and the culture, which is like the rules of how we engage with one another, is basically almost all that matters. And so I don't think there's over investing in creating a great team within vision. And we try to be generous in our time and resources when it comes to that. So why is centralizing hiring and parting ways with people? I think there are plenty of good reasons for it. One is that team managers, in most, by the way, in most companies, it's say you are, you run a team of ten people. Most companies, you'd be deciding, maybe there's a budget, like you know you can hire two people, but once that's in place, you'd be deciding who gets hired. Probably HR will screen CVs and send you, and maybe pre-interview a bunch of people

• 23:56Speaker 01

  and send you maybe five candidates, and then you pick the one you prefer. End of story. We think that system is bad for a few reasons. First of all, hiring managers, meaning that that person runs a team, have almost all the wrong incentives in hiring. For instance, they probably don't want to work late or on the weekends. They they feel they they need help, so they will try to fill the position as quickly as possible. I'm sure they will not hire someone who they think is a net negative for the team, but as long as they find someone who they think can get the job done somehow, they'll probably get that person. Obviously, as a far sighted ambitious organization, you don't want to have,

• 24:41Speaker 01

  you don't want to hire the first person who's adequate. You want to hire someone who can be amazing over time. So first, a bad incentive. The second problem, and it's connected to that, is if you are running the team, probably most people, although they would be willing to coach, if they, it comes down to it, they would much rather hire someone who's already fully mature and competent. So they, again, they can either do other stuff or work less. If you leave it to a hiring manager to decide, they'll favor very experienced candidates over green, immature, but potentially much over time, much better contributors.

• 25:18David Senra?

  I like that you identified the incentive misalignment, right? Did you find typical companies? What's the incentive structure for your hiring managers in your company then?

• 25:25Speaker 01

  Well, there's none, just trust. So they don't have any any any bonuses, any variable pay. We just tell them, we trust them to build the best organizations they possibly can, and then that's it. And we find that if we hire people who are intrinsically motivated and who like the project and you work with them and you're deserving of their friendship and admiration, then they will do their very best to achieve the common goals. In fact, we find that setting highly specific, concrete objectives to reach career progression or pay are tied, almost invariably leads to bad outcomes or inferior outcomes. Meaning maybe people will occasionally try a little bit harder in the short term,

• 26:08Speaker 01

  but then there's all sorts of deviations from what would be optimal holistically for the company, and that's instead optimal for specifically checking the boxes of that particular incentive system you created. And so we just tell them, we trust you to create the best teams you can. So hire well, part ways with, hopefully we don't need to part ways with a lot of people. Well, when it's necessary, please do that. Let's talk if you need help, let's discuss, but ultimately it's as simple as that. And by the way, it's, it shouldn't come as a shock. I mean, most of us, I think, when we have worked in projects where we thought we were doing incredibly well and everybody was pushing in the same direction, how frequently were there super mechanistic KPIs with our pay tied to it? I've never seen it.

• 26:51Speaker 01

  I mean, generally in startups, for example, yes, there's a broader idea. If we do really well, maybe our equity will be worth more, but it's highly indirect and ambiguous and when and how much. People work hard and try their best because, you know, they feel a sense of ownership. They like working with one another, they care about the project. So we try to recreate that that same setup. We give them full trust in leading hiring. And by the way, because this is centralized, they also have a much bigger sample and much better information, both in terms of what's available out there and what works and what doesn't. Again, if you're a hiring manager in a team of ten, it's probably bigger than most teams. At best, you're going to hire three people a year. I don't know, I'm just making it up, something like that.

• 27:33Speaker 01

  It's not a huge sample to learn from, and you're not focused on it. So you're not going to wake up in the morning thinking, how can I be a better interviewer? Obviously, it's not your core problem.

• 27:45Speaker 01

  For our centralized talent team, that's all they do. So, you know, they, there is no professional pride other than we're good at this. They do it at scale, so they have massive, massive sample size. And they get to see what kind of talent we can attract across all different, let's say, roles and positions. Therefore, they're much better positioned to understand whether someone is the right hire for a particular role, because they they've seen what's coming in time across the board. And so they know, they're better positioned to know, okay, if we wait a little bit longer, statistically speaking, we're likely or are we not likely to find someone who can be even better. So they have all sorts of advantages in terms of their focus, their, you know,

• 28:25Speaker 01

  the informational sample that supports their decision making, and also the efficiency that they, they are basically, yes, they're hiring for a particular role, but nothing prevents them from picking from other pipelines potentially and, you know, swapping as needed. Again, maybe someone applied as a product manager, but they see that they could actually be amazing as a growth manager. They can easily make the swap because they are looking at the entire thing, not just that particular.

• 28:53David Senra?

  I really love your insight. It was like, well, if you're you're running the team and you feel the pain, you might just take the first candidate that comes along. But your whole thing is like, we know our strategy works, so now we're just going to spend all of our time on talent. The conclusion you just shared here reminds me of Brad Jacobs, who was on this show last year. He says, he has a great maxim where he's like, an empty seat is less damaging than a poor fit.

• 29:15Speaker 01

  Oh, yeah.

• 29:15David Senra?

  He's just like, I'll leave the position empty. Like, it's going to be painful, but it's going to be not, it's going to be way Worse than if we hire the wrong person and he'll just leave it indefinitely till they find the right person. It's very similar to what you're saying.

• 29:25Speaker 01

  Yeah, completely. And look, I think in general, having sharp job descriptions is bad. You want to have a, there is a blob of work that needs to be done and different things are differently important, urgent. And if you have a team where people don't feel siloed, they're just responsible for the company's success. Again, just like a startup, if you're failing to hire someone who's supposed to take care of like a little part of this blob of potential work. It's not that that blob is ignored if it's really important. Someone will physically postpone something that's a little bit less important to take care of it, right? And so I always say, I generally talk to new hires. We have sessions where we discuss some of our cultural principles and other things.

• 30:09Speaker 01

  And one of the things I sometimes say is that we all have the same job at Benishpoons, all of us, starting with me. And that's helping the company succeed. On a daily basis, it's helpful to say you're a software engineer or a product manager, just to, so we don't step on each other's toes too much. But essentially, everybody's job is the same, do whatever is needed to help the company succeed. And so I'm not worried about a seat being emptied because I don't think the concept of seat even exists really. We'll just adapt and take over and complete the work that needs completion and, you know, we'll just not do some other work. At the end of the day, like very little work in a company, especially a digital business, is strictly necessary. Almost all of it is elective, optional. It's just a matter of what's high priority and lower priority.

• 30:53David Senra?

  Say more about this.

• 30:55Speaker 01

  Well, I mean, almost everything you do, you could also not be doing, almost all of it. And so winning starts with doing what's ROI positive, which is only a small portion actually of the complete universe of possible projects and tasks. And then doing things in order of priority, so from say highest ROI, I mean, the risk of being a little bit simplistic. And your resources will be limited. I think most companies do things that are ROI negative. You know, if there is 100 things they could be doing, but only 10 ROI positive, many companies are doing 40 things. Hopefully, at least they do the 10 that are ROI positive too. In some cases, tragically, they're now doing some of the ROI positive things despite doing so many other things.

• 31:37David Senra?

  Wait, so why do you think they're doing this? Is this a lack of talent, an issue of focus, not understanding prioritization? Like, what's going on there?

• 31:44Speaker 01

  Oh, I mean, all sorts of reasons.

• 31:45David Senra?

  For the companies you buy, because obviously you're buying things that are, there's a brand that's well known, there's a customer, there's a product there. But in almost, I think, every single example, you've massively improved everything you've purchased. So what are like the most common mistakes that people previously, under previous management were making?

• 32:02Speaker 01

  A lot of the reasons for those opportunities not being seized, frankly, lay outside of their control. Some of it is perverse incentives. If you're running a business on a standalone basis, especially for a public company, but also private companies, ultimately they're aiming to go public. So it's kind of same. You'll be judged on what I often, you'll be judged on what I would, let's say, consider ultimately secondary, if not even vanity metrics, rather than, let's say, valid creation through cash generation. For instance, if you are running a business where most of the revenue comes from subscriptions

• 32:47Speaker 01

  and you know maybe that the optimal price is a higher price. Like in every, pretty much with any product in a free market, if you raise prices, you're going to have fewer customers, which can be fine. You know, maybe you have 30% fewer customers, but each ultimately contributes twice as much, you're better off, right? However, often the markets will punish you dramatically if you do that because when they see that the number of subscribers has gone down, even if revenue has gone up, they would not like it. And we could debate why that's the case, it's an interesting discussion. But if you're a management team, ultimately in that particular context, you will have to heed the opinion or expectations of the market

• 33:30Speaker 01

  and you will not do that pricing change, even if you know that it's going to be positive. However, if a company, a business is run within the broader Benishpoons where none of the businesses, let's say, ends with itself, but it's a piece of a broader puzzle, a source of cash for further deployment and growth, then it's much easier to make those otherwise unpopular decisions. And even investors would potentially support them because they're not focused any longer on, I want, say, Evernote to have as many subscribers as possible. Yeah, all has been equal, I want to have more subscribers, but I would rather have an Evernote that generates more revenue, more cash flow, so that it's more accretive to the bigger Benishpoons and we can go after bigger acquisitions and thrive. So there are incentives, and this is one example. Another one is talent.

• 34:15Speaker 01

  Sometimes businesses, when they have matured and, you know, everybody understands and sees they're somewhat, somewhat saturated their opportunity, you know, maybe they're growing 15%, maybe they're flat, but they're not doubling every year or something. Often, they have long stopped attracting some of the most hungry, ambitious talent. And so these executive teams have access to perfectly valid talent, but maybe not against standout talent.

• 34:41David Senra?

  And wait a minute, so I just, I think it just clicked on one of the like unexpected benefits of what you're doing. It's like you buy AOL and I'm working on AOL. I don't think I'm working for AOL, I think I'm working for Benishpoons.

• 34:54Speaker 01

  Exactly. So, you know, consulting, like, you know, the big strategy consulting companies, McKinsey, BCG, Bain.

• 35:03David Senra?

  Did you have, you got hired there, right?

• 35:05Speaker 01

  I got hired, I got hired because we had, we saw in parallel with the startup we were talking about. So I have a background.

• 35:11David Senra?

  Tell the story, we're going to go back on Benishpoons, this is a hilarious story, dude.

• 35:14Speaker 01

  So I have a background in engineering, physics, and with two friends of mine, also engineers. We had this idea of building that company, that AI self-writing diary I was describing earlier, Evertail. But we had no money, you know, all of us coming from countryside in the northeast of Italy.

• 35:32David Senra?

  You come from like a town of what, 900 people or something like that?

• 35:35Speaker 01

  At least at the time, yeah, fewer than a thousand.

• 35:37David Senra?

  I don't think anybody in your family went to college, I think your parents cut hair, right?

• 35:41Speaker 01

  Yes, almost they're retired now, but yes, they, they used to.

• 35:46David Senra?

  Maybe some of those billions you got in your pockets are helping them retire.

• 35:51Speaker 01

  Well, it's all virtual, I have a whole lot of stock. So, so anyway, we wanted to build that startup, but we had no money. And it wasn't, at least we thought it wouldn't be easy to raise seed capital either. And maybe it's easier or was easier and certainly easier in the States. It wasn't for us, and so we figured, how do we do this? And so the three of us, very good friends in the time, and even more so today because we've gone through so much over the following 15 plus years. We figured, okay, we all, all of us look for a job and whoever gets the most lucrative offer, accepts it and pays for rent and food for the other two. The other two would work on a prototype and basically the startup until we can convince someone to give us some money.

• 36:36Speaker 01

  So whoever is working can quit and we can all focus on the startup. We all look for a job and, well, frankly, one of us was doing a PhD already. So that was, you know, our backup plan, but not a super lucrative job. So that, you know, we were hoping to do better than that. And I happened to get an offer from McKinsey for a consulting job as a strategy consultant. And so that was the best offer we got. And I remember I was terrified because I, I mean, I'm close incapable of lying or being opaque. I always want to be honest and transparent, but that's why I decided I would tell the partner from McKinsey,

• 37:15Speaker 01

  who extended an offer to me, that yes, I was going to work there if they wanted me, give it my 100%. But the plan was as soon as possible for me to quit, to go to the startup. And I was so convinced that they would withdraw the offer, you know, because who wants to hire someone who was kind of as a, who's not planning to hear?

• 37:38David Senra?

  Hang on, I'm going to be there for a little bit, I'm trying to leave as fast as possible.

• 37:40Speaker 01

  Exactly. Incredibly, that partner was enthusiastic about the project and said, yeah, it's great, you know, well, we want to have you here.

• 37:52Speaker 01

  So very grateful, very inspired, worked very hard, as hard as I could. Was working on the, on the startup in the, you know, physically during the night. But not like when people say during the night, they mean from 7:00 PM to 9:00 PM. I mean, like from midnight to in the morning and then on the weekends. And then I remember after the one year at McKinsey, I had my, I don't know, three weeks of vacation or something like that. I spent to work like full time on the startup. Anyway, about a year later, we managed to raise about half a million dollars. And so I quit, I mean, I finished a project another two, three months and then I left. So yes, that's my stint in consulting.

• 38:35Speaker 01

  And I, and I think I saw something there that I think has some similarities to Benishpoons at the time. Most of the people who applied to work at McKinsey, and I'm pretty sure it was the same for BCG, Bain, these other consultancies, were very excited to be working there. They got some of the best Radoits, at least from business, maybe not as much from engineering.

• 38:57Speaker 01

  But then you would end up serving telcos, banks, insurance companies, to which you would never have sent your CV. And I think Benning Spoons is kind of similar for software engineers, product designers, product managers. I believe we get some exceptionally good talent, especially students in Radoits. For reasons we can discuss, but talent assets is one of them, career opportunities. And then you end up working on AOL or, you know, again, Evernote. Some of these businesses, I, they, these people would then have applied if the, the, the whole prospect had been to, to work there for, for five years or 10 years. But they are incredibly excited and rightfully so to spend, say, 12 months or 18 months on AOL rebuilding the technological foundation.

• 39:41Speaker 01

  We think in the, you know, customer experience monetization, that's a very interesting challenge because you get to change a lot of stuff on a very large user and customer base. So you, you, you get the, the best of a startup and a big corp. From the big corp, you get, we're working on big user and customer bases. This is not, we're not trying to find product market fit. We have a lot of resources, but from a startup, you have a tiny team, lots of responsibility. We're actually making big changes. So it's not, we're not refining a button or trying to add the next 0.5% in revenue. We're trying to, to rebuild almost from the ground up in many cases. And so going back to, what, what are some of these executive teams from the acquired companies getting wrong? Well, they're often doing well, but they're, they can only work with the teams that realistically they can attract.

• 40:26Speaker 01

  And we are often able to bring in a lot of fresh talent with the new perspectives and some excellent skills. And so it's a lot easier to rethink and rebuild these companies when you have access to this, to this talent pool.

• 40:38David Senra?

  One of my biggest partners is Ramp and I'm really close with the, the founders there. And I was happy to be with them the night.

• 40:44Speaker 01

  Eric.

• 40:45David Senra?

  Eric and Kareem.

• 40:46Speaker 01

  Yeah, yeah.

• 40:46David Senra?

  But I was with Kareem the night that, uh, one of their main competitors, who they didn't even view as a competitor anymore, but everybody else did, Brex got acquired. And Kareem said something interesting. He's like, oh, uh, you know, it's like, oh, how do you think about this? He's just like, well, you know, there, people thought there was like a war between Ramp and Brex. He didn't. And he's like, well, if there was a war, it's definitely over now. And I go, why? He goes, best talent's not going to go to Virginia and go work for Capital One. He's like, we're going to keep getting better talent. And even if that, like, in that, the gap between, you know, the talent that we have and the talent that they're going to attract there. He's just like, it's like, you've played it out year one, year two, year three, five years from now. It's like, it's over. It's all about people. It's very similar to what you're saying.

• 41:25Speaker 01

  Yeah, I don't know their industry well, but it sounds plausible. I tend to agree with that.

• 41:29David Senra?

  Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, 11 Labs, Uber and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay and manage any worker anywhere in the world. So you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers.

• 42:11David Senra?

  The founder of 11 Labs has a great description of the value Deal can give your company. He said, "We built 11 Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories and ideas to every corner of the world." Deal is trusted by over 40,000 businesses. Learn how they can help your business today by going to deal.com/cenra. That is deal.com/cenra. I want to go back to this idea of saturating their capacity because it's still one of the most interesting things you told, you told me when we had lunch. So like, can you give an example? Okay, if I, you talked about, you know, it's better to have no habits than bad habits.

• 42:54David Senra?

  So I'm going to find graduates or in some cases, people that haven't even graduated yet. They might start as like an intern or very entry level at Benning Spoons. And then you're like, oh, we identified this talented person. And what do you mean by saturating their capacity? Like, give, give like concrete examples of how you've done this.

• 43:07Speaker 01

  Yeah, everybody at the company, certainly the people who have shown promise, they should have way more on their plate that then feels even remotely comfortable. And the reason why you should do that is, is manifold. The first reason is every time you choose what to work on, whether you do it consciously or unconsciously, you're prioritizing a set of work items, each with its own return attached. Again, you may be unaware of potential returns or very deliberate, but either way, that's what's happening.

• 43:37Speaker 01

  The bigger, the universe of, uh, let's say, work items that you can prioritize from mathematically, the higher the returns on your time you'll deliver. Let's say you have 10 possible tasks. If I add an each with a certain, let's say, ROI attached, if I add the 11th, it's, it's impossible, assuming that you select well, it's impossible that adding an 11th task will lower the ROI of what you choose to do. Cause you're, you still have the other 10. So if this is lower ROI than the others, you're still going to have to do the others. But it's, it's possible that it happens to be the highest ROI of all. And so you end up doing something more valuable.

• 44:17Speaker 01

  So the more work you give people, the better the opportunity for them to, to create value. Now that's especially true if they choose well. And therefore it's very important to work with people who are smart. And it's very important for, for, for managers, for leads, probably the number one thing they can do, or certainly, you know, one of the most important things they can do. And we try to coach them in this regard is to help the reports select well. So that's the most important thing. The other, uh, very important thing, uh, in, uh, that, that you accomplish when you give people a lot more work than, than, than feels comfortable is you're really forcing them to

• 44:57Speaker 01

  come to terms with the immensity of, of the, of the possible. We find that sometimes people, as they, as they grow and, uh, and the, and their, the aperture for them professionally expands, they get overwhelmed, oh, there's too much to do. We need more people, for example, on the team. And, uh, and I think that's generally a terrible way of looking at, at life or the world. Generally speaking, there's always a lot more you could be doing than, uh, than you can do in terms of your capacity. It's just that some people don't, don't realize it. It's not that if you're a student and you're, you're done studying for an exam, there's nothing else you can do. There's plenty you could do.

• 45:39Speaker 01

  You could launch a startup, you could, uh, take a second degree on the side. It's just that you may not be sufficiently proactive and imaginative to, to figure it out. And so as people jump in a job and if you give them just, you know, relatively short task lists so that they'll, they'll be done within their eight hours and there's nothing in their, on their mind, that initially feels easy and comfortable, but you're failing to train them at a massively important skill, which is handling that immensity of the, of the possible. And once you become really good at being comfortable with having a hundred times more things you could be doing than you can actually do, that's an insane superpower to have because it enables you again to, to handle a vast array of possibilities

• 46:24Speaker 01

  and, and select surgically select those with insanely high returns. And it's something you can only do if you're not thoroughly overwhelmed. So is it better to have someone become overwhelmed by that immensity? Once, you know, they're 10 years in and they're running a 100 person organization and a billion dollars in revenue? Or is it better to test them at that and coach them at that? I wouldn't say on day one, but maybe day seven and for the first year. So that, first of all, you only promote to that, that higher level of responsibility. People have proven that they can do that. And if they actually can do that, they begin benefiting, benefiting from it much earlier, even if their, their scope is, is more limited. But you need to completely eradicate the concept of, I'm only good at my job if I, uh, if I exhaust my checklist, my, my task list.

• 47:09Speaker 01

  There's no such thing. You're always going to have, at least at Benning Spoons, but I think again, life, if you look through the veil, is like that anyway. You're just unconscious about this sometimes. You really want to be able to handle that enormous amount of possibilities and surgically identify those that have insanely attractive returns and then be laser focused on those in this regard, everything else.

• 47:32David Senra?

  Is this related to what you were saying earlier where you're like, listen, they're not going to be AOL's, if it was a standalone brand, they're not going to get the talent that we are going to get at Benning Spoons. We can have a massive impact because they have a huge customer base, but then we could treat it like a startup. But then you said something about like, if they can work on this for 10 to 12 to 18 months. So then you rotate teams throughout the different companies? Is that part of saturating their capacity? It was like, okay, this opportunity on this business, this person is really talented, but there's no other ways to utilize that talent to a higher degree here. So let's move them to another team. Am I understanding that correctly or another company?

• 48:02Speaker 01

  No, that you, you do, there, there, there are, yes, we do rotate people all the time. There are very reasons for that. Part is, uh, I think at some point when you've looked at the same thing for a long time, you stop having good ideas. So it's good to get, you know, new people in to, to maybe take a fresh look. Part of it is we just, uh, uh, find that if people keep working with the same people, you risk developing subcultures. And we're highly opinionated on what the optimal culture looks like. We want it to be uniform across the company. And, and so, and if someone comes up with a better idea, that's awesome, but that has to be spread across the company. We don't want to have subcultures. And so you want to move people so, you know, mix and match and so, so that they, they, they don't get used to a different way of working, at least in one important aspects.

• 48:47Speaker 01

  Another one is that they get to learn more. So that goes back to what you were discussing. It's slightly different from having, you know, you know, an immense set of possible tasks.

• 48:58Speaker 01

  There is an element of, of, of diversity. You need new challenges and diverse challenges to keep honing your craft and, and finding new ways of growing. So that helps too. And it keeps also enthusiasm levels higher because, uh, you know, humans tend to get bored. And so we want to try new things to stay motivated. And last but not least, as we keep acquiring new things, um, as an organization, you know, the, the universe of the, of the things we could be doing expands with new acquisitions and the. Often those, working on those new things yields the highest expected returns. And so we regret, you know, regrettably, we have to remove resources from, from businesses that would still have, you know, plenty of opportunity in them. But, you know, relatively speaking, it's better to, to work on the new, on the new,

• 49:43Speaker 01

  on the new business. For all these reasons, we, we do rotate people all the time. And I think it's been quite, quite successful for us to do it that way.

• 49:50David Senra?

  You just said you're, you have a very strong and you're highly opinionated on the culture that you should have. Do you want to share some of those opinions?

• 49:56Speaker 01

  The main quality we look for in people, we call it extreme ownership. We try to work with people who care tremendously about being the best in the world, of what they do, about bringing value to the team.

• 50:08David Senra?

  Hold on, did you get that from Jaco's book?

• 50:10Speaker 01

  Actually, the, the, the name, yes. The concept is not exactly the same, there are similarities. But I thought the, the terminology, extreme ownership, was so immediately evocative of what you look for, that I said, okay, we need to use that, for sure.

• 50:25David Senra?

  Obviously, you know, I only read biographies and, and history, but I don't read business books, but I always tell people, it's like, that's one of the few business books I'd actually recommend reading. You can read it in a weekend. And yeah, it's very direct. It's just like Jaco is, and I've met him in real life, it's the exact same person.

• 50:39Speaker 01

  Yes.

• 50:40David Senra?

  So extreme ownership?

• 50:41Speaker 01

  Yeah, extreme ownership. Again, we, I think we define it a little bit differently, but the-

• 50:44David Senra?

  So how do you define it, then?

• 50:45Speaker 01

  Extreme ownership is, is caring in your belly tremendously about being the best at what you do, about helping the team and the company succeed. It's a matter of priority and intensity priority. And we want to work with people who feel that way about their work at Benishpoms. We'd rather not work with someone who's really, really smart, very competent, but for whom doing well here would only be priority number three or four, you know, like, we have seen it time and again, we've had people who were probably close to genius level IQ fail here, because ultimately, they saw their job as a way to make, you know, to earn a living, to, to make ends meet, rather than actually transcending apparent limitations and, and winning and be amazing at work.

• 51:29David Senra?

  Okay, hold on. You just got done saying, hey, we're going to centralize hiring, we have a bunch of engineers, you need to have brilliant people in HR, we went through this like very unique way that you think about this, right? But how do you screen for that? How do you screen for being successful here and helping this company be successful is that they're top, one of their top priorities, you know, maybe the top priority in their life?

• 51:50Speaker 01

  I mean, it's never going to be, I mean, we understand, obviously, if you have a family, that will be number one, but if you start telling me, after my family, then there's, you know, being a great gamer at night, plus you want to be-

• 52:01David Senra?

  Yeah, but people aren't going to apply for a job and say that. So like, what are the actual things that you're-

• 52:05Speaker 01

  Yeah, so I think there's, first of all, you try to, I mean, I don't want to give too much away, but let's say you're-

• 52:10David Senra?

  If it's a, if it's a proprietary dog.

• 52:13Speaker 01

  No, no, but I would say, the, first of all, you want to see if there's a capacity to, to express extreme ownership. There's a bunch of people, well, I suppose every human being in theory has it, but I find there, a lot of people are, they don't seem to be, at least not inclined to develop an extreme ownership or, or for almost anything. So they just struggle to care tremendously about things in life. And there's no moral judgment, but I'm just saying, I want to be a part of a team that has a real chance of redefining what's possible and, and succeeding at a really high level. Of course, that type of profile is not going to be highly appealing. I don't think I'm saying anything shocking here. So you look for signs in someone's past of, of that extreme ownership at work. Maybe they, you know, they, they were fully focused on their studies, okay, did they

• 52:58Speaker 01

  do incredibly well, at least, you know? Maybe they, they did a lot of work next to studying, because maybe they didn't have the financial means, or they wanted to learn a craft, maybe they were into open source. Did they, is, is their contribution extremely, you know, dismal, or is there something, just in terms of, it looks like they put in a lot, a lot of effort, maybe they didn't have a breakthrough, but you can tell through the sheer volume of contributions that they really care. Did they launch a startup? Was it because it's cool, four months, it didn't work out too bad? Or they ground at it for three years and it was incredibly unsuccessful, but you can tell they wouldn't let up, you know?

• 53:41Speaker 01

  Something that shows they are capable of, of putting their passion into something.

• 53:44David Senra?

  So in your S1, I think you referenced Singleton, Henry Singleton and Tom Murphy.

• 53:49Speaker 01

  Yeah.

• 53:50David Senra?

  I just read, I did another episode on my other podcast founders on Singleton. And what was remarkable, Singleton made a very early investment in Apple, right? And then he went to joining the board. And he was asked by his partner, he's like, well, there's a million companies, not a million, but there's a bunch of companies trying to make the personal computer. Like, why'd you choose Apple? Like, how, you, you pick the best one of the bunch, and there's a bunch of them. And he said two things, one, he thought that people were going to be intimidated, because they'd never dealt, there was no such thing as personal computer, these things can be intimidated, less likely be intimidated by a computer named, a computer called Apple. But more important than that, he's like, the, the founders of Apple had, he goes, there's a lot of these founders that I've met of other computer companies, that they wanted to start a computer company, but if it didn't work out, they'd be okay.

• 54:35David Senra?

  He goes, the founders of Apple had to make it work, they had nothing else. There was no way that Steve Jobs was going to give up. And the idea that Singleton, being the genius that he was, identified that in a 19 or 20 year old Steve Jobs is incredible.

• 54:48Speaker 01

  I think sometimes, but of course, one of the greatest entrepreneurs, right, to ever do it. And I think a lot of people focus on the eye for detail, certainly had that. The perception of what consumers would want, certainly good at it. I think maybe that was even like his main thing, but I believe what we would call extreme ownership, in his case, just is, we'll probably call it differently, but I think, deep down, it would be the same thing. Just he cared so badly about seeing Apple succeed the way he thought it should, like by building those amazing products. And when you want something so badly, you're not guaranteed to win, obviously, but it just sets you apart.

• 55:32David Senra?

  Because there's a million, a thousand different little decisions you're going to have to make, and you're just going to pay attention and care more about every single little decision. I've, I've mentioned this quote so many times on, on these conversations that we get to have with these founders on the show, but I think Josh Kushner, just, it's one of my favorite quotes I've ever heard. And Josh's point was just like, if you have to pick the person that is the smartest, or the person that has the most experience, or the person that wants it more, you always pick the person that wants it more.

• 55:56Speaker 01

  Oh, yeah.

• 55:57David Senra?

  I think that's kind of what you're getting with extreme ownership.

• 55:58Speaker 01

  Completely. Look, we, what we found is that there is a level of, let's call it intelligence, broadly speaking, not just purely, let's say, logical, analytical, that's necessary, in, at least in our endeavors. So, but after you pass a certain threshold, which is a, you know, admittedly a fairly high threshold, but we're not talking about, again, genius level, just a, then it's almost all about that you want it. Like, you, you really want to be amazing? I was talking about this with, again, some new joiners yesterday or the day before. I brought up, brought up the example of Rafa Nadal in tennis, I think I've said this before. Most experts I've talked to believe he wasn't even probably a top 50 talent in his generation,

• 56:40Speaker 01

  but went down as one of the three best for sure, some say the best or second best to ever do it. And where he really stood out was that extreme ownership. He just woke up in the morning and it was like, I'm going to be the best tennis player I can possibly be, I'll give it my all, 100%.

• 56:54David Senra?

  Did you read his autobiography? It's called Rafa?

• 56:57Speaker 01

  I haven't.

• 56:58David Senra?

  You should, I think you'd be interested, because it's like, a lot of people don't know the amount of injuries that he had when he was younger. He shouldn't have even been able to play at all, much less be one of the best to ever do it.

• 57:08Speaker 01

  Unbelievable, absolutely. Like, what I said to those new joiners, I told them, I don't believe there is almost any chance you will fail to have an amazing career, at least at Benishpoms, probably almost anywhere, certainly Benishpoms, where we try to be extremely meritocratic, if you really bring it, like if you're an extreme owner. I would bet there's less than a 1% chance you fail to have an amazing career, because we know you're smart, we tested that, we're unlikely, unless you cheated somehow, I, I am unlikely to be wrong. You have the, you know, you've studied what you needed to study, so you have some of the foundations. It's almost all about, do you come to work to be amazing, to be better today than you were yesterday, to see your team be better, to see the company take a step in the right direction? Or do you come to work basically waiting for the day to be, to be over?

• 57:53Speaker 01

  You know, like, of course, you're going to try to be okay, but you don't really care too much, as long as you're, you, you have a job and you're in your mind. And if you're part of the former group, you'll, you'll do extremely well, for sure. So that's, you know, really a key cultural tenet for us, we, we select for it, we try to, to foster it. We will much rather have a smaller team of people who feel that way than, than vice versa. And by the way, it's contagious, so if you have, if you have a high density of people who feel like, ah, highly accountable, proactive, because if you're an extreme owner, so you care tremendously, you're going to be entrepreneurial, because you'll be paranoid about things that could go wrong, and enthusiastic about new ideas and how can, you can improve things. If I ask you to do something, you will not forget, you get it done, more so, you even

• 58:35Speaker 01

  come back and do more things than I expected you to, and that will be incredibly exciting for me. And I don't want to show you that I can be just as good. So it's, it's just, there is an escalation of positive reinforcement that you accomplish if there is a high density of that feeling within the team. And as soon as you dilute that, the people who feel that either leave or lose. You can't have an extreme owner, like, Steve Jobs famously was, was looking for A players, and I, I think he was looking for people who had that desire, that drive to be, to do something amazing, even, even before looking for people who were brilliant. Obviously, you want to have both if you can, but you can never have a, I think, I think a high performance team where more than a small fraction of people lack extreme ownership. So that's really number one.

• 59:20Speaker 01

  And then there's, you know, many other things that are important, but, but secondary to, to this.

• 59:26David Senra?

  What are some of the things that are also important?

• 59:28Speaker 01

  Yeah, one thing that we, we call relentless simplification, we believe that most, most things don't matter, most things do more harm than good. However, humans have a tendency to, to add the complexity, do things and do those things that destroy value. So if you leave an organization, almost any environment-

• 59:54Speaker 01

  Let's say unattended and you don't provide guidance in this regard, it will tend to to become more complicated. People will be adding parts. And when I say parts, I mean, it could be expanding a team. It could be adding a step to a process, adding an entire new process. If it's a product, adding a feature to the product, new rules. It really, you know, I'm making a general point, but it applies to almost any human endeavor. People will tend to add pieces, very rarely remove pieces. And with every piece that you're adding to this ensemble, this this system, you're not adding complexity linearly because you're not just adding the piece, you're also adding interdependencies, interconnections with some, and sometimes all of their pieces. And so if you go from three to four pieces,

• 1:00:40Speaker 01

  they're not only get, you know, the the system is not getting, say, thirty three percent more complicated. It's maybe getting forty percent more complicated or fifty, depending on on again, the connections. And all these new connections impact the other connections. Most human organizations, if you don't make a conscious effort to achieve simplicity, so avoiding this this this increasing complexity and embodying this strong complexity will will go down that that path. And that's how we got to, you know, our modern society with all the bureaucracy and complicated regulation. A lot of it, or almost all of it, probably when it was introduced, it had, it was meant to be a good thing and maybe in a vacuum it was. But then people failed to account for this, the cost of these inner connections and and frictions.

• 1:01:24Speaker 01

  And so we have this value or this principle whereby we ask everyone who works here to, first of all, every time someone is suggesting that we should be adding complexity, the burden of proof is on those making that suggestion. The people who support the thesis that we shouldn't be adding that complexity don't need to prove it. They're done. It's just safe to raise a flag and say, I don't think it should. So the burden of proof is on those who want to add complexity, which helps reduce the additional complexity dramatically. And the the complexity add tends to be awfully, more often not good complexity, because you have to prove it. And so hopefully, if you're intellectually honest, that that should be a good, a good idea. Then the other part of relentless simplification is that we want people to be on the lookout for existing complexity and and suggest that we should be removing it.

• 1:02:08Speaker 01

  Understanding how we operate and the biases that accompany us throughout our lives is very important. Charlie Munger famously studied biases. And I think knowing your weaknesses or likely weaknesses is, you know, fifty percent of of of avoiding them or or overcoming them. So knowing that we as humans tend to be this thing called consistency bias, but also inertia bias. I mean, I've heard it, you know, slightly different things called with the with slightly different names. But essentially, we tend to assume the status quo is fine, and we focus on deltas that happen, new things that are added or changes. We we stop seeing, we we become blind to our surroundings, as they state the saying day after day.

• 1:02:47Speaker 01

  And so we ask our colleagues and all of us to make a conscious effort to question what's already there. And the the longer it's been there, the more we should be questioning whether it's still enough positive. So we can look for things we can get rid of.

• 1:03:01David Senra?

  Have you paid attention to how Elon talks about this at all?

• 1:03:03Speaker 01

  Maybe, maybe not.

• 1:03:04David Senra?

  Okay, I mean, it's one of the things that he probably repeats the most. Obviously, he has that famous like four-part algorithm that he applies to every company he does. But there's like emails from him, and I think he might even tweet it this. It's just like, go ultra hardcore on deletion. He is obsessed with exactly what you're saying. You call it relentless simplification. His is just like, he wants to delete, delete, delete as much as possible, simplify, simplify, simplify. We had Toby Luque on the podcast a few months ago, and he said something that was very interesting. He's like, well, in technology, the world belongs to the fast. It's to these teams that actually actually can get ahead by reduction. He's like, very few teams have, understand the skill and the genius of getting ahead by reducing. And the the illustration of his point, which he did beautifully, he's like, well, you know,

• 1:03:48David Senra?

  the modern day Picasso would be the the picture of the Raptor engine that SpaceX designed, where it's like, you see the first one.

• 1:03:55Speaker 01

  It got super simple.

• 1:03:56David Senra?

  Yeah, it's got all kinds of weird shit and wires coming out of there. And then the second version's a little less. And then the third one is just like beautiful. And I accident, I actually posted the clip like two days ago of Toby saying this on the podcast. And then I just quote treated it with the picture of the the Raptor. And then somebody asked for Elon's explanation. He goes into and responds to like how he thinks about this process. But he's completely obsessed with the going ultra hardcore on simplification on deletion.

• 1:04:21Speaker 01

  It is super power, super, super powerful.

• 1:04:25Speaker 01

  Because, yes, it breeds speed, scalability also, besides, which is a slightly different thing.

• 1:04:30David Senra?

  But even you just nailed it. It's like, even goes into like, well, if I have, like, the the the complexity is nonlinear, like you just said. If I have a hundred parts in this engine compared to if I have five, like, what does the supply chain look like? What does the manufacturing look like? What is the repairing it, figuring out what actually went wrong? Like, there's just a million other things that get more complicated with more complexity.

• 1:04:50Speaker 01

  So it's both people don't focus on simplification. For some reason, I think it's really probably, there are anthropologic reasons. There are certainly societal reasons. But people do not focus on simplification unless, again, they're, you know, unusual, you know, radical lateral thinkers like Elon or or you teach them. But when they do, the second problem, they tend to be incremental in it. But often, by far the biggest wins in terms of simplification is complete removal. For example, I mean, you just said, you know, Elon is a master at that. In our context, I remember we were banging our heads against the wall a decade ago, approximately, with the with job titles. So we, like pretty much every company we had, we were very small, but still enough people that job titles were a thing.

• 1:05:33Speaker 01

  So you wanted to, you know, maybe have the senior this, staff that, or director. And we were trying to develop definitions, who should be a director? You know, like, you need to, if if that exists, if it's a thing, you probably need to define it, you know? So spending time trying to define it. And then you assign someone that title, whether it's senior engineer. And then the other guy who's not senior engineer is disappointed. It's like, why, why is she senior engineer and not senior engineer? Well, because of this or that, so you need to have that conversation. And then it's emotional, it takes time. So at some point, we were looking for ways to streamline it and simplifying it. And someone said, why do we even have titles? What's the benefit of titles? And and someone else is like, well, you need titles. So everybody has titles. And why do people have titles? Let's really try to dig deep into the root cause.

• 1:06:18Speaker 01

  Because I agree, I mean, everybody has said probably there's some benefit. I mean, let's not be arrogant. There's probably some benefit. What what's that benefit? And we ultimately determined that the benefit was that people really needed titles for, let's say, bragging rights. It feels good to be able to to show progress in one's career. And they're useful if you need to find a new job to to be able to very conveniently and efficiently convey a level of experience or capability you have achieved. And so we were like, okay, but all we're saying here is probably true, but also not something that the company needs to be involved with, right? And so we we just got rid of titles. And we told people, you can pick your title for your CV, LinkedIn, whatever. We don't need to know. We don't want to know.

• 1:07:03Speaker 01

  We don't need to approve it. We don't want to see it. Just don't embarrass us. Like, you know, don't, you're new hire, don't say you're the CTO, because then people will question our integrity as a company. But as long as it's broadly reasonable, we're good. We have never reintroduced them again. We don't have any titles. I mean, the person runs product, which technically would be called a CPO. We have an algorithm. It's just product management lead, as simple as that. It's completely automated and and is.

• 1:07:28David Senra?

  What do you mean it's completely automated?

• 1:07:29Speaker 01

  The organization is based on algorithmic rules. So that if you have direct reports and if these reports are product managers, automatically this tool will call you product management lead. But whether you have two or two hundred, you're a product management lead. So there's no discussion. We don't need to agree whether you are or aren't. There's no senior, junior, director, VP. And I just made the example of the, let's say, topmost leader in product. For us, it's just, has the same quote unquote job title as a person leading one person. And if he needs to, you know, do something with his LinkedIn, he could put whatever he wants up there. And it's just, I've, we never have to have this discussion. So I, we never look back. We probably saved easily hundreds, if not thousands, of personal hours

• 1:08:13Speaker 01

  in terms of defining, you know, the terms and and having emotionally draining discussions with people. Never had a problem, not a single instance of someone complaining that we didn't formally assign to them my tags, ever, ever. Out of, at this point, many hundreds, actually multiple thousands of people. So that's an example of something that everybody does a certain way, that if you're trying to simplify incrementally, maybe you achieve a little bit of uplift, you know, maybe five percent. But if you get rid of it completely, it's liberating. It's a ten X improvement, potentially, or whatever the baseline you want to, however you want to measure it. And often, often, not always, but often, you find these opportunities on a product. Get rid of an entire part of the product. Two percent of people use it. It's adding complexity to codebase, bugs, issues.

• 1:08:58Speaker 01

  And sure, someone will be disappointed, but you know, the ninety eight percent of people who don't use it, you can serve them so much better that one year down the line, you'll be two X as as well off. Just do that. Don't slowly transition out a million migrations, headaches, issues.

• 1:09:15David Senra?

  I found one of my all time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers inside mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full screen video ads that are watched for an average of thirty five seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal and AppLovin achieves it.

• 1:09:57David Senra?

  There's no complex setup, no expertise needed, and AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day and increased their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin. And you can do that by going. To applovin.com. That's applovin.com.

• 1:10:27David Senra?

  Before we go back to these other cultural tenets of you, tell me about this automated system you just described. It's like running the company in the background. What is this?

• 1:10:33Speaker 01

  Yeah, I mean, I wouldn't say it runs the company in the background, but we are pretty fanatical about technology in general. Again, I personally was involved with AI in 2010, which at the time, nobody, I mean, it looked weird because it wasn't a thing really today. Obviously, if you're now building a startup with AI, people look you, what the heck are you doing? Of course, you should be building a startup, you know. We carried with us this passion for using technology and cutting edge tools to be more productive, more and more effective. And so we have invested pretty heavily at Benis Poon's over this point over a decade to develop. Basically, you could look at it as an operating system.

• 1:11:12Speaker 01

  At this point, over 50 proprietary tools that run almost everything that we do, or at least supported through automation. And then we buy companies and it's almost like installing them on this operating system. And a lot of the operations are subsequently run homogeneously, consistently and very efficiently through it. For example, we have one system to manage payments. We have one system to run A B tests. We have one system to predict user lifetime value. We have one system for recruiting and talent predictions. We have one system to orchestrate the many AI models we use internally to run our operations. So we always use the ideal one in terms of cost quality.

• 1:11:54Speaker 01

  We have one system to authorize different colleagues to have access to different systems. So let's say credentials management, one system for data aggregation and processing, and the list goes on and on. And we keep refining them and we have kind of a, an open source community internally whereby we have platform teams who own these different tools and make them better by the day. But then each of our businesses, as they use them, they find ways that they come up short. They can add features, fix bugs, and as they improve them, these improvements are propagated and automatically made available to the entire portfolio of businesses. So we, adding businesses actually makes us better as a whole, not just because we're adding some revenue,

• 1:12:38Speaker 01

  but because we are adding another entry point for innovation, improvement ideas on this kind of operating system. And it's been a boon for us. It's hard to estimate exactly how much in terms of efficiency effectiveness it's added, but it's certainly transformative, I'd say.

• 1:12:54David Senra?

  So adding more businesses is better for you, but then is that not in conflict with, I think you're now, for your acquisitions, you want to do fewer and bigger?

• 1:13:04Speaker 01

  Yeah, I mean, there's a trade off, obviously, like in almost everything in life. If you were bigger acquisitions is better for us to the extent that it means we can focus our limited operational capacity onto those transformations and those, and getting those right. We have seen that the, in terms of time and effort, it doesn't take a lot more time to transform a company that's bigger in terms of revenue than a company that's smaller.

• 1:13:34David Senra?

  So same amount of time invested?

• 1:13:36Speaker 01

  Roughly speaking, Evernote, in 2023, early 23, we, we had a team, a task force of Spooners, these people from the core team. You know, we've been talking about probably about 50 people who joined Evernote and really drove that transformation. We're writing the code base, we architect the cloud infrastructure, we're thinking monetization, reorganizing the company and all that. And that was, you know, a business generating a little less than $100 million in revenue.

• 1:14:03David Senra?

  At the time you acquired it?

• 1:14:04Speaker 01

  Yeah, at the time I acquired it. And then in the first half of this year, we, we did broadly speaking, the same thing with Bmail, with roughly the same number of people, 50 to 60, but Bmail is roughly $400 million in revenue. So approximately four times as large. And in the team originally was over 1,000 people, Evernote was a little over 300 people. So three to four X the scale, whether you want to look at revenue or headcount, roughly the same number of Spooners introduced into the business to change it. So.

• 1:14:34David Senra?

  That's incredible.

• 1:14:35Speaker 01

  Part of that is, I believe, intrinsically, the complexity of transforming a business doesn't scale linearly with the revenue of that business. Partly is, in the meantime, we have gotten a lot better, for example, expanded and improved that operating system. So we're getting more productive. But so because of that, we prefer to acquire relatively few businesses and make sure each counts. So it has to be larger and larger as we scale as a company. Currently, we're roughly $3 billion in revenue. So the business that moves the needle for us today needs to be a lot bigger than when we acquired Evernote. In terms purely of that operating system of technologies, we do benefit from more diversification because the more teams we have who adopt these technologies, the more likely we are to find ways they could be made better, innovated on.

• 1:15:19Speaker 01

  So we have.

• 1:15:21David Senra?

  So how do you reconcile the two? You want?

• 1:15:22Speaker 01

  I mean, we tend to prioritize the former because I think it does so bigger businesses.

• 1:15:27David Senra?

  Because you developed this operating system over how many years? A decade and a half?

• 1:15:29Speaker 01

  Yeah, but yeah, we started 13 years ago, obviously, you know, when we, when we kicked off the project, five, five people. We didn't have the luxury of investing in R and D in our technology. I think we started in earnest with significant investments, maybe 10 years ago, something like that.

• 1:15:44David Senra?

  And has anybody, I don't think you would do this, but has anybody tried to come and like buy these tools from you?

• 1:15:49Speaker 01

  First of all, we like to keep them for ourselves because they're on better advantage. Also, you can't do everything, you know, in life, you need to, we're talking about prioritization and focus. And we just decided that we, we use these tools for our own benefit to run these businesses as well as we can. Also, I don't think they would be all that appreciated by the broader market for a couple of reasons. Number one, they tend to be very, very advanced. Most people out there who run a digital business, they actually don't want, maybe they think they do, but they don't want the most sophisticated A B testing platform. Overwhelming. They're not obsessive about A B testing. They want something that's a little bit more approachable. So it wouldn't actually necessarily take full advantage of the V L.

• 1:16:30Speaker 01

  There are solutions out there on the market that are more, mass market, a little bit more intuitive, easier that I would recommend to them rather than than our own, which is again meant for high level of sophistication. And lastly, a lot of these technologies are doubly powerful because they're fully natively integrated with one another. They're all built to function together. And so it's very difficult for a business out there to choose to adopt 50 different things. They're not going to scrap everything they're doing. And so a lot of the value fades away if I'm only giving you one thing. So I don't even think that the business opportunity would be all that great to market this stuff.

• 1:17:07David Senra?

  I've heard people that I don't pay attention to Benis Poon's, they're like, oh, this is just like another like P E play. And I was like, that's, I don't think that's it at all. Can you, so let's, I think, walk through one of the acquisitions, right? You mentioned earlier, I don't know if this is a term you put on it, but like, you know, when you're starting a company, you're, it's kind of, you have to like luck your way into product market fit. You don't want to do that. You want to buy, you know, a working product. So let's take Evernote, for example. I was an Evernote customer for, I don't know, eight years. So like, what did you see in Evernote? What was the state of the business and then what happened after the fact, I guess?

• 1:17:39Speaker 01

  By the way, I think people who compare Benis Poon's to private equity, yeah, they're, they maybe have a simplistic, superficial view of the world. And they're like, okay, they acquire companies and, you know, they've raised prices. Okay, like, okay. But then, you know, Google acquires companies, acquires, acquired hundreds of companies and has raised prices hundreds of times. So it's a little bit of a pretty limited set of criteria to compare. I'll give you like the highlights on a high level and then I'll translate to the very specifics of Evernote or any business you want me to talk about. First major difference, we're not a fund. We don't buy to sell. We've never sold a material business. We buy to hold and operate forever. The second very big difference is that our interventions on the business require are very, very deep.

• 1:18:24Speaker 01

  Again, I'll be very clear as I describe Evernote, but we transform them sometimes. Sometimes we aren't recognition. I'd like to think for the better. That's what we try to do here. And the third aspect is we integrate these businesses very, very deeply into a shared platform, including the technological operating system we were discussing, but also this core team of, we call them Spooners, who run the businesses, you know, a lot of the R and D, marketing, we move them around fluidly across businesses. And none of this is, bears any resemblance to what private equity does because those are funded, buy to sell after, say, five years. They generally intervene, yeah, maybe on some costs or price, but they, I've never seen a private equity reinvent a product

• 1:19:07Speaker 01

  or rebuild the org, or rebuild the technological infrastructure. And they generally don't integrate the businesses together under a shared platform because they don't have the platform. And even if they did, they need to sell them piecemeal. So if you integrate them, you can't sell them, or at least it would be much more difficult to sell them. So we are almost as different as it gets, other than we acquire stuff for a living. So that's for sure in common. Now, Evernote specifically, so what we saw in it, well, Evernote in its history has been used by a quarter of a billion people.

• 1:19:41David Senra?

  How many?

• 1:19:41Speaker 01

  A quarter of a billion people. Extensive reach and usage ultimately build a brand. Naturally, there's that plus the experience needs to be good, which often was, especially for the first many years. But it's certainly, it's a brand that almost everybody has heard of, is familiar with, often is perceived positively, sometimes not as much. But it's certainly not negatively, more sometimes as, well, it's something from the past, it's probably not that relevant. But nobody has a negative association with Evernote or very few people. So a very well-known, powerful brand, pretty sizable user and customer base, several million active users and customers at the time of acquisition and to this day. And, and we believe that a substantial opportunity for, for improvement across the board. I'll describe the improvements in a moment.

• 1:20:26Speaker 01

  And lastly, something we always seek in acquisitions is predictability. We like to buy stuff where we have a good sense of where it's going, at least five years out, at least under management, once it's installed into our platform. And, and in that case, a few factors enabled us to predict its future. One, the user and customer base was highly tenured. On average, I think a paying customer being on the, on the platform, using Evernote for five to 10 years. I don't remember exactly, but a extremely long period of time. The most of revenue was from subscriptions, which we tend to be able to predict their future performance

• 1:21:10Speaker 01

  better than more volatile revenue streams like advertising. Most of the value lay with the. Existing users and customers as opposed to hypothetically new users and customers that are acquired out there. And we find that it's much easier to bet on existing customer basis than new acquisition. Cause new acquisition of users and customers tends to be much more volatile with the changes in competition, advertising dynamics, in terms of advertising for acquiring customers. So we liked the whole package. We thought the price was reasonable.

• 1:21:44David Senra?

  Did you disclose what you bought it for?

• 1:21:46Speaker 01

  Well, it can be seen directionally from our financial statements. It was about $200 million.

• 1:21:51David Senra?

  Say that again.

• 1:21:53Speaker 01

  200 million.

• 1:21:53David Senra?

  200, okay.

• 1:21:54Speaker 01

  More or less.

• 1:21:55David Senra?

  About, okay.

• 1:21:55Speaker 01

  203, something like that.

• 1:21:56David Senra?

  So wait, they were doing 100 million in revenue?

• 1:21:58Speaker 01

  A little less, like 90.

• 1:22:00David Senra?

  90, and were they making any money or no?

• 1:22:02Speaker 01

  I would say roughly break even.

• 1:22:04David Senra?

  Okay.

• 1:22:05Speaker 01

  Roughly break even. Slightly profitable.

• 1:22:08David Senra?

  And it's doing what now?

• 1:22:10Speaker 01

  So we don't disclose profits by individual business, but I would say it's very, very profitable. You can see our overall profitability as a group. Adjusted operating income margin were around 54, 55%. Individual businesses are, tend to be more profitable, especially if you've owned them for more than a couple of years.

• 1:22:35David Senra?

  So hold on, before you go on in there, so like an Evernote case, right? You drastically increased the profitability based on these rough numbers.

• 1:22:42Speaker 01

  Revenue, revenue went up.

• 1:22:43David Senra?

  Well, that's what I was gonna ask. Does the revenue also have to go up? Or you were just fine if you just make it?

• 1:22:47Speaker 01

  We tried to improve revenue and improve costs. Sometimes we're successful on both fronts. Generally, I would say sometimes more on one than the other, but on Evernote, we both increased revenue and reduced costs.

• 1:23:01David Senra?

  Explain the difference of what you were doing compared to they were doing whatever, 90 million and not making any money or breaking even. Like, what is the difference between how you were running the business and how they were?

• 1:23:11Speaker 01

  We made a lot of changes. We rebuilt the org vastly. So it was roughly 350 team members. We made it substantially smaller, I think a year, a year and a half after the acquisition closed. We were more around 50 to 60 team members.

• 1:23:31David Senra?

  Hold on, so when you acquired it, they had 350 people working on the product or the company?

• 1:23:37Speaker 01

  Approximately.

• 1:23:38David Senra?

  Okay. And you're cutting that down to, let's say, 50 to 60. This is what we were talking about before we started recording, which I think is really important. And this is why I like Adam from AppLovin2, cause you know, his whole thing is like, if you factor in either his cash flow to employee ratio or market cap to employee ratio, it's like, that's a very interesting metric, where his whole thing is like, you know, I'm doing this with 400 employees. You mentioned previously, it's like, to see what can be done and how efficient a business could be run. It's very similar to like, it's a good example for other entrepreneurs in the same way that like other runners didn't crack 4 minute mile, for example, until somebody did it. And once they see somebody did it, then you just see it happen all the time.

• 1:24:22Speaker 01

  Yeah.

• 1:24:23David Senra?

  So why could you do this with, let's say, 300 people less than they could have?

• 1:24:27Speaker 01

  I think there are different factors. One is the access to talent. We've been able to build an employer brand, a company that where some of us people wanna work. We got 800,000 job applications last year. We hired fewer than 300 people. And if you're running Evernote, even if you're Steve Jobs.

• 1:24:47David Senra?

  800,000 people are not applying to Evernote.

• 1:24:49Speaker 01

  Yeah, exactly. And it's not, it's not anyone's fault. I mean, that executive team was doing the best they could with the, with the resources they reasonably had available. So we had the, we have good fortune to be able to take advantage of an arbitrage in access to talent. We also have a massive advantage in that each of these businesses matters to us, but it's not everything. And so we can take risks. For example, if you're running Evernote, and that's all you do as a standalone company, and you make the change I just described in terms of headcount, if something goes wrong, you're out of a job, as I say, a CEO, and realistically, you're done because that

• 1:25:31Speaker 01

  will be the blemish on your CV that you can never clear, pretty much. It's not that we want something to go wrong if, say, Evernote is part of Benishpoos, but we have, we can make bets that are, the expected outcome is highly appealing, but maybe they're a little bit more risky and so not so appealing if that's all you do with your life. The upside of, again, it's almost like insurance. On average, we get it right and it's a great value. Occasionally, maybe we make a mistake that would be painful if it were, if that business was run as a standalone company. But you know, net-net, we do so much better and we learn so much faster. And the good lessons we learn from a business, we can port them and apply them as, you know, as relevant to all other businesses.

• 1:26:16Speaker 01

  Three, we had access to that technological platform, talent levels, the ability to take on risks that would be uncomfortable for, for that management team, given their boundary conditions. Three, that technological platform I discussed, it just enables us to do so much more with fewer people. But if you're running Evernote standalone, you're not gonna have resources to develop those technologies. Also, you don't have the business case, cause we can amortize those investments over all the way businesses and increasingly more businesses is required. And it's difficult to justify if all you do is Evernote. And then again, those perverse incentives I mentioned earlier whereby if you're judged

• 1:26:59Speaker 01

  by Evernote and Evernote alone, making a change that would, for example, result in a smaller number of active users or subscribers will get you so much hail, even though it's maybe the right thing to do for the business, we could make some of those unpopular decisions more easily and take full advantage because the business has been thriving relative to previous trajectory and financially and in terms of customers. So these are, you know, some of the big reasons. But yeah, the changes were sweeping. I mean, the org, we rebuilt it, I mentioned, you know, it was a lot smaller. And by the way, today, Evernote, we ran it with about 20 people.

• 1:27:35David Senra?

  What?

• 1:27:36Speaker 01

  Yes, because in the meantime, you keep improving. So I'll describe the improvements we made, but some are fundamental improvements in the underlying technology codebase that enable the team to do more with fewer resources because everything gets a little bit cleaner and more maintainable and manageable. Part of it is our operating system of technologies has gotten so much better in the following two, three years, that we're so much more productive. Especially with AI, we have had some close to breakthroughs in productivity.

• 1:28:07David Senra?

  Can you talk about that?

• 1:28:08Speaker 01

  Yeah, sure.

• 1:28:10David Senra?

  Everybody's interested in this right now. There's a bunch of founders that have already been on the show, they're coming back on, and we're just gonna do like an hour of how literally they're redesigning their entire organizations with AI.

• 1:28:19Speaker 01

  Yeah, we've been using AI pretty aggressively for as long as I can remember. Certainly in 2018, I'd like to say we're using it to predict user lifetime, basically to inform our A/B testing. But I would say over the past two years especially, with very rapid progress in LLMs, we've been able to have some major breakthroughs in various areas, especially software engineering and data analysis and product design. I'll give you a couple of examples. So for design, we recently actually deployed a tool we built in-house called Diagram. Whether you're a designer, a product manager, a growth manager, you go to this tool, it looks a little bit like Claude Design, just broadly speaking, but it's specialized in

• 1:29:02Speaker 01

  our particular context and fully integrated with everything else at Benishpoos. And you can just tell the tool to pull up screens for the app you're working on, so it's Evernote, for the relevant features. And then you guide it as it produces new versions of those interfaces. And it will do so by automatically following the design guidelines that the, say, the head designer for that tool has laid out in some documents somewhere. You don't have to know where they are, like the tool nodes. So you just tell it what you need and it'll give you work that the head designer would typically approve. It will automatically look into the codebase to know how the different interfaces interact functionally, so it will make proposals that make sense from that point of view.

• 1:29:47Speaker 01

  And then, once you're happy with your proposal, it will develop the code for you. And then the, say, lead engineer will be able to review and approve it if it's fine. And then automatically, because it's integrated with our A/B testing system, you'll have a new segment where you're gonna test that new, say, onboarding flow or whatever. If you had the skills before, you were a product designer, now you can do it sometimes in maybe 1% of the time. In many cases, it's actually a better result, cause it's so precise and just few months, we tend to miss things. But interestingly, it enables doing design work for people before couldn't, like product managers, software engineers, growth managers. So now, a lot of the inefficiencies that stem from, I'm a product manager, I have

• 1:30:29Speaker 01

  an idea, I wanna test something, but I need to wait for the product designer to be available. Then I need to explain to them what I have in mind. I fail to explain it properly, I get, three days later, I get work back and it's not what I meant, I need to explain.

• 1:30:42Speaker 01

  The inefficiencies stemming from this exchange of information. We humans are insanely inefficient at exchanging information. We're quite efficient at absorbing information. But when we have to articulate ideas, you know, language is very, very, it's better than not having language. It's very inefficient. And more so when it's with another human with whom the iteration cycle will be slow. Cause they may not be able to do the task immediately. Even if they do, it will take them time. But with a machine, you can tell it, it'll do it right away. And it will take them a fraction of the time. So you can actually iterate very quickly. So overall, you get to the result in a tiny fraction of the time. But interestingly, you can do it even if you can't design. And so this overall makes our teams a lot more efficient. This is an example.

• 1:31:27Speaker 01

  Another example is something we call Old Spooner. For it stands for Alter Ego or Alternative Spooner. And it's basically an agent that lives in Slack. We use Slack for communications. That has by design, the very same access you do as an individual in the company. So it has access to the same tools, to the same degree. So if you have a full access, partial access, it mimics you. It's meant to be you basically, but artificial. And you can instruct it to do pretty much anything you could do, it could do. Some things it will do better, some things it will do worse. So we have Evernote. We have a channel on Slack where we can report feedback on things we think could be improved, bugs or new features. And I was there to provide input on something.

• 1:32:13Speaker 01

  I was just using the tool and it failed at something and I wanted to relay that. And I saw live, one of the best users of Old Spooner by one of my colleagues. She runs Evernote and she wrote, you know, she, in this channel, she tagged Old Spooner and said, I noticed this bug. Could you please go to Moros, which is again back to the integration of our tools. It's our customer support tool. It collects feedback from users to check whether it's just, I got unlucky or if it's a widespread phenomenon or issue. And then report back so we know how to prioritize it. And separately, can you look into the code base for root causes for this issue? And if you can find them, propose a fix.

• 1:32:54Speaker 01

  And then ping Marco's lead engineer for that particular product. So that it can review the code and push it to production if it's fine. And so she, general manager for Evernote, in maybe three minutes, essentially fixed, identified and fixed a bug. Something that would have taken.

• 1:33:15David Senra?

  If this is human to human coordination.

• 1:33:17Speaker 01

  Yeah.

• 1:33:17David Senra?

  Weeks, maybe.

• 1:33:18Speaker 01

  Forever, like exactly. There are many more examples. I mean, I had to, I wanted to know the, you know, the trajectory of monthly active users on Meetup. Not one of our properties recently for analysis I was doing. And generally would have to ask a data analyst. And they'd be busy, I would either interrupt them or they would get back to me a couple of days later. It would take them presumably a couple of hours to give me that. Actually interacted with my old Spooner, went back and forth, asking for further cuts. Okay, just show me just for the US, just for users on iPhone. And just some, and you know, I got all the answers, all the graphs in a few minutes.

• 1:34:03Speaker 01

  Perfect, done.

• 1:34:05David Senra?

  I need to go back to this because you just blew my mind. So I know you're not telling us exact numbers, but Evernote is doing probably a couple of hundred million or thereabouts in revenue.

• 1:34:13Speaker 01

  Let's say more than a hundred, less than 200.

• 1:34:15David Senra?

  Okay, so there you go. That's the range of revenue. It is profitable and you just gave a hint of what like the operating profit percentage might look like, right? And you're doing this to 20 people.

• 1:34:27Speaker 01

  Yes, that's right. Yeah. Plus the help, slightly unquantifiable help of that platform that keeps pumping out technological improvements, you know, like those automatically benefit everybody. So it's, you know, you can allocate it by dollars in revenue, whatever. But yes, people wake up in the morning and fix bugs for Evernote, launch features, optimize monetization. That's about 20 people right now.

• 1:34:50David Senra?

  Okay, so this kind of efficiency, are you seeing that in the rest of the businesses that you own as well?

• 1:34:54Speaker 01

  Yeah, for the most part, I think that not all functions are equally.

• 1:34:57David Senra?

  Are you optimizing for that? Like.

• 1:34:59Speaker 01

  No, I mean, we just try to make each business as successful as possible. It's not like we don't, we want to have like the smallest number of people that we can. I mean, if more people create more value for customers and for Benning spoons, we would, assuming we can, we can hire enough, you know, fast enough. We would certainly deploy them. Sometimes we have situations where we would want to have more people, we just don't have them. So, okay, that's a separate issue. But we don't aim to minimize number at all, just to run these businesses as well as possible. And we often find that some of these resources, when you, when you take them back to startup mode. So they had been large, slightly bureaucratic, sometimes political organizations for a while. Things tend to grind to a halt.

• 1:35:41Speaker 01

  It's difficult to be entrepreneurial, enthusiastic, move fast, work on what matters. If we bring them back to a much smaller size, much higher talent density, we get rid of a lot of red tape. Then even though the team is smaller, perhaps precisely because the team is smaller, product development and optimization of monetization pick up again. And Evernote is a good example. If you look at the, it's difficult to precisely quantify innovation. But if you look at the timeline of say product improvements, features before we acquired it in the, say, two, three years before and after. It's night and day. I feel very comfortable saying it's at least three times as fast under almost any frame of measurement.

• 1:36:23Speaker 01

  Despite the team being much smaller, but it's really, I think despite is the wrong word. In many ways, it's because it's a lot smaller. And so they, these people are, again, startups. Instagram was built by, I suppose, 10 people, I'm not sure, something like that.

• 1:36:36David Senra?

  I think it was like 12 when they got acquired.

• 1:36:38Speaker 01

  There is plenty of proof that small teams of very capable people with a stream ownership, who really care, can do, can outwork and outproduce vast organizations where either not enough people care or they do. But there are so many feet to step onto and, you know, and so many hurdles to overcome to get stuff done that they, they, they failed to do so. And it's not, I mean, nobody wants that to be the case. It's more like frog in the boiling water kind of phenomenon where you keep adding teams and processes and rules. And then at some point, it's very difficult to, it's very difficult to care and it's very difficult to get stuff done.

• 1:37:16David Senra?

  This is what I meant about like, it goes back to how I've been describing to other founders, that it's just like this Galapagos island of entrepreneurship. Because I know you mentioned like being influenced by Henry Singleton, for example. And he would do this too. He was like, over and over again, he says, hey, you know, I think at one time he owned 130 different businesses and 129 of them were profitable. But he wanted to break business units into the smallest possible parts. Different was, difference was between you and him, you like breaking things down to smaller parts, less people, more efficient. But he didn't, he said you kept the business units separate.

• 1:37:47Speaker 01

  Yeah.

• 1:37:48David Senra?

  Where you're actually studying them all and then using insights and spreading across your entire organization. Very similar to like what Mark Lender did with Constellation. Is there anybody else that you've been influenced by or that you take like an idea or two from?

• 1:38:01Speaker 01

  Frankly, not a lot. Going back to what we were discussing earlier, that we were growing up as a business in no man's land, away in Italy. And purposefully chose to stay a little bit isolated to try to, at the risk of reinventing the wheel, also coming up with some real powerful innovation. So not so much, I'd say maybe Netflix, I think, I don't really know Netflix from the inside. I don't know anyone who works there, but you know, their, their famous deck, cultural deck. And then there have been a couple of books that have been written about it. I think some of those ideas that you want to beat complexity with talent in our process and keep rules to a minimum. I think some of that, I think robbed off on us.

• 1:38:46Speaker 01

  But other than that, I think we've tried to be quite autonomous and coming up with our own ideas.

• 1:38:50David Senra?

  Do you describe Benning spoons as a conglomerate or no?

• 1:38:53Speaker 01

  I mean, it's a conglomerate to the extent that.

• 1:38:54David Senra?

  But do you actually use that word?

• 1:38:56Speaker 01

  No, I've never used it. It doesn't, it doesn't bother me, but I think it's a, it's more, at least in my mind, a conglomerate is a set of relatively distinct and separate parts.

• 1:39:07David Senra?

  Yeah.

• 1:39:07Speaker 01

  In our case, we try to make everything as holographic and integrated as possible, as I described.

• 1:39:12David Senra?

  So Berkshire and Teledyne would be much more conglomerate.

• 1:39:15Speaker 01

  Yeah, exactly. And I think what Singleton and Buffett did well, well, better than almost anybody in history, is quite different from what I think we've been doing really well. They were. And in the case of Buffett, he still is exceptional at selecting, at picking companies, management teams that should be worth more than the market was valuing them. I wouldn't say either, certainly not Berkshire, I think by their own admission, would be, most people wouldn't consider them exceptional operators. They generally, in fact, would avoid buying businesses where they thought a lot had to be fixed. They didn't like that. They liked this.

• 1:39:54David Senra?

  For the people listening to this, they haven't studied Singleton. You can just go back. I just did an episode on him on my other podcast. It's remarkable how many ideas that we've heard from Buffett and Munger that Singleton discovered like 20 years before them. And they both, yeah, Buffett and Munger were both saying it's like, like we, this is where we got these ideas from.

• 1:40:12Speaker 01

  If I have to think about all the people who did exceptional things in business and investing, if I had to take their achievement, and I'm assuming we can quantify it and divide it by their level of popularity, or just not meaning they are liked or disliked, but how well-known they are, it would be at the top of the rank. Like, he's been one of the most successful investors and business people ever by any measure, and yet very few people know him, actually. I think if you ask 100 people, even in business, like 95 will not know who he was.

• 1:40:42David Senra?

  One of the things that Buffett and Singleton had in common is they essentially primarily saw their job as they were the ones that allocate capital. Like, their main talent was capital allocation, right? And Singleton, I think you might have said this, and I could be wrong, but this is what I'm going to ask you. It's like, well, after he started acquiring, he stopped acquiring companies, right? He bought like 160 in 10 years, something like that. I forgot the number, exact number. And then he's like, oh, now we're going to reverse course. We're not going to, he didn't make another acquisition, material acquisition for the rest of his career. And then he just focused on capital allocation, improving the business unit he's had, and then just discovering like, where's the best dollar I could spend? And is it improving operation of this company? Is it buying another company? And then he discovered it was actually buying back his own shares.

• 1:41:23Speaker 01

  Yeah.

• 1:41:24David Senra?

  So I think I heard you say before that out of all the investment opportunities you see in the future, it might be buying back Benning Spoons' shares.

• 1:41:31Speaker 01

  Yeah, not imminently. I think we see a runway right now, allocating capital toward acquisitions as being an expected continue being way too, like, returns, I think, will be way too appealing for that not to be the priority. But I think if you ask me, in the very long run, that could be an appealing way of creating shareholder value. I think what Singleton did incredibly well, it was acutely aware of the circumstances and boundary conditions, and very creative and made fully rational decisions. So for a decade or more even, the market was, you know, affording his stock a good multiple, and he was aggregating a lot of businesses.

• 1:42:15Speaker 01

  He was buying at a lower multiple. And he was, on top of that, exploiting the arbitrage, was also very astute at selecting those businesses, a kind of double-dipped business that was undervalued regardless, like, people didn't see the potential in the medium to long term. And add to that the fact that that business would then join a conglomerate with a higher multiple, so double value creation. And then later, the market changed its preferences, as the markets often do, so you've got to stay open-minded about it, and started appreciating more vertical businesses. And so he worked on improving those businesses and spinning them off so they could be maximally appreciated. So he was never opinionated on the how this should be done.

• 1:42:58Speaker 01

  He just looked, I believe, I've never met him, of course, but I believe that looked at investing and running a business as a puzzle and tried to find the best solution. He was also a great engineer. Like, he could have been one of the best engineers that he wanted to pursue that, and almost a grand master in chess, I believe, or at least.

• 1:43:15David Senra?

  He could play chess blindfolded. There's a story in, I think, the episode I just did, where he's like, playing with his back turned, and he goes, hold on, you told me the wrong move, three moves again. I mean, he's obviously genius of IQ. Charlie Munger's on record saying he was the smartest single human he ever met in his entire life. And imagine all the people that Munger met in his entire life. Singleton took Teledyne public almost immediately. Did you know when you started Benning Spoons, and you were like, okay, we're not going to stick with one company, we're going to keep acquiring, you started having, you did really small acquisitions, they were successful, you kept on that path? Was the plan for you and your co-founders, like, this is going to be a public company one day?

• 1:43:50Speaker 01

  I'd say when we talked about public versus private, I think more often than not, we thought this would, at some point, be a public company. There are advantages and disadvantages in being a public company. I'd say for most companies, the advantages are greater than the disadvantages. And for a company like Benning Spoons that requires capital to grow fast, I think the advantages are way too large. I mean, it's not really a discussion that it should be public. But yes, it's not all roses. Obviously, there are new pressures and incentives and noise that you'd be better off without, for sure.

• 1:44:23David Senra?

  How long it lasts, when, okay, we know we're going to go public, to you actually went public?

• 1:44:27Speaker 01

  We like to make decisions as late as possible. I think that procrastination is awesome if it doesn't come from laziness. Because if you postpone decisions, you often have more information when you actually get to make them.

• 1:44:42David Senra?

  Singleton said something like this, where he's like, if you don't make a decision, in many cases, it resolves itself.

• 1:44:47Speaker 01

  Yeah.

• 1:44:47David Senra?

  So it removes the need to make a decision.

• 1:44:50Speaker 01

  It's a slightly different thing. It's not a reason why, it's a subset of what I said, meaning, so there are some decisions that there is, the only advantage of making them now is that you can forget about them. So there's something to say about that. And I think if the decision is not particularly important, sometimes the moment you bring it up, just make it so that, you know, you can free up your ram to tackle other tasks. But if the decision is so critical as to whether you should be a public company or not, or whether you want to buy a company or another, generally speaking, you're better off delaying it as much as possible, or at least there's almost no cost to delaying it, other than the slight discomfort that you know it's still on your shelf, you still need to make it.

• 1:45:32Speaker 01

  And there are advantages, or at least no, I mean, worst-case scenario, you'll be just as well off when you eventually make it as you were early, but often you have more information. Maybe, as we're just saying, the boundary conditions shift, and you just don't need to make it any longer because it's irrelevant. Or maybe you would have made a decision one way, but then as the world changes, or you learned something else that you had failed to spot earlier, you end up with a different option. And so with the IPO, we decided relatively early, probably something like first half of 2025, that we would want to prepare to go public in the near to medium term, and so probably late 25, mid 26, late 26.

• 1:46:17Speaker 01

  But we would delay the decision as to whether actually to pull the trigger to as late as possible in the process. So we knew that we were probably going to be a public company at some point, at least surely by late 25, no doubt about it. But we didn't know if we would go public necessarily in early July 26. We just said, okay, let's get ready, and then we'll see. I think the definitive decision of, okay, we will go public as soon as possible, definitively, we made that decision in the spring of 26.

• 1:46:46David Senra?

  Earlier, you said that, assuming that the company, the first thing a company has to do is have a strategy, assuming that strategy is good, then the most important thing is talent acquisition. How do you articulate the strategic Benning Spoons?

• 1:46:58Speaker 01

  Well, basically, we want to achieve the maximum level of operational excellence, which means getting the most out of a business possible by any means necessary, both in our case, structural means, such as integrating everything on the same platform so that we eliminate all redundancies, and we can achieve all sorts of scale advantages and network advantages, and by sheer investment in talent and technology. By any means possible, we want to achieve the greatest advantages in operator. And once you have that, meaning your business is better off with you than with almost anybody else, once you have that for a sufficiently large number of businesses, then you're almost guaranteed to be able to compound capital very efficiently through acquisitions.

• 1:47:44Speaker 01

  Because by definition, by definition, mathematically, you'll be, if a business is better off with you than with everybody else, if there are enough of those out there, you should be the best, you know, the highest bidder when it's on sale, and the seller should still get excellent returns from their sale, and you get excellent returns. So we probably focus 99% of our resources and in efforts in being the best operator, building up that platform, unlocking as much of these structural advantages as we possibly can, and remarkably little in actually in the acquisition side of things. Like, we are very deliberate, highly sophisticated, but, but once we have a powerful platform, and these are structural advantages, then it actually gets pretty easy to deliver very high returns through acquisitions.

• 1:48:29Speaker 01

  It's not that we see necessarily things in businesses that nobody else saw. It's just that we know those businesses are going to do so much better with us than with almost anybody else, so we can offer more.

• 1:48:38David Senra?

  And that operational excellence allows you to bid higher as well. I think, I think you said, like, you're pretty sure that you bid maybe 50% higher than the next highest bid on, like, Evernote, for example.

• 1:48:48Speaker 01

  Yeah, I mean, I don't know, I cannot, never know for absolutely sure, because you don't, you know, obviously, the sell side only tells you so much, but I, I'm pretty confident that our offer was way, way higher than this, which, by the way, in hindsight, we should have negotiated better, but.

• 1:49:05David Senra?

  No, but no, we talked about this at lunch. I think you have a very unique, let's talk about this now, like, you had a very unique approach to negotiation. Like, I'm pretty sure you explicitly said, like, you don't want to come in as like, like how most people do, it's like, let me just put a really low number right now, and then you say a higher one, and then we go back and forth, and back and forth, and back and forth.

• 1:49:24Speaker 01

  I think in time, you want to be known as a, I want to say generous, because obviously nobody buys a company as generously, but.

• 1:49:35Speaker 01

  You want to come across or establish a reputation as someone who's trying to, you know, get the last penny out of a negotiation. You want to help the seller get good value from the transaction. But at the same time, you want to be known as pretty firm. Like, I put a number that I think is absolutely fair and highly competitive on the table. I probably think I could have gotten lower, but again, I'm not trying to get all the value out of this transaction at all. I wanted to get a lot of the value. But at the same time, I'm not going to be available for a lot of back and forth and...

• 1:50:09David Senra?

  Do you tell them that upfront?

• 1:50:11Speaker 01

  Generally, no. If they ask us, sure, but hopefully they do their research. I can only think of one case in recent memory, which is actually quite recent,

• 1:50:22Speaker 01

  where we ended up raising our offer substantially because...

• 1:50:28Speaker 01

  And but the reason is so in that case, we were asked, forced really, by the seller to put a number on the table before we had the data we needed. And so, you know, between not even participating or risking driving to change it a lot later, we said, okay, look, we don't know a whole lot. Based on what we know, we think we'd be happy to do this at between X and Y. And then later, as we progressed into, you know, the sales process and we got more data and we finally could form a somewhat complete opinion, we found that we could offer a lot more. And so, we increased that offer substantially. But it's really rare.

• 1:51:07David Senra?

  You increased the offer on your own, or they said that's way too low?

• 1:51:10Speaker 01

  You know, I don't actually remember exactly how it played out.

• 1:51:14David Senra?

  How would you do that?

• 1:51:15Speaker 01

  Probably a mix of the two.

• 1:51:16David Senra?

  How would you do that today? I would imagine if you think this is a nice...

• 1:51:20Speaker 01

  Frankly, I think I would do it similarly because we just didn't, we didn't have the data and the data wouldn't be forthcoming unless we put a number on the table. I don't, we're not trying to prove a point and be dogmatic and say we only put a number on the table if we have absolute certainty. So we said, look, we are not highly confident in this number because we don't have a lot of data, but this is not...

• 1:51:38David Senra?

  Okay, so let's say in a different example, you have the numbers that you need. You put the number out. Is that number pretty firm?

• 1:51:45Speaker 01

  Yeah, generally, yes. I don't think we increased it almost ever by more than 5 or 10%.

• 1:51:50David Senra?

  So, did you ever hear about the way Buffett bid for Clayton Holmes?

• 1:51:54Speaker 01

  No, I don't think so.

• 1:51:55David Senra?

  The founder of Clayton Holmes wrote an autobiography. I can't remember what it's called, but I think his name's Jim Clayton. And his son was handling negotiations because he had sat down and his son is CEO. And so, his son goes to Buffett. He's like, yeah, we'd, they were debating on like, what are you, price per share? He's like, the board would entertain an offer at 17. And Buffett goes, $12.50 bid. And then the guy comes out, he's like, all right, we talked over, we'll take 15. Buffett goes, 1250. He goes, all right, went back, we're going to do 14. And he goes, 1250 is my final offer. And then his closer was, I can assure you, if every capital market in the world closed tomorrow, and when he's like, you can still rely on this offer. And they're like, we'll take 1250.

• 1:52:40Speaker 01

  I will not name names, but we have had one or two situations a little bit like that. And look, I think it's easier to do because we're so confident. I don't believe to this day that we have ever been outbid. I don't remember a single case, at least not in the last five years, in which we put forth an offer and then the seller sold to someone else. We have had cases where they chose not to sell. Maybe they thought it was too, I suppose they thought the offer was too low, but we have never seen that business being sold to someone else. And that, and we have been able to deliver the extremely high returns we have while winning, essentially all winnable sales processes because of that massive advantage of an, as an operator,

• 1:53:24Speaker 01

  where we can deliver such an improved performance, this would be private equity is primarily in most of our people. When you have that ability to basically bid higher than, I mean, it's, I can't say everybody else every single time, of course, there will be exceptions, but almost everybody else almost every time, then you can be confident in your offer. And we've seen that sometimes we put forth the offer and the sales party thought they could get more and they choose not to engage further. And then maybe we hear back from them, say, nine months later or six months later, and they, then they're willing to transact at that price because they needed to convince themselves that actually that's what you can get. It's harder to do if you think your offer is weak. Then you need to be much more persuasive and try to get it done before people shop it around.

• 1:54:08Speaker 01

  But in our case, we always say, do you want to shop it around? Often, people try to look for exclusives. They're, okay, this is my offer, but unless I get exclusivity within five days or the offer is gone. Because they know that their best chance is to win on timing, like, I'm here now. They know the offer is not that great. In our case, when we're asked, we almost always say, look, if you want to, we encourage you to go and shop it around. Because in fact, once you convince yourself that this is the best offer, it'll be easier for us too. Like, it'll be a lot smoother from, we'll sign faster, we'll close more easily. Like, we want it to be fully satisfied that this is the best value for you and your shareholders that you can get. So that's being, generally speaking, our approach.

• 1:54:47David Senra?

  So, I think from the outside, I would ask, like, how much of your business is run by numbers? Remember the discussion we had on jiu-jitsu and MMA?

• 1:54:58Speaker 01

  Vaguely.

• 1:54:59David Senra?

  Okay.

• 1:54:59Speaker 01

  Which part?

• 1:55:00David Senra?

  You mentioned, you named some people that you were fans of in the sport of jiu-jitsu and MMA. And then you said the weirdest...

• 1:55:07Speaker 01

  John Danaher, we discussed.

• 1:55:08David Senra?

  But then you said one of the weirdest shit anybody's ever said to me in my life. And you're like, oh, by the way, I don't know what they look like.

• 1:55:14Speaker 01

  Oh, yeah, yeah, yeah.

• 1:55:15David Senra?

  And I'm like, how can you be a...

• 1:55:16Speaker 01

  Now I remember, yes, yeah, yeah.

• 1:55:17David Senra?

  How can you be a fan of a sport and not know what a person looks like?

• 1:55:20Speaker 01

  I wouldn't say I'm a fan of the sport, but I know, I knew something about this. I'm a little bit of a geek for stats, numbers. And so, yeah. Same for, for a lot of sports, like, for example, CrossFit. I don't practice CrossFit. I barely have. I've probably seen...

• 1:55:43David Senra?

  You don't watch the sports?

• 1:55:45Speaker 01

  No.

• 1:55:45David Senra?

  You study the data that comes off the sport. That's what I'm trying to get to.

• 1:55:49Speaker 01

  I would tell you that Miss Tumi, she's the greatest Crossfitter of all time. She probably won like eight CrossFit games. She only missed one when she was pregnant, I think, a couple of years ago. And then she came back and won again. So, I don't know. I just love to the stats.

• 1:56:01David Senra?

  But you don't know what she looks like? If she's walking out of the shade, would you?

• 1:56:05Speaker 01

  No, I don't think I've ever seen her. If I've seen her, it's maybe as I was Googling, I guess, the picture, but...

• 1:56:10David Senra?

  So, help me understand this. So, like, this part of you, which is one of the most memorable things you've ever said to me, right? Where you have like this, you had a bunch of knowledge about these people. Like, so clearly you retain these numbers. Are you running your business the same way?

• 1:56:23Speaker 01

  I would say I'm a strong believer in logic, in rational. I think logic and rationality properly defined are perfect. They're always good for you. I'm skeptical about numbers, actually, meaning numbers can be very dangerous because they are an approximation of reality. And if you take numbers at face value, if you're not sufficiently skeptical and inquisitive, you risk being misguided. So, numbers are wonderful and very useful, but they need to be held with care. What we try to preach at Benning Spoons is there's never a decision that you have to make where being logical and rational isn't the optimal strategy, ever.

• 1:57:08Speaker 01

  No matter how quantifiable or unquantifiable the matter at hand is, you're going to be as logical and as rational as you can. Whether you should be data-driven, let's see. I mean, some things are very clearly well-informed by numbers. Other things are probably, it's useful to bring numbers to the table, but they don't tell you everything. Some things are somewhat dangerous. For example, today, we generate well over $4 million in revenue per spooner. So, we...

• 1:57:36David Senra?

  $4 million per revenue per employee?

• 1:57:38Speaker 01

  Yeah, per, like, core team employee.

• 1:57:42Speaker 01

  So, technically, we, and we pay some of the highest compensation in the markets where we operate because we want to work with some of the best people.

• 1:57:54Speaker 01

  And that's not the main thing, but we want to make sure it doesn't become a thing. Like, we want to, wanting to feel that they're highly valued and so that we focus on the things that are actually more exciting and motivating than, you know, the extra dollar. So, pay needs to be high enough that nobody forgets about it, but it's not front and center, let's say. Having said that, we, as is only natural, we don't want to waste money and compensation if it doesn't bring better talent, right? I think I'm not saying anything shocking here. And so, I remember having this discussion with some of my colleagues,

• 1:58:24Speaker 01

  whether we should raise salaries or pay in general. And I was firmly of the opinion that we should, and we have, by the way, and we will further in the future. And someone suggested that we run an experiment and that was, we would put out their job descriptions with the higher salary number, then we would typically pay the company and see whether that would get us more applications, better applications, more conversion rates. I was in favor of running that experiment because had we seen major uplifts, that would have very strongly supported the view that we should be increasing salaries. But I told the team before we ran the experiment that I thought, even if we didn't see any uplift, I would still be of the opinion that we should raise salaries.

• 1:59:05Speaker 01

  And the reason why I believe so is that I think that the people who click on a job ad and actually then decide what to do is actually a fraction of the people that could be clicking on that ad. And by the way, a lot of those people will have already decided whether they're inclined to apply or they're just curious. And if you look at conversion from a piece of information you're changing, so late in the funnel, essentially, and running an experiment that's going to last two months, you're going to fail to observe all the compounding effects of you establishing a reputation as an extremely high-paying company.

• 1:59:47Speaker 01

  Those will never show up immediately. You need people to spread the word at universities, in workplaces. You need to start showing up in the job boards, as, you know, there are websites comparing. That will take many months at a minimum, probably multiple years. The same way as today, Benning Spoons is generally regarded as one of the highest talent density, best places to go work. It's not something we achieved overnight. It's a slow investment in that. And by the way, the test showed modest uplifts, but not enough in and of itself to justify maybe paying people 20% more. So, I cannot definitively prove that we were right in ultimately increasing compensation a lot, but I believe we were. If you based your decisions on numbers alone, or primarily on numbers in every case, you're very likely to miss out on a lot of opportunity.

• 2:00:31Speaker 01

  I'm sure Steve Jobs would have said that numbers were occasionally interesting to him, but definitely not the guiding deciding factor in many of the best decisions they made at Apple. So, we tried to make the maximum possible use of numbers, but with skepticism and context. But logic and rationality, they never fail you. They're the best thing.

• 2:00:53David Senra?

  Luca, man, out of all the founders I talked to, you're one of the least predictable people that I have conversations with. I really appreciate you exist. I love what you're doing at Benning Spoons, and I hope we have multiple conversations in the future.

• 2:01:04Speaker 01

  I have a pleasure.

• 2:01:04David Senra?

  Thanks for taking the time, man.

• 2:01:05Speaker 01

  Thank you, David.

• 2:01:06David Senra?

  I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.