Luca Ferrari - Building Bending Spoons - [Invest Like the Best, EP.446]

22:57This year alone, this 2025, it's almost at the end of the year, we'll be receiving about 800 ,000 unique job applications. We'll be hiring 250 people. So that's one in 3 ,000, 4 ,000. It's super selective. And it's not because I'm smart or anything. It's just inherent advantages of the bending spruce model. And of course, an employer brand built over a decade of investment and people work here saying it's amazing, talent is great. So you can't shortcut it. It takes forever, but you couldn't as a standalone company, even if you had the patience. I heard somewhere that for a long time on Slack, your label was recruiter.

23:30Which is pretty cool. I think it still is. It still is. You mentioned the idea of building an employer brand for a decade plus. Talk about those two things, how they go hand in hand and what you've done that's been most successful at building the employer brand. By far, talent density. We think about the jobs we offer as our most important product. So you need to know who your customer is, what you're offering, how you're differentiated, and have the courage of really focusing on that sharply. I find a lot of companies are almost afraid of someone not liking them, some team member getting offended by some practices.

24:04And I think they are unappealing in general because they're too vanilla, too boring. They're nothing in a way. They're everything and nothing. And certainly they're not appealing for the most brilliant and driven people who want very clear, exciting opportunity. So we have focused pretty much from the beginning of getting better over time at it on being the ideal place for incredibly talented and hungry, determined professionals. We make a promise to them to surround them with incredibly high talent density. I just mentioned how selective we are, the entry point, we continue to be selective throughout.

24:37That certainly forces us to have difficult conversations and our moments of stress, but overall it's a clear positive. Yes, it's a more intense, challenging workplace, but for people who want to be the best version of themselves professionally as quickly as possible, it's almost a unique opportunity. So that's our customer. That's the person we want to surround ourselves with. Why is testing yourself so addictive? What is it about it as a function that you and the team so enjoy? It's difficult to tell. I suspect, though, it's a common trait of a lot of people who have achieved greatness in their vertical.

25:11I'm thinking, for some reason, tennis comes to mind. And when I look at Novak Djokovic, Rafa Nadal. I don't know them personally. They both struck me as people who are absolutely turned on by the idea of testing their limits and pushing against those limits. I don't think they wanted to win for the sake of saying, oh, I won 23 Grand Slam tournaments. They love the idea that it was supposed to be impossible. And you know what? I'm going to prove it's not. It's one of the ways some humans are wired, but the truth is a lot of humans is wired that way. And those humans are those who tend to have breakthroughs, excel in their fields, whether it's academia, sports, or business.

25:46And so if you feel that way yourself, if you want to win and excel in an area like we want to do with our approach, that's the kind of person I think you want to serve on yourself with. Have you learned anything surprising about yourself or about how the world works in all these years of testing yourself? One thing I've learned that's cost me a lot of sanity and caused me some sleepless nights is that consensus is overrated and even dangerous, at least when you're trying to achieve something. I don't like the model of the bright, brilliant asshole or anything like that. I think you can not be a consensus seeker while being a perfectly respectful, nice human being.

26:24I think that's the model I would espouse. But in general, if you're striving to stand out in your field, if you're very concerned about aligning everybody around that particular vision approach, not causing anybody to dislike you, criticize you, I think you're absolutely doomed to fail. Unfortunately, I'm naturally wired to enjoy consensus. I quite struggle with friction and criticism by nature. And I think, at least personally, and certainly my capacity at the company that slowed me down, caused me some pain that, in hindsight, unwarranted and didn't bring any good to anybody. So I felt pain and others benefited as a consequence.

27:03And instead, when you have a clear idea, you believe that's the right approach. And of course, you have listened to input, intellectual honesty, openness. So it's not a matter of pride, just a matter of intellectual conviction. Then I think being able to just accept disagreement, pissing some people off and just going very straight toward that goal is a superpower. Not perfect at that for sure, but I'm much better today than I was when I started. But at least the first seven or eight years, I think I was absolutely terrible at it. Thankfully, artists on the team were better. And so as usual in a team, you complement each other.

27:34I think a lot of management teams are too worried about having a percentage, for example, of their team disagreeing with them, criticizing them. Instead, I think they should really try to, if they believe they've got the solution, the path ahead, they should be uncompromising in that regard. So if we rewind time now to the early days where you've got this core insight that zero to one is really hard and maybe somewhat random. You have this skill set that probably is really valuable and one to N. and you're going to go acquire businesses and apply the talent and skillset to make the products way better, bigger, faster, everything.

28:05What is the first couple years of that process like? Like, how are you looking for companies? How do you have enough money? I'm sure you must've started small. What were some of the first acquisitions? Talk us through the early lessons and early activity in the M &A markets. The beginning, again, we had those 40 ,000 euros. So we were trying to get, do some consulting, like I said, which never worked, basically brought no revenue, pretty much. The first acquisition, I think we closed it within the year, so pretty quickly. And we paid$10 ,000 for it. I don't remember what it was called. It was an iOS app to personalize your keyboard, ultimately made$20 ,000 off it.

28:41Very good return in a short period of time, but at a tiny scale. And then that$20 ,000 went into a couple other acquisitions and maybe turned into$40 ,000. But again, similar nature, so small product, amateurishly built, certainly no institutional investors, no investors of any sort, definitely no professional management teams, typically one person. A guided app. Yeah, exactly. In parallel, we also launched a handful of products from scratch, learned things because if you don't acquire almost anything because you've got no money, you're also not learning. So we're trying to learn, hopefully make some revenue.

29:13We had a couple of mild successes, enough that it extended a runway. So many small things like that, and we kept adding and compounding. But slowly but steadily, 10K turns into 20K and 40 and 80. And we've been compounding at pretty fast rates. If you look at our per share revenue or EBITDA growth over the past four years, where we are a decent scale, it's about 1.3 billion this year, it's still about 75 % per year. We're still compounding pretty fast. 10 years go by and you look back and you're like, oh, wow, I remember we were making half a million a year. Now we're making a billion. So in those early days, what were the key lessons that you were learning?

29:47What did you start to realize were the right attributes of an app, a piece of software, a company that you might acquire? What were the things that you were after? It's always been the same things on a high level. And that would be, so far, we've always focused on digital technology. We haven't bought supermarket chains, nor do we plan to. I feel you want to stay reasonably within your circle of competence. Ideally, here and there, you want to take a step outside of it. You need to keep pushing the boundaries because that will keep your time expanding as you expand within the TAM. But I don't think it would be wise, especially as long as the model works well, it's efficient to take massive leaps outside of the circular competence just because.

30:26So digital technology, scale, scale is relative, but because our approach is so hands-on, so time-consuming, I mentioned we can, sometimes we radically rethink a business or at least several components of it. We will do maybe five acquisitions a year, could be one, could be 10 max, and if it's really a stretch. And each, some more than others, will really go super deep and rethink the details. The time investment and the effort does not scale linearly with revenue. So for us to do an acquisition that will bring in half a billion in revenue is not five times as time-consuming as one that will bring 100 million.

30:59Maybe on average, it's a little bit more time consuming because it tends to be more complicated, but nowhere near linearly. And so we want to do fewer acquisitions, but bigger. So first criterion is scale. And again, at the time, 10K looked like a big bet. How do we feel like it? Today, we're actually hoping to invest easily a billion plus, but conceptually the same thing. The second thing is we need to be able to predict the future performance of that business. Otherwise, there's no way we can make a confident investment. We've gotten very sophisticated in times with statistical models and lots of assumptions and probability distributions, but at the essence of it, we need to buy stuff where we know where it's going, at least with sufficient confidence.

31:35And the last one is we need to believe we can make meaningful, substantial improvements to that business. Not that it's necessity, but it's difficult for us to imagine being able to make an offer that's super exciting for the seller and then being, okay, this is perfect, buy. Probably they wouldn't sell it to us for that price. These are the criteria and they have remained the same, but the level of sophistication, our understanding of these criteria over time, it's incomparable. Maybe we could talk about Evernote as a great case study because I used to use it all the time. It was my place of record for keeping my notes and book highlights and all these things.

32:07And people have heard of the brand. It was a big acquisition for you. I'm curious what you think of as like the milestone acquisitions in the history of bending spoons. I'd love to dive into that one just to hear an example of the whole story soup to nuts of how you found it, what you saw, what you did, how you thought about price, what your team did, what's happened since. I mentioned earlier at the beginning, it was all what we would call asset deals, individual apps and whatnot. And then we had a period of maybe three, four years where we saw that very basic, small-scale model work was going to saturate at some point in the not-too-distant future.

32:39And we figured we should do this at a bigger scale with structured companies, with management teams and large teams of professionals and institutional investors. But will we be able to do as well or at least enough there? And we were quite, I think we lacked confidence to take the leap immediately. And so we started losing a bit of focus and looking at alternative strategies while taking tentative baby steps into that next level of the same thing, really, but just, I guess it's a bit like I played locally now when I do an international tennis tournament to go back to the tennis. Will I be able to compete?

33:10And probably yes, if you're doing super well locally, of course you'll not be the best at that yet. But I think you can empathize with there being a little bit of hesitation and insecurity. And I think Evernote was the first such company, like up clearly within that definition. And it was very successful. And so it gave us, and so was it for the sellers, by the way, I think it was a great deal for both parties. My guess is that we paid 50 % more than the next best offer. So it was really a win-win. Any good strategy needs to be somewhat win-win, otherwise it will not go far. We were invited to that process.

33:42At the time, it wasn't something we took for granted because we were not so well-known. So many times we missed out on sales processes that happened and took a look at it. I think we were very fast in making what turned out to be the winning bid. And we just saw a very good brand, although certainly slightly tarnished, but still a quarter of a billion people had used Evernote. You can't say that of a lot of products. Wow, yeah. A strong brand, an important use case, a lot of customers with thousands or tens of thousands of notes using Evernote to run their lives really. And so that means potentially good retention.

34:15The product had not probably kept up with the times as well as you as a customer would have loved to see. Of course, you can only realize that fully once you're on the inside and really opened the hood. And you get a sense of that as a user. And I was a user actually before I acquired it. I've been a user since 2014, I believe. And so we bid, we won it. We began our usual transformation process on a different scale, but essentially had a team of some of our best experts, functional experts, growth, product, design, and engineering. Going, we met everybody. We spent a lot of time with everybody on the team and worked on projects and really got acquainted with the nitty-gritty details of the business, broadly speaking.

34:53and then developed a roadmap for how to make Evernote more successful and got to work. It's a completely different business today. I think in two and a half years, we have released probably about 250 significant product improvements. It's difficult to be 100 % quantitative of product improvements because there's no perfect definition. But in my estimation, we have been improving and innovating probably three to five times faster than before. We've been able to do this with a smaller team, really working on keeping all the positions that were critical, getting rid of projects and initiatives that we thought were tangential and really not adding a lot of value, working on talent density, the culture of impact orientation and rationality, really trying to make sure that what we do moves the needle.

35:33And it's a million things you bring in as a business with our platform, but we rebuilt almost entirely the code-based, the cloud infrastructure. There's almost nothing, at least nothing of the core components. It's now far higher performance. Notes sync up in less than 10 % of the time, in some cases, 1 % of the time. I remember that being a problem when I was using it. That's why I stopped. It is super fast. You would not tell the difference at all compared to the products you probably consider the best in the broader productivity. Maybe you think Notion is top-notch in the broader productivity.

36:05I think if you tried Evernote today, you would consider... They do different things, but the quality of the experience you consider probably on par. So we had to close a big gap there. Retention is at an all-time high. Despite prices being higher, because now Evernote is substantially more... It varies by country and it's probably an average, say, 60 % more expensive. So it's essentially more expensive than before, but actually retention is better because, yeah, we did lose 10 % of customers who were already not so sure. And once the price goes up, okay, I'm out of here. But all the more engaged, loyal customers are still on board and customer satisfaction by any quantitative metric is better than it's ever been before.

36:42But it was a very time-consuming effort, not something, I think, completely beyond what, say a private equity could do without having its own R &D team and having to maybe be ready to sell within a few years. And again, we can't do it a hundred companies each year, but we could do three or five or six. How do you know when there's pricing power? If prices are 60 % higher, you've made it a better product. So maybe that's why the price can go higher. But how do you think about price charge to end users across your universe of applications that you on? It really depends on each case. I'll give you another case that's quite different from Evernote, and that would be Meetup.

37:19So Meetup, historically, you could only use it as an organizer. You could only use it if you paid for it. And since we acquired it, we introduced a free tier. So you could organize. We actually do quite a lot for free. It kind of qualifies as a price decrease in a way, like we gave away more for free. And we actually increased the price for the more advanced use cases for the truly dedicated. Based on my observation, there's room for being more sophisticated about pricing, which is different from increasing prices, being better at segmentation, what's paid, what's given away for free, personalization, communications, experiences that ultimately all blend into monetization and the maximization of user LTV.

37:57Our direct experience is that there's a wide range of levels of sophistication in the market. I'd like to think Benny Spoon's being at the very top of that sophistication spectrum. Whether that translates into higher prices or lower prices or same prices, I don't know. It certainly translates into a very different overall approach to monetization. Just as a quick aside, why is it called Benning Spoons? So when we started, we knew that we weren't going to be a one product company. We still wanted the name to connect to something for us. A lot of companies are named after, somehow after the problem they're trying to solve, not all of them, but, or the product they're trying to deliver.

38:34Of course, that wasn't an option for us. We figured, okay, why don't we look for a name that somehow connects to some principles or values that we find inspiring. One of my co-founders, Matteo, is a big fan of The Matrix. Watched the movie the night before, I'm not sure, but anyway. He told us, why don't we call it Bending Spoons? He watched the movie and there's this little bold guy who bends a spoon with his mind and I think it's cool. Initially, we didn't like it. I still have a spreadsheet with different names. At Bending Spoons, I think we gave it like four out of five stars. There were a couple others that got more stars.

39:07The one I remembered in hindsight, thank God we didn't pick it, Appeal. We were doing only apps initially. Now we do all sorts of technology and software. Appeal. I think it's awful. For some reason, the Luca from 2013 thought it was brilliant. So it got five stars out of five. But we picked Bending Spoons. And the reason why we liked it was it connected to two principles or values that are still very dear to us. One is, call it the power of the mind. The idea of Bending Spoons somehow, at least to me, it inspires this vision of a powerful mind that can do things that appear impossible. And we're big believers that the human brain has incredible potential if you work on it and at it and try to really give it the tools.

39:46And the second reason why we loved it was that even if you have that brain, it, again, just intuitively feels to get to the point where you can bend spoons, you've probably worked really hard at your craft. And we like the idea of almost anything in life that has value, you got to work at it. I think it's true with a family, romantic relationships, your craft as a professional, your ability as an athlete. I think almost anything that will really give you satisfaction requires work. And plus it was a unique name. We hadn't heard of any company called Bending Spoons. And so we figured it's probably memorable.

40:20Let's go for it. I love it. And I love that movie. So now knowing the reference, it's great. Going back to the Evernote acquisition, you mentioned you paid 50 % more than maybe the next highest bidder. How do you know the right price to pay? How do you think about pricing assets. As you buy bigger and bigger ones, we can talk about Vimeo, we can talk about AOL. These bites at the Apple are going to get bigger and bigger. Price matters, of course. You have the ability to do a lot after buying it. So maybe that allows you to pay a higher price, but still, I'm sure you want to pay a good, fair, responsible price.

40:48How do you think about it? One is how do you determine your returns as a function of price? The second one is how do we stay disciplined, so we will really not pay more than we believe is right based on our expected returns, opportunity cost, what else we could be doing with that capital and what returns. So the first one is a matter of sophistication. And the second one is a matter of psychology, really, I think, discipline, patience. And the third one is how well do we negotiate? How efficient are we at positioning the ultimate price on that curve? The fastest but stupidest approach would be to immediately offer the very most you can pay, The opposite of offering a ridiculously low price is probably equally stupid.

41:29So you want to find the right balance. Interestingly, we actually are much closer to the former. We believe it's better to have a reputation for someone who offers a very fair price immediately, but who is not going to be very willing to negotiate much. So the first one, how do you determine that return as a function of price curve? You've got to be very sophisticated at knowing what you're doing, having first-party data for benchmarking, asking the right questions, having good models, but the output of the model is only as good as the assumptions you put in it. And we certainly have very sophisticated cohorted models and whatnot, but main advantages in being able to run these businesses a lot better.

42:05We don't win because we're good at predictions. We win because we can run them better so we can offer a good price, but it's certainly marginally important to making good predictions. And so you want to have 12 years of experience running many businesses from the trenches in the details of private equity, I think teaches you a lot more. so you understand why things went a certain way with a certain business. You're wiser when you set the assumptions for your next acquisition in a way that I think if you stay on the financial layer or kind of, oh, I talk to management every week, you think you understand, I don't think you really do.

42:33There is a cost to pay. It takes time. But then on the bright side, you're basically smarter than predicting the future when you find yourself in a similar situation again. So assumption setting is critical for us. We have many assumptions, each has a probability distribution. And we debate assumptions extensively without ever looking at what the model will spit out as a consequence. That's forbidden. Because we think that if you see the P &L, basically the business plan, as you do it, there are all sorts of biases. It doesn't look good enough. And you're like, oh, maybe this is conservative. We do not look at the output, only the inputs.

43:06We debate, analyze, dig for more data. Once we're happy, that's the best we can do. At this stage, We run a Monte Carlo simulation, and then we look at the distribution of IRR, MPV, and that's the truth. Nobody can say, now that I see it, I think maybe we were a bit pessimistic with the assumptions. No, too late. This is not the truth. This is what will guide our negotiation. So that's phase one. And then you make an offer. As I said, we try to make an offer that's sometimes the maximum will to pay or close to it, because we think although we could probably get a better deal in the moment if we started lower, than we don't want to establish a reputation for people you can push around and get more out of.

43:42We're more like the Warren Buffett model of, I'll give you what I think is actually a very good offer. And I'm okay if I hear no, but don't think you can get 25 % more out of me. Just asking. And then you've got to be disciplined when they ask for more than you're willing to pay. You absolutely need to not have fallen in love with that particular business and say, okay, you know what? That's not to be, we'll move on to the next one. What's your walkaway rate? Like for every AOL, Vimeo, Evernote that you buy? How many did you want to buy that you ultimately didn't? We need to define this because we look at actually thousands of businesses each year.

44:13We don't make an offer to thousands of businesses. I'd say we probably make an offer to twice as many as we buy. You know what? We have never lost a bid before. There has never been a business we made an offer for and someone else got it. Those we didn't buy were ultimately the seller just chose not to sell to anybody. So that tells me our offers are typically super competitive. We also tell us we're probably not very good at negotiating because I think some level of failure rate would indicate a more optimal strategy. I guess you fail, you learn, you get better. Can we talk about the history of the financing of the business?

44:42Because like you said, you've done very little direct equity capital raising before you've done some debt. Has most of this just been buildup of free cashflow from earlier businesses until you have enough to buy the next thing and then just rinse and repeat? Yeah. In short, the more sophisticated version is completely true what you just said for the first five years. Then we started using debt, pretty basic debt from commercial banks, not very high leverage ratios, 3.5 times EB down a good day, generally lower, trailing EBITDA in the last 12 months. That helped accelerate. Before, we couldn't use that because you need to have an established track record before they take you through a code.

45:20Since then, it's been essentially debt and reinvested earnings and debt. We have raised a bunch of equity, but mostly to fuel secondary transactions. Because if you're in business for a long time, you start to get into a good scale. People say, okay, I've invested in this company. And I'm talking really just team members, because from the beginning, we enabled people we pay just cash, no variable pay of any kind. And people can choose to receive some of their cash pay in equity at a discount. It's very unusual, by the way. And so in time, people have accumulated positions and that equity is worth nothing if there's never any liquidity.

45:52So we started organizing secondary transaction every 18 months, one year, two years. We've had maybe five, four probably since 2019. And so mostly equity has been raised to finance those transactions. But occasionally, the first capital increase of any significance was in 2022, I think. So yes, we have dilution from capital increases, very modest. Off the top of my head, I'd say maybe 10%. We could also not have done any of those at all. We still did them because we figured In a couple of cases, it helped us get over the hump to close a deal we couldn't without that little extra. With that, we were maxed out.

46:27But also, we figured if we bring in a little bit more in terms of high quality international investors, that would be helpful. Credibility, firepower if we need to go after a huge acquisition quickly, just optionality. But we're generally very cautious when it comes to dilution. I think if you really believe in what you're doing, it should be painful to increase your capital base. I don't know if it was Evernote or some other one. We've talked about Evernote, so maybe pick a different one. I'm curious for another acquisition, whether it's WeTransfer or Kamud or anything else, the AI photo sharing one Remini, which I was just looking at out before we started this morning.

47:00Are there other acquisitions that have taught you personally the most about your own process, about doing this well, that stand out in memory? There was one time where, let's say we bought a product at the peak of, let's call it a viral moment. This is really not applicable to the type of businesses we buy today, but at the time, it was a thing. It's many years ago now. And then as soon as we bought it, basically that viral wave was reaching and had reached the peak. And that completely changed. We thought we had been conservative, but it completely changed our assumptions and led to drastically inferior returns versus what we expected.

47:37And that taught us to be absolutely paranoid when it comes to the sources of user acquisition. So basically, either we buy businesses where almost all the value lies in existing customers or users, like people, okay, these have been acquired. It's just about now managing them as well as possible. Or if a lot of the value is predicated on substantial additional user acquisition or customer acquisition, then we need to really clearly understand the drivers of that expected acquisition and make sure that these drivers are things we can predict. For example, we know we can make pretty accurate predictions of word of mouth rates under normal circumstances, but not under sudden viral moments, we don't feel very confident making predictions of future rates of user acquisitions through paid advertising, for example.

48:22So that was a big lesson learned. Another one we learned, we actually went after Grindr, the LGBTQ plus dating app in 2019. So the app was owned by a Chinese firm and CFU's was forcing it to sell. So long story short, It was a big bite for us at the time. We're much smaller. It would have quadrupled the company. We didn't have an equally substantial track record as we do today. We went above and beyond to raise the capital. Almost won the deal. Ultimately, we lost it because someone else offered a bit more. And we would have offered more still, but we just had capped out on available sources of funds.

48:59So that was a failure. We worked. It took us about nine months. My main thing, and the main thing for several colleagues, at the time we were very small. We had an M &A team of one person. So it really paused our growth. Had we bought it, it would have been an incredible acceleration afterward. But it taught us to be very careful to put all our eggs in one basket. And so in hindsight, I think we could have still tried to get it, but maybe not obsessed so much over it, considering how unlikely it was to make it happen and try to place another few bets that year. If you look at our growth, those couple of years, it's way slower than almost any other year.

49:36And that's the key reason. Like we put all we had into making that one thing happen. It didn't happen. We hadn't done anything else. I'd done some things, but nothing that really moved the needle. So it taught us to be, think more in terms of probabilities. Not that we weren't before, but I'd say we've gotten almost obsessive about seeing the world in terms of statistics. With that model of the world, act accordingly. Can you talk about AOL a little bit? Obviously, that's a name that literally everyone will have heard of. And I'm fascinated to hear the story of you acquiring the business. So people know AOL as the way to connect to the internet back in the day, in the 90s, even the 80s, I think, actually.

50:11I think they started. Pioneers. At some point, AOL was what Google was in the 2000s. It was the hot new thing. So they had this outside in, it seems like a failed merger, Time Warner and whatnot. And then they had different homes. It's actually a very good business. It lost all the customers that they had to lose over the decades. And today it's a email inbox and a web portal with the aggregator of news and other content. It's a very good business with tens of millions of active users, very loyal users. Again, there's a lot of selection bias. People who want a Gmail have decades to go for it. People who really love that particular experience.

50:46They have lots of stuff there. And at the same time, we think, although the team has done a pretty good job, I think, at managing this business, there's a next level to be unlocked in terms of polishing the product, optimizing the offering, optimizing monetization. It's just a very good business that I think superficially people think, oh, it's probably legacy old. It's probably worth nothing. But actually, it's a wonderful business. And in fact, again, I won't name names, but a lot of our companies in the broader messaging or email industry segment, and if you just read the news, you would think are doing super well and they're much larger.

51:16But actually, if you had access to user count, P &L, including in time, looking at trends, they are just not nearly as good. Like, it doesn't even begin to compare. AOL is actually the fifth most used email inbox in the Western world, which is something. It's a pretty competitive category. So is it Gmail? No. If Google ever wants to divest it, we're happy to take a look. It's a very good business that will be even better, I hope, as we pour our hearts and souls into improving every facet of it. One of my mentors who's done a lot of investing and building software businesses over a long period of time said that one of the ways that he made the most money or was the most successful would be that he would enter in product situations where there were 12 things going on and there should only be three, that there was always just like too much stuff, too many features, too many products in the company.

52:04Have you found that to be true at all? That especially with companies that are a bit older, that there's been this creep of stuff that gets added that's not necessary? Is that like a common element of your playbook to take 12 down to three? I don't know that it's necessarily common because not all companies do that, but we have seen it and it's quite true. I thought it was a contrarian view, but now that I know your friend thinks the say. Maybe it's not as contrarian as I thought it was. But yes, I think people in general overestimate the value of R &D. Let me qualify. They think that generally pouring money into building stuff pays off.

52:37It's really not true at all. What we find is that there's a very small number of things that pay off ansomely, and most things are a waste of money. And while there's an element of you don't know before you do it, so for sure, a lot of it you do. For example, if you start from what your customers need, really focus on that rather than maybe what your engineers think is cool or fancy visions that have very little to do with the core problems you're solving. They're probably actually already taking big strides in a direction of greater efficiency. And by the way, it's not just about keeping costs more under control, but it's also doing the thing that matters better.

53:13Evernote today has a lower cost base than before, but I promise you, if you take 10 users at random, power customers, power users. Nine will tell you that it's actually higher performance, more resilient, a better feature set. And part of it is we've really focused on what these customers painfully needed. That helps you do more with less. How do you think about taking capital from a fund that's a 10-year VC fund or something, or a private equity fund versus a Bally Gifford that's got capital that lasts forever, when you're thinking about the right partners? All else, equal, we do prefer a permanent capital.

53:46And it's not so much because even permanent capital could ask you to liquidate. It's just that you don't have to. And I think the fact that they don't have to reduces the probability that you'll find yourself in a situation where it's just an unnatural, complicated moment. Incentives can become a little bit perverse. We haven't experienced that before, but I know stories of others having done that. But I think if there's an evergreen source of capital, I think you're less likely to find yourself in that unpleasant situation. I will add, I side more with investors on this than entrepreneurs, although in a way I'm more of an entrepreneur.

54:20Certainly. I think a lot of entrepreneurs take money from investors and have a level of entitlement that they should never be asked to provide a return. Oh, but why do you ask me to sell now? It's only been four years, five years. I think that's either naive or intellectually dishonest. Regardless of the particular bylaws that investor is subjected to where maybe they could stay forever. Ultimately, an investor is trying to achieve some form of IRR with some timeframe. So you should remain very respectful of the fact that when you take anybody's money, if you ask me, but certainly institutional money, you can't find it shocking or disappointing or then bitch about it in the entrepreneurial circles that they're asking, putting some level of pressure with you to sell.

55:03You're in such an interesting seat because you're both investor and operator. And so you have the shared perspective that you're often buying things as an investor, but then running them as an operator. If you think across all the investors, pure investors that have come and studied bending spoons, some of them had made equity investments, secondary investments, et cetera, what distinguishes the best investors? What do they do that's most different from those that are, let's say, average? I'd say most good investors, they recognize patterns. So I've seen a certain business model work and I use that to select their investments.

55:37If done right, this is a very successful way of investing. And then there are the bad investors and the amazing investors, none of which is a pattern recognizer. So they actually assess each business in an ad hoc manner on its own deep fundamental merit, but it's much more difficult. That's what divides the truly outlier investors from the bad ones. Those in the middle, maybe even leaning toward good, are pattern recognizers. But in the truly incredible ones, you sit with them, they're not saying, oh, you are the Uber of bicycle. Yeah, you're the Berkshire for this. They understand almost the laws of physics to make a metaphor that makes so that the apple falls.

56:18And that gives them certainly a lot of confidence, but also the ability to see what others don't. Because ultimately, a lot of the time, good investment is not determining that something is good. Like a lot of companies, most of us could tell they're good. But if everybody or even not quite a lot of people think they're good, probably the price embeds that goodness, and it's not a great deal. It is what it is. It's like a lot of companies today in AI. Again, I'm not going to name names, but some probably deserve their valuation. Some will, Easter will prove were even cheap. But most, even the good ones are probably too expensive, simply because everybody wants to invest.

56:49So in a way, it's the same thing. The truly outstanding investors will be able to find something that's really good, but few people think is good. And the only way to do that is not to apply a pattern, because by definition, If it fit a pattern, then it's either by the pattern or good by the pattern, everybody is on board. It has to not fit the pattern and you have to find ways of determining it's good. It's very difficult intellectually. You need creativity, imagination, logic, rationality. It cognitively is next level. In that specific effort for Bending Spoons specifically, where have the best investors really dug in to get that physics understanding of your business that's different than how other things work?

57:25Like where are the best digging? again. Since some of the best are really good at understanding people, at discerning who's really smart and not promotional from those who are not so smart, but very good promoters. And so when you see a business has a strong track record and someone explains to you in a way that makes sense, it's not just a good story, but it makes logical sense. That's a huge indication that probably there's something there. First of all, you now know why things have worked out and you can determine whether they're likely to continue working out. And secondly, if you're investing in someone who's made good decisions for the right reasons, not just out of luck, they're just more likely to navigate the future variables that will be thrown at them better than most.

58:03I know investors who invested, for example, in Amazon in the early days, who told me one particularly, who told me that the main reason why he did, and he made a big bet on it, and it was a huge success. He did believe in the e-commerce model and all that, but he believed that very few people he had ever met had the clarity of thought, the rationality of just Bezos. And so a model he believed had legs coupled with a person he thought was a brilliant leader, a very bright problem solver. That alone set that opportunity apart from a lot of other stuff. Yes, it would be difficult to have wide margins for a long time, but he was confident the company would be much better than at least it was priced at the time.

58:43So I think understanding people and their cognitive abilities is quite difficult. It requires in and of itself great cognitive abilities. is I find that if someone is eight after 10 smart, they can only discern the sevens from the sixes from the fives, but the eight and a half, the nines, the tens for them look like the same, like a big batch of, oh, they're so smart. And so to be able to distinguish the tens from the nines and the eights, you need to be probably close to a 10 yourself. Of course, experience and other elements too, which make it very difficult. They're not just brilliant from a point of view of logic and analysis, but also rationality.

59:15trying to really ignore this person who's really pleasant or charismatic. Yes, park it. What's really beneath that? It's difficult. We as humans have been evolutionists, made us animals of gut, of emotion, but emotion investing, they're not good friends, I think, or at least good investing. Another thing that you have to deal with in a unique way is this cocktail of incentives and motivation for different parts of the business. You have business units where a team is running an Evernote, for example, that's different than a spooner that's in the home office that's being moved around and doing lots of different things.

59:51What have you learned about setting incentives for people to get the outcomes that you want? Fairly complex structure. I don't know if this will disappoint you, but we don't. Everybody is paid a fixed salary, no variable pay, no stock grants, nothing. They can choose to invest part of their cash pay at a discount, not a crazy, but a pretty generous discount at the top core level. And that's it. The way we maximize alignment of effort is by hiring people who believe are high integrity, have great professional pride, and then just treating them with the utmost respect. And I think most people will try to do what's right and do what's right for the business along the lines of the mandate you gave them.

1:00:31So ultimately, you're optimizing for many spoons, not Evernote, nine out of 10 people, if you're hired well and the culture is right, will take it to heart and do that. In fact, I believe sometimes setting financial incentives, of course, if people do well, they're likely to get more responsibility, higher salaries. Certainly there's that, but it's not as immediately tied to a results next quarter or something very measurable. Through observation in time, if you're great at your job, you probably get more, do more. I think that sometimes when you set typical incentive plans with KPIs and whatnot, Now, first of all, it's very costly.

1:01:03It takes a lot of time. For that to be ROI positive, it's not enough that it adds value. It needs to add more value than the cost that's implied. It's absolutely guaranteed to create at least some perverse incentives because nobody can set perfect incentives. The world is too complicated. It changes too fast, for sure. So even if you are a genius, whatever you set as incentives will be imperfect. So there is an additional inefficiency that whatever extra efficiency it is to overcome before even into black territory as opposed to red territory. I think also those kind of incentives tend to hinder relationships.

1:01:35They tend to make things more transactional. It's more difficult to have a proper problem-solving session where all we're thinking about is how do we win together? I think most people will have it in the back of their minds. Okay, how do I get the better bonus? It's difficult to be entirely resistant to that feeling. And so I'm sure it could be done better, but we chose the simple way, which is treat people respectfully and just get rid of all that stuff and assume you'll do the best you can. I'm sure you're always dissatisfied with the state of things and want things to get better all the time.

1:02:02What about bending spoons today are you most dissatisfied with? I'm that kind of person, by the way. I'm perennially unhappy, which I think sounds awful because in a way I feel very fortunate. In truth, I feel very fortunate I'm perennially unhappy for some reason. Discontent, which is a huge superpower and a curse at the same time. What is not good or at least not as good as it could be? One of the things that is critical for our growth is hiring and coaching. I'm absolutely positive we offer literally one-of-a-kind level jobs, some of the best on the planet, absolutely certain. Incredible talent density.

1:02:35You learn faster than anywhere else. You get an opportunity to take on responsibility. That's crazy. Most of our general managers run businesses on average, 50, 100 million in revenues. If they were a scale-up, they would be considered a large scale-up. Many of these people are like 27, 28. Most of them are, I think, very few are above 30. unique opportunities, excellent financial opportunities too, whether it's very good salaries and investment opportunity in a company that's growing fast. We feel very privileged of getting a ton of great applications. Like I said, a huge number. I think we should be getting more better.

1:03:07We should be better at identifying the raw talent. I know we're rejecting a lot of great applicants who are actually better of some of the people we hire because we're just not good enough at spotting that talent in someone who has such a short track record, maybe a student, new graduate. That's an area of massive frustration in a way. At the same time, very proud of what the team has done there and frustrated we can't yet do better. And I know that's one of the keys to growing fast and achieving what we've sought to achieve. So it's certainly a major area. I'm always frustrated with our society is there's too much regulation.

1:03:38We're really working on the wrong stuff at the institutional level. People try to create economic growth and prosperity through more rules, just telling you, yeah, if we tell them exactly where to go with lots of rules, surely we'll be prosperous. They don't understand that it's quite the opposite. You got to get out of the way and create as free and open a playground as you can. We keep adding rules. Elon Musk once said something that I thought was brilliant and I fully subscribed to it. He said, we should have a rule that every new law is automatically removed, say three years later, unless someone can make a really good case that's created a lot of value.

1:04:13So we wouldn't have 10 ,000, 1 ,000 page long civil codes or whatever. We're basically trying to prevent rare corner cases, unpleasant, sometimes tragic corner cases, while making 99.99 % of the normal cases less efficient, more painful, some utterly impossible. But because they're not as newsworthy, because they're typically widespread and normal, those inefficiencies are not as interesting to talk about. In aggregate, there are just a massive tragedy, a much bigger tragedy than the one individual tragedy of one corner case. Ultimately, when it comes to regulation, the corner case wins and we regulate it away, but we make life much worse for everybody else 99 % of the time.

1:04:56This frustrates me because I think we're just shooting ourselves in the foot as society, essentially. What's your balance of time around this idea of being constantly discontent? What's your balance of time of what I'll call maintenance hours of the business? Things that are repetitive, meetings with teams, internal stuff, keeping the trains running versus space that you create to tinker with the business, try new things, stretch that comfort zone that you were talking about earlier. The question behind the question is like, what does your week look like? Like, how do you spend your time? Varies by period a lot.

1:05:24So for example, if when we close a large transaction, I'm often there with a task force in the trenches, meeting the new team and for weeks or even months, sometimes that will take up 50 % of my time or 70 % of my time. If we're working on a big fundraise, which has raised the largest debt round of any private company in Italy in history. And like we said, we raised$700 million at an $11 billion valuation in equity. These two initiatives certainly took a substantial part of my time. When we're not in fundraising mode, that goes down to a trickle, maybe have some calls with investors, but much less.

1:05:57So it varies. But I would say probably a fair split would be 50 % of my time talent. I check each candidate before we extend an offer. I extend the offer. I talk to many of the new hires. I help with talent density. I help trying to push for being demanding. So that's probably 50 % of my time. 50 % of my time is on everything time, probably financing and external relations, I would say. 50 % of my time is these transformations of companies we newly acquire. And 50 % of my time would be other, call it long tail platform work, which is probably where I would put that thinking creatively about how to improve the strategy and I work all the time.

1:06:37So I probably work as two FTEs like I think most people in my position would. But it's probably these four categories are comparable in investment on average in time. What did you learn during this biggest ever debt raise? Most of the people that I talked to for this are raising equity capital. I haven't had a lot of conversations with people that have raised lots of debt capital for something like an acquisition. I'm curious about the whole process and how you would compare and contrast equity versus debt capital markets from a raising perspective? The mindset is quite different because an equity investor tolerates the risk of losing money vastly better because they have an upside that's essentially uncapped within reason.

1:07:14A lender is almost entirely intolerant to the possibility of losing because their upside is that 3 % spread, 5 % spread, depending on the exact financial instrument, it's still a limited and generally fixed upside they have. It's all about not losing it. So a lot of the questions are more oriented toward understanding the potential worst case scenario and the risks. Equity investors are more oriented toward the TAM. How big could this be? How quickly could we get there? The surprising part is a lot of banks, a lot of lenders are actually quite visionary. I heard people say, well, they're probably more boring because they're actually no, a lot of them are brilliant and visionary.

1:07:53So they're quite curious about the model and how far it could go and understand very quickly why it works. I thoroughly enjoyed my conversations with lenders, at least as much as those with equity investors. Perhaps because they have this, they have to be so paranoid about the downside, this breeds in them a thoroughness, a thoughtfulness. That's not always the case with equity investors, for whom maybe that intuition of, oh, this team, this thing could go far is more important. Like catching the big wins is more important. And so they can be wrong more often. So they're maybe a little bit more quicker in their judgment a bit more.

1:08:27But I think lenders are quite an interesting type of investor to talk to. And generally it works that you talk to a couple of anchor lenders, some of the biggest banks, typically those with a strong investment banking arm too. They help you figure out that kind of shape around. They commit some of the money immediately so you know you've got some of it covered and you know where you're going. And then you start bringing under the tent more players with other important roles and then lesser roles. And at some point it's quote unquote just providing capital. And typically, some of this capital is basically it's with that lender, it will stay with you until maturity, five or seven years down the line.

1:09:03Some of this capital you may want to syndicate. The lender tells you, okay, I'll give you a billion dollars, but we agree that in the short term, we'll be going out to sell away essentially this billion dollar to many providers, each with one, 10, 50 million each, and they'll hold it for five years or seven years. But I'm just giving you a bridge to that moment. You need the money now. You're doing M &A, for example, and we don't have time to talk to 20 parties plus, it would certainly leak that you're buying that target. So I help you get there, but then we agree contractually that we'll be transferring that credit from me to these other lenders.

1:09:35So that phase is also interesting, and it's quite optimized because the debt markets are huge. It's gigantic and vastly more efficient probably than the actually much smaller, say, VC capital markets. And so the process of how you take that credit from the point of view of a lender and syndicate it out is super standardized by now. You create a deck, you record a presentation, you show up for one hour, maybe three times with batches of lenders. It's super, super standardized, very efficient. I'm so curious what you think about what I would call almost like a religious debate right now in the world of software, which is how AI will affect the sorts of businesses that you've bought historically?

1:10:14Will it enhance them? Will it hurt them because it's easier to create replicas or copies or new versions? We talked about Remini earlier, which is an app that you bought before ChatGPTO that I'm sure has benefited tremendously from the advent of AI. How does this new tidal wave of technology impact your old businesses, how you think about new businesses, just your take on it in general? Yeah, it's a complex discussion. And I think you're asking maybe a timeframe of five years because AI changes the very fabric of our society 50 years out or something like a long timeframe in ways that are both exciting and scary.

1:10:48But in the medium term, I think for Bending Spoons specifically, I think it's mostly a good thing because we don't care too much about within reason the risk to each individual piece of our business. Basically, most of our business units are 20 % of our revenue or less. A dramatic decrease in one One of them is still, yeah, we've been growing at 75 % a year. I'd rather none of them decline, but some do, some will. Maybe one or two will decline fast. It's undesirable, but not existential. So for our model, it's highly diversified. Lastly, a lot of what we do is being better, functionally better at running this company, meaning having a higher quality output at a lower cost across the functions, engineering, design, product growth.

1:11:28AI is an accelerator of both quality and efficiency if used properly. But it doesn't do it by itself. Maybe it will in 10 years. But today, we've seen it clearly as we have invested internally in excellence through AI in our operations. A lot of it is custom integrations, proprietary technology, a lot of culture work on getting people to use it the right way. So like with every innovation in the past, we'll see a small percentage of companies being at the forefront of leveraging that. Most companies being laggards. And I'm pretty confident Ben Nespuence will be at the very cutting edge of using it.

1:12:02So we're already making strides there that if anything, the gap in ability between us and most companies will widen for years. But again, I think it's likely to mostly benefit an aggregator and consolidator like Bennispools, assuming we stay disciplined with pricing, while being very disruptive for certain verticals. And some will be disrupted much earlier. So I think we as a society and investment community will be able to start seeing things and update our model of reality and predictions based on that. Now, can it be disruptive for many SaaS businesses? Absolutely. I think the time where we open up ChatGPT and we tell it, okay, build me Jira is far away.

1:12:42It's not months away. It's not even a couple of years away. AI today can't do a lot for you beyond, say, research, copywriting, and maybe some basic content production. But it'll do more and fast. We were working with AI in 2010. So we're very early. I'm a big believer in AI. Very big. However, even if it could build Jira today, it's not that easy to explain to it what you want when it's so complex. So I wouldn't underestimate the inability of the user to get out of it what they need. These products have been honed to customer needs for a long time. You're already using them. There is no investment in them in terms of data.

1:13:16So not only does the tool need to get to a point where it can replicate that, and with the same guarantee of performance, very difficult. Like getting to something that works the same 95 % of the time, we're super far from it. But that's an infinitely easier challenge than something that works essentially 100 % of the time. Infinitely easier. But also you need to be able to guide it to build it the way you want. And as long as software is ultimately a relatively small share of wallet, if you think about it, it's not an expense people will optimize first. It's not like a car that literally you plan your finances around.

1:13:48Before that truly eats into the overall size of the market, I think we are talking a lot of stars need to align. I think it's probably many years out. You mentioned earlier that ultimately your main product is your company and the people that work here are the key people to attract the jobs or products themselves. What are some of your favorite ways of making sure once you get these amazing people? We talked a lot about data science and recruiting and the pipeline and the crazy number of applicants and so on. Once they're here, making sure that they get the most out of it and you get the most out of them, which is mutually beneficial.

1:14:19What are the sorts of traditions and things that you do that you think have most contributed to it being the kind of place you want to work? I think ultimately the most important thing is to be very clear on what kind of company you want to be, your principles, your values, and then hire people who embrace those. And then you yourself, as a person who's maybe more visible than others, try as hard as you can to be the best paragon of those values as you can be. That's more important than any manifesto or initiative or proclamation. There are certainly things you can do that on the margins help foster those values a little bit further.

1:14:52Personally, a few things we do that I think are unusual, we love, are one is called State of the Spoon. It's twice a year. We have somewhat the equivalent of an Apple keynote, but it's just internal. And most of our teams take turns on stage presenting their most proud achievement and also failures and lessons learned of the past six months, what they're planning for the future. There is an element of comedy and self-deprecation, which makes it, I think, quite entertaining. You laugh a lot. It's three, four hours, and at the end of it, my jaw is painful because I laugh too much. It's just fun to organize all sorts of almost cabaret things.

1:15:27It's a great tradition, and it just helps us be proud of the things we do. Remember not to take ourselves too seriously. We're not saving lives. You meet and learn about colleagues you maybe hadn't necessarily been close to before. Another one we do is a yearly retreat where we bring everybody to a remote, exciting, typically exotic destination for seven, eight, nine days on the company's time and dime. It's just a vacation, but with colleagues. The last one, so I don't remember in which order, but we went to Seychelles, Mauritius, the Dominican Republic. In the past, we went to Japan, Australia, and everybody's there being together, making friends.

1:16:02It's expensive naturally, but We think it helps establish a level of trust, bonds with colleagues, and ultimately a company is people. So if you bond with colleagues, you're bonding with the abstract concept of the company to an extent. It's not the same thing. It's not enough, but it's part of it. We believe that it pays dividends in terms of, again, willingness to sacrifice, to be honest about problems, to do your best. Why do you think there are not more Benning Spoons? It's kind of like asking why are there not more Berkshires, like there's only one Buffett. why do you think there haven't been more people that have taken advantage of this ecosystem, this huge TAM of companies that are more mature now that you can acquire that have installed user bases and low growth, lower growth?

1:16:41There's always a first. Private equity wasn't a thing until it was a thing. And today you have trillions of dollars in private equity. You could have done private equity before KKR did private equity. Nothing prevented you from doing private equity in the 1930s. To my knowledge, nobody was doing private equity. At some point, someone comes up with an idea. It makes sense. It's efficient. It works. others flock to compete. Sometimes that ruins the opportunity, regardless you have a market. This may be the case, we'll see. I think we have far superior competitive advantages than a private equity because essentially a private equity, every acquisition is almost a we start afresh in a way.

1:17:18In our case, we do well because of the platform and the structure. It would take many years for someone to build the employer brand, the talent pool, the culture, the technologies to get to really compete. So I'm actually not, which is also one of the reasons why you see me being pretty transparent about some of the principles. I thought about it and I figured if I started over, knowing all I do, which someone else typically wouldn't at all, but also because what I say here, yeah, it's the tip of the iceberg, but then from there to actual day-to-day, make it work. But even if I started over with all I know, and even if someone said, oh, I trust you'll do super well, here's a billion dollars, to get to where we are now, say 12 years after the foundation of Bending Spools, it would take me maybe not 12 years, but easily seven or eight.

1:17:59Like it's a huge slog. You hire two people, you spend a year coaching them and then you hire four and they coach them and you help you and you build the technology slowly. It takes time to write software and polish it. Presumably more will try. I would say that's to be expected. I also think there are some things that are harder to do than other things. It's being painful. Again, private equity is very difficult. But if you're bright, you understand business, finding someone who will give you not a hundred billion dollars, that's the best of the best over decades. But enough that you can have a business and it's worth trying is not that difficult.

1:18:31There are so many private equity firms. And ultimately, you just need to do well enough that you don't look bad, like you're around average. And many will die, but some even statistically will do well enough. The barriers to entry are low. And so you have a proliferation, out of proliferation of wannabes. Some will prove to be great. Some will be great out of luck. And so again, you have more competition. But trying to build a menu spoons is, if you understand what you're doing, which is a prerequisite to even have a chance, it's dauntingly painful. many years from the ground up, cultivating the little garden.

1:19:00There is no shortcut to it. So I think it's just not a model that when people see it, a lot of people have known about it for years as I've talked to investors and I've seen nobody try because they just understand it's just too painful. I have loved doing this with you. It's so fun to hear you be so transparent about what you've done to build this thing. It's such a unique business and a unique place. It's fun to do it here with you here in Milan. When I do these interviews, I ask everyone the same traditional closing question. What is the kindest thing that anyone's ever done for you? When I was a little kid, I was almost pathologically shy to the point that I was, let's say, diagnosed with autism.

1:19:35I think the diagnosis was not necessarily particularly scientific, but that's to say I was so introverted and shy. I spent years in elementary school talking to nobody pretty much. So I go to middle school in Italy, middle school between the age of 10 and 13, I think. The first school year goes by and I've talked to essentially nobody in my class, Literally. And we're late in the year, I think it's probably May. We're on a school trip in the hills, just taking a stroll with our teacher and probably seeing some ruins or some Roman thing. Pretty common thing to do in Italy. I have plenty of ruins.

1:20:05And all of a sudden, two classmates of mine come over, just hug me. And they were the two outgoing, popular guys in the class. They just talked to me and they on the bus, they just drag me with them in the back and we start singing. and I'm terrified and happy at the same time because I did want to socialize. I just, I didn't know how. And I keep investing in this relationship for a long time. And I gave her 10 or 11, so little kids. Until months later, I felt confident in myself and I had turned into a reasonably effective social person. I could, not the most social, not the most outgoing, but you wouldn't tell that I had been almost pathologically shy to the point that my mom brought me to a doctor.

1:20:48And I owed it to those two. And what I learned during the third and last year of middle school was that one of them got mad at me for something stupid like a girl, I don't know, kissed me, not him. It's a stupid thing, 12 years old. And it lasted five minutes. But in those five minutes, it was furious. And it told me, you remember two years ago when Alberto and I did this and that and helped you and involved you and got you out of your shell. We didn't do it because we thought you were cool, but because this teacher told us that you needed help. And he did it to hurt me to say that. actually I'd never felt more grateful in my life because it's very difficult if you think about it for someone 10 years old to actually implement that request from a teacher to go with the uncool guy go through this log of months where the guy barely talks inviting him after classes to go to his place to play video games they literally changed my life it's probably the single thing that ever happened to me that I'm most grateful for incredible closing story I absolutely love it Thank you so much for your time.

1:21:49Thank you, Patrick. My pleasure.

1:22:19Thank you.