Bending Spoons, a holding company based in Milan, has received a significant financial injection from Berkshire Hathaway. The firm disclosed a $330 million stake this week. This move comes only a few months after Bending Spoons made its debut on Nasdaq in July. At the time, the company was relatively under the radar, despite owning some well-known internet brands like AOL and Evernote.
The announcement of Berkshire's investment sent Bending Spoons' stock up 41%. Some of those gains did slide back, but the company still holds a market cap of about $30 billion. Analysts at Mizuho are interpreting Berkshire's quick decision to up its stake post-IPO as a show of solid confidence in the business model Bending Spoons offers.
Yet, there's a flip side to the company's aggressive buying spree. Bending Spoons has announced job cuts at several of its portfolio companies. This includes Airtable, which it snapped up for $1.3 billion—a sharp markdown from its peak valuation. Similar layoffs have hit Evernote, Vimeo, and WeTransfer.
The surge of artificial intelligence is shaking up the software industry. Companies like Anthropic and OpenAI are now hitting trillion-dollar valuations. This shift has sparked what some are calling a "SaaSpocalypse, " where traditional software-as-a-service (SaaS) firms are struggling to keep up. Shares of companies like Intuit and Adobe have taken a dive this year, and many private SaaS firms are struggling to attract capital.
Just last month, Bending Spoons agreed to buy Miro, a collaboration software vendor, for $1.36 billion—a mere fraction of its previous $17.5 billion valuation. Many SaaS products, despite being led by competent teams, are no longer pushing the envelope in terms of innovation.
Bending Spoons was founded in 2013 by Luca Ferrari, Matteo Danieli, and Francesco Patarnello. They initially faced setbacks with a failed mobile app called Evertale. The founders pivoted and used their last $40,000 to build an operating company, acquiring undervalued software firms. Their acquisitions list includes Evernote in 2022, Brightcove in 2024, and, more recently, Vimeo, AOL, and Eventbrite.
Unlike traditional private equity firms such as Thoma Bravo and Vista Equity Partners, which focus on slashing costs for eventual exits, Bending Spoons aims to profit from its acquisitions. The company takes a hands-on approach, making significant changes to products and operations.
Nick Mehta, former CEO of Gainsight, commented that private equity firms are now wary after some high-priced acquisitions didn't pay off. Bending Spoons, however, claims it hasn't been outbid for a target in years.
Customers of the acquired companies often face price hikes. After acquiring Evernote, Bending Spoons raised the annual personal subscription price to $130 from $70. Despite this, loyal customers like Mizuho analyst Lloyd Walmsley stick around, citing the high costs of switching.
The profits from Bending Spoons' acquisitions are funneled back into future growth, primarily through further acquisitions. CEO Luca Ferrari said the company looks for improvement opportunities in its acquisitions, aiming for organic growth in the long run.
Despite the hurdles, Bending Spoons reported a more than 100% year-on-year increase in revenue, reaching over $700 million in its first earnings report as a public company. Net income also jumped by 171% to $177 million, largely thanks to acquisitions. The Airtable and Miro deals are expected to have a further impact on future earnings.
As Bending Spoons continues to maneuver through the changing software landscape, Wall Street will be keeping a close eye on its strategy. The firm's ability to breathe new life into software castoffs and keep customer loyalty intact amid rising AI competition will be essential for its ongoing success.
