Key takeaways
- Berkshire commits another $330 million to Bending Spoons
- Italian company buys and transforms established internet brands
- Investment raises Berkshire's planned ownership stake to 4%
AOL helped define the early internet. Evernote became one of the world's most recognizable note-taking apps, while Vimeo and WeTransfer attracted millions of users before facing tougher competition.
Today, all four belong to Bending Spoons, a Milan-based technology company that has turned buying established digital businesses into its core strategy.
On October 14, Berkshire Hathaway agreed to invest another $330 million in the company, adding to the $600 million it committed during Bending Spoons' July stock market debut.
The deal will bring Berkshire's ownership to approximately 4%, offering a striking endorsement of a business model built around acquiring and transforming existing software companies.
How Bending Spoons Turns Old Internet Brands Into New Businesses
Founded in 2013, Bending Spoons initially developed consumer applications before increasingly focusing on acquiring established digital companies.
Its portfolio now includes Evernote, WeTransfer, AOL, Vimeo, Eventbrite, Airtable, Brightcove and Tractive.
Unlike venture capital investors searching for the next breakthrough startup, Bending Spoons concentrates on businesses that already have products, paying customers and recognizable brands.
After an acquisition, the company typically reorganizes teams, upgrades technology, redesigns products and changes pricing or marketing strategies to improve earnings.
The approach resembles a modern version of turnaround investing, although Bending Spoons seeks to continue operating its acquisitions rather than liquidating their assets.
The strategy is not without controversy. Major restructuring and workforce reductions following acquisitions have attracted criticism from employees and users, particularly when subscription prices or product features change.
However, Bending Spoons argues that its operational platform can improve businesses that might otherwise struggle to remain competitive.
Why Berkshire Hathaway Is Investing Nearly $1 Billion
Berkshire Hathaway's latest investment involves 10 million newly issued Bending Spoons shares priced at $33 each.
Together with its $600 million IPO investment, the new commitment brings Berkshire's total announced investment to $930 million.
The purchase comes during a significant transition for Berkshire.
Greg Abel now leads the conglomerate as CEO, while Warren Buffett recently stepped down as chairman after decades of directing its investment strategy.
Berkshire has also expanded its exposure to technology, including a substantial Alphabet investment that made Google's parent one of its largest stock holdings.
Buffett previously explained why he considered Alphabet an attractive long-term business, emphasizing its competitive advantages over short-term market forecasts in earlier remarks.
Bending Spoons offers a different proposition: rather than relying on one dominant technology product, it seeks to acquire numerous businesses and improve their performance.
Can Buying Established Companies Outperform Building New Ones?
Bending Spoons reported approximately $704 million in second-quarter revenue, up 126% year over year, with acquisitions contributing to its rapid expansion.
The company also plans to continue acquiring businesses, supported by Berkshire's fresh capital and other financing arrangements.
Its July IPO also attracted interest beyond conventional stock exchanges, with a tokenized representation of Bending Spoons shares subsequently introduced on the Mantle blockchain.
Yet the strategy carries substantial risks. Older brands may continue losing customers, restructuring can weaken products, and borrowing to finance acquisitions increases financial obligations.
The central question is whether Bending Spoons can consistently generate more value from each acquisition than it spends purchasing and transforming the business.
That makes the company an unusual example of long-term compounding, the principle that helped Berkshire become one of the world's largest conglomerates.
Berkshire's investment does not guarantee that the strategy will work. But its nearly $1 billion commitment shows how valuable an established internet business can become when someone believes it can be operated differently.
