Bending Spoons is a company that acquires SaaS companies/products that are not growing or losing users but have a well-known brand and customers who stick around.
The execs at Bending Spoon buy these SaaS services on the cheap, cut costs, jack up prices, and milk remaining users for as much cash as possible for as long as possible.
Rinse and repeat. The goal is to generate the highest possible rate of return on invested capital in a law-abiding manner.
> After the acquisition, Bending Spoons is anything but a passive owner, making changes to the products’ user experience and features, as well as to the underlying tech; monetization strategy, including pricing; and team organization, including headcount.
> While this focus on efficiency and revenue overlaps with private equity strategies, Bending Spoons claims a key difference: It “aims to hold forever, and has never sold an acquired business.” It is building a live portfolio, not presiding over a tech graveyard.
I don’t feel like the article was sortballing the company. They brought up things like the WeTransfer founder criticizing Bending Spoons’ decisions.
As for my opinion on the company, I don’t really see anything particularly negative about it. I think the fact that they’ve never sold an acquired business is a rather admirable trait.
In a way, they’re doing something that may not have been possible without this style of intervention, which is to keep companies/products that would have otherwise disappeared viable.
For a company like Evernote it wouldn’t be better for their customers if the company liquidated. There are worse things that can happen to your service provider of choice than price increases or worse customer support.
People are framing this like they're creating sustainable businesses, but if you look into the details, what they're consistently doing is stagnating on any kind of feature development, making the apps and sites more difficult to use and have more nags, and they're increasing prices, sometimes by 10x or 100x. When I look for a company that I think I would admire, I'm looking for customers that are satisfied and recommend the product to their friends.
Charging $20,000 for a note-taking app subscription is not that.
I certainly don’t find any of that positive, either, but sometimes what a lot of these companies need to survive is to increase prices and only worry about the feelings of the customers who find those higher prices to be worth it.
The $20,000 price plan wasn’t a real price, that was just a not so gentle nudge to move to a different offering. Maybe it feels bad but that plan effectively doesn’t exist anymore. Things change.
It’s got fewer features for the dollar, but if the previous company was not sustainable in the first place, it is what it is.
A company raising prices or cutting service quality is only a problem if they’re in a monopoly situation with no other market alternatives. None of the companies Bending Spoons has acquired are in that position. Many of them are far from being the market leaders.
The point is that Bending Spoons isn’t buying companies and saddling them with unsustainable debt like they’re Toys R Us. They’re buying companies that need drastic operating change and implementing that change so that they can exist in perpetuity.
This is true, but there are choices you can make in life to really minimize the impact. I've been using TiddlyWiki for more than 20 years and it always Just Works. I picked it precisely because I value endurance in the software I choose. I know that's not a fad right now, but folks just don't have to subject themselves to this standard of treatment.
That aside, my objection is the use of shady tactics to achieve that goal (constant nags and popups, massive price increases for reduced service, rejection of previously "lifetime" memberships, etc.), at the expense of the customer. Swaddling that in a blanket of "it's sustainable" makes me feel only a tiny bit better about it. To make an extreme comparison: fraud is also sustainable; I guess I'm saying sustainability is not an inherent good. If (hypothetically) every Evernote customer would be better off if they were using Joplin, keeping Evernote around would be a bug, not a feature. I don't think this is actually true, might it might be close.
I think that every time an option leaves a market it’s a detriment to competition. It doesn’t really matter if that option was bad or that I won’t personally choose it.
I’m certainly very much against lifetime subscriptions losing promised features and things like that.
I will add to my original reply, if I drink their company kool aid on their company website they pretty specifically list out a number of improvements they’ve made to their product portfolio.
They have claims like making Evernote sync faster, fixing stuck transfers on WeTransfer, offering a free organizer EventBrite account for the first time since 2005. These seem like pretty tangible claims.
Perhaps they are trying to combat this exact negative image that they’re just there to suck out value.
Maybe they’re lying about their accomplishments, I really don’t know. I don’t use any of their products.
Yep, I ended up looking into this quite a bit more, and now agree with you. Evernote ratings were historically lower before the Bending Spoons acquisition. There are shady things you can do with ratings like ask whether they like they app before redirecting them to the rate it, it does seem like I was over-indexing on some anecdotes (I also worked with some ex-Evernoters, so I was coming in a bit biased). Thanks for pointing out the trend!
> There are four stages to any successful companies lifecycle
I usually say in interviews that my preferred time to join a company is at the end of stage 1 (start up) and the start of phase 2 (organizing).
Nothing makes me happier than to be told "Hey, we got this up and running and it's a mess. Now we need someone to turn this into a system that is easy to modify and maintain."
There's skill in being able to manage a declining or non-growth business in a way that still pleases your consumer base (and therefore reduces your attrition rate). Not everyone does it well.
There's nothing wrong with it per se. Plenty of great products were ruined because management refused to accept that it wasn't in a growth market anymore and should be run for minimising customer losses, not gaining substantial new ones. That, in turn, means laying off a lot of the design, engineering and sales talent that was necessary for the previous configuration.
You can also be a bastard and jack up prices while cutting e.g. customer service. (Though absent new major revisions, service costs should go down.) But I'd argue we need, in tech, more of this strategy of calm wind-down than the everything-must-be-growth mindset.
Similar story here. They took my ~$100/yr Harvest time-tracking Solo plan, increased the price by 2.5x for a more restricted plan than I had... or I could get back the plan I had for $20,000/year.
So I downloaded my data, and had Claude vibecode a fully-featured clone in a single evening. Even if I was paying Anthropic API rates, it cost me less than a single year of my Solo plan.
Was also on Harvest when news broke they had bought them here on HN. A lot of the same comments. I thought, "Well, maybe this is hyperbole, let's wait it out." About a month after they were acquired, same thing. Price of my plan went up almost by double.
So if anybody is reading this? They absolutely will gouge you. All the stories you've read are all true. Take some advice and get out while you can.
eh, i backed up in a few places a bit ago. the actual concern is BS charged me when they shouldn't have (5x the former price, annual), won't refund, and turned off the account anyway. and PayPal seems to have an open marriage with PCI-DSS/SOC2 right now
That's a short term business model if I have ever seen one.
"customers who stick around." is anthesis to mid- to long-term customer loyalty when you do "jack up prices, and milk remaining users for as much cash as possible"
Add to this that they make it really, really hard to unsubscribe. I think there's been some legal crackdowns, but for a time, they could make it literally impossible.
This article is like an advertisement. Here's how they spin it:
> Speaking to TechCrunch, co-founder and chief product officer Matteo Danieli said some of the scrutiny was due to the fact that products such as Evernote were genuinely loved by their users. But he said that despite all the changes, customer retention has been “remarkably stable.”
Ah yes. In other news, the prison population size is also remarkably stable.
> Don't forget "slash the workforce, ensuring that the product will get worse over time"
Not commenting on Bending Spoons. But in general, a company built to grow is overprovisioned for one being put into maintenance mode. If you're growing, sure, let the designers change the UI every release. If you're trying not to lose customers, don't do that. Which means you don't need a crack team of in-house designers.
I agree that a company in growth mode needs more employees than one in maintenance mode. But wouldn't the owners already have cut unnecessary employees before selling out to PE or similar?
> wouldn't the owners already have cut unnecessary employees before selling out to PE or similar?
Usually not. It's emotionally difficult. And knowing what you need and don't need to cut (versus transition or aggregate with your conglomerate's administrative layer) is its own expertise. If you had that, you wouldn't need Bending Spoons or whomever.
Yes, it is part of cutting costs, but there are other ways to cut costs ("synergies" from merging back office functions) that don't necessarily affect the product.
There’s no choice here, and often the companies are profitable, but if there is any stickiness to the product the customer gets the privilege of having a company they built trust with turn around and betray them with massively increased fees.
I'd argue it's worse for consumers, by keeping them alive it staves off competition, and leeches cash by increasing subscription prices or locking once free feature behind paywalls.
> The execs at Bending Spoon buy these SaaS services on the cheap, cut costs, jack up prices, and milk remaining users for as much cash as possible for as long as possible.
If they are such stable long term SaaS businesses who aren’t losing customers, why are they selling to bending spoons?
because there's no joy in managing a declining company, especially when you made it grow in the past, and probably get enough money from the deal that you don't need to care anymore.
My wife brought them to my attention recently because she heard about them from Scott Galloway, who was speaking highly of Bending Spoons on one of his podcasts. As she was explaining this to me, I said "It's just PE."
They must be doing some good PR/marketing, because, for some reason, "PE" isn't the first thing entering a lot of minds about Bending Spoons right now.
BendingSpoon isn't PE because they are not attempting a restructure to then exit out of the asset within a defined time period.
When BendingSpoon or IAC acquired an asset, it's meant to be held by them in order to augment their existing portfolio.
M&A isn't the hallmark of PE - restructuring an asset in order to exit out of it at a profit is.
The classic PE monetization strategy is to acquire an underperforming asset, restructure said asset, and then exit the asset at around 20% IRR.
BendingSpoons on the other hand is a holding company that is acquiring and consolidating stagnant but large SaaS platforms into a single mega-platform.
The economics are different as are the operational and organizational structures.
The classic PE strategy is to buy declining buy well known brands, borrow vast sums of money in the brands name, pay the PE firm huge consulting fees, and then bankrupt the acquired business.
Which isn't exactly what they seem to be doing but also isn't that far off.
Scotts point was that these brands have already declined, and that the only thing left is a very strongly loyal subscription base. That perked my ears up for sure.
The classic PE monetization strategy is to take an intangible asset and mine it: The one we all see is buying a quality brandname and mining it into oblivion. Plus various accountancy tricks to move the gold into the PE coffers.
In your example "very strongly loyal subscription base" is the asset.
Not really. They dramatically overhaul the products. Bloated staff are cut, old tech-debt-saddled systems are thrown out and rewritten. In some cases they basically just keep the brand and the database and rebuild the product around that, in a smaller and leaner manner.
That is the PE playbook - buy ok company, revamp things to make it more efficient and profitable. The main difference seems to be whether the owners sell the revamped company or not.
It’s executing a private equity (and conglomerate) strategy out of permanent capital. That makes it more similar to Berkshire Hathaway than a private equity fund. (It is also less levered than most private-equity funds, though more levered than most companies.)
Isn't it just a different form of private capital designed for the later stage of a tech company? I'm not saying its good, but I am not remotely surprised by tech's transition from growth/disruption/hiring to cost-cutting/M&A.
It is. They are also enshittifying Komoot and EventBrite. Also by default they acquire a company and fire all staff within the week. Fuck Bending Spoons.
Pre-bending spoons Komoot was a beautiful app and community.
You could operate it one handed with your brightness turned all the way down and easily get the info you needed.
Now when I pull it up mid ride to route home I have to click through multiple upgrade to premium pop ups with tiny exit crosses.
All good things etc etc
Founders decide they want to do other things with their lives all the time, and in the case of komoot reportedly exited at a €300m valuation for a company that had raised very little VC money, which is going to tempt most people no matter how much they hate popups...
is firing staff after acquisition inherently bad if it's the same staff/management that led to the app being devalued and losing users in the first place though
Labels literally negotiated their own royalty rates down in exchange for shares in Spotify. It’s the perfect way to push artists out of receiving earnings.
I think record labels would be first in line to buy Spotify if it was ever for sale.
Why do you think that a platform with so many customers as to be industry defining, with dozens of interface options, with a massive feature set, with a global footprint and basically flawless uptime requirements, could be kept running by two guys?
Whatever they are, they let Evernote devolve into a buggy pile of crap -- especially on Android. I migrated to Joplin, stopped paying for my obscenely expensive plan ($$$ per year) and haven't looked back.
I was reading a bit about their story, it feels like they managed to succeed by turning overly funded (and by then devalued) software products and restructuring them for long term profitability as they are not bounded to the classic 10 year time horizon of private funds. Wondering if we will see more plays like this as alternatives to traditional private equity and as fallback option for VC backed companies that bursted.
From the acquisitions I've followed, what they do is firing 80% of the staff the next week after the acquisition, raise prices, and put the app in maintenance mode. I don't know if they've done something more sensible elsewhere, but they mostly do wealth extraction.
They do claim to be shipping new features to their acquired apps. Look at their website. It's got lists of such things.
The steelman case for this is something like, mature apps that found product market fit are often over-staffed and doing a lot of duplicated work. You could get five of them together and consolidate their infrastructure/code to reduce costs, and have generalist devs who can work on any of those codebases. Then you need fewer people.
So this isn't an irrational thing to do. It's commonly done by firms like Google or Meta where they buy a small company and then rewrite it onto their own infrastructure to reduce costs. Sometimes the engineers are reallocated to other projects, or things drift and there are eventually layoffs. Google bought DoubleClick and then laid off 50% of the staff! Twitter didn't consolidate products but was clearly overstaffed, nobody imagines that Twitter was unique.
So the bull case for this is that it's finding efficiencies. The apps may not be the shiniest hottest things anymore, but they can still live on and be maintained if they're run more efficiently as a business. And yes this may involve layoffs or price rises, as often software startups hopelessly misprice their product and prefer to burn VC money than lose users or colleagues. Managers who aren't emotionally attached to the product or company can correct this, putting it on a long term stable path. That may suck for the user but probably sucks less than the company being under, or being acquihired and the product totally shut down.
While I agree that their specific approach sucks, I do wish more companies would declare products as "done" and stop messing with the UI and changing features every quarter, and just go into a long-term stability mode.
Contrary opinion I guess but they've modernized the two services I use that they've acquired: Evernote and Harvest. I was already a paying multi-seat customer of both so maybe the worst price increases didn't happen to me (yet); I suspect Bending Spoons has a real animosity to free/near-free tiers. But I certainly might get bitten soon.
I use Evernote for paperless household management (shared travel itineraries, scans of paperwork, saved recipes, etc.) as well as my personal notes. It was under Bending Spoons that they finally landed multi-player realtime collaboration, which ended a decade of annoying sync conflicts and bugs, at least for me. Every month there are new little features like @mention to include a linked note, that bring more parity with platforms like Notion – the kind of core improvements the original owners had completely lost focus on. And they record a monthly video evangelizing the new features. Would something newer be better? Who knows but I'm happy not to switch, I have thousands of notes in there which I access from laptop, desktop, phone, and web. Bouncing from one platform to another is not my favorite way to spend time. I'm quite happy with how they've managed a mature platform.
Harvest also started adding new features for the first time in many years. Their customer support did turn into a baffling AI bot for a while but eventually a human replied and apologized. Harvest is also a mature platform that just needs to not self-destruct in order to serve my needs; but small new features have been welcome.
Both these platforms have something in common too: Good old fashioned REST API's. I like to scan directly to Evernote from my Brother MFC printer/scanner, no computer or phone needed. We log time into Harvest from a variety of other platforms and apps. I'm happy to have these workflows maintained. I might submit that this kind of specialized, deep-pocketed owner is the best-case scenario for long-term preservation of mature REST-based SaaS small businesses. Otherwise they get bought by Google, or dwindle when the founders move on?
Bending Spoons are the miserable tossers who bought Meetup and somehow made it worse by monetising every move you make. And it was pretty bad to start with.
Well I want to launch Straightening Forks: the B-Corp that hires experienced developers, designers, and other digital folks and instead of buying dying digital estate to extract the remaining bone hurting juice from its user-base, it would instead: re-implement (fork, LOL) open alternatives seeking viable business models or just FOSS a working path, with minimal product features serving those core users and their needs, centralising the core cross-product services and cost optimising the backend plus realising what's the actual features users "need" vs. "want", and try to create sustainable products which instead of just extracting value try to provide value in this world.
Whenever I see Vimeo in a headline, it reminds me of my lack of foresight. In college, the creator of Vimeo was in my friend group. I went to his on-campus apartment to pick him up for a party once. He showed me this "video sharing website" that he was working on. Its title was an anagram of "movie." This was in 1999. Digitized video was barely a thing. I looked at it, didn't understand how it would be useful, and assumed it was another one of his eccentric creative outlets that would go nowhere. A few years later, he was a multimillionaire and I was not.
Are there any companies/products that got better after acquisition by these guys? I feel like the only times I've heard about them is when people are griping about how they're making stuff worse.
I wonder if "loyal user base" just means people who feel locked in, or somehow don't know any better. I can't imagine another reason for the "loyalty".
There is a market niche for projects cementary. Many companies or funds tend to buy projects at peak valuations (or artificial valuations based on blown up projections).
Re-valuating these projects on the books would be an embarrassing to the board. Losing face, shareholders questions.
Selling these assets (possibly via asset swap) to specialized cementary fund where they can be disolved and disappear in the haze is a different, more honorable matter.
They keep popular but unprofitable products that would otherwise be turned down alive.
There are Victorian-horror-esque costs to that, but it's still better that those projects be alive but enshittified than completely dead (If you disagree, you can just cancel your subscription, after all)
The execs at Bending Spoon buy these SaaS services on the cheap, cut costs, jack up prices, and milk remaining users for as much cash as possible for as long as possible.
Rinse and repeat. The goal is to generate the highest possible rate of return on invested capital in a law-abiding manner.
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