“If you take companies that at some point went bust, but hadn't had issues up to a certain point, and you asked them, they would all come across as very bullish about their usage of debt. It's not that people who went bust thought they would as they raised the debt. In most cases they thought they were fine and then things turned. So it's important to be paranoid when taking on any significant amount of debt.”
a16z Podcast · Startups & Venture · November 2026
Context
Asked about lessons from using debt effectively, Luca gives a survivorship-bias warning before listing Bending Spoons' own guardrails: keeping leverage well below 3x and hedging all of its debt against interest-rate moves.
Transcript
offer to someone to buy their company, either they chose not to sell or they sold it to us, not to someone else. So when you have such overwhelming quality success rate, it means you're really finding great product market fit in a way. Like you're really solving a problem that people
…credit and capital markets has been a key part of what you guys have achieved as well. Can you talk about some of the lessons from leveraging debt effectively? Because some companies have gotten in trouble and yet you guys have benefited and been so strategic in how you use debt in debt markets.
Sure. So, well, that helps you basically do more sooner, faster. And assuming your expected returns from those investments are higher than the cost of debt, it's always smart to take that with one big caveat, which is assuming the risk of defaulting on your debt remains negligible. Because obviously, if it becomes significant, then it's not a no-brainer any longer that taking the extra risk makes sense. Now, as an intellectually honest disclaimer, I think if you take companies that at some point, Went bust, but hadn't had issues up to a certain point, and you asked them, they would all come across as very bullish about their usage of debt. So we have been doing fine and have not even come remotely close to having issues with it. But it's still important to remain cautious because it's not that people who went bust thought they would as they raise the debt. I mean, I guess in some cases there were some perverse incentives to still raise the debt, but in most cases, they thought they were fine and then things turned and they had issues. So I think it's important to be paranoid in general when taking on any significant amount of debt. We have stringent limits we self-impose, trying to keep…
I mean, I think these are great rules of thumb. Perhaps encouraging a bit more ambition in product and the size of the swings and a bit more caution in credit and debt. We've seen many situations where founders tend to underestimate the probability of things going sideways with debt.
Particularly if you rely on one segment, one market, one product, one revenue stream, because boundary conditions can change quite abruptly. You're still not fully insulated if you have a diversified portfolio because diversification is a complex concept and it depends on whether you're diversified…
Yeah. Yeah, interesting. My theory is that everything is correlated, but that's a subject for a different talk. Well,
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