What a SPAC actually is, and why it was not the shortcut: Valentin Gruber of HomeToGo

A SPAC, in Valentin Gruber's description, is more or less a wallet. A bank account with a lot of money in it, which takes itself public quickly because there is almost nothing to inspect, and then buys a real company, which becomes public in the process.

That is the clean part. His verdict on whether it made going public easier is the reason to read on.

Gruber is COO of HomeToGo, listed in Frankfurt after going public via SPAC in 2021 at a $1.2 billion valuation, following $150 million in venture funding. His background includes Accenture.

One clarification up front, since it confuses people: HomeToGo is formally a Luxembourg entity, created for the listed vehicle. The company's roots and its people are in Berlin.

From metasearch to marketplace to software

HomeToGo started ten years before this conversation, in what Gruber calls a highly fragmented market where participants along the value chain both compete and partner with each other.

The original thesis was metasearch, and the founders were well positioned for it. One had previously founded Swoodoo, later sold to Kayak. The other came from vacation rentals.

Then they noticed something that changed the company. As a metasearch platform, you send travelers out to partner sites, and those sites vary enormously. Some offer a strong booking journey, good presentation and every payment method you would want. Others, in Gruber's description, look like Windows 95 and do not build trust.

Customers discriminate between them automatically, which means the strong sites convert and the weak ones do not. And the strong ones tend to be the largest partners.

Which presented a strategic fork. Support the large suppliers and travel agencies further, or support the smaller participants who lack the means to compete in a professionalizing market.

They chose the second, and extended into a marketplace, delivering the booking experience themselves.

And then they went further, because even inside their own marketplace, small providers still could not compete on data and technology. So HomeToGo moved into the supply side, building software for agencies and for private hosts.

The conversion rate problem that caused it

The specific evidence is worth spelling out, because it is a good example of a strategy emerging from an operational detail.

Even running the entire booking experience themselves, conversion rates behind different providers were very different. The reasons, once they looked, were numerous: how responsive the provider's servers are and how much load they can take, how current availability and pricing are, how reviews work and whether they are translated, whether all currencies are supported, whether every relevant amenity is represented, how well the descriptions are written.

And when they called small providers to ask them to improve, the answer was that they could not. There is no button in their system to increase photo resolution. The system caps them at low megapixels and limits the number of images. Which means they can never present well on a high-resolution screen, regardless of how good the property is.

Gruber's conclusion is the generous one, and it is why the strategy works. These agencies and hosts provide excellent guest and host experience and genuinely care about service. That is their strength. You cannot also expect them to be the technology people.

The subsidiaries, and why the reporting split

HomeToGo's structure has two halves.

The consumer brands, including Casamundo, Vimdu and Tripping.com, are kept for search presence. Gruber's reasoning is unsentimental: with Google, the more of the results page you occupy, the better. They are all run from the central team.

The supply-side businesses are the interesting ones. SECRA builds software for agencies to operate and distribute vacation rentals on owners' behalf. Smoobu lets homeowners list on multiple large platforms including Airbnb, Vrbo and Booking.com while synchronizing pricing, availability and messaging in one place. And Atraveo is the service layer on top of the software, where HomeToGo runs the whole thing including customer service and distribution, and the owner essentially just receives check-in and check-out information.

All of them came from acquisitions rather than internal builds, on the classic build-or-buy question.

The company now reports as two segments, HomeToGo Marketplace and HomeToGo PRO, and Gruber's explanation of why is a useful lesson in investor communication.

Hybrids are hard for markets to understand. His analogy is Amazon, where people look at the marketplace and neglect that the company also runs the largest server business in the world.

And the dynamics genuinely differ. PRO is subscription revenue, roughly the same every month. The marketplace is seasonal: a great deal of booking and therefore marketing spend in January, travel and revenue arriving in summer, and nobody booking a new holiday at the end of August. Two businesses, two rhythms, two customer groups.

Scale, for context: more than 15 million offers, including inventory US readers would recognize from Vrbo and Booking.com plus a long tail those platforms do not carry. Guidance at the time of recording was around 220 million in net revenue with 10 million in profit, on travel volume in the low single-digit billions, since HomeToGo earns commission on the total basket.

Strategy without a framework

Asked for his strategic planning framework, given time at Accenture, Gruber declines to supply one, and what he describes instead is better.

Everyone at the company stays close to the detail and close to whatever problem they are solving. You start with an idea, test it, iterate, and at some point hit a limit. The closer you are to the issue, the more obvious the limitation, and the better you know how to solve it.

Then the pivot point: if the answer is that you know how to solve it but cannot do it in the current setup, change the setup.

That is exactly how the supply-side strategy was born. There was an opportunity to make the marketplace better, and it could not be done as a marketplace, because it required changing what the partners were capable of.

The process is a problem statement rather than a plan. Write the problem down in a paper, ask people to contribute their experience and to flag anything overlooked, and then move quickly. Trial and error, learning fast rather than over-theorizing.

On prioritization he is equally unpretentious: classic return-on-investment logic. What effort will this take, what effect do we expect. And where experience or intuition diverge, they take a bet. He cites the CEO, who owns product, as someone who places a great many of them.

Killing your own work

Michael's follow-up is the harder cultural question. You want people to own what they build, and you also need them able to critique and kill it.

Gruber does not claim they have solved it. They worked through ownership, accountability and responsibility with the management team, handed out No Rules Rules by Reed Hastings and Erin Meyer, and adopted its feedback principles. Asked whether they are there yet, his answer is no.

What helps: time working together, building trust that responsibility is sometimes shared, and role modeling. This was a bet we took, we failed, I failed, my fault, let's move on.

The part he insists on is what sits in between. The learning. Whether you understood why the mistake happened and what you take from it so it does not repeat.

And his observation about when it degrades is the honest one. The higher the pressure in the company, the more this gets forgotten. The better things are running, the more it is embraced.

Fewer levels, and the competency owner

HomeToGo had the problem most scaling companies get: too many management levels. Director, senior director, VP, senior VP, C-level.

The failure mode Gruber describes is precise. Without clear authority, a decision travels up and down the ladder, and eventually a C-level talks to a VP and a decision emerges because one overpowers the other. The discussion that should have happened, between the two most competent people going head to head, never takes place.

So they built a deliberately broad senior layer beneath the board, where everyone can decide within their own area because they are the knowledge and competency owner there and are close to their teams. They support each other based on seniority, topic or experience, without further formal differentiation.

His description of his own role follows from it. He has the competency owner on the topic, so there is only a small chance he would make a better decision. His job is to question until the decision makes sense from every perspective: stakeholder groups, financial considerations, team implications. He positions himself as a sparring partner.

And the feedback loop is explicit. The more often a leader's decisions prove right, the more freedom they get. The more often the results diverge from what was expected, the closer he gets to the topic.

If I cannot understand it, it does not make sense

Michael raises the delicate part. How do you interrogate an expert's decision without appearing to doubt their expertise?

Gruber's answer is disarming. If he cannot understand it, it does not make sense. He does not claim to be exceptionally clever, so it has to be explained in a way he can follow, and if it cannot be, they will not do it.

He does not claim a technique. With enough read on the person, you can feel how much certainty sits behind a proposal, which tells you where to press and where not to.

What makes it work is a trusted relationship with each lead. Sometimes he opens by saying that for the next twenty minutes they should not take it personally, because time is short and this will be more direct with fewer flowers than usual.

And he is candid about his own limitation. The deeper you get into a topic, the more you develop a bias for it, potentially a bias toward its success, and you stop questioning enough. That is when a third person asking a naive question turns out to be the most valuable voice in the room.

Ten minutes of silence

The pre-read section is the most immediately copyable thing in the episode.

Gruber's case for writing: written information is digested more thoroughly and you can return to it. In spoken form, information is lost. Your attention wanders and you miss two sentences. He calls it more effective, while acknowledging it is not necessarily more efficient, since speaking is faster than reading.

He is gently skeptical of the Amazon mythology, noting he is not convinced every pre-read there runs to six pages, and observing that it is easy to be successful and then publish anything and have everyone believe it is the religion you live by.

His actual practice varies by topic. Where he is already deep in something, he does not want a pre-read. Where multiple stakeholders are involved, he always wants one filled in by every side, so all the available information is collected before they approach it together.

And the format is a working document rather than a presentation. Everyone contributes what they have, then everyone plays the commenting game, which removes the dependency on finding a slot in seven calendars.

They also run focus Wednesdays, where no regular meetings are permitted, so there is always time for whatever matters now.

The mechanism that produced the biggest gain: they open meetings, including the global management meeting, with ten minutes of silence in which everyone reads and comments on what has been written. Then the meeting begins, with everyone holding the same information, and the questions get answered publicly.

His estimate of the effect is a fourfold improvement in meeting length, while the information people actually absorb went up, because everyone has to read it. Previously, some people did not listen, and not every presenter is good.

Michael's summary is a good one: creating a synchronous moment to consume asynchronous work.

Managers who are connected to the problem

The principle underneath all of this is that HomeToGo does not want managers who only manage people.

Every leader stays connected to the topic, which means that when it matters you go into every detail and try to understand it to the last dot.

Gruber is honest that this can be tedious. His argument for doing it anyway: you are much smarter afterward, and you usually find not the one thing you were looking for but five more.

What a SPAC is, and what it costs

Why go public at all rather than raise another private round: in 2020 and 2021 public market valuations were substantially higher, and it was easier to raise a large amount at a good valuation.

Then the mechanics. Taking a company with history public conventionally requires extensive preparation. A SPAC is essentially a wallet, a bank account with money in it, so compliance is verified quickly and taking it public is fast. Once public, it buys a company, and that company becomes public.

The headline reading is that this makes going public much simpler.

Gruber's verdict: it does not. He estimates roughly 80% of the effort is identical, then says honestly he would put it at 100%, because you still have to be compliant for the public markets. Whether you do that work beforehand or during the merger with the SPAC vehicle, the requirements are the same.

Today they operate as though there were no difference, because there is not. On merger the traded vehicle's ticker changes to your name. HomeToGo trades as HTG, and nothing about their operations reveals the SPAC origin. The sponsor simply becomes an investor holding a large position.

What the structure genuinely provides is less uncertainty. With a SPAC you already know the team acquiring you, the investors, the amount of money arriving, and your valuation. A conventional IPO leaves all of that open until late in the process.

What they did with the money

The merger came with $225 million in cash, on top of the $150 million previously raised, much of which had already been spent on acquisitions.

The allocation was three ways. Regular growth toward profitability. M&A. And a reserve for rainy days, because everyone had just come through COVID and had learned that you cannot predict tomorrow. Given the acquisitions since, most of it went to the second.

How they decide what to buy

Gruber cites research that companies doing M&A tend to outperform those that do not, with wide variation in how well it is executed, and notes that companies have become considerably more professional at it. HomeToGo gets better with each deal, and he says there are early-deal mistakes they would not repeat.

The starting point is the same as the strategy process: what problem do we have, and would an acquisition solve it better than building it. Synergies exist along the value chain, so the further down it they look, country by country, the more interesting the targets.

Then availability, because not everything is for sale. Then price, because everything is a matter of price.

Then the part he treats as equally hard: personality match and alignment of ambition. Do the founders want to stay? What are they actually looking for? If they want ten times growth, HomeToGo is not the right partner. If they want out within a year, also not.

And one hard criterion, which is consistent with the company's own trajectory: they only buy profitable companies.

Michael's endorsement of that discipline is worth noting. Profitability is not just revenue exceeding cost. It is evidence of a refined machine and financial discipline, which is what separates a company that lasts from one that fizzles.

The bell they bought at a flea market

Gruber's crazy story is the IPO bell, and it is the best example of financial discipline in the archive.

Standing on the floor of the exchange in Frankfurt, ringing the bell, would have cost a significant six-figure sum. And they would have been permitted to bring fewer than a quarter of the team.

So they declined. They went to the flea market across from the office and bought a large bell, which has "captain" written on one side. They got a large television, projected the stock exchange floor onto it, brought in a camera crew, and made the same recording: standing in front of the exchange floor, ringing the bell, confetti going off.

Total cost, under 2,000 euros. The rest went into a party where everyone could actually celebrate.

He has two more. Branded trucks were driving across Germany, and one broke down directly in front of the stock exchange, which was ideal for photographs. The engine trouble was fixed after a couple of hours, and advertising outside the exchange would have cost far more than the truck.

And an acquisition negotiation where a last-minute address change sent them to what turned out to be the target's family and friends brunch. They spent two and a half hours with his family, children and friends while he tried to talk business on the side and made scrambled eggs. They had a good time. Gruber reads it as the man's way of saying he was not for sale.

The 5 things I took away from this conversation

1. A SPAC changes the certainty, not the work. Valentin's estimate is that essentially all of the compliance effort is the same. What you actually buy is knowing your investors, your valuation and the amount arriving before you commit. That is worth something, and it is a different thing from a shortcut.

2. The strategy trigger is when the fix does not fit the setup. I like this better than any planning framework. Stay close enough to the detail that you know the limitation, and when you know how to solve something but cannot within the current structure, that is the moment a new strategy is warranted.

3. Ten minutes of silence at the start of the meeting. Not a pre-read people claim to have done. Everyone reads and comments in the room, then the meeting starts with a shared baseline. A fourfold improvement in meeting length is a big claim, and the mechanism is obviously sound.

4. Too many levels means the wrong two people have the argument. The decision travels up the ladder and gets settled between a C-level and a VP because one outranks the other, rather than between the two people who actually know. Flattening is not about speed here. It is about which conversation happens.

5. Only buy profitable companies. A simple hard criterion, consistent with their own path, that eliminates a large category of deals before anyone spends time on them. Combined with checking founder ambition early, it filters most of the ways acquisitions go wrong.

FAQ

What is a SPAC? A special purpose acquisition company: a shell entity holding cash that lists on a stock exchange, then acquires a private company, which becomes publicly traded through the merger. Gruber describes it as essentially a wallet, which is why the shell itself can go public quickly.

Is a SPAC easier than an IPO? Not materially, in Gruber's experience. He estimates around 80% of the effort is identical and suspects it is closer to all of it, because the company still has to become compliant for public markets, whether that work happens before listing or during the merger.

What is the advantage of a SPAC over an IPO? Certainty. With a SPAC you know in advance who is acquiring you, who the investors are, how much money you will receive and at what valuation. A conventional IPO leaves those questions open well into the process.

How should a company decide what to acquire? HomeToGo starts from a problem they need to solve and asks whether buying beats building. Then availability, then price, then alignment on ambition with the founders. Their one non-negotiable is that the target must already be profitable.

How do you make decisions with fewer management layers? By putting authority with the person who owns the competency, and having senior leaders act as sparring partners rather than approvers. Gruber's test is whether the decision can be explained to him well enough that he understands it, on the basis that if it cannot, it should not proceed.

Also mentioned

• HomeToGo, its marketplace and PRO segments
• Smoobu, SECRA, Atraveo, Casamundo, Vimdu and Tripping.com, the acquired brands and platforms
• Swoodoo, later sold to Kayak, where the metasearch expertise came from
• No Rules Rules by Reed Hastings and Erin Meyer, handed to the whole management team
• Airbnb, Vrbo and Booking.com, the platforms Smoobu synchronizes across
• The Frankfurt Stock Exchange, whose bell they declined to ring

Listen to the full episode

Valentin Gruber on Between Two COO's

Between Two COO's is hosted by Michael Koenig. Subscribe on Apple Podcasts, Spotify, or wherever you listen.