I was invited to share my journey with the Techstars alumni community. Here are the questions that we covered.

You began your entrepreneurial journey in 1998, Having co-founded and been CEO of several successful ventures like Aucland, Zingy, and OLX.

• What inspired the creation of each business, and how did your vision for them evolve over time?
• Did you have to pivot from the initial idea at any time?
• Did you have a methodology/process for finding product market fit? 
• When did you know it was the right go-to-market time? 

These three ventures have reached great heights! Aucland evolved into one of the largest auction sites in Europe. Zingy raked in an impressive $200 million in annual revenues within just four years. And of course, OLX, a household name worldwide, operates in a whopping 30 countries with a massive team of over 10,000 employees. Quite the journey, right?

• What specific strategies or initiatives were key drivers in the growth of those companies?
• Did you identify common practices, like strategic partnerships or customer retention initiatives, that consistently contributed to the success of each venture?

• What were the biggest challenges you faced in scaling each one of them?
• For startup founders looking to build and scale online marketplaces, what advice would you give to ensure sustainable growth and the creation of a strong network effect?

Navigating Global Markets:

Having successfully transposed and adapted these business ideas across the U.S., Europe, Asia, and Latin America, 

• What strategies have you found most effective in navigating and thriving in diverse global markets?
• If a founder is about to enter into a new region (EU), what are some questions or pitfalls they should be aware of? 

Transition to Venture Capital:

Fast-forwarding to your role as Founding Partner at FJ Labs, you’ve invested in over 1100 companies over time, including major players like Alibaba and Coupang. Having over 900 active investments now. 

• What factors influenced your transition from hands-on entrepreneurship to venture capitalism?
• How does your entrepreneurial background influence your investment decisions at FJ Labs?
• What principles or philosophies guide your approach to angel investing, and how have these principles evolved over time?

Angel Investing:

Angel investors typically get involved with startups during their early stages, and you were recognized as the #1 Angel Investor globally by Forbes.

• What excites you the most about early-stage investing, and what challenges do you find most rewarding to tackle at this phase?
• What criteria do you prioritize when selecting startups to invest in, particularly in the dynamic realm of online marketplaces and network effects?

Advice to Founders:

• What advice would you give to startup founders seeking angel investment, and what key factors do you believe contribute to a successful pitch?

Balancing Risk and Innovation:

Angel investing involves a level of risk. 

• How do you strike a balance between taking calculated risks and ensuring potential rewards for both yourself and the startups you invest in?

Supporting Portfolio Startups:

• Beyond financial investment, how actively do you engage with and support the startups in your portfolio? Are there specific ways you contribute to their growth and success?

Networking and Deal Sourcing:

Building a strong network is crucial in the world of angel investing and also in the world of founding and growing a startup. 

• How do you approach networking, and what strategies do you use to source promising investment opportunities?

Learning from Investments:

• With such a vast portfolio, are there particular investments or experiences that stand out as valuable learning opportunities for you as an angel investor?
• As an angel investor, what key lessons have you learned that you believe founders should pay attention to?
• Given your global investment activities, how do you stay informed about emerging trends and opportunities in various regions?

Future Predictions:

• Looking ahead, what do you predict will be the next big wave or innovation in tech, and how can entrepreneurs position themselves to ride that wave?

Work-Life Integration:

You have a blog, where you talk about your professional and personal life.

• How do you manage your time effectively to ensure a balance between professional commitments and personal interests like travel, kitesurfing, and tennis?
• Do you find that these activities influence your leadership approach?
• How does this creativity translate into your leadership style, and how do you encourage a creative environment within your professional endeavors?

If you prefer, you can listen to the podcast.

Here is a transcript of the conversation for your reading pleasure.

Alejandro Garcia-Amaya: Today, we are honored to have Fabrice Grinda, founding partner at FJ Labs. Joining us, Fabrice, welcome.

Fabrice Grinda: Thank you for having me.

Alejandro Garcia-Amaya: All right. So, sit back for a second. I’m going to give a little bit of a background on you and then we’ll jump right into a number of the questions. So, Fabrice is a prominent internet entrepreneur and investor with a notable track record of 300 exits and 1,100 angel investments via his role as founding partner at FJ labs, a venture capital firm.

Before becoming an investor, Fabrice launched a number of successful companies such as OLX. The largest classifieds site in India, Brazil, Pakistan, Poland, Ukraine, Russia, Portugal, and many other emerging markets operating in 50 countries and has over 3000 employees. Before OLX, Fabrice founded and led Zingy, one of the largest wireless media companies in the Americas. Fabrice initiated his entrepreneurial journey in 1998 with the creation of Aucland, which evolved into one of Europe’s largest auction sites. Beyond his ventures, Fabrice worked as a management consultant for McKinsey and company, holding a BA in economics from Princeton University. He engages in global travel, kite surfing, which looks intense, tennis and shares insights on his personal and professional life through blogging at fabricegrinda.com, that’s GRINDA.com.

So, thank you. Welcome. I heard a number of tales from your journeys, and I can’t wait to jump into a number of them here. So, you began your entrepreneurial journey in 1998 and having co-founded and you’re a CEO on a number of successful ventures, like I mentioned in Aucland, Zingy and OLX. I’m going to cover a few anecdotes I heard from building each company and ask you for a lesson or lessons learned from each respective company. So, let’s jump into this.

You left McKinsey to start Aucland. So, after college, you went McKinsey, worked there, and then you left McKinsey, start Aucland, the eBay for France in your early twenties.

A couple of years or so into building Aucland, you could have sold it to eBay for, I believe the offer is 20 million, but you wanted to continue growing it. You were able to eventually raise 50-60+ million. At the end, you sold your stake to a private investor. What were some lessons learned from your experience? Cause that is fascinating, creating a company at fairly quickly already having a certain type of offer and declining it and then growing it. So, I’m sure there’s a million things that you learned, but what are some that come to mind?

Fabrice Grinda: Yeah. So, I knew I wanted to be a tech founder, by the way, before I even went to college or McKinsey, McKinsey was like business school, except they pay you.

And when I created my company, you know, I actually liked creating something out of nothing, I wanted to be a founder.  And I guess when you’re 23 at the time, I didn’t realize how much money like 20 million dollars was. When you have, you know, I had nothing, but somehow it didn’t feel meaningful in any way, shape, or form.

I’m like, nah, I want to build something massive. I’m going to change the world. And 20 million is nothing, you know, there’ll be opportunity to make it to the future. I’ll build something much bigger and if it fails, whatever. And I didn’t realize how. Life changing and meaningful than the amount of money was.

And so, I just missed it without even considering it, honestly. I was like, meh, nah. And in a way it was the correct choice because like maybe I raised the capital, we grew dramatically, and then later got a 300 million buyout offer from eBay. So, yes, we’ve taken the dilution. Instead of owning 75 percent of the company, I now own 40 percent of the company, but 40 percent of 300 million is 120 million.

It’s still worth a lot more than the 75/20. The problem, that said, in hindsight, knowing how hard it is to make money and how life changing it is and the fact that it can that it can make it easier for you to fund your next startups, et cetera. Probably should have taken the 20 to begin with.

Number two, that said. Once the 300 came, I could not convince my VCs to take the offer. So, that was another big lesson there in the sense that I’ve never raised money before, so I never negotiated a stock purchase agreement before. I didn’t have a drag along so I could not force a sale. I didn’t have all the core rights that I would have been expected to. Now, of course, this is in a time period where these rights, you know, safe dose didn’t exist, standard set of docs didn’t exist. And I’ve never done these things before. So, I didn’t know. I relied on my lawyer who’s supposed to have known better and didn’t negotiate the right, right.

So couldn’t force a sale. Ultimately, we merged with a publicly traded company.  Notionally for a lot more, but that stock promptly fell 99.98%. And I was telling the VC, this is not a good company. The eBay offers way better, but I can’t convince them, and many lessons learned. So, (A) 20 million is a lot of money. (B) Make sure you have like standard set of rights. Like, you know, drag rights, or at least piggyback and preemptive rights. And (C), pick a VC who’s aligned with you. Like I raised money at the highest valuation for the person who invested the most. But ultimately, it was not a normal VC. It was a very rich French person who wanted to show the world that they understood the Internet, but they weren’t in it to build successful companies. They were it to like to appear in the press to be strategic. And so, when the time came to exit, they didn’t care about exiting. I mean, the problem with someone who’s worth a hundred billion. I mean, at that time, I think it was only 20 billion is making a couple hundred million more makes no difference to them.

And so even though it was my recommendation we should exit, they were like, “Nah, I’m not exiting”. And I couldn’t change that. And they were in control, even though it was my company. And so, a number of mistakes in terms of raising money from the wrong VC to negotiating the wrong rights to not realizing how much money 20 million dollars was at the beginning.

So yeah, a lot of interesting life lessons. Then again, if I’d made 120 million at like 25. So, this was like two years later. When the eBay offer came, I probably would have been an arrogant and insufferable asshole. And so, you know, the eating a piece of humble pie, going from zero to hero, you know, and cover every magazine, et cetera, back to zero again.

It was probably a very valuable life lesson that I needed to learn.

Alejandro Garcia-Amaya: I love that. That’s very reflective and life changing. That’s incredible. Let’s move on to the next venture. So Zingy.

For this second venture, I heard you originally were thinking of an idea that you could bootstrap instead of finding venture capital for it. What made you think this way? And I know that eventually you also had to fundraise, but it was a very hard journey. Much harder than your first experience. Can you cover some of that?

Fabrice Grinda: Well, when you’re raising money in the bubbles. In the 1998, with a pedigree, I could say, top of my class at Princeton.  McKinsey, one of the first to ever be promoted directly to associate whatever, like people were throwing money at me.

In 2001, I knew the world would change and it was obvious that capital was going to be either impossible to raise or extraordinarily difficult. And, by the way, I thought the Internet was not going to be this big thing.

I’m like, you know what it’s not going to be the revolution I expected it to be. It’s not gonna be big. It’s not gonna be big a way to make money. But like, I’m not doing this because I want to make money. I’m doing this because I’d like the zero to one. I’d like to be a tech founder. I would like to be mission-driven, but because my core mission right now is to be a founder, I’m willing to sacrifice the idea to just do something that I think I can build profitably with very little capital.

And so, it was more a reflection of the macro circumstances in which we found ourselves. Which is like the winter of tech, basically. It was like, even though it was not a global recession, it was a tech recession. It was very, very deep.

So in 2001, I’m like, okay, I’m going to do ringtones. Not because I liked ringtones. I thought it was silly. Uh, but I thought I could build it pretty cost effectively in the US, because it had been successful in Europe and in Asia.

Alejandro Garcia-Amaya: So, focusing on ring tones, because you’re thinking about how quickly, in terms of go to market, you can sell this and already start generating revenue or profit.

But even before, even when you pick that idea, did you try to fundraise or you did, and it was because it was such a gloomy market that it just didn’t work out or what was the case?

Fabrice Grinda: Oh no, I actually try to fundraise. In in fact, the first two years were painful. I invested every last penny I had.

I borrowed a hundred thousand of my credit card. I slept on the couch at the office. I lived in New York, $2 a day. I mean, I couldn’t even afford coffee. I could only eat ramen noodles, missed payroll 27 times. I talked to every VC, but I think by the time. I think my first sentence that happened when I’m telling them I’m doing BTC telecom, when every BTC company in the world from Webvan and Pets.com, I’d gone under. Every telco company, like MCI Worldcom had gone under, I don’t think I’d finished the sentence. They’d hung up, right? Like there was no traction. I never even got a meeting to raise capital. So, you know, I try to raise capital. It would have like saved a lot of hair loss. But it was impossible.

And here’s the irony is once we became profitable, because so this company was built the old-fashioned way on profits. You know, we went from a million revenues in 02, to 5 in 03 to 15 in 04 to 200 in 05. But like we became profitable.

Alejandro Garcia-Amaya: Hold on. So, a million, when did you get a million, in how long?

Fabrice Grinda: Revenues in 2002.

Alejandro Garcia-Amaya: And how long had the company been operating for?

Fabrice Grinda: I created the company July 2, 2001, and we launched a couple months after that, basically. So, we did million revenue first year.

Alejandro Garcia-Amaya: Wow! Okay. So, I mean, a million in a year or 12 months, or a bit less. That’s still fairly impressive!

Fabrice Grinda: Yeah, it was okay.

Alejandro Garcia-Amaya: So even with that million, you’re trying to fundraise and, no one would pick up the phone. Wow!

Fabrice Grinda: No VCs. I know. I raised 1.4 million, but I raised 1.4 million in 5 to 10k increments. Any person I would meet, I’ve been like, ah, this amazing startup, please invest.

And I did raise 1.4 million, but literally in 10, the biggest check I was getting was like 10k. And at some point, I ran out of friends and family that I could beg and grovel for money, which is why I ended up missing payroll so many times. And, of course, every time we tell the employees, I don’t understand what went wrong. The banks didn’t process the wiring the payroll properly this month. Of course, I didn’t have any money. That’s why it wasn’t processed. Then I would find some guy to give me 5k, then poof, make payroll!

Alejandro Garcia-Amaya: That’s weird that you have to check the banks. Oh my God, that is wild. I love that. I love hearing that journey. There are so many of us founders have gone through that or are going through that.

So, this is really helpful to be able to hear that.

Fabrice Grinda: By the way, the most meaningful day of my tribunal journey, to date, is August 15, 2003. The day we became cashflow positive, not EBITDA positive, cashflow positive. We were EBITDA positive for three or four months already because then we were masters of own destiny.

We knew we were not gonna die, and I was able to pay back, my hundred thousand credit card debt and all the things I haven’t paid, and the back payroll, et cetera. That was, to date, the most important date of my life.

Alejandro Garcia-Amaya: That was three years. Three years into it, something like that.

Fabrice Grinda: Two years and two months

Alejandro Garcia-Amaya: Wow! That’s incredible. Even more than you mentioned in the fourth year, you already generating 200 million. You ended up, well, I always love asking this question to every one of our special unicorn founders in this show. Do you remember what your first sale? To whom it was and how did you get it going?

How did you sign that first customer? I know with Zingy, you were selling to enterprise.

Fabrice Grinda: Eventually. Yeah. So, I wanted to sell the enterprise. I wanted to run the, the mobile content platforms for the operators. But in 2001 in the US, it was the dark ages. There was no, there was no text messaging.

You could not text message within an operator, let alone cross operator. They didn’t think they needed this content, even though it was huge in Europe and Asia. And I was not, they were not picking up my phone calls either. So, I launched direct to consumer just as a proof of concept. I even, I had to hack my way into the delivery networks and gateways of AT&T and Cingular, et cetera, to be able to deliver.

I didn’t have a contract with them. I just like found a way to deliver through their gateways that were open. I started selling, charging via credit card. And I had the consumer to have to pick their network and phone. It was like the most archaic way of delivering it.

And that’s why I didn’t really scale at the beginning. But the point was showing up at all the conferences, being a CTIA. Proving my staying power and I kept knocking the door of the carriers. Eventually MSN at that time was like desperate for revenues. So, I essentially bribed them. I gave them like, I don’t know 100k or 50k to become their official partner that led a press release, which lends us to some credibility, even though it didn’t really beat any revenues. Then randomly, at that time, Motorola was running the NEXcell content portal. They reach out randomly and they said, hey, we saw you video Microsoft. Do you want to discuss doing something with us?

So, we started running it for them. And then NEXcell reached out to me and said, hey, well, you know, this is working pretty well. Can we do it directly? And then the first real contract in my life is Sprint. But I’ve been knocking the doors for two years and a half, and it’s just little by little, beat through staying power and presence of showing we’re not this flash in the pan startup. Got the contract once sprinted it, everyone else wanted to do it.

So, then it became, you know, they’re all lemmings. So once Sprint had done it, it was successful. We got a call from everyone from AT&T to singular to Verizon, and then we went from like dying for revenues to being overworked, especially with no money to build connectivity and partnerships with all these people.

And also, they sent me like three, you know, these are ginormous companies. They sent me like 300-page RFPs. I filled in the RFPs myself. I just promised to do everything. I just said, yeah, we’ll do everything.

Once we had signed the contract, I obviously didn’t deliver. And at 20th of what I’d promised, but it didn’t matter. That’s when they were pregnant, and they didn’t have a choice. So, I focused on the core. I’m like, you know what? I promised all these other things, but you know. Let’s do this to get going. And then we’ll work on the rest later.

Alejandro Garcia-Amaya: And they kept with it! And they’re like sure.

Fabrice Grinda: And they kept with it and it’s too late. We were coding and we were live, and it worked extraordinarily well.

Alejandro Garcia-Amaya: When you were going directly to the consumer, even though it wasn’t scalable, what was the time period? And what type of numbers or what type of key indicators were you looking at that allowed you to say, you know what, like, we really are up to something. I know this, like, we got to keep knocking on these doors. We got to keep doing this. Like, what was the shining light for you there?

Fabrice Grinda: It was not our numbers. Our numbers were de minimis and irrelevant. It was the fact that in Japan, this was a multibillion-dollar category and profitable.

In Korea, it was a multibillion-dollar category and profitable. In Europe, there were multiple players that were like doing hundreds of millions of sales and profitable. And so, if humans globally are very similar, if something works somewhere, it’s going to work somewhere else because at our core, we want to communicate. We want to socialize.

We want to have a sense of purpose. We want to be entertained. And if there’s something works somewhere, it’s going to work elsewhere. Now it’s going to be, you need to adapt that it’s not a carbon copy, but fundamentally the ideas are pretty similar. And that’s what it works so well in the rest of the world.

I’m like, it’s going to work in the US. It’s just a question of time. And I need to be there when the market opens up with all the building blocks in place. Now, if it had taken two more years, I probably would have been dead. So fortunately, it happens before I ran out of like complete semen, cash, et cetera.

Alejandro Garcia-Amaya: As you were signing up these enterprises, so sprint and all the other enterprises that came along, for in terms of team and talent, was there a moment where you said, we need to bring some individuals with enterprise level experience when it came for sales, so you already had that.

Fabrice Grinda: No. I couldn’t afford salespeople anyway.

In fact, the main issue is we want, at some point I stopped being able to. After I signed the Sprint deal and we signed everyone else. I didn’t have any cash until Sprint paid us. So, we signed Sprint, we went live April 1, 2003, but they paid quarterly plus 45, the check arrived August 15, 2003, but once they went live, everyone else wanted to sign.

But I didn’t pay my, my staff from April 1 to August 15. So, we went from 27 people to seven. Cause you know, when you stop paying people, they stop showing up for work for some reason. I don’t get that. And so, all of a sudden, we were massively overworked with everyone wanting to sign us and we had, we had no more staff.

So, I just start coding again. I was project manager slash front end developer slash head of sales, slash you name it.

Alejandro Garcia-Amaya: Customer success.

Fabrice Grinda: Fortunately, we saw the core, the CTO and the core back up office team that could help with the integrations. But, yeah, we went live and finally we’re profitable and then we scaled.

And I sold the company a year later for 80 million cash.

So, this time for cash, not equity. And I sold it over half of it, but that was not the most meaningful day in my life. Because, at that point, we were on a rocket ship. We went, you know, as I said, we did five million revenues, 50-200, we’re hiring people right and left. We’re growing like crazy. I was so busy.

My reward of myself for selling the company was like, I think I bought an Xbox, a TV and a tennis racket. And I’m like, you know, I still lived in my studio apartment for like multiple more years because I was too busy. And you know, I didn’t do this for the money anyway. Like, I thought this was an interesting thing to do and build.

Even though I didn’t like the mission of like selling ringtones and mobile contents, and I wanted other mission. 

Alejandro Garcia-Amaya: When it comes to lessons learned with Zingi, I love to also learn about the scaling. The fast growth, bringing in talent and making sure everyone’s in the same page. Is there a particular lesson, any particular pitfalls? Anything that you can share for founders out there right now that are going through that, right?

They found product market fit. Now they’re, they’re growing at a pretty fast clip. And what are things that they should keep an eye on or the questions they should be asking themselves?

Fabrice Grinda: The good news for us is our core team, you know, the CTO, me, et cetera, we’re like in place and it was really execution on existing contracts.

So, it didn’t really require fundamental new senior hires. I think the only thing I would change differently is like, regardless of the talent of someone, which I since implemented as a no asshole policy. Regardless of your IQ ability to deliver whatever, if you’re not a good person to other people and you don’t treat people well, you have no place here.

It took me too long to realize that. But other than that, not really. I made more hiring mistakes in the first company because my VCs were pushing me to hire like, you know, gray-haired, experienced people. And they were just not a cultural fit for the company. Like in tech startups is better to make the wrong decision but learn from it and pivot. Then like to try to get consensus to find the perfect answer, which never exists.

And so, people with your culture may make a lot of sense.

Alejandro Garcia-Amaya: You mentioned that you ended up selling for 80 million cash offer. What are, are there some lessons there? I remember hearing you mention about investment that you brought in an investment bank and that that was actually very helpful being able to do that.

Can you share a little bit more about that?

Fabrice Grinda: Yeah. So, I kept getting buyout offers. We want you to be profitable for like 8 million, 10 million, 12 million. And then I’ve said like, I’m not selling. And then this buyer came in, offered 40. And I’m like, okay, this is now I’ve realized how much money that is.

And it is life changing. And I own half the company and I’ve been so close to zero so many times. I’m like, let’s definitely consider it. I hired a banker to run an auction and they looked at like 10 different potential buyers and they increased the price, but frankly, just because they run an auction from 40 to 80.

So, that was helpful. That’s number one. And number two, just as importantly during the negotiation of the stock purchase agreement, et cetera, they could play the role of bad cop. Because obviously if the buyer, you want to have a good relationship with the buyer, you’re going to be there for a while. They’re going to lock you up.

And, I stayed there for 18 months. So, you can’t be the one negotiating every little detail in your, in the sales contract. And so, the natural division of labor is the bankers, the bad cops, you’re the good cop. Meaning that I will tell them like, look, I want to work with you, but my bankers are telling me what you’re offering is on market.

And that’d be silly to accept that. I just don’t want to look silly in front of them but give me something I can work with that seems reasonable. Obviously, I’m the one actually telling them what I wanted. So, I’m the one driving, like from the optics perspective, you appear to be the compromising nice guy and the bankers are the evil people that are negotiating so aggressively.

And so, with that good cop bad up routine. It is very effective. So, the bankers I hired were worth every penny. They play the role of the bad cop. They doubled the price. We got what we needed, and it was amazing.

Alejandro Garcia-Amaya: I love that! Let’s move into the last of the three big ventures here. OLX. For this third venture, I heard you originally want to improve Craigslist, but that did not work out.

So, you created OLX. You decided to launch it in a hundred countries in investing 50k per country. Where did that idea come from? This go-to market, of exactly what I mentioned, all these countries dedicating a slice for each one and seeing what sticks. How did that come about?

Fabrice Grinda: So, I loved marketplaces. I studied market design in college. My first startup I received, which is an eBay of Europe and I helped build an eBay Latin America where marketplaces. I love the acid light nature, the winner takes most from nature, the fact they bring liquidity and otherwise opaque markets. This is what I really wanted to build.

So had I not been resource constrained, I would not have built Zingy. I would have built something like OLX earlier. In fact, I own the OLX domain. I bought it in 98. So, it’s something I’ve been meaning to buy. And build for a long time.

And in hindsight, I should have built a classified site to begin with, not an auction site, but perhaps people would not have funded it because they didn’t believe in the business model.

It didn’t exist until later. So, 2005, I knew I wanted to exit Zingy was in the company I was meant to be building. And I didn’t like the people I sold it to. They were a Japanese company. We had massive cultural misunderstandings. I had the opportunity to buy Shazam for like a million dollars.

And they said, no. I mean, there are a lot of things we could have done. And I’m like, look, they would take all my profits, send them to Japan. I’m like, look, if you want someone like me, it’s to go build a billionaire company. Let me conquer the world. If not, you don’t need me, you know. Like, it’s just to maximize profits, you know, let me go do my own thing.

So, after 18 months, I left. And Craigslist has already started becoming a cultural phenomenon in the US in terms of liquidity, but I felt that they were doing a disservice to the community because they were not moderating the content, they had an old UX UI. So, I went to Craig and Jim and I’m like, look, I’ll do it for free.

Like, not because I want to make money out of this, but because I think you’re not helping the humanity by having the spam, the scam, this prostitution, murderers, et cetera. Like we could do a much better job here, but you have liquidity. So, let’s take advantage of that. And they said no, so then I try to buy them out.

They also said no. So, I’m like, okay, let’s go build it. Now to answer your question directly. Why try to launch in a hundred countries. Once someone has network effects in marketplaces is very hard to break. And there are already in common players in the U. S. like Craigslist or in France that had network effects. And it would take tens of millions in these countries and that type of capital was still not available. Now, the VCs that had not funded me in my last company, all of a sudden were throwing themselves at me because I’ve been very successful in the last company. So, now I have capital. At 10 million I go to launch. But I didn’t feel that was enough to go and like take Craigslist head on.

And I realized there’s a certain amount of serendipity in these marketplace side businesses as to what takes off when, where, et cetera. And I knew how to build supply. When you build a marketplace, you typically started the supply because the sellers are financially motivated to be in the platform.

You can go to them, tell them, Hey, look. I don’t currently have any buyers, but I’m free. So, it costs you nothing to be here. Why don’t you list? And people typically are willing to list. So, I did that, you know, and the core categories of like, sale goods, real estate, cars, in a hundred countries.

Again, 50k. Back of the day, there was much less competition in general. Many countries had no in common players. I could buy a long tail marketing on Google for like a penny a cluck, especially in these secondary countries and, and all the content led SEO. Every single listing is an ad that could be indexed.

So, we launched, not sure if I’d seen this done anywhere else, but I don’t know. I’ve seen serendipity happen in marketplaces before. And so, we launched, and it really took off in four places. So, focus on these four, close down all the other countries and then use the profits for these.

So, it really really really worked in Portugal and Pakistan. But obviously these are not large markets. It kind of worked, reasonably well, in Brazil and India. So, we’re like, Hey, this, this is where we’re going to focus. So, we focused on these four, once we became very successful and profitable in Brazil, then we use the profits from there to then go and expand to the other countries and ultimately ended up with 350 million units a month in 30 countries with over 10,000 employees,

Alejandro Garcia-Amaya: Geez! I love that you went after all these countries. Was it helpful that because of this scale, you had much you had better clarity of what the numbers indicated, right? Like, you could clearly see the difference in intake from Brazil and all that. Whereas if you might have done it in fewer countries, you might not have gotten, or was that not something.

Fabrice Grinda: Yeah, but you need to remember I built two auction sites before, right? Mercadolibre and Aucland. I knew that a marketplace that sells goods as liquidity, if the probability of you selling is about, if you list something, it’s about 20, 25%. That’s when you start getting liquidity. And yes, I did have an AB test across all these 100 countries.

And some clearly emerge as dominant, but I knew what metrics I was looking for. Net new listing per capita per thousand capita in the country. I had a very, very clear KPIs or AKRs of what I was looking for. And yes, having these different countries helped compare between them. Then, as I said, I mean, we went from a hundred down to four and then re-expanded eventually once we’d won these to 30, where OLX kind of is today.

Alejandro Garcia-Amaya: Having marketplaces be your sweet spot, what would you say are some vital customer acquisition lessons when it comes to building a marketplace? And you mentioned a couple of things, but if we could go a little bit deeper into that.

Fabrice Grinda: So, I typically started the supply because the supply is financially motivated in the platform, but you highly curate your supply.

And the biggest single mistake founders can make in marketplaces is put an infinite supply in the platform. And the problem is if you do that is there’s no buyers for it. So, the sellers are not engaged. They’re going to churn and maybe even if there’s a buyer, they won’t reply because they haven’t been engaged before.

And so, you find very select high quality sellers. You make sure they’re happy and motivated. Then you find demand for them. And once you have liquidity at that level, it could be national. It could be zip code. Whatever. It doesn’t matter what it is. Once you have liquidity, then you still supply a bit more than you bring them in and you keep scaling in parallel, making sure that you keep liquidity metrics, liquidity throughout and that both your sellers and buyers are happy.

And that’s when eventually you start seeing the network effects kick in. Your businesses really have that work effects once you see your cash go down, right? So, as you scale. Many companies see their cost of acquisitions increase, then they’re not network effect businesses. They’re still driven by whatever paid acquisition channel or sales team they’re using.

Network effect businesses really with scale, you actually start seeing lower and lower CACs. In the early days, in fact, your CACs could be very high because you’re injecting liquidity in the market. And that’s okay as long as you keep a very clear track of whether or not you have liquidity and things are working.

Alejandro Garcia-Amaya: That’s so interesting that you start with the supply versus the demand. My initial reaction, and I haven’t done a marketplace, but my initial reaction would be make sure that you actually have someone that actually cares to buy this thing, and versus providing something, but in your case, you’re saying make sure that the quality is there in the supply, and then that should attract the demand.

Fabrice Grinda: The demand is harder to get. Let’s start there. And people have many options to buy something. And so, getting demand is expensive and unless you have something for them, you’re not going to come to you. And so, getting them is not that super useful. As I said, the reason I started supply is because it’s easy or easier, right?

If you’re a real estate broker and tell them, Hey, let’s all your, you can put your properties here for free. They’ll do it. Or if you’ve got a car, I use car sales, whether it’s like, Hey, let’s your cars here for free. They’ll do it. Yeah. So, I start there because it’s actually something that I can get that has a certain amount of value that I can then bring to buyers to convince them to convert.

So, I started with the easy side and then I go to the hard side.

Alejandro Garcia-Amaya: Was there a particular sector that you focus in on a niche first? And what was that sector and how did you decide to then pick what the next sector would be?

Fabrice Grinda: Yes. So many of the countries we were in didn’t have functioning payment systems and didn’t have functioning delivery mechanism. There’s no post office. And so, classifieds are more powerful in these types of countries because there’s no Amazon. There’s no eBay. There’s no alternative. And I thought long and hard what category we should focus on. And we started on used goods, especially things like electronics, cell phones, because the in used goods, people transact multiple times a month, right?

So, I knew that the very valuable categories are cars and real estate, but cars and real estate people transact once every 5-10 years. And so, it does not lead to recurring organic traffic. But in used goods, if you’re buying and selling video games and, and cell phones and computer parts, et cetera, actually do get your users engaged.

And so, that allowed us to have the cheapest form of traffic. And so ultimately, we had organic traffic. Most of the vast majority of our traffic is organic coming on average, two times a month to transact. And then you could use that traffic to go and win cars and real estate. And so, using the used goods, which is a high recurrence category to then fund extension and to the high value by low recurrence categories made the most sense.

And that was a big difference with our competitors and allowed us essentially to add compete because our customer acquisition costs were lower. You know, we’d acquire someone for very cheap to come and whatever. Buy a video game for $10 or $5. And then eventually they’d buy a car.

Alejandro Garcia-Amaya: How did you structure, let’s say when you moved into Brazil or you moved into India and you said all focus, all energy, all resources go this direction. How did you structure the team? And they go to market within, cause they’re so different. You know, there’s so different places, but maybe they’re not like what you said, right?

Fabrice Grinda: They’re not, what are the core categories in India and Brazil? They’re the same cars, real estate, cell phones, video games, computer parts, furniture. I mean. They’re the same categories everywhere that the same needs. The same concerns on preventing scams and spam and phishing and prostitution and stuff like that. And the same types of sellers, right? Like we would go to car dealers and real estate brokers or agencies to get listings.

And so, the approach was same. And in fact, for the longest time, we didn’t have anyone on the ground in any of those countries. I centralized all operations in Buenos Aires. Because Deremate was built in Buenos Aires so when I was leaving Deremate I took over the entire team and it was the same thing.

And so, it’s basically I followed the exact same strategy, I’ve followed my auction site in terms of starting a supply, centralizing the tech platform. And because Buenos Aires is a cosmopolitan city where you have people from all around the world, we had the customer care team for Russia, for Brazil, for India, et cetera, in Buenos Aires.

Eventually we opened local operations, but for the longest time, we were all centralized in Buenos Aires. Same categories and obviously slightly different categories and obviously you needed the geographic make out of these countries to be different. But pretty funnily, yeah, everything’s centralized and it worked really, really well.

Alejandro Garcia-Amaya: That’s incredible. And I wanted to just spend a little bit of time and delve deeper into the marketplace. So, thanks for sharing that. Mostly because as when we fast forward to your role now as founding partner at FG Labs, when you’ve invested over 1,100 companies, including major players like Alibaba and Coupang, having over 900 active investments, all that, your investment thesis falls with marketplaces, right? Isn’t that still very much where you place your emphasis on, or is that one of the things and there’s more?

Fabrice Grinda: Well, I’m an accidental VC, first of all. So, I never set out to be a VC. It just so happens that while I was running all these companies, I was very visible to consumers and to the public.

And so other founders said, hey, can you invest? And I thought long and hard, should I be an investor while I’m a CEO? Is it a distraction from my core mandate? But I’m like, look, if I can articulate lessons learned to others. It makes me a better founder. If I can keep my fingers on the pulse of the market, it makes me a better founder.

So, as long as I find a way to invest very quickly. It doesn’t take more than one hour to decide if I invest or not, it’s okay. So, by 2013, when I sold OLX, I made 175 investments, like dozens of exit was doing really well. So, I’m like, you know what? With my partner Jose, who co-founded Deremate with me, I’m like, let’s create a family office, keep investing.

And then people started saying, Hey, we would like, to invest with you. And so, we created a first VC fund in 2016. But frankly, what we do is angel investing adventure scale. We behave like angels. I still invest in a two, one-hour meetings. We decide if we invest or not, et cetera.

Now, the reason it’s marketplaces, of course, I’ve been focusing and building and investing marketplaces for the last 25 years. And I actually even studied market design in college. And I still like network-effect businesses writ large. And so, my definition of marketplace is rather broad. It’s an intermediary between a buyer, something a seller or something, you know. So, if FinTech company that’s lending capital is usually a marketplace because there’s a provider capital and buyer capital, for instance.

So, it’s a broad definition. And these days we’re mostly doing B2B marketplaces. It is our bread and butter. The reason it’s not the sole focus is we do have a philosophy that if you’ve done right by us, we will invest, we’ll back you no matter what you do the second time around. And at this point, we’ve backed 2000 founders, 300 exits, 150 of them we made money on.

We lost money on the 150, then 150 we made money on. That’s about 300 founders. So, these 300 founders are coming back and they’re like, Hey, I’m building a new company, regardless of what they’re doing. They get a check from us.

Alejandro Garcia-Amaya: That’s an incredible amount of exits. That ratio is insane.

Fabrice Grinda: Oh yeah. And also, a credible amount of success, right? Making money in half the deals we’re invested in. So, we treat follow ons as though we were not an existing investor. So, we don’t always follow on and, and we often sell on the way up. We sell our winners. It’s like the anti VC strategy. When we feel something is overvalued, we’ll still have our position.

And so, in 2021, when everyone else was going crazy. I wrote a blog post entitled Welcome to the Everything Bubble, where I articulated why I thought that every asset class from real estate, bonds to public equities to crypto to SPACs to NFTs to privates, especially late-stage drivers, were valued and why people should be selling as much as they could.

Now, of course, It’s a private market, so you, we only sold a fraction of what we wanted to, but nonetheless, we had a fair amount of exits because there was a moment where other VCs would buy you in secondaries. We typically would sell 50% of our position and, and many of the companies in the up rounds.

By the way, the founders would be happy for it. They’d ask us to sell because they didn’t wanna get too diluted by the new primary equity coming in the company. By these 300 founders. Let me give you an example. We, we backed a founder called Brett Adcock, who built a company called Vettery.

It was a labor marketplace. We sold it to Odeco for a hundred million. We made like 8.5 extra money pretty quickly. And then he decided he was going to build an electric flying taxi company. Self-flying taxi cabby called Archer. So, we didn’t even take a call. We’re like, here’s our check. We did, we didn’t negotiate.

And then he sold that or took it public or whatever. And then he decided to build a humanoid robot, electric company, electric robots that are humanoid to replace humans and picking packing warehouses, we also sent her a check. Also, it didn’t really take a call, you know. So, as there are now 300 of these founders running around, that is becoming an increasingly large portion of the portfolio.

That said, we still do marketplaces because network effect businesses are beautiful, right? As I said, customer acquisition costs decrease as they scale their winner takes most their capital efficient. Yeah, once you have liquidity, it doesn’t take that much capital to win.

Alejandro Garcia-Amaya: What criteria do you prioritize when you’re selecting startups to invest in?

Fabrice Grinda: Yeah, so we have four criteria and they’re very explicit and, and we require all four to invest. So, some VCs will tell you, I only invest in extraordinary founders and that’s it. That’s the only criteria. That’s not true for us. We want extraordinary founders, which for us as a definition, but I’ll explain that.

So, I want an amazing team, a good business meeting good time and unit economics fair deal terms. Nothing’s cheap in fact, but fair and that matches our thesis of where the world is heading and that is making the world a better place addressing either an equality of opportunity or climate change or the mental, and physical well-being crisis.

And so let me double click and all for it. Number one team, we want people that are extraordinarily eloquent because people that are very eloquent or in a better position to raise capital to attract better teams, to do better BD, better PR, et cetera, and know how to execute. And the way I tease out at a one-hour call, if they know how to execute is the way they describe number two, which is how attractive the businesses and I care deeply about union economics.

Now we’re mostly seed and A, that’s for bread and butter. But we will do some pre-seed. Even pre-seed, I want the founder to be able to articulate what do you think’s estimated customer acquisition costs looks like based on landing page analysis, density, keyword analysis, conversion rate from the landing page signups to what he thinks purchases will be based on what the industry averages are.

And he better be able to articulate what the margin structure of the businesses like this is the AOV. And I expect them to give me an AOV that’s in line with the industry. And this is their margin structure. And even, and the unit economics I look for is one where you recoup your fully loaded CAC on a contribution margin two basis after six months and the three exit after 18 months.

And who knows what your LTB to CAC is because A, you haven’t been live for more than 18 months and B, you know, ideally you have negative churn. And so ultimately, it’s 10 to 1, 20 to 1, whatever. And if you’re not there, I want to know why you’re going to get there with scale, without needing every star in the multiverse together.

Number three, I want to deal terms to be fair. We invest in 200 companies a year. So, we know where the median valuation is. And we want to invest in something that’s fair. And so right now, you know, it’s like a seed round. You’re raising your, if you’re a marketplace where you do 150K in GMV or maybe 30K in net revenues, and you’re raising three at 10 pre, seed. Pre-seed you’re maybe raising one at five. And an A round, you’re doing five, 600K in GMV or maybe a hundred, 100-150K in net revenues or MRR and you’re raising seven at 23 pre.

And the mean is higher. And of course, if you’re a second time founder, the valuation might be higher. But that’s where really the market is today. And the B’s right now, you’re doing two and a half million in GMV a month that were the 15 percent take rate, or maybe 500, 600, 700 K and MRR.

And you’re raising 15 and 50 pre. If you’re way off of that. We may pass on some price and it’s okay. Well, maybe we’ll revisit the next round if you grow into the valuation. And number four, as I said, very clear theses on the future of work, the future of food, the future of real estate, the future automotive, the future of mobility.

We want things that fall in line with that future. And we need all four criteria to be collectively true. Even an amazing team, if we don’t like the rest, we’re not doing it.

Alejandro Garcia-Amaya: I love that. Well, that’s thank you for that breakdown. Super clear. When it comes to, I remember you hearing and this will be, there’s 2 more questions. This is 1 of them. And I’m very appreciative of your time.

You’ve mentioned about, we’re talking about the future. And where your investments are now, what investments get you super excited. I heard you talk about, like B2B services and improving within a number of industries, how things get done really?

Can you a little bit into that? You’re discussing, what was it like in the manufacturing sector?

Fabrice Grinda: Yeah. So, I’d say B2B marketplaces are bread and butter right now. There’re five subsites but let me take a step back. So, if you look at your consumer life, you have an amazing experience. Amazon, you can order anything and get it a day or two or DoorDash for food or Uber for cars or Airbnb or booking.com. And 25 percent of your online, of your purchases has basically been digitized as a consumer. But if you’re a business. You’re still in the dark ages with like sub 1 percent penetration in most categories.

So, imagine you want to buy petrochemicals. There’s no online catalog. There’s no connectivity to the factory to see availability. There’s no pricing. There’s no online ordering. There’s no online payments. There’s a tracking of your order. There’s no insurance, and there’s no financing, and all these could be different companies.

And this needs to happen in every major vertical. So, number one, digitizing B2B supply chains of inputs. So, petrochemicals, that’s Knowde. Or steel, it’s like Metaloop or Reibus. Or gravel and a company called Schuttflix and made every major input category. Number two, digitizing SMBs. Anyone they love the category, you know. You started a pizzeria because you like cooking pizzas and chit chatting with your customers.

You did not start a pizzeria because you’re like, I am excited to be building a website, entering comments with Google and Yelp, negotiating with suppliers, doing a deal with Uber and DoorDash, getting a POS, doing accounting. No! And so, we’re investing in companies that do all the grunt work. So, it kind of falls in future of work and SMB enablement for them.

So, we’re investors in Slice for pizzerias. Cents for dry cleaners and Odeko for coffee shops. And Chipper in Columbia for bodegas, and Fresha for barbershops, you know. And some of these at real scale, I mean, Fresha, I think 70,000 barbershops, billions in payment volume going through the platform. It really transforms the lives of these SMB owners.

Number three, moving supply chains out of China into friendly countries, especially India. So French shoring, I guess would be the core thesis in these massive tailwinds but if you’re, and this kind of falls in the second category as well, if you’re a little manufacturer in India, you own a factory, all you want to do is manufacture, what you don’t want to be doing is entering RFQs, doing prototyping, dealing with like exports and customs and invoicing and getting paid by these big companies in Europe or in the U.S. And so, we’re investors in marketplaces for apparel, for ceramics, for rugs, for linen, et cetera, that are helping these SMB manufacturers in India scale and sell to the West. But for the buyers, it’s fundamental because they’re also moving their supply chains out of China, which is a massive geopolitical risk, regardless.

Number four. Labor marketplaces that have support all these things. So, we’re investors in WorkRise, which is a labor marketplace for oil services workers or, or people doing solar installations, et cetera. And we’re investors in Trusted Health, which is nurses. Hundreds of millions of GMV were investors in Job&Talent which is a blue-collar worker marketplace in Spain and Southern Europe.

And I guess number five. The infrastructure layer to support all these B2B marketplaces. So, we’re investors in Flexport, which is a digital freight forwarder. ShipBob, which is a last mile picking, packing, delivery platform, and many, many, many others like payment companies like Rapyd or Stripe, that are supporting these different types of companies.

And so that’s really the bread and butter today, but we ended up doing a lot of fun, interesting things because of like the intravenous network we have, but also where curiosity takes us.

Alejandro Garcia-Amaya: I know that you mentioned that twice a year or so, that you meet up with a number of individuals and you talk about the future and different industries that excite you.

Is there any content from that you do share, whether it’s through your personal blog or like a white paper on something, anything that you love that you do have and you love for people to go to and check out.

Fabrice Grinda: So, yeah, so twice a year we do these conferences where I bring LPs, other VC partners and founders to talk about like the future of humanity, what doesn’t exist, should exist, how to make the world a better place.

Nothing explicit comes out of it except that we come up with ideas and then we go look for founders to either build them or we invest in them. Okay. So, it becomes part of like things we build in or invest in the year or two to come. But yes, I do write a lot on my blog. About trends, theses, where we’re at, where we’re going, and I write about everything and anything like, macroeconomics, crypto, whatever crosses my mind, but it usually has, or there is a pretty big overlay of where we are in AI, what is the state of entrepreneurship? And so, it is a way for me to structure my thoughts and, and create a conversation with the community at large.

Alejandro Garcia-Amaya: We’ll make sure to, when we share our talk, to have your personal blog link there as well. Anything that we didn’t cover that you’d love to share anything else that you love to share with the community.

Fabrice Grinda: Yeah, I guess my one analysis is I’m profoundly optimistic about where we are. And we’re still at the very beginning of the tech revolution. We are about to digitize the entire BDB world. That’s a trend that’s going to take 10, 20 years. It’s massively deflationary. Because it’s deflationary, it’s inclusionary and will increase people’s purchasing power and quality of life where on the verge of a massive revolution in climate tech, where we’re seeing now that deflationary power of tech through batteries and solar becoming so much cheaper than everything else that we’re going to completely transition or, or energy creation to a carbon free system to the point that I suspect that the marginal cost of electricity within 30, 20, 40 years will be 0, which will actually lead another revolution. And we’re going to be able to, like, grow crops in the desert, desalinate salt water.

I mean, there is so much positive things that are coming, uh, that if you take a step back that the trends are so optimistic and an AI itself will probably lead to a massive productivity revolution, which will transform our lives for the better. Now, we are at the top of the hype cycle, so probably in the next few years is going to disappoint and it’s going to take a while before it’s incorporated in government and in large enterprise where it will really impact productivity, but in 10 years, 20 years, it will probably completely transform the life we live for the better. And so.

Alejandro Garcia-Amaya: I’m super excited as well.

Fabrice Grinda: Yeah, I am so excited. We’re on the verge of building a better world of tomorrow, which will be a world of equality of opportunity of plenty, and it’ll be environmentally sustainable. So, I’m excited to be part of helping to build this world and you should be too.

Alejandro Garcia-Amaya: Yes. Well, thank you so much for the time. Thank you, Fabrice. Enjoy the rest of your day! Thank you.

Fabrice Grinda: Thank you. Take care.

Alejandro Garcia-Amaya: Take care.