Most of you are not aware that FJ Labs has an apprenticeship program. The program has been fantastic. The apprentices have created extraordinary companies, including AdoreMe and Beepi. They have helped us invest in over 250 startups. It has been extraordinarily beneficial all around.
To give you a sense of the genesis of the program, let me take you back to 2010. At that time, I was co-CEO of OLX by day and an angel investor by night. I had already met Jose and we had started our cooperation, but it was not as structured as it is today. I essentially had two full-time jobs and was stretched thinly between both.
By virtue of being the CEO of a successful internet company, many young entrepreneurs kept reaching out to me, either to advise them, or invest in their startups. A third of our deal flow still comes from entrepreneurs applying directly via my email, Facebook, or LinkedIn accounts.
One entrepreneur, in particular, reached out asking for a meeting. He brought up all the things we had in common: Ivy League School, McKinsey, French. A few weeks later, he showed up at the office door right around lunch time. We went for a sandwich across the street at Cosi. He told me he was operating a more elaborate Chatroulette competitor. He had raised a $300k, but he had not yet found the right product market fit. After spending $75k, he questioned the sustainability of the venture.
I thoughtfully explained why the business was not compelling from either a value proposition or business model perspective. Given that he was in business school at the time, and was operating a startup that did not seem compelling, I told him that he should probably shut it down and return the money to his investors. I thought this would be the last I would hear from him. The same day at 3 am, he emailed me saying he couldn’t sleep. He was excited and troubled. He was delighted by the candid feedback. No one had ever before given him such an appraisal of his startup, especially in such a direct manner without any sugar coating, which he surprisingly loved. He now wanted to work with me to find a new idea.
He kept emailing me, asking for follow up meetings. At this point, had I been a girl, and he a potential date or suitor, I would have been asking for a restraining order. I told him I was too busy, and did not have the time. He kept persisting. Eventually, he mailed me a check for $5,000, and said he would pay me $5,000 a month, every month, to work for me. At this point, I gave up and said that he could keep his money and come work with me for free. In parallel, he offered his investors the choice to take their money back or to follow him on a new journey. Most chose to back his future venture.
As I was working two jobs, there was room for someone to come help me on the investing side. However, I needed to figure out whether I could train him to become a venture capitalist. Could I train someone who had never been a venture investor before to make investment decisions on my behalf? It required me to structure my thinking and formalize my heuristics. The exercise turned out to be personally useful as it made explicit rules that had so far been implicit. It turns out I could teach someone to apply the same rules and my new apprentice turned out to be tremendously helpful. I no longer had to meet 20-30 entrepreneurs a week. He could take the first meetings and eliminate bad and out-of-scope companies. He identified the more promising ones for me to meet.
Seeing all the deal flow was a tremendous source of inspiration for him. The caveat was that he did not have the right to create a company that did the same thing as any company that approached us. By seeing so much deal flow in all these different categories, all these different business models, he was able to think through trends, businesses, and approaches that could be combined into something interesting.
We crossed these trends with the following guiding principle for finding a new startup idea: Find a large market, where the net promoter score of the existing providers, be they online or offline, is very low, and where we can build a business with either better economics or a better user experience, or preferably both.
We then filtered the ideas we came up with through our nine business selection criteria. We started with 50 ideas and whittled them down to 30, then 20, then ten, then two. We then picked one, pivoted, and AdoreMe was born. This first amazing apprentice was Morgan Hermand-Waiche. The company and he are now well on their way to success.
Having an apprentice proved so helpful that I decided to formalize an apprenticeship program to replicate what happened. Every year since then, we have had two to four part-time apprentices. The program has been so effective that we now have three full-time analysts in addition to the apprentices.
The apprenticeship program works as follows. We hire two to four apprentices from Harvard, Stanford, MIT, and Columbia at the end of their first year of business school. They join us full-time for the summer, working part of the summer as entrepreneurs in one of our start-ups, and the other part learning the basics of venture capital at FJ Labs. During their second year, they work 15 to 20 hours a week, helping us filter all the deal flow that we receive. Starting in January of their second year, to the extent they want to be entrepreneurs, we start thinking through ideas that we can build together. Once they graduate, we co-found a company together, for which we commit the first $1.25 million in funding.
None of this would have happened if it had not been for a combination of happenstance, and Morgan’s persistence in hunting me down and not taking ‘no’ for an answer. There are many skills or attributes that are valued in entrepreneurs, from passion, to intelligence, to specific technical expertise, but ultimately, nothing trumps grit, tenacity, persistence, and just a touch of luck.
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Find our email exchanges for your reading pleasure below.
1/ Our first email exchange:
From: Fabrice Grinda
To: Morgan Hermand-Waïche
Date: Fri, Nov 26, 2010 at 10:39 AM
Pas de probleme. Je suis jamais en France, mais je suis a NY en ce moment et serait a NY tout janvier…
From: Morgan Hermand-Waiche
Sent: Wednesday, November 24, 2010 4:59 AM
To: Fabrice Grinda
Subject:Contact avec un jeune entrepreneur francais diplome d’Harvard
Bonjour Fabrice,
Je m’appelle Morgan Hermand-Waiche et j’ai 28 ans.
Apres des passages par des grandes ecoles en France (Mines Paris) et aux US (Harvard Business School) j’ai decide de me lancer dans l’entrepreneuriat sur internet (Industrie du live video) et j’ai leve des fonds angels aux US cet ete.
Je suis sincerement epoustoufle par votre parcours (de McKinsey a Zingy & Olx) et si vous etes ouvert a rencontrer de jeunes entrepreneurs passionne avec de grandes envies de reussir je suis votre homme! Si vous en acceptez le principe je serai honore de partager un cafe a l’endroit et au moment de votre convenance pour faire plus ample connaissance (je voyage souvent a Paris et NY).
A bientot j’espere,
Morgan
2/ The 3:42am email following up on our first meeting:
––Original Message––
From: Morgan Hermand-Waïche
Sent: Thursday, January 20, 2011 1:35 PM
To: Fabrice Grinda
Subject: Merci pour tout
Cher Fabrice,
Je voulais simplement te dire a quel point tu a été inspirarionel pour moi
ce midi. Tu es incroyablement brillant, et j’ai enormement appris en
discutant avec toi.
Je serai ravi de lire tes 9 critères de sélection d’idée et les autres
articles que tu as écris tout autant qu’un exemple de document VC !
Merci pour m’avoir proposé de partager cela.
Enfin je te prie de m’excuser. En partant je t’ai propose de prendre part au
capital et en réalité je me suis mal exprimé. Ce n’est pas du capital qui me
rendrait heureux, mais tes conseils si precieux de temps a autres afin
d’avancer dans la bonne direction. Je sais que ton temps est limite, et que
beaucoup d’entrepreneurs revent de t’avoir en advisor, mais sache que je tu
es si inspirarionel pour moi que je payerais pour te donner de l’équity ! Ne
serait-ce qu’une demi-heure chaque mois aurait un impact sans limites. Crois
moi, je saurai bénéficier de ta guidance et la rendre au centuple avec le
temps.
Quoi qu’il advienne je suis enthousiaste et ne manquerai pas de te donner de
mes nouvelles dans 6 mois.
Le chemin entrepreuneurial est long mais c’est grace a des rencontres avec
des garçons qu’il vaut d’être vécu.
Merci encore pour ton temps,
Morgan
From: Fabrice Grinda
To: Morgan Hermand-Waïche
Date: Thu, Jan 20, 2011 at 8:34 PM
Ca me fait toujours plaisir d’aider.
Follow-ups:
1. Liens:
https://fabricegrinda.com/startup-kit-select-articles-for-first-time-entrepreneurs-to-read/
2. J’ai ci-joint une PPT de levee de fonds
3. J’avais compris ce que tu proposais 😉 Je suis d’accord pour la prochaine
boite, tu me donneras du founder’s equity ou un truc comme ca. En attendant
ping mois de temps a autres.
A bientôt,
Fabrice
P.S. Tu m’as paru bien timide pour un McKinsey / HBS…
From: Morgan Hermand-Waiche
To: Fabrice Grinda
date: Fri, Jan 21, 2011 at 3:42 AM
Bonjour Fabrice,
Merci beaucoup pour ces infos.
Si je t’ai apparu timide, c’est essentiellement parce-que je suis encore en recherche du bon business modele. Alors il est difficile de t’affirmer a ce stade „je vais faire XYZ”.
Par contre, j’ai une profonde determination pour apprendre et reussir. Et vite ! Je pense vraiment detenir le skillset pour maitriser la techno (Mines Paris), le business (HBS), la structuration du travail (McKinsey), et son excution avec une volonte sans limite pour monter une belle entreprise. J’irai la ou il le faudra pour reussir, y mettant corps et ame. J’ai refuse des jobs dans des Hedge Fund pour vivre cette aventure qui a un sens pour moi et qui peut avoir un upside enorme, alors ce n’est pas le moment d’etre timide !
Ce qui est vrai par contre, est que je n’ai pas la connaissance d’internet et que cela me prendra du temps d’explorer par moi-meme. Pour etre au top, j’ai besoin de quelqu’un qui est brillant, qui connait le secteur, et qui pourra me dire „Vas-y, fonce, ca c’est une bonne idee a faire dans ce pays”, et qui m’aiguillera sur les aspects critiques en cours de route. En d’autre mots, quelqu’un comme toi. Je le te promets, si tu me donnes une chance, tu ne seras pas decu. Tu le vois bien, meme la a 3h30 du matin, c’est a toi, a ce que tu m’as dit, et a ce que je peux en tirer pour le business que je pense.
Tu es un garcon extraordinaire Fabrice, et tu es l’unique raison pour laquelle je suis venu a NY aujourd’hui. Si je me suis montre timide, je n’en ai pas moins les dents qui rayent le parquet d’en dessous tellement j’ai envie de reussir dans l’entrepreneuriat ! Quand le porte est fermee, je passe par la fenetre.
Je vais murir notre conversation de ce jour, et si tu acceptes, j’aimerais revenir te voir pour parler plus concretement d’idees concretement actionables (cf. ton modele d’arbitrage international) avant que tu ne repartes de NY, et pourquoi pas te convaincre que prendre de l’equity dans cette boite nouvellement definie pourrait etre une bonne idee. Serais-tu libre a dejeuner jeudi prochain ou celui d’apres? 🙂
Donne moi une chance,
Je ne te decevrai pas,
Morgan
3/ Lots and lots and lots of other emails where Morgan tried to get another meeting 🙂