Costa Rica is Heavenly!

Last September I embarked on a multi-sport adventure in Costa Rica starting near the Atlantic Coast and finishing on the Pacific Ocean. The experience was simply divine.

We started by staying at the Pacuare Lodge on the Pacuare River. This stay ended up being the highlight of the trip. The Pacuare Lodge is an eco-lodge where everything is natural. You get to the lodge by crossing the river by cable tow. The residences are gorgeous. They are perched in the middle of the forest with breathtaking views of the river. There is no running water, electricity or sewage. All use rain and sun as their only source of water and heat. You use candles and a wind-up flashlight as your only source of light. All the food is grown on the property itself and was fantastic.

The next day we went rafting on the Pacuare River with class IV rapids. The ride was thrilling and made all the more engaging by the majestic scenery. It also provided my closest brush with death in years. Towards the end of the run, the guide asked us if we wanted to do the last rapids which were only class II with our bodies. Several of us jumped in the water to see what it would be like. The experience at first was disappointing. The waves were small and the current did not feel that strong. Unexpectedly, I encountered two countervailing currents and was pulled straight down to the bottom of the river. As I looked up, I saw all the other swimmers and the raft go by as I was seemingly stuck in place. I swam upwards towards the light as strongly as I could but did not make any progress. After a few seconds, I decided to stop to conserve my oxygen. I calmly concluded that with my life vest and the air in my lungs I should be buoyant and that I just needed to wait for them to do their job. As the seconds passed by for what felt like minutes and my oxygen started depleting, I thought this would be an extremely stupid way to die. I could not hold any longer and started simultaneously swallowing water, throwing up and blacking out … just as my head crossed the water.

I was saved! This served as a good reminder of how tenuous life is even in seemingly benign conditions – as everyone else reported the body rafting part as incredibly easy and uneventful.

From there we went to Arenal. The first day we started out with a canyoning tour. I had never rappelled down waterfalls and adored the experience. After a few hours of rappelling down cliffs and hiking, we headed to the Arenal Reserve. We went up the Sky Tram and did the Sky Trek ziplining. This was by far the longest zipline I had ever done – the last leg is almost half a mile long! We ended the day in style by relaxing in the hot springs of the Tabacon Grand Spa Resort.

The next day we did a full day bike tour of Arenal. The riding was grueling with rough unpaved road and numerous hills. We biked all the way to the base of the volcano and watched eruptions while surrounded by cooled lava. We wound down with amazing massages at Tabacon.

From there we flew to Quepos on the Pacific Ocean for a combination of sea kayaking, tennis and mountain biking. Once again, the experience was fantastic. After a weeklong adventure, our journey came to an end. We flew back to San Jose on a small propeller plane, but got caught in a thunderstorm on arrival with fog so thick we could not see the runaway. After two aborted landings we flew back to Quepos and took a cab to San Jose to fly back to the US.

This one of the most intense and fun vacations I have ever been on and look forward to similar adventures in the future!

Cabarete is the place to go if you are into kite boarding

I had heard great things about Cabarete in the Northern Dominican Republic and decided to check it out last September. I was not disappointed!

I had never been in a place that had such fantastic boarding conditions. Trade winds blow daily from at least 11 am to 5 pm. There was not a day where we could not kite board!

The hotels are a bit rustic (one of them has rooms for $9 per night!), but we were there to kite board not enjoy luxurious accommodations. Cabarete offers tons of other activities as well including windsurfing, scuba diving, dirt biking, horseback riding, cascading and more, but I have to admit we did not do anything other than kite board, play tennis and mountain bike.

Make sure you fly to Puerto Plata International Airport which is 20 minutes away to save yourself a 2/3 hour drive.

Buying the right gift

Most of us put very little thought into buying gifts for our friends. For some reason people seem intent on buying me ties and cufflinks. People: I appreciate the gesture, but I am an Internet entrepreneur. I wear jeans and t-shirts. I can’t recall in what year I last wore either of those things! Similarly, my female friends seem to receive flowers and chocolate. Those are somewhat useful, but very impersonal. The same is true for bottles of wine which are also used as a standby gift for both sexes.

I realize it’s actually hard to buy gifts for adults. We have almost everything we need. We buy ourselves the things we want. Moreover, knowing what our friends like does not necessarily help. For instance, you may know I like video games, but you can’t know what games I already have or am really interested in.

The solution is to buy people experiences aligned with their interests. Then the options are endless. In my case, I would be delighted to receive a massage at a spa, tennis lessons, theater tickets, gliding lessons, helicopter flying lessons, sessions with a personal trainer, martial arts lessons … the list goes on!

Allmydata 3.0: The Ultimate Online Storage Solution

I have to admit Allmydata has had a rough time. The original team had difficulty executing on the vision and most had to be replaced. Using a peer-to-peer client to have lower bandwidth and storage costs and hence lower pricing have not been a comparative advantage in an over-funded world where many money losing free competitors have emerged. Moreover, despite the security and encryption users hated the idea that their files were stored on other people’s computers. The product we had originally devised was much more difficult to use than we had anticipated. Frankly the software was slow, bloated and buggy!

Over the past year we rebooted the company. We changed the team, rewrote the specs, redesigned the product and changed the business model:

  • We redefined the problem Allmydata is trying to solve: Allmydata is the solution for online storage, backup and sharing.
  • The way we decided to solve this problem is by building a virtual drive on your computer that acts exactly like a regular drive if you use the Allmydata client:
  1. Allmydata shows up as a drive
  2. You can store as many files as you want of any type
  3. You can run files directly from the virtual drive or copy them to your local drive
  4. We decided not to build our own backup application, but instead to integrate to the backup applications built into Vista, XP and Mac OS or allow users to use any backup client they want
  5. We created a web interface that looks exactly like the client to give remote access to files without needing to download the software client
  • We simplified the business model dramatically removing tiered pricing and offering an all you can eat plan for $4.99 per month for unlimited storage with a 1 Gb free plan.
  • We removed peer to peer from the downloadable client as it was too resource hungry and slowed uploads down dramatically. We did keep it on our back-end to split the files on our own servers to allow us to use cheap Linux boxes and hence have much lower costs than all our competitors, Amazon’s S3 included.
  • We rewrote the software client such that memory usage went from as much as 200Mb to less than 30Mb.
  • Simultaneously with the Allmydata 3.0 release we are releasing a beta version of the Mac client both for Tiger and Leopard.

All the changes above happened incrementally over the past year or so. None of them on its own was a game changer, but we would like to believe that the sum total of the improvements create a “Skype-like” (meaning easy to use and understand solution) for users’ storage, backup and sharing needs.

We’ll see what the future holds but for the first time in a long time, I am becoming optimistic about Allmydata!

How did you raise your very first round of financing?

Greg Galant at Venture Voice just started a new series where he asks former show guests a question. You can find my answer to his first question below and on Venture Voice.

The first time I had to raise money was for Aucland, a copy of eBay for Southern Europe which was my first Internet startup. I was lucky not to have to raise seed money. While in college at Princeton, I built a company exporting high end computer equipment to Europe (motherboards, memory, CPUs, hard drives, etc.). Given its profits, I left Princeton in June 1996 with $50,000 in cash.

When I joined the McKinsey New York office as a consultant in September 1996, I ran a sophisticated real estate rent versus buy model. The model and my rule of thumb analysis (see Rent … unless you want to buy) were screaming BUY! I bought a large 1 bedroom apartment on 54th and 2nd for $115,000, putting $25,000 down.

With the other $25,000, I bought 4 stocks: Yahoo, Microsoft, Amazon and Intel. When I decided to create Aucland in July 1998, I sold the 1 bedroom apartment for $185,000. I sold all the stock I owned. After taxes, I was left with around $300,000 in cash. I invested 100% of it in Aucland.

The seed money was used to assemble the core team, build the product, launch the site and start marketing the product. During that entire process, I was aware that given our ambitions and the competitive market we were in we would need a lot more capital. The problem was that I knew nothing of raising money. I knew what VCs were – I had read about them in Forbes and Fortune, but that was about it. I searched online and most sites suggested writing a business plan and provided a few samples. Being an over-achieving former consultant, I promptly put together an 80 page business plan with an extremely sophisticated financial model. I dug out the phone number and email addresses of numerous VCs and started emailing them the business plan and calling to get meetings.

I did not get a single reply to my emails. Finally, a French VC took my call. We had a great rapport. He loved the idea and seemed to love the team, but was distraught by the size of our ambitions. He had never heard of a French entrepreneur wanting to raise $9 million. I knew American VCs did $5-15 million series A rounds. This VC (and the French VCs I met afterwards) did not want to invest more than $1 million. They wanted us to focus on the French market and the valuation they offered was ridiculously low.

As I had met all the major French VCs at that point and was getting nowhere, I decided to focus on execution. Our competitors were mostly run by tech people who did not have a clear sales and marketing strategy. I duplicated eBay’s organization structure creating category managers for the main categories who convinced stamp dealers, wine collectors, etc. to list their items on Aucland. As a result we launched with more items on auction than all of our competitors.

Simultaneously, we started promoting Aucland in the press. Our press launch was poorly attended. No one wanted to hear an inexperienced 24 year old speak about an Internet company. Many doubted the Internet would ever take off in France given the prevalence of the Minitel. However, I was convinced we had a great story to tell. I called dozens of journalists, none of whom wanted to meet me. I told them I just wanted 5 minutes of their time and that I would go to their office. This was relatively unheard of in France where journalists were usually not treated well by companies. As I suspected, the story of a young Frenchman going to the US to pursue his education and learn the ropes of business only to come back to France to bring entrepreneurship and the Internet was extremely compelling. Each 5 minute interview became a 1 hour interview which in turn led to a glowing article in the press. Each time a journalist sent me a question about the auction market, I would send them an entire article back within minutes. Because of the word of mouth effect in the journalistic markets, I rapidly became the go to entrepreneur for questions on the Internet auction market at first and then for the Internet market as a whole.

As we started getting traction on the site and attracting amazing buzz and PR, the Internet bubble suddenly inflated in the French market. In the spring of 1999, we started being approached by American VCs and newly created French venture funds. I had a fantastic rapport with one of the American VCs. I liked them, they understood our business and I was leaning towards closing a deal with them. At that point, in June 1999, I received a call from Bernard Arnault, the richest man in France, on my cell phone who invited visit him at the LVHM office.

As I sat down in his office he told me: “Mr. Grinda: You have a unique opportunity to create the eBay of the rest of the world. We will give you the human, financial and industrial resources to guarantee your success. In order to show you our commitment to your project, we will offer you twice the valuation and twice the investment that you have received to date. However, to show to the world that this is a strategic project for us we want 51% of your company.”

I had already met his team from Europ@Web, the venture fund he had created, and I had hated them. I actually really liked Arnault, but hated his minions. They struck me as petty and jealous with no fundamental understanding of the Web or of the business we were in. For a few days, I thought long and hard whether to choose the American VC or Arnault. My instinct told me to go with the Americans. Logic seemed to dictate to go with Arnault given that he offered much more money and that had resources in Europe to help us.

In the end, I chose to raise $18 million from Europ@Web, a decision that was eventually our undoing, especially when combined with all the mistakes we made as first time entrepreneurs. At the time, it was the largest raise in the history of French venture capital.

The times were very different from the way they are today. Things had become so crazy that around the time of the closing we started receiving unsolicited term sheets by fax from VCs I had never even talked to! Today, I know that VCs don’t read 80 page business plans, they just don’t have the time, and that a 10-15 page Powerpoint is the norm. I also realize that the Europ@Web model of taking 51% of the companies they invested in makes no sense. It creates too many conflicts of interests between the investors and the entrepreneurs. Today, if anyone wants the majority of my company, I have the good sense of cashing out a part of my shares and making sure there are clearly defined scenarios for an exit.

Despite the eventual outcome, all in all, it was a fantastic experience. I am extremely grateful to have been at the right time, at the place with the right skills to have been able to live through it all – the ups, the downs and all their lessons!

OLX just raised $13.5 million

OLX just raised another $13.5 million from General Catalyst, Bessemer Venture Partners, Founders Fund and DN Capital. This brings the total raised to $23.5 million as we had raised $10 million in September 2006 from the same VCs and various angels.

My two favorite VCs – Joel Cutler and Jeremy Levine, from General Catalyst and Bessemer Venture Partners respectively, remain on the board alongside my co-founder Alec Oxenford and myself.

We thought long and hard about whether we should raise more cash. In the end, in light of our ambitions and the insurance it buys in a probable economic downturn, we felt that raising more cash was the best solution despite the incremental dilution and liquidation preference.

We will use the funds to:

  • Build the best site in the market
  • Further our global deployment (we are currently in 40 countries in 15 languages)
  • Acquire more sites (we already acquired,, and invested in
  • Continue our aggressive marketing campaign

We intend to be extremely careful in how we spend the money to make sure that it lasts us until profitability.

We realize we remain a startup and need to keep our low cost and nimble startup culture. We are still at the beginning of a long road that will hopefully lead to the creation of the best free classified site in the world and allow us to make a difference in the life of our customers.

You can also read a TechCrunch article on the fund raising at:

Amtrak sucks!

In most countries trains are much more reliable than planes – they are not affected by the weather or runway, air traffic and gate limitations. In light of the numerous flight cancellations and the on time record of US airlines, this is probably also true in the US as well. Nonetheless, it’s shocking how unreliable Amtrak is. I take the train to Boston and DC relatively regularly and it’s almost never on time.

I am currently on the train to Boston to speak at an entrepreneurship conference at HBS. The train is already nearly an hour late and just stopped for an indeterminate period of time as they fix the bridge in front of us! While I am complaining, I suppose I should mention how incredibly slow the “high speed” Acela is!

Ah well, at least I have power and I can use my cell phone as a modem.

Physics of the Impossible is enlightening and entertaining

Michio Kaku’s exploration of the science behind science fiction is a fascinating way of getting a snapshot of where we stand in science in almost every domain. I don’t think I learned so much in a long time – especially while being entertained! I especially loved the way Kaku intertwines his scientific explanations with anecdotes from movies, literature and the life of the people behind the science.

Kaku analyzes various concepts of science fiction such as teleportation, telepathy, force fields, etc. He breaks them down in 3 categories: Class I impossibilities which we should be able to do within 100 years or so, Class II impossibilities which are scientifically feasible but beyond our reach for hundreds or thousands of years and Class III impossibilities which violate the laws of physics as we currently know them.

Surprisingly most things fall in Class I – force fields, telepathy and limited teleportation. A few concepts such as faster than light travel and time travel fall in Class II and only perpetual motion machines and precognition fall in Class III.

I am definitely going to check out Kaku’s other books.

Buy the book on Amazon at:

Healthy Living

I have a confession to make: I love Diet Coke. I find it tastes great and is extremely refreshing. In fact, so much so that for a while I only drank Diet Coke and I drink a lot so I was consuming more than 12 cans per day.

Unfortunately, Diet Coke and regular Coke both have phosphoric acid which leeches calcium from your bones and prevents calcium absorption. As I am also largely lactose intolerant and have low calcium intake to begin with, my doctors detected early signs of osteoporosis. As a result, I decided to completely stop drinking Coke and add calcium supplements to my diet.

While I was at it, I also completely cut all sugar substitutes (such as aspartame) and caffeine from my diet. Given how long aspartame has been around, I doubt it has negative health implications even if one drinks 24 cans of diet soda per day. However, recent studies suggest that sugar intake helps regulate the feeling of satiety and people taking sugar substitutes have a tendency to overeat.

With regards to caffeine, I have extremely high energy to begin with and don’t really need it, besides I don’t like the taste of coffee.

It’s been a week and so far so good. We’ll see how it goes!