2022 Holiday Gadget Gift Guide

It is that time of the year again, so I am sharing my recommendations for all gadget lovers of the world to be happy this holiday season. Note that the cover picture above is my Turks setup which includes the ASUS ROG Swift OLED PG48UQ, the Apple Watch Ultra, Ledger Nano X, HyperX Cloud Flight S, Herman Miller Embody Gaming Chair, Blue Yeti X, and earHero.

Computer Monitor: Asus ROG Swift OLED PG48UQ or PG42UQ

I have been a fan of OLED TVs since they first released with their deep blacks and extraordinary image quality. I pined for 4K OLED gaming monitors to be released. I even used a LG 48” TV as a monitor for a while but found it unwieldy and the glossy finish was too reflective for work. This is where the Asus ROG OLED PG48UQ and PG42UQ come into play. They are extraordinary. The image quality is second to none. The monitors are super-fast with 0.1ms grey-to-grey response time and overclockable 138Hz refresh rate. The special matte coating leads to less glare and fewer distractions. They are definitely the monitor to get. Note that both are identical, and you should get the one that fits your desk. If you have a very deep desk, get the 48”, otherwise get the 42”.

I also considered the Odyssey Ark 55” curved monitor, but for some reason did not love the curvature of the screen. Perhaps it was just too big relative to where I was sitting, but it did not feel comfortable. It’s also outrageously expensive at $2,799 vs. $1,499 and $1,399 for the ROG monitors. Note that I do not like ultrawide monitors with 21:9 or 32:9 formats like the Samsung Odyssey Neo G9 because I do not find them tall enough to be comfortable for work. Those typically come with a 1,440 vertical resolution. I much prefer the 16:9 format with 2,160 of vertical resolution. I would consider a curved ultrawide version of the ROG monitors, but only if they were as tall as their 16:9 counterparts with 2160 of vertical resolution (say 5,120 x 2,160 vs. the 5,120 x 1,440 of the Neo G9).

The best deal in 48” OLED monitors is the AORUS FO48U at $779. I did not play with it so cannot recommend it, but by all accounts, it’s a worthy alternative. Note that it has a glossy finish so would probably not be ideal in an office environment but would be great for gaming in a dark room. I use my monitors for both work and play and they need to function in bright rooms.

TV: LG C2 77-inch evo OLED TV

The LG C2 77-inch evo OLED TV is the best high-end TV for the money. The TV combines stunning picture quality with terrific gaming prowess. I prefer the C2 to the higher-end G2 as I can’t tell the difference between them. However, I prefer the C2 to the lower-end B2 especially with HDR as it gets brighter and highlights pop more. The C2 also has better gradient handling, resulting in less distracting banding. The 77” is currently on sale for $2,499 and the 65” for $1,699. Both are amazing buys and when it comes with TVs, bigger is better! However, the 83” sells for $3,999 and is not worth it.

Soundbar: Sonos Arc

It would be shame to have an amazing TV like the LG C2, without amazing sound. That’s where the Sonos Arc comes in. It’s a gorgeous soundbar offering premium surround sound without the need for supplementary speakers. It’s super easy to setup. It sounds incredible and it often feels like the sound is coming at you from all angles. I also do not think you need a subwoofer with the Arc as there is more than enough powerful bass to feel the on-screen explosions. It’s the perfect complement for your TV.

Projector: Epson EpiqVision Ultra LS800 Ultra Short-Throw Laser Projector

Two years ago, I recommended the Optoma CinemaX P2. Sadly, the salt and humidity in the air of Turks and Caicos killed it so I went projector shopping again. I ultimately settled on the Epson EpiqVision Ultra LS800. It’s amazing and a huge step up from the Optoma P2. It’s incredibly bright with 4,000 lumens (vs. 3,000). It can display images up to 150” (vs 120”). It has by far the shortest input lag of any projector in its class making it the only ultra-short-throw projector I would recommend for gaming. It’s super easy to setup. It has amazing sound with two full-range 5-watt speakers and a 10-watt subwoofer in a package that is essentially an integrated soundbar given the LS800’s width. In fact, it’s so good, I don’t use external speakers with it. It’s the ultra-short-throw projector to get.

Streaming Device: Apple TV 4K

Modern TVs like the LG C2 do not need a streaming device as it’s simpler to use the built-in apps especially since they now support Airplay. However, the Epson Ultra LS800 does not have a RJ-45 jack. In Turks I only have the VPN with a US IP address (to be able to watch US shows) on the wired network. As a result, I got the brand-new Apple TV 4K with Ethernet and 128Gb of storage and use it to stream on the Epson.

It’s expensive for what it is, but it’s the one of the best streaming devices on the market especially if you are used to Apple user interfaces and its ecosystem. The A15 Bionic chip makes it blisteringly quick which addresses one of my key criticisms of prior iterations.

If you prefer the Apple UX/UI and want a modern streaming device, you cannot go wrong with this one.

Notebook: LG Gram 17 Ultra-Slim PRO

I switched to the LG Gram 17 a few years ago to use when I travel, and I never looked back. It’s by far the lightest 17” notebook on the market at just over 3 pounds. The power adapter is exceedingly small and light. I regularly get over 10 hours per charge and feel like I never need to charge it.

My only gripes were that it was underpowered, but they addressed the issue with the 2022 version. It now comes with 32Gb of RAM, a 2TB SSD and a GeForce RTX 2050 graphics card. This is the notebook to get. Note that I do not game on it, as I have desktops with much more powerful graphics cards at my homes. I used to recommend gaming laptops, but they run ridiculously hot, the battery life is extremely limited (under 2 hours), and they are bulkier than I would like. However, if you want a notebook that you can game and work on there are great options from MSI and Asus.

Console: Xbox X & PS5

It was hard to recommend buying them until this year as they were both really hard to find and you had to massively overpay if you wanted them. Moreover, the lack of amazing new games did not make them a must buy. However, with the release of Elden Ring, it became imperative that I buy them as I prefer to play third person action role playing games (RPGs) on console than on PC. Luckily, this coincided with the consoles becoming more available.

If you can afford it, I would get both. The Xbox X is marginally more powerful and has slightly better graphics as a result. I also like the feel of the Xbox controller better in my hands. However, the PS5’s controller is objectively better and there are better first party games on the PS5 right now. I typically play games available on both consoles, like Call of Duty, on the Xbox. The exception is Elden Ring which for some reason looks marginally better on the PS5.

My biggest gripe remains the dearth of games I want to play on them. Once I finish a game, they gather dust for months while I await the release of the next game that interests me. Right now, I am about to play God of War Ragnarök which requires a PS5. I am eagerly awaiting the release of GTA 6, new Naughty Dog games, Starfield and many others, but who knows when they will release.

BTW do not allow cross-play with PC users when playing on console. A keyboard and mouse are just far more precise and it will ruin your gaming experience.

Video Games: Elden Ring & Age of Empires 4

I have a been a fan of real time strategy (RTS) games since the release of Dune 2 in 1992 and of the Age of Empires franchise specifically for 25 years. A year ago, Microsoft released Age of Empires IV. With much improved graphics and gameplay mechanics, I fell in love with the series all over again. It has been a lot of fun play online with my friends. Admittedly the game was not polished upon release and was missing many features. All of these have been addressed and the game is now well balanced and in a very good place. It’s the best RTS on the market right now and I encourage you to try it.

Likewise, I have been a huge fan of From Software Souls games for a long time. However, their linear design and extremely challenging difficulty level made it hard to recommend to normies. Elden Ring changes that. By combining the Souls formula with a gorgeous open world, From Software has created a masterpiece. If a boss is too strong for you, you can just bypass it and explore the rest of the world until you leveled up enough to take it on. The lore and story are riveting, and as per usual you are not spoon-fed anything. You get to figure out the story and decide where to go and what to do next. Expect to die many times as you “git gud,” but the sense of accomplishment from finally defeating that foe will make it all worth it. The multiplayer system, while still clunky, is the best in the series, and I was able to essentially play the entire game in co-op with my brother which was super fun. Note if you are new to Souls games I would recommend starting as an Astrologer which is the easiest class to play. We played through the game in about 100 hours and there are hundreds of other hours of content awaiting us. I can’t wait for the DLC to come out.

Fitness Tracker: Apple Watch Ultra

I have been part of the Fitbit ecosystem for years. I used the Fitbit Charge 5 since it came out (and the Charge 4 and 3 before then). I love the Charge 5 because of its simplicity and 7-day battery life. However, what has been annoying me continuously is that they keep breaking on me. I break at least 5 per year. I suspect that they do not like all the water I subject them to through kite surfing, and my daily hot tub and hot bath ritual. Alternatively, perhaps it does not like my adventures in the extreme cold. Fitbit replaces them for free every time, but it’s a pain in the neck to deal with..

When my Fitbit Charge 5 broke (yet again) a few weeks ago, I bit the bullet and bought the Apple Watch Ultra. I don’t love that the battery only lasts a day, so I charge it while I am working at my computer to make sure it has enough battery life to track my sleep. So far, I am very happy with it. It feels very sturdy, albeit a bit heavy, but the fitness, sleep and health tracking functions are second to none.

I will be putting it through its paces with lots of kitesurfing, extreme skiing, and my upcoming trip to Antarctica. Based on what I have seen so far, I think it’s going to be the watch for me for a very long time, or at least until the next version comes out 😉

Ride On Remote Controlled Car: 4WD Can-Am from CarTots

This is the perfect gadget for anyone with kids ages 0-5. François absolutely adores being driven in them. I bought a few of these for New York, Turks, and Revelstoke. You can fit two kids in them. You can drive them yourself with the remote, or when they are old enough, they can drive themselves with the functioning gas pedal and steering wheel.

The 4WD Can-Am is by far the best car I tested. It’s the most robust and can handle difficult terrain. I drove it on gravel and sand uphill and downhill with no issues. You can play music on it, and it has two batteries giving it the best battery life of the cars in its class.

With one of these, your progeny will be the cool kid on the block.

Crypto: Ledger Nano X

The downfall of FTX has strengthened the notion of “not your keys, not your coins” and the purpose and viability of DeFi in general. Most people should just buy and hold some BTC or ETH on Coinbase which is a regulated exchange. However, if you are more sophisticated, I would highly recommend you do self-custody with a Nano Ledger X.

I won’t lie that it’s a pain to setup. It’s an even bigger pain to use as you need to re-authenticate yourself continuously even with the longest setting, and you must manually verify every transaction, but that’s the entire point: better safe than sorry.

Note that I would only recommend this for technically savvy users who are doing more than just holding BTC and ETH on Coinbase which I consider to be an easier, safe, and viable alternative. However, at this point, I would NOT hold any coins on any centralized exchanges unless they are regulated and audited. I would not even trust Binance, though I have no indications they have done anything wrong with customer deposits.

Also note that you need to be extremely thoughtful about what you do with your recovery phrase in case you lose your Ledger. I keep mine split between different safes at different locations with different people who can access each of them, not that this matters much at this point as I sold most of my crypto between November 2021 and January 2022.

Wireless Headphones: HyperX Cloud II Wireless

I have been a fan of HyperX headphones for a very long time. They are incredibly comfortable, the sound quality is amazing, they block out external noises effectively and most importantly for me the microphone is noise cancelling allowing you to be able to Zoom from noisy environments without anyone on the call noticing. I recently upgraded all my headphones to the wireless version because I like to walk around during calls as I feel the blood flowing through my brain allows me to think better, not to mention it’s healthier. At my desk I use the Cloud II Wireless. I like that it’s USB-C and love the feel on my ears.

I travel with the HyperX Cloud Flight S because you can rotate the earcups which allows the headset to fit better in my eBags Pro Slim Laptop Backpack.

My only gripe with them is that they don’t support Bluetooth. You must use their USB dongle which works on PCs and the PS5. However, on my iPhone, I must connect the dongle to a lightning to USB connector, which works, but is far from ideal.

Chair: Herman Miller Embody Gaming Chair

I have been a huge fan of Herman Miller chairs, starting with the Aeron, before switching to the Embody years ago because I found it more comfortable. It’s an amazing chair and I love the gaming trim. It’s currently on sale on sale so I bought a few for every place I live and work in.

Streaming Microphone: Blue Yeti X

As I embarked on my Playing with Unicorns journey, I tested numerous microphones and headphones. Ultimately, I settled on the Blue Yeti X. The sound quality is excellent, and it is easy to setup and install.

Streaming Earphones: earHero

The earHero earphones are a great complement for the Blue Yeti X. They are invisible. No one can see you are wearing them, and they allow you to avoid noise pollution from your speakers into the microphone.

Winter is coming!

I have been putting a lot of thought into macro considerations of late. There are time periods when macro trumps micro. In those moments, all asset classes correlate to 1 on the way up in moments of exuberance. Due diligence goes out the window and markets do not differentiate amazing companies from clunkers. Likewise, all asset classes correlate to 1 on the way down in depressed times. The market throws out the baby with the bath water.

We have been living in such times for the last 18 months. In February 2021, I argued in Welcome to the Everything Bubble that negative real rates with aggressive expansionary fiscal policies were fueling a bubble across every asset class and that it was time to sell overvalued assets aggressively. In March of this year in The Great Unknown, I argued that people were significantly underestimating the risks to the global economy. Those risks have only increased since.

Being bearish about the global economy is consensus right now. As usual, I am contrarian, but in this case, my contrarian take is that the consensus is not bearish enough. Most people are underwriting some form of soft landing or mild recession in 2023. We are far from being in the valley of despair where all hope has been lost. Any news that is less bad than expected sees the market rip. This happened last week when the CPI print came in at 7.7% instead of 7.9%, or when people greeted the news of a potential slowdown in the rate of increase in rates with exuberance. Mind you, inflation remains stubbornly high, and rates are still going up even if the rate of increase might decline (e.g., the second derivative is negative, but the first derivative is still positive).

There are nine factors that are driving my bearishness.

1. Rates may go higher than people expect for longer than people expect

Until the September 20-21 FOMC meeting people were underwriting a US Fed Funds rate peaking at 3.5%. It’s currently 3.75% to 4% and expected to peak at 4.6% in 2023 before declining again.

Earlier this year I fretted that no one was considering the consequences of rates above 5% as they did not consider it within the realm of possibility. This is one area where the consensus has been repeatedly wrong over the last year.

With inflation remaining stubbornly high and showing signs of becoming structural as workers start requesting wage increases in line with expected higher inflation, rates may have to be significantly higher for longer than people expect. I would not be surprised if rates ultimately reached 5.5% or more and stayed high well into 2024 or longer.

2. The strong dollar is creating a sovereign debt crisis in emerging markets

Most emerging markets have their debt priced in dollars but have their tax revenues in their local currency. Increased rates in the US, combined with very high inflation, and often self-inflicted economic mistakes is seeing the dollar strengthen dramatically.

This increase is putting many emerging markets in a precarious position. Sri Lanka has already defaulted. Ghana and Pakistan look to be next with many others under pressure.

3. High gas prices are going to cause a recession in Germany

Germany’s business model for the last few decades has been to build things with cheap Russian gas and to export them to China. This business model is coming under pressure on both sides. The shutting down of Nordstream by Russia may leave Germany without enough gas both to heat its population and fuel its gas dependent heavy industry. Rationing and increased prices will cause a recession in Germany in 2023 with estimates ranging from a 0.4% to 7.9% GDP contraction depending on the duration and severity of the winter.

4. There is a new euro crisis looming

Greece almost took down the euro in the aftermath of the financial crisis of 2007-2008. The fiscal position of many European countries, especially in the PIGS (Portugal, Italy, Greece, Spain) is now significantly worse than it was back then.

The level of indebtment is such that it would not take a very large increase in their borrowing costs for these countries to become insolvent. The biggest risk probably comes from Italy whose debt to GDP ratio now exceeds 150% and whose economy is ten times larger than Greece’s. Worse the country elected a far-right nationalist government which may not find many friendly faces in Europe, especially as Germany is in the midst of an energy crisis.

I suspect that when the crisis happens Europe will do whatever it takes to preserve the euro, but that the process will be extremely painful.

5. There is a banking crisis on the horizon

Earlier this year I predicted that Credit Suisse and possibly UBS could default bringing down Switzerland with it. These banks have found themselves at the epicenter of every recent international debacle involving bad lending, e.g., Archegos , Greensil , Luckin Coffee, etc. Foreign currency denominated loans by themselves amount to ~400% of Swiss GDP. Officially, Swiss banking system assets are ~ 4.7x GDP but this excludes off balance sheet assets. Including these suggests a ratio of ~9.5x 10x is more accurate.

Since then, the market has come to realize the weakness at Credit Suisse.

European banks are generally in a weak position. They own a lot of government debt, which would expose them to a possible debt restructuring in the PIGS. They have issued mortgages with little collateral at extremely low rates and will suffer from rate increases and real estate price declines.

Moreover, they have not built significant reserves as their US counterparts have. Should there be a full-blown crisis of confidence it’s not hard to imagine the entire banking system seizing up as banks try to avoid counterparty risk leading to a massive financial crisis.

6. Real estate prices are about to fall

Like all other asset classes real estate saw a massive run up in prices in the past decade. Real estate is now overvalued in most places in the US and worldwide.

Contrarily to other asset classes, real estate prices have not yet adjusted despite mortgage rates increasing from 2.5% to 7% in the last 18 months. It takes a while for sellers to adjust their price expectations, so liquidity first dries up, then prices fall.

Prices have already fallen upwards of 7% in the last 3 months in cities like Austin, Texas. I would not be surprised if we saw national declines of upwards of 15% in the next 24 months.

This is happening globally. New Zealand house prices are down 10.9% in the last 11 months. Sweden is expected to see home prices drop 20% from their peak. Canada and the UK seem particularly vulnerable as most consumers have variable rate mortgages are exposed to the significant increase in rates.

7. Continued conflict in Ukraine and Russia will keep grain, gas, and oil prices high

There is no end in sight for the conflict. While it continues grain, gas, and oil prices will remain high given, keeping inflation high irrespective of interest rate levels given that the price is driven by supply constraints rather than high demand.

This does not even take into consideration what would happen should a tactical nuke be used during the conflict, the consequences of which would be unimaginable.

8. China is no longer a force for economic growth and disinflation

For decades, China was one of the driving forces of global economic growth and disinflation. The world greatly benefited from China’s ability to manufacture at low cost and at scale helping keep inflation in check.

This is no longer true. Xi Jinping’s incompetent management of the Chinese economy with its zero-covid policy, anti-tech regulation, and generally anti-capitalistic policies have crushed economic growth in the country.

Moreover, his jingoistic policies are leading to a decoupling of China and the West and a de-integration of supply chains. The process of moving these supply chains to India, Indonesia, Mexico, or back onshore, is inflationary as the world loses out from the specialization and the economies of scale it had benefited from during the past 30 years.

On the bright side, most military experts suggest that China will not have the amphibious capacity to invade Taiwan for the next five years. While this geopolitical Damocles sword still hangs over the global economy, it feels like the day of reckoning is not yet at hand.

9. Structurally higher geopolitical risk

The post Cold War entente is breaking down. We are entering a new Cold War in which the West is arrayed against China, Russia, Iran, and North Korea. The Ukraine conflict is making this dynamic crystal clear. Russia is fighting with Iranian made drones, North Korean made artillery, and with China’s Xi having Putin’s back at the UN as well as on the world stage.

This new Cold War could result in awful outcomes in any number of ways:

  • Nuclear conflict or a dirty bomb or an accident at the nuclear power station in Ukraine.
  • War in Taiwan.
  • Escalating cyber attacks on infrastructure in the West.
  • The use of technology to destabilize Western democracies, e.g., Russian and Chinese election trolling here in the US.

All of this makes the world a less stable place, erodes the rule of law, and increases the risk of catastrophic left tail outcomes.


Any one of these nine factors would be enough to create a global recession. What worries me is that they are all happening and playing out simultaneously suggesting that a replay of the Great Recession of 2007-2008 may be in store.

I am generally the most optimistic person in the room, and I have not been this bearish since 2006. I still think in probabilistic terms, but now I think the probability of a severe recession trumps the probability of a mild recession, which in turn trumps any optimistic outcome.

For the sake of completion, it’s worth mentioning the things that would make me re-assess my probability weighing towards more optimistic outcomes. If the Ukraine / Russia conflict came to a definite end, with inflation tamed, I would become way more sanguine. Likewise, China has the potential to spring a pleasant surprise in 2023 by tweaking its covid rules and addressing its housing crash.

What to do about it

Despite the high inflation, I would sell assets that are still reasonably priced or when bear market rallies occur to build up US dollar cash reserves to invest at deflated prices in the coming crisis. Should I be wrong in my read, I suspect that asset prices will not have recovered, and you can always re-enter at prices similar to those when you exited. The moment I would re-enter the market, especially with risk assets, is when rates started declining again.

However, if I am right, most asset classes will become very interesting with distressed assets becoming particularly compelling. This will be the first bona fide distress cycle since 2008-2009. I expect there will be plenty of opportunities in distressed bonds, real estate and even crypto.

The exception to this rule is if you have a 30-year fixed mortgage at very low rates on your real estate. In this case, you are better off keeping your real estate even if prices decline 15-20%, because at the current 7% mortgage rates, your ability to buy real estate will have been impaired by up to 50% depending on how low the rates you were paying were. Moreover, inflation is currently above the rates you are paying, decreasing your debt load in real terms.

I would also decrease your annual expenditures to build up a cash reserves in case the recession leads you to lose your job. Repay all variable high interest loans, such as credit card debt, but keep low interest debt.

History trumps macro

In the meantime, the only place to invest right now is in early-stage private tech startups. Early-stage valuations are reasonable. Founders are focusing on their unit economics. They are limiting cash burn to not have to go to market for at least two years. Startups face lower customer acquisition costs and much less competition. While exits will be delayed and exit multiples lower than in the past few years, this should be compensated by lower entry prices and the fact that winners will win their entire category.

The macro that matters for these startups is the one 6-8 years from now when they are seeking exits, rather than the current environment. For now all that matters is that they raise enough cash and grow enough to get their next fundraise so avoid capital intensive industries for now.

The best startup investments of the last decade were made between 2008 and 2011 (Uber, Airbnb, Whatsapp, Instagram), and I suspect that the most interesting investments of the 2020s will be made between 2022 and 2024.

In the long run, history trumps macro. I remain extremely optimistic about the future of the world and the economy. Since 1950, the 11 recessions have lasted between two and 18 months, with an average duration of 10 months. We will come out of this. Moreover, if you take a step back, the last 200 years have been a history of technological progress and innovation that have led to improvements in the human condition despite numerous wars and recessions.

Because of technology the average household in the West has a quality of life unimaginable to the kings of yesteryear. Because of economies of scale, network effects, positive feedback loops in knowledge and manufacturing (also referred to as learning curves), and entrepreneurs’ desire to address the largest possible market and impact the world as massively as possible, new technologies rapidly democratize.

This has led to a massive increase in equality of outcomes. 100 years ago, only the rich went on vacation, had a means of transportation, indoor plumbing, or electricity. Today in the West almost everyone has electricity, a car, a computer, and a smartphone. Almost everyone goes on vacation and can afford to fly. We take for granted that we can travel to the other side of the world in hours and that we have access to the sum total of humanity’s knowledge in our pockets in addition to having free global video communications. A poor famer in India with a smartphone has more access to information and communications than the president of the United States had a mere 30 years ago. These are remarkable feats.

Despite all this progress, we are still at the very beginning of the technology revolution. The largest sectors of the economy have not been digitized yet: public services, health care, or education. Most supply chains remain offline. Their digitalization will make them more efficient and be deflationary, which in turn will be inclusionary.

At FJ Labs, we are meeting so many extraordinary founders tackling the problems of the 21st century, climate change, inequality of opportunity, and the physical and mental well-being crisis, that we are optimistic that humanity will rise to the challenges of our time.

Having read the macro tea leaves correctly and sold as much of our late-stage and crypto positions as we could in 2021, we find ourselves in a cash rich position with only 25% of our fund deployed. As contrarians, we are now investing extremely aggressively in asset light businesses and are extremely privileged to be in position to help build a better world of tomorrow, a world of equality of opportunity and of plenty that is socially conscious and environmentally sustainable.

The next few years are going to be tough, but now is the best time to build, and we will come out of this stronger and better than ever.

Investing in the things that build our world

By Matias Barbero and Fabrice Grinda

Those of us building and investing in tech spend most of our time thinking about the future. We ponder the impossible, the cutting edge, even the esoteric: software, artificial intelligence, crypto, asset-light services delivered through digital apps. Mars and outer space might often represent a larger share of one’s daily musings than dull terrestrial matters. Yet here we are. We live on planet Earth. We inhabit the physical world, at least for now! Almost everything we do in our daily lives involves – directly or indirectly – tangible materials, machinery, chemicals, etc. We want to push the boundaries of how our world currently works by digitizing legacy industries and making them more efficient. All of this is deflationary, making goods cheaper for everybody, which in turn is inclusionary, aligning with our overarching purpose as investors.

The future is already here, it’s just not evenly distributed. That’s true for different industries, as it is for different countries around the globe. Consumer marketplaces have a huge head start over their B2B counterparts, for example. There are also varying levels of tech adoption across geographies. B2B marketplaces have been at the core of FJ Labs’ thesis in recent years and are one of the best tools with which entrepreneurs can take on the challenges and limitations present in the physical realm.

Within our B2B marketplace thesis, we focus on many different verticals, including staffing, FMCG, wholesale commerce, and others. Today we want to zoom into one of the categories: marketplaces dealing inputs and raw materials, or put differently, the things that build our physical world. This excludes other very compelling B2B marketplace categories such as staffing and labor, food and beverages, services, logistics, and many others.

Let’s double click on the focus of this post: inputs and raw materials. They all deal with physical components and help build our world, in the most literal sense. Under this definition, some of what we consider “inputs” could be deemed by others as “outputs” too, but for today’s purpose we view things like precision parts and heavy machinery as key “inputs” in the value chain that build the most prevalent things in our world.

We could look at this thesis from two different dimensions (see table below): A. Across different categories such as raw materials, precision parts, or heavy machinery, and B. Across different verticals like construction, agriculture, and many others. Note that through this lens Boom & Bucket, for instance, belongs both to the ‘heavy machinery’ category and the ‘construction’ vertical.

Let’s use the “raw materials” category as an example. Besides steel and chemicals, there could also be marketplaces for concrete, sand and gravel, minerals, among others. There are still many other companies to be built in each category and across verticals. We’re excited to see the creativity with which entrepreneurs tackle each of these.

We will cover two companies that are disrupting their respective industries: Reibus and Knowde. These are just two case studies we’ll be using today to highlight and layout important points within this broader thesis, but we see lots of opportunities ahead and we’ll conclude with some insights and comments for entrepreneurs to consider when exploring them.

My Chemical Romance

The chemical industry is ~$5 trillion in size and supports roughly 25% of the world’s GPD. The vast majority of the chemicals manufactured are used to make every physical product we love. If you’re reading this from an iPhone, if you’re wearing your favorite Nike’s today, or if you’re enjoying your midday salad, all roads will lead to chemicals in some way or another.

You would think that such an important industry would be supported by the latest technology, with streamlined and efficient internal processes to ensure a key layer in the world’s supply chain runs smoothly. But stakeholders in the chemical industry are operating the same way they did 100 years ago: sellers are offline and have not caught up with ecommerce advances, the buying process is extremely inefficient with transactions done over phone calls and emails, and product information is ridiculously opaque, lost in static pdf documents and a fragmented supply base.

Our portfolio company Knowde is out to solve this by bringing the entire buying experience online. They are building a Shopify and Amazon hybrid model whereby sellers can create their online storefronts with ecommerce, payments, and fulfilment capabilities while aggregating the collective supply under the Knowde umbrella so buyers can have a one-stop-shop for their chemicals.

There are different tactical ways in which a B2B marketplace can go about their go-to-market strategy; Knowde chose to start by tackling the opacity of the chemicals market through a relentless focus on search and discovery.

In practice, this means laying the groundwork of what will later become a fully online transactional marketplace. Until there’s enough liquidity on the supply side to ensure smooth transactions, the initial business model is predominantly based on storefronts monetized through SaaS in lieu of the traditional marketplace take rate.

This hyper-focus is yielding impressive results for Knowde as they are currently adding around 5 new suppliers per day (!) to their platform. To put matters into perspective, there are ~15k total global sellers and ~8k of them already have a live storefront with Knowde. This is roughly half of the world’s supply in one platform. Once they become the de facto industry destination for suppliers, there’s a clear path to keep upgrading key accounts into paid subscriptions and ultimately enabling online transactions, among many other value-added services.

Pedal to the Metal

We can’t have a proper conversation about the things that build our world without a word on steel. This raw material is as prevalent as it gets. From forks and knives to NYC’s skyscrapers; from refrigerators and washing machines to cargo ships cruising around the world. Since the late 19th century, steel has become a synonym for our modern infrastructure.

Manufacturers and distributors transact steel (think sheets, coils, bars coming out of steel mills) with OEMs who then use it to manufacture components and end products.

Another trillion-dollar global industry (starting to see the common appeal here?) fraught with inefficiencies and lack of innovation. There are structural issues coming from decades of stale and offline processes, exacerbated by logistical headaches proper of a heavy product that is expensive to move.

Reibus, one of FJ’s portfolio companies in this category, is a B2B marketplace servicing the industrial metals industry (mainly steel and aluminum) with purpose-built features for both buyers and sellers. What does this mean concretely? They provide much more than just a matching platform: Reibus embeds fintech (financing, payment options, etc.) and logistics capabilities (digital brokerage, shipment dashboard, etc.). They are a heavily managed SaaS-enabled marketplace.

Industry stakeholders were quick to adopt Reibus’ hands-on marketplace. Founded in 2018, Reibus has scaled in-platform transactions to several hundred million in annual GMV, with plenty of room to grow as they are still a tiny fraction of the offline market.

Building inputs & raw materials B2B marketplaces

We’re truly excited about this opportunity to invest in the things that build our world and think there are many unexplored avenues for future entrepreneurs to start new B2B marketplaces aligned with this input & raw materials thesis. As discussed at the beginning of this post, there are countless areas to explore and we see a lots of openings across both categories and verticals, and even geographic arbitrage plays.

It’s important to bear in mind, though, that not every industry will be suited for a marketplace model, and that certain conditions and core strengths will play an important role in the success of these ventures.

  1. Founder-market-fit matters: B2B marketplaces benefit from having at least one founder who is a true industry insider. They lived through the pain points in the industry and have been deeply frustrated by them. They would ideally combine this first-hand industry knowledge with a co-founder and/or founding team member that could think from first principles on how to best design frameworks to dramatically improve the current experience. They also have the credibility to convince existing players to change their processes. Just to name some examples, John Armstrong, Reibus’ CEO, had bought $1bn+ of materials before starting his tech entrepreneurial journey, and Knowde’s CEO, Ali Amin-Javaheri, spent 10+ years working for ChemPoint, an incumbent in the space he began to disrupt right after he left.
  2. Marketplace dynamics: Ask yourself if the buyer and seller base is fragmented enough. This is true for most marketplaces but especially true in B2B where many verticals are concentrated on the supply side. The more concentrated the industry, the harder it is to have a meaningful take rate. In fact, you may be merely a distributor for a few incumbents rather than a real marketplace if the market is concentrated enough. The incentive and easiness to circumvent your platform would also be higher.  
  3. Find your unlock: Aggregation is often not sufficient. The platform should quickly focus on value-added services to create strong value propositions for both supply and demand. Founders need to figure out which specific services or features will unlock the greatest amount of liquidity for the marketplace. For Knowde, it was solving discovery and price opacity with information locked into siloed pdfs. For Reibus, it was offering financing and logistics services.
  4. Different paths to start monetizing: Charging a take rate on each transaction is the classic way a marketplace can begin to generate revenue, but it shouldn’t necessarily be the first choice in the monetization toolkit, and it’s certainly not the only one. In some cases, you cannot charge a take rate right away and must find alternatives. Reibus, which leverages real material pricing in commodities to facilitate their RFQ process, was able to have a take rate from the get-go, but that would not have worked for Knowde, which needed to bring discovery online first, hence a SaaS business model made more sense in the beginning.
  5. Juice up the blended take rate: It’s often hard to take more than 1-3% in B2B marketplaces. As a result, they may also monetize through SaaS subscription or listing fees instead of, or in addition to a take rate. Moreover, revenues are usually complemented by offering and monetizing additional services: advertising/placement, financing, insurance, logistics are all options. Once network effects kick in, a mix of business models can create a multiplier effect on net revenues. Many end up being able to increase their blended revenues to 10% of GMV as a result of the monetization diversity.
  6. Geographic arbitrage: For certain businesses, you can bring an idea from one country to another. This arbitrage is not always going to be possible in B2B marketplaces for inputs and raw materials as some of the markets are truly global in nature, likely leading to global winners. Does this mean that there couldn’t be an “X model for Y country” play? No, but it’s less obvious than with other categories within the B2B marketplace realm (e.g., FMCG products, fresh food, labor, etc.). This is driven by how local the supply is, how transportable the good is, and the extent to which the price is set locally. The market for oil for instance is global – with a fungible, interchangeable commodity that can be easily transported and has a global price. Natural gas on the other hand is local, with prices that vary by region based on local supply and market conditions suggesting that regional players can emerge. That said, even if dealing with mostly global supply, startups in other regions might have a window of opportunity to focus on local differentiated supply, especially on the long tail, and compete before potentially stepping into someone else’s shoes.

Inputs & raw materials: investing in the things that build our world

Marketplaces have had many evolutions over the years. B2B marketplaces are now in their infancy but poised to catch up with the digitalization of their B2C counterparts. As a result, as counter intuitive as it sounds, we believe that many of the best opportunities lie in forgotten old industries.

We’ve been actively investing in the inputs and raw materials category and looking forward to meeting entrepreneurs thinking about these big challenges with deep industry knowledge and innovative approaches. The future of the things that build our world is only getting started.