After the passing of my beloved Rottweiler Bagheera, it took me a long time to be ready for another dog. In the same Ayahuasca ceremony during which my grandmother Françoise convinced me to have kids, I was visited by two white German shepherds. I had a fascination for John Snow’s white dire wolf, Ghost, but did not know the breed existed. From that moment on I knew I was meant to have one. My great friend Amanda helped research the best breeders. After careful consideration, including interviewing many owners, I selected Breahead White Shepherds.
What followed was years of impatiently waiting for my puppy to be born. In 2023, the stars aligned, and she was born June 13. I picked her up on August 5, the best birthday present ever! She fit right in with Fafa and the Grindaverse and it’s been an amazing love story since. As a side note, it’s shocking how quickly she is growing!
Other than that, the year was filled with adventure. The year started with a bang as I spent the first two weeks in Antarctica skiing to the South Pole. It was significantly harder than I ever expected and the hardest adventure I had ever been on. I had to pull a 100-pound sled 8 hours a day at 10,000 feet of altitude at a -30 degree temperature with -50 wind chill, in addition to having to set up and pack up the camp daily.
I came out of the experience with an overwhelming feeling of gratitude. I felt immense gratitude for the disconnection I experienced during these two weeks. I felt gratitude to have the ability to have such a unique experience in such a unique landscape. I felt the most gratitude to my family and my extended family in the Grindaverse for putting up with me and supporting me on all my crazy adventures.
I then went to Turks to thaw and host the FJ Labs bi-annual retreat. I had lost over 20 pounds during the expedition and was grateful to be reunited with all the extraordinary luxuries of life in the 21st century that we take for granted: electricity, toilets, running water, showers, and delicious fresh meals!
I then went on a winter adventure in Revelstoke. Fafa loved riding the gondola and the magic carpet and I loved backcountry skiing on weekends.
As per usual, I spent late June and early July in Nice visiting my family. I spent time in Saint-Paul de Vence, Auron and Saint-Tropez visiting my parents, aunt and uncle, brother and nephew. I also had the opportunity to host a fun French Founders event at the villa I had rented in Villefranche.
I then headed to Revelstoke for summer mountain adventures with tons of hiking, mountain biking, and standup paddle boarding. This summer was even more special as I built a padel court and a remote-controlled race car track on my property leading to infinite fun.
I then made my annual pilgrimage to Burning Man. I experienced it in three distinct parts. In the first I explored with my 77-year-old mom. We bonded and chatted for hours. It took a lot of effort to have her there, and it was a real privilege to be able to experience the burn with her. She absolutely loved it. In the second I connected with some of my best friends including my best friend of 35 years. In the third I observed the community rise to the occasion and help each other out. The core principles of radical self-reliance and gifting were on display as everyone helped each other out to deal with the rain and mud. It was the literal opposite of Lord of the Flies and led to quieter, more intimate moments with friends that were just as meaningful if not more so than a regular burn would have been. In other words, it was one of the best burns ever.
It’s been a blast to see Fafa grow up so much over the last year. He looks exactly like me at the same age with the same uncanny ability to hyper focus on something. He speaks clearly in both French and English. As always, he loves trains, planes, and automobiles and we have a blast playing together. He started the 2s program at The Ecole which is the perfect school for us with the rigor of the French school system combined with the team building, public speaking, and creativity of the American system.
The fall also saw me head to Venice for the first time. I then went to my good friend Kevin Ryan’s 60th birthday party in Ibiza, before coming back for an epic Halloween party in NY dressed as Hugh Hefner.
I then headed to Turks for the year end holidays as has become tradition in the family. I finally got around to starting to wing foil. I am also grateful that my brother Olivier brought a fitness and tennis coach which turned the vacation into a Fabrice bootcamp. We averaged 207 minutes of exercise per day, peaking at 333 minutes one day dramatically improving my fitness and mobility on the padel court.
This year we had the biggest Grindaverse reunion ever with 50 attendees for New Year. I even met a few amazing cousins I had never met before. I am glad my brother Christopher was able to come for part of it. My brother Olivier and I took the opportunity to play a film on the family history featuring our notable ancestors that we had commissioned. It was a beautiful love letter to our parents, and to the family at large. It celebrated their contributions and allowed us to express our gratitude for the role they played in getting us where we are. We stand on the shoulders of giants.
Professionally, 2023 continued to be extraordinarily busy. FJ Labs closed its third fund of $290 million in March. We correctly called the bubble in 2021 and suggested people pursue exits then. We continued to be contrarian in 2023. We decided to invest aggressively as everyone else was retrenching, focusing on asset light businesses raising at least two years of cash.
We feel it’s the best time to invest. Valuations are more reasonable. Founders are focused on cash burn and unit economics. There is much less competition. In the same way that the most interesting companies of the 2010s were built or came of age in the 2008 – 2012 timeframe (Uber, Airbnb, Twilio, Instagram, WhatsApp), I suspect that the most interesting companies of the 2020s will come out of the 2022 – 2024 timeframe.
For the most part we are focusing on B2B marketplaces and the digitization of B2B supply chains and avoiding the bubble in AI. I will detail our current investment thesis in an upcoming blog post, but you can hear it both in the keynote I gave on the state of entrepreneurship at the Transatlantic Leadership Forum at Goldman Sachs in the fall and in the masterclasses I gave respectively with Everything Marketplaces and Founders Network.
Overall, FJ Labs continued to rock. The team grew to 34 people. We added two analysts as part of an inaugural two-year analyst class and seasoned CFO, Ariel Lebowits what had been my CFO had Zingy and OLX. We deployed $73 million. We made 190 start-up investments, 89 first time investments and 101 follow-on investments. We also continued to deploy our liquid crypto strategy during the crypto winter investing in 30 liquid crypto companies.
For the first time the number of follow-on investments exceeded the number of new investments. This is up from the historical average of 35% of investments being follow-ons. The growing portfolio accounts for part of this increase as we are seeing more opportunities to support our existing founders. The macro environment also played a role as many portfolio companies decided to raise extension rounds to shore up runway, growth and unit economics to weather this challenging time. Despite the macro, we were fortunate to successfully exit several of our positions, including the secondary sale of Yassir, and the acquisition and AdoreMe by Victoria’s Secret.
Since Jose and I started angel investing 25 years ago, we invested in 1098 unique companies, had 365 exits (including partial exits), and currently have 839 active unique company investments. We had realized returns of 37% IRR and a 3.7x average multiple. In total, we deployed $603M of which $178M was provided by Jose and me.
In addition to redesigning large sections of this blog, I wrote a fair amount in 2023. My best articles were:
- Timing is Everything
- The Value of Ignorance
- Macroeconomic Update: I remain significantly more bearish than consensus!
I was less prolific with Playing with Unicorns as I did not have my streaming gear for large portions of the year. However, I had a fascinating conversation with my good friend Kevin Ryan. Fafa also made a guest appearance on my Ask Me Anything episode in February that was very well received.
Instead, I appeared on other podcasts, notably detailing the intricacies of building a fund on 1947 Rise, and discussing everything and anything (adventure travel, risk taking, spirituality, startups and much more) with my good friend Robin Haak.
As usual, I was a very prolific reader. My favorite books were:
- Endurance: Shackleton’s Incredible Voyage (which I read while in Antarctica!)
- Outlive: The Science and Art of Longevity
- Tomorrow, and Tomorrow, and Tomorrow: A Novel
- Nightfall and Other Stories by Isaac Asimov
My guilty pleasure of the year was the Starter Villain by John Scalzi.
Most of my personal predictions for 2023 came true. I got Angel. I loved Antarctica. I took my mom to Burning Man. I started wing foiling. Fafa and I had countless fun adventures. We had a blowout Grindaverse party at the end of the year.
My macroeconomic predictions proved overly bearish. Despite the fastest increase in interest rates in 30 years and a full-blown recession in the tech sector, the economy at large did well with strong wage growth, low unemployment, and declining inflation. I remain more bearish than consensus:
- Commercial real estate is headed for a major crisis.
- The commercial real estate crisis will exacerbate the banking crisis.
- Consumer debt is at an all-time high.
- Corporate debt refinancings will be expensive and difficult.
- The PMI is below 50.
- The yield curve is inverted.
- People are finally coming to terms with the fact that rates will be higher for longer.
- Political and geopolitical turmoil is not abating.
However, I see the world in probabilistic terms and the probability of a recession is lower now than it was a year ago (though I still ascribe a 40% probability to it, not the 5% that seems consensus). With inflation increasingly under control, the Fed should start lowering rates in the second half of the year. We may yet have a soft landing, a feat only achieved once in the last 60 years.
In the long term, a dollar crisis is looming given our unsustainable government deficits and increasing debt-to-GDP, but I suspect the day of reckoning for the US is over 5 years away with other fiat currency crisis playing out before then.
There is plenty to be optimistic about. We are still at the beginning of the technology revolution with minimal penetration of technology in most B2B supply chains and government. We are seeing continued progress in AI, batteries, space, robots, and vaccines. Adoption of solar power and electric cars is continuing unabated. We may very well be on the eve of a technology led deflationary productivity revolution that will transform our lives for the better while helping us address the challenges of our time: inequality of opportunity and climate change. I suspect that it will take over 5 years for AI driven productivity improvements to be noticed because it will take a while to be adopted in large enterprises and government, but I am hopeful that it will happen.
On a personal level, I am excited for 2024. My daughter Amélie, named after my mother’s grandmother, should join the ever-expanding Grindaverse in February. She will be the first granddaughter for my parents, and I cannot wait to meet her. I am looking forward to more crazy adventures with François and Angel. I am still hoping to convince François to ride on my back while I am kitesurfing. Next August, I am turning 50 and am looking forward to celebrating with all my friends and family in Turks & Caicos. The year will end with our typical family gathering in Turks & Caicos for Christmas, but for a change, I will head to Revelstoke for a snowy New Year in a more intimate setting.
Happy New Year!