OpenVC: My most in depth video interview ever!

Most interviews I have focus on my recent history and FJ Labs’ current thesis and selection criteria. I was beyond impressed when Harrison Faull sent me the following list of questions to prepare for the interview.

Early Life and Foundational Experiences

1. Princeton

Question: You arrived at Princeton at just 17, juggling three jobs, exporting computer equipment to Europe, and still graduating top of your class with $50k of savings in the bank. Is there a particular memory from those college years, a small victory, or a quiet moment when you realized that your ambition and hard work could open doors you never imagined? 

2. McKinsey

Question: After Princeton, you joined McKinsey and rose through the ranks at record speed. What enabled you to outperform your very capable peers so quickly? 

3. Aucland

Question: In the late ’90s, you adapted the eBay model to Europe and Latin America, raised $18 million, a record fundraise for a French startup. What was this company? Who did you have as investors, and what did your exit journey look like? 

Research Note: Raised funding from Bernard Arnault who didn’t want to maximize his exit in cash. Missed a €300m acquisition by eBay due to no tag along rights, despite owning 40% of the company. Ultimately sold to a listed company that collapsed by 99%.

4. The Media

Question: The French press was tough on you when that first marketplace exit didn’t pan out as hoped. How did you process that public scrutiny as a young man after being a French digital entrepreneur poster child? 

5. Zingy – the comeback 

Question: After the disappointment of Aucland, you were wiser and sought a specific business model that wouldn’t be capital intensive. This ultimately brought you to founding Zingy, a mobile ringtone business, which was a product you weren’t passionate about, but still decided to max out your credit cards, survive on $2 a day in NYC, and was forced to miss payroll multiple times. What kept you going during the darkest moments, and how do you advise founders today who are teetering on the edge of survival?

6. Astronomical growth

Question: Zingy’s revenues soared from $1 million in your first year, to $5 million, then $50 million, and ultimately $200 million! A remarkable growth trajectory. Looking back, what broke most often at each stage of scale, and what frameworks or mindsets helped you and the team adapt swiftly to these constant pressures?

Research Note: Faced huge lawsuits from record labels, had to navigate complex legal and scaling issues.

7. Selling Zingy for $80M in cash

Question: After a fierce bidding war, you sold Zingy for $80 million in cash. Having once struggled to raise a dime, how did it feel to exit so successfully? And what lessons from that exit guide how you think about both building enterprise value and timing exits in your portfolio companies today?

Research Note: Stayed on for 18 months, but had a different vision to the Japanese owners. Had an opportunity to purchase Shazam for $1m!?

OLX

8. The Opportunity 

Question: After exiting from Zingy, you saw that Craigslist was not as good as it could be. Please could you share what you saw and how you tried to join forces with Craigslist before setting up your own much improved version: OLX?

9. A Global Launch

Question: You launched into 100 countries simultaneously, allocating about $50k per market to run experiments and find initial traction, eventually zeroing in on India and Brazil. Can you walk us through how you designed these tests, and what signs told you which markets to double down on?

Research Note: Resulted in focusing on India and Brazil, massive SEO-driven growth.

10. Scaling OLX to 350 Million Users

Question: OLX grew to 350 million unique monthly visitors, powered by huge SEO success and a global presence spanning 50 countries and 11,000 employees. Could you tell us about one or two of your favourite memories at OLX? 

11. The OLX Exit and Competitive Warfare

Question: At OLX, you were forced into battling a European competitor, which resulted in an expensive media war. What did you learn from going head-to-head with entrenched rivals, and how do you apply these lessons when deciding to back founders who might be entering similarly competitive landscapes?

FJ Labs: Criteria, Process, and Global Vision

12. Question: FJ Labs invests in around 300 deals a year, spanning diverse industries and geographies. Can you walk us through the core thesis and strategy behind this high-volume, global approach, and what types of markets and business models you find most compelling right now?

13. The fantastic track record of FJ Labs

Question: With over 300 exits and a 39% IRR, FJ Labs has a remarkable track record. Could you share a recent success story that best illustrates the kind of value you bring to startups and how you support them through key inflection points?

14. The Nine Questions you ask about Marketplaces

Question: At FJ Labs, you’ve developed a set of nine criteria to evaluate marketplaces. What are these and which of them do founders overlook the most? 

Research Note: Team, business model (unit economics), deal terms.

15. MVP marketplace advice

For a founder who wants to build a marketplace, do you advise that they use a generic template from wordpress to get going? How do you advise that they research the opportunity? 

16. The Two-Meeting Decision

Question: You see 300 deals a week, but only make 300 investments a year, often making a decision after just two one-hour meetings. What’s happening in these meetings? 

17. Global and Unexpected Markets

Question: You’ve backed marketplaces as diverse as gravel in Poland and petrochemicals in India. Can you share a story of one particularly unexpected market you invested in, what convinced you to take the plunge?

Research Note: Prefers fragmented markets, not distributors for others.

18. Fundraising and Cohort Metrics

Question: You know so much about the importance of improving cohort metrics for a startup as they progress from seed to Series A. If a startup sees their newer cohorts spending less, or purchasing less frequently than earlier ones, what strategic pivots or re-evaluations would you suggest they consider to avoid stalling out?

Research Note: Warns that if cohorts don’t improve, the initial ICP might have been the peak.

19. AI and the Next Evolution of Marketplaces

Question: As AI continues to reshape industries, how do you see marketplaces evolving beyond simple buyer-seller matchmaking, and what emerging trends or models excite you about the future intersection of technology, supply, and demand?

20. Improving the Portfolio

Question: Given that you have such a highly concentrated portfolio of marketplace investments, do you ever make investments at the “topco” level that can be utilised by your entire portfolio? I’m thinking something like Klarna would have been a great fit for most of your startups. If so, could you share with us any examples? 

Personal Reflections

21. Minimalism, Family, and Adventures

Question: You spent three years owning all but 50 items, what do you think are the most valuable items to own in this culture of ostentatious consumption? 

22. Most Memorable Adventure and Purchase

Question: With all your life experiences, what’s the best adventure you’ve undertaken and the best purchase you’ve ever made? 

OpenVC’s Presentation of the Interview

On this episode of The OpenVC Podcast, we’re joined by Fabrice Grinda, a true pioneer in marketplaces, tech entrepreneurship, and venture investing.

🎓 At 17, he joined Princeton, worked three jobs, and graduated top of his class

💰 Raised $18M in seed funding for his first startup—the largest seed round ever for a French company

📈 Built Zingy to $200M+ revenue, then sold it for $80M in cash

🌍 Founded OLX, a global classified ads giant with 350M+ users and valued at $3B

📊 Now co-founder of FJ Labs, one of the world’s most active angel investors with 300+ startup investments

In this episode, we dive into:

✅ The hard lessons he learned from his first major exit

✅ His framework for evaluating billion-dollar opportunities

✅ How he scaled OLX into a global marketplace leader

✅ His investment philosophy and approach at FJ Labs

✅ Advice for founders navigating hypergrowth & market expansion

The OpenVC Show is hosted by Harrison Faull, co-founder and managing director of OVC Ventures. OVC ventures is the sole investment arm of OpenVC, where 1,000+ new startups raise funds monthly.

Harrison’s LinkedIn:   /harrisonfaull 

Timestamps:

00:00 From Ambition to Action: The Startup Journey Begins

04:02 Building Auckland: The Rise of a Marketplace

06:27 Navigating Challenges: The Evolving Landscape of Tech

08:35 Lessons from Failure: Resilience in the Face of Setbacks

10:43 Reinventing Success: The Birth of Zingy

13:15 The Ringtone Revolution: A New Business Model

15:16 Scaling Up: Overcoming Initial Hurdles

17:27 The Art of the Deal: Selling Zingy

20:32 Life After the Sale: Reflections and Future Plans

25:26 The Journey of Hypergrowth and Selling a Business

26:40 Passion for Product Development

27:58 Identifying Market Opportunities with OLX

30:54 Rapid Expansion and Market Testing

33:40 Transitioning to Angel Investing and FJ Labs

36:01 FJ Labs: Investment Strategy and Criteria

43:46 Advice for Founders: Building Marketplaces

46:35 Navigating Growth Challenges in Marketplaces

49:48 Leveraging AI in Marketplaces

52:44 Closing Thoughts and Future Engagements

In addition to the above YouTube video, you can also listen to the podcast on Spotify.

Transcript

Fabrice Grinda (00:00.141)

play that role and little by little got a lot better but they promoted me and I’m like okay thank you bye time has come I learned what I need to learn and now the time has come to go and actually pursue my destiny and go build tech startups

Harrison Faull (00:13.515)

Amazing. OK, so you had that ambition to be a founder from a young age. You went out, you built your toolkit, you got your credibility working at McKinsey. Can you tell us a little bit more about your first startup, Auckland, or not your first, well, the first tech startup that you had after McKinsey?

Fabrice Grinda (00:27.667)

Well, first venture method, but prior ones were tech as well, but they’re just not big, right? Like they were more like, you know, I building computers, selling them with your classmates and friends. I built a BBS, like the ancestor of the internet. This is the first one that’s like venture backed, lots of employees, et cetera. So the issue is I graduated, I finished McKinsey, was 23. And the issue is I didn’t consider myself to be pretty creative. And you want to be in tech, but I didn’t know what to build.

And so I’m like, you know what, maybe to start, I’ll just take an idea from the US and bring it to the rest of the world. Also, a lot of the ideas, in a way, required a lot of, especially back in the day, where it was a lot more expensive to build startups, a lot of skill sets and or capital I didn’t have. If you want to build Amazon, you need billions in inventory and warehouses and supply chain management skills. If you want to build E-Trade, you need banking licenses, et cetera.

Harrison Faull (01:24.367)

Cloud didn’t exist, right? So you had to build the physical infrastructure, which was already cost prohibitive. Yes.

Fabrice Grinda (01:28.008)

yeah, no, I built my own data centers. I built my own data centers. We had to get Oracle database licenses, and Microsoft web servers. mean, just turning the lights on is like a million bucks. The times have changed. There were very few people that knew how to code. And you had to code for the web. And so even finding them, which is part of the reason I coded the full front end of the site myself, because I just couldn’t find anyone that I was happy with their coding.

So kind of randomly, I saw the site of eBay in June of 98. And it was another one of these aha moments of love at first click. I studied economics and mathematics at Princeton, including market design. And the idea of creating markets which have liquidity, which unlock a tremendous amount of value, resonated with me. And I realized, OK, if you go to these offline,

flea markets, you’re unlikely to find what you want. If you want to sell, you’re unlikely to find a buyer for what you have. But if you put all that online, you create this virtuous circle with ever more buyers, brands, ever more sellers, and so on and so forth. And I thought this is a something, yes, marketplace is of a unique problem of chicken and egg, but it’s a problem that I’m uniquely well positioned to solve, given that that’s exactly what I’ve studied. Market design, a measuring elasticity of supply and demand, to figure out what an effective take rate is.

Fabrice Grinda (02:53.597)

thinking through how you match supply and demand, et cetera. And so I decided to go and build an eBay for France and Europe, ultimately, which is called Auckland.

Harrison Faull (03:03.469)

Awesome. the journey with Auckland was off to a running start. I’m not sure how long it was before you had the largest fundraise of any French startup ever with $18 million and actually funded by the family office of Berno Arnard, I believe. Yeah. So you’re extremely young. You’re bringing this US model to Europe. You’ve had the biggest fundraise and you’re off to the races. The press are writing about you.

Harrison Faull (03:33.061)

You’re on the front page of several different magazines. Can you tell us a bit about the journey of building that company before we get into just as interesting the ending of that journey?

Fabrice Grinda (03:43.739)

Well, the beginning of the journey was interesting because in the US, there was a full-blown tech bubble going on. And it actually had not yet reached France. And so even though I built the company, I built the code we’d launched, it actually hadn’t reached the level of hype. And every VC I talked to, and I was like, I want to raise like $10 million, do proper fundraising. They were like, nah, it’s France, half a million or a million. And I just didn’t want to do that.

kind of engineered the press hype around the company and around me. People did not take PR very seriously. And so in France, the CEOs of the companies were like barely talking to the press. And I basically reach out to the journalists and say, hey, I’d like to tell you about what I’m doing. None of them would take me seriously because I was 23 or 24. But I’m like, you know what? I’ll come to your office and just chat. And of course, I had a compelling story to tell. So each

Fabrice Grinda (04:39.987)

One hour conversation led to an article. And then I became kind of the go-to person for them to ask questions about tech. So they would send me a question. I would send them the article back. And literally, they would copy and paste the article, publish it. I mean, they’re lazy. And so very rapidly became the go-to person to ask tech questions, first in the written press, then radio, and finally on TV, like the 8 o’clock news, et cetera. And at the same time, people started realizing this internet thing was bubbling.

Fabrice Grinda (05:09.996)

And it became a bit frothy and also like it switched from no one caring to everyone wanted to invest in the category and Arno amongst others started reaching out and saying, hey, we want to back you. actually, I remember he actually bid on a foosball table or his secretary did and like and the transaction went well and realized there was something there. and so talk to him and the other people. He offered the most the highest valuation and the most capital, which is why I chose

to raise capital from him. And we were off to the races, I used the capital, we launched a super successful TV ad campaign, which was a way to reach the masses then. Traffic exploded, we grew to like 100 plus employees in five countries, 10 million a month in GMV. Like things looked actually like we’d made the right choice and everything was going well.

Harrison Faull (05:57.052)

Yeah. Wow. Amazing. So you’re young, you’ve managed to convince extremely impressive people that this is the future. They’ve backed you, you’re off to the races, the model is working. Did buyers started appearing? I believe there was some talks with eBay at some point.

Fabrice Grinda (06:15.26)

So eBay, met Meg and Pierre early, before I raised the capital from Arnaud on Europe at Web. And they actually offered me like $25 million or maybe $20 million. And at that point, I owned 75 % of the company. But the delusions of grandeur and arrogance of a completely penniless 24-year-old at that point, I’m like, eh, whatever. It’s money. doesn’t mean anything. I’m doing this to build something meaningful.

Fabrice Grinda (06:43.027)

15 million is nothing. And I really meant it. And it’s funny because I literally, I didn’t even, yeah, I didn’t even consider it. Since then I’ve learned how hard it is to make money and how easy it is to lose it. But yeah, I was gonna make 15 million at 24 and I didn’t even for one minute consider it. I was like, nah, it’s nothing, I’ll make it later. But it doesn’t matter. And…

Harrison Faull (06:47.303)

just dismissed it, literally just managed to dismiss it out of hand like that. It’s similar to your heroes though, like Zuckerberg turning down a billion when he was building Facebook.

Fabrice Grinda (07:12.07)

Yeah. so, and for a long time, it actually looked like it made the right call, right? Like the company grew very rapidly and then eBay came back maybe nine months later and offered like 300 million in cash. So clearly the turning down 20 to take 300 despite the dilution that happened along the way made sense.

Harrison Faull (07:37.939)

And would that have been all cash? Would that have been part of the dot com bubble in terms of equity? And why ultimately did that?

Fabrice Grinda (07:44.979)

It was a cash offer, but frankly their stock is one of the few that held up during the dot com bubble burst because they were a profitable company that did very well. So either would have been fine, but actually it was a cash offer.

Harrison Faull (08:00.308)

Okay, so what’s telling, who’s stopping you taking 300 million nine months after the fund rate?

Fabrice Grinda (08:03.762)

Well, as a first-time founder, you make a lot of mistakes. One mistake is you shouldn’t necessarily raise the highest, the most money at the highest valuation. Picking a VC is like getting married. They need to be with you in good times and bad times. You need to see eye eye and where this is going and what the vision of the company is. turns out that when

the person backing you is one of the wealthiest people in the world, making more money is not necessarily their core objective. And I came to Arno and he’s like, no, I’m not a mere financial investor. Making 10X in six months, that’s not for me. I’m an industrialist. I want to be perceived as the old school guy who got the internet. And he’s like, no, I don’t want to sell. Normally I would not want to sell now. I don’t want to sell ever. I’m not in it for the money.

Fabrice Grinda (08:56.689)

And I was like, that would have been nice to mention when you invested in my company. And usually it’s not a big deal because today you have these standardized documents and you can, there’s a drag along if I want to sell, I can force other people to sell, et cetera. But again, when I signed these documents, I was 23, I had no idea what I was doing. I trusted my lawyer to negotiate the right things. Of course, they didn’t take me seriously. Even though they were very well known.

law firm, I don’t think they took me purely seriously because I was so young. And yeah, they did a really bad job, didn’t have any of the relevant rights to force a sale of transactions. So sadly, we grabbed defeat from the jaws of victory. And what would have been extraordinary, as I led to essentially nothing. Sold to a company that he wanted to sell to, whose stock probably fell 99.98 % from like $10 billion in market cap to

$30 million in 1999. I mean, it was a total disaster. basically left the company with barely less, more than I started with. But interesting life lesson at someone else’s expense.

Harrison Faull (10:06.057)

Yeah, mean a lot learned and not very much time. But in terms of dealing with that failure, that setback, I’m sure there had been several along the way, building such an explosive growth company, there’s always going to be problems every day, but nothing of the magnitude of seeing the value of your shares go down quite so drastically, coupled with you being the poster child of France’s tech guru. And I’ve read that the press weren’t too kind to you.

after that success became a bit of a failure in their eyes. How did you handle that? What kind of resilience? Did you have any tools, any techniques to help you get through that that would be helpful for founders to hear about today to manage that pressure?

Fabrice Grinda (10:49.437)

So first of all, I mean, look, I never took that seriously like, you’re worth a billion or whatever. first of all, I realize it’s monopoly money, right? Like, virtual value of your shares does not allow you to buy an apartment or car, let alone buy coffee. So it’s virtual. And I realize we’re in a bubble. And then at some point, the bubble would burst. So from that perspective, my feet were grounded on a

were reasonably well-grounded and didn’t let that success get in my head. The bigger concern for me was I had been at the right time, at the right place, the right skills, and I’d failed to capture that opportunity. I worried that this was a once in a lifetime opportunity where young people with the right type of skills and background were given an opportunity to in a way like shortcut the different path that you had to go through in life or hoops.

to become successful. And I’d blown the opportunity, even though I’d executed in many ways perfectly from a product perspective, getting liquidity, building a website, et cetera, from a financial perspective. But at the end of day, I didn’t do this for the money. So I’m like, you know what? Maybe the entry now is going to be this niche little toy thing that only nerds like me are going to play with. And there’s no money in it. But I like building something out of nothing. This is my form of creative expression. And so.

There’s no money in it, but I’d rather stay in the internet. This is what I love to do. And I’ll go and build it again. So yeah, I was bit disappointed and disappointing. But because I never led the hype game in my head, the disappointment was more about the fact that I’d missed the opportunity and now I was just going to be doing this little niche-y thing for the rest of my life. It wasn’t going be meaningful or big. So that was more the disappointment. But at the end of the day, I like, you know what? I like what I’m doing. That’s all that matters.

Harrison Faull (12:47.86)

Incredible resilience, but let’s not downplay the victories too much. Do you have a favorite memory of that time of building Auckland? Is there one particular moment where you felt, wow, I’ve achieved X or that was really special?

Fabrice Grinda (13:03.474)

The, look, lots of little victories, right? Like turning the lights on, having the first transaction, having, I mean, we created a TV ad that was so shocking that we won a silver lining con for like creativity to when I made the cover of the French Fortune basically, or being the eight o’clock, all these were amazing. There were two TV shows where they’re following me around in my life as a founder and like, and it was like,

Fabrice Grinda (13:32.178)

number one TV show in France. don’t know, like 20 million or 30 million people watching it. And an entire episode was just following me do business. It was pretty insane, the level of fame and recognition, et cetera, for a otherwise shy, introverted 25-year-old.

Harrison Faull (13:50.124)

Yeah, you must have been able to create this persona or been able to convince yourself that it was the right thing to do to get all this free publicity to advertise Auckland and also yourself. Was personal brand a part of this or were you always trying to push the platform?

Fabrice Grinda (14:02.48)

The, no, it’s both. Look, I thought it would be helpful for both getting traffic and getting revenues. I think it was more meaningful then than it is today. Like today, I don’t care for visibility. Like I don’t have a publicist. I don’t want a big following. I have exactly the right level of fame. I think it would get in the way if I was more well known in terms of my quality of life.

And so I don’t pursue it in any way, shape, form. It was a means to an ends. Ultimately, I don’t think it was actually all that as helpful as I thought it might have otherwise been. Perhaps the doing that in the early days probably helped me get fundraising or capital in a way that I wouldn’t have had otherwise. But it didn’t bring that many users. Because the users are not reading Forbes and Fortune and the Washington Journal.

Fabrice Grinda (14:57.939)

The two that were helpful were the big TV ones where they were following me around. But even then, it’s pretty short-lived. One big TV ad in prime time on one of the major channels would have probably had just as much impact. But I did like the attention. And I realized that speaking came very naturally to me. And I’m not sure I created persona. It was just myself. And I was like a.

Be your authentic self and I think it resonates when you’re your true authentic self to other people, even though, know, I’m probably not probably, I am more direct and transparent than most people and sometimes it makes people uncomfortable, people realize it’s genuine and that’s all that matters.

Harrison Faull (15:39.363)

Awesome. No, I think that’s great advice. And yeah, a persona might be good if someone’s too nervous to get out of the camera, but the best thing is being your authentic self. And it definitely comes across on camera if you’re able to tap into that. Okay. So we’ve had the massive rise, a lot of small wins and some big wins with Auckland, then the crash ultimately with the exit. And then you reinvented yourself to create Zingy for the audience that don’t know.

What was the business and why did you choose that particular sector?

Fabrice Grinda (16:14.714)

Zingy was a mobile media company, to be more specific, we basically sold ringtones in the US market. In the old school days of the Motorola flip phones and the Nokia phones, people loved to personalize their devices with wallpapers or play little games or ringtones, which were the bigger category. And I chose the category despite not thinking it was particularly a large value add for humanity, and I never even listened to music in my life.

Because my prime directives was I wanted to be a tech founder. And in 2001, when the bubble had burst and no capital was available, I needed a company that I could build with very little capital and make profitable quickly. And as I looked at the types of companies I could build, almost all of them required reasonably large amounts of capital that was essentially not available. And this one, the few companies that were around doing it in Europe and Asia, were all profitable. And I’m like, OK.

This is something that doesn’t seem all that hard to execute that I can go build. The US is like years behind. There’s no like text messaging within a carrier, let alone between carriers. There’s no mobile payment solutions. We’re like US dark ages when it comes to mobile. So let’s try to see if I can bring the mobile revolution to the US market. And so that was the genesis of the idea. Because I just want to be a founder and the idea didn’t matter. Now.

Ideally, of course, that wouldn’t have been what I would have done. Ideally, I would have built the company I wanted to build, but you need to deal with the constraints that are around in the environment you’re with. If there’s no capital available, build something that you can build in a shoestring that can be profitable, even if it’s not ideal. Use that as a means to an end to then go on to build the thing you want to build.

Harrison Faull (18:00.749)

Awesome. I like it. But can you give us an insight into the early days? Because I know you went on to have phenomenal growth and a fantastic exit, but there was a long period where cash flow wasn’t coming in. Sales weren’t happening as fast as you wanted them to because you were doing a B2B. You wanted a B2B model, but I think you got initial traction B2C.

Fabrice Grinda (18:22.01)

Well, the ideal model, the way it’s worked in the rest of the world was actually B2C. You sell directly to the consumer, but the consumer can pay through their cell phone and it works on every phone. In the US, you had all these different networks like GSM, TDMA, CDMA, IDEN, et cetera. They were all incompatible. None of the carriers had delivery mechanisms into their platforms that were open or frankly didn’t even have any of them. And there was no billing mechanism. So the only way to launch, frankly, as a proof of concept was directly to the consumer.

Fabrice Grinda (18:50.675)

where we literally hacked into the delivery mechanisms of the carriers to deliver. They didn’t even know you could do that. We hacked into it and showed we could deliver into the networks, and not all of them, a subset of them. And so in order to order the ringtones at first, you had to pick your carrier, pick your phone model only from one of the phones that were available, so you didn’t know what that was. And you had to enter a credit card number on the web. So you can imagine the volumes were extraordinarily low. And the music companies didn’t take this seriously.

Fabrice Grinda (19:20.4)

None of them wanted to give me a license. And in other countries like France, there is a centralized music repository where you can just go get a license and poof, you get a license to all songs and you pay whatever, 10 cents a download or 10 % of the revenues. In the US, there was no standard contract, no standard license, and even no database who owned what. So we had to go on this detective hunt of figuring out which artists worked with which.

Fabrice Grinda (19:50.259)

writers, songwriters, because we needed the mechanical rights which were owned by the songwriters, which were represented by which law firm to try to figure out by which music publishing company to try to get the rights. even when we did figure it out after a massive detective work, the music companies often didn’t want to give us the licenses. And so even though I was like offering to pay them, they just didn’t give us the time of day. So we did a number of different things. At first, I

Fabrice Grinda (20:19.57)

documented who owned what, we launched, violating every, we didn’t even have licenses, we violated every copyright law in the world, but we would actually be sending checks to the different music publishers as though we had a contract. And they pretty much all of them deposited it. And so eventually they caught onto it and the penalty was like $250,000 per download infringement, and same penalties. So I was starting getting sued for billions and billions of dollars.

Fabrice Grinda (20:48.337)

by all these different publishers. And the lawyer, so I get the season’s business letter or whatever and the billion, multi-billion dollar. And I would call the lawyer like, I’m so excited that you’ve reached out to me. I’ve been trying to talk to you for so long. This is amazing. And to be like, who is this crazy guy? I’m suing him for like a billion dollars and he’s like so happy to talk to me. And I’m like, look, I actually want to do the right thing. I’ve wanted to do deals. I’ve wanted to pay you. By the way, I’ve paid you. You’ve deposited the checks. You’re all the checks. So I would argue I have an implicit contract.

Fabrice Grinda (21:17.618)

And if you want to sue me out of existence, you can, but it’ll cost you more and then just settle with me. And so I ended up settling with all the music companies, obviously for what I owed them or maybe 2x what I owed them, not like the crazy penalties, and ended up being the only licensed player in the US. No one else was trying to, because they went after me and I was just friendly. And also I put every last penny I had in the company. I borrowed 100k on my credit card.

Fabrice Grinda (21:46.675)

We had no revenue, so I missed payroll, I think, 27 times. Every two weeks, we make payroll. If I missed payroll, I’d be like, I don’t understand. Something’s wrong with the bank. They suck. They keep not wiring. Of course, there’s nobody in the bank who had to wire. But then I’d meet someone and convince them to put 5K or 10K in the company to make payroll. And so that happened over and over again for the first two years, basically. But little by little, laid the groundwork for what would lead to the success, meaning

Fabrice Grinda (22:16.828)

got the licenses. Then in order to, I kept knocking on the doors of all the phone carriers, but they’re big, ginormous companies. They don’t work with startups. They’re afraid we’re not gonna be around in the future. And so I went to all the shows. They didn’t even want to give me a meeting. Like I would shake their hands, make sure they heard my name. And so to, I kind of engineered the first deal. I, MSN, just like the Microsoft portal, they were desperate for good revenues.

I paid them $100,000 to become their official ringtone provider with a tab ringtones on MSN portal. And then we got a press release, and that got a little bit of tension. Then got Motorola to inbound me, and they were like, hey, we’re running the ringtone portal by web for Nextel. Do you mind providing them to us? So that was our first contract. And then this friend came calling and says, hey, we’re thinking of launching ringtones. Do you have any license? And I gave them like 25 of them. And that took on. once that took on and worked,

Fabrice Grinda (23:14.45)

All the other carriers were like, wait, we need this. And it became a frenzy where we signed every operator in like a three month period. And there was a question of launching. We finally got that. we launched on Sprint in March or April of 2003. We didn’t even know how well we were doing because it was on their platform. We finally got the check August 15, 2003, which is when we became profitable. And so we were saved. I I lived on the

Fabrice Grinda (23:43.443)

couch at the office for two years like living at two dollars a day I could only eat ramen noodles. So I paid back my credit card debt, paid back the employees that had backed salary and then it became a rocket ship. We went from a million in revenues in 02, 5 in 03, 50 in 04, 200 in 05 and yeah this time we grabbed victory from the jaws of defeat.

Harrison Faull (24:05.572)

How much were people willing to pay for ringtones back then?

Fabrice Grinda (24:11.122)

More than you would think. I started 99 cents, then I increased to 149, then I increased to 199, then I increased to 249, then I finished at 299, and we never saw declines in volume. So 299 in ringtone. And if you were especially a teen, and you wanted really the latest hook of the latest song to provide social currency, and so people would change almost every week or every other week. So it became a much bigger business than people expected.

Fabrice Grinda (24:40.531)

And in fact, think I paid 50 cents, I don’t know, $5 or $10 million in one year when he had in the club and once paid similar amounts. mean, the top songs of the day were extraordinarily popular. And we were generating more revenue to the songwriters and the artists than traditional music sales, which at the time were being all pirated by Napster and whatever the.

all the different, lime wire and things like that.

Harrison Faull (25:08.199)

Let see. wow, what a journey, what a story. So astronomical growth, right? 1 million to 200 million in four years in revenue. And then you end up selling. It’s sold to a Japanese company, if I’m right on that. I have to say, like most people do, transition period, pass over your skills, make sure there are processes in place. And I actually found that process to be not as smooth as one would hope. Could you tell us a little bit about

Harrison Faull (25:41.98)

what you learned from selling and perhaps what you might not have known at the time, do you would like to advise other founders on now to avoid a similar situation?

Fabrice Grinda (25:50.579)

The first thing I learned in selling is use a banker. We were approached by the Japanese buyer in Q1-04, and they offered $40 million, which of course at that time I owned the majority of the company. It was like a life-changing amount. I was like, I’ve learned my lesson from the buy time. This is meaningful enough that I should probably take it. I hired Broadview, which now is called Jefferies, to run a process, and it doubled the price.

So we ended up closing with the same seller, but they ultimately bid $80 million. So I sold for $80 instead of $40. And by running process, making competitive, we increased the price dramatically. Number two, while you’re negotiating the stock purchase agreement with a buyer, having someone be the backup is very useful because you’re going to have to work for a certain period of time with a buyer. And so you can’t be the one creating a bad blood, negative relationship with.

Fabrice Grinda (26:45.235)

I would actually be the one driving the negotiations in the back end, like whatever I said, I wanted something different. would say, look, I love you guys. I wanna work with you, but my bankers are telling me this is on market and I don’t wanna look foolish. So, you know, if you change that, I’ll make sure it gets through. And so I appear as the good cop and the person solving their own. So bankers, amazing when it comes to deals above a certain price and definitely 40, 50 million pass that threshold. Number two,

Fabrice Grinda (27:14.066)

If you do an earn out, make it a revenue earn out more than EBITDA earn out because the buyer controls in a way your cost structure and so they can change your EBITDA and that will lead to that will lead inevitably to a loss. Much better actually if you have an earn out to be just time-based. You need to be there and making sure that easy things happen like the hand of control, a la la. Now in case, actually stayed longer than you might think. I stayed for 18 months.

Because actually in the early days it was fun. I was part of a hyper growth company going from 50 to 200 million. We were changing offices every six months. We were expanding the product lines, adding gaming, adding full-blown music ringtones, negotiating deals with labels. We even had the opportunity to buy Shazam for like a million dollars. Now, ultimately the reason I left is actually because all the ambitions I had, which included like buying Shazam, et cetera,

Fabrice Grinda (28:10.076)

were thwarted because the Japanese just said, no, I need the profits. And so they would take all my profits and ship it to Japan and didn’t let me continue building the empire. so we’re like, you know, at end of the day, didn’t particularly love the business, definitely didn’t like them. The cultural differences were large, but I don’t regret selling to them because they paid the most and in cash. And it was reasonably easy to keep doing my own thing on a go-forward basis. So I’m actually no regrets from that perspective.

I mean, I would have wished they’d let me continue to try to build it into something bigger by the fact that they didn’t lead me to the next adventure. So, regrets.

Harrison Faull (28:41.313)

Okay. So you’ve been living on $2 a day with ramen noodles four years ago. Suddenly you get this massive paycheck, all liquid, full cash. What’s top of the list? What do you splash out on straight away?

Fabrice Grinda (29:03.186)

Nothing, honestly, I stayed in the same studio apartment. bought a TV, an Xbox, and two tennis rackets, which probably cost me $1,500 max total. I didn’t do it for the money to begin with, and I saw money as a means to an end, like to have the freedom to build my next company without needing seed capital or pre-seed capital, to not have to worry about, like, you know, if I don’t…

Harrison Faull (29:11.243)

What?

Fabrice Grinda (29:33.219)

food again like the way I did for two years or rent or whatever but no there was I didn’t change anything into my life partly because we’re so busy or like like the more meaningful day was the day became profitable because the day we became profitable and I like that day full-on popped champagne like we were saved like we were the masters of our own destiny we were not going to die and and and that was like the probably to this day the most meaningful day of my like business career because like

Fabrice Grinda (30:03.026)

Until then, there was always a moment where it looked like we could die. And from that day on, was like, OK, now we’re saved. We’re good. Selling was just another step. But at the moment we sold, we closed in May or June of 2004, was the hypergrowth mode. Part of the reason I sold for, in a way, that little relative to what ended up being our 2004, 2005 revenues is in Q104, we closed 4 million revenues, 1 million EBITDA. And the Japanese asked me for my projections.

And of course, you never know these things. I’m like, yeah, I don’t know. We’ll make 20 million revenues this year, 4 million profits, maybe 50 million next year, 7 million profits. Had I known we’re going to do 50 and 200, I would have waited a bit longer. But again, better to leave it too late and better for cash and sock. But as a result, when I sold, we were growing like this. We were probably literally we’re moving off as I take an office, we were we were seven and we came.

25 for the time I moved office. Then I’ve taken office for 75 people. Like, yeah, we’ll never move out of that. Like six months later, like I was shit, we needed a bigger office. So we kept moving offices, hiring people, launching product lines, growing like crazy. I was working so hard that, yeah, it didn’t change anything in my life because my life was still building my business.

Harrison Faull (31:20.396)

Yeah, that’s amazing. I think it’s also extremely interesting that you found so much joy in the process, in the building, over the product. I’m sure you had to be a product expert or have someone there that loved it and made it perfect. But ultimately, you weren’t very aligned with the final consumer.

Fabrice Grinda (31:37.469)

So I didn’t love selling ringtones, but I actually like building product. And the nuance for me, the product is not that. The product is like the website, the user interface in the mobile apps of the different phones. And I love building product. I’m a product CEO. I’m the one writing the user stories. And these days, I’m like on Figma.

Fabrice Grinda (32:03.314)

like creating all the frames and then I use Canva to create different designs. So I love playing with products. I didn’t like the end product we were selling, but actually the product process of building the products. I love that. That I could do all day long. I I still do it to this day, right? I build my own AI, build my own blog because I love playing with products.

Harrison Faull (32:26.979)

I mean, it comes through. It’s energized and say, you’re passionate for it. And I’m sure it played dividends in your next step as well. moving forward to OLX.

Fabrice Grinda (32:38.247)

But actually, one comment, because when people are like, OK, does working really hard pay dividends? And the answer is absolutely yes. But if there two people competing, and one is doing it for fun, and the other one is doing it because they feel they have to do it, the person doing it for fun will win every day of the week, because it’s not work. It’s fun. And so in college, frankly, in high school, my first startup, yeah, I was working 100 hour weeks.

traditionally defined as work, but I didn’t think it was work, I thought it was play. And so, because I thought it was fun, I was just doing my hobby and being compensated for it. So other people that are doing it for work, they’re getting burned out. And if you do something you love doing, you don’t get burned out, it’s just what you do.

Harrison Faull (33:24.612)

I think that’s more true for founders because they encounter so many hurdles, so many no’s, so many failures. Unless you truly love it or you find some passion, some joy that makes you a little bit delirious and the 1 % that manages to get to the finish line, it’s extremely hard to get there without that. So there’s definitely a lot of truth to what you’re saying. So third company now, OLX which also went on to become an absolute juggernaut.

Harrison Faull (33:54.432)

For those of us that aren’t fully aware of that company, can you give us a bit of a market landscape and why there was actually an opportunity for OLX? Because I know there’s a really interesting story when it comes to Craigslist and what you tried to do there.

Fabrice Grinda (34:05.522)

Yeah, so 2005, yeah. So obviously my true love, originally it was marketplaces. So I kept an eye on what was going on in that world. And of course eBay had gone from strength to strength, 2004, 2005, Craigslist came into its own in the US and became part of the fabric of society. And it was a place to find roommates and apartments or jobs and items. And, but even back then it was already looked like it was 10 years out of date from a user interface perspective.

And just as importantly, I didn’t think they did a very good job in moderation. was full of scam and spam and phishing. They basically didn’t have a moderation team. The latest listings would be the latest posted. And then they would use the community to mark the bad ones to eliminate them. So all the latest listings were always the worst ones. It made no sense. So I went to see Craig and Jim. And I’m like, hey, I love what you guys are doing. You’re providing an amazing public service to humanity and the community. But we can do it better. Let’s moderate. Let’s improve the UX UI.

Fabrice Grinda (35:02.288)

You may not want to, you may not have the money for it, but how about that? I’ll do it for free. Like I just sold my company, I don’t need money. I don’t need anything. I don’t need equity, I don’t need cash. I will do this as a service to the community and to humanity. And no, they didn’t give me time a day, they didn’t care. They literally didn’t care. I think in one of the meetings they were like so high on like weed that they were like fading out of consciousness.

Fabrice Grinda (35:29.712)

And every time I met them since, they never remember meeting me before. was like pretty weird interactions. And I’m like, you know what? If I’m going to compete with someone, might as well compete with the person who doesn’t care. Now, the issue is in the US, they already had liquidity in marketplaces. Liquidity and network effects are so powerful that breaking them is very hard. But the opportunity was, while it was big in the US and there were few established incumbents in Europe, in most of the rest of the world, no one was doing this.

Fabrice Grinda (35:59.291)

And Classified is actually an amazing product for an emerging market because in countries where there’s no trust, where there’s no online payment, where there’s no shipping systems that work, actually meeting at your street corner and exchange a good for cash is actually a very viable option. And it’s like, know what? I’m going to build a better version of Craigslist for the rest of the world. We’re going to go mobile first. We’re going to focus on women because…

women are the primary decision makers in all household purchases, right? They decide the car you drive, the babysitter you hire, the house you live in, and pretty much everything else. And yet Craigslist is the least female friendly safe site in the world. And yeah, we’re going to start with consumer used goods because those are people buy them on a regular basis. So we get started getting a lot of organic traffic. And from there, we’re to go to cars and then real estate and then jobs.

Fabrice Grinda (36:54.836)

And yeah, that was the vision. I’ll pause here for now.

Harrison Faull (37:00.377)

Awesome. I mean, you didn’t go slowly. I read a little bit about your first go-to-market strategy, which seems bonkers, but there’s a lot of good thinking in there. Could you tell our audience a little bit of how you managed to launch in 100 countries to test the different markets? I don’t know over what period, but I imagine very quickly.

Fabrice Grinda (37:19.378)

Yeah, a couple of months. mean, basically, when you build a marketplace, you want to sort of supply, so you get sellers on the platform. And you just go to all the sellers, like car dealers, roles and brokers, like, look, I’m building a website. It’s free to list. I don’t have an audience right now, but perhaps you’ll get buyers. So do you want to list? And everyone kind of says yes. So you get supply. We built a little sales team in Buenos Aires in Argentina that was multilingual. That spoke all the different languages of the countries we attacked.

And we created the site, 100 countries, I don’t remember 30 or 40 languages, launched. And then we spent 50k per country, so $5 million total, to test where we could get the flywheel going of ever more sellers buying, bringing more buyers, and so on and so forth. And in these things, there’s a level of randomness. There are a few countries where it really, really resonated and really, really, really picked up in Portugal and Pakistan.

Fabrice Grinda (38:18.322)

And it picked up, lesser scale, but still very well for, I mean, bigger scale overall, but lesser scale is the market share of the country in Brazil and India. And so for the 100 countries, yeah.

Harrison Faull (38:27.368)

Sorry to interrupt, but what does that look like? What does that outlier look like? Is it 100 times return on your capital on the marketing? How obvious was it to spot here or was it marginal differences?

Fabrice Grinda (38:36.508)

No, it’s pretty obvious to spot because all of a sudden, every day, more listings, more buyers, more transactions, the flywheel just starts and just doesn’t stop. And even when you stop marketing, things keep going. And so it’s reasonably obvious. If we were listing an item, the probability that it would sell, at first, was 25%, which was already liquidity, but grew to 50%, 60%. So all the items listed would sell.

Harrison Faull (38:46.589)

wow, the flywheel had already started kicking in. Okay.

Fabrice Grinda (39:07.27)

consumers would be happy. And just like, yeah, it just kept going. So the unit economics were, by the way, underwater for a long time. So our revenue per user is like $1 or $2 a year at that point in time, because we’re only on an advertising model in countries with low GDP per capita. And acquiring customers would cost us more than that. Nonetheless, the idea that you pay for the first customers and then they lead to more

And so the flywheel, it was pretty obvious that the flywheel was working in these four countries. So we went from 100 countries down to four, really doubled down on the ones that we thought had real strategic value. Obviously, if we’re going to win Portugal back to China, might as well win it. But that’s not we’re going to create a multi-billionaire company. It’s going to be Brazil and India. So we really doubled down there, grew it, became very large, even profitable in Brazil. And then once we were there, used those profits to then rescale

Fabrice Grinda (40:01.053)

to 30 other countries and become the leaders in 30 countries overall.

Harrison Faull (40:05.961)

Okay, so you’re building another phenomenal marketplace, which ultimately gives you this incredible toolkit. You’ve been there, you’ve done it, you’ve had two incredible marketplace businesses, and you’re making some angel investments on the side. Did you start off by only wanting to angel invest into marketplaces, or did you have a bit of a spray and pray approach, but then ultimately found your footing with just marketplaces?

Fabrice Grinda (40:30.674)

So before I move on answering this question, I’ll give you a sense of scale. So OLX became huge, right? It’s like 300 million users a month. It’s like tens of millions of people making a living off the site every month. We grew it to, I think 11,000 employees at the beginning. Huge, huge company. Now, my vision mission was always be founder CEO. I never meant to be an angel investor. I never meant to be a VC. But what happened is when you’re a very visible internet founder, a lot of other founders come to you for advice and or money.

And so back in 98, at the very beginning of my journey, already other founders were saying, hey, can you invest in my startup? And so I thought long and hard, should I be an angel investor in parallel to being a founder? mean, it is a distraction in a way. And having thought long and hard, I ultimately articulated, I guess, three things. One is if I can articulate lessons learned to others, it means I’ve internalized them. Makes me a better founder. Number two, I’m running these horizontal multi-category sites,

eBay or Craigslist type sites. Actually meeting and keeping my fingers on the pulse of the market by meeting all the verticals and understanding the latest trends and business models also makes me a better founder. It’s actually useful to make sure I don’t miss any of the bigger trends. Number three, to minimize distractions as long as in a one hour meeting I decide if I’m going to invest or not and therefore I’m going to stick to things I know like marketplaces, it’s okay. So I created my four selection criteria.

Fabrice Grinda (41:58.035)

and started investing already in 98. And so by 2013, when I sold and left OLX I’d already made 173 investments, I’d like dozens of exits, even though was a secondary business for me. In fact, it was funny, in the US, I was known more as a super angel than I was known as a tech founder because OLX is not big in the US. So even though OLX is like literally one of the largest companies in the world from websites in the world, I was known as an angel.

Fabrice Grinda (42:26.74)

Even though that was like my night gig, not my main gig.

Harrison Faull (42:28.938)

Thanks. Amazing. Okay. So you saw it as an opportunity to actually help OLX, help yourself in that journey with marketplaces. You ended up formalizing that angel investing process by forming FJ Labs, which has gone on to make 1100 investments, 300 plus exits. It’s remarkable. It’s a VC fund, but a super angel type model. Could you tell us today what

FJ Labs looks like, what you’re looking for, what kind of investment sizes you do.

Fabrice Grinda (43:06.576)

Yeah, so first of all, we didn’t start out as a VC fund. We started really as my partner, Jose and I were like, hey, we like building companies, we like investing companies. It’ll be a family office to do that. And it kind of took a life of its own. we started getting, beyond getting it inbounded by massive volumes of deals, like every week we get 300 inbound deals, which required a structure. So we had to hire people, et cetera. We started getting inbounded by investors who said, hey, we want exposure where you’re doing.

can you let us invest? And that’s what led to our first formal venture fund in 2016 of like 50 million of external capital. It led to our second venture fund in 2018 with 175 million of capital from 20 LPs, third one in 21 with 290 million from 20 LPs. And we’re about to go to market. We’re going to raise fund four of 300 million in Q1 25. And we do fund every three years. So like fund five will be in Q1 28 and so on and so forth.

And so it kind of took a lot of it’s own, but to your point, we don’t behave like VCs, we behave like angels. You know, like two one hour meetings over the course of a week and we decide if we invest or not. Now, what are we looking for? I’ll answer it in multiple ways. You know, we, as I said, we behave like angel investors. So we invest in every category, in every geography, at every stage. But we’re 50 % US, 25 % Western Europe, 10 % Brazil, India, 15 % of the rest of the world.

We’re 70 % seed and A, so we’re mostly post-launch, post-revenue. We want to fund your growth, but we are also 20 % beyond words and 10 % pre-seed. We are 70 % marketplaces and network effect businesses, mostly in B2B marketplaces these days because you need to digitize the entire supply chains in the B2B world, which are at the very beginning of their digitization processes. And that’s everything.

moving the online ordering of inputs to online, or moving input ordering online, helping SMBs digitize, doing support infrastructure for all the payment networks, shipping, cetera. And I guess most importantly, what we look for is we have four selection criteria. So when we decide to invest in a startup, it’s four things. One, do we like the team? Now every VC in the world will tell you, I only invest in extraordinary founders.

Fabrice Grinda (45:27.398)

But it can’t be like porn. It can’t be something like, I only recognize it when I see it. And so for us, an extraordinary founder is someone who’s amazingly eloquent, visionary salesperson, and so Van Dijkers intersection of those two knows how to execute. And the way in a one hour meeting we evaluate if someone knows how to execute is number two selection criteria. Do we like the business? And for us, it’s like total addressable market size and more importantly, unit economics. Can you f-

recoup your fully loaded customer acquisition costs on a net contribution margin basis in six months? Can you three x in 18 months? Do you have negative revenue churn such that ultimately your LTV to CAC is like 10 to 1 or 20 to 1? And if you’re not there, why are you going to get there with scale without needing every star in the multiverse to align? And there are some VCs will say team is everything, the rest is relevant to them, but we care deeply about the business you’re in. Does it have a good economics? Number three, what are the deal terms?

Now, nothing’s cheap in tech, but is it fair? Is it fair in light of the traction, the opportunity, the category, and the team? And number four, what is the thesis? Is the thesis aligned with our vision of the future of the world? And we have clear visions for the future of mobility, of food, of real estate, et cetera. And we’re trying to solve three fundamental problems, so climate change and equality of opportunity and the mental and physical wellbeing crisis. Are you solving something we care about? And we want all four things to be true simultaneously.

So we need to love the team, love the business, find the deal terms fair, and like the thesis and the problem they’re trying to solve. And if all four are true, after two one hour meetings in a week, we’ll tell you we’re in. We’ll write the $400K check on average. And we’ll be super helpful to you in terms of fundraising and think through marketplace dynamics. But we won’t bother you. We won’t be on your board. We’ll take whatever reporting you’re willing to give us. And yeah, we want to talk to you really once a year when you go fundraise. And we’re going to make sure you nail your fundraising.

Harrison Faull (47:22.234)

Okay, wow. That’s quite a high benchmark. I imagine you have to see quite a few deals to build the portfolio size that you’re after here. Could you give us an insight on how much you actually see and what that actually results in over a 12-month investment period?

Fabrice Grinda (47:37.971)

So we see about 300 deals a week inbound. They come from three sources. We share a lot of deal flow with other VCs. So we’re friends with about 100 VCs. We talk to them once a quarter. So it’s about a VC a day per quarter. And we send them all of our best deals. And they send us in return their best deals. Now, of course, we’re more prolific than they are. So we send them more deals than they send us. But it’s kind win-win-win. When they send us a deal, we give them our perspective.

we’re going to help the founders with their marketplace dynamics, in return we send them a lot more deals and our founders get funded by the best VC, so they love it. And we’re not competing for allocation. They’re writing a $10 million check, we’re writing a $400K check, so it’s not a big deal. So these deals are probably the best quality. That’s about 100 deals a week. Another 100 deals a week are coming from the founders we backed before. 1100 companies, about 2000 founders, they come back from the next company. They send us their friends, they send us their employees. So of the deals we invested in about

Fabrice Grinda (48:33.747)

50 % come from the VCs, about 30 % come in from the founders. Now the last 100 a week come cold and bound, mostly through my LinkedIn, some direct to my email, but frankly Instagram, WhatsApp, I you name it, it’s like kind of all over. Mostly to me because I’m the kind of the vision or the face of the fund, even though we’re four partners, we’re 10 investors, we’re 35, so we’re pretty big. And it is still 15 % of the deals we do.

Yeah, a bit more, like 17%, but whatever. 15%, 20 % of the deals we do come from the cold inbound channel. And while they’re lower quality on average, some of the more interesting deals come from that channel because it’s like amazing founders. They just happen to not come from Sanford and live in SF. They’re in like Albany, New York, or they’re not in Sao Paulo, they’re in Palo Horizonte, and they didn’t go to the right schools. They don’t have connectivity. Of course, it’s better to get a warm inbound, but if we don’t have it, that’s fine too.

And so we see through any deals, we take calls about 50. The other 250 are often completely out of scope, biotech, hardware, et cetera. If there’s not a marketplace network effect type dynamic, we’ll do any industry, but it has to have that. So if you’re telling me you’re building a marketplace for something in space, that’s fine. But if you’re building rockets, we’re less likely to invest. And same thing in biotech, a marketplace for labor in biotech, no problem at all.

for buying or selling components, but if you’re just building a biotech company, not for us. A lot of Out of Scope, a lot is also just too early. Look, we do do pre-seed and pre-launch, but because we don’t invest in competitors, if eight people were pitching us the same idea at the same time, we want to wait until one of them emerge as the early leader before we pull the trigger, because if we’re wrong on the bet in pre-seed, then we’ve shot ourselves out of the category completely.

So we’re more likely to wait until C or A than do pre-seed unless you’re a second time founder or third time founder, and we’ve backed you before, then we’ll do pre-seed. But our pre-seed bar is very, very high. And so we take these 50 calls a week with a 10 % investment team. It’s a one-hour call. We evaluate the four things I discussed. We have a two-hour investment committee meeting on Tuesday, every Tuesday, from 10 to 12. We review the 50 deals. We take a second call with maybe 10 other companies.

Fabrice Grinda (50:52.914)

One of the four partners will take many of the calls, but I’ll take maybe half of them. And at the end of that, we invest in about three new companies for a week. So 300 becomes three. So it’s 1%. It’s 150 new investments per year, not including the follow-ons and the companies we already invested in. And of course, so we have a separate investment committee every week for whatever companies in the portfolio are raising, going public, going bankrupt, whatever, when we decide what to do. And we treat those as net new investments.

Knowing what we know now, the team of the company of the opportunity would we invest in? The answer is yes, we write a check, the answer is no, we do nothing, or if a secondary is available, we might take a secondary opportunity on the way up. And so that’s another maybe 7,500 investments a year. So total, we end up doing two to 300 investments a year, of which 150 are net new on average.

Harrison Faull (51:44.158)

Wow, you’re a busy man. But that is amazing. It’s great to see someone deploying at such scale, at such velocity, because the ecosystem need it. And they’re going to be able to leverage the ones that do pass the benchmarks that you require to get in as an investor, to get you on board, get such great value out there. It’s just,

Fabrice Grinda (51:45.914)

Hey

Fabrice Grinda (52:08.528)

Yeah, and look, and by the way, this is not because I decided, this is the best top-down way to maximize portfolio construction. It’s more a reflection of the founder, my partner Jose, and frankly, the other partners’ personality in us. It’s like, we meet people we like, we want to back them. And each founder is really tackling a problem. There’s so many problems. Like when you say climate change, it’s not one problem. It’s 1,000 problems. It’s like emissions at a cement.

factory at submissions when you’re extracting mineral. mean, it’s it’s a billion different sub problems and each founder is tackling one of them. And there’s as many, there are multiple entrepreneurs and solutions per problem out there. And so there’s a million or thousands of founders we want to back. And so it’s really reflection of personality, even though actually a diversified portfolio leads to the best returns in the business because of the power law nature of venture.

Harrison Faull (53:00.074)

No, it’s a passion. You’re pulling it through. I’m sure you convinced your LPs that they know exactly what you guys are doing, what you’re trying to build, and they’re on board with that journey. Flipping back to founders and advice to founders, given your experience with marketplaces, are there like three top pieces of advice that you’d give a founder who wants to build in the next marketplace for something. What should they bear in mind from day zero?

Fabrice Grinda (53:27.452)

first thing is it’s easier to build than ever before. So don’t overthink it. Just launch and build it. I’d probably build on Shopify, even though Shopify is more for e-commerce than marketplace. And you can then build the seller component on top of it. Don’t overthink the tech. Just keep it simple. Literally, I could probably build any marketplace today if I’m for less than $15k in like a month. Use Shopify. have companies doing hundreds of millions of GMV in revenues on Shopify. It’s not a problem.

It’s not where the key success factor is. The key success is can you make the unit economics work? Can you acquire the sellers and the buyers? Can you match them? Second big recommendation, probably the number one mistake marketplace founders make is they overwhelm their marketplace with supply. so when you start a marketplace, 99 % of the case you’re going to start with the sellers because they’re financially motivated by the platform.

If you kind of go to anyone in any category, it doesn’t matter where they’re selling. They could be selling a service, could be selling a product, and you’re like, hey, I’m creating this store. It’s free for you to be on it. I may have buyers for you. Do you want to be there? Everyone’s going to say yes. Like there’s a very limited cost for them to be on it. But if you just take everyone and you have infinite supply and you don’t have any buyers, then

Fabrice Grinda (54:47.026)

None of these are going to get any value out of your marketplace and they’re not going to have buyers. As a result, they’re not going to be active. They’re going to churn. If I wanted to build a locksmith marketplace in New York City, I don’t need locksmith there in New York. A couple thousand? I could probably call every one of them in a month and get them on a platform, but I’m going to have no demand for them. So they’re all going to churn. If someone places an order, they’re not going to reply. They’re not going be engaged in the platform. So instead, what you should do is you get the very best supply, a good price,

Good operator, depends if it’s a product or a service, but like the very best seller for that product category. And then like a limited quantity, and then you go find them a buyer, you know, spend money. And it doesn’t, I also don’t care what the channel could be. It could be influencers, be TikTok, could be Facebook, could be Google, could be sales team, could be inbound, irrelevant. Just make sure that the economics work. So you find them a buyer and you make them happy. And then they scale the amount of time and products that they put in your platform relative to others.

And once you’ve reached kind of saturated them, then you bring the next seller and you keep scaling your supply and your demand in parallel. You don’t massively scale one side before the other, unless there’s value in having more items, which are some categories you need a critical mass of items before you can actually attract buyers. Otherwise you’re going to overwhelm your supply side. Nothing’s going to convert. The sellers are not going be engaged and everyone’s going to churn. You basically, you’ve drowned your marketplace and you’ve killed all chance of liquidity.

So really scale up the supply and demand in parallel, making sure both sides are happy at all times.

Harrison Faull (56:20.188)

That’s great advice and not something that might become as intuitive to someone that hasn’t built a marketplace before. So thank you very much. Okay, so that’s the founder that hasn’t started. The founder that has started who’s not seeing the cohort performance,

Harrison Faull (56:43.698)

Okay, thank you. Okay, so that’s fantastic advice for the MVP, the founder that’s just about to start their marketplace. When it comes to a founder that actually has taken that step, has taken that leap, they’ve got a marketplace going, they’re seeing some growth, they’re seeing some traction, but maybe their cohort performance is not improving over time. They’re not seeing that next user purchase more frequently. Do you have any advice on what to do then?

Fabrice Grinda (57:13.074)

So obviously finding product market fit is the number one thing that kills or at least success in startups. All I would say is, look, if you’re 20 % away, you’re going to figure it out. You’re going to change the funnels in a way that you can get there. You’re going to get optimizations in your marketing channels, et cetera. If you’re 10x away, you’re probably not going to get there with whatever it is you’re doing today. You need to change something pretty radical. Product, user experience, business model.

distribution strategy, et cetera. if you’re far away from it, probably not going to get there, which is OK. You use that lesson and pivot into something else. And if you’re close, just keep iterating on whatever current approach you’re doing. Now, there are some things you need to realize is something solve themselves automatically through scale. So imagine your economics are underwater because you’re paying the delivery people or they’re being paid on the marketplace $15 an hour, and you’re doing one delivery an hour.

But at scale, you can easily imagine that’ll be three deliveries an hour, and so $5 a delivery, not 15. And there the economics work. Then you can still articulate why you’re going to get there. Now, understand this. VCs like me, want to growth. obviously, we’re not going to fund profitable growth, but not profitable as in you reach underlying profitability. Profitable, you did economic growth. So the objective of your seed is to go to your A. The objective of your A is to go to your B. And from B, then you can go to full-blown profitability.

But let’s say you’re a consumer facing marketplace with like a 15 % take rate. At seed, you’re probably raising the median right now, three and nine pre, and we expect you to be doing 150k with the GMV. And with that, again, 15 % take rate. So if you’re at 5 % take rate, you need to be 4x bigger or whatever, 3x bigger. With that, we expect you to be at 750k in GMV with a 15 % take rate in good union economics, like 66 % margin, let’s say.

for your A. And with that you get whatever 2.53 million a month in GMV for your B. Again, with good economics. So cohorts, we expect the cohorts to improve over time. So the more you go on, the more valuable your marketplace, typically the more valuable the community is, the more items you have, the easier it is transact. And so we would expect new users come in to buy faster, to buy more.

Fabrice Grinda (59:38.643)

and to have a retention that is higher. And so if pretty quickly you see that the new chords are worse than the old chords, it probably, may mean the market is swelter than you think it is because it suggests that you already got all the early adopters and then the rest are not that excited or interested in the category. yeah, chord analysis matters a lot. LTV to CAC models matter a lot. And also making sure you have density in your acquisition channels because

If you’re doing Google almost totally fine, make sure that you can spend not just $100K a month, but like $1 million a month, or $5 million a month, and then you keep scaling. You have proper network effects when your cat goes down over time. If you have real network effects, you start getting more and more organic growth. So your blended cat should actually be declining over time as you scale. If your cat keeps going up and up and up, again, it probably means either you don’t have network effects or the market is more capped than you thought it was.

Harrison Faull (01:00:35.072)

Incredible advice. Thank you. Okay. With this AI boom and tools that are so easy for people to code now, is there anything particularly exciting about applying AI to marketplaces that you’re seeing happen today that hasn’t happened before that could reinvent space or just help that founder put fuel on the fire?

Fabrice Grinda (01:00:58.534)

Well, first of all, every founder should be using AI to improve productivity in their startup. Like customer care, productivity can improve dramatically with AI. Sales, productivity can improve dramatically with AI. Programmer productivity improves dramatically with AI. So you should be using the AI tools. I I take that as a given. Now you could also use AI to improve marketplace flows pretty dramatically. In some categories, now you could just take a photo and the AI can detect the item.

Fabrice Grinda (01:01:27.58)

pick a title, write a description, select the category, select the price, say if it’s real or fake, like poof, in like three photos, 20 seconds, you have a listing. Compare that to the old school way of doing it on eBay, where you do all that work for yourself. It’s like 10 minutes to put a listing, plus you put a credit card details, et cetera. So you should definitely use AI to improve buyer and seller flows to the point that you increase conversion rates, basically.

Fabrice Grinda (01:01:55.739)

In some categories, it’s very easy to do, like trading cards or collectibles where the items can be recognized or unique. In some categories, it’s less easy to do and may not be in the incumbents, rather in a better position to do it than the startups because they have the data. So Rebag, which is a handbag marketplace, has all the data of all the handbags which one are fake or real and what price based on the level of scratches and et cetera. And so they’ve created their AI called Clair to help you list your handbag.

They can do it, but if you were just a startup starting, probably you don’t have the data to be able to do that. But there’s also third party AI tools that can help on the marketplace. So we’re investors in a company called PhotoRoom. And what PhotoRoom does is you take photo of an item, it detects the type of item it is, and based on the marketplace you want to sell it on, it’ll change the background image of your photo to maximize the conversion and sell through rate. So sometimes it’ll put a white background, sometimes it’ll put a nature or whatever. mean, so there’s a lot that can be done from an AI perspective.

And of course, depending on the search behavior, you can improve your search and your recommended listings like, you like this, you may also like this, through AI in a pretty dramatic way. these are the most fundamental ways to use AI in marketplaces.

Harrison Faull (01:03:09.843)

I really like the idea of investing maybe into a startup that needs marketplaces as a customer. So that photo room, obviously you can give them instant scale. You’ve got 1100 portfolio companies, many of which are marketplaces. Bam, instant go to market strategy.

Fabrice Grinda (01:03:21.266)

Exactly. We’re investors in TopSort. TopSort helps marketplaces monetize by selling ads to their own sellers, kind of like Instacart or on Amazon right now. You can buy ads as an Amazon seller. And so it increases your take rate and it’s very high profitable, very profitable. And so we invest in that and of course then we send it to all portfolio companies and it’s win-win. TopSort gets all of our marketplaces as customers and the customers get higher GMB take rate. So it’s amazing.

Harrison Faull (01:03:51.694)

Incredible. Look, Fabrice, I know we’ve already gone over, so let’s wrap things up and just end by saying thank you very much for your time. The wisdom is incredible. For the founders out there that want to approach you, want to get investment from FJ Labs, where would you prefer that they send you DealFlow?

Fabrice Grinda (01:04:10.652)

So if you want to learn more about my thinking, read my blog, fabricegrinda.com. You can actually talk to my AI, fabriceai, at fabricegrinda.com. So fabriceai.fabricegrinda.com to ask any questions you may have and that you approach me directly to send me deals. The best way is to send me a LinkedIn in-mail. And in that message, though, make sure you describe what the startup is, what traction you have, include a deck. Basically, give me every information I need to decide whether it’s for us or

If you just say, I have an amazing story, I’d like to talk to you about it, you will not get a reply.

Harrison Faull (01:04:44.0)

Thank you very much.

Midas Liquid Yield Tokens (LYT): A New Era of Tokenized Yield Strategies

Stablecoins are hailed as the cornerstone of the crypto ecosystem, offering stability in a volatile market and promising to overhaul payment rails. However, underneath the surface, stablecoin supply is fundamentally driven by on-chain yield.

In the last two market cycles, stablecoin supply has expanded and contracted in direct response to yield. When on-chain yields exceeded U.S. Treasury Bills (T-Bills), demand for stablecoins soared – most notably following DeFi Summer, when total supply skyrocketed from less than $10 billion to over $150 billion in just two years. By contrast, when on-chain yields fell below the U.S. dollar risk-free rate, stablecoin supply contracted just as quickly as shown by the decline between 1Q22 to 3Q23. Recent growth is explained by the high on-chain yields due to contango crypto markets.

Source: DeFiLlama

The Problem: Stablecoins Aren’t Stable
In the search for yield, stablecoins have evolved into on-chain hedge fund strategies (‘yield-bearing’ stablecoins’), as shown by the growth of Ethena and others. In this structure, the yield is distributed via two tokens – a conventional stablecoin, which can be staked into a second token to earn the revenue of the underlying collateral. This structure has emerged because issuing a “stable” coin avoids classification as a security or a collective investment scheme, which would require regulatory approval.

By framing these products as “quasi stablecoins”, issuers navigate regulatory loopholes – however this comes at the cost of introducing systemic risks, including:

  • De-Peg Events – If the portfolio underperforms, liquidity runs force issuers into fire sales, destabilizing the entire ecosystem.
  • Misaligned Incentives – Issuers chase higher yields to attract TVL, often pushing portfolios into riskier assets.
  • Regulatory Uncertainty – Wrapping hedge fund strategies into “quasi-stablecoins” creates compliance risks, leaving investors without legally defined claims on underlying assets.

As Steakhouse Financial notes in its Stablecoin Manual:

“Stablecoins are subject to liquidity and solvency constraints. To function, a stablecoin must meet both of these hard constraints.”

However, yield-bearing stablecoins inherently stress these constraints. The competition to attract TVL leads to two systemic consequences:

  1. Crowding into the same yield opportunities, reducing returns
  2. Increasing systemic fragility, heightening de-peg risks

The Consequences: Lower Returns & Increased Systemic Risk

By setting a $1 liability, the investable universe of yield-bearing stablecoins are technically restricted to zero-duration collateral. This funnels assets across all issuers into the same trades, leading to diminishing returns. Historically, crowded trades, such as basis trades in commodities markets, have consistently underperformed. The effects of market crowding have extensively been studied in academia to result in in lower returns at higher risk. For instance, the basis-trade in commodities market has resulted in consistently in lower returns over a 24-year period.

Source: Crowding and Factor Returns by Wenjin Kang, K. Geert Rouwenhorst and Ke Tang

The relentless pursuit of yield pushes stablecoin issuers further up the risk curve. In doing so, they introduce systemic fragility, where a single weak link in the collateral pool can cause a cascading failure.

Additionally, stablecoin issuers rely on leverage and rehypothecation to fuel adoption. This creates a system where stress in one part of the collateral structure can trigger cascading failures. The 2022 stETH discount, the collapse of UST, and the recent de-pegs of USD0++ and USDz all reflect this vulnerability.


The Solution: Liquid Yield Tokens (LYT)

At Midas, we’ve built a fundamentally new approach to tokenized yield – Liquid Yield Tokens (LYT).

Instead of forcing yield into fragile stablecoin wrappers, LYT introduces a dedicated framework for on-chain investment strategies:

  • Floating Reference Value – Unlike stablecoins, LYTs do not have a fixed $1 peg. Their value fluctuates based on performance, eliminating de-peg risks.
  • Expanded Investment Universe – Removing the $1 liability constraint unlocks access to a broader range of yield-bearing assets, optimizing risk-adjusted returns.
  • Professional Risk Management – Each LYT is actively managed by institutional-grade risk curators, dynamically adjusting to market conditions.
  • Shared Liquidity & Atomic Redemptions – LYTs share a common liquidity pool, removing the need for fragmented LPs and enabling seamless DeFi integration.
  • Reward Farming at Scale – LYT holders benefit from additional incentives across protocols like Plume, Etherlink, and TAC.

How Liquid Yield Tokens (LYT) Work

Liquid Yield Tokens (LYT) are issued through Midas’ open and composable infrastructure. This approach separates the roles of issuer and risk manager, allowing users to benefit from customised risk curation.

The collateral of each token is managed by dedicated risk managers who operate under specific mandates and reported transparently on-chain. The risk manager dynamically allocates collateral to the best opportunities, adapting to changing market conditions to capture alpha while managing risks.

LYTs are issued through Midas’ open, composable infrastructure. Unlike stablecoins, LYT tokens clearly separate the roles of issuers and risk managers. Each LYT is managed by dedicated risk curators who dynamically allocate collateral to the best risk-reward strategies.

Every LYT is issued as a permissionless ERC-20 token, making it fully composable with the broader DeFi ecosystem.

Across all LYTs, Midas has implemented shared liquidity pools for instant redemptions. Instead of requiring liquidity mining incentives, LYTs are designed for capital-efficient scaling and deep DeFi integration. Protocols like Morpho, Euler, and Anja already support LYTs.


Introducing Three New LYTs

Today, we’re launching mRE7YIELD, mEDGE, and mMEV, each risk-curated by top-tier firms.

mRE7YIELD – Risk-Managed by RE7 Capital

RE7 Capital is a research-driven digital asset investment firm focused on DeFi yield and liquid alpha strategies. With a proven institutional-grade approach, mRE7YIELD delivers actively managed exposure to structured yield products.

  • Current APY: 20.83%
  • Institutional-grade structured yield strategies
  • Actively managed to capture market inefficiencies

mEDGE – Risk-Managed by Edge Capital

Edge Capital is a leading digital asset hedge fund and DeFi liquidity provider, managing capital for institutional investors and crypto foundations. Their market-neutral strategies are designed to generate consistent, high-risk-adjusted returns.

  • Current APY: 20.12%
  • $230M+ AUM
  • Four-year audited track record with a 3.5 Sharpe ratio

mMEV – Risk-Managed by MEV Capital

MEV Capital is an investment firm specializing in risk-managed, DeFi-native yield extraction strategies. With expertise in liquidity provisioning and structured yield products, it provides access to high-yield opportunities in decentralized markets.

  • Current APY: 17.53%
  • $350M+ AUM
  • 10+ curated public vaults across multiple chains

You can also find a concise overview of how Liquid Yield Tokens (LYTs) work in our Twitter thread and LinkedIn post.

For media coverage, check out the press releases on The Block & Coindesk.

We welcome any questions or feedback you may have.

Unicorn Bakery Conversation: 2025 Trends for B2B and B2C Marketplaces

I had the pleasure of chatting with Fabian Tausch of Unicorn Bakery. We covered the state of venture markets, the rise of B2B marketplaces, the impact of AI on startups, and why IPOs remain elusive for many companies.

We discussed:

  • Why the venture market is starting to recover in 2025 after years of stagnation.
  • How B2B marketplaces transform industries and why they’re still in their early stages.
  • The role of AI in improving marketplace efficiency and redefining business models.
  • Why IPOs remain challenging and what needs to change for companies to go public.
  • How founders can build defensibility and create network effects in their marketplaces.
  • Key 2025 trends include live commerce, cross-border marketplaces, and SMB digitization.

Chapters:

(00:00:00) Which timeframes does Fabrice look at while building thesis?

(00:02:20) The “Look-Back-Sentiment” of 2024 & the “Look-Out” for 2025

(00:07:11) What has to change to make IPO markets attractive again?

(00:10:38) How does the market dynamic change the venture industry?

(00:16:23) Current trends in new businesses

(00:29:52) The AI-impact on defensibility

(00:35:06) Hurdles to encounter when starting a marketplace today

If you prefer, you can listen to the episode in the embedded podcast player.

In addition to the above YouTube video and embedded podcast player, you can also listen to the podcast on iTunes and Spotify.


Transcript

Fabian Tausch:

[0:00] Welcome to a new episode of the Unicorn Bakery. Today we will have a look into marketplaces and the lookout for 2025 because the year is accelerating and everything is getting back on track and everybody is working again. And so therefore I decided to bring on Fabrice Grindag. And Fabrice is probably the best person to talk about marketplaces after doing 1,192 unique investments with FJ Labs so far. And FJ Labs 3 is a fund coming to an end, preparing fj4 i i call it fj4 now because it’s quicker but end of like more than or like 355 exits to be precise including partial exits probably one of the most i call it ridiculous and it’s probably not the right word but ridiculous stories that i’ve heard over the last years and one of the most unique personas even when there’s a large team behind it as well that i got to know so therefore i thought fabrice we will have to talk marketplaces today and i’m super happy to have you on the show again thank.

Fabrice Grinda:

[0:57] You for having me

Fabian Tausch:

[0:58] So you’ve been a founder yourself now you’re investing how are you assessing like knowing both perspectives how are you assessing a year which time frames are you looking at when you’re making decisions and building theses theses so we’re i.

Fabrice Grinda:

[1:14] Would say a bottoms-up type fund meaning we we don’t have pre-existing portfolio construction where we’re like oh we want to invest in that in many companies and this has to be the thesis. I think it’s more, if we meet founders we like, we invest. If we don’t, we don’t. And in years like 21, where we felt everything was overvalued, we invested in fewer companies. And then years like 23 or 24, where the markets were, except in AI, more depressed, we were investing like crazy because we felt the opportunity was great. And the thesis is similar. We have perspective, we see the trends and how companies are evolving. And as we see trends evolve because new founders are coming up with new models and approaches we evolve our thesis over time and we’ve seen marketplaces start with these double commit models then become like more vertical verticalized so they were horizontal marketplaces and vertical marketplaces then they’re managed marketplaces and then we have the marketplace pick type marketplaces i’m going to detail what these are and there are definitely many more trends happening now in 2025 and we’re still at the very beginning shockingly enough of the marketplace revolution so

Fabian Tausch:

[2:20] What’s the sentiment for 2025. And to dive into that, when you look back at 2024, what was the… Look back sentiment for 2024 and then the lookout for 2025 based on that yeah so.

Fabrice Grinda:

[2:34] Let me talk about the the sentiment writ large in the venture category so 21 of course was a bubbly year where everything was frothy and everything was overvalued and as rates went up because venture is a is a risk asset there was massive retrenching and and venture essentially has been in a recession and even depression, if not a cold winter for the last few years. So 23 and 24, we have total venture investing that is down like 66 to 75% peak to trough. Now, of course, maybe the peak was overvalued in 21, but it’s massively retrenching with lower number of investments, lower check sizes, and essentially no exits and no liquidity that was obtained. And so that said, it’s been a tale of two cities. There’s been the venture as a whole, which has been like this deep depression. There’s been AI that’s been extraordinarily hot and frothy and bubbly and continues to be that. So I actually thought if I look back at 24, I expected that the deep tech recession would continue and it has continued. Rates remained high. The liquidity opportunities remained limited.

Fabrice Grinda:

[3:41] M&A was limited partly because the companies were not flush with cash outside of AI and because M&A has been mostly stifled by the regulatory regimes. The SEC, FTC, FCC, etc. have essentially limited a lot of M&A. So large companies were not buying other companies, and the IPO markets have been closed. So there’s been no liquidity. Many LPs felt overexposed to venture. So venture as a whole has been in the doldrums in general, except in AI. In AI, many people saw the extraordinary growth of open AI. They felt they’d miss the boat, and they basically weren’t all in, all AI all the time, not really understanding necessarily what they were investing in and differentiating the amazing products that are not so amazing, often investing in what I would consider to be tools that are okay, but like co-pilots or whatever, but they’re not really differentiated. They’re not differentiated data sets, differentiated LLMs, no viable business model and worst of all, crazy valuation. So I think there is a day of reckoning to be coming at some point in the AI investing space, even though AI will transform our world. But no, it’s been frothy and AI, doldrums everywhere else. Now in 25,

Fabrice Grinda:

[4:50] The macro has been pretty good, actually. We have lowered inflation, full employment, and the economic growth and productivity growth has been pretty good. Now, as I look forward to 2025, I suspect that’ll be more of the same. The macro is, we’re no longer in a macro-driven environment. We’re in a slightly lower rate environment, which is a bit more benign. And the general fundamentals remain pretty good between reasonably low inflation, high employment, low unemployment, and pretty good productivity growth. I’m hoping, it is a hope, that the M&A markets and the IPO markets start reopening and that we start finally seeing exits of the very best companies in the portfolio. I think it will start in 25 and will continue into 26 and hopefully accelerate in 26 and 27. And as a result, I suspect that the venture market would large or start coming out of the doldrums outside of AI in 2025. And so I’m actually more bullish than I’ve been on the venture market for 25 and 26 than I was in the past. And yeah, I’ll pause here.

Fabian Tausch:

[5:56] Do exits have to happen first before the venture market starts to accelerate again? Or do you say because of the anticipation that this will happen in 25, 26, or 27, like whenever the exact date will be, everybody is more likely, and also LP is more likely to invest money in funds again. So what’s the dynamic here?

Fabrice Grinda:

[6:17] I think it’s a bit of both. Obviously, as exits happen, the LPs get liquidity and they’re more willing to rewrite checks into venture funds. But in general, because other asset classes, especially the public markets, have done rather well, there is some level of liquidity and rates are starting to fall. So I suspect that even absent the early indications of exits, there will be more of an increasing appetite for venture and venture investments in 25 relative to 23 and 24. Obviously, it would accelerate to be very much helped by exits, but if they don’t happen just yet, I think it’s probably okay.

Fabian Tausch:

[6:55] I recently did a quick episode with Kevin Hartz, who you might know as well, and Kevin said there is no incentive to go public at the moment, and that’s what we’re talking about. And he also says there won’t be any time soon. And I’m like, why at first, like, why is there no, and do you agree is I think the first question. And the second question is, what needs to change that IPO markets become more attractive again for the good companies that you’re also mentioning, saying, hey, the best companies that we have in the portfolios are currently not exited and not IPO’d. So what needs to change?

Fabrice Grinda:

[7:30] Well, there are different reasons why people don’t want to go public. First of all, if we are the very best companies in the portfolio and you’re compounding very rapidly, there’s no reason for you to go public, right? If you’re SpaceX or Stripe, and you already have access to liquidity through secondary markets and investors are throwing capital at you, regardless of the fact that you’re already worth hundreds of billions in the case of SpaceX… Then delaying the IPO probably makes sense, especially since you don’t want to deal with having all the downsides of being public, having all the information out there, dealing with Section 404 and SOX compliance and all the regulatory regime and the pain that goes from being public. And so, you know, I think we indirectly invested in SpaceX in like 2007, you know, and it’s been 18, it’s been whatever, 17 years and they’re still, we’re 18 years at this point, and they’re still not public and not going public anytime soon. and that’s okay. There are companies that can’t really go public because they raise money at 21 at very high prices. And today, the public markets would actually be at lower valuations than the private brands. And so for them, going public is unappealing unless they actually need the capital and they’re cut out of the private markets. But frankly, they maybe are not the best candidates. But there’s this intermediate step of companies that I think are ready to go public.

Fabrice Grinda:

[8:49] They’re somewhat reasonably priced relative to the last round and going public would be a liquidity event for their investors, founders, and LPs. And also they’re late enough in the game that actually going, there’s no, they’re already a series G right now. And so maybe there’s no more capital in the private markets that really makes sense. And for those, I do think going public makes sense. And there’s companies like ShipBob or Flexport or Klarna, and they will, I think, go public at some point in 25 or 26. By that said, the universe of companies for which going public makes sense is more limited. Now, is there a way to make it less onerous to go public in terms of both costs and oversight? Maybe.

Fabrice Grinda:

[9:32] It’s painful enough that it doesn’t make sense to go public unless you’re worth like $5 billion plus. Otherwise, you don’t have liquidity, you don’t have endless coverage. And that used to be very different. I think Microsoft went public at a $260 million market cap. If you’re worth $360 million today, you can’t afford to go public. It costs you several million a year to be public, and you’d have no coverage and no liquidity. And so do we want to bring this down again? Maybe, in which case it requires a pretty profound regime, regulatory regime change, which I don’t see in the cards. And so I suspect that the threshold for going public, at least in the US, will remain pretty high. And it’s okay. I think is meant to be a kind of a protection for public market investors and the general public when they’re buying socks and they don’t buy bad companies. Though it does mean it probably cuts them off about high growth companies where most of the high growth happens in the private markets. And then once they’re no longer a high growth, they go public. So it kind of sucks if you’re a public market investor because it means most of the value accrues to people like me on the private side. It is what it is from a structural perspective.

Fabian Tausch:

[10:38] What does this whole dynamic mean for people like you running funds that typically run on a 10 plus 2 basis, so 10 years of an investment horizon, can be adjusted a bit and extended? But seeing all these dynamics shifting the life cycles of a company until a liquidity event happens to the future, how does this change the venture industry?

Fabrice Grinda:

[11:05] The duration from investment to exit has increased dramatically. It’s kept increasing over the last 20 years. And yes, today, if you invest in the seed, you probably, for the very best companies, are going to go beyond the 12-year, the 10 plus 2. And you’ll have to get letters from your LPAs to extend even further. It actually probably makes sense that’s said to do it because they’re compounding aggressively and you don’t want to exit too early in any of these. The problem from a venture industry perspective is because the DPIs have been reasonably low, so the distributed capital, how much exit we’ve been getting on the way up, that delta between when you raise a fund and when you get the capital, there may be a three-fund lag. We are at fund four now that we’re about to raise in Q1 of 25%.

Fabrice Grinda:

[11:56] Our fund one is now fully distributed, meaning we’ve returned 1x the capital. So in a way, the fund one exits, and we’re at the top decile of DPI. And so most funds, probably, there’s a four, five, six fund lag between investment and exit, which is a massive negative cash flow. What it means for people like us, though, the reason we’ve been able to, in a way, get away with it with high DPI is because we write small checks. We’ve been getting a lot of exits through secondaries. And so the secondary markets have actually been exploded. So one of the bigger trends in venture is there are more and more secondaries, both in companies, but actually in funds. There are new investors that are buying full-on positions or LP positions from other LPs, especially in the late-stage funds or funds that have been deployed for 10 years or 12 years or whatever, and people are tired and they just want exits. And you also have people buying positions in the GPs of the fund. So secondary funds are becoming bigger and bigger. And secondary marketplaces like Forge, Equities, InsurancePost, NASDAQ, private markets are becoming larger and larger as people are pursuing liquidity. So that’s a mega trend. And by investing right now, I think in secondary funds makes a lot of sense because the liquidity is coming at a premium. And so both you can buy positions of companies at good discounts, but you could also buy positions in good funds at very big, like 40, 50, 60% discounts to NAV by people who want liquidity.

Fabian Tausch:

[13:26] In which way does this affect how I as a founder should figure out who as an investor I want to take on board?

Fabrice Grinda:

[13:34] In general, first of all, picking an ambassador is like a marriage, right? They’re your lead ambassador. They’re on your board. You’re going to be with them forever. So pick someone who likes you, understands what you’re doing, and has your back, and is going to stick with you in good times and bad times. From the VC’s capital structure perspective, I pick VCs who basically are long-term investors. And whether or not they exit in 5 years, 10 years, or 15 years, in a way, it doesn’t matter to them. And therefore, you’re not going to be pushed into an earlier exit than you would like. And of course, the people that have been around forever, who have infinite long-term capital, are probably the best bets for that. Benchmark, Sequoia, the people that are the brand names that have long-term committed capital to their funds, they are not giving in a hurry to exit. And in fact, they’ve transformed their funds from just private funds to public-private funds where they can hold public securities forever. You know, that’s why Sequoia is not an IRA. But does this matter that much? I think in general, not really. Most VCs will, they will figure out their own capital structure independently and they let the founders meet, right? Like at the end of the day, the last thing you want to do is force a company to sell too early as it’s compounding. And so I wouldn’t worry that much. And by the way, we at FJ, the reason our DPI’s are high is because we own 2-3% of the companies. We can go and get secondaries. In fact, a lot of VCs ask us, hey, do you mind selling part of your position? We want a bit more ownership of the upruns. And so the founders ask us actually, if we’d be willing to sell.

Fabrice Grinda:

[15:02] But if you’re a lead VC and you have 20% of the company and you’re on the board, you can’t do a secondary. Because if you try to sell, it’s a negative signal. Oh, what do they know about the company that we don’t? And so it kills the company. And so that approach doesn’t really work for lead VCs. They need to wait until the IPO. In fact, they cannot even sell post-lockup because they own so much of the company. They sold the price would collapse. And so for lead VCs, they’re going to be locked up for a long time. It’s only people like us that have small percentages that can sell on the way up. I don’t think it changes that much for a founder, honestly. Just pick the person that has your back and that has capital to follow. Now, the one thing that I think matters more is, does the VC, can they keep supporting you into the seed, the A, the B, the C, etc? Because we’re in a world where outside of AI, capital has been harder to come by. And so you want to be seeds with deep enough pockets that they can do the other round. So I wouldn’t worry about that at the precedence seed, because whereas the seed funds are seed funds, they’re not going to do your A, they don’t have enough capital. But once you get to the A funds, a lot of funds are crossover and they’ll do A and B, etc. So think of a left lane. They’ll do the A, the B, the C, etc. Or Andreessen or Sequoia. The only exception to that are like dedicated A funds that are amazing, like Benchmark. Even though they won’t have the capital necessarily to lead your B, it’s okay. I’d still take them. They’re amazing.

Fabian Tausch:

[16:23] In 2024, you did 100 first-time investments with FJ Labs in companies. And therefore, you looked at thousands of them, especially marketplaces. So therefore, what trends are you currently identifying and seeing and looking out for when you’re evaluating new businesses? What are the things that are coming up more and more right now where you think, hey, 2025 might be a chance and have a good hit on this trend for marketplaces?

Fabrice Grinda:

[16:52] I’ll separate. So first of all, we invested by 1% of the deals we see. So for 100 investments, we saw 10,000 deals or losses. But of course, many of these are out of scope, you know, our development, et cetera. So we didn’t take, we take calls of 300 calls, deals we get a week, we take calls with 50. And then we invest in three. So that’s the kind of 1%. So we only took calls with like one fifth of those or so. So maybe 2,000. Now, I’ll break down the trends into two buckets. One is megatrends, which we’re seeing as a general category. And then, like, why not things that are interesting that could form the basis of a larger trend? So let me explain the difference between the two. The big megatrend that we’re seeing as a category is the B2B marketplaces and the digitization of B2B supply chains is becoming a massive trend. So if you think of your consumer life, you can order food on DoorDash or Uber Eats and you get it back in like 15 minutes. You can order groceries on Instacart. You can order on Amazon. You get everything between a day and two days or even the same day sometimes.

Fabrice Grinda:

[18:07] You can book an Airbnb. You can get an Uber in five minutes. You can get a hotel on Booking.com. In your consumer life, digitization has happened in a very massive, meaningful way, and software is already eating the world.

Fabrice Grinda:

[18:25] In the B2E world, though, that’s not true. And that’s not true neither at the large enterprise nor at the SMBs, right? Like, so, and I’ll give the two examples separately. The large enterprise, like, if you want to buy petrochemicals, there’s no, like, catalog available of what’s available. So I’m not even saying Amazon, where you have one by now. I’m saying a list, just a list of what’s available. Then there’s no connectivity to the factory to understand manufacturing capacity and delays. There’s no online ordering. There’s no online payment. there’s no tracking and there’s no financing. And this needs to happen in every industry and every vertical and every category. Right now, we’re like sub 5% and usually sub 1% penetration on all of these. And when I think of these types of inputs, and I mean inputs writ large, like auto parts, construction, chemicals, energy, but it could also be like finished goods. None of that has been digitized. Number two, if you think of the life of your little SMB owner, like a little mom-and-pop shop owner. So imagine you own a restaurant. The people that own restaurants, what do they like to do? They like to cook. They like to chit-chat with the customers. And yet, what is the job that they end up having to do today? They need to create a website. They need to go to answer comments on Google and Yelp and TripAdvisor. They need to get a POS. They need to do accounting. They need to manage their inventory.

Fabrice Grinda:

[19:42] They need to do payroll. They need to negotiate Uber and DoorDash. And so SMB digitization, dude, all the work that these SMB guys don’t like to do is a mega trend as well. And I’ll give you a few examples. In SMB, we invested in Slice, which helps pizzeria owners manage all their back office. They now have 20,000 pizzerias on the platform, over a billion in sales, very profitable. We have Freshia, which does the same thing for barbershops. Sense that does the same thing for laundromats or dry cleaning companies. We have one that does it for spas and general yoga studios, et cetera, cold moments, et cetera. So this we’re vertifizing. On the input side, we’re in Nodi for petrochemicals. In Germany, we’re in a company called ShootFlix, which is a three-sided marketplace in order to get gravel.

Fabrice Grinda:

[20:33] We’re in Material Bank, I mean, in many others. And the other three trends, I would say, in the B2B are moving supply chains out of China. I guess the general trend I would call French shoring, especially into India. So for instance, If you’re a czar in H&M and you want to buy apparel and you want to buy in India, the thing is in India, there’s thousands of little mom-and-pop manufacturers. And what do these mom-and-pop manufacturers want to do? They just want to manufacture. They don’t know how to enter an RFQ. They don’t know how to do invoicing, prototyping, etc. So a marketplace like Ziad will do all that for them. So we’ve invested in all these marketplaces to help move supply chains out of China, mostly into India, but obviously also in Mexico, Vietnam, Philippines, Indonesia, et cetera.

Fabrice Grinda:

[21:18] Number four, there are a big lot of labor marketplaces. They’re emerging to support this rise of B2B. And so we’re in WorkRise, which is a marketplace for all services workers. We’re in Job and Talent for Blue Collar workers in Europe. We’re in Trusted Health for nurses.

Fabrice Grinda:

[21:39] And then last but not least, actually two more, Recommerce. Of course, e-commerce is very big right now in consumer, and it’s actually coming to the B2B world, both for a combination of getting lower costs and also for green reasons. So we’re an investor company called Ghost, which allows you to buy excess inventory. So you’re a little store, and you can buy clothing at a 90% discount from excess inventory from the bigger brands, and then you can sell it. And historically, that didn’t exist because it was impossible for these stores to buy a million units. But now you can buy like 10k orders and make it work it allows but not at least the infrastructure that supports all this so payments infrastructure like stripe or rapid automation robot robotization infrastructure so formic which helps people automate or figure which is robots in factories replacing human labors and they’re in bmw in germany replacing like 250k of machinists with like a 90k year robot that works 20 hours a day and then there’s like shipping companies like Flexport, ShipBob, Shippo, and even cross-border companies that we invest in, like Portless. So all those are like the major megatrends in B2B. Now, beyond these trends in B2B,

Fabrice Grinda:

[22:50] We’re seeing a few interesting companies that are doing things that suggest that there’s more to happen. So the big other trends in marketplace, let’s say, cross-border commerce is finally becoming a reality. So think of Vinted. The reason Vinted became so successful in so many countries, they actually… Back in the day when you had classifieds like eBay, Klein & Zagen, Klein & Zagen only has listings in Germany. And Le Boncoin only has listings in France. And you’re not shipping across countries, etc. But Vinted basically translates the listings, translates the chats between the users as integrated shipping cross-border and integrate payments cross-border, such that they’ve created for the first time the true pan-European marketplace. They’ve created a marketplace in Europe that kind of makes Europe look like the US. And it’s fully integrated, one language, one currency, one everything, but actually is happening for real. It’s absolutely easy to use. I love it. Yeah, and they’re crushing it, right? Like there are like 6 billion in GMB.

Fabrice Grinda:

[23:47] I think they’re massively profitable in the UK and Europe. Huge. And this is happening in other categories. So we’re investors in a company called Ovoco, which is a Lithuanian car parts marketplace, getting sourcing car parts in Eastern Europe, like in Poland and Lithuania, etc. And they’re selling in places like France. Absolutely crushing it as well. So cross-border is becoming a reality, especially in Europe. Europe is finally starting to look like the US. Next big trend is live commerce. Now, in China, on Taobao, which is like the eBay of China, if you want, 25% of the sales are from live video streaming. In the US, this has only happened in one category, which is collectibles. There’s a company called WhatNot that we’re non-investors in. They just raised like a $5 billion valuation.

Fabrice Grinda:

[24:32] But for collectibles, it kind of made sense. But it’s now happening in other verticals. So we’re investors in a company called Palm Street. And it’s basically prosumers in little stores selling rare plants. And they’re doing two streams per week they sell about ten thousand dollars worth of plants per month the women they’re buying these are spending about 1800 every six months and it’s beautiful because people are telling the story of where the plant comes from or you take care of it etc and it creates a rich experience so live video shopping is coming to the west finally and this company is absolutely crushing it so i can imagine other categories now they were themselves expanding in other categories, the iron crystals and rare pottery, etc. Then we’re seeing the creation of new verticals. We’re in a French company called Alpaga and they’re creating…

Fabrice Grinda:

[25:21] They’re a B2B restaurant equipment marketplace. And what’s interesting is it used to be that if you’re a restaurant, you would buy new equipment. The restaurant would go under very often. And then they change cuisine, et cetera. They have this equipment. They can’t sell it because it’s a pain in the neck. You can’t ship it. And it’s harder to install. So what they did is they built a network of service providers, shippers, and installers. And now the marketplace works. And they’ve seeded it with like a supply from like their hotels, hotel kitchens like Marriott, etc. And so adding a service layer in existing categories can create a marketplace from scratch. So we’re seeing it as well in things like, I guess, greenification is a big megatrend where everyone wants to green their houses. But historically, if you want to green your house, you go to a place like Thumbtack, you need to hire, you get contractors, they quote you and we’re installing a heat pump. It’s very complicated. you need to manage like 20 bids and then you typically get screwed where investors are a company called tetra and basically take a few photos of like what your system is and they’re like this is the provider this is the price and they do it for you and same thing they’ve added a service layer to an otherwise to a marketplace selling you’re installing heat efficiency or energy efficiency and they’re crushing it so i guess adding services to to make transactions Actions that were complex, simple, is another big trend. And I guess I’ll give you a few more trends. New business models are emerging. We’re investors in a company in France called La Bourse Olive, which is a book marketplace.

Fabrice Grinda:

[26:49] And what’s unique here is they take 90% of the commission of the sale of the book. And you’re like, why would someone be willing to give away 90% of the commission? And it’s because instead of being working on maximizing the price, they’re maximizing efficiency. If you’re a new parent, you have a lot of books. and at the end of the day, you don’t have the room for them. So you could sell them one by one on Amazon, but it’s a pain in the neck. You need to scan it, list it, it sells, you need to ship it. Here, you’d basically put all the books in a box, you ship it to them, you’re done. And you get a 10% credit to buy other books. And in basically a year, they become the leading used book seller in France with a 90% take rate. So amazing economics, amazing business, focusing on the convenience play. So again, we’re seeing new trends or ways of attacking existing categories by adding new approaches and convenience. AI is starting to come, and I’ll give you two examples of AI, and then I’ll stop there in the trends.

Fabrice Grinda:

[27:46] AI, obviously everyone’s using AI to do customer care, and everyone’s using AI to improve programmer productivity. In marketplaces, where we’re seeing the most use of AI is on redefining the listing process, right? So if you want to sell on eBay, you need to take a phone. You take a bunch of photos you write a title you write a description you select a category you enter a price and then you wait a week or two and then it and then it sells

Fabrice Grinda:

[28:13] The new model is there’s a company we invest in the US called Hero Stuff. You take a few photos and you create a video where you describe the product. And with AI, they convert your description into the full listing. And they actually pick the price, the category, the title, the description. They create a 15-second TikTok video that you can venture in your socials. And they list it on eBay, Facebook Marketplace, etc. Called Hero Stuff. and we’re seeing existing incumbents using their data to reinvent the listing process as well. So we’re investors at a marketplace called Rebag in handbags. And what they’ve done is they’ve created this AI called Claire because they have all the data. You take a few photos and they tell you, okay, this bag is real. Is this model from this year in this condition will sell for this price? Poof, you click and it’s sold. Like one minute you sold your bag because they will buy for you at the price of the market, which is amazing. And so we’re seeing new trends in AI being used to improve marketplace efficiency. So yeah, a lot of amazing, exciting trends. And yeah, I expect these to be the beginning and more at these to expand. So live commerce will come to other categories. Cross-border will exist beyond these two examples I gave. New business models where maybe you can take higher take rate by adding services there and focusing on convenience will come to the fore.

Fabrice Grinda:

[29:36] And adding services will unlock new categories where historically it was too painful to transact. And so those are the big trends outside of the B2B marketplace trend, which as I described is a mega trend. And we’re at day zero. So it’ll take 10 years for all these to play out.

Fabian Tausch:

[29:52] A lot of things happening at once. So one thing that you touched on is that everybody’s using also AI to enhance programming and here and there. How does the increased productivity that AI delivers to company building here and enhances product building and everything else, how do you build defensibility as a marketplace when the delivery of the product itself and the first MVP and having everything set up, how does the dynamic of building defensibility change due to the AI?

Fabrice Grinda:

[30:31] There’s been a megatrend over the last 25 years of costs for building companies, barriers for entry declining. When I built my first company, I needed to get Oracle databases and Microsoft web servers. I needed to build my own data center. There was no AWS, but there was also no Rackspace. And then we got open source, MySQL… And php then then we got then we get cloud computing and you could use aws and and and now with the new ai revolution you’re getting no code low code and or ai assisted code where the cost of launching a startup is cheaper and lower than it’s ever been that said building the tech platform has really never been the barren entry in marketplaces the product itself is easy to replicate you can and in fact most of our marketplaces often launch on shopify the the consumer on the consumer if you’re a consumer facing marketplace the buy side of the marketplace you might as well use shopify they have all the tools it’s cheap it’s easy they you can embed like everything you need from like tracking attribution testing like everything is kind of there it’s responsive you can get a mobile app pretty easily so that has always been kind of commodity it’s

Fabian Tausch:

[31:44] Funny i never thought about that but that’s that makes sense.

Fabrice Grinda:

[31:46] Yeah so when you launch a marketplace there is no moat the product is the moat is actually liquidity it’s your execution it’s getting buyers and sellers it’s having high nps it’s matching them effectively it’s creating the flywheel wherever more buyers bring to more sellers and more sellers brings more buyers it’s the brand you built that’s the moat it’s the actual execution the product itself is not a moat in any way, shape, or form, because it’s replicable. And this is becoming true in every vertical, basically, where any product is replicable. It’s your execution that is the most. That’s why ideas have some value, but not that much value. It’s really the execution that has all the value.

Fabian Tausch:

[32:25] So how would you say what’s necessary to, and I think you touched many of the topics already, but I would love to bring them together again, to build the brand that becomes number one, to build the mode of the supply and demand side and really become the number one marketplace in the industry that I’m in?

Fabrice Grinda:

[32:45] You need to delight your customers. And so I would start at the very beginning by typically going to the supply. And I would take the very, and the reason you go to the supply is they’re financially motivated to be on the platform. So you go to the very best supply and you tell them, look, we’re launching a new marketplace. We don’t have many customers yet, but we’re free to be on it. Would you be interested in listing? Everyone will say yes. So actually, the big mistake you can make is go to too much supply. You actually only take very limited supply. Then you test a bunch of marketing channels. It could be a sales team, it could be Google, it could be Tech Talk, it doesn’t matter. And you bring them demand and you match them.

Fabrice Grinda:

[33:21] And you want to basically, depending on the category, if you’re a used good marketplace, you want the probability of the item selling to be at least 25%. If you’re a services marketplace, you want to represent at least 25% of the revenues of the supply. But you want to delight them. And you want the NPS to be very high on both the supply and the demand side, usually by having some level of management and service layer that makes sure that they’re both very happy. Once you’ve done that, and they’re happy, and your NPS is high, and the sellers and buyers are happy, you add a few more sellers, and then you add a few more buyers, and you keep scaling in parallel. And usually, that kind of launches the flywheel, where all of a sudden, you get network effects, where ever more buyers bring in, where sellers bring in, where sellers bring in, where more buyers. And you know you have the flywheel when your CAC starts declining. Many of these so-called marketplaces are not marketplaces because what happens is they spend a lot of money buying the sellers and the buyers. The more they scale, the more their CAC increases. It means they have no network effects. It means something’s not fundamentally working. And I want the union economics to be very good. But the general idea that you delight your first customers and you keep building for them, make sure that they’re happy, applies not just to marketplaces, but frankly, every startup. Now, the way you start in marketplaces may vary depending on the marketplace you’re in. Maybe you need to be in one zip code, but maybe you’re a national product, right? So how you go about it

Fabrice Grinda:

[34:45] The first, obviously, if you’re in a service category, you probably need to be hyper-local. If you’re selling used goods, maybe not, especially if they can be shippable. So it really depends. But the focus and delighting your customers and making sure that they’re seeing their sellers, they’re seeing demand. And if they’re buyers, that they see enough of what they want that they can transact here.

Fabian Tausch:

[35:06] When I’m starting a marketplace today, what is likely the first hurdle that I will encounter?

Fabrice Grinda:

[35:14] Whether it’s today or 20 years ago, the first hurdle that you encounter is the chicken and egg problem is I have this wonderful site, wonderful user experience, but I have nothing. I have no buyers and I have no sellers. Which one do I start with? And my recommendation in 99% of the cases is to start with the sellers because they’re motivated financially to be on the platform. If they are there, they will make money. But I would, as I said, highly curated, go to the very best ones that are going to be engaged, that are happy to test it, that will be replying to the request from the buyers and make them happy. Fair.

Fabian Tausch:

[35:48] In regard of the time, I think that’s a very sharp, very dense lookout episode with a lot of trends that you can dive deeper into when you’re thinking about them being like, that makes sense. I can pick some ideas from here and use it for my own marketplace business and build on top of that because I can look into different industries. So and i know you did a marketplace trend episode on your own podcast as well i will link it down below so therefore if anyone can’t get enough from you so therefore i link your linkedin and of course fj labs and and your podcast there are many more episodes that you should listen to all for example like the outsourcing one that i that i really enjoyed so fabrice it’s been such a pleasure thanks for sharing all your insights and thoughts on marketplaces in 2025 and looking forward to catching up soon.

Fabrice Grinda:

[36:37] Thank you for having me.

>