Fabrice Grinda of FJ Labs - diversified portfolios, secondary sales and dinner parties

Fabrice Grinda is the co-founder and managing partner of FJ Labs, a venture capital firm that has invested in over 1,200 startups with more than 350 exits, including early investments in Alibaba, Flexport, and Delivery Hero. He previously built and sold three companies as CEO: Aucland (one of Europe's largest auction sites), Zingy (mobile media startup sold for $80M), and OLX (global classifieds platform operating in 90+ countries with 150M+ monthly users, acquired by Naspers). In this episod...

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  Hello fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdas.com. That's world of das, D-A-A-S, dot com. Hello fellow data nerds. My guest today is Fabrice Grinda. Fabrice is the founder of FJ Labs, a venture capital firm that has invested over 1,200 startups. He previously built and sold three companies, the CEO, Auckland, one of Europe's largest auction sites, Zingy, which was a mobile media startup sold for $80 million, and OLX, which is a global classified

• 0:46Speaker 00

  platform which operates in over 90 countries and over 150 million monthly users. FJ Labs recently closed a $290 million third fund and is one of the most active venture investors globally. Fabrice, welcome to World of DAS. Thank you for having me. Now, you and I are long, long time friends, friends for over 20 years. You're also one of the most prolific investors out there. I mean, you're literally making like hundreds of investments every year. How did you end up with that model? Like, what made you kind of move to that type of model? The intellectual answer would have been, oh, I have done a tap down analysis of what

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  is the proper way to maximize IRR. And I've realized that because venture follows a power law, the diversification leads to IRRs. And if having done all the research, clearly a diversified portfolio leads to the best returns. The answer is that is true, but it is actually not the reason I did that model. I did that model because I followed my curiosity. And whenever I met a founder that was doing something interesting that I liked, I was like, I need to back this guy because he's trying to solve a problem in the world. And the world is beset with problems. And I think founders basically see these problems and try to find scalable, repeatable, profitable solutions to address them. Just to jump at what you're saying is like, hey, you see a cool founder, if you

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  had like a core ownership requirement or something like that, you wouldn't necessarily always be able to back that founder because they may not have a room. Or if you always want to take a board seat, okay, well, you can't do that because they may have had somebody. So you just kind of backed into it. The other way, like you just want to back founders. Whenever I met someone doing something interesting that I thought was solving a problem in the world, I wanted to back them. And it's completely bottoms up. I meet someone I like regardless of stage, category, industry, etc. I invest. I don't see, I don't invest. And so. And it just led to this very diversified strategy. I think it's a reflection of my intellectual curiosity, right? Like there's infinite problems in the world. And all these founders are trying to solve all of these problems and I want to help all of them solve it. How does you like actually operationalize it? Because doing hundreds of investments per year means you have to.

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  Not necessarily you, but your, at least your team has to meet with at least 10x more of those types of companies every year. And you have to kind of think of like. How does one like actually operationalize that kind of investing strategy? It happened kind of naturally and organically. I was a very visible consumer facing internet CEO. So I was getting all this inbound deal flow. Drinking at the fire holes of deals and I hired a first analyst many years ago and to see, could I actually teach them to filter? Because obviously you don't want someone to pass on the next Uber and or send me deals that are not appealing. And I realized that my processes were scalable and repeatable. So now we're nine on the investment team. We get 300 inbound deals a week.

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  Talk to like 40 because the others are out of scope. They're too early. There's too many of them. We're not ready to make a call on that category. And I will speak to three to five. And so that filter of 300 and we invest in three every week. So let's say 300 to five, and then I mean, invest in three. So we invest in 1% of the deals we see is something that's worked extremely well. At this stage, a lot, or super early stage, a lot of it's really about the founder or the founders. How does one like do some sort of assessment? I mean, you're really probably only meeting them a couple of times, right? How does one assess the quality of the founders? It used to be just one on one hour meeting with me. Now, of course, there's a team. So now it's a one hour meeting with someone else and then a one hour meeting with me. I'll tell you how to knock. Assess founders, don't do reference checks.

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  Founders often reference badly because they were not meant to be employees. They were talking back to their bosses. They were working their startup while their job is set up. So the way you assess a founder in a one hour call, to me is easy, actually. First of all, humans are inherently social animals. And there's one thing that we do well is we know whether we like someone or not. And we can gauge chemistry within like 30 seconds or one minute of meeting just through the first three interactions. And so the way I evaluate a founder is two metrics. I want one who's extremely eloquent and an amazing salesperson. And by the way, introverts can actually be very salesy. I think we are probably examples of that and very eloquent. So someone who can weave a compelling narrative because they're going to be able to raise capital to higher valuation. They're going to attract better teams.

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  They're going to get better B, they're going to get more PR. But that's a necessary but insufficient condition because I also want them to be able to execute. And so the way I tease out whether they're going to be able to execute is actually because I use four selection criteria, not one. And the second one of which is, do I like the business? And so I need them to be able to articulate even pre-launch, the total addressable market size. What do they think the customer acquisition cost looks like, whether it's sales or marketing, et cetera? What is the contribution margin of the business? What's the average order value? Are they in line with industry numbers? So I need them to understand, know all these things and to be able to articulate why they think the long-term value is relative to the customer acquisition cost. You're drilling down on those, like you're actually asking that specific question. Yes, correct.

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  And usually the ones who know the business well, who thought through it, they actually are on top of the numbers and it comes naturally. And the people that are just like, they have the vision, but they wouldn't know how to execute, typically don't know how to answer these questions. I haven't thought through these and they're like, I'll figure it out. And to me, I need both. I need the Venn diagram in a section of like the great executors and the great salespeople. And that is actually pretty rare. Find the founders are in one or the other, not both. Sometimes there is a product. I assume quite a lot of times that you can play with the product or see the product. How important is that? Most often there's right. We're mostly seed investors, not pre-seed investors. The reason is I don't invest in competitors and so you're the bet.

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  Often at pre-seed, I see seeds, seven teams, like ideas are in the air that are doing the same thing at the same time. And I feel it's too early to make the call. How narrowly do you define a competitor? Because if you're doing like three deals a week, 150, like there's gonna be some competition that copies or bugs to that, right? Well, if they end up competing by the series C or B or whatever. But even right away, right? Right away. No, I mean, they can be doing exactly the same thing, the exact same category, attacking the same problem. But usually ideas are in the air. And so if someone's pitching me an idea, I usually have four other teams predict to me the exact same idea within a week or two week rate basis. And I will actually go try to talk to competitors and make sure we're back in the right order. So we'll wait. So they see there is a product. Product is very important to me.

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  My four selection criteria or team, business, terms and thesis and product speaks to kind of a lot of these, like do I think they're solving a fundamental problem in the world that I care about? Have they built something interesting, which means they're probably a good team, et cetera. So it speaks to all these different factors. A lot of your investments have been historically outside the US. You've been finding these great founders who are outside the US. You're shaking your head, so maybe I'm wrong about that. I used to invest maybe 50%. If I go back to 2012, because obviously I've been angel investing, investing since 98. In 2012, I think 50% of our investments were like Russia, China, Turkey.

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  And they're countries I don't invest in anymore because there's profound geopolitical shifts. And we're now in Cold War II. So stop investing in China after Xi Jinping disappeared Ma. And I stopped investing in Russia after Crimea was invaded and Turkey after Erdogan, you know. Stopped investing in Russia in 2014. Yes, we had like several unicorn investments there that after the Crimea invasion, basically the American VCs like stopped wanting to back these amazing companies and then the oligarchs took over the companies for nothing. So we completely stopped all these things. Now, because Oaxaca is so big in so many emerging markets, we have a lot of deal flow internationally, but we've always been 50% US and Canada, 25% Western Europe,

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  15% Latam, which used to be mostly Brazil and that is Brazil, Mexico, Colombia and 10% Rest of the World, which is mostly India. We're still like majority US, but in the US, because I do read cold inbound emails and over half the deals are cold inbound emails. Of course, they're the lowest quality, but also some of the nuggets because it's a non-traditional founder who didn't go to Stanford. It's not connected to the community. He has like series B level traction, but he happens to be in Arkansas. And you can invest at like C valuation at a B level traction company and we can help so much because that founder doesn't know how to raise, et cetera. You're actually finding these kind of like Arkansas Nuggets type of thing. We're also finding a short tail. I mean, we were in Baba and Uber and Airbnb and Instacart.

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  We're finding kind of everything, but we are some of the more interesting deals, you know, like in Brazil, there wouldn't be the ones from Sao Paulo, but they're like the one from Belo Horizonte and they messaged me on LinkedIn and they weren't connected. And we just came in and were able to inflect their business because of the role we play. When you're investing in like a Western Europe, are those companies still like Delaware C corps often or are they set up usually? They're usually not. They're usually incorporated whatever country they're in. But the good news is now there's robust VC ecosystems around the world. And so we have a VC partners for France, for Germany, for the UK, for Spain, for Brazil, for Mexico. And so we bring the deals to them in those countries and we don't need to go to the US companies.

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  It's interesting because I think we've probably done four deals recently where the founders are all based in Western Europe. And all four, again, this is like a small N, but all four, they were Delaware C corps. Even though none of the people were actually based in the US. Are they targeting the US market, though? Well, everybody targets the US market. So, you know, later on, you know, maybe one of the founders, I did eventually move here or something like that, but I was just surprised to see that. Is it so easy to set up a Delaware city nowadays? It happens. It's not that common. Many Europeans didn't target the US market. I mean, yes, the Finnish and the Swedes and the Nordic people, yes, but like the French, the Germans, and even the Brits would like target the European market. And so that didn't necessarily make sense.

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  Third criteria you mentioned was price. How does one think about that? Because prices for some of these deals, I mean, some of these YC companies are now trading at 30 posts, some of them even higher than 30 posts. How do you think about price these days? And how do you stay disciplined on price? So we do so many deals, right? We see the 300 deals a week. We invest 150 to 200 companies every year. So we have a very good sense of what we think the median is. And we also look at the data of the median. So we know where the median pre-seed, seed, A, B, C deals are out there. And we've tracked it over time and we've stayed very consistent. Right now, the major trend in VC, in Q1, 71% of investments in the US were in AI.

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  And the AI deals are trading, depending on the category, between 69% and 300% premium to the median valuation. By the way, like 100% of YC companies are AI. Yeah, and 100%, that's true. And so YC, for instance, is prototypically, I would not invest in YC. I go to YC, I look at the best deals there, and I wait a round or two, and usually the price normalizes with traction. And so I end up investing, I just invested in a company called Garage, which is a marketplace for fire trucks. I don't remember what YC price was, like maybe 30 or 40. We're now, two years later, they're doing 2 million a month and invested at like 50. And so on a risk-adjusted basis, investing in the next few rounds makes a lot more sense.

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  They do filter and find a lot of great companies, but I'm not paying 30 pre. And right now, my pre-seed median is probably 6 million and my seed Whoa, six million post? Yeah, one of five pre-seed. Wow, you and I, when we were investing 20 years ago together, that's actually what we were investing at. You were investing at six posts. No, but those might have been seed deals back then, now in pre-seed. I don't think so. I mean, when we did Bright Roll, it was a five pre, six post deal. And that was 2006, almost 20 years ago. I think you might have called that an A, though. I mean, it was like, pretty ridiculous, like. Sure, but it was the first money end. Yeah, I'm still seeing a lot of those deals. My median C right now is like 12, three, raising three, four, like 15 posts, 16 posts.

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  And by the way, my median A is like 30 and my median B is like 60. And the difference is the mean is being pushed up by these insane AI deals. But the market median is way higher than we are because of AI. And that's the beauty of being contrarian. So I actually just looked at my valuations at 21 versus 22 versus 2019. And we've actually been pretty consistent across the board. Our valuation ranges were more or less the same, 2019 all the way to 25. You would think, let's say, the valuation of a C deal should go up every year, roughly the amount that the market goes up. So if the market goes up 10%, so you think like every seven years or so that the valuations would double.

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  That's what one would think, but what you're saying is like, they've really been flat. They've not been going up. For the last seven or eight years, they've been flat, but perhaps because 21 was also inflated and so then it compressed. But in our case, our valuations in 21 were the same as valuations in 19 or 18. The later stage valuations have gone up a fair amount, but we also, because we are so disciplined in price, we actually didn't do anything. Look, February 21, I wrote this blog post entitled, Welcome to the Everything Bubble. And I said, because of overly loose fiscal monetary policy, every asset class is correlated one another way up. If it's not anchored to the ground, sell it. I mean, everything, private credit, publics, real estate, bonds, stocks, and of course, private liquid tech companies. And there were some you could sell secondaries.

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  And now, of course, we sold that being a 10th of what we wanted to sell. But whenever SoftBank or Tiger came in, we sold it. And right now, again, being contrarian, we are. Doing everything except AI. So now every company I invest in uses AI is technically an AI company, but they're not like the core underlying LLM companies. Too much competition, not enough differentiation on data modes, valuations are insane. I think there's a race at the bottom of pricing because there's 10 of them doing the same thing. And then there's OpenAI ever expanding and eating at what they're doing. And then there's orthogonal risk of like people coming in and like disrupting them completely. I wanted to pull on the thread that you were just mentioning the secondary. So as VCs, especially early stage VCs, we're trying to be good at investing, essentially good at buying.

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  Usually traditionally in VCs, just wait until the company does something. Maybe the company sells or the company IPOs. And then at that point, they have some sort of DPI and they kind of move on. But there's another way to be a little bit more proactive, which is to sell secondaries in an ongoing company or to pare down one's exposure. You don't have to sell the whole thing. You could sell 25% of your holdings and stuff like that. First of all, how do you think about that? Like, how does one evaluate the selling side of it? That's a muscle that I'm trying to build myself. So we have a different investment committee for choosing investment companies and for follow on. So we have a portfolio investment committee. And the portfolio investment committee, we present the companies as though we were non-existing investors.

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  So it's a completely de novo evaluation of the team of the company of traction. So knowing what we know now, the company of the traction of the valuation, if we were non-existing investors, would we be investing in this round? And if the answer is no, because they're not doing well, then we do nothing and usually can't sell. The answer is no, because they're amazing and we love them, but the price is insane. It's 100x AR and it's going to take good years to grow into it. And we're not going to be compounding at our own IR. So we've been compounding at like 30% IR for like 27 years. So we don't think there's a 10x is going to continue compounding. If there's an opportunity, we try to take some off the table. Now, these secondaries can happen in two ways. Either there's a round happening and there are three VCs, whatever, Greylock and Dreesen

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  and Sequoia that all want in, they all want 15%. The founder doesn't want 45% dilution, but wants all three of them in because he doesn't want them to back a competitor. So that's when there's usually a secondary happening either at a flat or maybe 10, 15, 20% discount to the round. And in these cases where it's overvalued, we sell 50% typically. How does one determine the amount that one's pairs down? If it's massively overvalued and it's like 100 XAR, it's going to take forever to grow to it, then maybe we sell 75%. If it's still risky, it's overvalued, but I'm saying maybe 25%. But on average, I would say I sell 50%. The management 50% is as follows. It goes to zero. I made 10X. I'm happy. It goes to the moon.

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  The 50% is big enough that it can ride and will keep us happy. So selling 50% of these moments, and sometimes we'll sell 50%, we'll rebuy in the next round, we'll resell again in the next round, et cetera. I sold maybe 30% of my SpaceX holdings in a secondary a year ago. And since then, you know, the mark's gone up. I made a mistake maybe by selling earlier or something. Yeah. So look, the things that I think can keep compounding like crazy, like OpenAI or SpaceX, I probably would, or Stripe or whatever, I probably wouldn't be selling because I don't know where the ceiling is there. But there are many companies where I think there is a ceiling. Yes, a vertical SaaS company or whatever. It's logarithmic. They're now in the part of the curve where it's slowing down. And now they're growing 30% year on year. There's a 10X from here, maybe it's a 2 to 3X.

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  And a PE buyer is very happy with that. I'm not happy with that. I need my 10X. And so time for me to exit. And look, 73% of VCs have not used secondaries. So they're just basically the only way until the company does something. There are two reasons for that. One is if you're on the board, you own 20% of the company. If you don't do your parada, the company dies, right? Like it's a negative signal. Yeah. If you're on the board, you have to do it. Yeah. And even if you're not on the board. You would have to get off the board if you're selling secondary. Yeah. But frankly, even if you're not on the board, if you own 20% of the company, it's like, what do they know that I don't know? Why are they selling? Exactly. So if you own a massive chunk, it's a lot easier for you and I, since we own a very small percentage of the company. Exactly. And by the way, there are two ways to do secondaries.

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  One is in the new rounds, when there's buyers that are interested, the VCs. And then the second way is through the platforms and the brokers, the forges of the world, et cetera. The problem with that is that's a super short tail. Like there's only liquidity in like 10 names or actually five names. And you never really know if, when someone reaches out to you, if they actually have a buyer. It's always somewhat like, are they just like ginning up a deal? And this could be a huge waste of your time. Yeah, so we have a disposition committee. By the way, the one VC that does this well, that is large and has board seats goes to lead edge. Lead edge also has a disposition committee and they make sure that they find exits for companies. Now they do it, obviously have much larger scale. We do it where like

• 19:25Speaker 00

  we have two or three to start the companies, which also makes it easier for us. But the majority of our exits. So look, first of all, we've had exits in 22, 23, 24, 25, and most people have not had exits. And the majority of our exits come in the form of secondaries. And the nice thing is then you get the money back to your LPs and you know, et cetera. Exactly. So we get DPI. So because we're so diversified, we are never going to be a top desk cell funds. Basically, we're at three X funds every time, or three, four X, and we're at 30% IRR. And in good times and bad times, we're always that. 30% IRR is not top DSO. I know it's not top 5%, but you don't think it gets you a top 10? We're typically somewhere near the top quartile, sometimes in it, sometimes right below it.

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  The problem is people look at us against one fund vintage. They should look at us across 10 fund vintage, right? They should look at us over 27 years. Then we would totally be at the very top. But where we rock is DPI. These days, venture is not really a 10, 12 year asset class, right? The 10 plus one plus one, it's really a 20 year asset class. SpaceX, I think I'm in through founders fund two. I think we invested in December 2007. You know, we're 18 years in. I'm very happy to be 18 years in, but that fund has been extended, extended, extended. I'm happy to keep extending it. The best companies stay private forever. It's one of the best performing funds of all time. Yeah. I've been that fun too, and I'm very happy to be healthy. So the notion that the SaaS class is really false. It's really 15 to 20 years and the best companies keep compounding.

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  When you think about your LPs, is there a certain type of LP that you prefer over others? Or how do you think about it on the other side of the ledger? You know, that's your quote unquote, your customer, your other customer. So the place where we are top that's all is DPI because we do secondaries. So we're top that's all the guy. Okay. So the ideal LP for me would be someone that believes in the strategy we have and just writes us a check every time in every funds. We love the diversification. We love the performance. We love the fact that you get amazing SVPs and amazing deals, given that you have so much deal flow and we're here every time. I have not found that LP yet because most LPs I find are procyclical.

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  Yeah, they've got their own liquidity issues about the other things. They've got their own diversification issues that they're trying to do. Exactly. At 21, they're like flush with cash. I want to invest like crazy, invest in tech. At 23, 24, 25, when I'm like, this is the very best time to invest in everything, excepting I. Give me cash. And they're like, no, we're overexposed to venture. We've had no distributions. And so people end up being procyclical. And that's true of family offices. That's true of pension funds, endowments, institutions. I think it's true across the board. Our LP base has been amazing. Other founders, New Asher Wayfair, Reid Hoffman, like Paul Mafia, like the old Vino in common, but they write like swell checks every time. Two family offices often being disrupted by tech. So like the Walgreens, ankle, et cetera, et cetera.

• 22:17Speaker 00

  And like three, it's been like corporates that want to buy a lot of the companies that we invested or want to understand where the trends are. So it's been like the Nasbers, Proses, Edavent, Axel Springer, eBay, et cetera. But there's kind of churn across the board. And also later stage funds like Tiger who wanted like, you know, to invest in the follow-ons. Now, a lot of these corporates we have were bought by private equity. And so they're not investing in us anymore. The later stage funds like Tiger, they're like really that active, don't need lead gen. They're not, they're churning. A lot of the family offices are procyclical. So I haven't found that perfect investor now. I wish, and I'm hoping and I'm trying for Fund 4, where we're just opening right now Fund 4. We just finished deploying Fund 3. It's a three-year

• 23:00Speaker 00

  deployment schedule. It's a flat 300 million dollar fund. I'm hoping that we can go institutional for the first time and get maybe more permanent capital. The issue we're facing is they don't love diversified strategies because they feel that their job is to get diversification by investing in 20 concentrated funds. And then they end up having an implied portfolio of 5 million companies. So I'm kind of doing their job for them. And so they don't really get it, even though I am specialized in like asset light, network effecty, marketplacey businesses. It's not a strategy that Resonated with that many socials. It's interesting because if you are a concentrated seed fund and you are not a benchmark, like you don't have the branding of a benchmark.

• 23:42Speaker 00

  If you have ownership requirements, it's very possible that the self-selection of the companies that would let you invest are not the ones you want to invest in. Often many companies have an extra, let's say, one to 500K that you can invest in, but they rarely have an extra $2 million at the seed. Because we're writing swell checks, like 200, 300K, 100K. Anyone will let us in and we're value added. They love us. We're friendly. We decide that quickly. We're not odorous in any way, shape or form. But yeah, if you're creating a seed fund and there's slow ventures and benchmark, whatever the other side, yeah, why would they let you in? Nowadays, what does it mean to be founder friendly? Like, is that a positioning that you take or how does one think about that? I've thought long and hard, what is my value proposition to the founders?

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  In a world where primary or Andreessen, they have like platforms and like recruiters and I don't have the AUM. I can't afford any of that stuff. And I'm like, okay, what is my superpower? And I think the core one that we do is we can help them fundraise. This environment, especially if you're not in AI, is super powerful because we're not leading, we're not pricing. We have basically these very strong relationships with like 100 VCs where we should deal flow with them. We stack rank our portfolio and we will bring them the very best companies that are appropriate for them in terms of stage, category, etc. So it's kind of a win-win-win. The founders love it because we tell them, look, you want to send reporting, bring. You don't want to send reporting, that's fine too. I just want to talk to you once a year. Once a year, when you're going to fundraise, let's review your debt. Let's review your pitch.

• 25:09Speaker 00

  Let's think through if you're ready to raise, what do we think the correct metrics are for raising? Who the correct VC is? We'll make the intro, we'll write the blurb. Because we make the intros, a 95% conversion rate to an acceptance. We'll get you to the pitch meeting within back channel until we get you to a chart sheet. So the VCs love it because they get differentiated deal flow that's filtered. The founders love it because they get funded and they get access to the best VCs in the world. And we love it because the companies get funded. And by the way, in return, those VCs typically invite us to their deals and we get the 200, 300K checks here. So this works extremely well. Now, beyond that, I will spend personal time with the top 20% of the portfolio in terms of helping them through strategy, etc., like in marketplace dynamics. And of course, they find that extremely valuable as well.

• 25:53Speaker 00

  How do you think about things like parrot rights and some of these other kind of rights that are helpful? I ask for them every time, like preemptive product, etc. But if I don't get them, that's fine too. Do we ask for a side letter? Look, we didn't write a big enough check to meet the criteria of majority investor. Would you mind giving it to us? And I'd say over 50% of the cases, we get it. But my learning is that paper is not worth it. You still have to help. If you're not helping, they don't want it. Exactly. The founders can do whatever they want. And so if you treat them well, they're happy with you. They're going to let you in. They're going to find a way to get you to invest, etc. And if they don't like you, even if you have it on paper, they can not give it to you because they'll say, oh, the investors don't want it, whatever. So I think what matters more is the actual, not in theory, but in practice, be founder friendly.

• 26:38Speaker 00

  Now, assuming you're assessing a company, you're meeting with the founders, I assume most of the time it's over video. It's not in person. Is that right? That's correct. Yeah. How do you think about that? And obviously you can't do it in person, but would it be better in person? Or do you think it not matter much or? Obviously, I'm based in New York, right? So I meet the New York founders, but the New York founders of the entire portfolio of the 1,200, maybe I've met 100, right? Like, so we're not even talking 10%. I find that actually chemistry, vision, ability to sell, etc. Comes across well, even on video. So I started investing for us in 98. I was using Skype. So the first investments were all made over Skype back in the day. And so I was a digital native to investing as an angel. And so kind of nothing changed, like the Zoom transition and COVID.

• 27:22Speaker 00

  Like, I was already there. Is it helpful? Yeah. It nice to build better rapport, but I think it's helpful at the margin versus I think most of what I need gets through. And of course, it's on video. It's not just voice. A video is helpful because you can see the facial expressions and other types of things. Yeah. By the way, the way I run these meetings, so I'm doing the second calls these days. I don't have them retell the entire story. Like I've read the notes, I've read the deck. I have like questions. I like, I literally go in Q and A, right? Like, so it's always like, hey, this is my understanding of what your business is. Am I right or wrong? If I'm wrong, like correct me. And it's a conversation. So it's never someone pitching me reading a deck. That you can practice. Someone can actually. Be very good at like doing the same deck fifty times or a hundred times because every VC makes them repeat it over and over again.

• 28:06Speaker 00

  But if you go drill down like really conversational or we go deep in avenues and you don't commerce, et cetera. Then I get a much better sense for are they really a top of everything because I know marketplace as well. I'm going to ask them like, let's just city of supply and demand, then it's detailed enough because I know what I'm talking about that I can evaluate whether they're there. You've written a lot about that. So many of these great companies were founded during recessions during the years like. Is it really true? If so, why is that? Why would that be? It is true, but amazing companies are funded in boob years as well, to be clear. Some companies I can make arguments for why they are really the product of recessions, right? Like in Airbnb's case, it took a cultural shift to be willing to have someone.

• 28:50Speaker 00

  Come and live in your house or stay in your house, whether you're there or not. And the fact that people were in financial dire straits in two thousand eight, two thousand nine, two thousand ten, then they were more willing to actually monetize their primary asset. Which is real estate in a way that they weren't before. Same thing with Uber. If you need an extra source of income, it was an easy ish way to make twenty thirty, forty dollars or that. And so in this environment where cash is limited, you're willing to find new ways to monetize and or to entertain yourself that are cheaper. So it's helpful at multiple levels. It's helpful there. Number two, it's helpful because instead of having twenty seven companies funded doing the exact same thing. Which basically brings off the cost of recognition costs, you bring pricing down and destroys potentially the value of the business because there are too many competitors.

• 29:34Speaker 00

  You only have one or two and it's not fair weather founders. You have like the true believers of doing it because. It is their life's mission and they need to do this no matter what. And as a result, they're more likely to win the category and they're more likely to succeed. I like it. You're coming in at a more reasonable valuation. There's less competition and people are more willing to try something. And even like hiring talent, it might be easier to get great talent during that time. Absolutely. I assume you track deals that you've passed on that did well, right? Something that we do is we track things. Okay, we passed on this deal. It did well, or. We also even track our deals. We didn't even see that did well. We're like, why didn't we see that deal? You have a process of actually going back in time. And looking at these things to get better.

• 30:19Speaker 00

  Yes, but I'm not sure I would get better. And well, a few things. So many deals that are amazing, we pass on because of price. And they went on to do very well. But when I actually look at all the other ones I passed on because of price that end up not doing well, often because of price, like they didn't grow in valuation. The blended return of that entire portfolio is actually lower than my current return. So I don't regret passing on price, even though there's a few exceptions. The exceptions are I passed on the $2 billion Uber rant. They were doing 100 million GMV, 18 million net revenues, losing 18 million a month, right? So I was looking at the numbers and I'm like, looking at these numbers and they're raising $2 billion. But they were growing like this and I love the product and I love the team. I loved everything.

• 31:04Speaker 00

  And I started my investment memo debrief by saying, I will regret this decision for the rest of my life. But having looked at the numbers, I cannot in good conscience justify investing in $2 billion valuation. Listen to myself when I started, I sentenced my saying, I don't regret this decision for the rest of my life. Probably should have asked, yeah. You hold up your nose and you may be in my smits. So when it's something magical and special and a rocket ship, you know, like whatever, OpenAI, SpaceX, you do it. But there's very, very, very few of these. One of the things we do at Flex Capital is we track deals that we didn't see that later seemed to be doing well or whatever. And then we try to go back, like, why didn't we see it?

• 31:47Speaker 00

  What was going on? What was happening? I know you have most of your deals through inbound. We do a lot of outbound as well. Are you looking at any of those things? Just like, okay, this is a clear winner. Like, I wish we would have seen Anthropic, for instance. Like, we never saw Anthropic as a deal. It would have been great to have seen it, even if we decided to pass on it. It was still would have been great to have seen it. In marketplaces, not working fax business, we see probably 97% of the deals. A very few we don't see. And if we want in, we get in 95% of them. Now, there are a few we don't get in. Despite the fact that we commit, all of a sudden Andreessen Security, Greylock get too ownership hungry and we end up cut off, even though we only won a couple hundred K.

• 32:30Speaker 00

  It happens very rarely. So on the 1200, like, how many of these deals would there have been? Matt's 20 more. So it's not a big source of concern in our case, but we're reasonably narrow from the things we look at. So we didn't see Anthropic, nor would we. Looked at it or expected to see it either. Switching topics, you are super interested in gadgets. You have a gadget guide. One of the things I love about you is like you're about having fun. So many people like have these gadgets for productivity and stuff like that. But so many things you care about are really just to have nothing to do with productivity. They're literally just about like having a good time. Life should be fun. I'm a gamer and perhaps because I'm a gamer, I see this world through the lens of gaming.

• 33:13Speaker 00

  And I only get one life with this avatar, but it really feels to me like it behaves like a video games. And so it's kind of hard to take a lot of these things seriously. And I love what I do, right? The philosophy of Alan wants like, you know, it's a game, but you play the game and you do it with like this, that's the humor and grace. I think always resonated with me like having kids. I have a four year old and a one year old. Allows me to be an even bigger kid. Like, so I realized I like building trains. I like building the magic tiles and like we have remote control cars and planes and helicopters. Like we have the best time ever. I don't know. People take this world and this life way too seriously. I love what I do because I think it's doing something meaningful and purposeful in the world, but I do it again with fun. So.

• 33:53Speaker 00

  Do you think people are more serious today than they were 20 years ago, or is the same or less like, are people silly enough? The answer people want to give intuitively is, oh, people are taking these things oh so seriously today, et cetera. They're not having fun and love it. I don't think that's true. People have always taken the world affairs very seriously. And if you think back, right? Like 1960s or like the desegregation movement and in the 1970s, you have the anti-war riots, like. Yeah, you had violence in Europe all over. The lines for oil and like a massive recession, right? Very somber and take things extremely seriously. So I don't think the game of life is taken more seriously. I think that people should take it.

• 34:32Speaker 00

  So I think in all times, people were too serious. Like you should have more fun and play with things and you have a much better life, frankly, like to me, it's all the game. And I realized that I've seen. Speaking of a position of privilege, imagine you're a bus driver and you have to drive a bus every single day. If you see it as like, oh, this is this dreary thing I need to do on an ongoing basis, you're going to burn out. If you make a game out of it, it's like, okay, how quickly can I do the route and like, today I like only do it just saying the right like, whatever, like gamify your life and make it fun. I was just in Italy. I came out on one day and left on the next day. It's a kind of a quick trip. On the one day I come in and the immigration guy, guy stamps your passport, he was hilarious.

• 35:15Speaker 00

  He was making jokes. He was making like, we were having fun. I was with my son. They were like, on the way out, we had this like super grumpy guy, right? Which is very grumpy. It's like, you want to be the first guy. Like, the first guy was just having such a good time. I had the same job, but like, he just clearly enjoyed his job a lot more. It doesn't matter what you do. Just have fun with it. Don't take it so seriously. Look, I love kite surfing. I love playing tennis. I like playing paddle. I like camping, backcountry skiing. I've taken my son to do all these things and paragliding and we have a blast. Like, same thing. People take parenting too seriously. Like, for the most part, you're not going to kill your kid. And it's good for them to take like controlled risks. So don't stop living your life, become parent.

• 35:55Speaker 00

  You do all the things you used to do and you do it with your kids. Like, it's one more thing you can do together. It's amazing and it's fun. You also have a adopted daughter, but you're a relation like of like zero to one parenting. How has that changed you? Hasn't really changed me in any way. I still do the same thing. You don't seem, I mean, I've known you for a long time. You don't seem to be that much different. It's allowed my inner child to express itself even more. I would roll around the mud with my puppies and my dogs and other people's dogs, actually. But now like I can even play more. It's an excuse for more play and more fun in life. We have a blast now. I have an amazing life partner who is clearly, I'm the gut cop and my role is play. And I've embraced that role and it's amazing.

• 36:38Speaker 00

  You're also like personally using AI. What are you kind of using it for? You think other people could use it more for? I have hours of warm conversation with GPT every day. Philosophy, research. Was that taking place of when you were reading? Is that taking place of conversations you have with other people? What's the time displacement happening? First of all, it's replaced Google completely. But that was quick. That wasn't that much time. Yeah, it's rabbit holes. Old Wikipedia rabbit holes that are going down. It's replaced Wikipedia rabbit holes for sure. YouTube, but it's actually also so much more efficient. Let me give you an example. I'm toying with the idea of moving out of Turks and Caicos and somewhere else. And so I started having conversations with GPT about like where else would have the same quality of beaches, but not of the downsides of things I don't love in Turks.

• 37:23Speaker 00

  And it ended up suggesting four countries, which should narrow down to two countries, four islands. Then it identified like base of what the off-grid community I'm trying to build, like actual land that was available based on an analysis of the maps of where it was open. Then it found me the owners and it said, you know what? I actually think you should go and buy this hotel because it's like decrepit of falling apart in three star. And here's my comparative valuation analysis of how much it's worth based on multiple analysis I've done at that. Holy macro, this is so cool. I've created a financial model of what I think your P and L looks like based on their published rates on Expedia and booking for like several years, times the average occupancy of the country, times the labor costs for these types of hotels. This is the P and L. This is what I think they're worth. By the way, it's a three star all-inclusive resort.

• 38:08Speaker 00

  This is the multiples at which these resorts have been trading at for the last like five years in the country. Therefore, on a comparable analysis thing is worth this much. These are the owners. This is how much it's worth. If you want to buy, maybe offer like 20 or 30% more, but don't start there. Start at market value and then be willing to pay 30 or 40% more. This is a deep research project, obviously, and it took it like hours to get me the results. But it's basically a McKinsey analysis, McKinsey level results through several hours of interaction. It is mind boggling and I've used it for, you know, if I need coding help, it gives me the answer. If I need research on like medicine, like supplements, like I'm trying to heal my tennis elbow. We had deep conversations of peptides and whether or not I should use peptides to heal my tendon and where the person comes. What do you come up with at the end?

• 38:54Speaker 00

  So I've done beside a rich PRP and we trained the tear from one centimeter to 3 centimeter. And now we're doing BPC 157 with TB 500 peptides because they're not growth hormone. Where they injected. Where does the right quantity? How do you get them? All that stuff came from interactions with Dr. GPT. You know, it's like mind boggling. You can use it for everything. And by the way, two years ago, I used Midjourney, I used Runaway, I use so many other AI tools. And now I just use GPT for literally everything. And even cursor, I could see in the future, A, GitHub and Copilot will just offer it for free and maybe even GPT will just add it. Or you'll use Wind Surf, which is an OpenAI product or something like that. Yeah, exactly. I only use OpenAI these days.

• 39:35Speaker 00

  You don't use any of the Google tools? You don't use perplexity? You don't use? Yeah, okay. I've done A B testing. Once in a while, I go to Grog and perplexity and anthropic and deep seek, etc. But like, I'm so happy with like my interactions with OpenAI and GPT. I certainly stopped using Midjourney like, I don't know, maybe a year ago or something. OpenAI is eating the world. I think it's an existential threat for Google, by the way. Like, I have stopped using Google completely. Like, I'm 100% there. You probably still use Google Docs and Google Mail and this suite. And you've got companies probably still use, a lot of them still use GCP and a lot of your people use Android. And yes, they've got a lot of things going. We're always on Microsoft Exchange for variety of reasons versus Gmail. Just to control your own emails, like for security or?

• 40:18Speaker 00

  Not at all. Google has 50 gig mailboxes. I have emails since 92. I have like several terabytes of emails. Google doesn't like folders and stuff. And the thing is, if you have several million emails and you do search, you get way too many results. So actually, I have a hierarchy of things organized and structured. I'm looking at my Gmail right now and I have two terabytes in there. Okay, so maybe they fixed up. But back in the day, maybe a decade ago, it was limited at 50 gigabytes. And so for a long time, there was a size limitation, but then everything for me is structured. Folders, subfolders, by company. It'd be hard to move or something. Yeah, it flattens the hierarchies and my brain thinks in these hierarchies and folders and subfolders, etc. And so it's more a reflection of the way I like to work.

• 41:01Speaker 00

  My inbox is my to-do list, right? Like, so I try to be at like inbox zero. I really happen to like the UX UI and the way I work with Exchange, so it's a personal preference, same way I prefer iOS to Android. At some point, I forgot where this was, 10 plus years ago, you were leading a more nomadic lifestyle where you're having fewer possessions and things like. That what did you learn from that journey? So let's start by why I did it. I did it because as we get older, I find that our friendships fray. They don't have the same quality as they have. When you're in college, you're seeing your best friends like every day. You're talking about future of life and philosophy and like you go really deep. As you get older, because you get busy with work, with husbands, with wives, with kids, whatever.

• 41:44Speaker 00

  You start seeing each other every six weeks, eight weeks, and it becomes a biographical update. If they live in different cities, much less. Yeah. I was just trading emails with one of my best friends from college. I realized I hadn't seen them in like six years. Exactly. So I felt that the quality of these relationships was fraying. And I'm like, you know what? I just sold my company. And the other thing is you have a default, right? If you have an apartment, you live there. If you have a job, you go there. If you live in a city, you stay there. Do you ask yourself at first principles, absent any constraints? Where would I want to be? What would I want to be doing? Who would I want to be seeing? And so I'm like, you know what? I happen to be in a very privileged position at this point in time where I actually can be anywhere, see anyone, do anything.

• 42:27Speaker 00

  Let's iterate, let's throw spaghetti in the world to figure out how I would want to actually structure my ideal life. And so I started by like couch surfing and friends couches to reconnect with them, which actually was a dismal failure. Because of course embedding yourself in their lives when they have jobs, kids, et cetera. And like, I'm also infinite energy. So my vision of like, we're going to play tennis from like whatever eight to 10 P M. We're going to come home and we're going to think through like geopolitics, macro. But they're like, I gotta bring the kid to school tomorrow. Yeah, I need to go to sleep. I'm tired. I need to go to school. We were like different life stages as well, even though we're the same age. I was like single and so it's very different. That didn't work, but I kept iterating and iterating. And then I realized, you know what?

• 43:09Speaker 00

  I find that each city has a time where it's best enjoyed. So I love New York, September, October. The weather's pleasant. You have all the new tech weeks, the events, et cetera. I love New York in April, May, June. Okay. So why don't I live there in like Airbnb's in that period? Oh, in the summer, it's too hot, it's humid, it's oppressive and no one's there. They're in the Hamptons and I don't like the Hamptons. Okay, let's go to South of France for a month. Oh, and let's go to Canada in August to go climbing and hiking and camping, et cetera. And then November, December, let's go to church where I'm kite surfing. And then January, February, let's go to Bridge Columbia. We're in backcountry skiing and March, let's go back to church. So through iteration, we're like one week, one week, two weeks, two weeks, two months, two months. I started creating this life where You know what? I love New York. It's the center of the world and it's a haven for creative,

• 43:53Speaker 00

  social, artistic, professional endeavors. It's where I host my dialogue dinners every like two to three weeks. It's where I feel the most fulfilled by every social interaction is professional and after two months there I am burned out. And also if you're doing, you're not thinking. And so then taking a step back and going to Tristan Keiko's, you're going to British Columbia where I'm working during the day, of course, my life is Zoom calls, but then there's none of the rest of the distractions of New York and I'm like meditating, reading, writing, doing my podcasts, writing on my blog, reading my books and just being very healthy and being reflective is my personal work-life balance. And so I ended up iterating, creating this life that is perfect

• 44:34Speaker 00

  for me. I'm not saying it's universal, but if I was just in Turks, I'd go crazy. If I was just in Rome, so I'd go crazy. If I was just in New York, I'd burn out. And so that combination of Mountain Beach City in the right time ended up being perfect for me. And I came through it just because I had this acid light lifestyle where I could actually try. And it took me many iterations. I started in Dominican Republic, not in Turks. That was a big mistake. I mean, but again, you weren't from trying. You and I, one of the things we share is like a love for dinner parties and stuff like that. What's the formula that you figured out that works well? There you can take all the credit because I basically copied the dialogue dinners. And so I host Jeffersonian dinners where it's one conversation only allowed at a time. I have a

• 45:17Speaker 00

  round table. I've always had round tables, even private dialogue, but I have a round table. We're we're eight. You're capping at a certain number of people. Correct. So we're eight to 10. Sometimes we could be 11, but very, very smart, ambitious people or Tennessee the alpha don't like to be listening for very long. And so I've actually had 20, 30 people Jeffersonian dinners, but they're hard to moderate on a long table. It's hard to keep one conversation centered. And so I'm like, you know what? Just for simplicity, we're going to be six to 12, but I don't say on average are eight to 10. I'm the moderator. This way I don't have a lost slot for moderator. Pre-assign topics, either personal or open-ended or topical, like reinventing democracy of the 21st century, often helped by the dialogue

• 46:01Speaker 00

  organization, in fact, in terms of finding the people that are coming to them, et cetera. So it's combination of my friends and dialogers and there's massive overlap between those two. You need to show up on time. Your phone needs to be off. After two hours, I tell Tell everyone that dinner has completed and that they're free to go. And that model works very well. The differences I've done is like, I used to be very strict. Like your phone rings once you're out, you're never coming back. You showed up one minute late, you're not allowed it. Now I'm like, you know what? Show up seven to seven thirty, we start at seven thirty, then you're not allowed it. And it's seven thirty to nine thirty and nine thirty, I am the proceedings and you can say or not if you want. And if your phone happened once in a while, I'm like, yeah, people have kids, etc. They can have emergencies. It's okay, I'm no longer as victorial as I used to be.

• 46:44Speaker 00

  That means a lot since we're exploring like intellectual topics or business things. Have you done for like social, we have couples or other stuff as well? Oh yeah. What's the best way to deal with aging parents? How to be a parent? I'm doing one with another, with Samantha Stein, another dialoger on non dualism. Non dualism. Yes, the fact that you're all God. Yes, I do them on a wide, wide variety of topics. You know, religion in 21st century, uh, life in a post singularity world, which is completely, I mean, no one knows, right? Like, so it's like you're limited by sci fi in your imagination. Books you've read, like whatever, like very wide range. And I mix the personal and the, but it's again, it's a reflection of probably like me.

• 47:28Speaker 00

  The reason I do them is I'm very intellectually curious and our jobs or, you know, we live in a world that rewards specialization. So it's a way to express my intellectual curiosity in polymathy. Now, a couple of questions we ask all of our guests. What is a conspiracy theory you believe? Good answer indirectly because it's not a conspiracy theory, but it's a belief I have that I've experienced that I cannot prove. But because conspiracy theories, you know, for the most part, it's like we look at the moon. You can see that we have like flag and like stuff we left there. So, and it was probably the most watched event in history, like aren't fake, you know? Or the earth is flat. You can kind of prove that it's not. In fact, people knew it was around like thousands of years ago. You know, you see the boat going over the horizon and the pacific disappearing.

• 48:12Speaker 00

  Not many of these, but through the use of psychedelics, I have felt very deeply that this reality is kind of a simulation.

• 48:23Speaker 00

  Dream Matrix, where basically an otherwise bored immortal omnipotent omniscient deity has created to have new experiences and we're all here to entertain each other and that we're living this dream of life and I can't prove it and I've never even but was aware that there were a few philosophies out there that suggest this belief, which is why it's interesting because like Christian type tradition, the God-human relationship is like a king, not one where we are God. And I felt that we are all basically an expression of God, which is why you can manifest, you can, some rules, like in the Matrix, in this simulation, some rules could be bent, others can be broken.

• 49:06Speaker 00

  I felt a sense of unity and oneness on acid, on ayahuasca, on mushrooms, that is mind-boggling. And like, literally, I would think of something and we're like, would happen? Or I would meet that person at Burning Man or whatever, like, can I prove that this is true? No, but I like lived it and felt it like once I accidentally took 10 drops of acid, like, I felt like I witnessed the creation of the universe and Earth and I had total ego that that brief individual disappeared and I became a mother, a surfer, like, it was beautiful and mind-boggling. And so it's not a conspiracy, but it's pretty crazy. Yeah, no, no, I like it. I can't prove it to be right. It could be an empty phenomenon of my brain, but I have lived it. I like, I have had a divine, it's like it felt like I communed with the divine.

• 49:51Speaker 00

  And that's what I think is missing for modern day religious experiences. Okay, this is cool. Last question we ask all of our guests, what conventional wisdom or advice do you think is generally bad advice? So I've thought about this one. In fact, it was on the dialogue dinner I had Thursday last week. It was one of the questions in the dialogue dinner. For the people always knows this dialogue is something you and I do together to explore intellectual curiosity with. Some very other interesting people. There's some piece of advice that can be correct for some, that can be incorrect for others. So one of the common pieces of advice and wisdom is like, follow your passion and see where it leads. And everything will be right for the world.

• 50:31Speaker 00

  And it is true, if you happen to have a passion that you love and it's monetizable, and you can make a good living out of it, it's amazing. Like, if you feel that you're playing, like I am, and probably you are, like, every day I feel like work is play, and it's amazing. But there are two cases where I think this doesn't work very well. One is if you have a passion and a hobby and you turn it into your job, you may actually lose the joie de vie. It may no longer be something that you loved, right? Like, think of Agassi and Temps. His father basically beat the joy out of him. He started- His book, Open, is like, I think, one of the best autobiographies I've ever written. Exactly. And he was miserable. And so turning your passion into a job is not always a great idea, because it's better as a hobby.

• 51:16Speaker 00

  And if you turn it into a job and it becomes work, you may hate it. So you need to really be thoughtful about that. And then second thing is, the job you should have is like, something where you're good at it, the world values it, as such, it's monetizable, and you're happy to be doing it on a repeated basis. It could very well be that if your hobby is like art history, there's only one Met curator, you know? So you may not be in a position to monetize it very effectively. So I would be thoughtful about that. So, but are there cases where the common wisdom advice works? Absolutely, and it's way better if you love what you do. But there are pieces where it really doesn't work. And so I'd be very thoughtful about it. Yeah, and going back to that bus driver or the passport stamper, like,

• 51:59Speaker 00

  you can find joy in many things, you know? Absolutely. All right, this has been amazing. Thank you, Fabrice Grinda, for joining us on World of the Dass. I follow you at Fabrice Grinda on X. Definitely encourage our listeners to engage you there. This has been a ton of fun. Thank you, Aur.

• 52:18Speaker 00

  Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review and check out worldofdas.com. That's worldofdas, D-A-A-S, dot com. And of course, connect with me on Twitter, at Aur, that's A-U-R-E-N. Would absolutely love to hear from you.