I had a fantastic conversation with Prashant. We dive deep into my journey, from leaving McKinsey at 23 to chasing my entrepreneurial dream, to the “spaghetti on the wall” strategy of launching OLX in 100+ countries simultaneously.

I get candid about nearly going bankrupt, borrowing money on my credit cards to make payroll, and the resilience it took to build a company to $200 million in revenue.

You’ll also hear the untold story of how I tried to buy the “Alibaba.com” domain from a then-unknown Jack Ma, and the pattern recognition that allowed me to become an early investor in future giants like Alibaba, Vinted, and Flexport.

We talk about:

• Why I left a prestigious job at McKinsey to become a founder.
• The high-risk strategy that made OLX a global phenomenon.
• Lessons from nearly losing everything and bouncing back stronger.
• The key traits that separate successful companies from those that fail.
• My contrarian take on the current AI bubble and where the real opportunities lie.
• The future of marketplaces and the next trillion-dollar opportunities.

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.

Timestamps:

(00:00) – Introduction

(03:02) – Journey from McKinsey to becoming an entrepreneur

(04:48) – OLX’s global expansion strategy and market selection

(07:33) – Fundraising approach and VC backing for OLX

(09:44) – Building Zingy to $200M revenue after near bankruptcy

(11:16) – Bootstrapping Zingy with small incremental raises

(12:32) – Transition from operator to investor

(14:16) – Being named #1 angel investor by Forbes

(16:11) – Framework for evaluating marketplace opportunities

(17:32) – Pattern recognition in successful vs failed companies

(19:09) – Current marketplace market conditions and valuations

(22:30) – How AI is changing purchasing behavior in marketplaces

(24:42) – Why B2B marketplaces are compelling now

(26:18) – AI’s impact on marketplace defensibility and network effects

(27:41) – Early investments in Alibaba, Airbnb, and Flexport stories

(29:58) – Cross-border marketplaces and live commerce trends

(32:27) – International arbitrage and business model innovation

(34:10) – Solving the chicken and egg problem in marketplaces

(36:00) – Take rates in marketplaces from early to mature stages

(39:12) – Marketplace monopolies and pricing power

(41:06) – Zomato’s valuation and public market implications

(45:45) – Biggest hurdles for marketplace founders today

(46:35) – Contrarian belief: Investing in marketplaces over AI

(48:08) – Rapid fire: Investment sectors, stages, and check sizes

(49:26) – How to reach Fabrice and closing remarks

Transcript

Fabrice Grinda: I grew from zero to two hundred million in four years. Profitable, non VC backed. Because in 2001, 2002, I was begging and groveling to VCs, please give me money, I’m dying. I invested every last penny I had. I borrowed a hundred thousand in my credit card. I missed payroll 27 times. But in 2001, no VC wanted to invest in a tech event.

Prashant Choubey: OLX became a global classified giant with 350 million plus users across 30 plus countries. Walk us through the spaghetti on the wall strategy, launching in 100 plus countries simultaneously.

Fabrice Grinda: We didn’t know where it was going to work. So we’re like, you know what? The idea works well. It’s easy to build.

Why don’t we launch in 100 countries? We spent 50k in 100 countries.

Prashant Choubey: Having invested in early in, companies like Alibaba, Airbnb, and Flexport, all now massive companies What did you see in them that others missed at those early stages? Well!

Hey everyone, this is Prashant and I’ll be your host for the VC10X podcast.

And today we have a very special guest, Fabrice Grinda with us. Fabrice is a legendary entrepreneur and one of the world’s most successful angel investors. Fabrice is the founder of OLX. The global classifieds giant with over 350 million users. He also built his first company Zingy to over 200 million dollars in revenue after nearly going bankrupt.

As an investor, he was named the number one angel investor in the world by Forbes. He was an early backer of giants like Alibaba, Airbnb and Flexport and has over 350 exits from his portfolio. In this episode, we dive deep into his incredible journey. We’ll hear about how he went from leaving McKinsey at 23 to becoming a serial entrepreneur.

He’ll walk us through the wild spaghetti on the wall strategy he used to launch OLX in over 100 countries at once. We’ll also hear the amazing story of how he tried to buy Alibaba. com domain from Jack Ma before anyone knew him. So without wasting any time, let’s dive straight in.

This episode is sponsored by my own podcasting agency called Podcast NX, where I help venture capitalists, asset managers, allocators, and family offices, and starting their own podcast and building a strong brand.

Podcast NX is designed in a way to work well with the busy schedule of investors, where we handle every aspect of podcast production, so you can focus on investing. If you’re looking to build a strong investor brand starting a podcast should be right up your priority list It’s the only form of marketing where you can showcase your strong network in other words access To limited partners and founders and grow that network further and contrary to what most people hear It’s still very early to start a podcast There are at least 10x more newsletters and 1000x more blogs than there are podcasts in this world. You can learn more about our podcasting services at podcast10x. Com.

I’ll make sure to add the link in the description below. Enjoy this episode.

Prashant Choubey: Hey Fabrice, it’s so good to have you on the VC10x you doing?

Fabrice Grinda: I’m doing very well. Thank you for having me.

Prashant Choubey: Yeah, it’s a pleasure having you on. to start things off, can we first have your amazing journey of being a founder yourself to now being an investor?

What drove you to leave McKinsey at 23 and then to become an entrepreneur and a very successful one at that? And how did those early consulting days help you in that journey of being a founder after that? Let’s start with that.

Fabrice Grinda: I’m probably a bit non-traditional because I went to McKinsey knowing I wanted to be a tech founder.

In fact, I went to college knowing I wanted to be a tech founder. But what happened is I went to Princeton, finished off my class, but I graduated. I was 21. And I want to be a tech founder, but I’m shy. I’m introverted. I’ve never managed anyone. I really don’t know business.

Let’s go to McKinsey. It’s like business school, except they pay you. And I went there for two years, learned everything I had to learn. And then okay, I’ve learned what I need to learn. I could write a deck and to tell a story, I’m better at oral and written communication skills at public speaking.

Now let’s go build a startup. And it was obvious to me, it was time to leave and it was time to go on and build startups, which is what I meant to be doing anyway.

Prashant Choubey: Absolutely. That’s quite interesting. So you, from the outset, you knew you want to be a startup founder, right?

Fabrice Grinda: Well, I knew that when I was 10, right? When I was 10, I got my first PC in 1984. I was, it was a compact, 8088. And I was following the lives of Bill Gates and Steve Jobs. And clearly I wanted to follow in their footsteps. And I was in France. And I went to the top school with friends and they were what do you want to be when you grow up?

And I was I want to be a tech founder, like my role model. they were what? You would betray the ideals of the French socialist revolution. So I burst out laughing. They weren’t kidding. I’m okay, American dream. Here I come. And so I left at 17 to go to Princeton and, never looked back.

Prashant Choubey: Wow, that’s an incredible story there, And OLX, a big highlight on your resume, OLX became a global classified giant with 350 million plus users across 30 plus countries. Walk us through the spaghetti on the wall strategy, launching in 100 plus countries simultaneously. What were the key lessons from markets that failed versus those that succeeded?

Yeah, so in 2005, I went to see Krem first of all, the U. S. and I’m Hey, Craigslist is great. It’s providing a public service to humanity, but it could be better. You should be moderating the content. You should have no span, no scam, no prostitution. And by the way, the primary ideas for this is women.

They’re the primary decision makers in all household purchases, right? They pick the house you live in, the babysitter you hire, the car you’re buying. So you need to create a female friendly site. you’re the exact opposite of that, but he didn’t care. He didn’t want me to, and I said, I’ll do it for free, by the way.

I said, let me run it for free. He’s not willing to let me do it, let’s create, let me see if I can build a better version of Craigslist. Now the issue in marketplaces, of course, it’s what I love is they have something called network effects. Every more buyers were there were sellers and more sellers means more buyers.

And so if someone already has that work, if I select Craigslist, breaking that is very, very hard. And so we didn’t know where he’s going to work. So we’re like, The idea works well, it’s easy to build. Why don’t we launch in a hundred countries? We spend 50 K and a hundred countries in a long tail SEM, BMW X3 red, the Delhi or Mumbai, 30, 000 miles, so we were paying a penny a click.

And we go to people that have listings to see if they get list. And then we see if we can match supply demand and it really worked in two countries, which were Pakistan and Portugal, and it worked very well, but a bit lost world in India and Brazil. So we went from a hundred countries to four.

And then we became very big in these four, and then we started using the profits, especially of Brazil, and then were expended from a hundred of four back to thirty. Now, to answer the question, why did these work when others didn’t, I think it’s a combination lack of incumbents, so there were no big established classified sites that were big.

The ability to buy advertising that was cheap. So not that much competition in buying ads on Google and Facebook at the time. and frankly luck. And so the, you know, why Portugal became so big, not very clear. I think maybe we had like the cultural zeitgeist super cool. People started using it and it took off, but once we saw something working, we’d double down and kept going.

Yeah, absolutely. That’s quite interesting. And there’s not a very general strategy that founders follow that. Okay, we’re going to launch in multiple markets simultaneously and then see which ones work and then go deeper in those markets. That’s not the strategy that is usually followed. That was your decision to do that.

And did you have VC backing at that time when you were launching in all these countries and testing it out? yeah.

Fabrice Grinda: I raised 10 million in VC. But so what happened is my prior company, Zingy. I grew from zero to 200 million in four years, so it was 1 5 5200 profitable non VC backed.

Say 2001, 2002. I was begging and groveling VCs, please give me money. I’m dying. I invested every last penny I had. I borrowed a hundred thousand in my credit card. I missed payroll 27 times. But in 2001, no VC wanted to invest in tech, the internet was dead. but eventually, when we became profitable, every VC said, I want to invest.

And so I didn’t want to invest because I didn’t need the money anymore. I was like, where were you three years ago? and eventually I sold the company and it was a very nice exit. And so all the VCs that missed on investing were like, whatever you do next, I’m going to back you. And so we raised 10 million at a 28 million valuation on a PowerPoint.

at the launch of OLX, and that’s why 100 countries, by the way, times 50k, that’s 5 million, right? And so I had the 5 million to do the tasks to see where it would work. And the reason it’s a different strategy that I used, but it worked here is classifieds is you do need to ma match supply and demand, but we’re not actually doing payments and shipping and logistics, et cetera.

So it’s actually in a way easier to go global. Facebook is pretty easy to go global because it’s the same platform everywhere in every language or Instagram or TikTok or whatever. And that’s not true. if you want to build, Uber, you need, or Ola or whatever, or if you want to build Zomato, you need, local delivery, local restaurants.

I mean, you, then you need a very local team. You can’t build that in a hundred countries. So it depends on the idea you had, but yes, I did have VC money. I created FOMO and so that I had 10 million in VC backing.

Prashant Choubey: Absolutely, and Zingy is another very interesting story that we should cover, right? So, after nearly going bankrupt with the first startup, you built Zingy to 200 million plus in revenue and sold it for 80 million dollars in cash, right?

What kept you going during the darkest phase of that journey and how do you advise founders today who are teetering through, on the edge of survival of their startups?

Fabrice Grinda: In a way, there’s a saying in French, which is you cannot shave an egg. I had nothing to lose. a hundred percent of my net worth was in the company.

We were getting sued left and right by record labels. I’m like, you know what? It costs you more money to shut me down than let me operate. And by the way, I can make you money. I also building something, right? I don’t do any of these things to make money.

I do these things because I like building, this is my way of expressing my creativity. I think it’s all a game. I think life is a game and I think building a startup is a game and it’s a game I to play. And as long as they felt the game was worth playing. It was worth continuing now, even though we were missing payroll, even though we were out of money, etc.

I could see the potential here, right? It’s a multibillion dollar category in other countries. There are a lot of reasons why I thought it would be big. if we execute it well, there are moments where you need to stop playing the game, right? if the universe is telling you this is not working, there is no product market fit.

You’re not going to get there no matter what, then of course, you want to move on and go play another game.

Prashant Choubey: Absolutely. So you’re saying Zingy was bootstrapped all the way to 200 million plus and revenue, right?

Fabrice Grinda: I did raise 1. 4 million, but I raised it at 10K increments, I would meet someone who’s please, followed by startup, I’d better get 10K here, 10K there, make payroll, that I wouldn’t find money, miss payroll, find another 20K, make payroll, et cetera.

So it was, it was re I did raise 1. 4 million, but it was the most complicated raise of my life because it was all in 5k increments.

Prashant Choubey: Got it. And what, at what stage was there was super early stage of Zingy when you raised this or later?

Fabrice Grinda: Well, little by little first, I put every last penny I have in the company.

So I had 700 K plus a hundred balance with my credit card. So first I put 800 K in, then I started raising and again, until, you know, until I ran out of money, basically.

Prashant Choubey: Okay. And then after a point, you just stopped raising your businesses.

Fabrice Grinda: Well, at some point, you’re profitable. That being profitable is wonderful.

You’re the master of your own destiny, right? Like all these founders announcing I just raised a hundred million at a 500 million valuation. I mean, that’s the ego announcing. That doesn’t do you any good. This is monopoly money. What do you want is real money that you could go buy coffee.

But you have monopoly money. Does it buy you coffee or a car or a house?

Prashant Choubey: Yeah, absolutely. Zingy happened. And then, OLX happened, I would say to successes. Right. And then after that, you went on to become an investor, started FJ Labs, which is quite successful as of today. And. You have become sort of the most sought after, marketplace investor, right?

So do tell us about that investor journey, how that started, what were the initial investments you made? I know there are some big names in your portfolio as well, but would love to hear it from you.

Fabrice Grinda: Yeah. So my investor journey started way earlier than that. So when I built my first startup back in 1998, which is an eBay of France, it was called Aucland.

I was a very visible consumer facing internet CEO. So a lot of other founders started reaching out and saying, Hey, could you help, could you invest? And so I thought long and hard, should I be an angel at parallel to being a CEO? Because it’s a distraction from my core mandate as Fabrice CEO. But ultimately I articulated or argue to myself, okay, if I can articulate lessons learned to others, it makes me a better founder.

If I can keep my fingers on the pulse of the market, it makes me a better founder. So as long as it’s not too distracting. So if I can decide it in an hour, if I invest or not, then it’s okay, let’s do it. And so I started angel investing back in 1998. at the very beginning of my entrepreneurial journey.

And so by 2013, when I’d left OLX, I’d already made 170 investments. I’d had dozens of exits. It was already doing very well. I’d already invested in Alibaba. I’d already invested in Barberal. I’d already invested in Delivery Hero. I’d already become a very successful angel. So continuing to do that, just with more skill, came very naturally.

Prashant Choubey: Absolutely. And as a matter of fact, you were named the number one angel investor globally by Forbes at one point, right? So what do you think is the major difference between being a successful operator versus being a successful investor? What, what skills do you think were transferable from being a founder versus being an investor now?

Fabrice Grinda: Well, the first thing is I’m, I didn’t join a VC for my deal to be safer, right? so in a way I’m building a startup, it’s the same thing, defining a strategy, defining culture, hiring people, raising capital from LPs, which is not that dissimilar from raising money from VC. So a lot of the skills from if you’re building a firm or transferable.

Now, of course the job is different. It’s judgment. And the good news is I already had. Thousands of at bats, investing by the time I built a VC firm. so that was irreplicable and not every operator is a good investor. And not every investor was a good operator, but in my case, I’ve been doing both from since the beginning and it came pretty naturally to me.

Now, on average, I would say I prefer to be an operator than investor. It’s just it’s hard to justify the opportunity cost of time, given that I’m already very successful. The idea needs to be – I have the potential to be huge to just find my time. And I find that there’s a lot of leverage in working with a lot of founders.

I can bring a lot of the things I’ve learned. They do the hard work and I can try to reflect their trajectory and help them fundraise and strategically by being an advisor. And so in a way I touch many more people and a much more diffused way than I was as a direct founder, but it feels in a way more scalable and it also is pretty compatible with my intellectual curiosity. I’m interested in solving the problems of the world. And there’s not one problem like climate change is not one problem. It’s thousands of problems. Inequality of opportunity is not one problem. It’s thousands of problems. And thousands of founders are trying to track sub niches of that.

And I like to be involved in solving all the world’s problems.

Prashant Choubey: Absolutely. And, marketplace is, somewhat your forte, your expertise, right? So what’s your specific framework for evaluating marketplace opportunities and how has it evolved?

Fabrice Grinda: There are four things I look at when investing in, we’re looking at investing in startups specifically.

One is the team that every VC says I invest only in extraordinary people. Now for me, extraordinary people is someone who’s both a visionary, eloquent salesperson But also knows how to execute. So the Venn diagram intersection of people that know how to execute and are visionary salespeople. Number two, do I like the business?

Now, do I like the business as a combination of total addressable market size and unit economics? How quickly do you recoup on a contribution margin to basis? You’re fully loaded cost of acquisition costs. What is your LTV to CAC after 18 months, 36 months, et cetera. And there. Pretty good. I have a pretty good sense of what type of metrics I’m looking for in terms of GMV growth at different stages, effective take rate, margin, etc.

Varies honestly by industry, but, obviously we have all the metrics that we’re looking for. In fact, I’ve published them on my blog. Number three – is the valuation reasonable? I think it’s cheap. It’s not quite reasonable in light of the traction, the team, the opportunity. And then number four, do I like a thesis that’s in line with my vision of where the future of the world is going in terms of like the future of mobility, the future of food, the future of real estate, et cetera, et cetera?

Prashant Choubey: Yeah, absolutely. And with 355 plus exits from your portfolio and a 39 percent IRR, can you share some pattern recognition around what separates the companies that achieve meaningful exits from those that don’t?

Fabrice Grinda: So companies fail for a bunch of reasons. The number one reason they fail is they don’t find product market fit.

So the idea, or they find product market fit that only lasts for a certain point and then it doesn’t scale anymore. And so maybe you had a customer acquisition channel that worked until, 10 million or a hundred million, but it doesn’t keep going. And therefore you can’t scale at profitable unit economics that’s what reason number one, you don’t find product profit

Reason number two, if you have a co-founder, you’re more likely to succeed. But if you fight with your co-founder, you will fail. and then number three, raising too much money at too high a price, right? Especially the first site founder, you’re tempted to take the highest valuation, raise the most capital.

But if you raise too much capital and you don’t grow into the valuation because you don’t winna do anti-dilution, you don’t want to do, Dan ran. It’s going to kill the company. And so eight of the people that avoid this obviously find product market fit. They’re fine for their co-founders and they raise the right amount of money, the right terms that allows them to keep scaling categories that are large enough with good unit economics that they get there.

Now there’s an element of luck, you never know ahead of time if the idea you have ends up being a lot bigger than you think it’s right. Airbnb was inflatable mattresses in people’s living rooms. It sounded like a small idea, but they tweaked it, became a much larger idea.

Prashant Choubey: Absolutely. And I know, FJ Labs publishes its own reports, with regularly about what are the market conditions like and so on. so can you tell us about how are you looking at the marketplace market right now? As an investor, how do you look at the valuations going up or down? How easy it is to build one or what are the challenges that you’re seeing right now?

Fabrice Grinda: So it’s never been easier to build a marketplace, now you have tools that are available and low code, no code AI. It’s easier to everything to build the stack, it’s easier to if our customers, it’s easier to integrate AI to translate listings to have listings automatic data photo and it creates the title, the description, the category, it suggests the price.

So you can do a lot of interesting things these days with marketplaces. And there’s a lot of marketplaces yet to be built. Now, obviously, If you’re in the consumer side, a lot of things have been done. Like you have Flipkart, you have Zomato, you have Ola, you have Airbnb. But if you’re in the B2B side, very little is done, right?

If you want to buy petrochemicals, there’s no site where you can see a list of what’s available. There’s no connectivity to the factory to understand manufacturing delays and manufacturing capacity. If there’s no online ordering, there’s no online payment. There’s no tracking of your order. There’s no financing.

And this, these happen in every industry and every vertical. Likewise, if you think of all the mom and shop SMBs and bodegas or whatever, Everything’s pen and paper, no, one’s actually automated there. There’s huge opportunities in marketplaces and B2B, both for large enterprise, for inputs and for SMBs.

Now, in terms of what are the trends? Well, right now in venture, it’s all AI all the time. So all the VCs or lemmings, they only want to invest in AI. I think 75 percent of the investments for the first half of the year, when AI 95 percent of the batch of YC is AI, it’s all AI all the time. which, and there’s clearly an AI bubble going on now.

AI will transform the world in a more meaningful way than we expect it to, but it’ll take a lot longer than people think. And a lot of dead companies along the way, because too many people are doing the same thing and raising money to higher price as a result, marketplaces are kind of on loft, valuations are very reasonable.

They’re kind of back to where they were in 2019. And, but what’s interesting is I think marketplaces are a smarter way to play out, right? you can invest in one of the LLMs. and then you can be fighting the game of kings and you need hundreds of millions of capital, and other, even the early winners like lovable or cursor may not be long term winners as GPT starts releasing development tools and GitHub has co-piloted,

so I think there’ll be a lot of dead bodies there, but imagine you’re investigating a marketplace and then you use AI to make it significantly more efficient. You improve the listing process. Do you improve the customer care system? You improve the purchasing process. I think applied AI is probably the better way to play it and you play it at more reasonable valuations.

But as a founder, it’s harder to raise in marketplaces, especially BB than it is in AI. and as a result, you need to raise enough money that you can get to the next rent and the valuations are more reasonable, which also means you’re less in a way you’re less likely to fail because you didn’t grow into your valuation.

Prashant Choubey: Absolutely. That’s quite interesting. And do you think marketplaces are also going to evolve with AI coming in because now the purchasing behavior of people is also changing. Earlier they used to directly go to the said marketplaces. You mentioned Flipkart or Amazon that go there, search for what they want and get it.

But now what’s happening is they’re first searching on LLMs that what would be the best brand to buy and what fulfills my…

Fabrice Grinda: that’s actually not true, by the way, what you just said.

Prashant Choubey: Okay.

Fabrice Grinda: There’s three purchasing behaviors on marketplaces. One is if you know exactly what you’re looking for, you just go to Google. If you go to Flipkart or Amazon and you just put it in, boom, you get it.

there’s no reason to use an LLM there. And a lot of people know exactly what they’re looking for sometimes. That’s one big search category. Number two, a lot of people would go and do browsing as entertainment. If you go to OLX, you typically don’t know what you’re looking for. You’re just browsing through listings.

It’s kind window shopping, and sometimes you find something and then you get it. LLMs don’t play a role here because there’s no, nothing to make it more efficient. Now LLMs play a role in, consider it purchases. Oh, I’m moving to Delhi, but I don’t know the neighborhoods. This is the budget I have.

I need these many bedrooms. What do you recommend? Where are the trade-offs? Or I, I want to buy a new car, but I don’t know, give these are my uses. Which one would you recommend? LLMs play a role, but even then it’s not obvious that it ends up being on a chat, JPT versus on a Carvana, Carvana is every information about every car, Amazon launched something called Rufus.

And if you want to ask Rufus, which sneaker to buy or whatever, it’s really good at it. So it’s not, even then it’s obvious. If I look in the marketplaces, we are investors in how much traffic is coming from LLMs, it’s tiny, tiny, tiny. It’s 1%. not even now. Is it growing? Sure, but it’s really more taking sure from Google than this taking share from, the marketplace.

So I don’t think they disrupt marketplaces, which the marketplaces are winner takes most. They they’re doing the fulfillment, the customer care, they have the liquidity, et cetera. So the share of wallet, I think that the LMS can capture is no more than the share of wallet Google captures.

Prashant Choubey: Got it. Yeah. Thanks for sharing that. And you mentioned that you have identified B2B marketplaces are still in their early stages, right? So what makes B2B marketplaces particularly compelling now? And how do they differ from B2C marketplaces?

Fabrice Grinda: The reason they’re compelling now is there’s a generational shift where the people that were running them or, that are running the RFPs at a chemical company, they were their sixties and seventies and they’re retiring and they’re being replaced by millennials. And the same thing is happening in SMBs. the owners of these SMBs are retiring. Their kids are not taking over. It’s where they’re selling them a private equity.

And so these people coming in a prefer to use online tools and RFPs and they’re trying to make them more efficient. So when private equity is buying. laundromats, obviously the tribe, they’re going to bring in as many tools as they can to make it as efficient as possible or break software and inventory management and fleet delivery management, et cetera, which are tools I’d someone who’s 70 or 60 is not was on using.

And so there’s a very good why now. Now the difference between the consumer facing ones is a lot of people that are running these typically come from the industry. Because if you need to create a behavior change, you need Dow Chemical to change the way they buy or sell their petrochemicals, it helps if you’ve been in the industry and you can go talk to the CEO and say, Hey, I’ve created this, you should definitely use it.

It’ll save you a lot of money versus if you’re a 23 year old Stanford grad, right? So the profile is more a 40 year old, 45 year old who comes from the industry.

Prashant Choubey: Got it. Yeah. Thanks for sharing that. That’s definitely a small perspective and, how is AI fundamentally changing, marketplace defensibility and network effects?

Are traditional modes becoming less valuable now or is it still the same?

Fabrice Grinda: No, it’s still the same. It’s still winner takes most. And if you have liquidity, you don’t lose liquidity. If anything, AI makes you even stronger because what I, so let me give you an example. We’re investors in a fashion marketplace in Europe called Vinted.

They’re absolutely crushing it. They’re like out of a 10 billion in GMV, a billion net revenues, super profitable. And so they were already the winners or there were any leaders at each of the countries that were in. Then they added AI to translate the listings between whatever Polish and German and French.

So then you have more listings in every country. Then they translated the conversations between the buyers and sellers. So you may be in France. But you’re actually talking to a seller in Lithuania. You don’t even realize it. The integrated payment and shipping, then they lower the customer care costs by automating customer care, then they automated the listing process.

So you can take a photo and it tells you, this is the item title, description, category price. So it makes it simple. So the visit to listing rate goes up. The visit to purchase rate goes up and the costs of transactions goes down. So it makes them way more efficient. And so it makes the winners win even more.

As long as they adopt it, right? so if you’re an old school incumbent, I suspect has not been a first mover AI adopter, but the fast moving transactional marketplaces have been very good.

Prashant Choubey: Absolutely. Yeah. That’s quite interesting how marketplaces are using AI to, make it more efficient and improve their processes internally, right?

Having invested in early in companies like Alibaba Airbnb and Flexport all now massive companies right by the way. What did you see in them that others missed in at those early stages?

Fabrice Grinda: it is different in each of them. I went to study at Beijing Normal University in 94. I learned Mandarin and when I launched my first company, Aucland. The code name is Alibaba, so I try to buy the Alibaba.com domain name from Jack Ma who said no obviously.

I didn’t know who he was, and II was always following Jack and Taobao from afar. And so when the opportunity came in, 2009 or 2010, 2011 to buy some shares, it was pretty obvious that they had something magical. They just turned on monetization. It made sense to invest. Flexport, Brian is a superstar and the idea of fixing international logistics, which is a truly no category made a lot of sense and making more efficient.

So B2B marketplace by excellence. And what was the other company you mentioned?

Prashant Choubey: Yeah. Airbnb. Yeah. And

Fabrice Grinda: Airbnb, Airbnb very quickly, I realized they had global net worth effects because people were traveling internationally. And so when they were winning one country, they start winning the others. and I loved it.

I was a user of Airbnb very early on and a power user. I was renting my own places. I was renting places on there. I lived in Airbnb’s for three years. In 2012. When I gave up all my possessions to charity, I lived in Airbnb’s from 2012 to 2015. So I was a power user. So it was obvious for me, I needed to invest.

Prashant Choubey: Absolutely. Amazing stories there, right? You’ve been investing in cross border marketplaces and live commerce as key 2025 trends. Why do you think these specific areas we’ll see breakthrough, moments now?

Fabrice Grinda: There’s a big geopolitical grift or shift happening, right? Where people will have to move because of cold war two between Russia, China, Iran, North Korea, one side in the West and the other people have to move their supply chains out of China.

And so clearly there’s a trend towards what I called French shoring, moving the supply chain out of China, mostly into India, and so I’ve invested in companies in India that are trying to export to, and that are helping fulfill the provide inventory to, international companies, especially in Europe and the US.

So Ziod is an example of that for apparel. There are, they’re doing the RFQs because obviously the mom and pop guy who’s trying to just manufacture apparel, he doesn’t really know how to talk to Zara and H& M and answer RFQs and yield customs and shipping and pricing. And so Ziod will do all of that for them, and get them big orders.

And then they just need to execute a manufacturer. So this is an example of cross border marketplaces that India is the place buy excellence today.

Prashant Choubey: Absolutely. And what about live commerce?

Fabrice Grinda: So live commerce, is much bigger in China than it is in the rest of the world.

Mostly because, it’s been pushed by the main platform. So Taobao Live is like 25 percent of the commerce on Taobao. And in the U. S., Amazon, eBay never launched live in a meaningful way. And so it ended up being taken over by what not, in certain categories. But now we’re seeing more use cases of it.

So we invested in a company called Palm Street and they’re selling rare plants by live commerce, because it makes a lot of sense that you’d buy rare plants. There’s a story around them, how to take care of them, where they come from, et cetera, through that medium. And so we’re seeing these small businesses that are doing two live streams per week.

And they end up selling like 10, 000 per month on the live stream. So doing really, really well. And so it’s happening in more and more verticals, little by little.

Prashant Choubey: Absolutely. Yeah. What I’m observing is that different countries or regions in the world have different marketplace or commerce trends. You know how their shopping is different based on the region they come from.

Right. And you kind of have this global scope in your investing activity that you’re able to see these trends in one region. And you can say, see that, okay, maybe this is going to replicate in other regions as well. And you go and invest early in those companies. Is that a correct assessment of how you’re doing it?

Fabrice Grinda: Yeah, it is one of the ways we’re doing it. We’re seeing a trend in the country and we’re like, Oh, this is interesting. If it works somewhere, it’s probably going to work somewhere else. Let’s go see if there’s an equivalent in another country. it’s not, I’d say most of what we invested in is more business model innovation.

Adding new layers of new different approaches to market, marketplace design or business models or AI. We do some international arbitrage. We’re like, Oh, life commerce works here. Let’s go do it elsewhere, as well, though it’s not a big chunk of what we do.

Prashant Choubey: Got it. Yeah. I just thought that was a theme because, even OLX, there was Craigslist that was adjacent to it.

And then you saw that, okay, there are other markets that are not tapped into by any other players. And there was an opportunity there.

Fabrice Grinda: Yeah. That was definitely the theme then. But right now, most of our investments are in the U. S. right? And in the U. S. you need to innovate. You’re not, there’s no way to copy.

most of the things we invest in these days are new innovations, new business models, new approaches.

Prashant Choubey: That is interesting. something that’s, interesting about marketplaces is that they have an inflection point where in the early days, it’s extremely hard to build a marketplace because there are two sides of the equation.

At least two can be more as well. And then you bring both of those on the platform and engage meaningfully so that both those parties get value out of the platform, right? And initially it’s extremely hard the chicken and egg problem as you know it, right? But after a point it reaches an inflection point and it takes a life of its own and then let’s call that PMF or something But it blows up from there, so, how do founders who are in the early stages of solving that chicken and egg problem, starting out that platform and bringing new people in. What’s the ideal GTM approach for them that you’ve seen, startups in your portfolio take that you can advise to them.

Fabrice Grinda: So usually you start focusing on the supply because the supply is financially motivated to be on the platform. If you go to a seller, you’re like, Hey, I may have buyer’s free. Do you want to be here? It’s free. Well, if you can commission, if it works, most people say yes. But the key is curate the supply only bring very little that’s high quality, that’s engaged.

Because imagine I wanted to build a locksmith marketplace in Delhi. I could probably, hire a team, call every one of them, have a hundred percent of them on the platform, but then I have no demand for them, so they’re not rich. They’re going to churn. They aren’t going to reply, et cetera. Instead you take one and one zip code.

You bring enough demand that he’s very happy. And when you represent 25 percent of his revenues, and then you bring another one. And so you, you, you start supply, bring demand, add a bit more supply, bring demand, always matching the two. The biggest mistake you can make as a marketplace founder is you get so much supply that your demand, you have enough demands that the sell through rate is very low.

So if you’re selling used goods, you have liquidity. If at least the probability of the item selling that you’re listing is 20%, 25 to 20, 25 percent at the low ends. Less than that, you probably don’t have liquidity. If you’re a service marketplace, you want to represent at least 20 percent of the earnings of the labor on the marketplace.

And so then you have product market fit. It’s even more, then you have network effects. Then you have ever more sellers where you have more buyers and more buyers with them or sellers until then you need to make it happen basically.

Prashant Choubey: Absolutely. So there, we have the solution to the chicken and egg problem, at least in marketplaces, the high quality supply comes first and then you build from there and bring the buyers in.

Fabrice Grinda: It’s not true. I mean, it’s true in 99 percent of the cases. there are a few cases where you do demand first; but, in most cases, you get the supply just because it’s easier to get, right? they’re financially motivated to be there.

Prashant Choubey: Absolutely. I completely agree. there’s one term take rate, right?

In marketplaces, which is the share you’ll take from the total revenue generated for the suppliers on a platform, right? How do you see that in the early days? Do you see marketplaces when they are in the early stages. You know take less rate from their suppliers and then as the platform strengthens, there are more buyers.

There’s more brand equity. Then they start to increase that take rate and what are the general, rate choosing in the early stages when it’s not established yet and then to the mature stage. Let’s say, you know not to the Airbnb stage, but even before that was the standard rate. You’re seeing as they create in marketplaces.

Fabrice Grinda: The answer for us is it depends the way you measure Whether what take rate you can take is you measure the elasticity of supply and demand And you take the take rate on the more inelastic side now on most marketplaces you take a three to twenty five percent of paper range take rate on the supply side and But there are a few cases that where you take in the buy side because that’s where they get value you’d like.

I’d like to charge the people that are getting the value. So Vinted charges the buyers because they’re getting value from the escrow and the ship. But if you pick at home, they’re sell charging sellers, which is they benefit from the home pickup. Now, to answer your question, I would start with a low-ish take rate, but non-zero because you want to make sure people are willing to pay.

most marketplaces in the consumer side, I’d start at 10 with the objective of going to 15, 20 in the long term on the B2B side, way different. Some cases you can take, you cannot take any take rate because it’s too, the, the orders are too big. It’s too price sensitive that you use different models of business model.

So I will. Because you have a marketplace, it doesn’t need to be that the business models, a take rate, the business model could be self-serving ads, right? we were investors at a company called top sort and they allow the sellers to buy ads to improve placement, in some cases, 5 percent of GMV is through these ads that are self-service.

You can sell our financing. You can sell listing fees. Yeah. there are a whole bunch of ways that you can monetize a marketplace of which take rate is only one of them. That said. If you can, try to have a take rate, typical B2B take rates are 1 to 3%, maybe going to 5, 6, 7, and typical consumer take rates are 10, going to 15, 20.

Prashant Choubey: Got it. Yeah. Thanks for sharing that. That’s going to be helpful for our listeners. One thing that I’ve seen is that once these marketplaces are established, let’s take Airbnb, for instance, or let’s take Zomato in the Indian market, in the food and restaurant space. This sort of become a monopoly and they get to that stage, right?

There are only one or two winners at most in marketplaces, which is something that investors love. Absolutely. But from the consumer point of view, marketplaces can also start to become exploitative at that stage, because since you control the entire brand equity of a particular category, you can command any take rate that you want and suppliers would still have.

Fabrice Grinda: That’s not quite true. So, first of all, because there are natural monopolies, because the ever more buyers were ranked by sellers, more sellers were even more buyers. That’s why I think the protected firm LLMs, because at the end of the day, even the LLM will just send you to the dominant monopoly provider. you cannot come in and take what you want because there’s a point at which it’s non-economic to be on the platform and you’re disruptable.

People that took too high a take rate and were ultimately disrupted, right? Like the reason Taobao won in China, eBay had bought the leading player called each net, the 95 percent market share, but they started taking too high take rate. Taobao took the market away from them. The same thing happened to eBay in Korea.

They had a company and it was disrupted by G market for same thing. They took a lower take rate. So there is a natural fair take rate that people will bear. but you can’t just take, 100 percent right, like by definition, like everyone will turn so I do bet it that’s true.

You have more pricing power when you’re the winning natural monopoly. So will that winning natural monopoly have a higher take rate than at the beginning when it’s competitive? Absolutely. But will it be completely affiliative? No, it’ll be high enough. As high as possible for them to make money, but not so high that it creates an opportunity for someone else to come in.

Prashant Choubey: Absolutely. Quite interesting. And, what you’re also seeing, let’s just take the example of Zomato in India. It’s a publicly traded company now, and it’s trading at a massive valuation, right? And there is debate around it that, okay, is that valuation reasonable or not? As someone who’s a veteran in the marketplace space and knows the Indian market, especially in and out.

Do you think Zomato or, that size and the brand equity that they’ve established, it’s justified, for them to command, that higher valuation. If yes, then does that have any takeaways for, the companies that are playing in the private market and the valuations there, does that have any influence on that?

Fabrice Grinda: So let me start by saying that I’m not a public market investor. I have not, I don’t look at public market comps. I usually sell when a company goes public because I lose my proprietary access to the founder, right? once private, I can call up a CEO. It was like, Hey, how’s it going?

Can I help? Et cetera. The minute they’re public, I’m kind of, first of all, fidelity is a big investor and they’re not allowed to give me any information. So what is my comparative advantage as a public market investor? It’s zero. So I sell when they go public. Now, why could I make an argument that a company like Zomato commands should command a high price. Again, I have no idea what the multiples are. I have no idea what the valuation is. I don’t know. I don’t even know where the percentage penetration of online food ordering is in India, but I can make multiple stories that to justify hyper valuation. One is online food ordering in India is whatever 10%.

It’s going to go to 50%, right? It’s going to go up dramatically. And this is a huge market. Two, I can imagine a future where the marginal cost of delivery of food, with a combination of drones and self-driving vehicles and delivery mechanisms goes to zero. and then you’re in, then your margin just increases dramatically.

Now is that happening the next three years? No. At some point in the next 10, probably. number three, can I imagine a future where in a high real estate markets, cost markets of Mumbai or Delhi or whatever, if you have enough dark kitchens. That cooked food that’s prepared in three minutes can be delivered at zero cost by drone.

you can have an extraordinary meal delivered to you in 10 minutes. That’s cheaper than if you want to go to the, buy the groceries and to replace the grocery market. And maybe you even create homes that don’t have kitchens in the future. Yeah, I can imagine that. again, is that five years from now?

No, 10 years from now, probably not maybe more 15, 20, but I can make, I can paint a story Of how this can be very, very, very big and much more profitable than it is today. I now It’s probabilistic. And would you pay to the, it’s that future potential violation today? Maybe, maybe not. but there are reasons for why I’m, I am personally very bullish on, on food delivery, writ large, in India and a global market.

Prashant Choubey: Absolutely. And, the last part of the question was that, do private markets, marketplaces who are still private, but have still matured and are in the journey to IPO, but still raising private rounds, do they have any takeaway from valuations that are being commanded in the public markets by companies like Zomato?

Fabrice Grinda: Well, the problem in the rest of the world is the opposite is the public market valuations are lower than the private market valuations. And so the companies are having trouble going public because they raised too much money at too high a price. And they don’t want to suffer the ignominy of having to raid to go public at a much lower price than the last rate.

So the clearly the later stage of startup is the more relevant, public market, signals are now. If you’re a marketplace that is not in food, It, how relevant is the Zomato multiple? I’m not sure it’s that relevant, honestly, because, different brief profile, different margin profile, Zomato is a three sided marketplace.

There’s restaurants, consumers, delivery people, most marketplaces are two sided, right? I, I’m not sure it would be that relevant, but yes, our market or public market valuations relevant for late stage private companies. Absolutely. the bigger problem, as I said, in the U S is the opposite of this.

The private ones are true expensive relative to the public ones. And so it’s creating a, it’s making it hard for them to go public.

Prashant Choubey: Got it. Yeah. Makes sense. for founders building marketplaces today, what are the biggest hurdles they need to overcome? in today’s market that didn’t exist when you were building OLX at that time.

Fabrice Grinda: I’d say, first of all, it’s a lot easier to build one than before, because with no code, low code AI, you could build anything no money. So there’s really a lot more competition, because if you have a good idea of what copy it, customer acquisition is not obvious, right? Like the costs of customer acquisition have gone up pretty dramatically.

And so figuring out how you have a scalable, repeatable, sustainable customer acquisition channel. And it doesn’t matter to me what it is. It could be paid. It could be organic. It could be influencers, but it needs to work. It’d be rich, replicable, I think reasonably hard. And then most, many of the consumer categories have been taken.

So you need to take very new, innovative approaches or you need to go B2B.

Prashant Choubey: Got it. Makes sense. moving to my last main question before we try to wrap this up. what’s one contrarian belief that you have, about the future of marketplaces or venture investing? That most people would disagree with.

Fabrice Grinda: I think most people right now are like, it’s all about AI all the time.

And I think there’s a bubble in AI where yes, AI will change the world, but like every other tech revolution, it’s going to take a lot longer to impact the world than people think, because before the government of India uses AI intelligently, or whatever, a big massive company, I think it’s going to be a long, long, long time where it definitely the government, the U S and France, et cetera.

And that’s most of GDP, but in the future, when it is applied, it’ll transform society more than people can imagine. It’s overestimated in the short term. It’s underestimated in the long term. but that’s like 10, 15, 20 years from now. And so in people are, I’ve written off marketplaces.

So right now the contrarian thing to do is invest in marketplaces, that, they, the non-contrarian thing is invest in AI. The contrarian thing is invest in marketplaces as a bet on AI, because I’d rather do applied AI than actually do direct LLMs that are super competitive at crazy prices. to me, that’s a contrarian bet.

A lot of people are like, Oh, mark places have all been done. And I disagree. If you’ve looked at B2B supply chains and SMBs were sub 5%, often sub 1 percent penetration were day zero. Everything needs to be built. And this is trillions and trillions and trillions of dollars of the economy that they need to be digitized.

Prashant Choubey: Absolutely. Yeah. Thanks for sharing that. With that, we move to the rapid fire round, wherein I’ll ask you six quick questions about the investing you’re doing, and you have to give six quick answers, all right?

Fabrice Grinda: Go for it!

Prashant Choubey: Awesome. So the first one is what are the sectors and regions you invest in?

Fabrice Grinda: US, Europe, India, Latin America. And sectors, any industry by marketplaces, the network effect business.

Prashant Choubey: Okay. what’s the typical stage of investment?

Fabrice Grinda: Every stage is difficult, but the earlier ones are more difficult because you have no idea if you’re doing a good job or not for 10 years. You invest that seed and it takes 15 years for the company to go public.

So you don’t actually really know if you’re ready to get it.

Prashant Choubey: Okay. But at what stage, you like to come in as an investor?

Fabrice Grinda: Oh, I like to invest that seed and A.

Prashant Choubey: Seed and A, okay.

Fabrice Grinda: Seed and A. I do some B’s, I do some pre seed, but, or bread and butter are seed and A.

Prashant Choubey: Got it. Got it. do you lead rounds?

Fabrice Grinda: We don’t lead rounds; we are the friendly, value added investor that writes 12 checks of 340k.

Prashant Choubey: Okay, got it. The next one also you covered, which is typical text size. Next one is, where can founders get in touch in case there’s a direct way?

Fabrice Grinda: The best way to reach me is, to go to my LinkedIn and send me an email.

I will review it, or, well, an even better way is, you send me an email if you have my email, or if you know someone who knows me and you get a warm intro, but if you can’t get a warm intro, go to my LinkedIn email, it’ll work.

Prashant Choubey: Awesome. where can our listeners follow you?

Fabrice Grinda: The best way to follow me, frankly, is my blog, FabriceGrinda.com

Prashant Choubey: Awesome. I’ll make sure to put that link in the show notes below. Thanks so much for making time for this. Fabrice, it’s been a pleasure having you on the podcast and loved all your insights on your journey and marketplaces especially. So thanks so much and I wish you happy investing.

Fabrice Grinda: Thank you for having me.

Prashant Choubey: Thanks so much.