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The Meb Faber Show - Better Investing

Fabrice Grinda - We're Still at the Very Beginning of the Tech Revolution... We Are Day One | #123

The Meb Faber Show - Better Investing

The Idea Farm

Management, Investing, Business

4.8 • 978 Ratings

🗓️ 26 September 2018

⏱️ 59 minutes

🧾️ Download transcript

Summary

In Episode 123, we welcome entrepreneur and renowned angel investor, Fabrice Grinda. The guys begin by discussing their mutual love for skiing, talking about heli-skiing in Canada, powder skiing in Japan, and the steeps of Chamonix in France.  Meb asks Fabrice to recap his background. What follows is a fascinating look at the professional path of a wildly-successful entrepreneur and angel investor. Fabrice’s history involves consulting with McKinsey, building the equivalent of eBay in Europe and South America, starting another company that brought ringtones, mobile games, and wallpaper to the US (and eventually did $200M in revenues), and then consulting for fellow CEOs. Ultimately, Fabrice and his partner launched FJ Investments, which is where he’s currently focused. Meb asks about Fabrice’s investment approach and the frameworks he uses. Fabrice tells us he invests in about 75 new startups each year, mostly seed and pre-seed. He writes smaller checks (about $500K), as compared to the bigger VC firms. He provides us insights into his selection criteria – one of the most important of which is unit economics. The degree to which a founder understands his/her economics is an indicator as to how well he/she understand the business. Fabrice has deployed about $140M to date, mostly personal money. He’s had 150 realized exits on 400 investments, with a realized IRR that’s pretty staggering. You’ll have to listen to get that detail.  The guys hit on a handful of topics next: Fabrice’s experience with Beepi, which ends with Fabrice’s advice to “nail it before you scale it”…. Why investing in the U.S. is often a wiser choice than looking internationally… Fabrice’s preference for investing in marketplace-oriented businesses… And how “we’re still at the very beginning of the tech revolution… we are day one.” Next, the guys talk about the specifics of creating an angel portfolio, with Meb bringing up the phrase “spray and pray”. Fabrice tells us that’s not his methodology. He’s more selective. That said, in private markets, returns tend to follow power law, meaning the top few deals account for most of the returns so it’s important to have some of those deals in your portfolio. Given this, for most people, there’s real value in diversification. Meb asks what lessons Fabrice has learned throughout his experiences so far. Fabrice tells us that if you’re going to invest in this asset class, you need to be diversified. He mentions that if you have less than a certain amount of investments, you’re going to lose money. Another lesson is that investors needs to stick to their guns. For instance, Fabrice has found that his thesis, the company team, the business, and the valuation (deal terms) must all be within his desired parameters in order to move forward. There was a time when he would fall in love with a founder, and would use that as an excuse to slide on some of his other criteria. But doing so sometimes lost him money. Other lessons involve honesty and transparency, as well as the importance of knowing your true value-add. There’s way more in this angel-themed episode: The current angel market, including opportunities and valuations… How Fabrice sees the broader economy and recession risk… How a crypto-hacker got into Fabrice’s crypto wallet… and Fabrice’s most memorable trade. Any entrepreneurs will likely be able to relate to this one. All these details and more in Episode 123. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

Welcome to the Mebb Fabor Show, where the focus is on helping you grow and preserve your wealth.

0:12.7

Join us as we discuss the craft of investing

0:15.6

and uncover new and profitable ideas,

0:18.4

all to help you grow wealthier and wiser.

0:20.8

Better investing starts here.

0:23.0

Mepp Faber is the co-founder and chief investment officer at Cambria Investment Management.

0:31.0

Due to industry regulations, he will not discuss any of Cambria's funds on this

0:35.5

podcast.

0:36.8

All opinions expressed by podcast participants are solely their own opinions and do not

0:41.0

reflect the opinion of Cambria Investment Management or its

0:43.6

affiliates. For more information visit cambria Investments.com.

0:49.4

Welcome podcast listeners today we have a great show for you with a man

0:54.4

Forbes recently named is the number one angel investor in the galaxy. They actually

0:58.8

said the world but I don't know any other angel investors on Mars. He's an investor

1:02.4

in a lot of companies you would recognize,

1:04.5

including one of our favorites and friends Betterment,

1:06.8

and is invested in 400 companies.

1:10.2

He's not just an investor,

1:11.1

he's also started up, sold three companies.

1:14.1

He runs the startup studio and venture fund FJ Labs, which we co-founded with a buddy of his.

1:18.6

We're thrilled that he's joined us.

1:19.7

Welcome, Fabrice Grenda.

...

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