1Mby1M Virtual Accelerator Investor Forum: With Fabrice Grinda, Founding Partner at FJ Labs (Part 2)

Sramana Mitra: Let’s do some examples of what you’ve invested in that are representative of your investment thesis. Pick one that you are proud of and one that would tell us more about your company. 

Fabrice Grinda: First of all, we are thesis-driven, so we think through and ask ourselves, “Okay, where is the world heading?” Our answer is in marketplaces and meta trends. We have a specific thesis of three things that are happening right now in marketplaces.

One is, multi-category horizontals are being verticalized. An example of that would be taking a vertical like eBay. We invested in a company called TCGplayer. They are a mad pick for gathering marketplaces. To most people, that might sound ridiculous, but they are doing $200 million or more in sales.

They are doing well because they have taken the category and they’ve owned it. We are verticalizing a lot of the food companies. In the US, you have UberEats, GrubHub, and DoorDash.

We invested in a company called Slice. They are a pizza food company and they are on track to do $1 billion in sales next year. They are doing well and are profitable. Most people look at these investments and say, “This doesn’t really make sense when you have these existing incumbents to create these verticals.”

When you layer our perspective with the future of work, they are putting themselves in the shoes of the consumer instead of the shoes of the provider. Imagine that you are Luigi and you own your pizzeria. What is it that you want to be doing? You would want to be cooking pizza. What is it that you don’t want to be doing? It would be picking up the phone, creating websites, and answering customer questions.

The company Slice does all the back office for these mom-and-pop pizzerias, allowing them to do the job that they love to do. They are going to grow to $1 billion next year. These types of investments, verticalized and very bespoke for each category, is what we are looking for.

We invested in another company called RigUp. They are an oil services labor marketplace. If you want to hire a welder to work on a drill in the North Sea, they will find you a person to do that. They have grown to several billion a year in sales from nothing.

Again, they are vertically integrated and working deeply in their industry. They are an intermediary between the workers and the oil companies. 

Sramana Mitra: We have seen investors come and discuss vertical marketplaces. The SaaS-enabled marketplace is a trend that we have heard quite a bit where you have two sides of the marketplace and you create a SaaS for each side. By then, you would have critical mass and then you would turn that into a marketplace. Are you seeing that in your portfolio?

Fabrice Grinda: Absolutely. There are three trends in marketplaces. Verticalization is one of them. The second is reinventing old-school marketplaces where the buyer and the seller need to talk to one where the marketplace fixes your supply. The third one is B2B.

Overlay of that is the approach to the market. The most common approach we see is building SaaS tools for one or both sides of the market and giving them away for free to build a successful marketplace.

The first example that I gave, TCGplayer, provides a software solution to the stores to manage their inventory. The SaaS-enabled marketplace is a trend and is happening in every sector.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Fabrice Grinda, Founding Partner at FJ Labs
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