Episode 48: Ask Me Anything
I had not done an Ask Me Anything session in over a year which led to many questions on a wide variety of topics: macro, marketplaces, AI, fundraising, wealth management, education, island shopping, India, how to lose your accent, adventure travel, climate tech, the state of VC, and much more.
Here are the key questions we covered:
00:01:17 How will all the geopolitical changes, tariffs, and Trump policies influence the world?
00:06:14 What are the key tips for finding and persuading investors?
00:08:44 What do you think is the future of fashion marketplaces? How has it been impacted by downfalls of marketplaces such as Farfetch? What is the role of AI in these?
00:13:19 What’s your view on the best investment opportunities currently? Is the stock market, given the current drop off, attractive or still overvalued? I read a while ago your non-traditional approach to wealth management. How would you allocate $10 million now?
00:19:21 We have around 15K revenues per month, are we okay to raise a pre-seed?
00:21:14 What kind of education, school, university degrees do you recommend for kids to best prepare for them for the jobs market in 10 years considering the impact of AI? What skills should they start developing?
00:26:46 What is the best cold inbound email you ever received?
00:29:39 If you’re finishing your studies today, what kind of job or company would you join to best train yourself to launch a tech startup later? Is a place like McKinsey or investment banking still relevant if the goal is to learn to work with intensity and structure?
00:32:40 As a recent French graduate with a background in BA in finance, which countries do you think offer the most learning opportunities today in terms of ease of doing business, networking, potential, etc.?
00:33:34 When will you launch the updated and new version of Fabrice AI? How can I build a network in the tech community in France?
00:38:30 Fabrice, any exciting travel coming up? What’s your favorite personal use of AI?
00:42:39 If an incumbent exists in my category, are there still opportunities to enter the market?
00:45:51 What made you decide for Turks & Caicos and not another island?
00:52:57 What is your favorite place in India?
00:55:48 How did you lose your French accent? What is your secret?
01:00:52 What is on your target list for climate related investment opportunities?
01:02:55 Did you do your long hike through Greenland that you wanted to do?
01:06:03 If you were building a tech company like Zingy today, would you still raise VC money or bootstrap it considering there are many examples of founders barely making any money in $500M exits?
01:08:39 What advice do you have for a home care marketplace founder who has found product market fit but ran out of money in 2023 but has “survived”?
01:10:55 What are the future big trends in AI and especially with consumer usage?
01:13:12 For personal or small retail, which AI tools do you believe are worth paying a subscription for today?
01:13:49 What do you seek in founders for pre-revenue Startups?
01:14:34 What is the biggest turn down for the VC while seeing the pitch deck? What is the biggest green flag as well? What is the red flag when cold connecting with VC people?
01:16:17 Can you address the opportunities for crossover funds?
01:18:43 Any view on Indian VC opportunities?
01:19:29 Should I hire a CTO or CFO?
01:20:23 What do you see as the future for companies like Alan (French Unicorn) nearly 10 years in €500 million raised, still unprofitable, operating on tight margins, valued at €4.5B?
01:21:15 From your perspective, what skill or type of service is the easiest to sell today is a freelance consultant?
01:22:20 How much will Bitcoin be worth in 2030?
01:26:35 What do you think of initiatives such as WorldCoin?
01:26:43 Loved the shoot-out story in the Dominican Republic. Do you have any other crazy adrenaline pumping stories from your adventures?
01:30:27 Do you prefer repeat founders or first-time founders?
01:32:22 Why is it so hard to raise capital for fashion marketplaces?
01:33:28 In your view, what is the most important trait or skill for a founder – being emotionally stable, able to handle the extreme stress, something else entirely?
01:36:11 Would you be open for a lunch in New York so I can bring all the questions I have for 45 minutes?
01:37:13 What makes niche marketplaces breakout and go big globally?
01:39:44 Is artificial intelligence dangerous for humanity? Will it increase unemployment? Should countries create rules to prevent that? Can we master something that might be beyond us?
01:46:46 What’s your take on vibe coding trend or real shift?
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Transcript
Transcript
Hello everyone. I’m hoping you’re having a wonderful week. So, it’s been over a year since I did a ask Me Anything, and of course, a lot has changed in the world. There’s been so many developments in AI, so many developments in politics and geopolitics and the world at large. So, I figured it was time to basically take your questions, assess where we are, and yeah, see how things are going to go.
So, with that, any further ado, let’s get going. Welcome to episode 48. Ask me Anything.
So as usual feel free to put questions in the, in the, in the chat and I will answer them real time as they get posted. And just to get us started, I’ll, I’ll start with the pre asked questions. People send me by email post me sending a newsletter saying, Hey what are the topics that you want me to cover?
So I’ll start with, I want to ask your opinion about how all the geopolitical changes tariffs, Trump policies will influence the world in trade and what opportunities this will create. It would be amazing if you feel like sharing this. So obviously there’s been a lot of changing, there’s been a lot of disruption with all the terror policy, et cetera.
I mean, here’s what’s interesting is when Trump got elected I guess a lot of people in tech community were maybe hopeful that, hey, the markets will reopening again, right? Like the problem intact in the last few years is outside of artificial intelligence, there’s been no real investment.
There’s been a very big compression, and there’s been no exits, no M&A, no IPOs. And the M&A was blocked mostly by like the antitrust regulation, so SCC, FTC, FCC, and, the IPO is just the IPO market and the IPO windows closed, so we were hoping it was going to start reopening and we in fact have several companies in our portfolio like Klarna, that have filed to go public in, in early 25.
But with all the tariff stuff like then the noise and the markets and the uncertainty and the fear of what might happen in the unknown the IPO windows closed. They delayed at least the IPO don’t know if they pulled it forever. And so things haven’t played out exactly as we were hopefully expecting. Now to answer the question that I was asked specifically is like, what do I think is going on?
I try to give in general the benefit of adapt to policymakers while decisions assume they’re not idiots. And so if I’m assuming they’re not idiots, why are they doing what they’re doing? And so I thought through long and hard, and here’s a rational potential explanation I came up with for why this may make sense.
So I think Trump sees himself as the peacemaker in chief. He wants to make peace in Ukraine. He wants to make peace in the Middle East. And I think the problem that he’s faced or he is facing is he’s like, look, no one has ever given Putin an exit strategy, right? Like if Putin any made any concessions, left Ukraine with nothing to show for it, perhaps his own safety might be at risk.
Can we create an environment where we give them an opportunity to make concessions, to get a piece? And so one way to think about it, I’m like, Hey, maybe we’re pretending to fight with our allies. We’re maybe we don’t tell them because if you tell them with all the slice, leak, et cetera, it comes out and we put tariffs on all our allied countries to create more of a common ground, to give them an opportunity to negotiate and make concessions that lead to last piece.
Now, I think it’s a bad strategy cause I don’t think you want to be negotiating with Putin who cannot be trusted. But if that was your intention, maybe you try it and if it doesn’t work, you know what? You’re goanna get token concessions from the EU, from Canada, Mexico, whatever.
And perhaps you roll everything back. So I’m hoping that these things are temporary now. The problem is temporary in the world of politics, maybe a year or two and not like three months. And in the meantime, to answer the specific question, like what are the opportunities being created? Well, clearly, you know, thinking through how you’re moving your supply chains, thinking through how you are dealing with your cost structure and, you know, are you onshoring things as we’re seeing some companies do, or are you moving the supply chains out of China?
You know, we’re investors in Quince, which is an affordable luxury marketplace, and they’re crushing it zero to billion in like three years. They’re going to a multi-billion dollar run rate. Historically, they were sourcing everything from China. In a three month period they moved their entire supply chains out of China.
Now, they would benefit tremendously if de Minimis continues the de Minimis exemption for orders below $800. But even if it doesn’t because they’re the lowest cost provider, I suspect they, they will continue to do well. So I suspect the low cost nimble producers, so the startups of the world will continue to do well in that world.
Now that said, I. With global geopolitical macroeconomic uncertainty, it’s harder to raise venture funding. It’s harder for VCs to raise venture capital. And until there’s exits and IPOs, the flywheel is not really open. So it’s still going to remain complicated, but hoping that this plays out in the next few years in a not too disruptive way.
And it will create opportunities. But I suspect that disruptors, the startups are better positioned to take advantage of these opportunities than the Cummins because they move quickly, they have lower cost structures. Let’s see. One of the questions we got in, and then I’ll go into more email questions.
So Onur and I’m not going to mention your last name to avoid completely torturing on how I say it. What are the key tips for finding and persuading investors? Because I have a start-up called Cusinea. It’s an AI powered online training platform for restaurant workers and a marketing social media platform for restaurants. We already have partnered six restaurants before the official launch. I’m currently seeking investment.
I would describe where you’re at kind of at the pre-seed stage and the pre-seed stage. You know, pre-launch or like proof of concept. This first half million, million dollars you need to raise honestly is still, is mostly, there’s not many funds that focus on that. The pre-seed.
There are a few, like Afore A-F-O-R-E is an example of that. There’s iSeed in India from, I mean there’s a few but very, very few. Amplify in LA most pre-seed honestly is fool’s friends and family. It’s like going to your wealthier friends who support you, back you and saying, Hey, I need 5-10K.
And the thing is, you know, 50 times 10K, 100 times 5K actually is enough money to pre-seed. Also you need to realize it’s cheaper than it’s ever been a build a startup. You know, when I was building my first startups, I needed an like Oracle database servers, Microsoft Web Servers.
I needed to build my own data center that was pre-open source, pre Rackspace data centers. And that’s even pre, obviously cloud and now AI. You can kind of build anything these days with 15K you can launch and then you can use whatever capital you raise a couple hundred K to prove product market fit.
But your objective is to get a seed level traction. So what I would try to get to is 20K a month in net revenues. But if you’re charging SaaS fees, you get 20K in MRR, not ARR. With that, you get to the point where you can go raise seed ramps and then you can go raise 2-3 million from VC’s proving product market fit.
Likewise if you’re in a marketplace, you know you want to get to 150K a month in GMV. If you have a 15% take rate and same thing, you have 20-30K in net revenues, you prove product market fit, then you go raise the two, 3 million people like us who are unlikely unless you’re a second time founder, you’ve proven it before to invest your seed round unless you’ve proven a modicum of product market fit by getting there with very little cap.
Second question from notionXarma on Twitch. I wanted to ask your idea about what do you think future of fashion marketplace and fashion is and how it impacted downfalls of marketplaces such as Farfetch? Just to add, what is the role of AI marketplaces in these?
So it’s interesting because in the US especially, the fashion marketplaces, and maybe let me put a full screen, you see more of the questions here?
The AI marketplaces, sorry, not the ai, the fashion marketplaces have not done very well, right? Poshmark? The real, real, I don’t know where the market cap of the real, real is. It’s actually not very high because the cost structure is too high. And so from the outside it could look like the category of fashion marketplaces is not doing well.
But there is a counter example. There is one company that is completely crushing it in Europe that has redefined and reinvented the category. And I’m very proud and happy to say I’m an early investor in the company since at least the pivot. And that company’s called Vinted V-I-N-T-E-D, so Vinted, which is actually currently being run by my right hand man at OLX.
He was like the fixer. When something went wrong in like whatever, Kenya, he would go and fix it. The difference they have to the Lithuanian based startup, most of biggest markets for them were France and the UK. They’ve made multiple innovations. First innovation is instead of charging 10-15% commission on the seller, they’re completely free, completely free to sell, completely free to buy.
And they say, if you’re the buyer, if you want optional escrow and shipping and payment, we will do it for you and we’ll charge whatever, two euros or like $2 plus 5% and everyone’s doing it. And as a result, they have an effective take rate of 10%. And what’s interesting, and, and some of these numbers are public, so I’ll give the public numbers from the last round.
Last year they did 6 billion in GMV, they did 600 million in net revenues. I think they did 80 million or so in free cash flow. They have a 50% EBITDA margin in the UK, 45% EBITDA margin in France. And they’re growing like this. And now, they’re in Italy, Spain, and like they’re growing across Europe, they’re launching into luxury.
And because they have the lowest cost structure, because they have the lowest take grade, they’re doing extraordinarily well with this buyer paid model. And so fashion is working really well. Now AI is playing multiple roles here. First role AI is playing is Vinted is probably the first true 10 European company.
It used to be when you were launching in Europe, you were like a French company or a German company, or a UK company. And when you were launching, you were actually opening a new office and having a different site and, and you would not sell between the sites in place. So what they’ve done is they realized we can now ship cross border in Europe very cheaply.
And so what you, what they do is the listings in France are actually translated automatically by AI and listed in Spain and Italy. And when a buyer in Italy wants to talk to a seller in France, all the conversations are translated automatically. So you have automatic translations of the listings, automatic translations of the conversations, all done by AI.
The listing process is also massively improved and done by AI. So when you list right now, the AI will identify the category, the items suggest, the price, et cetera. So AI is being used to improve, like the background of the photos, to increase the sell-through rate, to, to automate the conversations between the users and to improve the sell through rate.
So massively disruptive and fashion is doing very well. And by the way, there are other innovations in the fashion marketplace space, not just in in buying and selling goods. We just invested in a company called Pickle. Pickle is a rental marketplace. So think it rents the runway but rental. And in New York, like all the Gen Z and millennial women have basically used it for dresses, et cetera.
It works extremely well. So I would say Vinted and Pickle, probably the two best examples of things that are happening in fashion. And these companies have way more growth to grow. I would not be surprised if Vinted is a 20-30 maybe even 50 plus billion dollar company in the next few years.
I’m very bullish on that investment. We’re going to continue investing, even though we now value a lot higher. And we’re all in on that company.
Mitch, on Twitch. What’s your view on the best investment opportunities currently? Is the stock market, given the current drop off, attractive or still overvalued? It was a while ago on non-traditional approach to wealth management. How would you allocate the $10 million now?
The answer is, it depends on who you are and what your life needs are, and also where you are in your life cycle, right? Like if you’re 80 years old, investing in venture or you’re not going to make money for 10 years doesn’t make sense for me.
But on average, I stick to my knitting, like the reason I invest in venture of courses. I know what I’m doing. I’ve been returning 30% a year every year for the last 25 years. Nothing else I could invest in. And I think it’s pretty safe because a tech and software is eating the world and I know what I’m doing and I have a very, very diversified portfolio.
So I like investing in venture, investing in tech, but I would not invest in specific startup names, right? If you just started, you have 10 million in cash and you’re like, Hey, should I be an angel investor? I would say probably no, because you don’t have a deal flow, so you might not be seeing the best deals.
If anything, because you don’t have a deal flow, you’re probably seeing the worst deals. And venture follows something like called a power law, where the top deals account for all the returns. And so unless you’re investing in at least 50 deals, which guarantees you get some of the good deals, you’re very likely to lose money.
So you should not do your own angel investing. Now, if you want to give a little bit money to your friends, sure, I would allocate probably. So if you have access to a venture fund like ours, which we’re not that hard to get into, I would allocate a fair amount in venture. But again, you need to think through venture funds, capital calls every three years.
There’s going to be another fund in three years, another fund, three years, so whatever allocation. My personal allocation, by the way, it would be 10% in treasuries, T-bills, you know, you’re still generating 4% of your completely safe, and that’s your cash management and you use that for capital calls, et cetera. 10% in real estate. And real estate for me is not an investment, it’s consumption. It’s where I live and I have three beautiful homes, and in my case, the rest I’m putting in venture now I’m putting it in my own fund because I know what I’m doing. If I would probably, for most people at 10 million, your real estate is going to be more than that because you, you’re, the value of the real estate you want to live in is going to be higher.
That said, you’re getting leverage on it. So, you know, maybe you can have a $4-5 million house, but you put equity and then you can invest the rest in T-bills, you know, 10-20%. And then the rest, I still prefer the venture strategy. If you have a long term horizon, you don’t need cash. But I would invest in a fund and diversified funds, like box group or us, whatever would probably better.
You don’t have access to that. Yeah. S&P 500, ETF. Invest it, call it a day. Never look at it again. Or you know, in fact, I don’t, look, I don’t follow the news. I wouldn’t look at the portfolio. This is something that’s meant to compound over many years. So if you owned an ETF and S&P 500, or if you own Bitcoin, and yeah, I would probably have 5-10% of crypto invest it. Never look at it. If you want to look at it, look at it January one of every year. Don’t look at the ups and downs unless you’re a trader and you should not be a trader. You shouldn’t be looking at it. So most people, I’d say, I don’t know, maybe you go 20. I, obviously, I’m way, I don’t feel tech or venture is risky.
So I, I’m like 80% venture, 10% real estate, 10% cash or T-bills. Maybe other people should be 30% S&P 500, ETF you know, 10% crypto. And might just even be just BTC to make it simple. In crypto, let’s say another 20 or 30, not 20 in venture, 20 in T-bills and 10 in real estate, maybe something like that.
I mean, and you go up and down that way. Now it depends on sort of cash needs, income, salary, et cetera, life cycle. But a good sense of how I would think about it. But I would not be actively trading, I would not be investing specifically in my own startups because you’re not going to have enough and you’re not going to have the deal flow.
Okay. Let’s see. The next question Sheelagh Brady. In your experience, how do you think a new platform entering the risk management and safety space can leverage the geopolitical environment to its advantage? In your view, should the influence be for companies be on demonstrating ROI, or are there other strategic angles you’d advise focusing on at this stage?
There are a lot of companies in risk management, so I would want to understand what your real core differentiation is. Or you lower costs and better because you are leveraging AI or you going after a very specific vertical. I don’t hire these types of companies. If risk management, et cetera, I think, you know, they’re like salt on type stuff.
It’s like a waste of money. So I’m probably the least good person to ask. I’m probably the least good person to ask like, what, what this is. But look, the same strategy would apply for me if you’re at the beginning of launching the process. How do I validate business ideas? I talk to potential clients.
I test whether or not they value the proposition. By the way, we talked to 50 of them, not five of them. I would say, okay, if I’m charging you this much, would you be willing to pay for it? I would like basically try to get these pilots going and I would not raise money until I have some modicum of product market fed.
if you even need money, right? It may need more of a cash flow. Lifestyle consultancy type business more than it is a scalable venture business. Sean on Twitter, thank you for doing this. Well, thank you. I’m I love doing this actually. It’s fun to like brainstorm, see what people, what is on people’s minds.
But I’m doing it once a year. Maybe I’ll do it every six months or so, on a go forward basis.