Judging by the user comments, Fabrice Grinda has been one of our most popular guests. We interviewed him last December on his last day at work at Zingy, the ringtone company he founded, sold for $80 million, then grew to $130 million in sales. Before Zingy, he started the leading auction sites in Europe and Latin America.
We can now break the news of his most ambitious venture yet: An ad-supported auction site to compete with Craigslist and eBay. It’s called OLX, and it’s already live. We grabbed him for a text interview to give us an update.
What have you done since being interviewed on Venture Voice in December?
I went on a whirlwind tour of the world that mixed pleasure and business with a guiding theme: meeting as many entrepreneurs as possible around the world. I started off with a week in Paris where I met both all my old Internet buddies from the bubble days and new up-and-coming startups. I then went skiing for a few days in St. Moritz Switzerland before going on a 10 day trip in Morocco. I visited Casablanca, Marrakech, Essaouira, Agadir. Stayed in local riads, visited the medinas and hiked the dunes of Chegaga in the Sahara. I then spent 10 days in Nice with my family before heading for Latin America. There I spent 24 days between Argentina, Chile and Uruguay. The leisure part of the trip saw me ice climbing on glaciers, horseback riding, biking, boating, rafting and hiking throughout Patagonia. I met numerous entrepreneurs and the former minister of the economy. During my stay in Buenos Aires I invested in a company – DineroMail – a Paypal-type company for Latin America – and created the seeds of my new company – OLX. After that I was off to Belize for snorkeling, biking, hiking and visiting Mayan ruins – while considering buying land there. I then spent two weeks in San Francisco meeting as many Web 2.0 companies as I could and speaking with VCs to get the lay of the land. I went skiing in Squaw Valley for President’s Day week-end with Princeton and McKinsey friends, then went skiing and snowmobiling with my dad and brother in Jackson Hole, Wyoming, before coming back to New York, refreshed, energized, hungry and ready to conquer the world again!
You sold your last company for $80 million, you have McKinsey on your resume, and you were one of the most popular guests on Venture Voice. Why are you risking your reputation and working like crazy on a new venture when you could just become a venture capitalist or philanthropist (or pursue some other career that offers a more glamorous life style with less risk)?
After selling Zingy I considered a number of options – becoming CEO of an established Internet startup, becoming a partner in a venture capital fund or creating my own fund. All those are attractive in their own right and I may yet do one of those later on in life. However, there is something magical about creating something out of nothing, about starting a company and growing it, that I hungered to experience again. I felt the calling and just had to do it. As Goethe once said: “Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.”
I don’t really see risks when I start business – I see opportunities! As for working hard – well it does not really feel like work when you love what you are doing 🙂 I will eventually become a philanthropist, but probably not for another 20 years, I have a lot to build first!
What is OLX?
OLX.com is the next generation of free online classifieds and auctions providing a more local service on a global level. OLX offers jobs, housing, goods and services, personals, events and community and much more!
Craigslist is an extremely disruptive company already and makes very little money per user. eBay is celebrated as one of the most well run dot com corporations and has already survived a challenge from Yahoo. Why take them on? How will you beat them?
We are not taking on eBay and Craigslist, our community of users will!
We aim at being only facilitators in the larger trend of the Internet helping people help each other using this marvelous network in a totally free experience.
We have all heard growing complaints that eBay has been abusing its monopoly position to gouge its sellers for years. In China, eBay’s monopoly in person to person trading has been successfully challenged by a free and improved service– TaoBao. To a lesser extent, the same situation applies in the United States where Craigslist has grown to an unimaginable scale with its free and local features.
I, like many people, like Craigslist and have used it many times to hire people, find a dog keeper, buy a foosball table, etc., but also like many I have a love/hate relationship with the website. One could claim that in spite of all the value Craigslist has created, today, Craigslist is not fully delivering on its core mission of providing a great public service to the community.
With these thoughts in mind, we decided to create OLX: a free service with great and unmatched functionality.
- A city, neighborhood and zip code database so we can cover an entire country and not just pre-selected cities
- A distance field allowing you to see postings within a certain range of your zip code in the countries where it is possible
- Ability to post items in virtual worlds (e.g.; SecondLife)
- Ability to include videos and pictures in listings
- Ajax WYSIWYG editor for richer listings
- RSS feed
- HTML snippet that can be embedded on MySpace, Xanga, Facebook or your blog to publicize your listing
- Ability to comment on listings to create a stronger community
- Advanced search allowing searches at variable regional settings
- Auction and Buy It Now options and a rating system for the For Sale category
- Ability to post listings in any language in any country
- Ability to view the site in any country in any language
- Global reach
- Mobile version
- We really believe that online users will increasingly take advantage of this cutting edge product. It will probably take some time to gain real momentum…but the OLX revolution has certainly begun!
According to your website, OLX was just founded in March. How’d you get it built so quickly? How much has it cost you?
OLX was incorporated in March and the technology team was assembled in January and February. The reason we were able to get the site off the ground so quickly is that we hired key former technology people from Deremate, the Latin American auction site I co-founded in 1999 which was sold to MercadoLibre (partly owned by eBay) in November 2005. The technology team has been living and breathing auctions and classified for the past 7 years and really knew how to rapidly build a next generation site. Also, Alec Oxenford, the former CEO of Deremate, came on board as co-CEO of OLX and has been doing an amazing job managing the team in Buenos Aires. I also have extensive experience in consumer to consumer trading platforms, having created Aucland which was one of the largest auction sites in Europe.
Given the lower costs in Argentina following the peso devaluation, so far it cost less than $30,000 to get the site up and running.
Your business obviously needs a critical mass of buyers and sellers to be useful. How do you plan on getting enough users (and how many is enough)? What do you think it will cost you?
Getting enough buyers and sellers is indeed the key. We would like to believe that a combination of a much better product with smart viral marketing, keyword advertising, affiliate management, word of mouth, partnerships with newspapers and portals, effective PR, mobile distribution and going after cities and countries that are not competitive should allow us to get traction in enough locations to provide a great public service to our community of users. Given the global scale and extensive scope of our project, it will cost us millions to get there and take years, but it’s a gamble we are willing to take!
You’ve invested in some other companies too. How many hours per week are you spending on OLX?
I am a big believer in focus which is why OLX is my full time 50+ hours a week job. I am chairman of Allmydata, an amazing online backup company. I am an investor in Phanfare (www.phanfare.com), a premium photo and video hosting site and DineroMail, a Paypal equivalent for Latin America. However, those don’t take more than ten hours a week of my time. Of those Allmydata is my largest time commitment.
There are still bugs in your site and you’ve got a ways to go from completion. Why is it public and not a closed beta?
Historically I was secretive about my projects and would not launch or talk about the projects until they were fully finalized. However, I have been impressed by the power of communities to guide product strategy in many recent Web companies. As a result, I have decided to change that philosophy to allow the very users of the site to help shape the product and the vision. I am also a big believer in occupying the market early and placing a stake in the ground.
Besides the core of the site is complete and the site actually works pretty well. There are only a few small bugs left that are being eliminated as we speak.
Do you consider OLX to be a “Web 2.0” company?
Web 2.0 means different things to different people. For me, at its essence, it means empowering users to do what they want with the Web in a simple and open way. Given that OLX is all about user generated content, simplicity and openness, it is the very definition of a Web 2.0 company. We will allow users to publicly comment on listings to further the sense of community and will make the entire site available in RSS. We also use Ajax throughout the site. We use it to provide a WYSIWYG editor on the posting page, to allow users to see in real time if their username is already taken on the registration page and to zoom in and out of our region search engine.
Will there be a fancy launch party? Will we be invited?
We have not yet decided on our launch event, but I would not count on a fancy launch party. Startups must be frugal!
I made the first post in the OLX jobs section. How many responses do you think my post will get before it expires in 30 days?
The site is just getting off the ground and we are just now starting to promote it so you are not going to get a lot of responses yet, but you will have been one of the first to partake in this wonderful new adventure 🙂
What’s the most significant difference between how you’re building this company and how you’ve built your prior companies?
This is probably the riskiest endeavor I have ever done. I am attacking entrenched incumbents in a large market and am facing a slew of new competitors (Microsoft Expo, Google Base, etc.). Should I succeed the payoffs will be huge, but the probability of success is much lower than in any of my previous companies where I was an early mover in a much less competitive space.
In light of this environment, execution is going to be key and for the first time I decided to have a co-CEO and a remote technology team. The technology team is in Buenos Aires –not because they are less expensive – but because there is a large pool of available developers, many of which with a key expertise in auctions and classifieds. As for having a co-CEO – given the scale and ambition of the project and the fact that a large part of the team is in Buenos Aires – I felt I needed a local person on the ground I could trust to make all the right decisions. Alec and I see eye to eye on almost everything and he’s absolutely brilliant. He worked at BCG and went to HBS before heading up Deremate, but I don’t hold it against him 🙂
With all of your past ventures, you had bet all of your money on their success. If they failed, you would have been practically penniless. Now that’s not the case. Do you think you’re still hungry enough to win?
I am not sure I am going to be able to convince you, but I am as hungry as I have ever been! Physically I feel this transcending wave of energy and excitement that I can barely contain! Also, you also need to realize that I never considered I had anything to loose in the past either. Even if I had been left penniless by my previous ventures, I could always have gotten a job at McKinsey or in banking, private equity or venture capital. So it’s not as though I am taking less of a risk – I am putting millions on the line and if anything I might be taking more risk given than the project is riskier and I am putting my reputation on the line (I had none to stake before).