Venture Europe: Entrepreneurship | Technology | Venture Capital | Eu/Acc
00:00:00 · Calin Fabri, Chaz Englander
[00:00:00] S0: You've been an entrepreneur for so many times. Do you feel that it gets You hear a lot about the ups and downs and the roller coaster in entrepreneurship. You would believe that after you do it once or twice, the highs are less high and the lows, less low? Like how do you see it? [00:00:19] S1: I mean, for me, I felt like the highs are just as high, if not get higher. The lows you become like, you know, somewhat immune to, right? I think like, look at the end of the day, if you've done this, you know, two or three times, you're not doing it for the money, right? You're doing it, you know, you made the money, you're doing it for the love of the game. And the love of the game is the high moments. [00:00:42] S0: So the first time you you decided to become an entrepreneur, do you wanna tell me the story behind it? It was like with your brother, no?
00:00:42 · Calin Fabri, Chaz Englander
[00:00:42] S0: So the first time you you decided to become an entrepreneur, do you wanna tell me the story behind it? It was like with your brother, no? [00:00:50] S1: Yeah. Yeah. So look, Arne and I... Arne, funny enough, Arne originally got into Cambridge to study law. And then, like my older brother, he swapped out to study computer science when we started coding together. So, like, I think we always knew that we wanted to build something, and I think we quite quickly got the bug of the excitement of, like, writing code and building stuff. And that's kind of our journey really started as wanting to be entrepreneurs, right? We didn't we were those type of entrepreneurs that set out and we'd already decided that we wanted to build something. We got kind of lucky. I mean, we worked hard, but got lucky. We built a consumer marketplace and got on YC back in kind of 2017, very much in the heyday and raised a great Series A and then ended up selling that business. But it was such good fun. [00:01:39] S0: When you look back, what is about building? Is it that you want to scratch your own itch? What do you think is the intrinsic motivation initially for the first builders? I would assume you don't think about how big is the market, you don't think about all the things that maybe you kind of learn later to ask the questions about?
00:01:39 · Calin Fabri, Chaz Englander
[00:01:39] S0: When you look back, what is about building? Is it that you want to scratch your own itch? What do you think is the intrinsic motivation initially for the first builders? I would assume you don't think about how big is the market, you don't think about all the things that maybe you kind of learn later to ask the questions about? [00:01:58] S1: I think you've to be honest with yourself about what you enjoy. I really do believe that being an entrepreneur is a journey, not a destination. It sounds cheesy, but like, that's really what we believe. And so you've got to be able to look yourself in the mirror and like, do you really enjoying yourself? Because like, if you're doing it for any other reason, you know, you're motivated by money or, you know, those things tend to shine through pretty quick. You know, you you you've got to enjoy the creativity and the concept of building things. You've got to be curious and resourceful. And that's really what motivated us to do it, right? It's like we just got so excited about building things that people want at the end of the day. It's like there's nothing whether it's in consumer or it's in B2B, in our view, it's quite similar. If you build something and put it in a user's hand and it makes them smile, that sort of stuff doesn't get old. [00:03:03] S0: So what was the curiosity with FatLlama, for example?
00:03:07 · Chaz Englander
[00:03:07] S1: So I think that really started where it just baffled us, think that, you know, so Fat Llama, for those that don't know, was a marketplace or is a marketplace that allows people to rent out their items to other people nearby in a way that they're fully insured. So that's anything from DJ equipment, musical instruments, cameras, drones, gardening equipment, sports equipment, whatever. Right? So, you know, there's items that you have that you're not necessarily using every day that, you know, kind of just sit there, but you don't want to sell it. It really didn't make sense to us that there was just so much of this stuff, like, that just kind of hangs around. And so we kind of set out very mission driven to solve that problem, and that's kind of what we did. And we knew that it was layered, right? So like, another interesting problem kind of within the overall problem space is like, how do you even build a product where you can ensure the lenders in that scenario, right? If I'm lending out a £10,000 camera or $10,000 camera to someone who lives down the road, how do you build a product to make sure that that person borrowing the item is going to be a genuine borrower? It's very different to Airbnb, right? Because Airbnb, you can't steal a house. I mean, you can try, but you can't really steal a house. These things, you know, these are just high value items that you can steal and sell in most cases pretty quickly by the nature of what they are as items as well, right? And we just wanted to solve that problem.
00:04:53 · Calin Fabri
[00:04:53] S0: And marketplaces are just notoriously hard to build, like you have the chicken and the egg problem. And also usually you just have to be very niche so the match rate is kind of high. So let's say on the supply is someone like to your point they are DJs but they can't afford to buy the set. And on the other hand, there's like people that actually have that stuff. Like did you go very niche onto, let's say, a product segment or a customer segment? How did you solve the cold start problem?
00:05:26 · Chaz Englander
[00:05:26] S1: Well, first of all, unlike our subsequent two businesses, that business took probably two, two point five years to see any real product market fit, basically for the reasons that you described, right? We had this issue where either items were high value and low use case frequency or they were low value and high use case frequency, right? And the issue with those two ends of the spectrum in a marketplace is you're really only making money on your second, third, fourth, fifth, sixth and so on transaction. You're not really going to make money on that first transaction. That was really difficult to do. We the way that we kind of growth hacked that was we built the supply side first, right? So we really focused on anything that we could to get items listed in a certain location in a certain category. And then once we had them, we knew that we only had that lender active for a certain period of time. So it was so important that we would get them a rental. For the first rentals, this was just like us buying the stuff. And then it was like, we would get an inquiry on, like, our listing, and we would, like, route that to, like, another lender with a real item and so on and so on. So it's definitely... We'd like to start with, it was like a bit of brute force. You know? And and... But eventually, of the flywheel started to get going. But yes, we ended up having to focus really category by category, particularly where the overall unit economics made sense. So for example, where there was high use case frequency with high value, these were really good early adopters because they were things, people like musicians and creatives like photographers and so on. They were great because they were using these high value items on a regular basis. The unit economics, both from a retention perspective and the average order value tended to make sense in those categories.