May 21, 2022 · 1h 6m · news
Fabrice Grinda: The First Person to Predict the Collapse of Credit Suisse? | 20VC #886 · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, host Harry Stebbings interviews prominent tech investor Fabrice Grinda, who details his probabilistic macroeconomic outlooks—ranging from stagnation to a severe banking collapse—and explains how FJ Labs adapts its early-stage venture capital strategy to navigate these shifting market conditions.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 10.2% of the talking time here. How this is scored →
Harry as informed peer 4.1 Guest teaching 4.0 Guest disagreement 2.0 Harry pushing back 3.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 45:20 Fabrice Rejects Luddite Premise
Fabrice forcefully refutes Harry's suggestion that technology decouples labor productivity from GDP, stating it is objectively false and explicitly calling out the Luddite argument.
Hardest push from Harry ▶ 4:44 Harry Challenges Founder FundsHarry directly challenges the ethics and focus of hyper-growth CEOs raising external LP venture funds, refusing to accept it as a reasonable practice.
Biggest teaching moment ▶ 45:20 Fabrice's Historical Employment MasterclassFabrice re-educates Harry using 20 years of tech history, explaining how destroying top job categories in 1999 created higher overall employment and productivity by 2019.
Harry holds his own ▶ 23:25 Harry Attributes 2008 Startups to Mobile ShiftHarry pushes back on Fabrice's macro-driven explanation of 2008 startup creation, demonstrating high expertise by pointing to the mobile platform shift as the real driver.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Changes in Venture Investing and Founder Funds | 5 | 3 | 2 | 6 | Harry directly challenges the premise of hyper-growth founders raising external LP funds, arguing it distracts from their core mandate. Fabrice responds cooperatively by explaining time allocation frameworks and reflecting on his own founder-investor history. | |
| The Macro Environment and The Great Unknown | 2 | 4 | 1 | 1 | Harry asks a broad opening macro question, stepping back to let Fabrice outline his probabilistic three-scenario economic framework. The host acts as an active listener while the guest educates on macro cycles. | |
| Scenario 1: The Optimistic Case | 2 | 4 | 1 | 1 | Fabrice lays out the optimistic scenario, explaining how discount rates impact tech valuations and how supply chains could normalize post-COVID. Harry prompts the discussion with minimal pushback or counter-arguments. | |
| Historical Progress and VC Capital Overhang | 7 | 3 | 2 | 6 | Harry demonstrates strong market expertise by arguing that 2008 breakout startups were driven by the mobile platform shift rather than macro factors, and questions Insight Partners' $20B fund size. Fabrice counters calmly by pointing to historical capital cycles. | |
| Scenario 2: The Great Stagnation | 3 | 4 | 1 | 2 | Fabrice details the 60% probability Great Stagnation case involving persistent inflation and negative real interest rates. Harry guides the conversation with questions about central bank policy and VC market impacts without challenging Fabrice's thesis. | |
| Scenario 3: The Worst-Case and Credit Suisse Collapse | 6 | 7 | 5 | 5 | Fabrice presents his worst-case scenario, including predicting the collapse of Credit Suisse due to bad assets. Harry challenges him on IMF intervention and quotes Howard Marks on labor productivity, prompting Fabrice to forcefully reject the Luddite argument. | |
| Venture Opportunities and Quickfire Round | 4 | 3 | 2 | 3 | Harry conducts a quickfire round covering books, anti-bureaucracy mindset shifts, historical misses, and check sizes. Harry lightly teases Fabrice about check size access, while Fabrice candidly admits his insecurity regarding small deployment sizes. |
Statements from this episode (19)
FJ Labs decides on startup investments after a single one-hour meeting
“And so I created a setup for a process for deciding in a one hour meeting if I would invest or not in a startup. And that's essentially one that we still use to this day, you know, with refinement over time.”
Fabrice Grinda auto-signed all investment legal documents unread for 15 years
“For 15, actually, probably for 15 years, every document that was ever sent to me, legal document that was sent to me, SPA, Anything like companies selling, et cetera. I auto signed, or my, actually, my virtual assistant in the Philippines, who had my signature…”
FJ Labs receives approximately 200 inbound startup deal submissions per week
“Inbound deals that we get about 200 a week, they go to someone else first, and the team reviews, takes the first call, and I take the second call, so we went from one hour decision-making process to two Two one-hour meeting decision-making process over the cou…”
Fabrice Grinda warned of an 'everything bubble' across asset classes in 2021
“A year ago, I wrote a piece called Welcome to the Everything Bubble, and I made the argument, and so that was in March 20, 21, that a combination of extraordinarily low, loose monetary and fiscal policy was fueling an asset bubble in every asset class simultan…”
Fabrice Grinda assigns a 60% probability to prolonged macroeconomic stagnation
“Today, in my probabilistic terms, I say there's a 20% scenario that we, probability that we end up with a optimistic outcome from where we are, and I can explain why. Maybe a 60% scenario of, like, what I call the great stagnation and another 20% scenario of, …”
Fabrice Grinda argues crypto is a risk asset, not an inflation hedge
“This goes to show that crypto is not an inflation hedge. It's still a risk asset have been marked down dramatically.”
Fabrice Grinda argues technological progress always outperforms short-term macroeconomic cycles
“History trumps macro, right? Like, the last 200 years of I've been a history of technological progress that has led and innovation that has led improvements in the human condition. And over the last 200 years, despite world wars, the great depression... If you…”
Fabrice Grinda notes annual US seed deals expanded from 5,000 to 20,000
“There used to be 5000 seed funded startups per year in the U.S. That would raise 500 K or more. And last two years, it was almost 20,000. So we tripled, we more than tripled, I mean, it was over 15,000. It was between 15 and 20,000. So we tripled or quadrupled…”
Fabrice Grinda explains why $20 billion mega-funds cannot effectively write $10M checks
“If you're deploying twenty billion, You really don't get out of bed and write a ten million dollar a check very often because it just doesn't move the needle. Like there's no, you're not deploying enough capital. It's like a return of capital that you can make…”
Fabrice Grinda keeps 60% of his personal net worth in early-stage startups
“My asset allocation, my personal net worth is still 60% basically early stage startups”
Fabrice Grinda predicts VC funds will see fewer exits and lower IRRs
“It means we have fewer exits in the next few years. It means the valuations at which these exits happen are lower which means that the IR we get are lower”
Fabrice Grinda calls the degrowth movement bullshit, championing tech productivity instead
“The degrowth movement is bullshit, like no one wants to go back to being a farmer and having a life expectancy of 29, starving multiple times a year, so the only way we solve the problem is actually through technology-led productivity growth and deflation”
Fabrice Grinda predicts UBS and Credit Suisse are too big to bail
“They're too big to bail. So it's not too big to fail. They're too big to bail. They're so big. They're bigger, the Swiss government does not have the underwriting power to underwrite it, and I could see them failing and bringing down Switzerland with them, and…”
FJ Labs tripled annual deal count to 300 while reducing check sizes
“So, so because the number of startups we invested in, because the number of startups that was created weren't tripled from 5000 to 15,000, we tripled the number of deals we did from a hundred to 300, essentially. And so I've had to divide my check sizes by thr…”
FJ Labs made zero Series C+ investments in 2021 due to pricing
“I mean, last year we didn't do a single deal C and beyond, just because prices are too high.”
Fabrice Grinda predicts major Series B and C repricing within 12 months
“Where I'm most excited about opportunities to deploy a lot of capital at good prices in the coming 12 months. Yes, it is the B and beyond or C and beyond, because I think we're going to see major repricing”
Invest if passing means lifelong regret over a founder, says Fabrice Grinda
“When you start the statement with, this is a foundational generational company, and the founder is extraordinary, and I'm going to regret this decision the rest of your life. You are. Do not, if you write that, make the investment.”
Shorts cut from this episode
▶ History trumps Macro · 20VC with Harry Stebbings (@22:01)
▶ Worst-case scenario for the EU · 20VC with Harry Stebbings (@40:06)
▶ What happened last time inflation was this high? · 20VC with (@12:57)
▶ The EU could collapse if this one thing happens.. · 20VC wit (@40:06)
▶ FOUR CRITERIA to invest in a startup | Fabrice Grinda on 20V (@2:48)
▶ Could the Fed raise interest rates to 20% ?? · 20VC with Ha (@38:56)
▶ Why is a recession so likely? · 20VC with Harry Stebbings (@34:29)