Lee Fixel has seen the value of practicing patience and exercising long-term thinking when investing in early-stage companies.
“That’s really important for entrepreneurs to know that we can be very patient and long-term with our support of their businesses,” Fixel said during a question-and-answer session at the Trends in Real Estate & Capital Markets Forum, held Nov. 12 at the University of Missouri.
Fixel is a partner at Tiger Global Management. He has led the firm’s investments in companies including Facebook, LinkedIn, Spotify and Flipkart.
That has earned the graduate of Washington University in St. Louis a reputation as one of the world’s leading tech investors. Fixel, 38, has made the Midas List, Forbes’ annual ranking of the top venture capitalists, six times.
During his appearance at MU, Fixel shed light on his investment philosophy through discussion of several specific startups, including a couple of his most successful portfolio companies.
Before delving into his own investments, Fixel reflected on the importance of patience by recalling the long runway investors gave to a company that today is considered a titan of tech.
“Look at Amazon,” Fixel said. “It’s an incredible business, but there was almost a decade where people were doubting them, thinking it’s a terrible business.”
He views Amazon’s long slog to becoming a market leader as fairly typical.
“Once in a while you get some outstanding business that just grows exponentially very quickly,” he said. “But that’s not the general path.”
Asked how he finds companies capable of Amazon-type growth, Fixel said he focuses on disruptors — that is, young businesses that have a better product or supply chain than established companies, and that offer an “equal or higher-quality product at the same price or (a) lower price with the same or higher gross margins.”
He cited Warby Parker, an online eyewear retailer and Tiger Global portfolio company, as an example.
“Warby Parker basically decided they were going to disrupt Luxottica by using the internet to sell eyewear,” he said.
“So they created this brand. They went to China. They manufactured very high-quality eyewear. And they are able to sell that for $95.”
By contrast, eyewear giant Luxottica typically sells glasses for hundreds of dollars, Fixel said. But Warby Parker is able to maintain comparable gross margins to Luxottica at a much lower price point.
“When you can provide that quality of product at a lower price point,” he said, “the disruptive forces are very powerful.”
Fixel is perhaps best known for his investment in Flipkart, India’s largest ecommerce company.
He said he saw potential for online retail in the country because of the high cost of brick-and-mortar stores there.
“In India, organized retail is very underdeveloped because real estate costs are extremely expensive,” he said.
That observation, coupled with a belief in Flipkart’s co-founders, led Fixel to make a big bet on the company. In 2009, Tiger Global invested $10 million in the startup, which at the time had revenue of around $100,000, Fixel said.
Some other investors balked at Flipkart’s high valuation at the time, Fixel said, but he didn’t want haggling over the valuation to get in the way of making a deal.
His perspective at the time: “If we’re right, this is going to be absolutely enormous and the valuation’s not going to matter. And if we’re wrong, who cares what percentage we own?”
Fast forward almost a decade, and Fixel was proven right. This May, Walmart announced it was buying a controlling stake in the company for $16 billion.