Interview
How We Got Fred Wilson, Benchmark and Index to Invest $94M | Why Robinhood's Strategy is Wrong
- Company Status & Structure: FOMO is a mobile trading app with 17 employees, operating with no internal hierarchy, no one-on-one meetings, and a flat organizational structure.
- Founder Compensation: The founding team and employees received no salary for the first eight months of development to align incentives and conserve capital.
- Ownership Model: FOMO granted non-founder employees equity percentages typically reserved for founders (5–10% of the company), effectively treating top performers as an "extended founding team."
- Capital Strategy (Early Stage): The company executed an all-angel round with 140 investors to solve the "cold start" problem by aligning early users with ownership stakes to drive distribution.
- Strategic Investment: Benchmark Capital led the Series A; Paul Erlanger noted that waiting to announce a previous round is critical when preparing to raise capital to minimize inbound noise.
- Series B Financing: FOMO raised $75 million in a Series B round, priced at a $550 million post-money valuation.
- Index Ventures contributed $55 million.
- Union Square Ventures (USV) contributed $15 million.
- Funding Rationale: Capital was raised not out of immediate need, but to protect against market volatility and fund vertical integration of infrastructure, moving away from reliance on third-party services like AWS for core data indexing.
- Product Definition: FOMO positions itself as a trading app anchored by a social graph, allowing users to share real-time positions, follow friends, and access a "network effect" that drives engagement beyond traditional finance apps.
- Market Differentiation: The company argues that "social super apps" (e.g., Robinhood) lack intentionality, whereas FOMO's social graph allows users to express specific theses across diverse asset classes (crypto, equities, prediction markets) simultaneously.
- Global Access Strategy: Unlike US-centric competitors, FOMO targets global access to on-chain assets and is preparing to launch global access to equities and perpetuals (perps), bypassing geographic restrictions inherent in traditional brokerages.
- AI & Engineering Efficiency:
- The team reports shipping a new web application in one month and a new product in three weeks, leveraging AI tools like Cursor and CodeEx.
- Senior engineers use AI to generate code frameworks and lower-level implementations, allowing them to focus on architecture and review, significantly accelerating the learning curve for new components.
- The company estimates it could feasibly spend 20% of developer salaries on token usage in the future as AI commoditization lowers costs.
- Growth Mechanics: FOMO utilizes a "share card" feature to create viral loops, where users publicly share successful trades (e.g., turning $300 into $1.5 million) to other social platforms, driving external traffic back to the app.
- Creator Economy Strategy: The company manages an in-house team of 30–40 creators, focusing on "immortal assets" (perpetual content) rather than transient marketing, and rejects the "lowest hanging fruit" approach by paying higher Customer Acquisition Costs (CAC) for users with higher Lifetime Value (LTV).
- Hiring Philosophy: FOMO prioritizes small, senior, autonomous teams to avoid "bloat" common in 1-to-10 scaling phases, noting that AI tools increase the value of top-tier engineers while potentially reducing the need for large numbers of junior developers.
- Future Roadmap: The company plans to integrate prediction markets (currently referencing Polymarket or Kalshi) and pre-IPO perpetuals (e.g., on SpaceX, Anthropic) as regulatory clarity improves.
- Founder Advice: Paul Erlanger advises CS students to use AI extensively in their jobs but to practice coding without it while in university to maintain fundamental skills.
- CEO Reflection: Erlanger identifies his greatest strength as holding "loosely held strong beliefs" that force team debate, though his weakness is occasionally getting hung up on consensus rather than making swift decisions.
- Regulatory Outlook: FOMO views the current negative crypto sentiment as a result of scams and lack of consumer protection, positioning the company as a long-term "beacon of light" focused on compliance and user safety.