Eugene Malobrodsky On Helping Raise $390 Million For His Last Startup And Now Investing In Immigrant Founders

In the dynamic world of entrepreneurship, few stories captivate as much as that of Eugene Malobrodsky. Eugene’s journey is a testament to resilience, determination, and the immigrant spirit, from his humble beginnings in Lithuania to co-founding AnchorFree, a groundbreaking tech company that later went public.

Eugene has now started a venture fund, One Way Ventures, that invests in immigrant tech founders. This fund has invested in companies like Instock, Machinery Partners, Koverly, Nuvocargo.

In this episode, you will learn:

• Eugene’s journey exemplifies the power of resilience and determination, overcoming challenges from his early days in Lithuania to the trials of building AnchorFree in Silicon Valley.
• The 2008 financial crisis taught Eugene the importance of adaptability, emphasizing the need to let go of non-working ideas and pivot strategically to ensure the company’s survival.
• Burke Roberts’ role as a mentor and investor played a pivotal role in AnchorFree’s success, highlighting the significance of experienced guidance in the startup landscape.
• AnchorFree’s success wasn’t just in financial achievements but in creating products like Hotspot Shield that had a global impact on privacy, security, and freedom of internet access.
• Eugene’s transition from founder to investor is driven by a purposeful mission to support first-gen immigrant founders, recognizing their sacrifices and potential contributions to the entrepreneurial landscape.
• Eugene emphasizes the importance of building a team of true believers, highlighting that success in entrepreneurship is not just about individual brilliance but collective dedication.
• As an investor, Eugene seeks out founders who genuinely believe in making a significant impact on their industries, emphasizing the importance of purpose-driven innovation in startup success.

SUBSCRIBE ON:

For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). 

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Eugene Malobrodsky:

Eugene Malobrodsky is a Partner at One Way Ventures, a seed-stage VC fund that backs exceptional immigrant tech founders.

Prior to One Way Ventures, Eugene founded two successful startups. His latest venture was AnchorFree, and its leading product, HotSpot Shield, revolutionized consumer privacy and security for millions of users globally.

In 2018, AnchorFree was acquired by a private equity fund, WondrCo, where Eugene continued his involvement as Chief Strategy Officer.

Eugene acts as a board member for Zero Cognitive Systems and Geozilla. Eugene was featured in Forbes’ 30 Under 30 and was awarded Silicon Valley’s Best Tech Manager Award at the 2018 Timmy Awards.

Connect with Eugene Malobrodsky:

• PitchBook
• LinkedIn
• Crunchbase
• F6S

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the dealmaker show. So today. We have a very exciting founder turned investor. You know we’re going to be talking about building scaling financings also turning the chapter to and exiting ah found a company going public as well. And then also there is tons of founder learnings that our guest is going to share with us today and then also how they look at portfolio companies too. You know when it comes to making new investments now that they’re on the other side that he’s on the other side of the table. So again, inspiring conversation ahead of us and without furtherther ado. Let’s welcome our guest today Egene malow broski welcome to the show.

Eugene Malobrodksy: Thank you, Thank you! I’m glad to be here. It’s ah exciting to be part of both of our Journeys I Guess on this podcast.

Alejandro Cremades: So so let let’s do a little of a walk through memory lane here eugene I know that you were born in Luth in Lithuania in ah in a small town there and eventually you came to the us at 13 but give us a walk through memory lane. How was life growing up for you.

Eugene Malobrodksy: Ah, so I grew up in that I mean second largest city but in a country that’s you know, under 2000000 people. It’s a small country. So ah I grew up in that family. Ah, both parents engineers. Ah. Ah, important like my whole family is education first just like many many ah eastern european families and I think the inspiration was always. Not doing things that everybody was doing for me and I was always eager to be entrepreneurial and I had you know very to some extent engineering mindset where i. Like to build things I like to put things together for me like everything was like a puzzle piece ah from and at the same time the gift that I was born with that I didn’t have to learn is I was an extrovert so it was easy for me. To communicate with other people and I think that was like a big ah kind of push towards my future.

Alejandro Cremades: So.

Alejandro Cremades: And and also I guess you know coming to the us too when when you were 13 I’m sure that at 13 I mean you’re already a grownup I mean you know you’re very well aware of your surroundings. You know you’ve already made your friendships. You are familiar. You know with everything around you you are able to really use your judgment as well. So when you come here to the us you move to Silicon Valley with your parents. You come to the land of opportunity I mean I’m sure that it was amazing for you to be able to see all of this and I’m sure it was kind of like a culture shock too. But I guess you know. It was dealing with the unknown and it was like new friendships knew everything for you and that’s uncertain too when you’re 13 and where you’re trying to find your own identity. So how do you think that that experience shape you up as well.

Eugene Malobrodksy: Ah, absolutely um I think that was probably I was very excited to move to the us like as any kid. That’s all United States oh my god disneyland the the ah mighty grows on trees kind of thing. But um when I moved here it was difficult. My english was okay, not great. So I will had to ah learn the language. Ah. I had to make new friends and that part thank god was the easy part thing and mostly because of my extrovert kind of ah I’m an extrovert by birth so that helped me create new relationships. But. You know it’s a new place new language new everything. But I think perseverance and grit ah and wanting to meet new people learn and surround yourself with people that care ah and want to grow is. How I grew myself.

Alejandro Cremades: So then in in this case for you as well. I mean you got involved with the world of startups pretty early on I mean was it like ah like an easy transition. You know like to to go into the world of startups or how how did you get into it.

Eugene Malobrodksy: Yeah.

Eugene Malobrodksy: Yeah, so ah, my uncle already lived here in United States and and he came to Lithuania and brought a laptop. We’re talking about like black and white screen like 1 of those big bricks and.

Eugene Malobrodksy: Like I really fell in love with like computers and what you could do was them and when I moved to United States you know I continued the. Learning more about computers I took classes and computer graphics and different things and ah I got an opportunity ah through ah my mom actually to join the company that she was working at at that time in a different department. Testing Motorolla. Ah ah euriium product which was like the phones that you used to have on the airplanes. Um, so the company was doing localization. The company was called samul trans they still there and I was basically. Ah, hired as a Q a tester to test the the product. Ah and that kind was like the start of lot of and actually outside my window was the first office of Google.

Eugene Malobrodksy: Like I could see Google’s first office that used to be actually some Microsystems office. But um, but that kind of gave me an understanding that this is the path I want to take the technology is the drive of the future and. this is how I this is how I kept going from there I joined another startup ah that did not work out as a system administrator. Ah the company did not survive um and after that I joined another company. That was in it asset management and I learned the art of sales and I understood I’m really good in selling and this ah and then I also understood that I’m just really not good. Following direction and go and being like you told what to do? Yes I mean that’s a childhood but like that moment I understood that I can do this myself and it just happened that my ah friend that I met. Still in middle school also lost his job at back then remedy corporation and know if you remember that and we basically took our credit took our parents credit cards and started the business from credit cards. Um.

Eugene Malobrodksy: And grew that business to over a million. There are ah and but in the back of my mind I always wanted to create a product company. Not just like selling it asset company and ah.

Eugene Malobrodksy: When we were walking around first I mean we’re talking about like early early 2000 s right? So talking know 2002 or so ah and you couldn’t just go to a restaurant or coffee shop and and and work out of a coffee shop. Because there was the wifi was not there or it was extremely expensive or you have to pay like hourly. So the idea that we has like okay, let’s build this and when we’re have enough money. We’ll build a company that’s able to bring democracy of access to the internet. To others and ourselves so we could be on university avenue in palalta or in the streets of San Francisco and be able to work from anywhere and enjoy that without meeting the office and that opportunity came in 2005 ah, when we decided that that was the time to build a new company that was called anchor free and the whole idea at first in the company was about ah democracy of internet access in terms of wi-fi and we create our own software. Hire First engineers that would allow to insert advertising into the wifi stream and while you’re in the wifi. It’s free. You don’t have to pay for it and was sponsored by advertising so through.

Eugene Malobrodksy: Ah, lots of different events. We got introduced to some amazing investors that you know it is like 2 23 year olds trying to build something literally have no experience in building anything significant in terms of companies we got introduced, but.

Alejandro Cremades: But it was but but it was massive. You know I mean and and I like for you to to continue here because I mean you guys raised for this company 430000000 so I mean it was incredible. so so yeah so so so walk us through how the introduction you know.

Eugene Malobrodksy: In big.

Alejandro Cremades: Keep going on on how you got introduced and then how the experience of going from 1 financing cycle to the next. How did that unfold as well.

Eugene Malobrodksy: Out that that’s a great great story which has you know lots of sweat and tears and and blood I would say um I mean ah we got introduced through some connections that we had. To this banker that introduced us to Burke Roberts who was a former Ceo and chairman of Mci and he’s like okay I’ll meet with these guys so we fly all the way to Baltimore to. Young guys going into the office of ah I think it was already like part of Verizon but he still had an office inside the building we go on there and lay on a 20 something floor and we meet was was burt who. Literally built one of the largest telecoms in the United States and we sit in front with telemar idea that hey we want to build this wifi network that will be all over ah, all in all the downtowns around the United States and stuff like that.

Eugene Malobrodksy: Ah, he ask us questions how we’re gonna monetize we explain that through advertising so on. So okay, he’s like thank you very much. Let me think about it so we leave the office we go downstairs. There’s a restaurant there. We sit down like there’s no freaking way that this guy is gonna invest in us. Like no freaking way like then about an hour later he calls and he’s like you know, ah you know I’ll give you money to build this and not only that he went to a lot of his friends.

Eugene Malobrodksy: And broadly investors. We’re talking about like Dupont family offices. We’re talking about a lot of the telecom guys. Um, and that was the first time when somebody really believed in us and he stayed as a mentor till the end with us and on our board. Which we’re extremely thankful for um, but that was when we started so and as we were building out our network. We understood 1 thing that the cost of infrastructure. And maintenance of that infrastructure was very high so we were thinking is okay, what else can we bring as a product ah that people can take wisdom and continue generating revenue for us so we could actually be able to afford so we created the product that became famous. Which is hearts per shield and the idea of how but shield was you come to the network you you can turn on our product. It secures the connection provides you privacy and protection against ah.

Eugene Malobrodksy: I mean men middle attacks and so on and we basically for a really long period of time until 2000 so we started the company in 2005 in 2008 we launched hots per shield sorry 2007 we launched hots per shield. And in 2008 this is the moment where ah we had no money in a bank account and 2008 as you can remember is the time when the whole market was collapsing. We went to a lot of vcs everybody basically told us no and we struggled and we had a board meeting with our investors. This is the first time when we had to let go a lot of people and now. Very hard. But ah this was we basically sat down with our board and they gave us a bailout round. It was a down round. But.

Eugene Malobrodksy: They basically said look this is your last lifeline and when you and and one of the learnings and like 1 of the quotes that stuck with me for such a long let’s until today is that for every dollar that you spend you need to make a dollar and the penny back. Least and most of our investors were extremely conservatives. Not very silicon valley investors they were like okay when you invest when you’re investing into something and spending you need to make money. You cannot just throw money away. So in 2009 we actually broke even in 2011 we burned all through our and ns and this and and one of the things in 2008 and this is one of the learnings that we had and. I would highly suggest to a lot of the founders that there to not be afraid to let go something that does not work so we stuck to the idea that we want to build the networks and build an idea of the hots but shieldll at the same time. And clearly the network aspect was not going to break even for us. It’s just draining money resources engineering I t like everything because you own the infrastructure you’re like a small telecom.

Alejandro Cremades: So how do you detach yourself because I mean that’s saying it sounds like you guys were attached to that strategy. So how do you guys detach.

Eugene Malobrodksy: Lets so that were attached with strategy but we understood the hospital was taking off I mean hospital was taking off and it kind of started taking a life of its own I mean it. Ah it became a platform. Of privacy and freedom especially in countries that had internet censorship. So ah, one of our marketing guys put a ad for hotspa shield on one of the blogs in Egypt and ah. All of a sudden hot special just exploded. We’re talking about like adding at like 10 servers on every two days ah but we were still so married to that first one not letting go which was like burning a hole in our pocket which led us to some extent to. Almost running out of mine age thousand and eight like if would have said okay that stuff that idea doesn’t work like forget about it. This thing is growing focus on that. Forget about the other business but we’re just married I guess it’s like founders. Baby right? And you’re like do I give up 1 baby because I want to save the other one or you could, but so we were trying to save 2 babies and that’s ah that was a huge mistake I think yeah and um, but going forward.

Eugene Malobrodksy: In 2013 Goldman Sachs came in and said guys we love your business. We love your growth. We’re highly profitable. Um and and back then we were still profitable only from advertising.

Eugene Malobrodksy: And ah Goldman invested $55000000 in us in 2000 and I believe it’s 2013 which was great like we had 3 term sheets. Or so Goldman was like take our money. No almost no strings attached. Ah and we took the money we started growing the business. That’s.

Eugene Malobrodksy: Work obviously went publicever you found out that there is Goldman invested in this vpn company. So this is what most of the competitors came to the market and we were the first ones to create technology that’s used to be used. For enterprises back to the consumer level and and that was one of the things that ah was quite amazing because you know we’re. At the same time. It was very hard because you are basically bringing the product that did not have a market at that moment yet. So we have to teach the market. What it is why you need it and also for people to continue using it. Ah, so then we have a lot of competitors started coming in as well. But we’re still based of the leaders I mean we were top in the app store globally in the top 50 top 20 apps. And overall and like number 1 number 2 in category is in like Middle East we were competing against number 1 spot was the quran which is insane. Um, but we were we.

Eugene Malobrodksy: Kind of became a company was not just a company that’s generating revenue but also created creating a huge impact on the world which is providing providing democracy and privacy and security to people around the world to be able to speak up their minds and. Different regimes and.

Alejandro Cremades: now now now 1 thing obviously led to the next and and then eventually you know the company got acquired. You know by the investors that bought the minority and then you know they they split the company into 3 different pieces and.

Eugene Malobrodksy: Minority if.

Eugene Malobrodksy: Um, yeah, 28 2 18 2018

Alejandro Cremades: This actually happening in 20 in 2020. We’d say wass actually like around 2020 or 20 what was what was the year twenty eighteen but regardless you know it was a pivotal moment for you because at this point you know obviously you had been. You know with the company for for quite a bit of time and we’re talking for like close to like something like 15 years I mean a great yeah like crazy amount of time and this was your identity. This is everything that you knew so obviously this chapter you know is time to turn page.

Eugene Malobrodksy: Yep, 13 years yeah 1314 years there praise it.

Eugene Malobrodksy: Yeah.

Alejandro Cremades: And here you are reflecting on the journey figuring out what’s next and obviously 1 thing that you were excited about was immigrant founders right? I mean you were an immigrant founder too. So how does that translating to you all of a sudden finding yourself in one way ventures what was that transition like.

Eugene Malobrodksy: I.

Eugene Malobrodksy: So I was still at anchor free after the new investment and the brought ins some of their new management but I was already starting to think like what do I want to do next I mean I’ve been a founder for 17 years of two companies nonstop. And like there wasn’t even a gap in the middle and I was like okay, what do I want to do next and I and I had felt inspiration I brought over 20200 people from different countries around the world to work for me at anchor free and. I saw how hard they work I under I I understood that they’re giving up so much for the better future that I wanted to be like okay these are the type of people that. Are basically first of all building the country here and also are the future and I wanted to raise a small fund and invest in the immigrant founders and I met a friend I said hey. Ah, who is a founder of pet cube. Um, and he’s like oh you know I told him about the idea that of starting this fund to invest in immigrant fall’s like actually I have ah my angel investor who is Simone Duka he ah originally was the mit blackja team group leader.

Eugene Malobrodksy: And started the company sold the company became angel investor in many many companies and then was a managing director of textars in Boston before he started one way and he’s like you should talk to him because it feels that you have the same vision of what you guys are want to do. So he introduced me to Cnn and that we had a great conversation. He’s like look before you start your own. This is a long journey you you should try it out and see if you even like it so I joined him as a venture partner while I was still doing anchor free. And that moment that anchorer free I was now chief strategy officer which is like a title without really power. So ah I basically started ah bringing in companies investing in companies. As a venture partner and then and then basically ah ah when we started raising our second fund because I joined the midway of the first fund simeon has asked me if I would be interested in joining as a fulltime partner on the journey with him. And our our third partner lacks and I accepted. We successfully raise our $65000000 fund um and been investing in a first gen immigrant founders. Um that ah.

Eugene Malobrodksy: Are building companies here in the United States primarily um and you know what? the interesting stats are ah if you look the stats today that 55% of american startups are actually built by amen and founders and. It’s even bigger percent 80% of american unicorn companies have an immigrant founder or an executive which is staggering and so this is why I really believe in in this and and if you just. Think about like how much you’re giving up by moving here. You’re giving up your friends your relatives your home that you grew up on and you basically move all the way to a different country. You just have you just have to. Grind to succeed you just can’t afford not to succeed. Otherwise why the hell did you sacrifice all of this if you can’t if you if you’re not going to succeed so.

Alejandro Cremades: Yeah on and and and and and always yeah, that’s a big one. You know so megram myself I can totally you know relate to what you’re saying there I guess you guys now have about 110000000 assets under management. How many investments have you guys done so far.

Eugene Malobrodksy: So in both funds. Ah, we’ve done ah around 50 plus investments.

Alejandro Cremades: And then what do you look for in founders. You know what? they? what are some of the trades.

Eugene Malobrodksy: So ah, one they have to be a ah at least one of the thousands is to be a first young immigrant basically person who immigrated to United States ah and not born in the United States second is ah would really try and to found founder find founders that I mean it’s a team. It’s a number one. It’s a team and the founder bet. Ah, we’re looking for founders that have ah an idea that they truly believe in want to change. And industry and we primarily focus on industries as fintech health tech ah like logistics deep tech and b two b sas those are our like primary areas that we invest in and we’re really looking for founders. Ah. Really want to make an impact on the industry and build something big I know it sounds cheesy. Everybody says like oh I want to build something big, but ah, this is I think something that every. Investor is looking for.

Alejandro Cremades: Now in in in this case, you know when you see like obviously like pattern recognition is a big one. You know when people um, you know are thinking about investments right? and and and thinking about engaging with founders. So what is the 1 thing you know I ah.

Alejandro Cremades: Personality you know trait that character thing. 1 thing that you see perhaps you know repeats the most you know and some of those founders that end up building something big.

Eugene Malobrodksy: That’s a very good question I think Resilience. Ah, and I think would be most likely survival Instinct. Um. Basic thinking when things don’t go as planned thinking outside the box how they can survive I think that’s one of the big differentiators.

Alejandro Cremades: So I guess there’s probably a lot of um people right now listening to this that are immigrants or are thinking about coming to the us I Guess if they’re looking to to for example, like to to build.

Eugene Malobrodksy: Are.

Alejandro Cremades: You know their their the relationship to be able to connect with people like you eugen. What’s what kind of like tip. Do you have for them. How can they go about doing so because obviously you land here. You don’t know anyone you don’t know anything. How do you go about being able to connect with people like you.

Eugene Malobrodksy: I mean the first thing they can go on Linkedin find my name and connect with me. Um, ah, even if we don’t invest I try it as hard as I can to find time to help people and give a suggestion I the the other week. Ah. I helped to found that it’s too early for us to invest and I helped him was reviewing his dad giving him ideas read in helping him redo his pitch. Ah just because I wanted to help him. Um, ah look oh. Our website one way ventures one way vc.com ah, you can apply ah and contact us through there as well. Um, that’s the other way of of contacting us. Ah.

Eugene Malobrodksy: But Linkedin is probably the easiest.

Alejandro Cremades: There you go and just one last thing here Eugene if I could bring you back in time to the early two thousand s and give me the opportunity of having a chat with that younger self by younggene that was thinking about building a company of his own. And you had the opportunity of giving your younger self one piece of advice before launching a business. What would that be and why give me what you know now.

Eugene Malobrodksy: Always try to hire the best people not only the ones that are great at what they do, but also true believers in what your company is building because those are the people that will help you and the company. To really really succeed I think that’s probably like really take the time to to interview the people by the way 1 thing that didn’t mention is I actually interviewed every. Person that we hired till I left and and some people I said look this is just not a fit not because he doesn’t have the skills is just culture or just. Did not feel that this could be part of the family.

Alejandro Cremades: Yeah I mean I hear you and that will well gene incredible. You know the discussion here and and I want to thank you for really taking the time to to be with us today and and it has been such an honor to have you. So thank you? Thank you? Thank you.

Eugene Malobrodksy: Thank you, Thank you so much as well. I appreciate.

*****

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com“>al*******@pa**************.com

 

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More