SuperAngel #187 Keith Grose, full time angel, on importance of grit, trust and communication

0:03Hi, and welcome back to the European VC, the go-to-podcast for everything European VC. If you love the show, share with your friends and join our newsletter at eu.vc. All right, all right, all right, Andreas. So now we're at our second Super Angel podcast episode, which, as we said when launching the first one, we've decided to feature here on the EUVC pod. And I love this one. In it, we were actually joined by Keith Gross, who we also had the pleasure to meet in person for our Dagoblaster event a couple of weeks back in London. And I have to disclose I didn't see him. I guess the office was full.

0:41I guess there was too many people. Super happy to hear that though. Yeah, busy indeed. All right, but let's get into it and set the context for everyone. You're listening to this episode because we got a bunch of learnings from this as well as all of the Art of the Super Angel podcast. And I just want to ask you, David, what was your main takeaways? A core takeaway that I took out of it at least, which was this concept of founder allocation, right? When thinking about portfolio construction, not necessarily thinking about the deals and the sectors and the verticals and the geos, whatever, but more thinking of it as my time is extremely limited.

1:16And as an angel, there's a limited amount of time that I can also dedicate with the investments I make. So thinking of time as the anti-commodity and optimizing for how I spend my time and with whom I spend my time. All right, we will not bore your ears more or tire yours more with our voices. We will let you listen to this episode where I and Anthony Dannen from Cocoa dive into angel nesting with Keith Gross. To-do-do.

1:49Is this a dream? No, it's not a dream. I'm an angel. Why would God send me an angel? Because God knows that everyone needs a little coaching down there. I'm loving angels. I saw an angel. All angels say for a long day. Please say it's me an angel. With a smile on her face We're in it together, but don't want me, Johnny You've been touched by an angel, girl Hi, and welcome to the Super Angel Podcast The go-to podcast for angels backing the next generation of European unicorn founders If you love our show, do drop us a review, share it with your friends and join our community at eu.bc Today, we're happy to welcome Keith, head of International for Plaid, an open finance platform and data network that powers over 3 ,000 digital financial apps and more than 12 ,000 financial institutions across the US, Canada, UK and Europe.

2:49As well as this, Keith leads the strategy and operations for Plaid's international products. If you're an angel listening in and wanting to get closer to the European angel scene, do not hesitate to reach out to us. We'd love to connect and see how we can play together. And now, some words from our beloved sponsors. How are you currently reporting to your LPs? Is fund administration taking hours? Are you getting lost in spreadsheet version control? Well, Flow solves all of these issues and more, allowing you to unlock the power of your fund's data by consolidating your work streams onto Flow. Book a demo to learn about Flow's portfolio and fund management features and transaction infrastructure at flow.io forward slash VC.

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4:34keith welcome to the super angel podcast we are so excited to have you with us thank you it's so great to be here thank you for having me andres and anthony thanks for being uh keith and you know actually we've co-invested in a bunch of deals together with keith so i'm so excited to have him here. And, you know, I do think he's one of the strongest commercial product operators I know and bring quite a refreshing U.S. experience to the European ecosystem. So yeah, again, thank you. Thank you for joining us. Of course. It's great to be here. Would love to start like, you know, hearing a bit, you know, for the listeners, right, your backstory, what got you into operating, what got you into Plaid and then angel investing or, you know, the technology ecosystem as a whole.

5:13Yeah, I'll go way back for this. And so stop me if I go too far back, but I've really always loved early stage tech since I was in high school. So I went to a basically a boarding school for nerds in the US. It was called the School of Science and Math. Our mascot was the unicorn. I was surrounded by this environment where everyone was like, what's the latest thing that's being built, the latest thing coming out? We always got the popular science magazine. And so I really fell in love with tech from that point on. And that's what led me to move to Silicon Valley after university and start my career there.

5:45It was really at Google, though, where I started to get into fintech and infrastructure. So I worked on expanding and building out what became their fintech products. So Google Pay API suite and the Google Wallet app, and really started to see under the covers, if you want to build a great consumer experience, the infrastructure that you have to build is very intense, and there's a lot of complications around it. And so I started falling in love with solving those problems. And ultimately, that's what led me to Plaid. If people aren't familiar, it's an open banking platform. So it's an infrastructure layer that supports lots of other fintech applications.

6:19And I joined to help them expand their offering to Europe for the first time. And so while it wasn't a founder experience, it was almost a mini founder experience because I had to set up a new entity, payroll, operations, compliance, build out the product, then scale the go-to-market team. And now it's a multi-million ARR business and off and running. And so I went through that journey. And over that journey, I started to have other people who are doing international expansion or building fintech products start to ask me for advice. How did you handle this? What did you think about scaling your organization in this way?

6:51And that's how I really fell into angel investing is really through supporting people who are going through a similar experience that I've been through. And so I almost think of angel investing as evolution in that sense. You're taking your learnings and trying to help another founder be more successful by supporting them with what you know and the problems and successes that you've seen along the way. So that's sort of a little bit of my journey, if that's helpful. Yeah, absolutely. That's fantastic. And I do find that angel investing is a way of actually ensuring you have a continuous relationship with those people in some respects, right?

7:23And in a way that's aligned. But now tell me a bit more about any favorite deals. I mean, first of all, how many have you been doing? Tell us a bit more about your angel investments, but also any favorites you want to share with the listeners would be great. Yeah, absolutely. I started out angel investing through syndicates and platforms like AngelList, and then moved into doing direct deals and supporting founders that I need directly. I think a few of my favorite deals, and I've probably now at this point done somewhere around 40 angel investments over the past basically three years. So relatively active.

7:58Probably my favorite deal is Ramp Network, which is a crypto on-ramp. I think you're very familiar with them as well. but I've just loved Simon and the team that he's been building. The grit that they bring and what they've built as a business is incredible. And so just seeing the speed at which they execute and also the, I say, the chip on their shoulders is something I've now started to look for in other founders. I really want to see that grit when I talk to someone early stage because you're going to go through so many ups and downs if you're founding a company that I think that's the number one quality that I look for.

8:31And so Ramp Network is probably my favorite deal I've ever done. And then another deal I'll mention is supporting people that I've seen sort of go through working with me and then leave and build their own company. And so I also invested in Stitch, which is ex-Plat alum's founding an authentication startup in the US. And I think it's so exciting to watch people that you've known and seen grow, go on to become their own fantastic founders. So those two deals stick out for me as ones that are really have a sort of a special place for me. Yeah, absolutely. And when you go back and look through the experience of the 40 investments you've done to date, what would you say angel investing has given you or something you wouldn't have expected even that it might have given you, whether professionally or personally?

9:13Yeah, I think a few things there. One is it's helped me crystallize my own experience and learning. I think almost think of the way you would think about it if you're writing your own business book or something. If you actually have to share your ideas and your experience with someone else, it makes you think through, why did I make these decisions? Why did I structure things this way? It makes you reevaluate and have more clarity about your own experience. And then the second thing I would say there is actually building an amazing network and sort of friendship group out of this angel investing process.

9:47For me, I really love to be on WhatsApp level communication, texting back and forth with the founders I invest in, introducing the people I think they should know. And so oftentimes, whenever they come through London or if they're in London, I meet up with them and you really start to actually develop a great relationship beyond just an investor or angel relationship. And so I think it's a great way to build a fintech community and to embed yourself in that fintech community. I think that's probably one of the things I've enjoyed the most. I'd love to just double click on that because now you said that fintech community and you're obviously building yourself in the fintech world as well.

10:22Do you stick to that sector? Is that how you think about it or what is the strategy? Yeah, because I like to think of it as well from the founder's perspective, right? Like you're not just investing in a founder. A founder is investing in you. They're giving you a piece of what they're building in exchange for something. So what are you bringing to the table there? And so I like to invest in companies where I know I can add value. And for me, that's very clearly fintech, crypto, B2B companies, and in particular, API-based businesses where you have to think through how do you structure your go-to-market motion?

10:52How do you think about pricing? How do you think about verticalizing your customers? Things that I've gone through myself. And so I do tend to do 95 % of my investments in the crypto and fintech space, just simply because I feel like that's where the exchange of value is best because I can bring a lot to the table for founders. The good news is, and maybe that's self-serving because many people will know I'm a bit of a fintech nerd, but I say fintech is everything. So in some respects, it's quite a horizontal and touches in so many industries. So it's quite a broad thesis in itself, I would assume.

11:23So it's great. Absolutely. I'm also a believer that every company will become a fintech company at some point. Every tech company will become a fintech company at some point. So it It does offer a lot of a broad platform to invest there. But then you're giving me the stage here to invite you up and dance all over crypto because, you know, right now we're recording this at the time where I think everyone is thinking, what the hell is going on? Could we just dive deep there for one second and let you start, Keith? How do you talk to your founders right now through the turmoil going on in the market?

11:56I think, I mean, it's definitely the depths of crypto winter right now, right? But I think if you're building something of value, especially something that's infrastructure, it's going to go through multiple market cycles. And so I always tell people that actually down markets are the best time to build because you're less distracted. There's less well-funded competitors popping up around you. This is the time to focus on you and your team. And I also think it provides healthy prioritization and discipline. You have to make hard trade-offs that sometimes in the boom market, you might not have had to make.

12:26and that actually I think is a very healthy cycle for any startup to go through. Crypto just happens to seem to go through that every 18 months, but that's also because it's early as an ecosystem. And so it's going through this hype and drop cycle. I think the other thing here though is it's really important and I also think about this in the companies in crypto that I invest in, that I'm not investing in something that's built on speculation or hype. Like what is the actual real value here? And so a lot of what I'm focused on investing on is people that are building bridges between traditional financial infrastructure and the web, which I think is really where crypto stands out and builds amazing value.

13:05And also that you're helping build something that's actually going to add things to people's lives. And so I do think there are companies in crypto that are doing that and that will continue to do that. I'm still a long-term believer in the space, even though obviously right now with the recent FTX news, it's definitely a tough time. I think also good founders are just keeping their heads down and staying focused on the long-term goal. I will come back to this subject because I think it's not necessarily crypto, but fintech and how you as a specialist in that sector acts as an angel. But maybe just before we dive really deep, let's get an overview of your investment strategy and thesis and so on.

13:40Kind of share with us how you think about your portfolio allocation and that kind of thing. Oh, no. It's not about the thesis.

13:54First of all, the way I think about it is what percentage of sort of how I think about my entire net worth am I comfortable putting into angel investing? Because I also like to think of angel investing as there's a very low likelihood of really positive outcomes. You're doing it, you need to be doing it as a way to build an ecosystem, to provide value to other founders, to build a network beyond just the investing side of it. And so obviously you're not putting 50 % of your net worth into angel investing. I think that's a bad decision for anyone. But then I also am thinking about from that perspective, I'm always more focused on the founder allocation.

14:31Which of these founders that I speak to, am I going to be willing to spend hours of my time with and why? And that's where I invest accordingly. So I almost think of it in that way. If you have limited hours in a day, how would you structure your day? Because I think a lot of angel investing, the value that a founder is going to get out of you is having access to you and your knowledge and what you bring to the table. And so I allocate my portfolio in that sense, almost like time-based. Who would I want to dedicate the most time to and invest accordingly in that way? And maybe given that, I wouldn't ask you for your net worth and ask you how much money are you putting, but I will ask you for your time worth and how much time are you putting, dedicating to angel investing?

15:15Yeah, I would say I probably speak to these days, two to three founders a week, and I'm probably doing something like 10 investments a year. And so sometimes these are founders that just are reaching out for very different reasons or they just want to talk about Plaid or something else. but that's probably the number of investments that I'm doing. But I speak to founders all the time. I actually really like that notion of like thinking about the quantity of deals that you're making versus the amount of time you have to dedicate to them. As a funny tidbit, like I remember there was, and I'm not going to name it names, but like it's a founder that actually had a very active investment strategy who had optimized for, let's say, you know, volumes for capturing potentially the best outcomes.

15:58And he told me that he suddenly realized that literally his whole weekends are wiped out on clearing out WhatsApp messages from his 150 plus investments, right? So it's definitely something for the listeners and other angels to take into consideration. And Keith, do touch more on that because I think that it is an interesting concept of managing time. And that is, in the end, the most precious resource that all of us have. So do dive a bit into how you think about that. And also, how do you ensure that you attribute your time to where you really see it being valuable and that kind of thing? Yeah, I think it depends on the stage of company, the space they're in, and where I feel like my experience is going to line up with their needs.

16:44Then the other thing, one of the questions I always ask founders I talk to is, what are you hoping to get out of this? How do you want to work with me? And there are some founders who say, look, I know I'm going to have these three problems. I'm going to write out a memo of how I'm thinking about it. And I'm going to send you this doc. And if you could just spend the Sunday afternoon putting in your thoughts and comments here, that would be great. There are other founders who say, look, let's just exchange WhatsApps and they'll shoot me a text on the fly whenever they have a question one off that takes five minutes here or there.

17:14So you really have to talk with founders and say, look, how do you want to work with me? And there are some who say, I'll contact you when I need you. And I never hear from them again. So there is this range of how much a founder wants to use you or doesn't want to use you. I just make sure that I'm very upfront about that. And we share this relationship and understanding because I do think of it like a friendship. And I think of it as I'm going to be willing to invest time here. If I'm writing you a check, it's because I'm willing to spend at least a couple of hours a month talking to you and helping you work through problems.

17:44And I think the bigger the opportunity size I see, the more time I'm going to be willing to spend with you, the bigger check I'm going to be willing to write as well. When you then decide to invest, do you then typically also lead the round slash lead an angel syndicate or do you typically co-invest with multiple others? How do you think about SPVs? Are you happy to join into those or would you rather go direct? I never want to lead the round because I want to be a supporting force, not the driving force in a company is the way I think about it. And typically I do invest with other angels. I have gone through SPVs just because sometimes from a founder's perspective, that is the easiest way to manage the investment itself and the paperwork.

18:25And I'm happy to do that from a syndicate. But I also think founders get the most value out of me when they know me one-on-one. And I do find that I have more of that one-on-one relationship if I'm investing directly or co-investing alongside one other angel versus going through a syndicate or SPV where there's many angels gathering together into one investment. So my preference is to invest solo or alongside just a couple of angels directly versus a broader syndicate, because I think that's where founders know you one on one and have more of an impetus to reach out to you for questions they have.

18:57And how about how do you source deals? Because we're going to have many listeners that primarily rely on, let's say, either their personal network or they rely on an angel club they're part of. Or, you know, how do you think about that? And also, if you could add some words to the different routes or channels of Stealth. Yeah, it's interesting because it's changed over time. I think a big part of my role over the past four years has been building Plaid's presence in Europe. And that has led to me being very visible. I'm always at conferences, I'm doing speaking, I'm doing podcasts. And so I actually tend to have a lot of deal flow of founders reaching out to me just because they've been trying to figure out some problem and they've gone to a conference to hear a talk that I've done or they've looked up some podcast they had talking about fintech.

19:47And so actually a lot of it comes inbound from just having this presence that I've built in the ecosystem itself. And then the other way is actually from events in London. Again, this sort of is how I started out building my fintech ecosystem and relationships with the ecosystem here in London. And I would go to hackathons. I would go to fintech drink events. I'm always present. And I have to meet people one-on-one there who are thinking about starting a company. And then a year or six months down the road, when they are ready for that, they reach out and say, hey, I'm thinking about taking this step.

20:20How do you approach it? Or I'm launching a new market and taking on a new role. Can you talk me through how you thought about launching markets at Plaid? Things like that. So for me, it's always been sort of building that network and ecosystem and being open for people to find you wherever they are. I would say probably 30 % to 40 % of my deals are cold inbounds coming off of LinkedIn. Another 30 % to 40 % are referrals from other friends in the ecosystem. We say you should talk to Keith for this particular problem. And then 20 % of them are people that I reach out to or that I see are building something and I say, hey, let's talk.

20:52It's interesting. Anthony, do you want to attach any comments to that? Well, my take is very simple. I'm glad to be hanging out with people like Keith so I can have people like Keith being sourcing deals for us, right? No, not too much to add to that. I will say that the earlier stage you go, the more unscalable it is to source. And the closer you are to operator networks, to founder networks, the closer you have a visible superpower, the better it is to be either a magnet or to be in the flow of the very interesting people, right? And so you can be systematic and say, you know, I source X amount from VCs and Y amount from founders.

21:32But in the end of the day, I think it's a lot about the personal brand as well and kind of magnifying that. And that's, I think, a way you can scale that beyond. You know, for us, it is like many other funds. I think what really works with Cocoa is we are an angel fund. We don't step on anyone's toes. So on top of what we usually, that usually funds get, we also have VCs actively referring as very good deals rather than their third, fourth, fifth, at best when you're competing. And also our positioning versus other funds is a lot about helping the founders before they're ready to pitch to the ex-VC even, right?

22:10And so we want to be Keith's recommendation to his ex-colleague before he goes out to talk to the tier one VCs he wants to pitch to, right? Exactly. Keith, I have two questions that I want to ask you before we get to your core learnings from your time as an angel investor? And the first question is, you mentioned that, I think you used the phrasing that when founders come through London, so that means, okay, they're not always in London. So how do you think about doing deals internationally? Again, I always go back to, can I relate my knowledge to the experience this founder is going to be going through?

22:48So I'm happy to do international deals as long as I understand the product or market they're going after, or if it's within the fintech and crypto space. And I feel like, especially B2B infrastructure, where I know that my understanding and knowledge is going to translate into value for them, even if it's in a different geographic location. And when I say come through London, actually, a lot of founders, especially in post-COVID area, are very mobile or digital nomads, or they actually spend most of their time in a different country in Europe. But everyone has to come to London because it's such a hub for fintech.

23:22And so I think if you're a founder in fintech, you are in London at least a couple of times a year for one reason or another. And that's where I always make sure that I make myself available for founders when they're in this ecosystem. But I'm happy to do international investments. And I think, again, a lot of where I add value is having led international expansion now at multiple companies. I can really bring a lot to the table for international founders that are thinking about, how do I come to the UK? or I've started my company in Europe, how do I bring it to the US? That's actually a place where my experience is really relevant for founders.