Saul Klein is currently a General Partner at LocalGlobe - a seed VC based in the UK and GP at Lattitude - a series B focused VC fund meant to fill in the gap in the European VC ecosystem which you will learn more about during our conversation.
Previously, Saul was a General Partner at Index Ventures a role that he held for 8 years
In 2012 David Cameron appointed Saul to be the UK's first tech envoy to Israel and a Technology Business Ambassador. Saul is a serial entrepreneur with two decades of experience building and exiting companies in the US, Israel and Europe.
He has a passion for working with seed and early stage businesses. Most recently Saul co-founded Platoon, Zinc, Kano and Seedcamp, as well as being co-founder and original CEO of Lovefilm International (acquired by Amazon) and He was also part of the original executive team at Skype (acquired by eBay).
Transcript - Not edited
SUMMARY KEYWORDS
founders, europe, people, seed, business, entrepreneurial, book, companies, firefly, uk, build, index ventures, building, organisation, years, most impactful, practical, european, yahoo, team
SPEAKERS
Calin Fabri, Saul Klein
Calin FabriĀ 00:03
Our guest in this first episode is Saul Klein. Saul is currently a general partner at local globe, a seed VC based in the UK, and general partner at latitude a growth focused VC fund meant to fill in the gap in the European VC ecosystem, which you will learn more about during our conversation. Previously, Saul was the general partner at Index Ventures role that he held for eight years. And also in 2012, David Cameron appointed soul to be the UK is first tech envoy to Israel, and technology business ambassador, so is a serial entrepreneur with two decades of experience in building and exiting companies in US Israel, but also in Europe. He has a passion for working with seed and early stage businesses. Most recently, so co founded platoon, zinc Cano, and seed camp, as well as being co founder and original CEO of LoveFilm International, acquired by Amazon. And he was also part of the original executive team at Skype, which was acquired by eBay. It is with great pleasure to introduce you to Seoul Klein. already.
So let's first try to set the stage for our audience is 1995. And you're 23 years old. The internet is very, very young. The main browser used by the early adopters is mosaic. Yahoo was 30 people strong and famous Wired magazine had only three issues launched. You just terminated your contract at the telegraph. And you decided to join the founding team at Firefly as VP of marketing. Firefly was a six person VC backed startup that started a Media Lab in Cambridge. You look around in Europe, and you realise that the startup ecosystem is non existent, and it is going to be hard to build a business from Europe and you decide to move to the US. After some years Firefly got acquired by Microsoft, and he moved on to build other successful businesses like LoveFilm join executive team at Skype, and later on Index Ventures. And now founded seed came in latitude among others. Fast forward 26 years. Where do you see Europe now? And what change and what is still missing?
Saul KleinĀ 03:13
Wow, it makes me feel very old. I actually remember very well, going to Boston, I think in February 1994. And joining the team at Firefly, it was freezing cold. And the internet was very, very young. I was young with the internet was very literally Yahoo, which some people probably don't even know remember, writing was the biggest internet company out there. Amazon was just getting started. So not only was the UK and Europe in in the very early days from an entrepreneurial perspective, in general, nevermind in tech, but so was so as the US and you know, I remember coming back to Europe in 2002. It was very, very early days, there were very few VCs active. And actually when I when I joined index in 2007. And we started seed camp, I started seed camp with Reshma again, it was very, very early days. And there were very little sense that the European tech ecosystem was vibrant or active. And if it was it was limited to a very small number of cities. The idea that you could have companies coming out of Estonia or companies coming out of Romania like UiPath would have been crazy in those days. And then I remember I spent two years in Israel from 2010 to 2012. Coming back to the UK in 2012. And seeing a report that said the UK was number one in the G 20 In terms of the internet as a percentage of G ADP, and I just couldn't believe it. There's absolutely no way that's true of the UK. And the reality is they've been in that time period when I left when I started at the telegraph. And we put the telegraph online in October 90 for the largest ISP, which for people who are too young to remember ISP, internet service provider, was demon, and it had 10,000 subscribers. And when I came back from Israel in 2012, the Internet was 8% of GDP. And at this point, I think it's 15% of GDP. And the UK or London is after the Bay Area and Beijing the third largest tech ecosystem globally. I mean, it's night and day.
Calin FabriĀ 05:54
Got it. So if you look at the European intrapreneurial situation, both from the intrapreneurial perspective, but also from the capital perspective, where would you say that we are now? And what do you think is missing still,
Saul KleinĀ 06:09
there's a really great charts that dealroom put out last year, looking at by stage seed stage being less than $4 million, series A being five to 10 million, or $15 million dollars, Series B being 15 to 40, C being 40 to 100. And then mega rounds being 100 Plus, so at the seed stage, Europe, accounts for 38% of all rounds globally, which is as high as North America. At Series A, it goes down to 26%. And is like 40% of North America. By Series B it goes down to 21%. And North America's 54%. By Series C it goes down to 14%. And Asia is at 24%. And North America is 57%. So at the early stages, particularly at seed stage, and Europe is actually as healthy if you like as any other ecosystem anywhere, including the US. But as the rounds get bigger, the proportion of those rounds relative both to the US and to Asia is much smaller. To give you a sense of the mega round 13% of rounds that 100 million to two 50 million are in Europe. 30% are in Asia. So like three times more in Asia. Nevermind the US arguably, we are still massively undercapitalized from Series B and beyond, which is one of the reasons why two, three years ago we decided to launch latitude because I guess, historically, which is why we launched local globe, we felt that seed funding was still undercapitalized. In Europe founders weren't raising enough money at seeds to get to a great series A and we still think that's critical. And it's really important that founders raise enough money, they partner with the right seed funds. So you can get to a great series A there's there's Series B and beyond, again, European founders really don't have access to enough capital. And when they do have access to capital, the vast majority is international visit of the mega round stages, less than 20% of the capital is either domestic or cross border. 40% of the scale up capital is us. In Europe,
Calin FabriĀ 08:57
we we have some work to do at later stages, it seems based on on this fact, to change the topic a little bit and focus more on the founding team. From a team perspective. What do you think it takes to raise a good seed round now in Europe?
Saul KleinĀ 09:17
Well, I mean, I think, first of all, I would say that while Europe is not doing as well, as yet, as some of the other geographies when it comes to those sort of larger rounds. The quality of the companies coming through is incredible. I think there are 100 Plus unicorns, just in London and Paris. And Europe now has with Ajin with Spotify and UiPath and others companies that are worth 10s of billions of dollars not we had Skype were like 4 billion dollars. I mean, that was an enormous number. But nowadays, founders are aiming much higher. And they they're becoming much bigger companies. But at seed stage, and quite frankly, I think this is true at any stage founders need to look for investors who really understand and share their dream. And sharing their dream means that they, you're able to sort of paint a picture of a markets and a marketplace that is going to be really meaningful and have a serious economic and social impact. You need to show evidence that you're building or can build a product that people are going to love and rely on whether they're consumers or rent or businesses, you need to show that you're able to persuade other people that your dream is worth following. That means you've got great co founders, or you've got an amazing team. And those are the things I think we and most other investors would look for is the people, the products, the insights that they have about the market and the future. We're really, I think we used to use the term we're looking for practical science fiction, the things that in 1520 years, everyone may look at and say, oh, yeah, of course, that's all BS. But like, 1520 years before people like you crazy, that's, that's never gonna happen.
Calin FabriĀ 11:39
Do you remember who was the last intrapreneur that you have met that checked all the boxes and qualified for your term of practical science fiction,
Saul KleinĀ 11:50
we're lucky in that we meet founders like that the whole time, just with local glow. Since 2015, we've backed over 150 companies in sectors from food to fashion to robotics, to neuroscience. And so it's hard to pick one but one founder who really is building something that is practical science fiction is a guy called James from from coal mined. And CO mind is a non invasive neuro science, business, neuro tech. It's a non invasive brain computer interface. And James, when we invested in his business was 19 years old. He learns about machine learning and TensorFlow on YouTube and taught himself TensorFlow. He's, you know, research neuroscience on Google Scholar, basically self taught, and just had the most incredible approach to non invasive brain computer interfaces, and what this could mean for people and society at large. And what what we were really impressed by with James was not just his technical mastery of the different components, because you know, this is hardware. This is software, this is AI, but also like the ethical implications of building a business around a brain machine interface that was both read and write that is definitely practical science fiction. And this is definitely an exceptional founder.
Calin FabriĀ 13:44
You mentioned in your previous talks about the founder cult. And if you look at the founding team overall, or at the early stage team, that actually they all have to be a little bit intrapreneurial to drive the success of the company. What other characteristics next to vision? Do you think an exceptional team that will succeed must have,
Saul KleinĀ 14:06
you know, we use this term practical science fiction, and the clue is in the practical as well as a science as well as the fiction I wrote a post on Quora about the Platonic or the ideal startup team. And one is practical and operations person or someone who really knows how to get stuff done. One is science if you like engineering product, someone who can like make and build something. And the other is fiction, someone who can tell the story, understand the customer, and be able to tell that sell the vision as well. And I think very few founders, if any, have all three of those dimensions in one person, whether you're a solo founder and you finding other people in your family Finding team who can fill in those other dimensions. But ultimately, I think you need all three of those dimensions to build a great organisation. But to do that, you've got to be very self aware, because you have to understand what are your own strengths and weaknesses. And you have to recognise in other people where they complement you, and where they can help help you develop and vice versa. And in our business, we talk about playing Total Football. And anyone who's a fan of football will know this is the art that Barcelona and I acts developed. And it's the idea that really, on some level, you can play anywhere on the pitch, but also you have real awareness of where you should be and where other people can be. And we think of our team being built and developed in that way. And we look for that in other teams as well.
Calin FabriĀ 15:57
What are three most important things that founders listening should just go tomorrow and implement in their team, so something like low hanging fruit that they can just go and run with it?
Saul KleinĀ 16:11
A really great CEO, who I've got a lot of respect for Samir Desai, who started and still runs funding circle and saw him from when him and his partners came in and was starting the business all the way through their IPO. And he said, the CEO does three things. Basically, they set the strategy, they you know, recruits and develop the team, and they make sure the company is properly finance. And if you're a leader, those are the things you need to make sure you're on top of that the organisation has a really clear sense of its mission. You know, what it's doing, why it's doing it, what the steps are to get there. Number two, is you've got the people in place who can complement you and recruits and build out the business. So go after that vision, then obviously, you've got to have the capital and the resources to get there. And it's not a lot more complicated than that. So complicated stuff is like actually doing it don't think if you remember those three things, as a CEO, or a leader, is probably not a lot more you need to remember.
Calin FabriĀ 17:27
Perfect. Two, three more questions as a wrap up at the end. I know that also you have to leave in five minutes, what is the most impactful book and why?
Saul KleinĀ 17:35
I've read some great books in the last six months, probably I'll mention three. And then I'll tell you the most impactful book ever. So by the way, I like this because I didn't study computer science at university. So I don't qualify, either as practical, or scientists, I qualify as the fiction because I studied literature at university. So yeah, the tops three books in the last six months. One is Reed Hastings book, no rules rules, which I think is just an incredible book about culture and management and having competed against Netflix at love film. I've just got incredible respect for Netflix and him and the organisation they built. Second also related actually, because they ended up acquiring love film is Walter Isaacson's collected, Jeff Bezos, his annual shareholder letters and all Jeff Bezos, his public speeches and statements and put it into a book. I don't remember what it is. But if you look on Amazon, I think you might find it's unbelievable. And like there is no clear I think, more articulates entrepreneur or an innovator, I think, maybe ever, but certainly in the last 50 to 100 years and Bezos. And then the third and again, it's terrible. I don't remember the name of the book. I'll look it up on my Kindle, but it's a book about the two Jewish families that were instrumental in shaping is called kings of Shanghai by Jonathan Kaufman. It's basically about these two Jewish families who built massive commercial empires first in India, then in Shanghai and then inch in Hong Kong. And you know, how they, you know, it's their story set against the backdrop of the Chinese revolution, Hong Kong and the British the Opium Wars. So it's really, really interesting if people are interested about China, Hong Kong and India, which I definitely very interested and then okay, now, now you got me a brilliant book, which one of my colleagues recommended to me, is Let My People Go Surfing, which is by the Patagonia founder, which is a brilliant book on building a company with with real impact and real purpose, which is something we aspire to do. And we love backing founders who do that. And then my favourite book of all time is the Heart of Darkness by Joseph Conrad
Calin FabriĀ 20:20
hearts of darkness. I'm going to check that Staying on the topic of things that had an impact on you, next to books, who was the most impactful person in your life and why?
Saul KleinĀ 20:33
I mean, my wife, obviously, I would say, for several reasons, I'd start with the fact that she introduced to me something in my 20s, that's been life saving, I think, which is digital Shabbat. So we're Jewish. And if you're a traditionally you will take Shabbat, Saturday off, you won't do any work. And you spend time with family. And so for me, like having a holiday once a week, where I don't look at email, I don't look at my phone. typically don't drive means that once a week, I basically have a days holiday. And I that obviously sounds obvious, because the concept of the Sabbath goes back 1000s of years, and not just in Judaism, but sort of deep wisdom. And in the modern age, I think we run around like crazy. And we're always on and making sure you have downtime, and have time to spend with your family with yourself is super valuable. And then yeah, obviously my both my parents in different ways influenced me a lot, and continued to influence me a lot. You know, I still work with my dad.
Calin FabriĀ 21:54
Yeah, how beautiful that is. I'm very lucky. Thank you. Thank you very much for taking the time. So if you have any ask from people listening. And if you want to let us know, where can people find you on the internet?
Saul KleinĀ 22:10
Yeah, so you can find me on Twitter at Cape CAAP. I'm lucky that I got a short Twitter handle. And the reason why I got it is it was it's always been my alias I was when I signed up for when we created my Yahoo. For Firefly at Yahoo. We were testing the ID system. And I called myself cape and I call myself Cape because I was born in South Africa. And I've always loved Cape Town and the cape, so at Cape on Twitter. And then when everyone's able to travel again, please come visit us at Phoenix courts in Somers town, which is between Kings Cross and Euston and if you're coming from Europe, on the Eurostar and you're using more of a climate friendly means of transport the train rather than the plane, you walk out of the Euro staff from Brussels or Amsterdam or Paris and our office is like a two minute walk away. Please come visit us at Phoenix courts as well and yeah, good luck with with whatever you're doing.