Greatest Gains and Losses From A Lifetime of Investing with Alex Golod

Have you ever wondered about the lifeblood of startups and how angel investing truly works? Sit tight as we chat with Alex Golod, an IT executive turned angel investor, who shares his fascinating journey from immigrant to a key player in the high-stakes world of tech startups. We'll unearth Alex's unique investment philosophy and discuss why he's drawn to revolutionizing B2B sectors, such as FinTech and EdTech. His insights shine a light on the interplay between American market interests and global investment strategies, offering a masterclass in navigating the complexities of capital infusion for burgeoning enterprises.

The narrative of the American dream wouldn't be complete without acknowledging the entrepreneurial spirit of immigrant founders. This episode pays homage to their substantial contributions to the North American economy and the unparalleled opportunities they've created. We'll navigate through the labyrinth of international business laws and the helpfulness of U.S.-based entities in simplifying these ventures. If you've ever contemplated dipping your toes into angel investing, you'll find nuggets of wisdom on leveraging the expertise of seasoned investors, joining syndicates, and tapping into crowdfunding platforms to kick-start your investment journey.

Wrapping up, we dissect the myriad of paths a startup can travel—from modest, organic growth to chasing the elusive unicorn status. This episode is a deep dive into the world of startup funding, contrasting the roles and goals of angel investors and venture capitalists. We highlight the tenacity of founders who weather long spells without profits, drawing parallels with the growth trajectories of behemoths like Amazon and Facebook. Join us for an episode that's not just a conversation, but an exploration of ambition, strategy, and the profound decisions that shape the future of tech startups.

Transcript

Speaker 1: 0:01

Hello everyone and welcome to Voice Like a Lion podcast. I'm your host, stephen Pemberton, and today I'm so fascinated with this gentleman and his story and I know that you guys are going to love the journey that we go down there in this conversation. So this is Alex Gulod. He is a results-driven IT executive, angel investor and a global technology sourcing expert with over 20 years in technology. So, alex, welcome to the show.

Speaker 2: 0:26

Glad to be here, thanks for having me, absolutely.

Speaker 1: 0:29

So. I know that we got introduced to a mutual friend and you and this mutual friend you share one thing in common both of you are angel investors. But I know that you guys do not do the same things in the same way. So take me back just a little bit. What got you interested in becoming an angel investor?

Speaker 2: 0:46

Well, that's, of course it's a long story, but I'll try to distill it into very few simple facts. I came to the United States in 93, well, I would say over 30 years ago as a very young man and I was always fascinated by the way the way business and entrepreneurship flourished in this country, and of course it's called the length of opportunity for a good reason. I've been doing a lot of different corporate and small business entrepreneurship jobs, but I was always having this what I called investor streak. So one time came I started investing, first into the business, as I understood closely related to my technology interest, closely aligned to that.

Speaker 2: 1:53

And later on, about seven, eight years ago, when I what I call graduated from both corporate and entrepreneurship world, I thought I would like to build my portfolio, to point out, and that's what I'm doing for the last six or seven years, of course with variable success, you know it's usually on paper until you realize your gains and losses. But what's important here is the fact that it's sort of driven for me by my investment philosophy, but also by what I call community spirit. There are a lot of young companies in US that needs to get off the ground and it's not that easy, especially without money. The main, the main problem for young and ambitious and inspiring entrepreneurs is simply the fact that they need money to succeed. Despite all our technological advances, it's very difficult to start a real successful business without money and Angela investors come in.

Speaker 1: 3:01

That's such a thank you for taking me through that. One thing that I sit there and I was hearing you say is you were talking about startup founders and just how hard it is to get startups off the ground, and I do think that that is absolutely the truth. I mean, I am a startup founder and for me, this, this is something that's been very interesting, because I mean, we bootstrap everything and when I sit there and I'm reading this book, it's called the founders and it talks about a real startup. I got a. We're a startup per se, but, like real startups, big ones the first one was PayPal and, with PayPal, just listening to how much capital they needed to run a company that ended up becoming a billion dollar IPO, it's insane. And even, yes, we have AI, we have these different tools and different aspects of business, but capital is such an important one. So, with capital being so important, how do you, how do you choose? How do you choose a startup to say, yes, this is the one that I'm going to invest my capital?

Speaker 2: 3:58

of course, we'll have our checks and balances and checklists and scenarios right, but I personally invest in what we call in our world seed round. So it's past friends and family, past some initial traction that needs to be displayed for outside money to come in. I'm personally focused on what I call technology centric B2B companies, where, not necessarily having the same characteristics that consumer businesses. Apparently, there is the world beyond Silicon Valley borders as we know it, despite popular belief, and there are a lot of interesting niches right. There are a lot of things that need to be reimagined in this world. I'm particularly fascinated by a FinTech and insurer tech industries that definitely require burning down some bridges and starting a new.

Speaker 2: 5:06

I like advertising tech and educational tech. I also like the businesses that have an opportunity to create jobs and community to guys and attract type of scenario, but most of them have have ability to grow and flourish and expand and bring bring some value, Of course, to other businesses but and to consumers as well. B2b to C model. Other than that, it's all over the place. It can be corporate gifting platform or it can be something that what I roughly call media, entertainment area, music tech. There are a lot of interesting developments in several industries.

Speaker 1: 6:10

The first time we talked, you mentioned that you don't just invest in the United States, you actually invest all over the world. So, with you investing all over the world, do you see it? Well, honestly, this is my question, because what do you see being the biggest difference between investing in an American company and investing in an overseas company?

Speaker 2: 6:28

Well, the biggest difference is probably risk factor. When you live in the States, you happen to know much more about loss. The risk factor of transparency you can ask and get much more information In other countries. Of course, we're dealing with different sets of factors, rules and regulations. Also the fact that there can be legal differences. There can be differences with currencies, so when you invest in euro zones, they mostly found everything surprising in euro and not dollars.

Speaker 2: 7:16

The common denominator often is the fact that my portfolio companies, including global ones, have interest in US markets. It's not universal rule for me, but it's definitely a big plus because something has to happen in this country for the startups to succeed. So I'm not necessarily completely out of startups where they operate in Europe or Latin, but definitely doing business in the US is a big plus. The other area where I'm quite active is immigrant community in North America. So in other words, part of my investment dollars are allocated to immigrant founders. That's, in my opinion, one of those economic engines for US, of course supported by all kinds of statistics, but that's near and dear to my heart. Being myself an immigrant founder, I do like to invest in other immigrant stories, exceptional immigrant founders, as I said.

Speaker 1: 8:30

I love that you do that. I remember when you mentioned that that's one of the highlights of the conversation, because I mean, honestly, if we're honest, if everyone listening if you are in America, you did not come from here At some point in time in your lineage. Unless you are a Native American, then you did not come from here. All of us are immigrants and I think that that's something that we have to take into consideration, and I love that you're supporting the immigrant community, because it really is what the it's the cornerstone of what America was built on. So for you being able to invest in those immigrants to help them have the same kind of successes, or even more success than yourself, it's inspiring, honestly, and I'm very thankful that you're doing that, because more of us need to get into that field to realize that none of us are considered quote unquote Native Americans. We just are Americans. That means at some point in time, we had family members come over here. I mean, for me, I'm Hawaiian. Yes, hawaii is a part of America now, but we're the youngest state, so that means we're actually annexed. So what being Hawaiian is? Until the annexation, if we were to come to America, we would have been immigrants. So I think that there's so much to say for what you're doing to support immigrants.

Speaker 1: 9:44

And just going back for one second, this has been a question ever since I talked to another gentleman who is on this podcast. His name was David Sputumic and he went all around the globe and he would do these big corporate mergers and acquisitions is, when you talk about overseas and you're talking to a company, how do you know? How do you know the different laws and regulations? Do you take the time to study it? Do you hire a lawyer from over there? It's like, how do you navigate those waters? And because if I came and just kind of like an example is, if I was in Israel, let's say, and I had a company and I just learned the legal jargon of America, and then I came to you and I said, hey, alex, this is my company, this is how we're gonna approach America, this is the way we're gonna do it, and you didn't realize that I had actually built my company incorrectly in Israel and it was like against the law for me to run. How would you navigate that? I'm just very curious about it.

Speaker 2: 10:37

Well, to be honest, the world changed dramatically and if foreign companies are trying to raise money from US investors, both institutional and individual, it's more likely than not that they already incorporated in US. That's where Delaware comes in play. Usually Most of them are part of US based or global accelerators, incubators, other programs, and so they're not that foreign. What I mean? The other way to operate it, because, no, I do not hire a lawyer and I do not employ my own business lawyer for every single transaction. There are a lot of syndicates right. Some of them are quite global. There are some laws and regulations. So in my case, I have one of my portfolio companies is FinTech in Berlin, germany, but they also incorporated in UK, so there are very specific UK rules and regulations how to organize the company, and they're one of the very few that are not incorporated in US. It's pretty clear cut.

Speaker 2: 12:00

I am also very interested in the region where I came from. I'm originally from Belarus. I prefer not prefer, but definitely interested to invest in some companies in the region, what we call CE, central Eastern Europe. So I have founders from Baltic States, from Nordic, from Ukraine, belarus, from Poland, but most of them do have presence, both legal and what I call human. They have some staff and some roots in US as well, so it's not necessarily that foreign. And of course there are certain countries that, based on my own principles, I'm not gonna touch, probably don't need to spell it it's. I don't see much of flourishing that epic ecosystem in North Korea or Iran, right what it malnirite. So it's not that difficult and, once again, my portfolio is still US-Centric, of course.

Speaker 1: 13:05

So how does so for me, with having extra capital, if I wanted to become an angel investor? I've wondered this for myself is how? Because you talk about syndicates how do you find syndicates Right? I've always just thought do I just walk into a store and say, hey, you do you need money? And just trying to help the owner grow, or something? I've always wondered how do you actually pick someone that you want to invest in? How do you find these investments? How do you find the founders? How do you go about doing that?

Speaker 2: 13:37

So, in terms of beginning of any path right, you need to learn, and a land is always good. By example, In my opinion, there are these very famous, often quoted words by John Donne no man is an island, Right. So the whole idea and that's came to me a little later in the game, unfortunately is the fact that not only no man is an island long wolf approach to investing is sort of doomed You're not the smartest person in the room. You don't want to be the smartest person in the room. Hence you learn from more experienced investors, and one of the easiest ways to get into investing is, of course, through syndicates. Very well-known syndicates are run by Angel East. Some of my co-investors and friends are syndicators. There are, of course, a little lower barrier of entry through crowdfunding platforms like Republic, which I really like, like WeFundr, but this is more of you know, smaller dollar amounts, kind of getting started, so to speak. There are also several great programs.

Speaker 2: 15:02

I'm a big fan of some accelerators. I used to work with several of them. Unfortunately, some of them got kind of hit very hard during COVID years. The whole idea of what we call batch cohort, when several startups come in to place like Boston, Austin or New York and accelerate their businesses with the help of mentors and, by the way, Steve Walsh, who introduced us. He is a great mentor for one of the most respectable accelerators, tech stars, Boston right. So this is great source for deal flow. This is great source to find co-investors, as I mentioned, accelerators right.

Speaker 2: 15:49

And then the other way, which is more of differentiation, less of a risk, is to become LP slightly later on in your investing career. For one of L-Stage VC funds, MLP was the fund in Boston called One Way Ventures, and they're called One Way simply because they do invest in exceptional immigrant stories. So it fits very well with my personal interest and with my personal investment philosophy. But I would certainly start from well-defined rounds in the companies that slightly may be later in the game, past the concept stage, and also definitely diversify.

Speaker 2: 16:39

If you invest in one or three or five, the probability of success is quite limited. It's not necessarily close to zero, as some people say, but it's definitely not 50%. So between diversification and syndication it's kind of easier to learn, in my opinion. Okay, and the verification means what I like about the education has to be diversity of thought, diversity of founders, diversity of everything. So it's not just geographic, it's not just based on specific mission. If you don't have to have just mission on your investment criteria, but not only you improve your investment to attend, you probably improve lives of those startup founders.

Speaker 1: 17:35

I actually love that theology because I've never thought of it. I mean, when I hear the word, I'm thankful that you jumped in and you were describing what diversification means to you. When people hear diversification, it's like, okay, I'm in fintech, but I'm also going to be over here in like healthcare and then I'm going to invest in multifamily real estate. It's like that's what you mean by diversification, right? Then you're saying no, like completely diversify, diversify founders, diversify region. To love how you explain that. And I think it's really interesting because when I talk to angel investors like yourself or even venture capitalists, is it's interesting to hear the way that you process things, because I wouldn't think of that and I wouldn't think about I'm going to diversify from founder all the way down. It's like, okay, I think of diversification, I'm just going to diversify my portfolio, I'll go get some stocks, I'll go do whatever. But I think what really fascinated me by something that you said was and it relates to what I've run into a few times when people try to pitch me, when they send me different things and I look at it is you said it's like after a certain rounds, after certain rounds of funding, is when you will come in and you will fund. And I think, why do you feel like it is? And I'll give you a real example.

Speaker 1: 18:49

There's a gentleman came to me.

Speaker 1: 18:51

He's been in the advertising business for 17 years, has a really good company in advertising, has done really well, but for some reason he wanted to.

Speaker 1: 19:01

He says that he started a SaaS company and the way that he did that is he has this platform and I looked at it and I thought it was interesting. But I discussed it with a couple of other investors and we both we all kind of came to the same conclusion, which is he created a software, but if he just would roll that into his marketing agency, he would make more money on the market. Instead of trying to spin it off and create some company. Try to raise different rounds of funding is just to keep it encapsulated in one one big company that already has the credibility. It's already been around for over a decade and a half and then, if he needed liquidity, he could just sell off some of his equity, sell off some of the private equity, and I thought that's fascinating. But why do people want to create a company and get, get venture capitalists or get people like yourself to come in and fund, so it's very interesting question.

Speaker 2: 19:51

So, philosophically, not every company is created for venture capital, so for outside money, for capital infusion in general. There are tons of companies that somehow, not in very precise term, are called lifestyle companies. They're not. They just simply not built for outside capital. In other words, as investor, I would consider, you know, very basic question what would happen if I invest in this company? How they're going to take my money and run with that and those really are. Why do they know exactly where they're going to place their bets? But there are tons of companies that can grow organically, that can grow from M&A. They can access new markets or new product lines without any outside capital.

Speaker 2: 20:47

And as as angel investor, as venture capitalists, we really have to understand the difference right. So I personally bet on a, you know, on a jetty, more so than on a horse. The founder is very important, but if founder is moving their own way or the way that's not going to make their venture successful, what what's really different about those founders? There's a beautiful word called pivot. They can pivot in one area or another, the third one. So in your example, it's some kind of pivot as well, but not necessarily the right one. So it's, as I said, not every business really requires the capital. That's number one. Number two point which I really like to make is the fact that I do invest in a list stage. So seed round is a list stage for most of VC. Definitely private equity not going that way at all, but not necessarily that my interest as angel investor are truly aligned with VC. As we know, vc is built to have one round after another. Pretty soon all letters of alphabet will be taken right series A, b, c, d, etc.

Speaker 2: 22:15

Right, if you look at some of those very successful, at least financially from financial standpoint companies, they they went through a BCD rounds and they've been successful. But the exit, you know, the exit is so far away. So if we have a little area, I don't necessarily subscribe to idea that my money, our round, seed round should be the last one. But limiting number of rounds, limited, limiting them, dilution, it's, it's important for me. So I person subscribe to their concept of early exits. You know.

Speaker 2: 22:56

So, when not all companies are born unicorns, right, most of the companies will never reach unicorn status anyway, and hence I I am looking at the companies that have a An opportunity to grow to, let's say, 50 or 100 million dollar range, which is perfectly fine for me. Yeah, but that's exactly not what we see is all about. Unicorns are not good enough for them. You know the valuation of ten billion dollars what they call new unicorn as of five years ago. Considering inflation, it's quite clear. But that's not necessarily what I'm looking at in terms of my first question. Right, this is this question is really oh, here is they're pitching me something do they have a chance, even moonshot chance, to get to ten billion dollar valuation? That's not my question. My question is probably Do they have a chance to reach hundred million dollar? Do they have a chance to build the team and build successful business? So different set of questions.

Speaker 1: 24:07

Yes, I think it's really. It's fascinating because even the conversation I have with Steve Is he talked about, because I asked him a question. It's like what's the difference between a company that exit for hundreds of millions, that somehow exit for less than 20 million? And he said it's really on the founder. It's like if the founder feels as if they. He said he had one founder that exited and they made 36 million dollars. He said that company was going to where that guy was gonna make a hundred million. It's like, but how am I gonna convince you to wait and hold on to grow into a hundred when you can take life changing money now? And that's such a fascinating concept Because I think that there's more than even just a concept. As a moonshot that could go to the new unicorn and go to 10 billion is like are you as a founder, when you are looking at for those founders, those founders themselves have to be unicorns, because most people are not gonna be able to stomach the ride up to 10 billion. That's a long way. And I mean I heard this from, I saw this on social media the other day.

Speaker 1: 25:09

It was an angel investor talking about his time investing and he said actually was a venture capitalist and he discussed venture capital and he was saying he said that it took seven years, that Facebook was seven years no revenue. He said seven years no revenue. It's like not no profit, it's they took nothing, like they made nothing in seven years. It's like how do you run a business for seven years without making anything? And then he said amazon was taking a loss for 13 years straight. How do you take a loss for 13 years straight? The only way you can do that is if you have huge venture capital backing. And I think that is so fascinating though, because now we hear about amazon. They're a trillion dollar company and that's incredible, but it's like the ride right, because somebody asked Jeff Bezos that they said how are you Evaluated at being a billionaire when your company is losing money every single year? And he said that's one of the the mysteries of the universe, but that that's one of.

Speaker 1: 26:04

I mean, even for him, he's a unicorn of a founder that you're willing to sit there and lose, but it's those behind the scenes things that you're sitting here and talking about. That's enlightening me and helping me understand and helping us at the audience understand what that looks like, how that works for you. It's you're just looking for someone to go to 100 million and take an exit. A lot of times there's a buddy of mine that he helps Ecommerce companies exit and he tells them that's like grow your company to a few million dollars a year, do that for a year or two, exit and then just go do it again. He's like stop trying to grow this thing to a billion dollar company. He's like just grow it, exit, take that capital, do something else. And I think so. What what spurs you to look for those kind of companies? Why did you decide for early exits over the long haul?

Speaker 2: 26:47

Unicorns? That's definitely Legit question. It's not easy to answer because you know most of most of founders, to be honest, are ready to take an exit within 10 200 million dollar range yeah, for the whole company, and those are as you mentioned in your e-commerce example. Those are normally good exits. Kind of surprisingly that people don't see this. As you know, clemdank or home run, but there are tons of exits that happen in In startup world that bring most of investors and founders, for that matter, between two and three eggs. Those are really legit exits. Right, if you, if you can, if you can take those and recycle this money and help more young, new, ambitious companies, that's, that's a big plus in my opinion, and you know, in all honesty, the probability of building unicorn is extremely low, extremely low, right, and most of Just by talking to my colleagues, collaborators, co-investors, like steve, most of successful exits do happen within, you know, 100 or maybe 200 million dollar range. So so it's totally fine.

Speaker 2: 28:18

On the other hand, I don't necessarily see much value I would say financial value in tons of startups that grow really, really big. They're not, they're no longer startups, but they sort of don't know how to make profit. We'll know these businesses right, it's most of on-demand economy which we'll find by using it. Right, we're perfectly fine with using uber and door dash and Bnb, etc. The the slight problem with those businesses, as you mentioned yourself, they don't know how to make a profit. Yeah, and that's that's kind of conceptually an issue, because most of most of businesses in In society will even capitalistic society, right, I built to create profit somehow. They're not. So that's that's really. That's really a difference.

Speaker 2: 29:23

So there are tons of insurance companies that are two and three hundred years old Right, even in us, surprisingly, and they're, they're good, stable companies and there's really nothing wrong with that. Yes, they need to be probably burned down and reimagined and that's why there are so many inshore tech companies. The problem is legacy players still have an upper hand. So if you look at the history of insurance versus inshore tech, legacy players versus new companies same with FinTech it's very, very uneven road. I think the whole idea is variety. It can be both. There can be unicorns. There can be companies that grow into stable growth and become 50 to 100 million dollar businesses that maybe even pay dividends. There are exits. There are so many roads that can be taken. Liquidity is important. You need to realize liquidity sooner or later.

Speaker 1: 30:31

Absolutely so, Alex, for anyone who wants to follow along on your investing journey. How would they follow along with?

Speaker 2: 30:38

you, I would say the best way to connect with me and look at what I'm doing in the world is through LinkedIn.

Speaker 1: 30:45

Now make sure to have that down in the description and, for the people listening, be sure to follow along in this journey, because if you're getting this much value and information just from the last 30 minutes, just imagine what you can get just by following along. That's what you have going on. But before I let you go, alex, I ask everyone on the podcast. A similar question to this is tell me a funny story about your investing journey.

Speaker 2: 31:10

Oh boy, I don't know about this particular question, I don't know even about it's not necessarily that funny, but it's more of a little bit of lesson learned. Some of the stories and introduction and encounters happen in the place where you don't expect. I do travel a lot and some of the most fascinating conversation and sometimes they lead somewhere you know, either to new business, new investment happen in far away countries, in airports, airport lunch, inside the plane, even sometimes you, you meet people and you either become friends or you collaborate with them and you stay in touch. You go, you go out with them for like lunch at dinner and exchange notes. And I don't want to go into the area of hotel bars, right, a lot of interesting conversation happened to, but it's like I said it's I cannot come come up with really funny story, but there are. There are a lot of really great, fascinating causes that happen when you travel. If you're intellectually curious, that's the way to go, you know, just talk to people.

Speaker 1: 32:38

Yes, that that has honestly been one of the biggest growth areas for me is just talking to more people, because everyone has a story and everyone's story is interesting. Everyone's story is unique to them, and thank you for being on the show. I appreciate you being here and just sharing all your wealth of knowledge with me and with our audience.

Speaker 2: 32:56

Thank you so much to thanks for having me.

Speaker 1: 32:59

And to everyone listening. I'll see you in the next episode.