Thomas Korte Of AngelPad On Its “Disproportionate Success” With European Founders

In another week or so, AngelPad, a five-year-old accelerator that twice a year chooses roughly a dozen startups to coach over a three-month period, will host an invite-only “demo day” for a couple hundred angels and VCs in San Francisco.

Likely, the investors are already looking forward to it. AngelPad has funded 115 companies to date, including its current cohort, and half a dozen of those companies are now valued at more than $100 million. Among them: the in-app video startup Vungle, the business-to-business marketplace Kinnek, and the mobile application performance management company Crittercism. AngelPad has also seen at least one major exit in MoPub, a startup that helped mobile publishers manage their ad inventory. Twitter acquired the company for $350 million in stock in the fall of 2013. The value of those shares shot to $1 billion after Twitter went public later that year.

Recently, we grabbed some coffee with Thomas Korte, the former international product manager at Google who cofounded AngelPad with his wife, Carine Magescas, to get a sneak preview of its latest companies. (More on those to come.) We also talked about why he has seen “disproportional success with Euro founders.” More from that chat, edited for length, follows:

TC: Back in September, Bill Gurley questioned the unit economics of several companies, including the delivery service Postmates, which is one of your early investments. His concern was that their margins are too low relative to the amounts of money they’ve raised from investors. What did you make of his comments?

TK: I didn’t hear them, but I read about them, and I think he’s a very smart guy whose points were valid. I just know he got it completely wrong about Postmates’s unit economics. The other companies he mentioned at the time, including Instacart, are fundamentally different businesses. If you as a founder or investor think a company’s success is just about scale and grabbing market share, you’re living in a world of bedlam. I couldn’t agree more.

I do think you need to disregard business fundamentals sometimes, but not at a scale where you’re raising and spending hundreds of millions of dollars, because you reach a point where people start to ask questions and [investors grow weary].

TC: Amazon is making a big push into on-demand delivery. How big a threat is it to Postmates?

TK: I’m not worried. A year ago, if you’d asked me about Amazon and Google Express, I might have been worried, but Postmates’s business is so complicated. Companies that get themselves into [the same business] start to understand how complex it is, and I think Postmates has a tremendous advantage already.

In the on-demand space, it doesn’t matter if it’s drivers or bike messengers. It’s who can provide the most money to the people who work for them who wins. As long as Postmates or Instacart or Uber or Lyft is able to pay people more than the others in a similar environment, they’ll succeed.

Do you see a future in which Uber and Postmates could potentially partner?

Yahoo used to like to partner, Google liked to do itself. Uber, like Google, has shown to like to do everything itself. I think that’s good. In the early days, you want them to battle it out. Eventually, there will be failure and guys buying out other companies. But let’s hope for consumers’ sake that doesn’t happen anytime soon because there’s so much innovation to be done and [technology stagnates] without competition.

Remember when Ev Williams started [the podcasting service] Odeo? Then Apple came along and [derailed Odeo] because all of a sudden, you could get podcasting on your phone. But because Apple came in and killed the innovation around it, we still have the same boring podcasting technology today as we did then.

TC: You’ve told me before that you think Postmates and some of your other companies have enjoyed “disproportionate success” in part because of their European founders. Why?

I think there are a couple of reasons, though, by the way, I don’t think what I’m about to say it necessarily true of all Europeans; these are just my observations about [AngelPad’s portfolio companies].

First, it’s hard to pick up your bag and leave everything and everyone you know, particularly given that, in the U.S., there are some massive obstacles to overcome, beginning with immigration. We don’t talk enough about it, but it’s a big deal for founders to figure out their status and stay here.

The cultural expectations are very different in Europe, too. You don’t see businesspeople who lose and rebuild everything. You don’t see a Donald Trump in Europe. So your expectation is that failure is not an option. When [Postmates cofounder and CEO] Bastian [Lehmann] arrived here [from Europe] for AngelPad, it was for, a real-time tweet curation platform. It was 2010, though, and the Twitter ecosystem was changing a lot and every investor began running from companies built atop Twitter. It would have been convenient for him to say, “Well, we tried.” But he kept on grinding.

Another thing: these founders don’t have normal, natural networks that you have here of people who can give you an intro. Sometimes, [those associations are] a positive and sometimes it’s a curse, because it can give you a false sense of confidence.

You’re going to be showing off some new companies to investors soon. What’s one overarching new trend people should be watching?

We have three companies that work on housing, including a WeWork for living, and a way to managing vacation rentals in a much more efficient way. Housing hasn’t been disrupted. We still sign one year leases. We still bring our stuff to buildings and take it out with us afterward. There’s a lot that’s going to change.