Jeffery:
All right, well, just in the fashion of how we like to do things, let’s just jump right in. So, uh welcome. Thank you very much for joining us today, Jonathan. We’re so excited to be able to chat with you and really dive into everything that’s going on in your world. And the best way for us to start is if you can give us a little bit of background on yourself, where you kind of come from, where you’re at, and where you’re looking to go. And then one thing about you that nobody will know

Jonathan:
Let’s see, um you know, I started becoming an angel investor back in 2012. It was just something I got really interested in. I have a background in investing in the public stock markets as a financial advisor and at the time I was running my family’s clothing company and I knew I wanted to catch the bug of just like getting into investing again and I’m in Los Angeles. So you hear about Silicon Beach and I wanted to learn more and more about that and I took my journey back in 2012. You know, since then I’ve done over 80 plus different deals from pre-seed to pre I. P. O. companies. You know some have worked out some haven’t, that’s okay, it’s the nature of the beast. I’ve been becoming LP in like 16 different funds throughout L. A. in Silicon Valley. Um, I start my own fund in 2018 with two really close friends. We don’t have outside capital, we just have money, our own money in it. And we look at really pre-seed, seed, and series A companies in the technology and consumer space are check sizes are anywhere from 100,000 to 50 initially. And at the same time I’m part of another company called Trousdale Ventures that my other partner starter, it’s a family office where we all contribute um money and, and our due diligence and skill set to look at deals that aren’t just pre-seed, seed and series A.

They could be like, you know, first check in all the way to like a pre I. P. O. Company where we could be putting like, you know, tens of twenties and millions of dollars in. Um let’s see something that not many people know about me. It’s always a good one. Well no one would really know that. Like I’m a two time Emmy winner, you know, which is funny because if you google my name, it will say that I’m a tv producer, which is so funny because like I’d actually rather be known as a venture capitalist, but you know, I M D B goes up in the search rankings and SEO

Jeffery:
That’s awesome. Two-time Emmy winner. This is awesome. I have to explain, give us a little bit more context of this. Emmy winning side of things

Jonathan:
One of my portfolio companies. She introduced me to a great and talented executive producer and creator and writer and director of a show called The BAY. So um you know, I helped finance it a little being a producer for the last three seasons. So I’m technically three-time nominee and two-time winner. I didn’t even realize I won this year until the they sent me like, hey you can buy your Emmy now

Jeffery:
Oh they don’t give you the Emmy?

Jonathan:
They give you only a certain number like one or two for like you know, but then everything that you have more than one producer to producer got to buy your own. That’s

Jeffery:
Really! But what’s the price tag on an Emmy?

Jonathan:
God, I think it’s like $500 or $600.

Jeffery:
Oh that’s (inaudible) I thought maybe 5 $600,000.

Jonathan:
No, no, no, that’s how much I invest right?

Jeffery:
So it’s not pure gold then.

Jonathan:
No. Plated.

Jeffery:
All right, fair enough, fair enough.

But it’s still probably has, it carries a bit of a moniker. It gets everybody excited when you share that.

Jonathan:
It’s interesting that people, people are more excited and interested in learning about that than like any of some of my investment companies.

Jeffery:
I guess in a way it has its carries its own nostalgia. There’s not very very few of them, I guess in the world that we’re aware of, that people have. When you win one compared to the amount of people out there, it’s got to be carried some weight. It’s gotta be, it’s like winning the Stanley cup or winning the Super Bowl. It’s not happening every week or every year, right?

Jonathan:
But it’s just it’s you’re you’re joining a great set of talented people and, you know, you’re just like, just like, you know, you’re investing in startups, you’re you’re investing someone’s dream and vision and you’re getting awarded for it. So, yeah, it’s it’s been a fun experience and we’ll see what the future holds the next investment.

Jeffery:
Yeah, no, that’s that’s pretty exciting, and again, something nobody knows. So it’s worth diving into. So just to go back a little bit, being in the investment side and carrying this through to the start ups and stuff like that. What kind of experience can you say that you really homed in on in your past when you were trading that really exemplified what you’re doing today? So there are certain skills that you had, and is it short-term gains for uh big money? Like what is the transaction that you kind of took that and said, you know what, this is how I’m going to treat the same thing I’m doing today. It’s back hunch. You know, when your stock trading or your investment trading, you’ve kind of got your own little method of how you invest, it’s kind of like playing cards, you kind of build your own little sequence and that’s how you make the money. Is there a same kind of process that you learned back in the day that you use when you’re working with startups?

Jonathan:
You know what, for me, it’s like seeing the future, right? Because, like, right now, when you look at the talk to an entrepreneur, it’s gonna be rough, especially when I’m investing so early, you’re not gonna believe them necessarily right away, right? But you’re really investing in the person. And sometimes when it’s this early, it’s the person and the team that matters so much more to me than the idea. Because the person can help pivot right? Once you’re stuck with an idea, you might not be able to get there and you can do something else. I always think about like one of my biggest regrets.

I don’t want to say regrets, but like mistakes that I made, I guess was, You know, I got, uh, this company in 2012, I got the pitch deck and it was a valuation of 20 million and it was talking about, so we pretend to buy and sell stocks at the game and you get like a weekly score. And I was just like, who wants to play this game? There’s no angry birds, there’s no like plants and zombies, you know, Zynga anything like that.

I thought like who would want to play this? And you know, and I thought the name was weird like why do they call it Robin Hood? You know, and you just think like, you know, looking back like should’ve invested in Robin Hood, you know 25,000 be worth like tens of millions, you know? But it was just something where like I was too focused on the idea versus like the team and seeing how are they going to execute because you have to think future-forward, right?

Just like in the stock market you don’t invest on past performance, you’re investing on what the new leadership, what the new strategy is going forward. And so I take that with me every time I look at the company, it’s not where they are today, but where they’re going to be, can we help them raise money to get to their series A or their series B or you know, the next round of financing that will get them to the success.

Jeffery:
So in saying that though a lot of it’s also, uh and I think in this context is that when you were looking at it, it’s, let’s just say that Airbnb came to you at the same time, well sharing economy wasn’t as prevalent, so you might have said, you know what, this is a great team, but I really don’t understand why someone is going to want to rent your space unless you’re backpacking and living in hostels and understood this whole concept, it probably would have just said, no, I’m not really into it. And it’s kind of the same as the gaming side, you’re probably looking at it going, I don’t see the context of it. but what is interesting is that as the world is shifted, your mindset is also picked up to it. So you get the odd person that probably did think that Robin Hood was amazing at the time, even though they probably didn’t understand it or think it was anything for me, but either with Snapchat, you know, like really I need to protect a photo that I’m sending, is that really a business? So, but they were able to drive users and then the context of it built up and sometimes I guess the founding team is obviously number one, right from the beginning, but how much of this plays into how the world is actually working at the time, because look at these other properties that have become quite valuable, But at the time they’ve been around 10 years, Netflix, 20 years and they weren’t making the same dent, and they had a great team.

So how much of that is going in with the world as it’s changing?

Jonathan:
You know, when I look at it like any investment, it’s like, it just takes different teams, you know, because like, and it’s also an investing, like if you’re an investor, you’re not just counting on yourself.

That’s why I have business partners, I’m not a one man show by any stretch of imagination. It’s about finding a right group of people, a cohort of sorts, uh, to find the best brain capital behind something like I always think of this and I get this from my business partner, Dave, it’s like, it’s one team to go from 0 to 100,000 revenue. It might be a totally different team to get to 100,000 to a million and then 10 million.

And then 100 million. It’s not always Mark Zuckerberg, Bill Gates starting being the founder and Ceo all the way through. Like you see that like this takes this person that gets you there and it makes more sense. So it’s just like how you raise your money, who you bring in is just as important as anything.

So, and me as an investor, I surround myself with as many people like, I mean I could invest my own money, but I like partnerships, you know, I invest in other people’s funds because it’s more collaborative for me, it’s not something where it’s just like winner take all and I’m trying to get all of everything. It’s like I need other brain power to help me get there. And I see that when I look at my investments to, because the people who are more than willing to look at themselves and say, oh, I need help. I need to, you know, there’s like sometimes you have investment companies where it’s just like, oh, all right, we got the money then you don’t hear from them.

And for not for just like days or weeks, but like months on end. And I’m just like, now you’re all of a sudden calling me for more money. Like I didn’t know what you were doing the whole time. So like, that makes no sense to me. Like, you can’t call me when you’re in trouble. You can call me to see like where you are along the path all the way because that’s why you’re not just taking money from you. You know, as an angel investor. Yes, maybe you are. But like now as an institutional investor, but we have more brainpower and more capital. Like you’ve got to help me get you there sooner.

Jeffery:
I love it. No, it’s so true. And what I like about the fact is that you’re open to it. You’re not admitting that I’m doing something wrong here. What you’re admitting to is that the more information I can bring in and the more minds that can be collaborating around what we’re trying to achieve here, uh we’re going to be able to get there faster and we’re gonna be able to do it more efficiently.

But we’re also going to be smarter about it. So go ahead, go ahead.

Jonathan:
No, I was gonna say like, you know I mean like I’m wearing this M. I. T. Shirt and I do venturing there and it’s like, you know when you go there like you want to get six sigma right certainty and that’s like 99.999999% accuracy. But but think about what we do in real life, no one has that whether you’re the president, United States or your fortune 500 ceo or you’re just deciding like what to have for dinner sometimes right? Like you’re not going to have that such accuracy when making a decision. If you get to one sigma that’s almost 70% 68%.

Like that’s pretty good. I go to Vegas on those odds. I make bets on those odds right? And imagine if you’re just a start of going like listen if you have confidence you’re over 51% you got to make that decision and like live with it and pivot as they come. I mean that’s really what is it? People say like there is no science to it. There is science, there are some numbers you can crunch but there is an art form to what we do.

Jeffery:
I agree. Big time and a lot of it is diving in and learning a lot more about that team, learning about their initiatives, learning about their direction. But even from your earlier comment, you made um where you’re investing in funds, um that’s kind of uncommon. There’s not a, you know, we know this space if you look around and we’re not, we’re looking for, why don’t people want to invest in funds or why don’t funds invest in other funds?

I would think that if you find a great collaboration of people that are doing great things, you really could be very powerful by allowing them to go out and do the work and build and grow and then the same thing and start stapling that into multiple groups because you have the same equal mindset versus tackling the problem one by one by one by one. I would think that that one by one would take a long time versus being able to do it in a big consortium.

Jonathan:
Yeah, No, completely.

Jeffery:
And have you found that, and you mentioned this as well that when you do make investments, sometimes you’re not getting the same uh, feedback loop that you’re looking for, but in the, or even in the fun side that you’re, you know, I got the money and I go, um, what do you recommend as a way to keep that conversation and that collaboration going so that people feel part of what you’re doing, but at the same time they want to be investing in you because they see what’s going on and they see the growth and the opportunities. What are ways that you try to keep that ball moving forward For everyone.

Jonathan:
For me, it’s about check ins.

You know, sometimes like it’s about it, we’re leading a company, you know, we’re leading the round, we’re gonna put in, we’re going to say, hey, not that, it’s like, well almost as demanded of you like quarterly meetings, right? And it’s not that like, hey, it’s like whether we have a board seat or not, we want to be involved really early.

We want to know like sometimes you can be daily, you can be monthly, but at the very least quarterly, you know, especially because when this is like, we’re not making thousands of thousands of bets, right? As a fund manager, you’re making probably 20 to 25 bets or you’re one fund, you know, at any given time through a 2 to 3 year investment cycle. And these are your babies, right? Like who’s gonna call their baby ugly? Like it’s not like the ones that bastard stepchild, like no, you’re going to be focused on and love them each individually as much.

Like, you know, other funds like founders fund for example, I know for example, they, they basically say when they invest, this is gonna be the entire fund returner, right? That’s how much conviction you have because you’re not thinking like, oh this is like, yeah, these are ok, but these are the best like over time you’re gonna see that, right?

But when you first make the initial investment, the belief is like this is it. This is like this is makes perfect sense at this moment, the best investment I can make with all the information I’ve given right here right now.

Jeffery:
And then how do you find that? Um how fast that changes And then how do you guys as an organization step in to kind of help that along? Because you make this investment, Everything is great. Like you said, like you’re all in this company is amazing. And then six months, eight months in problem. This thing this happened. This occurred. And now you’re like, oh my God, what’s going on here?

How do you, how do you kind of interject er how do you keep guiding or help you? What is that next step for you guys for us?

Jonathan:
We gotta look at metrics, right? Like part of the quarterly calls we have was like, listen, we’re going to send you an Excel spreadsheet, right? And like that’s not the growing numbers. All right, let us know where your are you spending, are you on on budget? Right? From basically on your, on all the uh, all the performers you sent before. And, and like looking at like, well, gee, like why does this month more or less than what was on track? Right. And so that’s what’s important to us being able to see things much more earlier because like one time I invest in the company and this makes perfect and I thought it was great. This is the company I invested instead of Robin Hood funny enough and it was diabetes care.

That’s the company out of our startup out of Y. C. Unfortunately it folded last year. But the concept made sense like when we go see a doctor like you want more data as possible. But when you go see your doctor you’re just getting one data point what your blood is that day? When you get get drawn, what if you’re giving your daughter daily?

You know like the whole idea of fair notes and everything. There was like if you’re just you know doing your blood sugars and sending that in every day, your doctor is going to have a point of data to make it clear understanding of where you are as a diabetic or prediabetic or whatever. So it’s like it’s not like Out of 365 days that one day you have one reading you’re trying to get as many readings as possible along the way and that way you can help make a change sooner than later.

Jeffery:
Agreed. Now how do you get that data? How do you get that open communication? Because they’ve got other investors, they’ve got other advisers, they’ve got business to run. So how do you kind of maneuver through that? Is that you assign it and say hey the CFO and the company needs to be the person that I need to chat with more often because we need to be able to help collaborate. Like how do you designate this to make sure that you’re able to put in a couple of feelers and help out here and there.

Jonathan:
Yeah. Difference between angel investor and being like an institutional investor or venture capitalists because you’re the difference of angel investors, venture capital, what are the differences? Right? An angel investor, you’re not going to be day to day. You know, they don’t anticipate and they’ll come to you if they have questions.

But as a venture capitalist, it’s really like I have a set of partners, me and my partner Dave or Philip and listen, these are our companies were going to split up. We can’t all be listen, we can all pull each other in when we need to at times, but like this is what I’m responsible for and this is what I need to check in on because it’s not about just like oh he’s good at that and you’re good at this. And then like we all pieces together, it’s like no you’re that one point of contact and being the point of contact gives me the ability is like oh well I’m not good, I don’t have enough information, I need to pull this partner in or I need to talk to a friend from business school or from M. I. T. That I went to like they understand this a little better and keep pulling it together because it’s more info, it’s more data.

I mean like data is eating the world right, like that’s what mortgages instead and that’s kind of the same principles apply. You’re just trying to get as much information as you can to make the best decisions. So from our point of view it’s like someone is leading one company like just like when you’re writing a brief of Supreme Court right? There are nine justices but one is leading the opinion on the opposition side. And so it’s like okay you’re leading the context so like I want to invest this company user. Why? Like I mean I mean when you’re investing in a fund, you should look at like the memos, right?

Like why did you come up with this decision investing in this company at that time? Because that’s part of its like CYA. You know? But the other part of it’s like no you’re you’re truly justifying why it made sense for you to do and this is the follow up to you to do to see it through.

He’s throwing in money is not enough. I mean like and if you’re a startup and that’s all you care about, like I probably wouldn’t want to invest in you either because we’re just looking for someone who’s giving you like the highest valuation with the least amount of like care and like interest that’s not necessarily lead you to success.

Jeffery:
I love it. So you’ve got a good way of getting everybody on your team associated inside of the business and getting that, who’s doing what, who’s good at it and then collaborating and ensuring you’ve got that direction going forward.

And I love the points. I think they’re golden because not only does that work for you inside of a company, but it works inside of your own fund. And the only way you guys would be working is kind of dictating how you should be working with your startups. So it allows for that multi um pollination, I guess, of your own internal skills, updating your investors by doing the right things and then taking that path to the startups and saying, hey internally we have to work this way.

This is how we got to work with you guys, so you can have the same positive outcome that we’re receiving. So now that you’ve kind of structured this with your startups, how long, how far do you go with them is if it’s in a pre-seed, are you doing this at each stage of the investment?

And are you going all the way to a series B C D or is there a handoff point where you’re saying, all right guys, we’ve got you to here now, you know, Horowitz is coming in, they’re going to take over, we don’t need to be here anymore. So I love you guys, but we’re going to sit on the back burner now.

Jonathan:
It depends on strategy we’re talking about because unicorn venture partner sits within Truesdale ventures. It’s just that for unicorns perspective, we’re precede seed and series a my job is to get you to college, right?

That’s how I look at it. When we get your series a, you’re getting like you got into whatever Harvard, UCL A, USC, whatever college you got into and it’s that team’s job to get you over, right? Because like I said, we’re good to getting into your series a for unicorns perspective at the same time, like we have, you know, Trousdale where Trousdale, we can go a little bit further with you, you know, in terms of writing checks, but we necessarily don’t want to be like always elite because I think we could take a company from the first check all the way to three IPO, but we can’t be the only check writers.

So we better make sure we have like a consortium of people who are willing to take the lead with us and take the risk with us because it’s not just the money that we’re worried about, it’s just like we might not know a certain person that Costco or walmart, you know, because we’re more like, oh you have more beat or better people at Kroger for example, it was a good CPG company. So we need those kind of people to help us out and and get into more doors like when you look at like, well who we have a really great traditional brick and mortar strategy, well, we need to find somebody who really is good at, you know, direct consumer and driving their B to C business, you know, and having like what kind of, you know, facebook or google or tick tock strategy that company should have.

So it really just depends. But like from my perspective, I think the series A is more than enough and then it’s everyone else because those are huge check sizes right at that point, you’re looking at like 5, 6 million, you know, rounds and the lead investors got to put 3 to 4.

It’s a lot of conviction. It’s not that we’re, we don’t want to do it, but it’s just that we’re not a fund of that capability. When you think about it, A seed investment fund shouldn’t be have assets under management over 100 million. That’s just too much at times because like a couple of that early you give them extra money doesn’t mean they’re going to be better. It just means they have extra, they got to spend it and like they can be very wasteful for it. And it’s just like, like if you’re gonna like write a $5 million dollar seed round, they’re not going to be able to get any other money, you’re controlling it all the way through and it’s just like that’s not good for them getting their next round of funding.

Jeffery:
For sure. So when you’re tying in these other investment community or these other groups, um you’re not being the only funds coming in in that pre-seed seed round up into series.

They are their criteria that you’re looking for. Like, do you vet who those other groups are that are coming in or you’re allowing the startup to go figure out their own landscape.

Jonathan:
Usually it depends where we come in. If it’s something that we love, you know, we’re going to be on phone calls for you, we’re going to dial for dollars just as you are right and like, hey, like they’re going to other firms want their due diligence come talk to us.

There’s been a couple of our portfolio companies where, you know, they’re out there raising money still and we, you are references, you know, and at the same time it’s just like, oh, I, I’m gonna help you so many different funds. Like I’m gonna go talk to people like, oh, why this? And, and sometimes you don’t even know, it’s like they’re in both funds more than one I’ve had that happen to, which is great. That means it’s even more diligence for me to look at. That makes me feel safer if I’m making a series A investor because you know, the idea of being a seat investor is that like the anticipation is that you’re gonna write their next round, so they’re series A and it’s gonna look really horrible if you don’t, because that means if you don’t that means you don’t believe in them anymore, you don’t think they can grow as promised.

So that’s one of the things where like Andresen and the bigger like VC firms, they’re not really in the seed stage because they want to get out of the risk more right, because it’s not the car, but if they put it in C. Check and they’re not going to write their series a series B like because it’s like, well that’s when you know it’s a winner more than likely and that’s where you’re going to like, you know, you know, double down.

Jeffery:
Yeah, for sure. And and it it makes uh it’s perfect logic that as you’re working with these companies, you’re bringing in your helping them clothes quicker and move faster so that by the time you do get to that series A you’re already lining it up, you’ve already built enough street grab so that that’s bringing it up enough value. And then once that next group comes in, they’re going to help move them forward and allow you to go back and start doing the same process again with other companies.

Jonathan:
yep.

Jeffery:
So while you’re doing that, what are the things that these series and above companies, what are they looking for? Is it the conviction is that the team, is that the product, is that the revenues, all of these together? What things are they looking for that really shaped this up from a founder standpoint and a team that they need to really focus on when they get to these stages.

Jonathan:
No, from my perspective, when it comes to that, it’s really like the revenue, ARR. You know, because when you’re a seed investment, you know, you’re trying to get to like 100 you know, 100,000 MRR. So you almost have like a million, right? Which is like, it’s amazing. That’s correct. So like when you’re looking at a pre sees, a post, like, you know, seed round or a series a, you know, they want you to be, you know, getting to that point where you’re going to be at like a million ARR. Right?

And it’s just like you figured it out, you don’t, you have a series that you have more than an M. V. P. You have a product market fit, you have great customers and now, like maybe you’re in one part of the region or the world now, it’s like we’re going to give you more money to accelerate like we’re adding gas to the fire and that’s what’s exciting about a series A investment. So it’s just like, you know, I look at things where it’s just like, it’s a medical, you know, telemedicine health.

They got a great attraction in san Francisco California or southern California. Now, it’s like, okay, we need more money to go to new york, go to the midwest and like that’s gonna, we’re gonna grow to each channel or it could be like, we’re only located physically here in this location now, we need to open up in other cities, other tier one cities of tier two cities and you’re gonna see like, listen, it worked here, we can prove it out in another atmosphere.

So that’s what, it’s a little bit different. Like to me, it seems like for Series A and higher, it’s more like an eye banking role or it’s like you’re just throwing numbers at it because it’s like saying like this is how much I need to get, you know to acquire customers. Like you have ideas like this is how much I need to spend Facebook or instagram ads like where it’s like you didn’t have that luxury before.

You were just like doing like minimal like uh you know, spend a day, $100 here and there to see what the traction would be and now it’s just like, wow, I’m going to blow it out with this budget because really like, no, I always get, I always think it’s funny when companies like we’re gonna be profitable in three years. I’m like really because maybe you shouldn’t be profitable. Maybe you should be taking the money that you made and putting it back in the business and growing even bigger because we care about like not like, you know like singles and doubles as a venture capitalist. The ideas like we want you to get hitting in the hundreds of millions, you know, valuation and like getting profitable is not like the goal when it’s like three years down the road. It’s great if it’s a cash cow business and it’s like, and you don’t like, you’re not trying to generate a huge amount of alpha, you know, it’s great if you just want a steady income stream, which is great, just like you have property, right?

And you have real estate, you know, rental income that’s great, right? But rental income is not going to make you like, you know 10 times richer, you know, it’s just steady streaming money, right? So it’s kind of like what your risk tolerances and talking to your entrepreneurs because it’s like why are you thinking small, Right? Because like Uber to this day is revenue making a lot of it, but it’s not profitable. But eventually they’re getting that point where they will be just like we’re amazon for 10 plus years was not profitable, you know, so we get more excited about companies are like show us how you’re going to spend your money to keep growing.

You know sometimes getting the customer base because when facebook was at a billion evaluation, you know, they were nowhere near the profitability that they are now, you know when there are 900 plus bill, imagine like you could have gotten a 900 X return by investing in facebook at a billion Because they have so much room to grow. Like that’s what we want to see. Not everything is like that, but that’s the idea of going forward because you know my business partner like venture style returns, we’re venture capitalists, we’re not looking for 20 were looking for, you know, even at a billion dollars you want to get to 10 billion. And that’s what you see like introducing everybody else when they’re putting in more money for Robin Hood at 11 billion and they’re putting in another 200 million.

Like they don’t think Robin Hood’s gonna just go to 12 billion. You know, it’s like, well it better be a two x at least.

Jeffery:
Yeah, exactly. Yeah, they know that there’s a high potential that they’re going to double same thing, like clubhouse and all of these brands that have just been taking off in a short period of time. It’s because they’re seeing where it’s going to go kind of like, and I guess you can look at it the same thing as looking at Tesla and saying this is where Tesla is going to be in a few years because it’s really overpriced, something like 500 times revenue.

But uh, I guess there is a potential still could move there. But the idea is that they’re creating a room to allow that to occur and they’re visioning it happening and that doesn’t just go on the venture side, that’s the ownership side, that’s the direction they want to go and you kind of have to get behind that if you want to be able to build and grow a company.

Jonathan:
Yeah, definitely so. We’ re very forward thinking. I mean that’s, that’s the whole idea and it’s nothing is booked. You know, it’s always like past kicking the can down a little bit further and seeing where we can get the opportunities.

Jeffery:
Yeah, I love that, that you’re, that you take this approach at, at an earlier stage with the companies and that pre-seed and seed where you’re looking at the company and saying you know what, Don’t don’t worry so much about what you’re spending, worry about how you’re going to grow it.

Line up the numbers the data and start pushing this MVP and start making this MVP. Get some traction that million dollars a year or that 100,000 MRR is a good little point to get to and once they start to prove the market now if we throw the gasoline on the fire can this really blow this up? And I like that aspect because a lot of companies have that fear and like you said they were like I want to be profitable and maybe being profitable is great but then there’s a point of I’m not profitable now. How do you go into massive debt and grow the hell out of your company?

Jonathan:
Yeah and we saw that like there was a big switch, right? When we were talking about Uber or Airbnb or we work right? There were private too long, right? And which is like they were growing but they weren’t profitable. But like when you’re at a series A, series B, like I don’t care about profitability right now, I need to see growth because there is a point, the curve inverts, right?

We’re like, okay, now profitability matters because now you’re gonna become a public company and you’re going to have to hit, you know, analysts like targets and you’re gonna have to show how you’re going to be profitable. And I get that, right? But when you’re a private company, the best part of being private is that you don’t have shareholders, you know, you’re not, you’re not beholden to like the whole public and how your traded and the perception you’re just trying to grow the company as big as you can. And then one day you’re going to have the right, you know, the right strategy in place to grow.

Jeffery:
No, I love it. And uh, this is kind of in the, in that same vein is that you’ve got that series a, and that’s where you start getting into that blitz scaling, which is becoming, uh, quite popular. Um, well maybe it’s not quite popular, I’m popularizing it I guess, but looking at that avenue of it, of where you start to run fast, put in, feed it with money and feed it, drive it and make sure that that team is the one that’s going to make that thing double triple every month.

Jonathan:
Yeah. At the same time it’s not about being first. Sometimes it is right, But like right now we see the clubhouse, hey, they’ve done an amazing job, you know? But it’s really, it’s still like, it’s really secular, you know, it’s not like, it’s not open up to the masses. Yeah. You’re only on IOS, you know, Apple, you’re not on android, there’s a huge market there, right?

And like, how are you gonna go? How are you going to monetize? Right? Like, I think they’ve done a great job. But I can’t say that clubhouse is the only audio platform, you know where twitter is coming up with spaces, facebook is coming with a copycat and there’s other great entrepreneurs with maybe even better tech, not necessarily like the network affects yet of more people coming on, but we’ll wait and see, right? I mean, like, I think we all think like Looking in the past history, like the Fortune 500 companies or you know, the doubt, they’re not always the same.

We’re gonna change year to year, five years ago. It’s not the same companies, you know, because there’s a good management, bad management, there’s like, you know, things that go out of style, you know like a blockbuster, you know, or a travel agent, you know that like, you know, I look at companies where we do more automation and robotics, right? And so like we have to like find new roles for the job force and like finding really lean things to help cut the cost and increased profitability. So that’s what we definitely look at every day and see what possibilities are.

Jeffery:
I love it. And in your kind of movement forward, what types of companies are you looking for? What is the uh is it open-ended sectors? Or if you really started to refine kind of your investment thesis and say, you know what, I’m going to stick to these companies and this is an area of more heavily interested in

Jonathan:
For me. You know, I I keep a very broad consumer and tech, right? I would say a little better understanding of consumer because just with my background, you know, like I understand the sale cycle, I understand the turns.

With tech, it’s a little bit of a longer sales cycle, right? I mean, I have an investment into Dioxin, right? And, and it’s like everyone uses dioxin, but like, it’s not, it’s not huge and enterprise yet, you know, you have docusign and hello, sign another like platforms were like, yeah, they’re they’re kind of leading more than Dioxin, but that’s okay.

I’m sure Russell, the team, they’re going to find a way to add up adding signatures, are adding data rules and they’re going to increase the revenue, try to find more revenue generating profit streams. Um But going forward, like we still love looking at consumer products, we love looking at better for you brands.

Um you know, we we have things in the future of work, you know, these are huge catchphrases, but I think that’s important, like we’re not going to be in this age where like, you don’t know how to use a computer, you know, I remember entering the state at the Department of Labor and it was just like, there was still like a 20-year gap, people truly knowing how to use a computer and like, I think we’re way past that now. you know, where we are with smartphones and everything. And at the same time, you know, it’s in this covid world, like, you know, not that you have to be like, well yeah, we’re not gonna be in the office anymore, so how we’re gonna be, you’ll get productivity better.

Look at that kind of projects on a mental health and wellness just as important, you know, whether it’s like not necessary that we look at healthcare, biotech, you know, but really just like, you know, telemedicine is something that we are focused on and interested in financial Fintech companies, like how you’re investing your money and like, uh you know, how are you going to spend your time with it? I mean, those are just important uh you know, industries that we look at.

Jeffery:
I like it and it dawned on me that it makes me think like your past experience with all the things that you’ve done in the family business on the trading side, how much that’s actually helped you build out your own thesis of the types of investments and how you invest and how your company is actually shaped. And you see there’s a lot of correlation there. Do you feel like if I wouldn’t, haven’t accomplished these things in the past, I probably wouldn’t be investing in startups because I wouldn’t have had the same perspective.

Jonathan:
It’s, it’s people say like, oh, I love like, you know, investing people who are operators. And it’s true because like once you’ve been in the trenches, you know, you know, the struggle that people face and deal with, you know, it’s not like you’re reading a case study and giving it your best go.

It’s like, no, this is actually, it happened to me. I remember like when I was first interviewing for jobs, you know, at MIT and like I wouldn’t say at the time and I was like, jeez, what was 2011, 10 years ago when I was 28 I don’t think I had enough, you know, experiences to truly like indicate like, hey how I could look at things but now being like, you know, jeez like uh you know 10 years later, like I definitely have a better perspective as I’ve been through it, I’ve been more than just the project manager, I’ve been a vice president of a president of the company and you just see different things because like I always tell people like july this is the lie of academia, it’s like okay given A and B find C, but like in the real world, like you can be a great test taker but in the real world you don’t know what A and B is like no one’s gonna just give you the numbers and then, oh okay with that, I could figure it out like you are, it’s a completely blank slate and just like with our startups and entrepreneurs like they are just triggering to figure it out, you know, before even getting comes to C, they have to figure out what, what product market that they can be, where, where their customers are and then they can solve the problem getting revenue and customer growth.

Jeffery:
But have a great focus, have a great problem and you’ll be able to get to that revenue eventually.

Jonathan:
Yeah, you mentioned earlier, facebook was a prime example of that when they went to market, they didn’t have revenues. They had a little little revenues but they had millions of users and they hadn’t turned on the revenue machine. And then as soon as they turned it on, bam! The rest is history.

Jonathan:
But they made like kiki buys right, whether it’s WhatsApp or instagram.I mean like when you looked at their like s one when they went public like there was something in there, they said they hadn’t like understand mobile yet. You know, when you think of facebook initially it wasn’t this like app world that we’re in, like we have to thank like, you know, steve jobs and apple and like getting used to apps, right? But like before it’s like you went on facebook on an actual web browser, you added people, you made updates then like think about like if they didn’t pivot and understand that that you’re looking right now with Snapchat, they’ve kind of figured it out where it’s like, oh, this is how we can grow rugby, this is our niche. We’re not going to try to take facebook’s market share or do the, where it’s going to be in our own space and this is how we’re going to grow 50 revenue year to year.

Jeffery:
Yeah, that’s true. I love it. Well, I think Jonathan, we could, we could continue talking on all this stuff in depth and we might have to actually have a part to. But for right now we’re gonna, we’re gonna shift a little bit before we go into rapid fire questions.

But I think the journey and all the information shared is bang on. It’s, it’s brilliant. I got notes everywhere. Now my brain is going 100 miles an hour, but I appreciate that. So now I gotta want to kind of dive into a more of experience question and with all the things that you’ve gone through the company’s you’ve seen, is there a story that really kind of tugged at, you? Really made it an impression on you where the startup really overcame the barriers of anything that could possibly be thrown at them and really use that as a way to fuel them and give them the energy to succeed. We’re always looking for that uh positive, exciting uh, succession story where someone just went to town and they know that a tough go maybe at the beginning, but they overcame it and you know, now they’re facebook ish and they’re driving like crazy, any great stories, our founders or anything that comes to mind.

Jonathan:
Um not to mention that comes to mind, like specifically, but just I know a lot of my portfolio is still in the journey, they are in the journey and like, you know, they were literally like, like a week away from like closing because they didn’t get enough money because like, you’re all about your cash flow, like companies go bankrupt because of cash flow, not because they don’t have any sales, it’s just like they have to pay their creditors right?

And are there supplier? So like I, you know, I have a beverage company, you know and it’s a great product but she needs money to scale, she needs money to grow and like sometimes you make one decision about buying extra pan because there’s cash shortage and like your cash flow is like tight but luckily like you know, we sit on the board and we believe in the company and we are willing to fund it through in these times of crises because it’s not about like the end that that’s so fascinating to me.

It’s like the journey along the way and you could just laugh about it. That’s what excites me. It’s like, you know like oh the people were there and now they call them suck. Like yeah, that’s how you know, you’re really, you’re really close to Mark zucker because you don’t call Mark, he doesn’t go by mark. But it’s just like you knew like I had no idea what it would you come and then just like wow we made this change, we made that higher and that was the difference and it was like one little phone call like got you into the store and that’s what’s exciting to me and it’s like it’s never, Well the reason why I do this is that it’s not mundane, it’s not like 9-5 and you’re out like after being a president owner of a company, it’s like it’s 24/ 7 and hopefully it’s not your entire or your work-life balance is out of whack but you’re going to find things where it’s just like wow that’s really exciting.

Like we got in front of this person and now we’re here at this place now, we’re in whole foods now, where we’re, you know?

And it was just like, wow, it makes perfect sense now. But like, you know, like, hey, maybe we got denied on shark tank, but now, you know, now it’s like this coffee company that we have a board seat on like a, it’s taken off like tremendously and that’s that’s what’s exciting. I mean, there there is a struggle. You’re going to have that, you know, bad days. But hopefully in the end you’re gonna have more good than bad.

Jeffery:
Agreed. and when you do have that bad day, you just got to know who you can reach out to and lean on a little bit and that’ll help you get through the day.

Jonathan:
Yep.

Jeffery:
I love it. All right, we’re gonna jump into some rapid-fire questions.

Jonathan:
Sure.

Jeffery:
All right. What’s your favorite part of investing?

Jonathan:
Mhm. Let’s see. It’s not the end game. It sounds like, oh yeah, we made millions of dollars that. It’s not that it’s just that like, like, wow, we made an investment into a company. It’s not gonna stay close to change the world, but like, wow, it really is something where it’s like, you know, we’re futurist, we’re seeing the future. Like I have this like web, you know, I bought this domain weird VC dot com. Like maybe I’ll call something, we’re adventurous because just like, you know, like 10 years ago you were talking about, it would be weird to like, you know, sleep on someone’s air mattress. You know, you’re getting someone’s random car at the airport, but it’s not weird anymore. So it’s just like how we look at things that seem so crazy.

We’re like, we’re trying to buy and sell stock on an app and now it’s like, wow, this is how we trade. Look at how it’s changed everything. There’s congressional hearings.

Jeffery:
Exactly. No, I love that. I didn’t come up with a weird, but I want to come with a podcast where we actually interviewed startups that we’re doing weird, odd things. We had one where there was a keyboard and it was all different sounds you never heard of before, but it was like a piano, but it was like 100 keys, but it was completely different sounds that would blow your mind away. And we’re like, man, there’s probably something here. We could just investigate and find companies that are doing things that would blow your mind even though they may not be mainstream, but it could be pretty cool.

So, I love that. All right. How many companies do you invest in per year?

Jonathan:
I think conservatively we’re up there like we’re 15-20 companies, depending, um, you know, brand new investments. Yeah.

Jeffery:
Love it. You mentioned a little bit about the verticals maybe just re emphasize the verticals you focus on

Jonathan:
On technology, which is very broad. It could be, you know, saz it could be Fintech, it could be real estate, Fintech, it could be, you know, Blockchain. It could be just enterprise. Um, and then consumer and consumer could be, marketplaces could be an actual CPG product or it could be, you know, uh, you know, the tech behind something. You know, those are two real verticals tech and consumer.

Jeffery:
Okay, what is your timeline for investments in terms of making a decision or like what we do beginning start to end like started having a chat and decide you’re going to make an investment three days or three months.

Jonathan:
And it’s also really depends, right? I always that’s the thing, I always tell people it’s not a set amount of time because like, you know, I literally, I’m about to invest in a company now where you know, he’s raising three million off of 25 million pre-money valuation and there’s no deck, like there’s no deck. So like what? But all we have is his MRR. He’s at 500,000 MRR after two months and he’s a dating app, you know?

And it’s just like, wow. I mean yeah, he’s got a number, you’ve got traction and like we’re all fighting for allocation, you know? And it’s just like you don’t need a deck. Like some things are just hot like yeah, I can make a decision like in a week, okay, yes, we’re going to put in a million, you know? Or sometimes it’s just like uh you know, we need to go over the legals. You know, it’s like sometimes yeah, we can’t even go through our legal team and review everything because it’s like, well we have signed this a route.

Jeffery:
I love it. And those, those are hot deals. Those are always exciting to, they gotta move quick. Um Any anything that you look for when you’re making an investment in the on the DD side is it focused heavily on the team or on the product? You mentioned a few of these in the past. But what is the big thing for you guys?

Jonathan:
It depends what stage, right?

Because if you’re looking at a seed deal, it’s all about the team. For me, because if the revenue is not going to be there, you know, it’s not going to be if you’re you’re you’re trusting them that they’ve set out a path and that they’re willing to pivot and move forward and something else.

So I look at the team and it’s a C deal. When it’s a series a deal, it’s almost like a time where it’s like, you know, you can the money helps them grow the team. All right. So it’s almost like you’re helping them shape the team were like in the seed deal, like they don’t have the team to execute, but they have enough people to get it through and like to grow and figure it out. So when its seed, I definitely look at the team when it’s more series A and higher, it’s like it’s looking at the numbers, it’s looking as, it doesn’t make sense for them to be able to grow this fast. Can they double I’m here from year to year in the revenue because when you look at consumer products, like from year one to year two to year three, let’s say you’re getting to one million cells.

You should be a three million and then nine million. Because that’s the trajectory you need to be at to get to exit velocity. Whether that’s through acquisition or that’s for an IPO. Because that means you’re growing fast enough. If you’re just going 10% year over year, that’s not gonna cut it. That cuts it if your walmart, you know, because you’re already a huge amount of numbers.

Jeffery:
All right. Do you lead rounds?

Jonathan:
Yes, we do. We have we co-invest, but sometimes we do lead rounds as well, depending on how much we love a company.

Jeffery:
Okay. And uh follow on investments.

Jonathan:
That’s the idea. Like any good investment fund would tell you like your judge not on what you invest initially, but what you follow on on right? And that’s where you’re just like your gambling like you’re putting your money on the winners. Because initially let’s say you’re investing in 20 to 25 C. Cos you can’t like you can’t honestly say all 25 are going to make it to the next round so you’re gonna lead follow on the top.

You know half of them maybe 10 to 15 right? And then maybe at the next 10 to 15 you know that we could get to the series B maybe you know third of those or fourth of those go right. And so that’s the ones. And listen it doesn’t have to be like you have to be a unicorn. You have to like you know have double digit returns year over year. It’s just like listen you’re doing great decent business and you can still exit out you know and you’re gonna bolted onto something. But the idea is that the follow on is just as important because you’re saving, you’re not allocating all the money you’ve raised into everything in the first three years investing because that’s why it’s a tenure investment cycle. Because after the first 1 to 3 years, you’re gonna be able to see the series A series B winners that you’re gonna put in more money to save what you, unfortunately, had to, you know, shut down.

Jeffery:
yep. I like it. Um And any preferred terms you invest on, if it prep shares, safes common shares…

Jonathan:
Honestly, like what we like is like we like price grounds, you know, like we will accept safe and convertible notes when we have to, when we’re not leading, right? We’re just like, we’re not because we’re there are term makers or term takers, right? And so when we are uh term makers, like we want to have a price because you know, if I give you a safe like you don’t have to share unless it’s written with a side letter, you don’t have to share anything what you’re doing.

Like I can’t stop you from like going to Tahiti. You know, it would be horrible if I didn’t do my due diligence, understand like what kind of person you were, how you invest the money but your debt, you know, it’s not even that safes are not even death. Like you don’t even get paid in interest right until it converts so you can wait forever. And just like you just wait there. So when your price found you, you have voting shares, you have, you know, a true ownership of a company.

Jonathan:
Love it. Love it. Okay, so that’s uh that pretty much rounds uh that part of it. And now we’re just into the last legs of this awesome discussion and I wanted to get into a little more personal side.

Jonathan:
Okay.

Jeffery:
And so the first question on the personal side, what’s your favorite sports team?

Jonathan:
Los Angeles Lakers. No question.

Jeffery:
Nice. I was a Lakers fan. Way, way, way, way back when I was a kid. But then the Raptors became uh can never go see a Lakers game, but I could go watch your Raptors game. So there was a point in time where I was like why am I a Lakers fan? I can’t even see the team play live unless I’m flying there. And right now I’m 20 and I don’t have it, I can’t drive there so or fly there. So then I had to become a new fan and it’s amazing that the Raptors are the team.

But I do love the Lakers still they still have a hard part of my heart man. It was all because of fletch.

Jonathan:
Really

Jeffery:
Remember the movie fledge? It all about the Lakers? Well I was a huge fan of that movie and then that’s where I got into watching them and I was like okay

Jonathan:
I’m born and raised in Los Angeles. I got season tickets.

Jeffery:
That’s brilliant. Yeah, it’s a great team. Ok. Second question, favorite movie and what character would you play in the movie?

Jonathan:
Favorite movie, you this is a tough one. You know like I could just go with a comedy and just be like every time I watch the big Lebowski it’s always something funny. It’s always something funny was just like God I don’t even notice that you know what what like you know the writing on that you know, it’s just like, it’s so funny. It’s like, it’s like for me it’s like I like comedies more than like a drama even though you know, like only dramas win Academy Awards, right?

But you know, a great comedy is just fun because sometimes like you just want to decompress and enjoy yourself. You know what character? I don’t know. I would love to be the dude. Uh you know, just be carefree. You know, I want to be intense like walter and john Goodman or clueless like Donny. Uh

Jeffery:
Oh, that’s awesome. Uh So which character you got to pick a character?

Jonathan:
The Dude dude dude, I love it. Yeah,

Jeffery:
I love it.

Jonathan:
Yeah. He’s smarter than you think.

Jeffery:
Totally, I love that. One of our buddies, a group of us, it’s pretty much our favorite movie. It’s the only movie we actually quote continuously. So big fan of it. Yeah, that’s awesome, Brilliant. I love it. Well, Jonathan, I want to thank you for all your time today. I learned a ton. The audience is gonna learn a ton but fantastic. Thank you so much for joining us and sharing and we are going to have a part 2, 100%. There’s going to be the more stuff we’re going to dive into. But I really appreciate your time. And the best way that we like to end the show off is we want to leave the last word to you, to share, to anything you want to say to investors, to entrepreneurs, any advice, anything that you think you want to share.

But we leave you the last word

Jonathan:
For me, it’s, there’s no one way want to write one way to solve a problem. I really appreciate entrepreneurs who have true grit, you know, and I appreciate investors who also have the same mindset, right? Because it’s, you can’t be closed off, you can’t think that there’s only one way of doing things, you know, and it’s not just number of basis.

There is some, you know, like I think we’re in the best market in the world, you know, and you’re going to find ways like getting business done and the true capitalist or a true entrepreneur, they’re going to find a way, you know, to get through to push through because that’s what every company like. If everyone is accepted no for an answer, we wouldn’t do anything. There would be no sales at all whatsoever. You can’t take no for an answer. Like there’s just no way, like you gotta find a way to get to Yes.

Jeffery:
I like it awesome. Uh actually that’s, I’m gonna use that line at some point in the next week because I wholeheartedly agree with you.

Don’t take a no, find a way to get a yes, I love it. Well, Jonathan, thank you very much for again for your time today. Fantastic. And yeah, we’ll enter there. But again, thanks for your time.

Jonathan:
You’re very welcome, Jeffrey, You take care.

Jeffery:
Thank you, awesome man. That was huge, huge, massive feedback. Really loved all the things that they’re doing, how they invest.

Um Yeah, I loved a lot of the points of everything he said to for sure. Um you know, raised to get success, grow hustle and at the end I don’t take no for an answer, find out how to get those yes is that was the key to all of that. So love that Jonathan, Great job. Thanks everybody.