WSO Podcast | E190: Partner at RareBreed VC from Cornell MBA

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WSO Podcast (Episode 190) Transcript:

Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me! As I talked to some of the community's most successful and inspirational members to gain valuable insight into

different career paths and life in general. Let's get to it. In this episode, Jonathan Crowell, partner of Rare Breed VC Fund, shares his winding path coming out of UC Santa Barbara from teaching himself how to code to launching two start-ups out of school to attending Cornell's Johnson School of Management for his MBA many years later. Jonathan explains how he successfully pivoted to venture capital by landing an internship with Andreessen Horowitz in their market development group. Enjoy. Jonathan, thanks so much for taking the time. Thanks, Patrick. Great to be here. So be awesome if you could just give the listeners a short summary of your bio.

Jonathan Kroll: [00:01:04] So I'm Jonathan Kroll. I'm a partner at Rare Breed Ventures, where at $10 million preceded seed fund, we're on our first fund and I'm currently raising a fund to which should hopefully be significantly larger. Before that, I was at a fund called Sparrow Ventures, which is a single LP fund based in Silicon Valley backed by Pierre Omidyar. And then prior to that, I was at Andreessen Horowitz on an operating team and then kind of horizontally. So that's like the second half of my career.

The first half was all entrepreneurial. I started a company right out of college, did that for six years and then started another company sort of accidentally and then went to business school, figured, OK, I spent eight years being a founder, going really deep, kind of wanted to explore the opposite of that, which is going really broad. So in the tech world can either basically be a journalist, you can work in an accelerator or you could be a VC. Or I guess you could throw like a start up studio in there as well. But like, there's not many arenas where you get to go really, really broad and broadly cover the early stage world of start-ups venture capital. So that's kind of what got me into VC for sure.

Patrick (CEO of WSO): [00:02:14] And you're from the Santa Barbara area.

Jonathan Kroll: [00:02:17] Yes, I grew up in Santa Barbara and currently located in San Francisco, but with a couple of years in New York.

 

Patrick (CEO of WSO): [00:02:23] Awesome. So let's go all the way back to just kind of you see Uiuc, right? So did you know when you were there? It looks like you're really into languages, but you weren't into like start-ups? Or maybe you were. Maybe we were starting businesses, then I'd love to just hear. Did the entrepreneurial bug hit you early and what happened kind of for you to kind of just found a business right out of school? Yeah, the traditional route.

Jonathan Kroll: [00:02:48] So I'm not one of those people who like was selling candy bars or like flipping bikes and stuff like that as a kid and making a ton of money. That wasn't me, but I did. My first entrepreneurial venture, I guess, was I was a huge nerd, right? So I also was really into aviation. So I started a virtual airline which used to be, I think it's still a thing, but it's all based around Microsoft Flight Simulator like 95, 98, 2000. And you know, pilots, you would be actual people who join us pilots and I started a virtual airline, had my own fleet, had all these people who quote unquote worked for me. And then I sort of like.

Patrick (CEO of WSO): [00:03:24] Are like a simulate, it was like a game, like a SIM City kind of thing.

Jonathan Kroll: [00:03:27] So imagine it's exactly like, you know, Microsoft Flight Simulator at the time was really single player. And so people wanted to, like, join simulated airlines and feel like what it would be like, like huge nerds, right? Yeah, we were the people who like, who like, who love commercial aviation. We're not even talking fighter planes. We're talking like seven, fifty seven stuff like that. So, yeah, people come together. So I founded this virtual airline and then ran it for a couple of years. I was like 12 when I started it, but it got pretty big and I sold it. I burnt out, I burned out. You know, you have to make all these routes. You manage all your fleet. You have to like, keep logging the hours for all these

Patrick (CEO of WSO): [00:04:09] Actually like bringing in money. Oh, no, no.

Jonathan Kroll: [00:04:12] None of this is about money. I mean, it was

Patrick (CEO of WSO): [00:04:14] Like community and just the love for planes and that type of thing. Honestly, it was a way to enhance the game

Jonathan Kroll: [00:04:21] Because it made it multiplayer. And for people who are nerds about commercial aviation, it was a way to nerd out hardcore and fly real routes and like, kind of like pretend. So you were like flying actual routes is like real time, like you could actually fly like and you'd have to spend like four hours on the computer. I can't

 

Jonathan Kroll: [00:04:38] Believe I'm getting this publicly, but yes, it's so like if you're flying like a transcon from like SFO to New York, you know you're sitting there for four and a half five hours and you're flying the actual like standard terminal arrivals and stuff. But you know, the procedures or at least close there to like the procedures that, like real pilots follow, you know, because we're at number 12.

Patrick (CEO of WSO): [00:05:00] So your next career will be as a as actual pilot.

Jonathan Kroll: [00:05:03] Maybe if I were to be, I would pull like a Richard Branson or John Travolta, right? Probably more like a John Travolta where he just like wanted to be a pilot, became an actor, made a ton of money and then now has like his own. I think he has like an old seven or seven Qantas old vintage airliner and flies that around. I think that's the best way to be a pilot, right, is to just be independently wealthy and do it for the joy of it and then not get to lose that bug as a as a pilot, flying people day in, day out.

Patrick (CEO of WSO): [00:05:36] But so your career I didn't follow. So like when you were when you were a UC Santa Barbara where you tell me like the path, like, were you doing internships, like the typical things like sophomore year or summer

Jonathan Kroll: [00:05:48] Or a very atypical background than what you might expect?

So, you know, sort to say, like when I was like 12, 13, love technology was all about it was building websites like really early on that I remember AOL. I was building websites like I was like 10 or so, you know, with dial up internet figured that out on my own. I just really like love that. And then somewhere along the line between there and college, I

sort of like, lost that love. And so I went to college with, like a different idea. I wanted to be a diplomat, so I was going to join like the U.S. Foreign Service, and it was really

good at language and really good at learning. And I just have that brain for some reason. So I decided, well, kind of like decide to some degree where I end up in the world. So I have a degree in French, Spanish and Portuguese. I also took a lot of Italian and even took some Catalan in there. And so that was my goal. I was going to go join basically the government. After graduating at the time, that would have been 2007. So what happened was like 2006, 2007. That was a crazy time in the world and a crazy time for technology that was like the peak of Web two or like just actually the initial uptick of web to kind of like what we're going through now with what three in crypto? But iPhone came out the summer I graduated college, I found One, you know, Facebook was like two years old. It's a start-ups. Youtube is independent start up. All this stuff is happening really, really fast. And I was like a senior in college watching this thinking like, there's no way I can go join the government. I'm too excited about this. So I actually, like, finished up my classes and go home and then like, I taught myself how to code because it's really good at languages. There's just like definitely like an analogous relationship from like computer languages to natural languages. So whatever makes my brain a sponge for language made it a brain or a sponge for computer languages. Exactly. So I got it really quickly and love that, and I was obsessed because to me, it was like, Wow. In theory, you can like, create basically infinite value from nothing. No inputs, no raw materials. Yeah, I have to get involved in this. So I graduated and I started a company right away and I didn't know anything, and I was a guy with a degree in languages. So it was a very atypical background. No internships, none of that because I had this path for like 90 percent of college that was going to follow.

Patrick (CEO of WSO): [00:08:02] So you knew like you were going to do the coding and stuff when you're like a sophomore or junior?

Jonathan Kroll: [00:08:07] No, I was going to be a diplomat. Oh, you thought

Patrick (CEO of WSO): [00:08:10] You were going to be the diplomat? And then suddenly it was like a 90 degree or 180 degree turn, like, no, actually. Just kidding. I'm going to go teach myself coding and go to move to Silicon Valley. Exactly.

Jonathan Kroll: [00:08:18] That obviously happened in a year from like my interest to starting a company.

Patrick (CEO of WSO): [00:08:22] So did you think about? Are joining a start up or you just realized it's never going to hire me because no one wants a triple language major

Jonathan Kroll: [00:08:28] That at the time it wasn't the same environment as it is today. This is 15 years ago, so it wasn't as easy to know, you know what start-ups to join. There definitely weren't as many start-ups at all.

Patrick (CEO of WSO): [00:08:40] So what was the idea and what was the first start up? Tell us.

Jonathan Kroll: [00:08:43] Yeah. So I come from a family of lawyers. The only thing I have besides being a diplomat, I ever knew. Well, actually, I knew I never wanted to be a lawyer. So that's the only other career sort of inclination I had early on. Yeah, because all of my family, my dad, my grandparents, my grandmother, who was born in 1915, was a lawyer in the 40s when barely any women were lawyers. And so everybody and I so I knew what it was like to be in that environment because the law kind of is all encompassing, like my dad is always working. Our garage was full of those banker boxes and always on calls or knee-deep in a stack of papers. And so, you know, over time, growing up in that, I knew a lot about how the law and law firms work. I knew a lot about the problems in that very traditional industry, like basically had realized how untouched it was by technology and how much, you know, there was to potentially gain for everybody in that industry. If technology was the backbone of it versus just, you know, pen and paper. So I figured kind of very naively actually that like, ok, well, I'm going to try to start a legal tech start up. And the idea was that we wanted to democratize access to the top one percent of lawyers and law firms starting in California. And that's because lawyers and law firms, the best lawyers don't advertise. They see it as beneath them. Its firm, firm and firm. That's the name of most of those top funds. None of them have a brand name. And so they're not running Google ads or

anything like that. They all get. They also insist on referrals from other attorneys, basically. Yeah. And you know, for the big dollar amount type of cases like class action or personal injury or like insurance type of things, the client never pays a an hourly fee. It's all contingency based because the dollar amounts are so huge, the lawyers actually want to take their 30 40 percent cut. So it doesn't matter who you are, it doesn't matter if you're in the network. It doesn't matter if you speak English or an illegal immigrant, but you'll never find your way to the top, whereas in law firms, because you're not in like the second degree network from those guys, but there's no reason for it. And actually, it's like mutually beneficial for them to be those two sides of the market to be connected. So we built this like algorithmic. Out, excuse me, algorithmically driven marketplace to kind of like take the man on the street, get all of the salient details about their legal matter and then determine like what that's appropriate for as far as, like what types of attorneys and then try to like, go deeper and then match them on like basically like a dating site like other variables to increase the likelihood of a successful engagement between a lawyer and a client, which is a very problematic relationship. And in a lot of those lawyer client relationships for a variety of reasons, and our revenue model was tied to that success. So we had a vested interest in that.

Patrick (CEO of WSO): [00:11:45] And so you ran it for a while,

Jonathan Kroll: [00:11:47] Didn't for six years know I knew nothing. I started with basically just a lot of very overly eager optimism. And I learned a ton. I learned a ton. So six years in, it raised about a million dollars. Had a good team going, but basically ultimately realized I'd built a company that could not scale and really was starved for cash because we subsisted on the, you know, our cut of the legal fee that the lawyers made, which was also a very difficult thing to even be able to take in revenue

Patrick (CEO of WSO): [00:12:17] That you even call it. Oh yeah, typically that's illegal.

 

Jonathan Kroll: [00:12:19] Typically, the only lawyers in law firms can collect legal fees. So we had to we went through this really long process to become certified by the state bar of California. We were like, Oh my gosh, totally regulated. It took a year to do that. We were audited every year, but we could never nail the like success piece of.

What made us successful in gaining between lawyers and clients, plus lawyers never used our technology, our software systems, to update cases, and so we basically had

either spent all this money to acquire these. These cases sent them to lawyers and they just went nowhere or we had successful engagements, but then we didn't know what was going on with the case. The lawyer forgot about us and basically came a collections agency on the back end of that. So it just wasn't a good business model. And I learned that the hard way. Yeah, yeah.

Patrick (CEO of WSO): [00:13:07] We spent grinding years grinding. So then what do I what? What was this pivot or what was this new whole company you started because you kind of started decided, OK, this isn't working. Shut it down.

Jonathan Kroll: [00:13:18] I actually sold it, so basically four parts basically got out at par, didn't make any money and I didn't make any money for most of the years I worked there, you know? So it was I lost money, but on an equity basis, it was even right and it became just an advertising company that like. $2 billion. Who wanted to hide behind like a proxy brand? Got it. But some of the cases, and that's not my heart, wasn't in that. So I figured, OK, well, I know so much more than I did when I started, but I also know how much more I don't know, and I wasn't aware of that previously. So I decided, OK, I'm going to go to business school. I think this is a good time and I need that because I've never had a formal business education. Remember, I had a degree in languages, so I started to study for the GMAT. And funny thing happened on the way to business school. I started to really notice like, hey, the test prep industry, especially in higher ED, is super. I don't say predatory, I'd say like the power dynamics. Are not in the favor of the consumer, because lifetime value basically is the equivalent of one sale for one application season. Nobody's coming back like nobody pays attention to turn attention, whatever and test prep because most people need to take the test to get in or they take the test and they didn't score well and they just don't go. Very few like come back for another season, so you don't care about that. So that also what that means is that your product can be mediocre. It has to just be good enough to get the sale. It's all about sales. It's not about the product or your outcomes. So like, that's the disservice of the customer who is a student, right? In the case

Patrick (CEO of WSO): [00:14:57] You're talking about, like GMAT prep here. Exactly, exactly. And so in the case

Jonathan Kroll: [00:15:00] Of the student, right, like Jim, that's a very difficult test. It's, you know, your score is relative to the scores of other students around the world, right? So on the quantitative section especially, it's very difficult for Americans to score well because the way we learn math, this is less rigorous from a

Patrick (CEO of WSO): [00:15:18] Scored higher on verbal. It was like I did really well in math.

Jonathan Kroll: [00:15:21] That's not uncommon. Yeah, well, that's no.

Patrick (CEO of WSO): [00:15:24] You're also up against people who are going to business school who tend to be better in math. So math tends to be the harder one to score.

Jonathan Kroll: [00:15:32] It's very started. So we decided to start their thinking and I got ahead of myself. But what ultimately happened is I teamed up with my GMAT tutors for just these two independent guides who had focused just on the quant section, and it actually developed their own extremely in-depth curriculum. It was like they originally wanted to publish it, and so it would have been the equivalent of about 4000 pages, but. It actually became a software platform that we developed together as we all teamed up, I like led the charge. I knew how to build software. And so then I recruited a team. We decided to actually build the best product out there to help students succeed on the GMAT. We went into the group and that was really successful. I think, you know, it still is one of the top Gmat Test prep companies out there called Target Test Prep,

Patrick (CEO of WSO): [00:16:20] And that's just still focused on the math. Or is it primarily cool? That's awesome. So what how did you what happened there? Like at the end, you exit it somehow? They buy you out. What? What happens?

Jonathan Kroll: [00:16:32] So I realized early on right from the get-go that like this is through business school. This is before business school, before, OK. Oh my way. Kind of unexpected thing. So instead of like just studying with my tutors, I teamed up with them and spent two years with them building this. So, but you know, from the get-go, I was very clear that I'm not going to stick around for more than two years because I want to go to business school. I don't want to age out going to a full-time business school. So it's getting to that point. I was like twenty-nine or so at the time.

Patrick (CEO of WSO): [00:17:03] So talk to the listeners. Talk to listeners about that aging out of. Do you feel like there's like a cut-off where if you don't go to business school, it's getting much harder in terms of they want, they want like, say, there's age discrimination, but there probably is right in terms of, well, I don't even know about that. That's, I think, definitely believe that's true between you and me and everybody listening. Yeah, but I also think there's another factor which is like your benefits diminish over time as you get more experienced. Plus, if you are like at HBS and you're thirty-six and the median guy or girl is twenty-eight. You know, there's a big difference there, and so that can kind of be weird as well. Your other option is the executive MBA, and that's there's a whole other host of things to consider. It's much more expensive and just a different format. So for me, I wanted to go to a full time MBA, so I committed it two years. And at the end of that, throughout this whole time, I'm taking the GMAT, but I was also taking it for, like my own edification, to lead better, like Build a product. And I was like, really eating dog food because I was also at the gym. So I took the gym at like, I think I've taken the official gym at like six times or something. You can only take it like four times a year. I think so that shows you taking the group like four or five times. So I know the sets really well now, but. You know, so come towards the end of that, I was applying for business school and decided that I was kind of disenfranchised which like your typical top business schools, stanford at all. Just thought for me, it was not the, you know, I'm not the banker, I'm not the consultants. I was the entrepreneur, West Coast entrepreneur kind of guy. And I wanted to be in tech. So they'll tell you that that's

they have pathways for that. And I think these days it's gotten a lot better. But at the time, I kind of went to classes and thought, you know, I don't really think I fit in here.

Patrick (CEO of WSO): [00:19:00] And so did you did you go to Stanford or apply to Stanford at Stanford? Seems like it might have been a good match given your entrepreneurial background.

Jonathan Kroll: [00:19:07] It would have I just think, you know,I didn't get in there,

Patrick (CEO of WSO): [00:19:11] But like, yeah, it's like a four percent acceptance rate or something, but yeah,

Jonathan Kroll: [00:19:14] Yeah. But you know, I wasn't upset about it because I felt like it was just a smaller, a scaled down version of the general demographic of other typekit schools. Yeah, I thought for a moment, I'm really just not going to go to business school. Hmm. And so

Patrick (CEO of WSO): [00:19:29] What changed? What do you mean you like?

Jonathan Kroll: [00:19:32] So what changed was I found a program randomly called Cornell Tech, which is a campus actually of cornell, but there's seven-degree programs there and one of them is an MBA program. It was a very new experiment to have that cross-functional and integrated. Nba experience across like technical functions, as well as like business versus just being in a business school silo, which is MBA students.

Patrick (CEO of WSO): [00:20:04] So you were kind of playing with the idea of going there, but then ended up at the full-time program, right?

Jonathan Kroll: [00:20:10] Well, there is a full-time program, so I did go there. Ok, so you did the Cornell tech?

Patrick (CEO of WSO): [00:20:14] Yeah, that's right.

Jonathan Kroll: [00:20:15] I ultimately went there. I mean, at first I was skeptical. I thought it was just marketing like everywhere else about being open. For the more I like, peel back the layers, I realized, Wow, this is really substantive. Like, you know, this guy who's the CTO, former CTO of Twitter he like is one of the practitioners that teaches, of course, like Eric Schmidt is on is the. It was the chairman of the board of governors, I think he's still on the board, the dean at the time was on the board of Amazon and so like that trickled down there were like real substantive. There was real substantive involvement from the tech industry, and the program specialized, so like your peer is none of my peers. Maybe one or two of them were bankers in my business school program, but they all

Patrick (CEO of WSO): [00:20:56] Like other places like that or Cornell, unique in the sense of like having a like. And so what did that even mean in terms of being in the Cornell Tech MBA program? Like, are you doing like learning how to code as well on the side or like, is it more just like a business degree with a tech bent to it?

Jonathan Kroll: [00:21:15] It's sort of all of the above. So I mean, you spend your time across two campuses, you know, you're at the main campus and you know, this is cool to do all your core. And then you move to the Cornell Tech campus in New York City, which is on Rhode Island. And I was part of the first class there, and it's a beautiful campus. Like, I think it's like a $2 billion campus they built on the southern tip of Roosevelt Island. My view from my apartment on campus was insane. I could see I've been there.

Patrick (CEO of WSO): [00:21:39] Yeah, yeah. I lived in New York and I played soccer on Roosevelt Island. I was like, Oh,

Jonathan Kroll: [00:21:43] Awesome, so you know? Yeah, yeah. So it's a really cool place, and it's like one of the best-hidden gems in the city. It's quiet at night there. The Duane Reade closes at like 7:00. It closes in general. That closes at 7:00 and shows you how sleepy it gets. It's like just like ten minutes, even on the tram or on the from Manhattan. So but what happens at Cornell Tech is that there's seven. There's seven-degree programs across like three schools. There's business, there's law, but there's like three or four engineering programs and a third of the curriculum is integrated. So you don't you don't. You do learn how to code if you don't know. But mainly the backgrounds they pull from are. The tech people and what happens is like, you end up building a product cross-functionally like you're the only NBA you have like three engineers, one is like a master of engineering student, the other might be like operations research or some other specialized master's program in CSS. And just like the real world, right, where you're not going to be just around out there in VR, so you want to be a product manager, that's going to be your life. And there's a huge age difference, right? But like for me, it was like ten years from me to the rest of my teammates, and that was like pretty standard. But it mirrors the real world, and that's I think that's super valuable. So you build. We built a data science tool for two Sigma Ventures one semester and then everybody builds a start-up where it used to make it.

So everybody built a start-up. Now you have the choice, I believe. But so then you come together again in the fall and build.

Patrick (CEO of WSO): [00:23:17] And so, yeah, tell me, it sounds like you loved it.

Jonathan Kroll: [00:23:21] It was a great program, it's very, very difficult because it's very you take on all this extra stuff over like typical business school, and there's not it's not the program where you're like flying around the world, hanging out because you finish your core and you're just playing. It's not that it's way, it's like there's a lot of forum nights and it was hard. It's really hard.

Patrick (CEO of WSO): [00:23:38] And so as you're kind of approaching that, that critical summer, like where a lot of people are doing your classmates, you're doing internships, what were you doing? Just building, just building?

Jonathan Kroll: [00:23:48] And then, you know, trying to figure out what came next because, at that point, I was only aspirationally like wanting to get in DC, but going from business school to B.S. and earnest, it's very difficult. And I knew that.

Patrick (CEO of WSO): [00:24:00] Yeah, so like, what did you do? How did you start planning? It's like, how did you start planning it? What was what was the path

Jonathan Kroll: [00:24:07] Here? The first thing I did as I leveled with myself kind of to that's to say, like, I knew that the odds were low. I knew that there was a good potentially like 50 percent chance or lower. I wasn't going to make it if I was even like. And that's one hundred percent committed to trying. So I knew that that was possible. So I figured like, well, you know, there's no path and there's no recruiting cycle. None of that. And it's a very insular industry. So. The only thing that I had going for me is that I had been an entrepreneur, but I hadn't raised money from big funds and had a huge network. It's not even close, so I just. Figured in a network this shit out of this right, I'm going to go like, meet every VC I can and try to help them in some way because what I do have our founders in my Rolodex and have companies that I'm aware of. And so I got involved with student VC groups. I initially thought, OK, well, that's really going to help. Got involved with Big Red Ventures, which is run by MBA students at Cornell. You know, I thought about doing like the dorm room fund type of stuff. Ultimately, in hindsight, those weren't valuable at all. I can't speak for any specific program that I wasn't in, but like, you know, at least for me, I felt like and now I know this is really an apprenticeship business, and it's hard to mirror that without being fully immersed.

Patrick (CEO of WSO): [00:25:31] Do you feel like having that on your CV at least helped a little bit in terms of like networking? No, no, no, no.

Jonathan Kroll: [00:25:38] Not at all. I want to say no, not not in the slightest. I mean, you think that when you're a student, you're like, Oh, this is so cool because it's hard to get in because there's a ton of demand from other MBA students and other people. You know, if it's open to other programs, other schools, which some are like this, all of this demands, it's really selective. It's hard to get in. So you feel like, OK, well, I've made it, and this is going to really help me. But looking back, it would have made any difference.

Patrick (CEO of WSO): [00:26:03] So really, it was more about just the relationships you were developing, just through the networking.

Jonathan Kroll: [00:26:08] Yes, I'd say this is where it gets to like nongeneralizable advice because this is very specific to my situation. But when in the summer we moved down to Cornell Tech and Rhode Island, it was a huge event because this was something that had started with Mayor Bloomberg. He had made this competition for that land on Roosevelt Island and ultimately went to Cornell after they'd be out Stanford.

And so I was the first class on that campus, so I was there for the inauguration of the campus or dedication of it. The governor was there, the mayor was there. All these dignitaries were there. And so it was a big deal in New York City Tech was paying a lot of attention, but there wasn't really like a visitor bureau or like any institutional way for like folks who were in the industry and curious, like get involved because it was still like getting stood up on its legs and didn't have like just excess people in the administration to go just like the ambassadors to the tech community. So I figured, OK, well, this is interesting. I've kind of got a sense that like. New York VCs are curious about what's going on because a lot of start-ups do come from there, there's also an amazing program called the Runway Program, which is like one of the best-kept secrets, but it's a post-doc program to your postdoc postdoctoral incubator for PhDs, where these guys and girls are commercializing their research and building these, like super defensible. Really, really, really interesting companies. It's cool. So I figured I'm going to be the investor unofficial ambassador for all of that.

Patrick (CEO of WSO): [00:27:39] Ok, so you kind of started what New York primarily like going around and

Jonathan Kroll: [00:27:44] Started going around and doing a lot of

Patrick (CEO of WSO): [00:27:46] Coffee chats and

Jonathan Kroll: [00:27:48] Did that, but then realized I need to do more. And so I wanted to up the value that I could offer them, you know, and that's what you have to do in D.C. if you're looking to get in, it's like you can't just be a guy asking for coffee chats and hoping to get a job out of that. You have to kind of like really just on blind faith, invest in a relationship and like either provide value in the form of bringing down deals. That's the best case where you bring,

Patrick (CEO of WSO): [00:28:17] Yeah, you're sourcing deal sourcing deals for them, you know, saying, Oh, I know this company that's thinking of raising blah blah blah. That's right. So did you? Was that how you eventually kind of broken and you started bringing one or two great deals to somebody or no, not quite.

Jonathan Kroll: [00:28:32] So what I ended up doing was as that embattled official ambassador, I connected the entrepreneurs on Roosevelt Island with the VC crowd in New York, you know, primarily seed and pre-seed investors who were really interested in what was going on, you know, at the shiny thing in the river. And, you know, going so

far as to like, like organize a happy hour in conjunction with like a fund in New York that was like held off-campus. They paid for like just to bring, you know, founders folks who were starting companies and already had companies all there to like just to get to know the team there. And so that was like kind of my niche and that led to a couple of interviews.

Patrick (CEO of WSO): [00:29:13] And what do you mean, expect it? What do you mean to lead to interviews like the partners started coming up to you and just saying, Hey, you know, you're looking for a job?

Jonathan Kroll: [00:29:22] Well then that you're exactly, you know, knowing those looking for a job. Now you sort of have some political capital or you're at least like Indira because

Patrick (CEO of WSO): [00:29:31] You're seen as like the organizer, you're seen as the person that's bringing people together, which is like half the battle. Nbc is like sourcing, right?

Jonathan Kroll: [00:29:38] So it is. But what happens if you see when there's a job opening depending on the seniority, you know, there's a catch 20, there's an experienced catch 22 you want, you know, people have done the job before, and the only way to get the experience to the job is to have done the job before. So you're trying to break in, it's even harder. So I knew that like have to kind of get in that circle somehow and get some like secret, you know, job openings that weren't public. You know, that would be circling around.

Patrick (CEO of WSO): [00:30:10] Yeah, the shadow job market is huge, right? So how did you start? Like, how much did you do before you started kind of hearing about these roles at these openings and landing what would be more considered like a formal interview? Um, like how much how many events did you put on with like these, was it ten? Was it to twenty? Like, what was it?

Jonathan Kroll: [00:30:32] There was like two big ones, but it was just more of like an ongoing thing. And then I think subsequent to that, like, of course, like bringing them deals, whether they did them or not. I think if they're high quality, that says something about you, it says something about who you're connected to. And in B.C., you have to be connected to the founder ecosystem. So I think that also is like evidence of that. But basically just building goodwill enough that somebody would even like, you know, give you a. They like warm intro to the partners of the fund who are hiring for a specific role like that goes a long, long way because that's from a pure investor versus your this MBA student.

Patrick (CEO of WSO): [00:31:11] Tell me about your experience of just like or expectations like coming from, you know you are grinding at a startup. You could have gone probably gone to investment banking or consulting, made six figures. What was your anticipation or experience kind of like going for these interviews? And like, what was it like the actual more formal interview? Was it more just a conversation because you already had the relationship going and or did you have some interviews that like, were there like, OK, let's keep talking and they just like, slow played it.

Jonathan Kroll: [00:31:40] All of those happen. There's no structure. Most of them are conversations. Yeah. These are people who are used to having conversations,

Patrick (CEO of WSO): [00:31:47] But there's no like technical interview. They're not like trying to like, they're not testing all that cap tables. And like,

Jonathan Kroll: [00:31:52] I mean, your mileage may vary there, but I think not, not there. Yeah, but I ended up not taking any of those offers. Ok. Why? So this is nothing I also expected to. But you know, I ended up taking an internship versus an actual job, and that's because I got the opportunity to have this like post MBA internship and Andreessen Horowitz. And I really wasn't excited about the fact that it was an internship. I was getting married in November of that year. It was like of all the student debt, like, I don't need to be paid 30 dollars an hour. It's like maybe have a job for three months. That sounds like really the riskiest thing I could do. But once I went for the interview at the office in New York back then it was just I was the third of ultimately the third of like three people who work there. Now I think it's a much, much bigger, but I kind of saw I had my first peek behind the curtain of like the whole like Sand Hill Road machine and I was just blown away. This is my first interview.

Jonathan Kroll: [00:32:50] I was like blown away and I realized, OK, well, I have to do this. And there were so much more here and I will just fight to stay. I will just, you know, yeah, you know, grind, hustle, whatever it takes for me to stay here after my internship. And so that's what I did.

Patrick (CEO of WSO): [00:33:07] So there's this internship program at like, is this common like Andreasen versus and not

Jonathan Kroll: [00:33:12] Even though program, it's not even a program. So what do you mean?

Patrick (CEO of WSO): [00:33:15] They're just like

Jonathan Kroll: [00:33:16] A Cornell alum and was hiring from a couple of schools, cornell being one of them. So I actually had to beat out a couple of my classmates for it.

Patrick (CEO of WSO): [00:33:24] But he was just hiring as an intern and saying, I can't promise you a job after three months because they're just so scrappy and it was like a new office in New York. That's right. Got it, and so you were like, just hire me, it's fine, I'm getting married, you have all this student debt, but I'm going to roll the dice because I know in this, at least with Andreasen, it's a well-oiled machine. Or they're going to be bringing a lot of best practices from Sand Hill to the New York office, and you're going to probably learn more. They're the first like

Jonathan Kroll: [00:33:50] Some startup fund or something. Yeah, precisely. And mainly that like. I just felt like I was going to see the like rarest end of the market for DC, meaning like the fewest people will get to see behind that curtain versus, like most of you see, are like smaller funds. I was at a place that had like a seat at the power and the power dynamics and had billions of &om and had amazing companies in its portfolio and is really like a household name. Just felt like I was going to see so much more and learn so much more in that environment that I just couldn't.

Patrick (CEO of WSO): [00:34:23] You had to beat out all these other classmates and other MBAs for the lucky goal of a $30 an hour internship.

Jonathan Kroll: [00:34:31] Correct. Correct. Yes. So my wife didn't say at the time, you know, that was her experience or her reaction to she was not thrilled.

Patrick (CEO of WSO): [00:34:40] I feel like this is actually really important for the listeners to hear is like, a venture like, this is very I feel like it's very common. It's almost like, No, you're going to be here and you're going to have to prove it. And on top of it, you're not going to get paid much. Ok, so they bring you on what's your role kind of coming in with your expectation of like what the internship is going to be? And then how did you think this is how I land the full-time job?

Jonathan Kroll: [00:35:03] So the role was on a team called market development, which sits between the portfolio mainly on the enterprise side and then those portfolio companies, their intended customers. So mainly fortune. One hundred companies like Big Corporate spend billions a year individually, sometimes like JP Morgan on technology. And so that's the market they tap into. And it's really interesting. It was an interesting window into that into enterprise software, at least because I got to be in these like thousands of these meetings where it's us and a couple of portfolio founders. And then like the CIO or Cisco or CTO from J.P. Morgan or Goldman or, you know, you name it, and it's you are sort of like a consultant in that regard as well,

Patrick (CEO of WSO): [00:35:46] Like you're helping the poor get ready for those meetings. What else you're also helping the corporates

Jonathan Kroll: [00:35:52] Like. First thing you do is we would get like the full download and they bare their soul to us about their initiatives, their problems. This is all in terms of technology. And so then we get consultative and like, figure out well which of our portfolio companies might actually solve these issues like and looking forward like, actually might fit within your strategic roadmap for technology that goes over the top. So we sort of feel

Patrick (CEO of WSO): [00:36:15] Like if you'll spend thirty million dollars a year on this, we can have these guys develop it in my building.

Jonathan Kroll: [00:36:21] It's more so like they take banks. Banks are notoriously, you know, a couple of decades behind the trend in terms of their infrastructure. You know, the classic examples, they're still mainframes and banks. You know, we're here in a cloud world. So even moving to cloud in a compliant, regulated industry as well, like is a big issue. There's a lot of security requirements and other sorts of issues that are material to a large invest, publicly traded investment bank. So there's so many problems that are associated with that. These are mainly like gaps in where the market was and our solutions in the form of portfolio companies were like the new ways to solve certain business problems like that from a technology perspective or like higher-level just to like, run. You know, run processes more effectively in some cases.

Patrick (CEO of WSO): [00:37:15] Well, were there any assurances given to you this three month internship that there was a certain percentage given full-time offers or anything like that? Zero.

Jonathan Kroll: [00:37:23] No, this wasn't even a program.

Patrick (CEO of WSO): [00:37:24] There was it wasn't even a program. It was just you was just me. Ok. Yeah. And so you're kind of. Hoping you can stay, you're doing this, this is right after you graduate, you just start working with them.

Jonathan Kroll: [00:37:36] Not only that, so I made it clear I want to say it, but I also made it clear that I wanted to change. I wanted to be an investor as well.

Patrick (CEO of WSO): [00:37:43] Right. So you wanted to be on the investment team?Correct. And I was on

Jonathan Kroll: [00:37:47] A team that was adjacent to that. But we're not we were not involved. We were involved post investment on that team.

Patrick (CEO of WSO): [00:37:53] Yeah. So you weren't going in on the investment committee meetings and like arguing or like reviewing potential investments. And yeah, that's why I wanted to be. And so,

Jonathan Kroll: [00:38:01] You know, that was kind of a hard sell to my boss, too. I mean, he was great about it, but like, Hey, thanks for having me. By the way, I'm going to hustle to say, but I also want to leave your team and do something else.

Patrick (CEO of WSO): [00:38:11] Yeah, so tell me. Yeah, so he was in the market development. He was the lead of the market development. He's probably like, Yeah, OK, whatever. So tell me how that played out.

Jonathan Kroll: [00:38:21] So I just grinded. And I like, you know, basically did everything I could to add value and also, like, really help that whole organization run better. Starting with that pod and then, you know, looking to I had specific skills, you know, I was really good at like putting together technology tools I understood, like the power of leveraging off the shelf SaaS tools to like, completely change how a process internal process is done. And so I started to like, just be proactive and on my own start doing things and then suggesting them to my boss once like I had enough evidence of like, hey, this is actually effective and impressive. So I ended up getting to say, and then I moved back to the West Coast to go work out of the Menlo Park HQ, which is a totally different experience, too. But there's like, you know, at the time, it was like 150 people versus three.  And that was super interesting as well because like

Patrick (CEO of WSO): [00:39:19] You kind of on the market development,

Jonathan Kroll: [00:39:21] Technically, yes. But I was doing some more stuff horizontally. So I was like, You know, my boss is in New York technically. So I was, you know,

Patrick (CEO of WSO): [00:39:28] You were given a little more latitude to

Jonathan Kroll: [00:39:30] I was hustling because I wanted to stay until, you know, ultimately, I realized one day I had an epiphany like, Well, if I'm gonna stay, you know, I would be on the enterprise team. I don't really, you know, enterprise software and enterprise like networking, security, software-defined networking stuff like that. Microservices stuff is I understand it. It's interesting. It's important, but it's not what resonates with me enough that like day and day out, that's all you're like living, sleeping, breathing.

Patrick (CEO of WSO): [00:40:00] So what was what did you do when you made that realization? So how long were you in Menlo before you kind of said, OK?

Jonathan Kroll: [00:40:07] So I was there, it was like a good amount of time after I had arrived. I don't remember exactly. It was a little less than a year, but I ended up leaving and I wanted to continue with my original mission to be a. Venture investor and I had brought in a lot of founders at that point. I had gotten more in the world when I was at a16z on the investment side. Then. Then I had been when I was in New York, So I felt like that was

that was good, and that actually gave me enough insight to realize that this is not what I want to do in this vertical, so I wouldn't want to go to a generalist fund. And so that's how I ended up at Sparrow Ventures, which is kind of the opposite. It's like $125 million series, a fund that's a single LP fund backed by Pierre Omidyar, who's the founder of eBay. And it's like it was like three years old at the time, or even less. It might have been two, but yeah, it was the total opposite of that.

Patrick (CEO of WSO): [00:41:05] And so what was yeah, what was it like in the sense of you're now a generalist, you're looking at everything networking with everyone?

Jonathan Kroll: [00:41:12] That's right. I'm a super, super generalist because I'm the guy who got a degree in languages who's like sort of an autodidact on the technology side and like taught himself how to code. And so I'm really a good generalist, and so I felt like that would be a good fit is

Patrick (CEO of WSO): [00:41:26] A good fit for you, and I feel like that'd be a good

Jonathan Kroll: [00:41:28] Fit. And so it was interesting, too, because that's at a fund of that size versus this like, you know, relative Behemoth like Andreessen at Sparrow. I got to see broadly horizontally how a fund runs, how it works. Not much fundraising because we had a sole LP, but just on the operational perspective in the day to day. And so that was really interesting. Yeah. And I had had a lot of say and I had a lot of my voice mattered a lot because I was one of like, you know, three or four on the investment team in the overall team of six or seven.

Patrick (CEO of WSO): [00:42:01] Right. It's interesting. So you were there for two years during the pandemic?

Jonathan Kroll: [00:42:07] Yes. Is there the pandemic? So I left last July. Okay.

Patrick (CEO of WSO): [00:42:16] And tell me about this. Yeah. Tell me how this happened. And would you say this is typical where it's like? You know, eventually, you go become, you know, you work for a few years and then you become a partner somewhere. It's not typical, I would, you know, but

Jonathan Kroll: [00:42:32] You know, I was also pretty experienced on the at that point, you know, I had built software for basically 10 years and then I had a couple of years under my belt and I had been very interested in venture capital for a long time, so I was not new. Even the first time I technically was a b c, it wasn't anything new or foreign. Yeah. So it's not typical because. What most people do is they either enter really young right out of undergrad and you become an analyst somewhere and you stay for a year or two and you either get hired as an associate or senior associate somewhere else or you go to business school or something like that or you go to a portfolio company. The other route is less standard, but you kind of just get in randomly. I notice a lot of people end up in Andreessen Horowitz randomly by virtue of working at portfolio companies that had succeeded or failed, or just by getting to know a general partner or somehow in some capacity of working together or by being on a board, even a board observer from another fund that had a shared or had a co-investment with a16z. There's a lot of cross-pollination on boards as well. But you know, the other path is you go get your MBA and you go try to get in post MBA. It's like a post-MBA senior associate somewhere. And I think that's one of the hardest part because there's not a lot of those opportunities, not

Patrick (CEO of WSO): [00:43:56] A lot of seats. Yeah, it's like private equity. Like, not a lot of seats.

Jonathan Kroll: [00:43:59] Yeah, that's right. And you have done some X Factor, too, because if you're a guy who's just like what worked at Deloitte or you're even if you are in traditional finance, like you basically know nothing about C, there's nothing aligned versus if you had worked in a startup, you know your own or even just sort of your blue chip kind of startup as an employee like that's so more relevant.

Patrick (CEO of WSO): [00:44:24] How do you even plan the Sparrow role? Like, where did even how did he even come up with another shadow? Like what they were really hiring, but you just like, created a role for yourself?

Jonathan Kroll: [00:44:32] How did you know this was? I just applied

Patrick (CEO of WSO): [00:44:34] There was justified. Ok, so it's a traditional thing. And then how was the interview justified?

Jonathan Kroll: [00:44:39] And it was a long that was a very long process because, at that point, I had interviewed a lot of funds and had similar processes where it's like, you know, your basic phone screen to getting to know you to, OK, here's a project. And that's the key. That's the key part of the story. And almost all of these interviews for the more junior roles like, there's going to be some sort of project that's going to the goal of which is to see how you think and would think about things broadly.

Patrick (CEO of WSO): [00:45:10] So can you give me an example of like a project?

Jonathan Kroll: [00:45:13] Yeah. So I did this when I was thinking of the enterprise world.

I went back on my original thinking, Well, I need to get a job. So like, maybe since I was working on an enterprise team at a16z, maybe just try another enterprise fund. And so I did some interviews there and glad it didn't work out. But like I had to do this project there, that was basically this like whole overview of this like technology called service mesh, which is still pretty nascent and like super like. Technical and very far away from the end-user and foreign technology we're talking about, like this is like the dev sort of world, and it's not something that's really scalable or at the time, it wasn't in the sense that like it was so new that I had to like, truly find my own unique perspective on it. And it was really technical. And I spent a lot of time on that and I did a pretty OK job. But I realized too like what I want to do again. So like, OK, I woke up again from that, that dream. And then at Sparrow, I had some project, but it was more about. Analyzing a company, but of my choosing in a specific space like they have these three core themes that they invest in, even the generalist like health and health and human connection. Oh, my God, I'm forgetting already. Sorry, climate sustainability, and there's there's one other, but, you know, pick a company in any of those and give a whole like. Presentation on why or why you would invest and then just basically analyze. The opportunity. And because you're thinking, so I did that, I figured with all of you, how

Patrick (CEO of WSO): [00:47:00] Did you choose on a startup in that? How would people think about screening? Well, I think you could

Jonathan Kroll: [00:47:06] Do the obvious thing, right, which is pick the obvious company that was going to succeed or that had succeeded already, and you're just going to like. Triple down on success. I wanted to actually pick a company that I pass on. So I picked the company that I knew would be a no, but it would be a nuance no like it wouldn't be a clear no either. That's the opposite of that, which is like, OK, yeah, well, the company is, you know, losing $10 million a month and they've got 300 K in the bank like anybody could pass in that company or the CEO. It's like just got convicted of a felony. You know, those are easy passes. I wanted to like a very nuanced pass to give a thoughtful reason as to why. And that's what I did. I found I don't remember the company, but it was some app that was. You know, it really don't even remember. To be honest, I could dig it out somewhere, I saw the presentation, but like more important was the research that went into it and the whole perspective that framed it. And then what I would want to see, and here's what I leverage my product background in building products for so long, just like really talking about product metrics and understanding. If you don't even know this stuff right now, at least conveying what would you want to know if you were looking at this deal for real? Because I wasn't looking at a real deal, I didn't. I had like less information than about a company. Yeah.

Patrick (CEO of WSO): [00:48:24] Very cool. That's awesome, man. So how are things kind of now that you're? The partner and you're kind of

Jonathan Kroll: [00:48:30] Yeah, so what happened after that was started to team up with a friend of mine and we partnered up. To raise a little pre-seed and seed fund, but it was too small to support two people because of the management fee structure can only support one. And so I had a job at the time and thankfully we were doing exclusively series investing and this is a pre-seed and seed fund. So I clicked with my boss because I don't have any conflict

to do it in secret. Arguably made a lot of sense because there's this, you know, you're talking all these like seed stage companies that are going to be raising a one day. And so you're already like

Patrick (CEO of WSO): [00:49:07] In that mix, yeah, find the best ones and then feed them to us. Yeah, no, I get it. That's right. So what's your what was the size of the fund like a million bucks, a couple of million bucks?

Jonathan Kroll: [00:49:16] But was it $10 million?

Patrick (CEO of WSO): [00:49:18] Ok, so you had something to start with and the checks or what like?

Jonathan Kroll: [00:49:21] Well, this is a fund one. And so it was a very long process to raise that fund. So it took a year. Took a year to close on the full amount, and at the time, my partner, his name's Matt Cornwell. He became like a pretty famous or well-known Twitter V.C. It's one of the most visible guys out there, and that sort of happened in conjunction with this. So, you know. I left last July, and at that point we had almost raised the whole fund. What's happened since then is we've had we would, of course, close on the whole fund, but we've invested in nearly 30 companies and on paper we've done really well, at least on paper. I can't take full credit for that. The market has been like insane, insane. And so so it's kind of hard not to do well. But you know, we think, you know, hopefully, that like we're doing a little bit better than there's some alpha in there, basically. Yeah. And you seem to think that too. So we're raising a much bigger fund somewhere in the seventy-five to one hundred twenty-five region issue. It is. So hopefully, you know, so we're just getting started on that now. But I will be a general partner Mac and I will be the two GPUs of that fund. And that's where we are, I guess today.

Patrick (CEO of WSO): [00:50:40] Super exciting. So now it's a lot of years since the first 10 million has been deployed. There's a lot of your time spent on, you know, just portfolio company work sort of helping them or is it or are you kind of still looking for new deals and there's a way you can kind of tap and there's some initial commitments?

Jonathan Kroll: [00:50:57] So definitely both. We're not fully invested. You know, we have still like quarterly capital calls, so we still have capital coming in. So we have and then we have reserves. So we've invested most of it, but not all of it. So we definitely are speaking with founders. Most of my day is talking to founders, either new founders or helping portfolio, which is always, always on our mind. I, for a couple of months, also dropped into one of our portfolio companies to help out from July up until. It's just the other month with some specific issues around and helping them, they were crazy story, but they like went from zero to about 300000 users in eight weeks. And so, you know, I was then like drawing on my previous startup experience because I have gotten comfortable with that kind of craziness. I kind of feed on it. Yeah, it was really nice to sort of be back in that a little bit. So I dropped in to help. Now that company is doing great and they don't need me anymore. So but that perfectly coincided with like our fundraisers kicking off our fundraising. So, yeah, basically sourcing and portfolio and now Lp type of networking and just kind of making our way around the fundraising circuit for those who invest in these funds.

Patrick (CEO of WSO): [00:52:18] It's great. And so do you feel like looking back at all of your kind of moves in all of your whole story from college to now, any kind of words of wisdom? If you were talking to yourself when you were younger or to the listeners out there who maybe, maybe partway through your similar path? Oh yeah. Oh yeah, a lot.

Jonathan Kroll: [00:52:38] I mean, it's hard on one hand, because I like, you know, firmly believe that. And here you are where you are. You know, by virtue of where you've been, and I think that's hard to argue with. So I don't know if I'd change anything. I don't know how that would change what I'm doing now and I'm happy where I am now. But I would have definitely been more thoughtful about what I wanted to do in college and kind of looked ahead more. I was kind of like. I was I kind of had the sense like I didn't really. Care, I just was a little too overly optimistic that things would work out, and so I'd been more thoughtful about choosing a major. I could studied a couple of languages. I could also done computer science or something I didn't need, like three languages, but I just tripled down. But also, I learned a ton about the value of being able to teach yourself things really, really quickly. But I would never I don't think I would again personally start a company right out of college. That really was hard

because I didn't know much as a great learning experience, but it's a learning experience that comes from getting punched in the face every day and for six years, for six years. But there comes a point where you like you kind of can look back and go, wow, I've learned a ton. But then I got there and saw the other end of that mountain range and was like, Oh my

God, I know nothing because you're seeing the other side, you know enough to know how little, you know. But at the same time, like I could have gotten valuable operating experience at another startup, and I wouldn't have been so like poor and destitute those years, which is important because that's like a foundation for, you know, as you continue right in your twenties and is a guy who only did startups at the top business school, I had definitely made less money than my peers because I was so devoted to this company, and I feel like I got to work somewhere, especially like a name brand. I had a good experience. I would have had money, more money, and I could have brought both back to be even a more effective founder later on. But I was thinking like that.

Patrick (CEO of WSO): [00:54:36] Yeah, it's tough. I mean, I look at, you know, I've been running Wall Street for 15 years or 16 years and over a decade full time. And I just there's so many times I look back and I'm like, Oh my gosh, why didn't I do that earlier? Oh, what a big mistake. Just, you know, obvious things. You know, you don't know what you don't know, right? So that's right. Yeah, and that's always the danger you're going to turn around. You're going to wake up one day and realize what you left on the table.

Jonathan Kroll: [00:55:04] Yeah, you're not.

Patrick (CEO of WSO): [00:55:05] Truly, that's my thing. I think I need to have more conversations with like mentors. Maybe you could be a mentor for me.

Jonathan Kroll: [00:55:14] You can trade I I'm actively accepting new mentors in my life.

Yes. I'm right in the mentor department.

Patrick (CEO of WSO): [00:55:22] But now I really appreciate you taking the time and sharing your story. I think, you know, I think there's a lot of good, good lessons here. People kind of peel it back. But yeah, thank you so much for sharing your wisdom. Thank you.

Jonathan Kroll: [00:55:34] Thanks for having me, Patrick. This is great. And look, it was great. Great chat and you did awesome.  Thanks for the interview

Patrick (CEO of WSO): [00:55:42] And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis. And till next time.