Accelerating Startup Growth with Jonathan Cogley

Startups get the party. Startups get the party started. Startups get the party. Startups get the party started.

You want tech and tacos, Tacos and tech you know we got tacos and tech is on smash border green guacamole keeper countins counting beans Contador Quentan frijoles found us trying to raise some queso la vida San Diego school of rappy rapping fire tortillas round jalapenos in these modern times a crappy beer and coffee My coding yoga posse fold the body origami we be surfing coronado eating tacos El gordo, the taco stand in pesto lucha libre and sombrero Got a shout out to cost angels by the ocean Watch the sunset la Hoya shores Entrepreneurs trying to get funded When San Diego Startup Week is popping in the summer Oceanside, the Tijuana esti be full of hustlers from couch surfing to penthouses right on the beach. Tech leaders who who believe stars are within reach we interview and founders who be shooting for the moon. SDTechOS with your host, Neil Bloom. Come on.

Startups get the party. Startups get the.

Welcome to the Tacos and Tech podcast where we discover cutting edge San Diego technologies and the builders making it happen. I'm your host, Neil Blum, San Diego's tech ambassador, and together you're going to put a face to the name of today's tech leaders with our own blend of local lifestyle.

Startups get the party. Startups get the party started. Startups get the party. Startups get the party.

Thanks to our friends at Cox Business for being an instrumental resource to our startup and tech community here in San Diego. As a partner in San Diego Startup Week, quick pitch and top tech awards, Cox Business has helped our ecosystem grow into the community it is today.

And welcome back to the Tacos in Tech Podcast. I'm your host, Neil Bloom and I am joined with Jonathan Cogley, CEO of LogicBoost Labs. Hey, Jonathan, thanks for joining the podcast.

Hi, Neil. Happy to be here.

We're thrilled to have you here. We're thrilled to have you in San Diego. A recent immigrant to San Diego. You know, we're excited to have you here in town. Your energy has already been seen at Startup Week, Startup Month, Convergence at First Mondays. We've seen you all over there, which is great to have you involved in that community, but we want to get to know a little bit about your background. Do you want to first give us just a little overview of what LogixBoost Labs is?

Absolutely. So LogicBoost Labs is a new accelerator in San Diego. It is focused on B2B SaaS startups and our mission is to go from pre revenue, early revenue to a million. ARR.

Awesome. All right, we're going to dive into, deep into its founding story and what you've already been able to do so far and kind of what. What the right parameters of companies are. And we'll make sure in the show notes people know how to get in touch with you and to apply for the upcoming program. But first, tell us about you. Where are you from? Where did you grow up?

So I'm originally from South Africa, so I grew up in Johannesburg. I was born there and then I moved to the UK after graduating college and I lived there for a couple years and then I moved to the us so kind of lived on three continents so far. But I've been in the US for a long time, so this is probably the most familiar to me now.

You know, there's kind of an interesting group of South Africans in San Diego. Is that something that's known. Do people go from South Africa to San. Do you know people who live in both or have family in both at all?

I've heard about there being lots of South Africans here, but I haven't met any. It's always like someone's neighbor. And so I don't directly know these people, but I have found a great South African store. So giving a call out to Perky's. It's up in Kearney Mesa, Like Google, Perky's, and Graham Perket runs it. He's from Durban originally. And all the South African goodies are there. Biltong, the dried sausage, all the candy. So definitely worth a visit.

That's awesome. We'll have to get you connected to some of the South African tech community in San Diego, especially Etienne de Bruyne. If you haven't met Etienne yet, we'll introduce you there for sure. Did you study tech in college? Was that already a path you were headed on?

Believe it or not, I didn't. I studied microbiology and genetics, so I was a life sciences guy. And when I got to the uk, it was a little hard to continue pursuing that at the time and finding work in it. And it was right in the late 90s, so if you knew any form of programming, you could get a job. So I landed up being like a consultant programmer and just going from gig to gig and I didn't feel legitimate. So I got my master's in computer science so that I could feel that I at least had some credibility.

Got it. Okay. And were you working in like, what kind of industries were you kind of getting gigs in?

At first, a little bit all over. I did some, worked at a hospital for a while. I worked at a consulting company that. It doesn't exist anymore, but it's kind of big. It's kind of like an IBM consulting ish sort of thing. I worked there. And then probably one of the coolest gigs I had, I worked for the BBC. So I got to do Perl programming on Oracle servers or no, it must have been Sun Solaris with like Oracle stuff. And I was programming football scores. So football being soccer and like most popular sport in the country. And their. Their site would get slammed and I got to write all these cool scripts and like Terror park football schools live and post them on the website and it was pretty cool.

Yeah, that's fun. It's fun to wake up and say, this is my job. I get paid to do that. That's pretty fun.

Yeah. And being in media too, like the folks around me, there'd be people coming into the office with like feather boas and like just outrageous outfits. It was really a fun place to be.

That's fun. What brought you eventually to the US and you said DC is where you ended up first?

I actually ended up in Pennsylvania, so I met my first wife visiting Pennsylvania, visiting family here. And then we got married and we moved back to Pennsylvania. So I moved from London to Pennsylvania. I lived there for a couple of years. And then I was really looking to grow a business at the time, and Pennsylvania wasn't quite the spot to do it, and D.C. was kind of the bigger metropolis. So I moved to D.C. with the mind to like, grow something bigger.

Okay, so what was that business? What was, Was that your. The first business you had started?

It was, it was, but it wasn't what it landed up being. The initial part of it was a services business. So I'd been doing like 1099 consulting as a programmer for years. So I was like, well, why don't I have a programmer team and we'll do like consulting gigs around programming. It was really fun. We used to tackle very difficult problems. So usually like really complex insurance logic kind of stuff or large software companies that had just difficult platform issues. We'd get into that. So it was really about having a group of like expert programmers that could coordinate well and tackle very difficult problems. And so I grew that business to about 2 million a year in consulting revenue. But I quickly realized that the services business wasn't for Me, it's just too hard to scale if you're going to grow it to 10 million. It's just a lot of people, a lot of business development. Just especially in D.C. too, because it's a lot of federal work. We landed up doing mostly commercial, but there's a lot of, you know, song and dance you have to do to get federal work that it doesn't necessarily appeal to all entrepreneurs. Yeah.

Did you come from an entrepreneurial family? Like, had anyone else started a business in your family?

My dad did. So my dad ran his own business? Not initially. He worked for big companies for decades. And then probably the last eight years of his career he started a business and was very successful. But I think it's a little bit of a culture in South Africa. There's a lot of entrepreneurs and it doesn't have to be anything big. You know, it could be a plumber, like your next door neighbor's a plumber and runs his own company. But it was just very common to see that it wasn't like always thinking about going and getting a job at another company. It was often like, well, what can you do yourself?

I totally understand that. So what was the transition like going from service, I'm guessing, to a software or something that's scalable, right?

Yeah. I wanted to do a software product. I wasn't sure what to do. And we tried several different things. I had lots of failures as you do try things like this will be great. And then we got it all wrong. And then we stumbled onto one of the problems we had as programmer consultants is back in the day, people would keep giving us VPN passwords and then passwords for source code, control, access, all that kind of stuff. And we kept getting all these passwords and we had a team of maybe five people, six people. And how do we share them? How do we securely share these shared credentials? And so that gave us the idea for our first successful product, which is the psychotic the whole passwords secret server vault, which turned out to be like over $100 million business. Who knew, right?

Amazing. So kind of like a one pass lastpass kind of approach.

Exactly that. But specifically for admins for IT admins. So if you've got like Cisco routers or UNIX servers or like whatever, all that stuff and you don't know how to manage it, and they want all sorts of stuff to happen, like can you find new routers and reset their passwords for me, like all that kind of like PowerShell scripting built in. So it's kind of like the IT admin's password vault.

Got it. Okay. And was that also fully, like, you bootstrapped that, or did you raise outside funds to build it as well?

No, so I bootstrapped it with consulting revenue. My consulting company was owned entirely by me, so I was lucky enough to have all the equity. And then I kind of rolled out a couple of products that failed and then finally had one that started working and then slowly built the revenue on that. And it took a long time. We launched the product in 2005, and it took till the end of 2010 to get to a million in revenue. But then the product kind of eclipsed the services revenue, and then our whole focus shifted, and that's how it went.

Wow. Pretty incredible. And you built that. You were in D.C. at that time, is where you're building that?

Yeah, built the whole company probably like two miles from the White House, like in northwest D.C. and stayed in that area.

Were you aware of a software or startup tech scene in D.C. while you were building yours, or were you solely focused just head down working on psychotic?

I was aware of it, but it was back in, like, you know, mid-2000s. It was pretty new. And a lot of the tech scene in D.C. was out of the city. It was more like Reston, out in Virginia, where you've got the cybersecurity corridor in Maryland, like around nsa, a lot of intelligence, dod, all that kind of stuff. So those were kind of out of the city. But I always found a big advantage by being right in the city with really good public transport. With Metro, I could attract the talent from both Maryland, Virginia and D.C. so it was sort of a strategic advantage to be right where we were. But it was difficult. Some things are hard, like hiring salespeople in 2005 or even 2010 in D.C. all you would get is federal sales, because that's what the salespeople there do, you know. So if you want commercial sales that's going to help you sell into Europe or something, that's just not a skill set you're going to find there.

So you had to open up offices elsewhere or what was kind of the solution?

Yeah, it's a good question. I don't know. We struggled. We mostly developed our own sales talent. So we would hire, like, college grads, and then we, you know, hire sales coaches and do training programs and kind of grow them within. We didn't launch overseas offices for quite a few years. We stayed all based in D.C. got it.

Okay. I know at some point you started mentoring and maybe even investing and advising in other companies. Like what? What allowed you to take a focus a little bit off your own company to do that? Because I think you did it before you sold the business. Is that true or was it after the fact?

There's been two exits with the business, so I was able to do it after the first one. So honestly, I got, I got pretty burned out with my company. I'd been doing, you know, running it as a consulting business for years, then shifted to product in 2005. By 2015, I was, you know, the days of 60 to 100 hour weeks were starting to take their toll. The early years I didn't have weekends. I used to work most weekends, that kind of stuff. So I was really burned out. And I was facing a big challenge in trying to up the revenue at my old company. In 2014, we'd done 10 million in revenue, but it was back with the old perpetual license model. Perpetual plus maintenance. It wasn't cool. SaaS, right, because SaaS was less popular, especially with enterprise software back then. So in order to grow the business adequately in 2015, I needed to maintain about 50% growth. So I had to do $15 million in total revenue that year. And I only had about three recurring in maintenance. So I needed $12 million in new business. That's hard. That's really hard, you know, with a small company. And if I got it wrong, then my valuation would drop enormously, right? My multiple would drop maybe from 5 or 6 to 2 or 2.5 or something. So it was literally tens of millions of dollars hung in the balance depending on how I did it. So I got a growth equity firm involved. I vetted them very carefully, did all the due diligence on them and got them involved, sold a majority stake to them in 2015. And then with the specific goal to no longer be CEO at the company and kind of work my way out, the company was at around 50 employees, was cool and everything, but I wasn't really getting to do the stuff that I like doing anymore as you do. Right? And I think that's an important thing too, like knowing your limits and when is the right time to step aside, like what you're good at and what you're not good at. But that gave me the opportunity to step aside. And then I took time off for probably about a year and just kind of recovered. And then I was like, well, what do I do next? I didn't have to do something. But 39 years old, I was pretty ready to still do something. So I got into incubators Volunteered at two different incubators and started doing mentoring, chatting to startups. And over the course of maybe two to three years, I chatted to a couple hundred startups and that was great. I latched onto this idea of problem solving and coaching and mentoring is something that I really enjoy.

That's awesome. 1776, I think is one of them, right, that you got involved in. World renowned for kind of the community that they've built in dc, I, at least from an outside perspective, see as one of the hubs, you know, in D.C. where the startup community physically comes together for density. Is that kind of how it was when you were there?

Definitely, yeah. They have an office on 15th Street. I would go in there. Really cool space at the time back when you didn't see as many funky office spaces as you do today. But yeah, it's a cool platform as well. The software behind the incubator and how they do everything. So it was a good way to expose me to the startup world from an incubator's perspective and just seeing how they do everything. And I got to meet some pretty fascinating startups during the time there's.

Did you start investing immediately or were you kind of gun shy and just kind of advised and mentored?

Just advised and mentored. And then I think there's a cycle you go through. You're like recovering entrepreneur, I guess, I don't know. And you're like, okay, what do I do next? I can't just mentor. Let's put some money in. And then the full cycle usually goes all the way back to starting your own startup and going back to 100 hour weeks. And I knew I didn't want to do that, so I did a little bit of angel investing and that was interesting to see as well because I'd be helping the company, giving them some money. But I quickly noticed that that wasn't really enough either, like just having money and having advice. They really needed to have the right people on the team. So that kind of this whole thing was the genesis of Logic Boost Labs was kind of coming up with the formula for what I think startups really need to be successful.

Got it. So yeah, so take us through kind of some of the ingredients that goes into it because it's not just capital and it's not just mentorship, it's little bit of a few pieces of all the things. So take us through kind of what Logic Boost is in that regard and also maybe how you brought it. I don't know if you found it in San Diego or how it kind of became in San Diego itself.

So I was doing mentoring, started to look at why I was still based in D.C. because I'd gone to sort of part time at my old company and then I completely exited out of my old company, was no longer an employee in 2017. So I started looking at well, where should I be? So I decided on San Diego as a just a beautiful place to live and a very active lifestyle and hadn't really looked too much into the startup scene here at the time. Just kind of moved here and then pleasantly discovered how vibrant the community is afterwards. But coming back to your question, what I, what I was noticing with these startups was the mentoring was key and the money was helpful, but if they had, you know, $200,000 on the balance sheet, they still couldn't hire the right person that they needed. Maybe if they were getting a big check and they're making $2 million worth of funding then maybe they can go out and hire more people and be more generous. But that's not most startups that I see, they're usually really struggling to get any kind of funding and they're working with pretty small dollar amounts. And so if you're in the B2B SaaS space, sales is, as we know, is absolutely key. And the typical startup I would speak to would have no sales process yet or maybe the founder is the only salesperson and maybe they have a technical background or something. So you need experienced sales talent to get in there to be able to define the sales process, put together all the campaigns and just decide how everything's going to be and ultimately, you know, hire a sales team and all the things that are going to be necessary. If I look back to my old startup at Psychotic, you know, we often say, well are we a technology company or are we a cyber security company? And quite honestly at some level I think you're just a sales company is if I look at what it took to get to all the different revenue levels and the CEO all the way up to like 120 to 140 million, he's an absolute die hard sales guy. He just knows how to build sales orgs. And that's just the same for B2B SaaS. Like you've got to have that serious sales talent and the challenge in finding it is if you're going to look at like a mid level salesperson, like a sales manager at a tech company that's talented and has maybe 8 or 10 years experience under their belt, those folks are very happily employed and they're making a lot of money and they're not going to come work for your startup. And that's the hard part, that's the person you needed. So part of the thesis of Logic Boost Labs was, well, I can hire those people, I know those people, I have relationships with many of them, they trust me. We've worked together in the past, we've had good things happen, we've got a good reputation. I can hire those people into a company that's stable, like an accelerator, be able to use those folks in the startups. So give the startup access to a person that they otherwise wouldn't be able to hire and then do all the things that are needed, build out the sales program, get the first customers in the door, start growing the business and start towards that track for a million in revenue. That's one of the key pieces and I'd say probably the last piece that really became apparent too is I've seen so many startups that spend so much time fundraising. And so I look back at my past, I was lucky enough with my consulting company, I didn't have to fundraise. I never built an investor deck in my old company, not once, never did it. But that also meant that I got to spend all my time talking to customers, talking to customers, being in on demos, following roadmap, all the things that really mattered about making sure we had the right product and we had the best chance of being successful. And so the fourth piece in the puzzle I think is to have ongoing funding. So when we structure deals at Logic Boost Labs, our startups get the money, the advice, the people and then they get a convertible note which serves as a line of credit. So as long as they meet certain milestones and they need further money in the future, we just draw on that line of credit to be able to give them further investment.

Got it. So kind of a come for the one stop shop of funding wise so you don't have to go and hit 30, 40, 50 people to try to fill the round per se.

Exactly. And at least for the early stages, maybe Series A or B, maybe we're not it, you're going to need maybe a lead investor who's more aligned with your industry. But to get you to, once you're at a million in ARR, you've got a lot more choices and things you can do right. You're going to be a lot more attractive to investors, especially if you've spent.

The time selling and knowing your customer really well. Series A is just more gas, putting it on the Fire as opposed to still trying to figure out your product market fit, which sometimes you see that at series A, you know, to they're still pivoting and raising, you know, the 5 to 10 million in funding. So that's smart. That's really smart. Is there like a timetable of like how long they're with the accelerator or what's that whole, I guess take us through like the process of selecting companies and then what's the experience like with Logic Boost Labs over time?

Sure. So we run, we run the process in cohorts. So our cohorts are quarterly. So every quarter we put out for applications. So right now startups can apply for. June 30th is our deadline for the current cohort. So we take in applications again. We're looking for B2B SaaS, companies and early revenue, have an MVP already, have a founder that either is full time already or is prepared to become full time. We just haven't seen startups be successful with kind of part time founders. It's too difficult. So once the application happens, we then go through all those companies and we're typically looking to invest in one to two startups per quarter. And our max initial deal size is 300,000. And that's a combination of the investment and potentially services if that's what they're looking for, that VP of sales coming in for six months or something like that. We vet the startups based on all the typical things you'd expect. How good the idea is, how good the team is, how well we think they can execute. And then we do have a sweet spot for San Diego startups. So being based here, we're, we're open to startups anywhere in the US but we focus most of our efforts on recruiting San Diego startups just because that's where we are and we like the ecosystem and we like the community here. And then once the process, so let's say someone makes it all the way through and gets accepted into the cohort, you're looking at kind of a two year timeline. So we structure our mentoring agreements for two years. So it's much more intimate, much more long term than like an incubator, for example. And so they're going to get the investment dollars, we're going to have put together our go to market plan together that will actually determine what the investment would look like and how it's structured and then we start executing together. They usually don't have board meetings or anything at that point, so we help them with a little bit of structure. Again, we don't want to be too bureaucratic, but you know, get a board in place. I typically take a board seat. Usually the startup founders have two or three seats and we have a single seat. So again, we're just here as a partner. We're typically looking for a 20% equity stake. So a little higher than your typical incubator, but again, it's larger dollar amounts and a much longer term, more intimate relationship. And then depending on how well they do, we see. So we have three portfolio companies. We just added a fourth one. We're watching them and tracking them to graduation, which means how do you get to a million ARR? And we've got one that's actually hit it already. We've got one that's about halfway and one that's about a third of the way. So so far doing pretty good with three for three, which is crazy I think in investor circles. So hopefully we can keep the track record going.

Yeah, that's fantastic. Are you able to say the companies or are they still under wraps and quiet?

No, no, they're. Three of the four are on the website. So we have Propel, which is a CRM software for public relations professionals. So kind of like a, like a salesforce, but very specific around managing orders, which is a very different workflow and how everything happens there. Then we have scholars that's based out of Tennessee and they're an employer branding company. They're doing really nicely, shaking things up. They're focusing on the next generation coming through as interns and graduates and they have a really good understanding of that market. And then our third company is Bar Pay, which is a little bit closer. They're based in LA and they just did a massive pivot for Covid back in March. We brought them into the program in February and then Covid happened in March. Right. And so their focus was around how to do software to manage high volume bars. So you know how you buy drinks and optimize the way the bartender works in a bar. And an apple for ordering drinks. And of course, soon as March hit, there were no more high volume bars. They disappeared. So they pivoted and they shifted everything to be more Covid safe. So it was all around like order and payment for restaurants and bars, contact tracing, wait, listing all those different pieces. And they've seen just enormous traction. They've just passed the 10,000 customer mark last month. So great, great success there. And then our newest addition to our portfolio is a company called 2 cents that's out of Brooklyn. They're a cybersecurity company. So it's very close to what we're used to, which is, you know, and this is what happens. Right. Like we're, we're pitching San Diego startups, but of course, you know, the connections that we've had for years keep coming back. So we landed up in a deal with them. They're a little bit more, more further along than we're used to. So they already are at a million ARR. In fact a bit over. But we're able to help them a lot just because we understand the space so well.

No, it's nice and diverse, obviously in the industries and where the companies are at, it sounds like, which is pretty cool.

Yep. In our next applicants right now we have easily eight San Diego startups. So I'm very hopeful.

So you said quarterly. So three months from now you're going to have a whole other batch applying.

Yes. Once we close on June 30, then we'll open it for the next cohort. Yep. We have budgeted, we have budgeted 2.5 million a year for the next four years. So we've got 10 million out there, which covers our costs as a company and then also all of our investments.

Okay. So the big call is obviously for people to apply doing a Millionaire or less earlier the better it sounds like to kind of help them ramp all the way to that. Anything else from the community that can be helpful to you? Mentors are looking for other mentors or investors or anything like that to kind of join in, in what you're building.

We definitely have a strong need for consultants. So if you have expertise around marketing or certain aspects of things that a B2B SaaS company would need, you know, whether it's sales or any of those things, please definitely get in touch and let us know because we often, you know, we can't cover all the bases and we're always looking for folks we can bring in to help the startups. So definitely let us know about that. And then we do often have positions opening up at the startups. So again, you know, if you're looking for sales or marketing or something like that and want to work directly in the startups looking for a job, definitely let us know. We'd like to keep a kind of a Rolodex of folks that we can refer into the companies.

Absolutely. That's a great way. Especially since you're going to have such a big portfolio one year from now every quarterly companies to be a great job throughput through you. So that's smart. So you've been in San Diego a few years now. You're obviously focused on helping grow this startup ecosystem. But we got to know where are you eating? Where are you spending your time? Where are the tacos coming from for you?

The tacos. So I'm based in Ocean Beach. I live over like Sunset Cliffs kind of area. So I would say my local taco place is probably Mike's down on Newport Ave. They have not steered me wrong there. It's a pretty solid taco and you can take it onto the beach and sit and eat it. So that would probably be my choice. Where do you go, Neil?

Ooh, you know, it's hard. It's like asking like, who's your favorite, baby? I've got so many favorites. My favorite was also a beach one, but they closed pre pandemic bull taco in Cardiff. Also would go down and be able to watch it from the beach. So there's a whole new crop of taco places coming and especially like ghost taco spots spinning up out of kitchens that are kind of takeout only. So I'm keeping an eye on that of what are the new crop of taco spots. But the go tos for me, Roberto's in Del Mar is a go to for the view and for just knowing that you always get the same thing at Roberto's. Sometimes you got to mix it up and do a California burrito. You got to get some French fries inside your burrito too. So if you haven't had a California burrito yet, that's. That is a San Diego thing to do.

I have. There's another place. I'm forgetting the name on Newport as well that does the breakfast burritos in the morning. It's been going for years, but solid.

You can't really go wrong, that's for sure. In San Diego at least. So we're going to add yours. I don't think Mike's has been named yet. We haven't had a lot of ob taco spots names, so it's going into the taco database. We'll list a new one through the site. So thanks for that.

You're welcome. They do like a carne asada nachos that are pretty killer too.

Oh, okay. Awesome. Well, we'll have to meet up for Mike's at some point soon too.

Yes, absolutely.

Well, Jonathan, it's so great to get to know some of the backstory and really we're excited for all you're putting into the community here. Another call to action for companies to apply and make sure that especially that you're focused so much on top of the funnel. Early stage, let's build some early companies, especially in San Diego and even dc. I found a lot of the entrepreneurs are very technical background, as you mentioned, you know, engineers who could use some sales insight, which it sounds like you guys are adding tremendously to. So thanks for that and we're excited to collaborate together here in the community. So thanks for being on the pod.

Definitely. Yeah, I've seen some folks coming out of Qualcomm and other employers, you know, lots of smart people and clever ideas. So it's very encouraging. Very vibrant community here. I'm really impressed.

Awesome. Well, we're excited to continue collaborating together and let's go build some good companies.

Sounds great. Thanks, Neil.

Thanks, Jonathan. Cheers.

Thanks for joining us on the Tacos and Tech podcast with Neil Bloom. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to School of Rap for our rad intro music. And thanks as well to Nest Podcast Network where we are recording live inside their studio at Nest Co working in Bankers Hill. You can find Neil Blume on Twitter Neil Bloom as well as Fresh Brew, Tech and Tacos and Tech Pod on Twitter too.

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