Fortify.vc: Founders Funding Founders

How does an employee turn himself into a hit-making entrepreneur and investor?

After spending years in sales and engineering at UUNET and other companies, Jonathon Perrelli founded Plesk, The Shadow Group, eTantrum, SecureSoftware, & SecureForce.

As an investor, he backed Plaxo, FormSpring, FormStack, and other companies. Then he launched Fortify.vc, where founders fund founders.

Jonathon Perrelli

Jonathon Perrelli

Fortify.vc

Jonathon Perrelli is the founder of Fortify.vc, a seed and early stage technology fund.

 

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Full Interview Transcript

Andrew: Three messages before we get started: if you’re a tech entrepreneur, don’t you have unique legal needs that the average lawyer can’t help you with? That’s why you need Scott Edward Walker of Walker Corporate Law. If you’ve read his articles on Venture Beat, you know that he can help you with issues like raising money, or issuing stock options, or even deciding whether to form a corporation. Scott Edward Walker is the entrepreneur’s lawyer. See him at WalkerCorporateLaw.com.

And do you remember when I interviewed Sarah Sutton Fell about how thousands of people pay for her job site? Look at the biggest point that she made: she said that she has a phone number on every page of her site because, and here’s the stat, 95% of the people who call end up buying. Most people, though, don’t call her, but seeing a real number increases their confidence in her and they buy. So try this: go to grasshopper.com and get a phone number that will make your company sound professional. Add it to your site and see what happens. Grasshopper.com.

And remember Patrick Buckley who I interviewed? He came up with an idea for an iPad case. He built a store to sell it, and in a few months he generated about a million dollars in sales. Well, the platform he used is Shopify. If you have an idea to sell anything, set up your store on Shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up a beautiful store and manage it. Shopify.com. Here’s the program.

Hey everyone, I’m Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart and more and more the place where successful entrepreneurs in the tech space come to tell their story, so you can learn from them and do what they’ve done and hopefully come back after you’ve built your own successful company and do an interview like today’s guest is. Big question for this interview is: how does an employee turn himself into a hit-making entrepreneur and investor? After spending years in sales and engineering at UUNet and other companies, Jonathan Perrelli, who you see up on your screen, founded Plesk, the Shadow Group, eTantrum, Secure Software, and Secure Force. As an investor – and you’ll find out how he learned to become an investor, you’ll see the whole “making of” in this interview, I hope – as in investor he backed Plaxo, Formspring, Formstack, and many other companies. Then he launched Fortify.vc, whose logo you see just over his shoulder, where founders fund founders. Jonathan, welcome.

Jonathan: Thank you so much for having me today, Jonathan, this is a lot of fun. I’m psyched.

Andrew: Me too. So, Jonathan, I’m actually looking at – I can’t even tell what, what year is this from? The year 2000, it’s an article from Potomac Tech Journal. Version 1.1, whatever that is, where a young Jonathan Perrelli’s describing his company eTantrum, and let’s see: he already raised $2,500,000.00 in seed capital, including $1,000,000 put in by the founders. And this guy Jonathan, which is you of course, says that he’s hunting for $10,000,000 more. Let me ask you this, before we get into your story: I thought the whole idea is that you’re not supposed to invest your own money in your own company, if you’re getting outside funding?

Jonathan: I was young, and it was a long time ago. We actually were very fortunate. I was at UUNet and had cashed out, because we had gone public, and the other founders were at Cisco. We had quite a bit of capital for guys in our early-mid 20s, and at the time, we had a crazy proposition, which was to be the other half of Napster. We had sort of a Shazam if you will, the app we use today, and an iTunes mix, so we could basically determine who to pay and how much to pay along the food chain in music. But we put all our eggs in one basket, which was with Napster. So when Napster was deemed by the courts to be a platform illegal for use, we were no longer a viable company. And that was when the dot com bomb sort of just erupted. So we did have outside capital, but we also had a lot of our own money in the deal, and that was a painful, yet very much appreciated period of my life because I learned more from that experience, and I share that with entrepreneurs more, and I go back to the journal, of 14 journals that I have, hand-written notes, and that’s the one I look at the most. Because there are lessons learned there that, when an entrepreneur says, is it Door One or Door Two, which one should I open, I say, “Well, you know, I kind of remember Door 3 and 4, let’s talk through all of those. And then let’s pick the right one for you, and if this one doesn’t work maybe open the other one but stay the hell away from that one.”

Andrew: You know, I talked with you in the pre-interview about how I wanted to start off with your biggest success and now here I am drawn into this story of your most painful setback. So now, if you don’t mind, let’s spend a lot of time on this, or a little bit of time, actually, in the…

Jonathon: I love it! Andrew: …in the intro, and then I want to go back to the successful stories, and I want to learn how you made yourself into an angel investor, because one of the things I appreciate about the way you told me that story is, you set about to do it; you didn’t just happen to be an angel investor, you had this plan that you worked out, and I want to learn how you did it, and how you pick companies. But…you said you wrote a journal. What kind of things did you keep in that journal?

Jonathan: Well, it was a combination of meeting notes, voicemails, you know, every time someone called, and then lessons learned. And I learned from a gentleman at UUNet, before eTantrum, to document and have a diary of those things. So I don’t keep a personal diary of my emotions; I keep a business diary of my emotions, and what happens, and incredible lessons learned, Andrew.

The key thing there, I believe, was that we put so much love and desire into an industry we knew nothing about. We were tech guys; I was at an ISP, the other founders were at Cisco, doing hardware and software, and mostly security work. We read this book that was several hundred pages thick, literally, like this thick, called, ‘The Business of Music ‘.

We went and had meetings with Ice-T, and, you know, whichever labels would meet with us, to try to learn the ins and outs, and we thought we would be able to master this in no time flat, and we were spanked pretty hard. The key thing about that lesson, or series of lessons, that came from that was that it’s okay to fail.

I’m in D.C., and it’s a great town, and it’s unique in many of its own ways, but I miss Palo Alto and San Francisco, and that’s where my heart is on many days, when I think about the Valley and we try to bring some of that here, but D.C. is unique in its own way. One thing I think we’re horrible at is respecting the badge of honor of failures in entrepreneurship, and that’s one thing in the Valley that’s fantastically appreciated. You know, VCs here say, “Well, wait a second, that person failed.” No, no, no, no, no, we love it when an entrepreneur comes and can admit that they failed, because they won’t make those same mistakes again, and you know how that works.

Andrew: I see. But it’s not just, “Did they fail?” Some entrepreneurs fail because they deserve to fail – they’re too stubborn, they didn’t learn from their mistakes, they didn’t get anything out of the experience – and they become sad sacks as a result of it, hating the world. You didn’t become that. You took a lot of lessons from it. Let me first understand the way that you learn. You’re telling me that you just have a notebook on your desk; if a voicemail came in, you’d just jot down what the voicemail was about, and, you know, you’d have that for yourself for later, to make a phone call back. If there was some issue that you were facing, you wrote in it? No, I’m seeing that this is not the way you kept it. Tell me about this journal.

Jonathan: [??] Today it’s different; I do it in an iPhone. But I did do it that way for years, I have a whole stack of journals that are the kind of notebooks you buy at Staples or Office Depot. Absolutely, that’s how I did it, and I go back and reference them, because…

Andrew: And you write emotional stuff in there, like, “Aw, I can’t believe I screwed up that phone call?”

Jonathan: Absolutely.

Andrew: You would? Tell me about some of the more…be vulnerable, and open up a little bit about the painful things that you would’ve jotted down.

Jonathan: Okay. Most times I’ve gone back and read this stuff, it was when my instincts said, “Trust your gut, just listen to yourself,” and I didn’t, that I really screwed up, and that’s when I was most upset. Some of the executives I’ve worked with, and some of the founders that were hand-picked, should’ve been trashed, because the instinct was, you know, radar going off all day long, this person’s a little maniacal, or, you know, bipolar, whatever the hell it was, and the truth of the matter is, we’re animals in a jungle – we should trust our instincts. After all, that gut instinct is important, not just to whom you work with, who you partner with in a strategic session, but also what you invest in. So the areas of most frustration for me were when I really didn’t trust my own instincts, and those of people that I worked with, where we would go out on a limb that we shouldn’t have, maybe.

Andrew: It sounds like it’s mostly around people, you’re saying…

Jonathan: Definitely.

Andrew: …that you should have let some people go, but you just couldn’t do it? Your instincts said they’re not the right fit, but you couldn’t pull the trigger?

Jonathan: At eTantrum, for the most part, yes. But in other cases, partnering with the right people, that “Mission: Impossible” mindset, they’ll get it done, regardless of how much capital’s in the bank. I mean, a company, I know we don’t want to jump ahead too much, but we just signed a deal to fund and close a round with Uppity, and without funding for the last year-plus, they have driven forward a company with a product. Now they’ve got capital; just wait to see what’s going to happen. I mean, when people put their own money at risk, that is what we love to see as investors, and that’s what we did at eTantrum; we just didn’t know what the hell we were doing. We were in an industry we had no concept of, and we were trying to disrupt alongside something that had a big target and bull’s-eye on its head, which was Napster, which was awesome, but…

Andrew: Actually, tell me a little bit about Uppity, because I think it gives me, it’ll give the audience and me an indication of the kind of entrepreneurs that you like funding and what your relationship with an entrepreneur can do for a company. Then we’ll go back and figure out how as an employee at UUNET, you first of all got a million dollars, you and your partner, to launch this business, and what else you got from UUNET, specifically the lessons that you said helped shape you as an entrepreneur afterwards.

So Uppidy, what is it?

Jonathan: Josh Konowe and I were in San Francisco actually, hanging out in the marina with John Wechsler, who is the president and co-founder of Formspring. John and I were talking about a project we were working on and Josh said, “Well I have an idea. What do you guys think of this? Storing, searching, publishing, managing text. It’s the second largest set of data we have in this country and in the world. No one’s doing anything with it.” [inaudible]

Andrew: Text as in text messages, not text as in text documents.

Jonathan: I’m sorry. SMS. Text messages.

Josh was saying, “No one does anything with this and I’ve got this problem I want to solve it.” Three months later, John Wechsler and I, we’re both busy but still talking about this other project we wanted to work on and Josh showed up with a product.

Josh said, “Hey, I built that thing we were talking about out in San Francisco. What do you think about it?” Josh and I had been friends for years. We were in a group called Mindshare together, which is CEO roundtable that’s annual in DC, meets every month.

What’s interesting about Josh is Josh had a couple of founders and Josh is now the surviving founder. They’re still shareholders but sometimes companies have sort of this double-headed dragon where you’ve got a chairman and a CEO or president and a CEO. Who makes the decisions? In the early stage of a company one person with the vision, in my opinion, who has the passion and fire in their belly is the person that should drive the company.

It’s OK to go from point A to point B and pivot in between, but just make sure you get to point B. Don’t go from point A to point A2 to point C3 to D, back … just get to that place even if you have to go along the line. That’s what Josh was able to do with no funding, funding himself.

We’re proud to be investors and we’re proud to have Band of Angels from the Bay Area also as investors in that deal. We’re excited to see what comes from Uppidy because they’re growing their user base exponential.

Andrew: Let me understand this a little bit better. All right. You guys said, “Hey, it’s crazy that’s nothing happening with SMS. No one’s managing it.” If I send a text message to my wife or to a girlfriend on the side or who knows what it is, it all gets lost. I don’t have a girlfriend on the side.

All those, and there are a lot of love notes, that go back and forth via text right now. You’re saying those are lost? There’s a lot of business being done by text, right? You might text me some information about today’s interview, if I want to come back and find it a year from now, it’s all going to be gone. He’s saying he wants to manage it. Is that the thing?

Jonathan: Manage it, store it forever. So you can determine …

Andrew: Store it forever, make it searchable and accessible, kind of like email would be. Great. What was he able to do with that idea over the year and how did you help him?

Jonathan: He built a platform on Android, Blackberry, and IOS. It’s amazing what he’s been able to do with no funding, funding himself. Where we were able to help was strategically to … discussions of should it be for the enterprise or should it be for the consumer?

Myself, limited partners, and our fund, and some of our mentor network got together, we spent 56 hours over the course of four days. Several of us locked ourselves in a room ‘cuz we love Josh and we knew we were going to fund his company. We said, “The only way this thing is going to succeed is if pay attention to what the market needs.”

We did all the research and we found out Blackberry already stores every message if the admin of a servers checks a box. We found that the enterprise was not the ideal scenario, but that people transfer phones and phone carriers all the time and yet they still want to have their SMS. It was for the consumer that mattered most.

That was Josh’s instinct and Josh was right, but there was this internal question at the company of “Is it enterprise or is it consumer?” We helped to drive that decision and many other related to the product strategy and the set for investment also. We’ve already talked to investors for the next round of who wants to come in because they care strategically about storage of SMS and searching and publishing.

Andrew: It seems like … this is a little bit too much to say, but I can’t come up with a better way to say it, you’re almost co-founding the business with him. You’re there to nurture him through that process. You’re not going to do that for everyone. What was it about Josh that made you say, “Yes, he is the person I want to spend time with.” As opposed to say, maybe you’re going to get 100 emails after this from people who want similar treatment from you and think they deserve it. You can’t do it for them. What was it about Josh?

Jonathan: We look alike. Josh is a good friend. We spend a lot of time together and we always have. That was one of those scenarios where we did really spend a lot of time together, but we’ve done that for three other companies of the 10 we have in our portfolio right now. The ones that needed it. Some don’t need it. Some say, “We’re on a path. We’re headed here. We’ll let you know when we need help,” and we offer it.

We don’t want to be a VC that says, “We’re willing to offer assistance [??]” and then not to it. We like to under-promise and over-deliver every time. If we meet with a company within the first meeting or two, we’ll say, “There’s not much we can do for you except add capital, but we will help bring in investors that might be able to because you’re in Texas and they’re in Texas.” We invest outside the Metro area, obviously we invest all over the world. We have deals that will be outside the U.S.

You’re right, you can’t do that for every founder, but for the founders that we can and where we will spend time with them at the Fort, that’s the name of our office, we will and our mentors will.

Andrew: One of the things that you learned, and we’ll talk later about how you learned to become an investor, is one of the things that you learned, hey it all comes down to friendships? Screw [Ameripocrosy] I can’t possibly figure out who’s got the best technology out of every single human being in the world. I’ve got to have relationships with people who I feel like I can build a business with and from the small pool of people that I can build those solid relationships with and there friends, that’s who I’m going to invest in. Is that one of the big lessons?

Jonathan: I think that is. I think that relationships matter quite a bit as does reality. There are thins that people take into consideration when talking about people they know, like, I know so-and-so. Well, number one, do you have their mobile number? Do you SMS with them regularly? Would you have them over for Thanksgiving dinner if they’re family was out of town? Those kinds of relationships, those core relationships are what we like to see in a founding team. It’s like a family. At Secure Force, the company I founded, we talk about, the one term we usually internally to describe our personal situations and our families, we have 20 some babies now that have been born since Secure Force was started, is being in the trenches together.

In the trenches, like a military, a Green Beret, a Seal, a Special Forces unit. We do whatever we had to, to help each other out and that’s what we like to see with founders.

Andrew: Like what? You know what actually, you talk a lot and even your terminology says this about military battle, entrepreneurship happens in a fort and when we are comrades-in-arms. What have you done that’s really warrior like?

Jonathan: I come from a Marine Corp family. I’m not a Marine but when you’re in DC and you drive by the Pentagon and you have meetings in the Pentagon all the time, I guess you get that mind-set. Business is war, in my opinion.

Andrew: How? Give me an example of how you conducted yourself like a warrior? You know you have, tell me how you’ve done that and by-the-way I know you must have stories that you’ll tell me over a Whiskey only and others that I’m sure you’ll be comfortable sharing here in front of the audience. Give me some of those strong stories that you’re comfortable sharing with the audience.

Jonathan: An old time movies about war you see generals playing with what almost appears to be chess pieces on top of a map. If anything, that is what we did. We strategize on white boards, in many ways, who are your partners? Who are your competitors? Who do you need to recruit away from your competitors? Who are the people who are going to help you get to, not the next stage, but like Wayne Gretzky and like Shawn Parker thing? Where’s the puck going? How are we going to get there? That’s the key. That’s something that, you know entrepreneurs have vision and some of them are amazing. They know where they are going to be in five years. Others know where they are going to be in five minutes but they’re amazing at product development or UIUX but they can only see that far.

It’s finding that balance, Andrew, I believe that we’re really good at, our time at Fortify-VC is really good at, at helping entrepreneurs see the mix of things that is not there. When we talk about war and battle, we talk about, and I’ve studied military history, but it’s not what my degree is in, I’m a finance major with psych and a little bit of computer science, but for us, it’s all about strategic direction, tactical execution. That’s how you think in war. How are we going to take the hill but beyond the hill what’s next.

Andrew: All right. Let’s go back in time and find out how you got here. [??], first of all congratulations on earning money, the [??] that you can use to fund your company. What else did you get out of that?

Jonathan: It’s gone now.

Andrew: It’s gone. Actually, it was your second company, your first company was Plesk but tell me about [??] what did you get from them?

Jonathan: I’ll paint this picture. We had a reunion several years after [??] was acquired. [??] has been acquired I think four maybe five times. It’s now part of Verizon’s business and it’s the infrastructure that is the majority of the ISP backbone in the U.S., and in the world. We had a reunion, everything has two “U’s” so [reunion.org] was our reunion site and over 800 people came to this reunion from like every continent, practically. Grown men who I had known for over 10 – 12 years were crying, bawling because they had and remembered the energy that we had at UUNET and how everyone cared about each other. We were on this mission to win and destroy our competition, PSI, BBN, NETCOM and others who all succeeded in their own right.

But it was that energy that is so hard to find and one of the things that we learned was there are many cogs in the wheel of a company: HR, marketing, sales, product development, operations, engineering, everything, customer service. And if any one of those doesn’t work, you’re hosed. And every one of them worked seamlessly at UUNET. Now, they worked and there were a lot of bodies in the wake of them working and a lot of people that worked 70-80 hours a week, but the experience was so amazing that people have tried their entire careers to find that “energy”, is what we refer to it as, that we had at UUNET. And people, grown men cried at a reunion saying, “I haven’t found it. I’ll never find it.” and, you know, speaking, tears of joy in some ways, thinking fondly of those days. But we just, we killed it. We went from $25 million the year I got there, not that it was me doing it, but an amazing sales team and support team, to $4.5 billion in five years. In real revenue. Like, that’s sick. And that happened here in DC. It’s awesome. Uh oh. I can’t hear you.

Andrew: No, there it is. It’s a-, I’m such a frigging dork the thing is that, and I have to own it up, I have to own it because people are going to notice this, I have a hard time breathing. So it comes across on the mic when I breathe heavily, you know. And people keep telling me about the medication to take, where is that? Somewhere in here I have all the medication that everyone who sees me recommends, allergy meds, this med, whatever. So I put it on mute whenever I’m not talking. I put Skype on mute so that people don’t pick up on my breathing while you talk. But what I was saying was UUNET makes the piping for the Internet, right?

Jonathan: That’s right.

Andrew: That doesn’t seem to me like an exciting business. Give me a specific example of how you guys fought together to beat the competition, something that just left it’s mark on you and said, “I want that kind of day. I want that mission for the rest of the businesses that I’m a part of.”

Jonathan: OK. Well, one thing that we did was, we architected a better backbone. So where other networks were bottlenecked, we created, we helped to build Juniper. Juniper wouldn’t have started without UUNET, historical fact. I don’t know if it’s on Wikipedia, but those involved with the transaction know that Cisco wasn’t doing their job and weren’t keeping up with the bandwidth and frequent requirements that our customers had so we went to, you know, [??], Kleiner-Perkins and others and said, “Hey. Build something better. Build something faster.” We were constantly improving. There was never a day at UUNET when I wasn’t challenged that others weren’t challenged and if you weren’t challenged, you weren’t trying and you were left in the dust. Those that were, became directors of the company with millions of dollars in stock options in their early 20’s. We had receptionists that were multi-millionaires. So we drove the infrastructure of the Internet, we often say, because AOL was, literally, their campus was right next door, that “AOL was the toilet and we were the plumbing.” So, you know, when you remember those days, AOL really was how a lot of our parents and friends and doctors’ offices first got on the Internet.

Well, we were the infrastructure providers for the banking industry, for the government, for other providers. We were the providers’ providers, so there’s a lot of pride in that. But that was during 9-5 hours, what was amazing was our departed CEO, John Sidgemore, a mentor and an amazing man, just woke up one day and said, “Why aren’t we using this thing at night?” At night we then provided AOL, Earthlink, MSN and everyone else with the same backbone. So we were constantly evolving the network we created. Jeff Rinaldi, a friend and a fund manager for an IP fund in New York, created the burstable product and then everyone copied it within months and that was usage-based pricing, pay for what you’re using. It was just fair, it was reasonable. It was the right thing to do. We loved competition.

Every meeting we had and they were sometimes every other month, together, it was first in the office and then it was in movie theaters, then it became hotel ballrooms, then it became, like, convention center-size and we were a huge company. We bought companies all over the world. It was all about, you know, there was this little thing on the bottom left of a chart that was UUNET and then there were these other big things like AT&T and BBN and NetCom and PSI and I remember that in the early days that we were always trying to catch up to them and then when we surpassed them, we didn’t look back. We just kept going. We destroyed our competition and that drive, if you ask anyone that was in sales or marketing or engineering at UUNET, it wasn’t just about “How can we improve?”. It’s about, “How can we be better than everyone else?” and I think that, to entrepreneurs, is a key message.

Andrew: How can we be better how?

Jonathan: “How can we be better at customer service?” for one for sure. Like, we would tell customers, “Go ahead and go with a cheaper solution. We’ll know you’ll be back.” and most of the time, they came back. We had records of this in our CRM at the time.

Be better in serving customers best. Be better at treating others with respect internally. When you have a large company growing that quickly, we went from a couple hundred people when I got there to over 8,000 when I left. Respect others in the organization because there is going to come a time when you’re going to need their help. We try not to play politics, granted 8,000 people, plenty of politics [??] building, but it was irrelevant. Those that focused only on that were left behind.

Andrew: What kind of customer service? What would you do that was different from others?

Jonathan: If a customer had a problem and I’m just thinking of a couple examples, with a router, we wouldn’t just send them one in two-weeks. Sometimes we would have the local engineer that was on our staff actually go there and have Fed-ex meet them and literally they’d arrive at the same time and they’d just fix it and leave. That’s the kind of stuff that we did back in the day, back in the day. I get jazzed talking about UUNET. Adam and I were UUNET guys. So Fortify-VC is founded by UUNET, we like to think akin to a very successful and friends of yours at the Founders Fund because they were PayPal execs with the exception of Shawn Parker. Who, by-the-way was a UUNET guy. I read an article recently, Mark Pincus from Zynga and Freeloader hired Shawn as an intern when he was 15. Then he had a little stint with the FBI and then Shawn came to work at UUNET for two years. I worked with him everyday. Shawn is now a mentor to me when he was an intern to me years ago.

What an incredible experience and journey and that started at really Freeloader, but he spent a long time at UUNET also.

Andrew: You’re talking about that Forbes cover story about him, right? That mentioned Freeloader and every other thing that he ever did including the issue with the FBI, but missed UUNET completely.

Jonathan: That’s right. I have to talk to Shawn about that. I’m not sure if he’s not proud of those days, but he should be because he built some incredible technology for us back when we couldn’t, there was no Career Builder or Monster. We had literally paper just faxes and people dropping off and mailing resume’s. There were stacks of them.

Andrew: I got to ask you about him because, boy the guy is really shaking things up in our industry and living it up too. I didn’t realize that, one of the things that I picked up in Forbes article, how about this, did you pick up on this, that he has a jet take off at 4:30 in the morning, I think, something like that because at 5:00 in the morning there’s some regulation that says they can’t fly. So he’ll go right up till the end and then he’ll have special fried chicken with them or something on that jet. When you hear stories like that of a guy that used to be your intern, how do you feel?

Jonathan: Shawn was like that when he was an intern.

Andrew: What do you mean? He wasn’t flying around the country in private jets?

Jonathan: No. He was meticulous and incredibly detailed about everything. We used to go to Starbucks and Shawn drank one thing. It was the same thing he probably still drinks. Well now he prefers teas that are a nice mix and blend. Look, when you’re a billionaire, you can allow the eccentric person inside of you to come out and Shawn is 100% natural and Shawn gets a pretty bum deal and rap in the media. It kind of pisses those of us off that have known Shawn for a really long time because he’s a great guy and he’s a philanthropist, he’s a humanist, he is an amazing guy. The reality is, Jim Clark used to be the man in the Valley because he did back-to-backs. Shawn Parker has just started, he’s just begun.

So if Steve Jobs is, who sad as hell, literally tears come to my eyes when I think of Steve, but Steve’s gone now. Who’s going to step up and replace? Guy Kawasaki should return to Apple for work by-the-way, but beyond that, Shawn Parker is the guy, in my opinion, that over the next 20 years will look back and say, “Thank goodness Shawn fixed the music industry.” Yeah, it’s disruptive and it’s going to piss a lot of people off, but it’s also going to bring music to people who don’t have access to it, okay. What’s he going to do next? Who knows? Entertainment. I’d love to see him get involved with politics. If there’s anything that needs to be fixed, it’s our political system. Next time I talk to Shawn, I’ll ask him he’ll start thinking about that one for his next gig in a few years.

Andrew: You think of him as the kind of person who could fix everything. If he just had the time, he could fix politics. The way that he fixed Face Book and took it from “The Face Book” to what we know today or help make it is today.

Jonathan: Let’s be honest. Face Book is Mark Zuckerberg’s vision, but Shawn Parker has a way of getting involved at the right time. He’s got the best timing and he has a way of seeing the vision through and that’s the key and he focuses, hyper focuses so now he’s playing with Fanny again and Air Time and I think they’re going to change the world in that way. There are a lot of cool companies trying to fix our political system. Make it easier. Get more people involved. I sincerely do believe that if Shawn took it on as a project and spent several years on it that we’d all be better off for it. I do believe that. I have a lot of faith in Shawn.

Andrew: That’s impressive to hear you talk about a former intern in that way. You also said that he now gives you advice. Give me one specific piece of advice that he gave you that help shape the way that you are today.

Jonathan: When someone offers you the f****ing money take it.

Andrew: Yeah? And, so, when did you do that?

Jonathan: A couple of times, I mean, not with Secured Force, but Shawn basically knows the economies of scale and he knows global markets and the reality is we do this and if you’re a **** in the ocean anytime soon things are going to dry up. So, the message is clear. When someone wants to invest in your company don’t be greedy, don’t be silly, take the money. Agree on some reasonable terms. Be fair about your evaluation. Be fair about what’s to come, but when you need the capital bring it on board. That’s one of the things that I’ve learned from Sean amongst some of the others.

Andrew: Secured Force, you mentioned it a few times. You’ve talk to me about it in the pre interview. What is Secured Force?

Jonathan: Secured Force is a cyber security solutions provider back when security was network security, then IT security, then information assurance. We provide the government with, not just architect and engineering services, but we deploy systems that men and women in the theater of war in Iraq, Afghanistan and Kuwait and all over the world rely on to communicate back with the Pentagon and other agencies.

So, the systems we engineer in architect here at Secured Force, I say here because I’m actually with Secure Force right now. We’re sharing office space until the Ford is built in a couple of months. We take a lot of pride in what we do and we have incredible engineers. Most of which served in the military. The major have clearances to do work at various levels within the government. We just take a lot of pride in what we do.

I came to a point in my career where I wasn’t the right person to run the company anymore and I had to step down because I number one don’t like how the government spends money. So, it’s kind of tough to say to a customer, it’s not going to cost $40 million, it’s going to cost $14 million. What are we suppose to do with the other $26?

Andrew: And they still want to give that to you?

Jonathan: The government is totally screwed up, absolutely.

Andrew: So why don’t you just take it and say, great, I’ll do something better with it than you guys would?

Jonathan: I’m not just a capitalist, but I bleed red, white and blue. It pains me, significantly, how we spend money. So I’ll just leave it at that.

Andrew: So literally, no exaggeration here, they will give you, what did you say? $40 million for something that should cost . . . give me those numbers again.

Jonathan: Let’s just say this, let’s say that when a Boeing or **** builds the new air fighter, the new jet for battle, we overspend billions of dollars. Our government is the best government in the world and I’m very proud to be an American. I wouldn’t want to live anywhere else. However, we’re totally screwed up in how we not only spend but manage money. They are rewarded in the government when they . . . and my dad was a government server, both of my parents were. I never understood in August of every year when I was a kid why my dad had to go in and spend extra money.

I had businesses. I sold fireworks and bubble gum. I said that doesn’t make any sense. He was like, I know, but if we don’t spend it we lose it. Well, that’s still the case today. Are you kidding me? Why don’t we reward people and give them bonuses for spending less money? So it’s very frustrating to me and it’s not a problem I’m going to solve, but it’s one that I hope we figure out eventually because it’s hurting our . . . The Roman empire fell for many reasons, most of which was due to people and the interactions between them. We’re smarter than that today, but we’re declining and we need to pick that back up.

I don’t know what the answer to that problem is, but I think it’s responsible spending and responsible stewardship by companies that are serving the government. That’s not always the case, so, sorry for the soap box on that one.

Andrew: One of the things that I’ve notice, I’ll stand up on your soap box with you, one of the things that I’ve notice here about meeting tech entrepreneurs is they’re kind of golden handcuffed in their businesses and in their jobs because they get paid so well by the government to do work that they can’t stand, that they know is just outdated. They work on software that was picked four years ago and they’re almost at the end of a five year cycle. I guess, at the end of that five year cycle they have to commit to a new software platform for the next five years, and I think, who the hell plans for the next five years. What wasn’t around five years ago that is today?

Look at how much the world has changed. They can go and start new companies because they’ve got this great money coming in and this great lifestyle because of it.

Jonathan: OK, so, it’s amazing that I’m wearing this shirt today and it ironic, but Open Path is a company that serves our government and serves our government well. They Q/A any app on any mobile device. In fact, their conference room has like a couple of thousand or something boxes for every phone so they can test it on every device. Companies like that, companies like Secured Force are serving our government well. In fact, since 911 a lot of potential attacks on us both cyber and physical and others to our financial system have been un foiled by people in and around the DC area and all over the country, all over the world at various agencies like [??] Reduction Agency and all throughout the DOD and Intel.

They’re doing an amazing job. [??] a founders fund company based in Palo Alto, is doing great things to find bad guys and serving our government well. I think our money is very well spent on products like that. I’m not saying, yes our government — on the one hand our government spends really improperly in a lot of ways and poorly manages, on the other end, there are some amazing technologists. You’re actually right, if they left the government they’d be building the next [Palo Tiers] because they see the problem inside the government. I’ll get to that in a second.

The key thing to note is we haven’t been attacked continuously and people have tried. A lot of money’s been spent. Who the hell knows how much? Uncle Sam doesn’t even know, but we’re pretty safe. I feel pretty good. I live just a few miles from the White House and I feel pretty safe about it. The thing to note, in the Valley, there are a lot of people that have great ideas and sometimes on a napkin you can get funded. People say that New York, with a prototype, you can get funded. In DC with profit you can get funded, with revenues or profit.

Well we actually believe that that’s not the case. We believe that the government, that individuals should be able to leave the government and come out and actually support their dreams and their visions and other entrepreneurs. It hasn’t been an economy for seed and early stage funding that has been incredibly valuable to entrepreneurship, but that’s what we’re trying to change at Fortify-VC. That’s one of our goals, is to say, “Come out of the government. Come out of those agencies. Come hang out at the Fort, not NSA’s fort our Fort. See what we’re doing and see how other entrepreneurs are taking just a little bit of capital, it doesn’t take $5 million anymore, it takes a hell of a lot less, and take your idea to the next level. We’ll help you with mentor-ship.”

Like 500 Start-ups, that energy at 500 Start-ups is freaking amazing in Mount View. You’ve been I’m sure. What Dave [McClearin], now Paul [??], Christine the group there have done is they’ve brought in the experts and the mentors have provided to the founders this incredible cycle of energy. The founders now through each other and the founders back to the mentors. It’s this Eco-system of people and an energy that’s very positive. We’re doing that in DC. We’re doing it. It’s been done, but it’s been done in little pockets by people as a hobby.

Well we’re taking the flag and saying, “OK guys, it’s time to do this full-time.” Everybody that’s a mentor come to the Fort and everybody that’s a potential investor, get out of the freaking, wherever you’re hanging out and not finding deals because they’re not coming to you, come hang out with us because there’s plenty of companies for you to co-invest with us.

Andrew: I got to come in. When’s the Fort going to be ready?

Jonathan: A couple months. It’s going to be sick. It’s going to be awesome.

Andrew: A couple of months. By the end of the year.

Jonathan: By the end of the year, yes. There will be a lot of companies in there.

Andrew: All right. I want to know how you became a Venture Capitalist. I understand why you got sick of working for the government, not working for the government but being a government contractor. I understand how you learned to be a better entrepreneur. I’m curious, why become an Angel investor? Why try to figure that whole thing out? You’ve got entrepreneurship pretty much figured out. You have experience there, you have connections there, you have friendships. You have the success and failures that enable you to raise more money. Why go to the other side?

Jonathan: Personally it’s very simple. I always wanted to be a Venture Capitalist. When I first read about Venture Capital in the late ’80s, I thought that’s where I’m going to end up. Now I want to end up as a High School Lacrosse coach and teacher of entrepreneurship when my kids are in High School, but Venture Capital to me, fits me. It’s like Steve Jobs, infamous words, “Do what you love and it won’t feel like work” right? To me it’s not work to help other people pursue their dreams. That’s my dream. My dream is to provide encouragement, funding, energy, wisdom and then networks of people and also all the tactical resources required, platforms required to entrepreneurs so that their dream can come true.

That is my dream. I’ve tried it. I’m pretty good at it. Some people know Secure Force, I was a co-founder. Certainly our customers loved Secure Force and I’ve been involved with other companies that have had nice exists, but I think I will be much more useful to the Eco-system as a Super Angel Venture Capitalist than I could be as an entrepreneur because that’s just what fits me better, if that makes sense.

Andrew: I’m not sure I get it, to be honest with you. You’re saying that the whole time you were at Plask at the Shadow Group, at E-Tantrum you loved it, but you were thinking, “I want to help other people build their businesses. I can’t wait to be able to foster innovation in other people’s business and support them?”

Jonathan: Absolutely. I’ve always been a mentor. I’ve gone to Universities and helped young entrepreneurs in High Schools. It’s just like at the end of every one of those days, when I was able to do those things, I just felt better about myself because I was giving back. In all sincerity, I enjoy being an entrepreneur. Hell, Fortify-VC is a start-up, we’re not even six months old. I do enjoy it and I am involved with a handful of companies now, but to me there are quarterbacks and there are cheerleaders. I’m a better cheerleader. That’s the bottom line. Or coach, maybe it’s a combination of those two than I am at quarterback.

Andrew: All right. You said, “I want to become an investor. I want to get to this next level in my life.” The first thing you did, you told me in the pre-interview, was you started writing checks. Tell me about that.

Jonathan: Yeah, I’ve been writing checks ever since I had money in my early 20’s and investing in companies. Some succeeded, most of them have actually. I have a pretty good track record as an angel.

Andrew: Back to the early 20’s, this is the money that you got from UUNET?

Jonathan: Well, I’ve been investing in stocks ever since I was a little kid, so I had some money there. I had different businesses. I always worked through college and after, but, yeah, mostly the money from UUNET went into other companies.

Andrew: When you graduated college, how much money did you have in your bank account?

Jonathan: I don’t know, thirty, forty grand maybe.

Andrew: Thirty, forty grand? Wow. From doing what? By the way, I had $20,000 at that point, maybe actually it was before college, college took a lot of my money. I remember thinking, “I’ve got to find a way to invest this in something big right now,” because $20,000 to someone in his teens is a lot, but once you get to your 20’s it becomes less. There’s like age inflation, you know? A 10-year old with $1,000 bucks is rich. A 15-year old with $1,000 bucks is so-so. A 21-year old with just $1,000 bucks in the bank is headed for trouble.

Jonathan: Here’s what I learned. I learned that guys like Ted Turner made money and then doubled-down and did it many other times. I’ve continued to take capital and put it at risk and it’s continued to grow.

Being an angel was a blast. I love being involved with start-ups.

Andrew: So you just started writing checks to people who you thought were … How do you decide?

Here’s the thing, I’m looking from the outside at all these angel investors and to me, at least the way they describe it, they’re not doing any analysis. They’re not really figuring out the business. They’re saying, “I like you. I want to back you. Here’s the check. Let’s talk later on.” I don’t see the logic and the reason behind it. You’re a rational reasoned person. We’re in a rational reasonable industry. How can the description of how to be an angel investor be “You want to support people? Write a check.” Give me something with more meat on it. Help me understand it with more spreadsheets behind it or something.

Jonathan: There’s plenty of due diligence workflow and processes that are critical to investing, and I’ve always followed those. At the end of the day it’s a gut instinct that I follow that if it’s sitting on the fence that puts me over to one side or the other.

For me angel investing has just improved over the years in the sophistication and co-investing. We like to syndicate deals. That means we, Fortify VC, and me personally when I was investing as an angel, like to invest with other people I think are good angels, good investors, good stewards of financial responsibility, and good mentors to start-ups.

I think it’s crazy to just write a check. That’s a donation. That’s what Kiva and other sites are for. If you want to donate money to people, go for it. That’s awesome. Help, if you have it, do it. It’s philanthropy, but for us it’s investing. Although, Distilled Intelligence, our event, I know we’ll talk about that later, was more about we gave away 25 grand. That was to promote entrepreneurship.

Being an angel and then converting that to Fortify VC, when we started the fund in May, we said, “There are some great companies we’ve looked at for over a year. Some of them are ready for funding. Let’s write some checks.” We went through the due diligence process, we worked with multiple law firms. We have our own CFO that tears through financials when they’re relevant. [laughs] A lot of start-ups don’t have revenue yet, so then we look at use of proceeds more importantly.

Andrew: What’s more important if they don’t have revenue you said?

Jonathan: Use of proceeds, how they’re going to spend the money. The use of proceeds, use of funds.

We also, because of a little company called SecureForce, have access to some awesome security engineers and hackers that can look at code for us and make sure things are real and were developed here, and by those people, and aren’t Swiss cheese and have a lot of holes in them.

For us it’s really important, Fortify VC, to perform due diligence and understand the space. There are four things we look for. We look for team, team, team. Like location in real estate it is critical. We look for a product. [??] of services on occasion, but we like a product. A product that is industry disruptive or changing the world. We like markets that are huge or growing. We like what we call a defendable position, which is either intellectual property or first-to-market or something that they can say, “Hey, we’ve got this thing that other people want to partner with, or they might want to acquire.”

Those things are core for us. When we get really close to a start-up we then sniff around a little bit, and that’s when we use our instinct. That’s when we know “this is not going to happen” or “these guys will succeed regardless of what comes at them”. They make the right decisions under stress and duress. They don’t turn around and have friendly fire incidents. In tough times they actually are in the trenches together driving things forward, and that’s where the military mindset comes from, so we look for that in teams.

Andrew: Let me break this down a little bit. Starting with, going back to the early checks that you wrote, what are some of the mistakes that you made in the early — in fact, what was the approach that you took in the early days when you said, ‘I’m going to back other entrepreneurs because I’ve got money and I need my money to work for me.

Jonathan: Not understanding terms was one of the biggest mistakes that I made.

Andrew: Give me an example. You don’t have to mention the name, you can call them Widget Company, but give me an example.

Jonathan: I’ll call them Brivo [SP].

Andrew: You’ll call them who?

Jonathan: Brivo was one of the companies.

Andrew: OK. So tell me about Brivo.

Jonathan: MentalPhysics was their original name. It’s a company I put 25 grand in when I was in my mid-20s (I think I was 25, actually). They had an unattended home delivery box. Awesome concept for a doorman in New York or any city, or if you’ve got a lot of packages to a business where 82 or 85% of the packages would fit in this big box. It had a code, DHL (now gone), UPS, USPS, FedEx, everyone could drop that off and it would be a secured package, and you could come back and get it.

And this was all transmitted; the data was transmitted securely on the worldwide web. Well, that was the company that Chamberlain Garage Door Opener invested in, and you know, along came VC’s and then the market kind of tanked. Those of us that were early investors got totally washed out.

Our investment, even though the company had an exit (this happens; good lesson learned), became worth zero because we were just diluted down to the point where later-stage VC’s said, hey, you know, we’re going to come in and clean this thing up and we’re going to take the value from here.

Now, terms are important. One of the reasons we call this fund ‘Fortify’ is so that we can avoid situations like that, and fortify our position and the position of the founders. Founders funding founders — you know, being a founder-friendly fund, we’re also a VC-friendly fund, because things go upstage. So we look for win, win, win, win, win, win, win — everyone from customers to partners. There’s a way to do business where everybody wins and people don’t have to get F-ed. So that’s what we try to look for, and I’ve had situations where that wasn’t exactly the case.

Andrew: By the way, you’re allowed to curse here. You use whatever language you feel comfortable with; I want to get to know you the way you really are. And if you say ‘F-ed’ around the office that’s fine; if you use other language, go for it! Be salty, my friend.

Jonathan: Thanks.

Andrew: All right. Let’s talk about one of the companies today then. So I’m looking at your website and I see the companies that you funded include FastCustomer. Can we talk about how you connected with Aaron [SP], the founder of FastCustomer and how that evolved into one of your investments?

Jonathan: Sure. Paul Singh is the founder; Paul is a friend. So before Paul was in 500, Paul did this amazing experiment and said, ‘I’m going to try and start one company a month for a year,’ and just had all these ideas and coded away and brought in other people. And he did it! Not many people can say that. Paul’s a phenomenal genius and an operator and an executioner.

Andrew: His interview here — by the way, he did an interview here a long time ago. The friggin’ thing killed! He was like this guy who my audience didn’t even know about, but he told the story of how he created MailFinch, this digital — this company where if you send him a PDF he’ll print out the letters and mail it out on your behalf.

The way that it through just showed a level of intelligence that you don’t see from most entrepreneurs, and we liked following along. Many people have e-mailed me and said, ‘MailFinch is done, what happened to him?’ He’s now at Founders Fund. He’s helping other entrepreneurs think the way that he did.

Jonathan: Actually, 500 Startups. He’s at 500 Startups.

Andrew: Excuse me; what did I say?

Jonathan: Founders Fund.

Andrew: Oh, right, right — 500 Startups. So locally here in D.C. He got together with Aaron Dragushan. He coded up the first version of FastCustomer and Aaron was doing some of the other stuff around it. I don’t exactly know what the work breakdown was.

Jonathan: So when I decided in January to jump out of cyber-security and you know, had transitioned for over a year at SecureForce, I said I want to get more involved with the startup community. So I met Paul and I met many others, and Stephanie Hay and Aaron were two people who were involved in FastCustomer. Love ’em both — love them! They are amazing people, they’re great people. They’re the kind of people you want to have over for Thanksgiving dinner and just hang out with. We like to invest with people like that.

But they also had an amazing idea. And Aaron’s vision and passion — this is a guy, by the way, who ran a different company in the marketing space for 14 years, never took a dime from anyone and was profitable, always. Love that!

So we met with Aaron. And Aaron’s like, ‘Do you like waiting on hold?’ I said no and it sucks. And he’s like, ‘Well, we solved that problem. Let me show you how.’

He showed us and no B.S., the product worked, and I said that’s something I’d like to invest in. And from there we did due diligence and then later . . .

Andrew: Yeah, so that’s what I want to understand. What’s the due diligence? Yeah, he does have a great idea for an iPhone app, it started out as an iPhone app where you say, ‘I want to call up Citibank’s credit card people and dispute a charge.’

Well, I don’t want to wait on hold for 10 minutes until I get to talk to them. I hit ‘Citibank Credit Card’ on my iPhone; they call on my behalf. Ten minutes later I get the phone call. It’s a great idea, they built it on [Tolio], anyone else can go and rebuild it, yeah you like them, but tell me about the due diligence there.

Jonathan: So, we asked Aaron how soon we would be revenue positive, just any customer paying for anything. He said within a year, and we said this is a deal that we’re willing to take a risk on. Remember, venture capital investing is all about risk, and it’s the risk-reward tradeoff. So, we said we believe in these guys, they have a product that works, we’ve used it and we love it, we’re users of the product. Then Aaron came to us, just before the round closed, and we had committed and others said they would be in, and he goes “guys, somebody offered to pay us, a year early, but they’re going to pay us and it’s thousands of dollars. I think we’re ahead of where we thought we would be”, and that’s where things really took off.

Yes, they’ll have copycats, and actually they’re changing their back end, so it will be more their own database infrastructure and their own tools and platforms, but, the bottom line is that a guy like Aaron is going to succeed, regardless of what happens in the market. Because people will always hate waiting on hold, even if the economy is in the shitter. So, we love Steph [Hey], she’s an incredibly creative NYUX design expert, and Paul’s pretty busy with 500 start-ups. But he certainly helps with the vision, and he was involved with the company early.

So, that’s a deal where due diligence became, let’s look at legal, let’s look use of proceeds, let’s check the backgrounds of the individuals involved, and then let’s go a couple of steps beyond that, and ask around about other people and references. We always do this, who are customers, who are friends, it’s not that hard to find information about people these days. So we did a lot of that and this was one of those that was just a unanimous no-brainer. We’re really, really glad to be investors and Aaron’s an amazing guy and he runs an awesome team. So we’re sad that he’s left D.C., but it’s only because his wife is getting her PHD out in Arizona, so hopefully he’ll be back.

Andrew: I should say too, that I put a little bit of money in the company, only because I’ve known Aaron for years, he copied one of my businesses a long time ago, and I said “son of a bitch, I really admire what he was able to do with that.” We reconnected on hacker news, we became friends and I said “I want to follow what he’s doing here”, and this is a good way for me to do it.

By the way, the reason that I don’t do any investment after that is because I don’t want to have to make these disclosures. I want people to understand that I’m doing these interviews and asking the kind of questions I do because I’m freaking passionate about the questions and I think the answers will be useful, not because there’s any self serving goal there.

Jonathan: That’s respectable, absolutely.

Andrew: Right. Thank you, I appreciate that. What else have we missed here? Let’s deal with intelligence. Why did you decide to get into an event? That’s the name of your event, right?

Jonathan: Yeah. So, I said to Adam, I think it was late August, I said the only way to get people energized around here, is to bring them together. We have to have an event. It’s rumored, by SEC [??] regulations, it’s rumored that we’re still raising a fund, of course we just started the fund and it was two months later. But there was no way to get all these people in a room together, and there’s a lot of events locally, but their either hosted by a law firm, and they’re for five companies and they’re already vetted and ten investors show up.

We wanted something that would make us flash, and Adam is a pretty smart, conservative dude. Well he’s like “look, we’re pretty busy, how the hell are we going to do this?” and I said “well, for a few weeks, we’re probably not going to sleep,” and that’s what ended up happening. But Distilled Intelligence was a vision that we had, for distilling down what was hundreds of companies, we don’t say the full amount, because we don’t want people to go, oh well there are ten thousand that I’m not applying next year. It was well over a hundred and it took us days to get it just over a hundred, and we couldn’t get it to 50, which was our goal, we got to 55.

Let’s get all of these companies together, they’ll apply, we’ll go through with limited partners, mentors, other VCs and friends, and we’ll pick down a nice mix of clean and green tech, and mobile commerce, and cyber security, and social platforms, and enterprise software, and medical IT, and we did that. We said “OK, now how are we going to motivate people, and how are we going to get the community engaged?” It was like, success beget success, and this is an important thing I think for your entrepreneur listeners and founders and others. We had one sponsor, the Heightened Group, which is a recruiting firm, buddies from UUNET they’re like, “whatever you’re doing man, we want to support you.” I was like, well I hope you end up getting customers out of this, we appreciate it.

They signed on, they wrote a check, because our wives weren’t real happy about us writing checks, because we’re not only investing in the fund, but let’s give away $25,000, right, with no equity. Then Open Path, these guys friends came through and said we want to sponsor, then Coolie, then [PWC], then [Deloyd], and [DLA] and a lot of other firms and local county governments of economic development firms, and that helped us get together, what these events can cost six figures to throw. So, then we engaged the local tech community, in D.C., which is actually thriving and awesome. D.C. Tech made up Peter Corbett’s [sp], our strategy labs guys, and many, many other things. We engaged all of them and said, ‘help promote this thing.

We need 500 people to shoe up and we need to have a kick-ass event, and we’re going to go from 55 people to get 60 seconds to pitch, and judges are going to distill that down to 22, and then 22 will get three minutes with a slide deck. The key is that all 55 of those prepared their 60 second and three minute, and they were ready to talk to investors that day, even if they weren’t a part of the 22. That went down to 11, and people thought is was going to be five prizes. It was 11 prizes, so we under-promised and over-delivered. We gave away Ginsu knives, and Glengarry Glen Ross DVDs, the 11th place social tape was Don Berger, very cool guy. So what ended up happening was we had well over 500 people, so we didn’t violate any fire codes for the facility because people came and left during the day. It was sold out and it was awesome because the energy was there. The energy was there partly because we had the right forum, we had the right founders, we had the right investors, but we had the fire. We had competition, and it’s competition, in our opinion, that’s that missing ingredient in a lot of companies, that we had a UUNET, and that’s what we had at the Fort, that’s what we have at our companies, we help drive that in people, and, you know, folks have been saying some really kind words about, it’s very humbling, about what happened because the community came out for that event.

It wasn’t Adam, and Carl, and I, and our army of interns and LP’s and mentors, it was 500 people from all over the mid-Atlantic. In fact, folks came from California, New York, Florida, and we put it together in under two months. So now we have our next DI2.O, Distilled Intelligence 2.0 will be on 10/11/2012, October 11th, next year. It’ll probably be two days. It’ll probably be multiple categories with a lot of judges, and it’ll probably be well over six figures. It was our way of giving back, and now we’re going to give it back in a bigger way next year. It was just awesome.

So what happened from that is we found a lot of companies that were kind of hiding in the woodwork, in basements in garages, the dudes that our doing Intel work during the day are building their own products at night, like we talked about earlier, and we’re now funding a lot of those companies. There will be some announcements in the next couple of months that will make us akin to the 500 startups, or Y-Combinator.

Andrew: In D.C?

Jonathan: In D.C., with a lot of companies, yeah.

Andrew: All right, I have a couple of questions here. Our time is almost running out…

Jonathan: Okay.

Andrew: … so I’ve got to squeeze them both in though.

Jonathan: Okay.

Andrew: The first question is this: so much of this is depending on relationships. The person who’s listening to me, maybe has a great idea and a great business, saying ‘how do I connect with Jonathan?’ How does someone who’s a stranger today, become such a buddy of yours that you say ‘I want to work with him the way that I like working with Stephanie [sp]’, or Aaron or so many other people that you mentioned?

Jonathan: So…

Andrew: How do we go from strangers to best-buds?

Jonathan: Oh boy, you know, we have an email address: bringit@fortify.vc, so you and I…

Andrew: That’s not enough though, random from people, that’s just a pain in the butt.

Jonathan: I respond to them.

Andrew: You respond to the email from where? Give me that address again.

Jonathan When people email bringit@fortify.vc, Adam, Carla, or I will respond. If we get overwhelmed, we’ll hire more interns, but we’ve been responding to those emails because we think it’s important, and we remember emailing vc’s and never getting a response. So we’re going to try to always be true to that. That process may change with forums over time, but that’s how we roll. You know, a lot of VCs say, It’s the network and we want you to be referred to us from one or more sources’. Well, absolutely.

Of course I want Aaron or Paul saying this, ‘hey Jonathan, you should take a look at these guys.’ Right? But when someone doesn’t have those relationships, and they’ve never done it before and they’re an introvert, but their coding away, they could be the next Mark Zuckerberg. They could be the next Shawn Parker. So bring it. Contact us, and if we find what you’re doing to be interesting, we’ll do what we can to meet, to talk, and to try to help you, and if we find what you’re doing to not be interesting, we’re going to friggin’ tell you. What you’re doing…

Andrew: You’ll say, ‘hey, this sucks’.

Jonathan: Well, I think we might say it differently, but, yeah, we’ve said, ‘hey this sucks, change it’, or ‘do this better’, or ‘maybe you should research this’, or ‘talk to these people’. This is not just about making money. Don’t get me wrong, capitalist is in my title, but the reality is, it’s about the economy, it’s about the eco-system, and it’s about helping people. Again, my dream is helping people pursue their dream. That is true, as true as true can be, so that’s what we want to do. We want to not miss those opportunities and we say bring it. You know?

Andrew: All right, here’s the other thing. You mentioned earlier that you’re part of a group, and a few other Mixergy interviewees have been part of the group. What’s the group, for some reason I’m forgetting it right now.

Jonathan: VT Idea.

Andrew: VT Idea. That’s…

Jonathan: That one, or Mindshare. I’m part of two groups.

Andy: Mindshare, that’s the one.

Jonathon: Okay.

Andrew: What is Mindshare, and why is Mindshare so effective?

Jonathan: So 15 years ago, just in Washington D.C., Mike Lincoln of [Cooley-Goddard], basically the godfather of the legal system and much, much more in D.C., got together with accountants, with other attorneys, with recruiting firms, with bankers, and others, and said, ‘we need to get all of the entrepreneurs together and see what happens’. So folks were nominated, and every year we could nominate folks. They’d pick a class of 25 to 35 CEOs, their founders, and companies.

Of course, the goal is that the founders will need from these folks. So everyone has an interest in that, but what it has become is a support group and an email list of several hundred people. Men and women who run companies serving not just the government, but customers all over the world. It’s a very close group. We have our little bashes, and we have our little things in email. Folks don’t always agree.

The times I’ve seen when people actually need to reach out, and get a hand from someone, they’ve got an issue or a kid at college that needs help. Within minutes/hours their kid from the next town over is helping that kid. So it’s a really tight community of people, and it’s something that …

Andrew: I think you said you meet once a month?

Jonathan: Actually the alumni don’t meet as often, but during the year when you’re in the class (and I was in the class 5 years ago) for Secure Force. You meet monthly, you get together, you eat, you hear someone come in and speak and teach, and then you give an update.

What Mind Share great for me and Josh from Uppidty , as a Mind Share classmate, is not just what I learned about recruiting or marketing or SEO or SEM during that one class. It’s about the relationships that you create, and I think the Founder’s Institute – 500 starducts [sounds like], Y-Combinator, tech stars, and the rest – have classes. Those relationships are going to last a lifetime for people, and that’s why I’m very proud of to be part of Mind Share.

VTID is another one. Virginia Tech Intelligence Defense Executive Alumni – it’s a lot of alumni from Virginia Tech. We have three directors of DOD agencies, most in history, helping each other to help men and women in uniform, and to help men and women doing things covertly around the world to basically protect the homeland essentially. That’s what we do a VTID, and that’s another group that I’m part of and very active in.

Andrew: I’d love to do an interview with one of the founders of either of those two groups. Just to find out how they make it so effective. I’ve heard so many good things about them.

Jonathan: We’ll hook it up.

Andrew: You’ll hook it up. I’ll follow up with you via email with that.

Jonathan: Absolutely.

Andrew: All right. The website is www.fortify.vc. BC is the top-level domain on that -Fortify dot bc. If you get a chance to go check out Paul Sing’s interview on Mixergy. Google it. You’ll love it. The way that he thinks is just inspiring, and it’s

duplicatable. Is that the word? Replicatable.

Jonathan: So wait. Shawn Parker. Have you interviewed Shawn? I don’t think so.

Andrew: No. Would Shawn let me interview him?

Jonathan: I’ll ask him.

Andrew: I would love that. Please ask, and if he wanted me to I would be willing to do the interview on his jet at four in the morning.

Jonathan: Awesome, with some fried chicken.

Andrew: Or on your jet. Do you have a jet yet?

Jonathan: Not yet sir.

Andrew: Not yet. We’re working on it. Are you working on it? Is that one of the goals?

Jonathan: I love Virgin American. I fly coast to coast, and it’s great. We’ll see.

Andrew: All right, and I’m looking forward to seeing you at the fort when it’s built soon.

Jonathan: Awesome.

Andrew: Thanks for doing the interview.

Jonathan: Thank you sir.

Andrew: Thank you all for watching.

Jonathan: Cheers.

Andrew: Go to www.fortify.bc/people. Bye.

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