Heroes in Business - Jonathan Cogley Founder Thycotic sold $1.4Billion, Founder and CEO LogicBoost Labs

Episode Date: August 27, 2021

How to get noticed by a GIANT. Jonathan Cogley Founder LogicBoost Labs, Founder Thycotic sold for 1 Billion is interviewed by David Cogan founder of Eliances and Famous Celebrity Host of the Eliances Heroes radio show   

Up in the sky, look, it's captivating, it's energizing, it's Eliance's Heroes. Eliance's is the destination for entrepreneurs, investors, CEOs, inventors, leaders, celebrities, and startups, where our heroes in business align. Now, here's your host flying in, David Kogan, founder of Alliances. That's right, and it's another amazing day. Why? Because we share the secrets of incredible people that either entertain us, build companies, build communities, employ people, make a difference, and you can too. No matter what level you're at, you can too. Because remember, you're at Alliances, which is the only place where entrepreneurs align. So make sure you check out previous episodes at E-L-I-A-N-C-E-S.com.

Like when I recently interviewed the president of Alibaba. So that's right. Make sure you go to Alliances.com. All right. Well, listen to alliances.com. All right. Well, listen to this. What happens when you build a company, but you end up selling it for a significant amount of money, and it doesn't stop there because you end up starting another company? Welcome to the show, Jonathan Cogley. He is the founder and CEO of Logic Boost Labs.

Welcome to the show, Jonathan. Thank you, David. So nice to be here. All right. Let's go back a little bit. You ended up starting this other company called Thycotic. Talk to us what that was. So that was, gosh, it started in the early 2000s as a consulting company that was all services based. And then I really wanted to go to product because it would scale better. So it turned into a cybersecurity startup making products.

And that was all around about 2005. And then ultimately built the company to about 10 million in revenue by 2014. And then you ended up selling it. Is that right? Yeah. So I sold a majority stake to a growth equity firm out in New York City in 2015. And I think I picked my partner very, very well. They went on to build the business more than 10 times larger than 10 million, operating run rate of about 120 to 140 million a year. And we just had a massive exit just a few months ago of 1.4 billion dollars.

All right so congratulations on that that's huge it's the 1.4 billion dollars so after that sells why continue within business and do anything else why not just live on the beach? Good question to be honest I could do that back in 2015. My first exit was sizable enough. I didn't have to work again. But, you know, you can't, as crazy as it sounds, you can't just vacation all the time. You got to have a purpose. You got to do something. You got to be meaningful in this world. Right. 2017 and discovered that I really love problem solving, especially in the entrepreneur and startup space. And so I did a lot of mentoring for different startups. And that all ultimately led to the genesis of a startup accelerator now that I created called Logic Boost Labs. I love it. And that's what this is about. So we definitely want to hear about Logic Boost Labs, which by the way, you can reach Jonathan at by going to logicboostlabs.com. So tell us about this Logic Boost Labs. I love the word just labs. I mean,

a picture of like all these amazing people in a lab doing experiments with startups. It sounds like Batman or science or something, right? Right. And I got to finally use purple. I've always wanted to use purple as a company color. And so now we're doing it awesome but yeah the story basically goes that i was doing mentoring and i got to speak to a lot of startups i spoke to oh gosh the last few years probably like three four hundred startups um you know chat to the founders learn what's bothering them like what they're struggling with and what i kept noticing was they obviously needed help. They needed advice. Inevitably, they needed money, too.

So I ended up doing a little bit of angel investment, but it still wasn't enough. Getting the advice, getting the money, they still couldn't necessarily succeed in what they were trying to do. And probably the most frequent thing I saw is they struggled with sales. They just didn't know how to set up the sales process and how to build a sales team. And if I look back at my previous company, Thycotic, I mean, by the time, you know, by 1.4 billion, I think our sales team was like 450 people. It is a sales monster. And that is B2B SaaS. Like if you're going to be successful, you have to have a good sales org. And so what I decided to do was I was like, well, they can't hire the right salespeople that they need because they're too risky.

A good salesperson is already happily employed at a larger company, making a good salary and options and everything else. And so the whole idea was I know those people. I can hire them. Why don't I build a team of employees at an accelerator that has the expertise to actually help the startups? And so that's really the magic that we bring is that we bring money. We bring advice and mentoring. We bring the right people to make your startup successful. And then we've even discovered a lot of founders spend too much time fundraising. So now when we do our investment, we actually do a fourth component where we provide a convertible note as like a line of credit. So if you need further funding, additional milestones, you can

then just, you know, use our funding rather than having to spend, you know, how many hours doing investor pitches and everything else. So Jonathan, it's amazing, again, what you're doing with this and helping startups. What type, and funding them, and I mean, just providing all the services necessary for them to grow, what type of, I mean, you must get a ton of applications. Like how do you sort through them? How do you pick, how do you know who's going to be the one that's worthwhile of your time, energy and investment? Good question. Yeah. So we run it in cohorts. So every quarter we take applicants and then we sift through them, do a bunch more meetings with each of the contenders. We do focus entirely on B2B SaaS. So that kind of limits the field, you know,

very focused on the things where we have the most expertise. And then in terms of evaluating the startups, we do require them to have an MVP. So we're not kind of incubator stage. We definitely work with some incubators and provide advice there. But the accelerator itself, you have to have a product that's ready to sell and ideally, you know, one, two, three early pilot customers. And then in terms of qualities that we look for with the startups, everyone thinks it's, you know, the idea, that's what all angels are interested in or something. And I don't think so. It's really the team. What I've seen time and time again is if you find the right entrepreneurs that kind of have the quote unquote right stuff, which is usually, you know, tenacity,

grit, just the ability tenacity, grit, just the ability to figure it out, right? These are folks that are going to make money selling cookies if they have to. If you find those folks, if they don't have the right idea now, they're going to come up with it in three, six, nine months anyway. And so that's probably the big thing.

And obviously we try to steer them with the idea, help them with market fit, determining their TAM, their SAM, all that kind of stuff. But definitely team, I would say, is the most important factor. That's excellent. Excellent. And again, you're watching, listening to me, David Kogan, host of the Alliances Hero Show. Make sure you go to alliances.com. That's E-L-I-A-N-C-E-S.com.

Because we have with us the amazing Jonathan Cogley, founder and CEO of Logic Boost Labs. He was the Tycotic founder, which he ended up selling his company, sold that Tycotic founder, sold for $1.4 billion. You can reach him at logicboostlabs.com. So Jonathan, you've been very successful. You sold the company, had a huge exit then in addition you're helping all these companies but we really want to know kind of the meat part of it is is you you talked about some of the qualities but if there were a few secrets that you could share because you know you view you see so many you know you know of picking the winners what are some of those secrets you talked about the tenacity of the founder stuff how does somebody

even get that how do they how do they acquire the skill to know that it's going to be an all-in thing to do what they need to do wow that's um i think at some level it's innate you're kind of built with it it probably can be learned um i think a key factor if you're trying to decide if you're you know going to be a successful entrepreneur or not, if this is the right path for you, I think a key factor to evaluate is risk. How comfortable are you as an individual with risk? Um, cause I've seen many entrepreneurs or want to be entrepreneurs really struggle with

that. Just the concept of, uh, payroll and cashflow and how they're going to, you know, just not being able to sleep at night. And yet if you talk to typical successful entrepreneurs, that's something they never, ever think about. So first off, I think that appetite for risk that you're comfortable with, if you don't have that, it's going to be a really, really difficult road. And it's tricky, right? Because being entrepreneurs becomes sort of trendy or fashionable, but clearly it's not for everyone. So I think a good hard look at yourself. And then also it's just, it's not an easy road. You know, psychotics and open success,

right? It only took 16 years to happen. You know, there's a long nights, long weeks. I didn't take vacations for the first couple of years. I worked 100, 120 hour weeks for years on end. And I see the same thing with our founders today. You know, the entrepreneurial road is not an easy path. It's far more difficult than getting a regular nine to five job. So I think first, you know, internally look at all of that and see if you have kind of the right stuff. And it's really something that's going to make you happy, right? We have one life to live and make sure that you're doing something that's going to really fulfill you. And then in terms of looking for problems i'd say the the biggest thing that i see people being successful with is having experience in a particular business domain so say for example you work as a realtor for a couple years and then

you decide to make an app to tackle that industry or whatever it might be accounting you know whatever field it is it doesn't matter but have that deep day-to-day knowledge of how it works and the problems that that industry faces and then when you bring a solution to that, it's going to be based on, you know, real things that you've actually experienced and know, and know what those struggles are. And that way you're, um, the problem you're solving is very likely to be real. It's something that people will pay for and it's likely to be a more successful solution. How are some of the tests though? Like what kind of testing do you do to see if there is an actual market of what somebody is bringing to you?

So there's your classic research. So look at some of the analyst firms out there, any white papers that are out there to get a sense of the size. So for example, I'll keep going with the realtor example. Let's say you're making some software for realtors. You know, you'd look at some public reports that maybe discuss how many realtors there are in the US. Maybe there's certain factors you're interested in. Maybe

you're going to tackle your local city first. So what's the possible size of the market there? So I'd look at kind of, you know, public information and address how big your market could possibly be. And then again, if you've had experience in the industry, you should have folks that are experiencing that pain that you know. So you'd look for a few pilot customers, right? If you can't convince three, four, five people to try out your solution, then, and ideally even more than try it out, maybe pay a hundred dollars to use it. You know, that's really going to validate your idea, right? Nothing validates your idea more than revenue. Someone prepared to give up cold, hard cash to solve that problem so i would say those

are kind of the first steps um and we look for those we look for pilot customers we'll do interviews with the customers as well to understand the use cases that are being solved and make sure that it's real some entrepreneurs kind of approach it the wrong way around they come in with cool technology and they're like oh this is so great so great. Shiny new, you know, it must be useful. Like wrong approach, right? Come back to the problem, really dig in, enjoy, you know, get the juicy problem, really understand what it's all about. And usually the technology is actually the easy part. Understanding the industry and the challenges is the hard part.

We've got some questions that have come in. One of those is in particular is, is that when you ended up selling your company what was that experience like like your your first exit where you know like you had mentioned you had enough to pretty much just continue to live off of it invest and do your thing what was going what what what's that feeling like um it's pretty scary i would would say. You know, it's your baby. It's something I had worked on, gosh, probably about 12 years in the making at that point. I think, honestly, I got a little bit burned out. I've been working so hard in the business for so long. And also, like I mentioned before, you know, B2B SaaS at some point really becomes a sales org scaling challenge. And so I was at the point where I had a sales team of maybe about 20 people.

And it needed to grow to 100, to 150, to 200 salespeople. And that's not a task that just anyone can do, right? There's very experienced people out there that know how to do that, how to structure territories, comp plans, like all the things you need to grow a massive sales organization. And that wasn't something that really appealed to me. I'd far soon to get experts in that know how to do that. So it's very tempting to me to get the right player in, get some cash off the table, basically get the returns for all my hard work to that point, and then still retain a reasonable

stake in the company and have the right partner that then knows how to grow it to the next stage. So for me, it was kind of scary, but also a relief. Another question is, is it easier now or was it easier before when you were doing your business to do a startup and make it successful? Oh, this is a good question. I've heard this sentiment before this idea, like, you know, funny, I could be back with Bill Gates and come up with Microsoft. And everyone had all the easy things back then. I would say the opposite. Just to give you an idea, when we launched our product, our cybersecurity product in 2005, we built our own CRM, we needed to have

credit card processing on our website. So we built it. We needed e-commerce on our website, so we built it. Who would ever do that in 2021, right? You would never do those things. You can pick all those little modules you need, and all those things are so easy to get and put together today. You don't have to do any of that stuff. So I would say, if anything, it has become so much easier to launch products with all the infrastructure and cloud services and everything that's available. I will agree that the idea market is somewhat saturated. Whatever you probably think of, someone's already doing it. That's not a bad thing. That could validate that there's a real market there and maybe you can compete and do it better. So when you started the company, you were doing, had nothing to do with cybersecurity,

but yet that ended up coming to be right. And really blew up significantly. How do you, how does somebody as an owner and how did you come up with the idea to go ahead and do it? I mean, we start off with one thing when we're doing a startup and then things definitely end up shifting. I mean, I don't know how many people we have interviewed that had the one idea and only stuck with that idea, but how do you, how does it come to be? I think you just have to listen to the market, right? Just pay attention when you're talking to potential customers. So they, we were doing a services company, we're providing programming services to DC software companies mostly. And they kept giving us credentials, credentials for their VPN,

credentials for their source control, all this kind of thing. And we're like, well, this is terrible. Like, how do we manage all these credentials? And so we looked at products in the marketplace and nothing was really doing what we needed. So we built something and also tried things, right? If it's quick and easy to build,

try it and see if there's any success. And the first thing we did was we went to a trade show. We bought a booth. We had enough money coming in from consulting. We're like, hey, let's do this. It cost us like 10 grand. We had a booth at a Microsoft trade show. And the amazing part was we got to speak to about 500 system administrators over the course of three days that all looked at our product and went, huh, kind of cool, but would be way better if it did x y or z and so we kept going back to that trade show year after year and then added more and within a couple years they would say well does it do x we're like yes does it do that you know

and we would do all the things and how do you know how to do all these things it's like well you're the 2000 system administrator that i've personally spoken to. So just that again, that industry expertise, right? Dig into the problem, enjoy it. And then applying the technology tends to be kind of the easy part actually. That's excellent. Well, knowing what you now know about cybersecurity, now, is it scary out there with it still?

I mean, have we gotten better? I think so. I think the tools have been a lot better. I think in fairness to our, we were lucky. like our timing was phenomenal to start building a cybersecurity tool in 2005. That takes maybe, you know, seven, eight years to really get mature in the enterprise space. So and then all the breaches started happening from what, like 2009, 2010 onwards. So at some level, it was luck too. We were just in the right place at the right time. The tools have got a lot better. But again, it's a tough problem to solve because you only need one lapse in security and the bad guys get in.

So you got to be 100% perfect all the time. It's tough, right? So there's a lot of space there for tools to make the landscape better. And I think that's happening already and continues to happen our newest part portfolio company is a company called two cents and they're right in the same cybersecurity space looking at authentication and you know solving all very similar problems

so there's lots of opportunity for new startups there we've got time for one more question I think this is important too we've got time for one more question. I think this is important too. We've got a couple people submit this. What do you have for the advice for young entrepreneurs, those that are in high school that want to go ahead and make their mark in the world like you have, have huge dreams? What kind of secrets can you share with them of what they could be doing right now? Probably try lots of things now.

Even if you're in high school look for business ideas there's some there's a nice TED talk that talks about raising entrepreneurial children we can probably put it in the comments of the show or something but anyway things like that look at what people have done the presenter in that show it talks about collecting hangers from all of his neighbors and then taking them and selling them back to the laundry service. Like what a great idea. And he was doing that at like nine years old or something. So look around you right now. What can you do? A friend of mine,

his daughter has an Etsy business. She's 10. You know, you can do these things. So there's really no excuse. And those will teach you the basics of business. It'll teach you marketing. It'll teach you sales, teach you cash flow, teach you some basic accounting. So start now, you know, have wide open eyes, look for opportunity, build experience, build connections, and good things will happen for you. Well, fantastic advice. And good things are happening because you're on the show. And I have the opportunity to be able to interview you for our audience. Jonathan Coogley, you support startups to give them an insight of how to be successful and help them find funding. That's a hero. Jonathan Coogley, founder and CEO of Logic

Boost Labs. He's the founder of Tycotic, sold for $1.4 billion billion reach out to them at logic boost labs.com that's logic boost labs.com and of course we have our website at alliances thanks man