Tech VC and founder Jeff Rosen talks about his favorite portfolio companies at Broom Ventures and how his fund came about. He also tells a compelling story from his days at Teach For America.
Highlights:
Sal Daher Introduces Jeff Rosen of Broom Ventures
Team, Leadership & Culture
“...we look particularly closely at the people and try to understand their commitment, their mission orientation, their psychology, their empathy.”
Broom Portfolio Company Writesonic Helps People Write Really Fast & Effectively
“It is scary. It's so good that you cannot possibly tell that it wasn't written by a human.”
“We're quite comfortable investing in in-person teams, distributed teams, international teams. It's the people that matter more than anything else.”
Broom Portfolio Company Tive: Hardware Trackers & Integrated Software for Supply Chains
Broom Invested in Tive Just as the Pandemic Was Starting in 2020; Brilliant Move in Retrospect
Krenar Komoni Is an Outstanding Founder Driving Surprising Growth
Immigrant Founders and the Superman Effect
A Conspiracy Theory Debunked
Listeners, please Leave a Written Review on Apple Podcasts; It Helps Us Get Found
Jeff Rosen’s Trying Experience in Teach For America
Jeff Rosen Grew a Beard and Impersonated a Drill Sargent to Get Control of His Classroom
“There were some extraordinary students in the school despite all of the challenges that they had faced in their lives.”
Jeff Rosen Started Programing in Middle School be Creating Games for His TI-83 Calculator
How Jeff Rosen Became a Co-Founder of Rhombus, a Blockchain Infrastructure Company
Sal Daher Expresses His Skepticism About the Existence of a Compelling Use Case for the Blockchain
Sal Daher Remains Open to Being Convinced About the Blockchain
How Jeff Rosen and His Co-Founder Dan Von Kohorn Started Their VC Fund
ANGEL INVEST BOSTON IS SPONSORED BY:
Transcript of “Broom Ventures”
Guest: Founder & VC Jeff Rosen
Sal Daher: I'm really proud to say that the Angel Invest Boston podcast is sponsored by Purdue University entrepreneurship and Peter Fasse, pat attorney at Fish & Richardson. Purdue is exceptional in its support of its faculty, faculty of its top five engineering school in helping them get their technology from the lab out to the market, out to industry, out to the clinic. Peter Fasse is also a great support to entrepreneurs. He is a patent attorney specializing in microfluidics and has been tremendously helpful to some of the startups which I'm involved, including a startup, came out of Purdue, Savran Technologies. I'm proud to have these two sponsors for my podcast.
Sal Daher Introduces Jeff Rosen of Broom Ventures
Welcome to Angel Invest Boston, conversations of Boston's most interesting angels and founders. I'm Sal Daher, an angel who's very curious to find out how to best build interesting technology companies. Today, we are very privileged to have with us a venture capitalist, Jeff Rosen, from Broom Ventures.
Jeff Rosen: Hey. Good to be here.
Sal Daher: Great. Jeff is the partner of my Walnut colleague, Dan Von Kohorn, and I'm grateful to Dan for putting Jeff and me together so that we can have this very interesting conversation because Broom Ventures is a shop that is investing in the artificial intelligence space, which is the area that Dan and Jeff specialize in. Let's start out, Jeff. Can you tell the audience, our audience of founders and people who work at startups and also angel investors, what is the thesis behind Broom Ventures?
Team, Leadership & Culture
Jeff Rosen: The thesis is what we call TLC. People tend to hear that and think of tender loving care. When we hear that, we think of that, but the way we would call it is team leadership and culture. We think that those are the core elements that define whether early-stage startups will succeed or fail. We've experienced this as engineers working at larger startups. We experienced it as operators. We run our own companies. Certainly, we've experienced that as investors as well.
On top of all of the standard diligence that VCs do, we add a layer where we look particularly closely at the people and try to understand their commitment, their mission orientation, their psychology, their empathy. That's the layer on which we decide to invest. Then on top of that, it's also the layer where we support. We know that for seed-stage startups, hiring is a major concern, so we connect companies with talent, and we help them define their vision, mission, core values in order to hire people who will be mission-aligned folks and not mercenaries. That's a thesis behind Broom Ventures.
“...we look particularly closely at the people and try to understand their commitment, their mission orientation, their psychology, their empathy.”
The reason we call it Broom is because everybody on the team is a founder. In the case of my partner, Dan, many times over a founder, and we genuinely love to sweep the floors and do whatever work is necessary to help the company succeed. We can't possibly imagine being passive investors. We just love the work too much, and so, we invest in companies where we can help, and we try to take them to the next level.
Sal Daher: Yes. That's very interesting. In the artificial diligence space, getting the right people right now is just everything. Trying to find a machine learning expert, something extremely hard. Then once you found that right person, getting that person to be the most productive in the best environment is everything. It's very good.
Anyway, let's get down to some details. I just want to talk about some portfolio companies that you're excited about at this moment, what's top of mind for you. Doesn't mean that they are the fairest of your children. It just means that it's the one that's most top of mind
Broom Portfolio Company Writesonic Helps People Write Really Fast & Effectively
Jeff Rosen: I'm blessed with 26 children in the portfolio, and I love all of them equally. Based on what you mentioned, two come to mind that I'll talk about. Since you mentioned AI, and in part, because my partner, Dan, has such expensive background in AI, we have a particular focus on finding extraordinary companies in that space. One of them in our portfolio is called Writesonic [https://writesonic.com], and they do generative AI for marketing content for companies. It is quite magical software. If you haven't tried it before, I would encourage you to give it a shot and just see how human-like the language comes out from just some pretty small inputs.
It can write essays, it can write blog posts, it can write tweets. Everything is SEO, optimized for your company's content marketing. What stood out during our diligence process was just how extraordinary the technology is. Under the hood, they've got a combination of their own models and GPT-3, and I have used it in my personal life to help me write investment memos, for example. An astonishing thing. Yes, it's meta. I use Writesonic to help me write the memo for why I invested in Writesonic.
Sal Daher: Yes. Jeff, would you say the name of the startup again? Maybe spell it out.
Jeff Rosen: Yes, it's two words, Write, W-R-I-T-E, Sonic, S-O-N-I-C. Writesonic.com. All together, one word, Writesonic.
Sal Daher: Writesonic. Meaning you write at sonic speeds, at the speed of sound.
Jeff Rosen: Exactly. It essentially turns anybody-- I would know because I am totally not qualified to be a content marketer. I'm a math major, many years software engineer. I have no idea what I'm doing. I give it prompts. I know what I want it to do, but I don't know how to phrase it in the best way. I enter some keywords, a sentence or two, maybe, and it generates what I need it to generate. I'll even let you in on a secret. It helps us generate the copy for the Broom Ventures website.
Sal Daher: Wow. This is amazing [chuckles]. It's scary.
“It is scary. It's so good that you cannot possibly tell that it wasn't written by a human.”
Jeff Rosen: It is scary. It's so good that you cannot possibly tell that it wasn't written by a human. When it's longer form, I use it for co-writing, like a writing assistant, that AI under the hood. It will create a draft, I'll edit the draft, and then I'll send it back to Writesonic for further review. Going back and forth, we ended up with a product that's much better than anything I could produce on my own. When it comes to something like a tweet, I only need to give it a couple of words. What comes out is a perfectly formatted tweet that does what I need it to do.
Sal Daher: That is so cool. I do that every week for my podcast. I wonder what it would do based on the transcript from the podcast. If you give it a transcript? What could it do?
Jeff Rosen: I think it has a summarizing feature. I can't say for sure because I haven't used that piece of it. It would be nice. I have seen this feature and other platforms where it can analyze an entire article and condense it to the key points from a couple of paragraphs.
Sal Daher: That'd be cool. I'm going to check it out. Writesonic. How did you guys connect with Writesonic?
Jeff Rosen: We met Sam, the founder, at Y Combinator Demo Day. He had just graduated from the batch. There were, oh my goodness, 300, 400 companies in that batch.
Sal Daher: That's how Y Combinator rolls these days.
Jeff Rosen: Yes, there's a lot. We look through every single one. This one really stood out in particular. When we met Sam, it stood out even more because of Sam as an individual.
Sal Daher: Yes, yes. Tell us about Sam.
Jeff Rosen: Sam is one of the most extraordinarily productive human beings I've met. He willed Writesonic into existence essentially as a solo founder. Eventually, he started hiring, but only after he had built out a quiet fully fleshed-out product and brought his first tens of thousands of MRR before he really thought about hiring at all. That means he was doing the engineering, he was doing-- Your listeners, I'm sure, are founders or know founders and know there's many hats. Particularly hard to be a solo founder because you have to wear every single one of them.
Sal Daher: It is one of the most well-established bits of knowledge in the study of startups that more founders; better. Being a solo founder is really hard. Having more founders with complementary skills really, really increases the chances of success of a startup.
Jeff Rosen: I absolutely agree. On top of that too, it helps from an emotional standpoint when you're down and you're feeling demotivated, it helps so much to have a co-founder who can lift you up.
Sal Daher: Who's in the same boat? Yes. This is Samanyou Garg, CEO and founder of Writesonic.
Jeff Rosen: Exactly. As a human being, he is-- as I mentioned, he's wildly productive, but is a soft-spoken-- His genuine kindness comes through. We immediately identify them as someone who we would want to work for. He's exactly the kind of leader who I would want to follow personally. I'm attracted to leaders like that, who lead by doing, who show rather than tell, who are just quietly competent and impressive. That shone through right away when we met him.
We met with him twice in two days. We compressed our diligence process because we knew that this was going to be an ultra-competitive round. There's a funny story behind this, but we ended up getting allocation in the round with about 15 minutes to spare. If we had made the offer 15 minutes later, we may well have missed the round, and we're quite grateful that we got in.
Sal Daher: Wow. That's a tough space to be in. What do you expect to be the future course for Writesonic? Do you expect them to be acquired?
Jeff Rosen: I want what Sam wants. I'll put it that way. I want Sam to follow his vision and take the company where he sees it. I know that in the long run, he believes that the company should-- essentially, it should cover your company's content marketing needs from end to end. Without revealing too much about his roadmap or his future plans, in the same way that no-code tools can help companies get from zero to one and one and beyond without expensive developers, it should be similar for this where anybody can become an expert content marketer in a 10th of time and with quality just as high or higher than a human would produce.
You can imagine some other interesting applications in the long run as well. For example, imagine you're an enterprise with a catalog of 100,000 products. Going through and writing all of those product descriptions in a consistent voice with a consistent call to action, it's essentially impossible to do that because no one person can do that, and if you have multiple people doing it, then you lose that consistency in the voice, and you may really want that.
Sal Daher: My wife and I are renovating our kitchen, and we were looking for a range hood. There's a company that manufactures the range hood that we have in there right now, but we've got need a different model. We really like the company. It's called Proline. They're in Utah. Their website really needs some work. Maybe they could use Writesonic. Here's a shout-out to Proline, check out Writesonic. It could probably really help you create content for your website cause they have great products, but the attributes of the particular-- There are gazillion models and the attributes are not really clearly spelled out and it's not well explained, and so forth.
I suspect that there's ample room for the use of something like Writesonic in creating a product catalog that is consistent, that makes sense, explains things well to people, and is SEO competent. Tremendous. Tremendous. Is there anything else you want to say about Writesonic? This is so cool.
Jeff Rosen: It is cool. I was going to say, even if you don't have a company, you just want to play around with what feels like the future, you may just enjoy. You can create a free account and just mess around. It's surprisingly good. I wish I could still bottle or capture the first feeling when I tried it and I thought, oh my God, this is magic. I'm jaded now. I've used it for a year. I just expect greatness from it, but that first feeling was pretty special.
Sal Daher: Fantastic. Do they have any thoughts about working in the space, unstructured data in electronic health records? Boy, do they need help in this area?
Jeff Rosen: Very much so. It's a mess. I can't say I know too much about their plans in that industry, but certainly, that's a problem that needs to be addressed.
Sal Daher: They're based in the Bay Area?
“We're quite comfortable investing in in-person teams, distributed teams, international teams. It's the people that matter more than anything else.”
Jeff Rosen: They are a fully remote distributed team. Sam lives in India. He's got employees all over the world. Our fund itself is remote. We've got partners all over the country. We've got operations and investments all over the country and globally, and we're agnostic as to the location of the startups that we invest in. We're quite comfortable investing in in-person teams, distributed teams, international teams. It's the people that matter more than anything else.
Sal Daher: You’re physically are in Boston.
Jeff Rosen: My partner, Dan, is physically in Boston. He holds down the fort there. I grew up in Connecticut, outside of Hartford, and right now I live in the Bay Area.
Sal Daher: All right. Well, so let's talk about your Boston startup.
Broom Portfolio Company Tive: Hardware Trackers & Integrated Software for Supply Chains
Jeff Rosen: It's called Tive. [https://www.tive.com]. What they do is supply chain tracking with hardware trackers and integrated software.
Sal Daher: T-I-V-E.
Jeff Rosen: Yes, T-I-V-E. They can track anything throughout the entire supply chain. You take the little blue cube, the 5G solo tracker it's called, you slap it onto any container that you want to track throughout the world, and then you have a, I guess I would call it a command center where you as the guru in your company for the supply chain now have access to location data, temperature data, shock data, and several other data points. They're quite robust. You see that all in an integrated SaaS platform.
I love this company for many reasons. It has a particularly close place in my heart because it was one of our first investments. We opened our fund in the second quarter of 2020, which a lot was going on in the world at that time, and we made our first few investments in that most uncertain time during COVID when the world was falling apart, markets were way down, startups weren't sure what the future held, and that was when we made our first investment in Tive.
Broom Invested in Tive Just as the Pandemic Was Starting in 2020; Brilliant Move in Retrospect
This one was such a clear investment for so many reasons. One because the traction, it's good on its own, it was so impressive, but it's really hard to meet Krenar Komoni and not want to back him. He is living his dream. He’s a chip expert. He's been working on 5G technology for years. He's been working on this company since 2015, 2016, and it took years before the traction really came.
By the time he got there, he had built the industry’s leading product. We invested right at that inflection point. Then we've invested four more times. We've backed him five times through our initial check and follow-ons, and we're just going to continue to back him because he is so mission-driven, has built something extraordinary that has grown faster than almost any other company I know, and has a massive market in front of it. You would be shocked how many shipments out there are still not tracked, and Tive is going to be able to track all of them.
Krenar Komoni Is an Outstanding Founder Driving Surprising Growth
Sal Daher: Wow, that is so interesting. Right here in Boston. I guess Boston is a place you would expect something like this to be popping. Tell me about Krenar Komoni, the CEO and founder of Tive. What's the story there?
Jeff Rosen: His background is technical in hardware. He has more advanced degrees than I can possibly keep track of or even hope to understand in the intricacies of chip building, but that makes him, in our view, the perfect person to build this technology. On the personal side, it's really hard to hear his story and not just be blown away with what he's gone through in life. He is an immigrant from Kosovo. He escaped during the war-torn years, came here with very little, and not only has he built this extraordinary company here but he's also given back in Kosovo.
He's set up a remote engineering team for Tive based in Kosovo flies back there frequently, and it’s created dozens of jobs. I'm not sure of the exact number, but it's at least dozens back in his homeland. Quite inspiring stuff. When you talk about mission alignment, it's hard not to think of Krenar.
Immigrant Founders and the Superman Effect
Sal Daher: It's like the Superman effect, the explanation for why Superman on earth has superpowers, that he comes from a planet with very high gravity and so forth and so that when he comes here to earth, he could jump over buildings. Of course, that elides the fact that any biological system would very promptly-- his strength for jumping over buildings would promptly disappear in the low-gravity setting. We all know what happens to the astronauts. In the 1930s I guess, there was a very naive view of the world that made sense.
I see that that happens in terms that "Superman effect" happens with founders in a sense that if a founder comes from a country that is just a horribly, horribly difficult place to do business. He or she has this drive to succeed and so forth, they can jump over tall buildings in a single bound, so to speak, and it doesn't seem to wear off. They are programed like this for life. I've seen this before. I've seen this before.
Jeff Rosen: Exactly. Same with us when we are running to back it as fast as we can because it's rare and it's so impressive.
Sal Daher: There’s no atrophy from reduced gravity.
Jeff Rosen: No, certainly not. When you think about founder/product alignment, we have talked about product market fit a lot, but the founder product fit is definitely important in our view, the right person to build it. It's not just his incredible technical abilities but his purpose in life is to make sure that every item arrives on time and in full.
Sal Daher: So cool.
Jeff Rosen: Like I said, we've backed him several times since the early days, and most recently is Series B was just announced. It was a $54 million round led by AXA, the big insurance conglomerate, and we were happy, thrilled to participate again.
Sal Daher: What's their business model?
Jeff Rosen: They make money on the trackers and on the software.
Sal Daher: And on the software... This is a SaaS play. They’re generating ARR, annual recurring revenue?
Jeff Rosen: Exactly. It's typically large enterprise clients. I'm not sure which ones I'm able to say out loud. Just to err on the safe side, just broadly speaking, top grocery chains, top professional sports leagues, top logistics agencies. Those are the nature of the clients. They tend to sign very large contracts. Essentially always, they upsell over time. They start tracking some items. You can imagine a grocery chain. We'll start with a contract where we track produce. Then the produce tracking goes really well, so now we're going to add poultry. That goes really well, and now we're going to add international markets. Before you know, you're covering 20% of their total supply chain, and there's still room to grow from there obviously.
A Conspiracy Theory Debunked
Sal Daher: This podcast should reassure conspiracy theorists that not everything has a chip tracking it. [laughs] As a matter of fact, surprisingly few things, so few in fact that there was an opportunity for Tive to keep track of grocery shipments and things like that.
Jeff Rosen: Then here we are carrying our smartphones around tracking us everywhere we go anyway.
Sal Daher: Oh, it doesn't count. The conspiracy theorists have to use their phones to transmit to conspiracy theories. [laughs]
Jeff Rosen: Exactly.
Sal Daher: Anyway, these things work on different levels. This is really exciting. I love these founders that take off and build a company. He was also a solo founder, Krenar?
Jeff Rosen: He was.
Sal Daher: I've seen Bettina Hein for example, the founder of Pixability was a solo founder, and it's painful. Very, very painful. She was a solo founder because she just couldn't find the right people to help her co-found. She understood the value of co-founder. She'd had co-founders before, but she had this drive to build this company and did it on her own.
Now, Jeff, what I want to do over the second half. We've talked about two exciting startups that you're involved with. Writesonic, which generates remarkable SEO-friendly text, and Tive, which is helping various retailers or grocery chains track inventory. Anything else, any other startup that you want to bring up at this point?
Jeff Rosen: If I had time, I would talk about all 26 because there's so much to say about all of that.
Sal Daher: You’re like Lake Wobegon all your children are above average.
Jeff Rosen: Exactly.
Sal Daher: All the men are handsome and all the women are strong. [laughs]
Jeff Rosen: [laughs] I would say that.
Sal Daher: Garrison Keillor! Garrison Keillor!
Anyway, at this point, what I like to do is I like to switch a little bit, and let's get into how you came to become a venture capitalist. Your very, very impressive resume that you have there. Most impressive thing in the early resume is not the fact that you studied math at Yale, but the fact that you managed to get into Teach For America. I want you to tell the story of how you went from math at Yale, Teach For America, and eventually become a venture capitalist.
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Jeff Rosen’s Trying Experience in Teach For America
Jeff, let's go back now. You grew up near Hartford, Connecticut. You went to Yale University. You studied mathematics there. Then you went to work for Teach For America, which is extremely hard to get into. Tell us about that experience.
Jeff Rosen: Sure. It was the most meaningful experience of my life, both for good and for very difficult to say the least. I have always loved math and I've always loved teaching math. I grew up as a mathlete, not an athlete. I was studying for math competition starting in middle school and through high school, even in college. That was my driver, but I've always had a passion for helping math become accessible to people to whom it doesn't come naturally. I think it's beautiful. It's so much more interesting than you would typically learn in a school curriculum.
I have a lot of issues with the way that it's currently taught where there's so much plug and chug, just training people to pass the test. They pass the test, they forget about it.
Sal Daher: They take all the fun and beauty out of math. My father was a mathematician. My late father was a mathematician. He was also a prophet for mathematics. He thought that everyone should study mathematics and should understand the beauty and the joy of mathematics. And...that it was accessible to them if you had a good enough teacher, which is consonant with what you're saying here, with your story of being in Teach For America, the idea that you want to bring the beauty of mathematics to people for whom it may not come as easily as it should.
Jeff Rosen: Exactly. I was blessed beyond an ability that I can say to have had a teacher like that in high school, David Quarfoot [https://math.ucsd.edu/people/profiles/david-quarfoot] is his name, who inspired me and challenged me and showed me how impactful teachers can be, and I just knew I wanted to do that too. After graduating from Yale studying math there, the first thing I did was became a high school math teacher, teaching precalculus and AP calculus at a charter school in East Oakland, California. It was the first AP class ever offered at the school. That was the challenge laid out for me when I got there.
I quickly realized that most assumptions that I had made about what teaching would be like for me were wrong. It helped me understand some elements of my upbringing that were more privileged than I realized. Just as an example, in the sense that when I went to school, I knew that it would be quiet in the classroom and that I would have a teacher who was motivated and cared, and I could learn, but that was not the case at first. 93% of the students are on free or reduced lunch. It's a difficult part of Oakland. There had never been advanced math class at the school before, and so it was going to be a tremendous challenge.
The hardest part was for me personally, I don't really have the strong aggressive dominant personality that is sometimes required to lead a classroom where the students are going to test you more than you've been tested before. To be honest, I completely failed in the first several months to gain control over the classroom, and so all of my ideas about what I could accomplish, what I could teach, all these lesson plans, they really just fell by the wayside because there was something lower on the Maslow hierarchy that I didn't think about, I wasn't really well equipped for, and just didn't get it done.
I didn't motivate the students properly. I didn't stand out correctly. I wanted to be their friend instead of establishing myself as the leader first. To anyone out there who's thinking about going into teaching, the number one mistake, and it cost me dearly in the beginning.
Sal Daher: Well, Jeff, being a good teacher, you can be a good teacher on different scales. It's a fractal thing. There are people who are drill sergeants. A classroom like that might have benefited from a drill sergeant type of teacher who can assert, discipline in the class, and get everybody to quiet down and to listen and to pay attention. That's crowd management aspect of it. Is very, very different from the person who is very subtle and very good at understanding different learning styles and how to motivate someone on a one-on-one basis.
I have a nephew who is a superb teacher on a one-to-one basis, but he's like you. He's soft-spoken and he's not someone who's confrontational and who likes to assert his personality. He will get along with people and so on. He's not someone who's going to be instilling authority in a class. However, the guy just has this knack for understanding how to explain things to people in a way that it gets through to them. I think part of it is that he struggled with this education, learning, so he had to develop all sorts of strategies to learn himself. He's obsessed with learning strategies and so forth.
I think someone like that is better on a one-to-one coaching relationship where you don't have this crowd control problem. When it's 15 kids in a class, they start showing off to each other and the whole thing degenerates. I've seen that environment. It's also-- If you come from a middle-class background, there's a lot that's given to you that you have no clue how valuable it is until it's absent. How did you go from failing at being a teacher at Teach For America to becoming a VC?
Jeff Rosen: Let me tell you the second half of the story at Teach For America because there's, thankfully, a bit of a redemption arc.
Sal Daher: Oh, great. Great to hear that. The story arc completes.
Jeff Rosen: I thought about quitting. I'm not used to-- We add some color to it. I had bulletproof windows because my classroom faced the street. Multiple times, we heard gunshots during the day and had to go on lockdown.
Sal Daher: That is so sad.
Jeff Rosen Grew a Beard and Impersonated a Drill Sargent to Get Control of His Classroom
Jeff Rosen: There was a student who threatened to stab me in the middle of class. These are things that I had never dealt with before and quitting was something that was on my mind. It was just emotional. I cried a lot. I spent a lot of time feeling sad, but I'm really goal-oriented. The end goal of motivating these students and achieving good outcomes with them was so strong that I taught myself how to adopt to the personality that was required. It was incredible how everything was downstream from there. I have to be honest with you, I was totally faking it. I grew my beard.
Sal Daher: You even became a drill sergeant.
Jeff Rosen: I acted like a drill sergeant. They didn't know I was like--
Sal Daher: You knew that inside you’re not a drill sergeant, you're a softy, but externally, you’re like, rah, rah, rah.
Jeff Rosen: Exactly. It was actually amazing what happened. It was just like that was what was required from the beginning. Once you establish yourself as you are the authority in the classroom and nonsense won't be tolerated--
Sal Daher: Establishing yourself as the top dog in the class then you can get things done.
Jeff Rosen: Exactly. They test you, and if you hold strong, then they stop testing you and actually they respect you. From that comes everything else. There were some extraordinary students in the school despite all of the challenges that they had faced in their lives. I truly believe that every student there wants to be there, wants to learn, and has the capability to do amazing things.
“There were some extraordinary students in the school despite all of the challenges that they had faced in their lives.”
I was really blessed with some exceptional students. Once I learned how to control the behavior in the classroom, they shone in a way that I just felt bad that I hadn't unlocked it before. Really amazing students who worked so, so hard to achieve their goals. In the end, some amazing things happened with them. With the students collaboratively, we raised a fund. It was the first time I had ever raised money in my life. We raised the funds to take the students on trips to visit colleges to help inspire them to see what's out there.
For many of them, they had never been on a plane or had never left California. We actually went to Boston for our first trip and showed them an array of colleges. They looked at BU, they looked at Northeastern, they looked at Tufts, but I have to admit, I didn't want them to have to go to Harvard because I went to Yale and I just didn't think that would be a good experience for them.
Sal Daher: [chuckles] Good. That's a great story. That's a great story.
Jeff Rosen: Yes. They're wonderful kids, and they've gone on to do incredible things in their lives. It's amazing what setting foot on a college campus does. This was another thing where I had just made assumptions that were not true, and I just assumed that everybody would be motivated to work hard in high school to go to a good college because I just assumed that everyone would know what kinds of opportunities were available in college, and of course, that's not the case and that was an error. By being there in person, you really get to see it.
They got to meet college students who had come from backgrounds like them. They just got to walk around on these beautiful quads, grass, and these people playing frisbee and having fun and studying outside, and wait, there's like 50 buildings? I thought school was only one building. You walk 10 minutes to get to all these different places, there's a science lab, there’s just everything. Extracurricular activities, sports.
Sal Daher: Their eyes are opened up to the possibilities. A little bit of what this podcast attempts to do is to provide those kinds of models. One of your students coming from Oakland, California, from a difficult environment connecting with other students in a university campus who came from similar environments, they say to themselves, "Oh wait, wait a second, I can do this." There's a model.
Jeff Rosen: Exactly. It gives you something to work towards. When you're struggling, when you just don't feel like doing the hard work, that happened to me in high school so many times, beating my head against the wall, I just don't want to do it. What kept me going was the motivation that there's going to be an amazing college experience at the end of this, and it's worth the effort now to get that later. After the trip, they knew what was out there for them, and so that helped motivate them during the tough times back at school.
Sal Daher: Excellent. How did you end up becoming a venture capitalist?
Jeff Rosen Started Programing in Middle School be Creating Games for His TI-83 Calculator
Jeff Rosen: After Teach For America, I became a software engineer. I had been programming since middle school. I was making TI-83 games to impress my equally nerdy friends back in the day. I went to a particularly nerdy school, and that was how you gain social currency.
Sal Daher: TI-83 is a Texas Instrument programing in calculator, graphing as well. You could graph with it and so forth. Anyway, so with your TI-83, so what did you do with that?
Jeff Rosen: I made the most silly games and the most rudimentary programming language to try to get some credit with my friends who were trying to make even cooler games and fortune tellers and little skiing games and silly kid stuff, but it was fun. That was how I cut my teeth on programming. After teaching, I realized that that was what I wanted to try next. I worked for three different startups in the San Francisco Bay Area, working on a variety of different software. One was at NASDAQ doing secondary liquidity programs, software to support that so that early employees at growing software startups can turn some of that paper wealth into actual wealth.
I worked at a startup that was doing restaurant software, so back of the house, helping them order their supplies and pay their invoices.
Sal Daher: Listen fact, secondary liquidity means after an initial public offering, the stock that goes public may not be deeply traded, because there's so many stocks out there and this is a stock that has a small market cap. You were attempting to increase the buy and sell activity so that there would be liquidity, so that people who were in the options pool of the company and so forth would be able to cash in their shares.
Jeff Rosen: Exactly. Then with this case, it was for companies that were not yet public but wanted to give the employees and founders an option. It can be difficult. For example, if you're an early employee at a startup, it grows super fast. On paper, your options are worth $5 million. All that hard work you've put in has paid off, except that now 99% of your notional net worth is tied up in this thing that is totally illiquid, and on top of that, it's paper. You can't send your kids to college, you can't buy a house.
Sal Daher: I didn't know this. NASDAQ has a secondary market for pre-IPO, private paper. I wasn't aware of this.
Jeff Rosen: At the time, it was called NASDAQ private market. This was back in 2014. It wasn't so much a liquid market as a structured one. They would give a company the option to come up with an investor who is interested in buying secondary common shares and match them with the employees.
Sal Daher: They're just matching trades and providing the infrastructure to settle the transactions efficiently. Very interesting.
Jeff Rosen: Exactly. A couple other startups as well. One was doing back-of-the-house software for restaurants, helping them order food from vendors, pay their bills, check everything digitally. The third was a company that does sensor motion tracking for professional athletes and members of the military to prevent and predict potential injuries that may happen. Quite interesting software. There's a force plate that you do all these different jumping tests and balance tests and landing tests, and it can predict with alarming accuracy what injuries you may face.
That's quite useful for a professional sports team to want to know who to draft. A couple for the military so that they can assign a program of nutrition and workouts in order to prevent that injury from happening. Actually, alarmingly, when I interviewed for the company, I was technical. I was doing the technical interview, but after I finished, the CEO made me go jump on the plate. It was embarrassing. Well, first of all, my numbers were so much lower than the training data that it almost broke the machine.
That was a bad thing. On top of that, he knew from my data, just looking at it, he said, "Look, I know exactly what you're doing and not doing and your workout. I can tell that you do squats, but I can tell that you've never done a single leg exercise in your life. You've never done a left leg and a right leg exercise. You've only done them together, and you're missing out on this whole form of strength that you could have." I just hung my head. I was embarrassed he called me out, and everything he said was true.
Sal Daher: What's the name of this company?
Jeff Rosen: It's called Sparta Science. Very, very cool.
Sal Daher: Sparta Science?
Jeff Rosen: Yes, exactly.
Sal Daher: Wow. I'm going to check them out. Great. Okay. Then how did you end up in the venture business?
How Jeff Rosen Became a Co-Founder of Rhombus, a Blockchain Infrastructure Company
Jeff Rosen: The next step after that was co-founding a company with Dan, the partner that I mentioned, who's based out of Boston.
Sal Daher: Dan Von Kohorn, my Walnut colleague who connected us.
Jeff Rosen: Exactly.
Sal Daher: One of these days, I hope to have him on. Keep working on him, Jeff.
Jeff Rosen: He is even more shy than I am, but I'll try.
Sal Daher: [laughs] Great guy.
Jeff Rosen: Yes, great guy. I've known him for 12 years since I was in college. We've worked together on some things. He was co-founding a company in the blockchain technology space. He and his cousin who was the CEO invited me to join the company as a co-founder. That was my first ever experience in the trenches as a founder.
We built that company together, building enterprise oracles to delivering data on chain for consumption for all sorts of different kinds of interesting applications, be it smart contracts, insurance applications, betting applications, various enterprise applications, quite interesting stuff. Ultimately, we sold that company to Chainlink, which is the largest player in the space, and integrated the technology there.
Sal Daher: What was the company called?
Jeff Rosen: Rhombus, like the shape.
Sal Daher Expresses His Skepticism About the Existence of a Compelling Use Case for the Blockchain
Sal Daher: Oh, Rhombus. Okay. I see that on your resume. Interesting. I've been sort of a blockchain, crypto skeptic because I have yet to be convinced that there is a particular use case somewhere which can only be met with distributed ledgers. If you're trying to disabuse me of that impression or that opinion, you could try to do that right now one where it's-- It can be done any other way. It's absolutely compelling and it's a really useful thing.
Jeff Rosen: We knew from the beginning that we were not going to launch a token and do a cash grab like that. We knew we're nerds, we're all technical, and we wanted to build core infrastructure.
Sal Daher: Picks and shovels, creating infrastructure for an existing-- I don't deny that there's massive demand for it. There's a lot of interest in it. My question really is, have you seen or can you give me an example of a real-life application where the distributed ledger is superior to any other?
Jeff Rosen: Yes. I've worked in the industry for years, and I'm a skeptic as well of many of the purported applications. I think the hype has exceeded the actual value by maybe 10x. Nevertheless, I do think there are quite interesting applications out there. One that I am interested in-- Well, there's a few, but one in particular that I like is insurance application. It won't work in all cases, but a case when the claim is fairly narrow.
An example would be flight insurance. In that case, you buy the insurance, you pay the premium. In case your flight is delayed or canceled or what have you, you get a payout, maybe paying you back what you paid for the flight, and so that's insurance. If the flight works great, then you pay the premium and you take your flight, and everybody's happy. There's a market for that. It's an interesting form of insurance. That's something that can be really nicely done on a blockchain because it's really simple. It's just, did the flight arrive on time or not? You can aggregate many data sources.
Sal Daher: It's binary. It's like a credit default swap or something. There's a well-defined event. Then if the event occurs, the payout is x, the decision chain is very clear. You can automate that and you can do it in a distributed way. Where does the efficiency come in? Why can't you just have a central ledger keeping track of that? How's that superior to a central ledger, having a distributed ledger in that situation?
Jeff Rosen: If you've experienced the insurance claims process before, you probably have not always had the best experience in the sense that they are your judge, jury, and executioner. They're highly incentivized to make it slow and painful and roadblocks and hope that you won't collect. They get to decide. They issue the policy and they also get to decide if you meet the requirements. I think people would be more interested in buying the policy if they knew that there would be an instant payout that was arbitrated by several mutually agreed upon data sources about flight delays, as opposed to the insurance company itself being the one to do that.
For example, this wouldn't work for auto insurance. I would not want a decentralized arbiter.
Sal Daher: It's too diffuse but credit default swaps. If a credit instrument defaults, you get a payment of x. They meet the same description. I can, well, imagine an insurance company that advertises itself as being mechanical, having automatic payout where it maintains a central ledger, and it just says, we're going to pay you as if it were automatic. You just cash your money and get the price of your ticket. If the flight is delayed, you lose a ticket and you get it done. It's automatic. It doesn't have to be with a decentralized ledger. You don't have to have all these people checking because it's a fact the flight was delayed. I remain skeptical that the distributed ledger is going to take over the world.
Doesn't the fact that there's all this overhead, there's all this dead weight with all the computation you have to do to replicate ledgers everywhere and hash functions and all that stuff that you have to do to encrypt it, doesn't that add overhead burden to make the software overly complex?
Jeff Rosen: Absolutely agree. On top of that, a lot of Web3 companies these days seem to be built-- I don't know how to describe it. Almost like a religious perspective where the first principle is we need to build this in a decentralized way. The second principle is, what can we build that users want? Totally, that is not the way that I think we should be going about this.
Sal Daher: Build it and they will come.
Jeff Rosen: Yes. Start from the user need, and then if it happens that a decentralized ledger is the right way to build that technology, then we should build it that way but only because that's what users want and that's what gives them a better experience. When you think about it that way, I do still believe we may disagree. I still do see use cases there, but not nearly as many as you see in the world.
Sal Daher Remains Open to Being Convinced About the Blockchain
Sal Daher: Well, Jeff, I remain open to be convinced it is impossible to prove a negative to say that it is not usable. Reminds me of a story my elder daughter. She was, I don't know, three or four, and she says to me, "Papai," that's daddy in Portuguese, "is there such a thing as magic?" I say to her, "Laura, there's no such thing as magic." "How do you know?" You’re a mathematician, you see the logic problem there. "Well, I've never observed it."
That's the strongest statement you can make. You've never observed magic occurring. Lots of things lead you to believe that magic doesn't exist, but how can you prove that there's no such thing? All you have to do to prove magic exists is to come up with an example, here's magic. You prove the potential with the actual. She says, "Maybe somewhere in the universe, somewhere in another planet, there's actually magic. You just haven't seen it." I'm left like, "Oh, geez." It was not the first time that I lose an argument with her.
Jeff Rosen: Smart kid. I love it.
Sal Daher: You see the problem here?
Jeff Rosen: Did your daughter end up growing up studying formal logic by chance?
Sal Daher: No. She became a physician much against my advice. My sister's surgeon, and she was influenced by that.
Jeff Rosen: Amazing.
Sal Daher: She's a primary care physician. My younger daughter, she's the one that might have gone that way because she loved philosophy and she's now a software engineer, but she likes that formal logic reasoning. My dad, of course, was all over this stuff. It was table talk in our house when we were kids.
Jeff, you founded a company. Then I guess you went into the VC space because you then decided to start a fund sometime after Rhombus.
How Jeff Rosen and His Co-Founder Dan Von Kohorn Started Their VC Fund
Jeff Rosen: Yes. Dan came to me one day and said, I have met this extraordinary person, his name is Joe Musselman. He looks exactly like his name to an extent that you're not going to believe. He has an incredible background. He's the founder of The Honor Foundation which transitions Navy Seals into the private sector. He's got a West Coast network in VC that is different from Dan's network. He wanted to start fund together and he asked if I would join with them, and that's how it came together.
Sal Daher: Awesome. You and Dan are very similar. Dan Musselman is very, very different from the two of you.
Jeff Rosen: Very much so. We need a mix of extroverts and introverts. We need a mix of long-term vision and short-term execution. Thankfully, with Joe and Dan, we have all those bases covered.
Sal Daher: A special forces veteran and two geeks go into a bar, [laughs] two math geeks, two quant geeks go into a bar. It sounds like a start of an interesting joke.
Jeff Rosen: Exactly.
Sal Daher: That's tremendous.
Jeff Rosen: Actually, if your listeners go to our website and just look at the team page, you'll see it right away.
Sal Daher: You'll be astonished. I was looking at Joe Musselman. I was like, “Wow.” The guy is ripped. Very interesting. It's fascinating. How does this creative tension work itself out? Can you tell some stories about this?
Jeff Rosen: Well, there's something really important that he brings to the table, which is he has worked with these people who have sacrificed more than the rest of us can know or understand. When we think about working on a team or being a strong leader or building a culture, TLC, like we talk about, Joe's network has lived this. The lessons that we can learn from them are extremely valuable for ourselves and for our portfolio companies.
Sal Daher: Because in the end, it's all about creating teams and motivating the teams and understanding them and so forth, and so he brings that understanding of teamwork and of sacrifice.
Jeff Rosen: Exactly. He just recently hosted a leadership conversation for our founders and our network where he brought on Rob Newson, who was a Navy seal captain decades in the forces and the lessons that he has learned are incomparable. Being able to hear directly from him and have our founders be able to apply that to their own leadership styles, that's quite valuable.
Sal Daher: Fascinating. This is really fascinating.
Well, Jeff, this has been a really, really tremendously interesting interview. I'm so grateful to Dan Von Kohorn for putting us together. As we think about wrapping up our chat, is there anything that you want to communicate to our audience of founders, of angel investors, people who want to start a startup? Any parting thoughts?
Jeff Rosen: I would just encourage them to reach out. We call ourselves room for a reason. We genuinely love sweeping the floors, and we love speaking with founders and hearing about the incredible things that they're building. If they can reach out and want to chat, I'm always happy to do that. It's jeff@broom.ventures. Look forward to hearing from some wonderful founders.
Sal Daher: Excellent. Broom dot broom comes from the famous story of JFK visiting Cape Canaveral, NASA, and asking a janitor-- How does that story go?
Jeff Rosen: He asked him how he was doing, what he was doing, what his job was like, and he said, "Well, Mr. President, I'm helping to put him on the moon." That speaks to mission alignment throughout the entire organization which is important to us and it also speaks to no task is too small.
Sal Daher: Yes. Pushing a broom is important to putting a man on the moon.
Jeff Rosen: Exactly. There's no task too small. There’s no ego involved. We were just founders who love to help founders. Last night, Dan and I were up until 2:00 AM Eastern Time helping a founder in our portfolio put together an FAQ document for their data room, for their raising their next round. We love that kind of stuff. That's the kind of commitment that we make through our founders and the reason we're doing this.
Sal Daher: Well, Jeff Rosen, well said. Thanks a lot for making time to be on Angel Invest Boston. I thank the listeners for having a listen. This is Angel Invest Boston, I'm Sal Daher.
[music]
I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.