Goldman Sachs 10,000 Small Business recently spoke with Jon Gosier, an alumnus from Cohort 3 at the Community College of Philadelphia following his recognition as one of Time Magazine's "12 New Faces of Black Leadership." The conversation revolves around Jon's experience working in the technology industry as an entrepreneur and investor. Through his own professional experience, Jon discusses his career and how he hopes to continue to change and improve the business community around him. Jon reflects on the impact and importance of peer groups and partnerships as his career has developed, and how through his commitment to giving back he continues to encourage entrepreneurs to build their own networks of support.
1. What does it mean to you to be listed as one of Time Magazine's "12 New Faces of Black Leadership" and an "Innovator of the Year" in 2013 by Black Enterprise Magazine?
First of all, it's incredibly flattering and second of all, it's great that the perception of leadership is starting to change. I am a software developer and have done some stuff in the financial space as an investor. Those are two ways of creating wealth and technology for individuals. Traditionally when you think about leadership it's more things like civil rights or politics. It's good to be included among such great company.
2. Can you share how you came to be a professional entrepreneur and venture capitalist?
Entrepreneurship kind of happens one of three ways. One, you have a lot of wealth or know someone who can financially back your ideas as an early-investor. That's probably the least common path for entrepreneurship. What is more common is the second path, which is when you have an idea of something that you want to see in the world and you have to make a choice whether you want to do that on your own, fundraise for money, or find some other way to do it. You're building something from nothing, which is what I had to do. The third path is "interpreneurship" where one can do things under the employment of a fund or a corporation that they work for where there are an entrepreneur-in-residence.
I fall into the second category. I had to do all this from scratch, its called bootstrapping. In order to be really successful, I had to let everything else go. I quite my job in the film industry and just went all in. Once I started my first business, I was working for myself, had no other income or safety net and if I wanted to survive it had to work. There is no greater motivator than that when it comes to starting anything.
It's not easy, but doing it with no safety net is what drove me because I just knew that I had to keep things going because there was really no back up plan.
You figure it out as you go along. You hit some bumps in the road. I certainly had times where the companies I have been involved with were not doing as well as I would have liked but you push through it, you persevere, and you figure it all out. Along the way you're figuring out things like business models, how to market to your audiences, and how to understand your staff and how to talk to investors. It was through that grueling type of entrepreneurship that I eventually became an investor.
I came from a community where this type of technology is foreign, starting your own business was foreign, and there were few people that could help. I think that it's important for people like myself who have done things and succeeded, whether it's massively or modestly, to share that knowledge with the people who come after us. Because maybe they can accomplish what took me five years to do in one or two years avoiding some of the mistakes I made. Investment to me is more than just a chance to make money; it's genuinely sharing advice, mentoring companies, being their big brother as they enter the next phase of growth.
3. What initiated your connection to creating startups and new ventures in Africa specifically?
One, it's a very attractive market. It's the fastest growing region of the world. Seven out of ten of the fastest growing countries in the world are African.
Obviously they are coming from a lower level in terms of what that growth means, but at the end of the day it's still growth. In capital markets, growth is good. That's where you make your money.
Most of African countries are considered to be what is known as frontier markets, meaning there isn't a lot of competition and therefore all sorts of new things that can be tried. There is not a whole lot of regulation [in Africa] so you can innovate with business models more freely than anywhere else. So, there are many reasons why as an entrepreneur and as an investor I like Africa.
Clearly Africa is not without its challenges but all of those things are more or less becoming better. Health is becoming better in Africa and poverty is being reduced. There are a billion people in Africa, 300 million of which are now considered middle-income, which is actually larger than the middle-income population in India. Even though Africa is many countries and India is one country the point is if you look at it as a collective, middle-income growth is very strong in Africa. So, it's a great market to be in because of the growth and the change happening.
Number two, the reason why I ended up there and learned all of this was by complete chance. I followed an ex-girlfriend over to the continent because she was dong charity work, and it was while I was there that I started to see that the Africa I knew from TV was not the reality of the Africa that I was seeing. So I wanted to get involved with the story that I was seeing with my own eyes. That's when I started my first company, Appfrica. What we did was help multi-national technology companies and media companies get established in Africa.
I was in Africa for three years, and we were essentially support for organizations that wanted to do business in Africa. We would help them find talent, do market research, build technology products. We essentially provided technical services for multi-national companies. We now more or less just invest and manage a portfolio of investments.
4. From your involvement in events like Black Tech Week, how do you see the technology world changing and beginning to celebrate the long history of black innovators?
The tech industry has started to realize that diversity in many forms has incredible value to the quality of products that they put out and the type of returns that can be generated. The fact that the African American and Latin American audiences tend to over-trend on the use of mobile phones and things like Twitter and Facebook is important. Those are your users, and for Silicon Valley who prides itself on being user driven and having a focus on users and user abilities, you cannot ignore who your users are. So you have to start paying attention to the demographic trends, age trends, and the cultural trends that are dictating what is going to work. It's no different than a company like Snapchat discovering a market opportunity because people are so concerned about privacy. If you think about people that do have that concern, they are just another segment of the audience. In the same way you could look at Latin American women or African American males, two different segments.
I think people are starting to remove the anxiety and the fear of talking about these things. At the end of the day, these are technology companies and businesses, and it's their job to think about their audiences and identify who is using their services and why. If you think about it from that lens, you are making a huge mistake by ignoring any audience that could use your product.
5. Do you see these recognition opportunities such as Time Magazine's honor shaping what you and others do in the community?
It's great to highlight examples of success. I don't think that is the only thing that will drive people to pursue technology careers and to become entrepreneurs, but I think it is reassuring for those that do to know that there are opportunities for recognition and to know that there are people out there that they can be in touch with. I get calls from entrepreneurs of all types--women, men, African Americans, Latin Americans, white Americans -- people who want advice and who want to learn from someone who has walked the path before them.
So I try to take at least one or two of those calls a day because when I was trying to do this, that support wasn't there. I want to be the resource that I did not have. It's a small amount of time and genuinely, I have seen a few companies avoid some major mistakes just from my sharing. Maybe they would have come to those conclusions any way, but it helps to have it reinforced by someone who can actually say, "I tried that and it didn't work. Here is why I think it didn't work, and why you should do something different."
6. Who have been some of the most important mentors in your professional life?
It's hard to point to any individuals, because there just were not any that took the time or had the understanding of what I was trying to do to actually help. I can say that where I am now in my career, I try to surround myself with a group of advisors who fulfill strategic roles. For me, I have an advisory board of mentors in a given industry. I do not start a company these days without picking the advisors first. I think that is the first step to success. That's why I tell all the entrepreneurs that I speak with to build a strong advisory board.
There have been a couple of professional networks that have helped me a lot. The TED network and their Fellowship program helped me immensely. I became a TED Fellow in 2009 a year after starting Appfrica and continue to be involved to this day because they were so transformative for me in the early part of my career.
The Goldman Sachs 10,000 Small Businesses was another network that served as professional development for me. It helped me to think about business in a way that I wasn't really before. I ran several businesses and was investing when I went into the program. I came out of the program thinking about a lot of things that I wasn't thinking about before.
Those professional networking groups, although not specifically one individual mentor, helped me a lot.
7. What were the most important skills you learned or experiences during the Goldman Sachs 10,000 Small Businesses program?
The most important experience that I had was the fact that nine entrepreneurs came together and created a fund with myself that is now Third Cohort Capital. That was completely not planned and it was actually a result of one of the conversations that we had around business valuations and why the mechanics of the tech industry are so different from other industries when you're valuing a business. That led to a lot of conversations around how you can have a company with zero revenue and be valued at a billion dollars. That was a great experience.
I would say the second thing I learned was from that conversation around valuations and the different methods of evaluating businesses. I was used to using the multiple system and applying that multiple to revenue or some other metric. It tends to be much more qualitative and harder for people outside the industry to understand. As part of the training we learned the Discounted Cash Flow model, and comparative models. I thought that was really useful and as an investor I use all of these things on a regular basis. The more traditional ways to value a business were not things that I did before the program.
8. How and when did you and your peers from the Goldman Sachs 10,000 Small Businesses program start Third Cohort Capital? What was the driving force behind it?
We started it shortly after we graduated from the program. There were three driving factors. One, we all collectively decided that this was a great community to be a part of. We had all benefited from it in different ways. When we initially got together we were trying to find some way to give back to the community. The second thing that drove it was the conversations around business valuation and seeing how potentially lucrative it could be to invest in this particular area. The third driver was that we had all formed bonds in the program and wanted to a reason to continue to talk to each other.
We started the fund about a month or two after graduating, and we deliberately structured it to be an angel investment fund, which is a type of venture capital fund where investors put in their own capital to invest in companies in exchange for equity . In an angel fund, everyone puts in their money and then you share a respective amount of equity in the companies the fund invests in.
We are an angel fund that supports technology companies; but we also knew that although that was a lucrative way to invest, it wasn't the way to give back. So we created a mechanism where we aim to offer very low interest rate loans to graduates of the program on favorable terms. If they need the small amount of capital we can offer, they can get it from us on favorable terms. We see this as our small way of supporting the Goldman Sachs 10,000 Small Businesses community.
We may not always invest in the same things; right now we are thinking about real estate. Generally the idea is the same, let's use 80% of our capital to do something that is going to be profitable, let's use 10 percent to support the community of alumni and leave the final 10 percent for operations.
9. If you had one piece of advice for your peers in small businesses, what would it be?
Surround yourself with people who have more experience than you do or people who have more depth in a particular area than you do. That's what I mean by building an advisory board. You will save yourself a lot of time if you find them, sell them your vision, and get them to join your team. Now you will have support for two things; one, you will benefit from their knowledge and two, you will expand your own network by the number of people on the board. Your board can reach out to people, help with fundraising and do all sorts of things that would be that would be difficult to do if you were by yourself. I think a strong diverse team is always better than not.
10. What are some of your goals for changing the technology and venture capital world? How do you think these two industries can become more accessible especially to the middle-class?
That's my favorite question. I think that the diversity problems that we're facing in the tech industry will not be solved unless we change the other side of the table, the people who are investing. If you have more inclusive investors and venture and angel funds, I think you will naturally start to see a more diverse talent pool raising capital. Ultimately, to be a successful fund you have to be a fund first. By diversifying the investment partners you eliminate some of the biases that would prevent some talent or innovations from being recognized.
Also, if you have a strong fund that is profitable, then you can support different networks in ways that you wouldn't be able to without a sustainable structure. Since starting Third Cohort Capital I created a more traditional fund that is essentially following this model. How do we create the best fund that we can possibly create that will generate revenue and then share a portion of our profits with social causes that we think are worth supporting?
Cross Valley Capital is a true venture capital fund that I am trying to do it on a much more committed basis. While Third Cohort Capital was something the partners did in their spare time, Cross Valley is my full-time thing. It's trying to change the way venture capital works on behalf of communities.
To learn more about Jon Gosier please visit http://gosier.org
This blogger represents the Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.