Building a Venture Scale AI Developer Tool Company: Moderne CEO Jonathan Schneider (Part 2)

Sramana Mitra: Did you quit and then start or did you start while you still had your job? How did you get started?

Jonathan Schneider: Ultimately, VMware acquired a company called Heptio, which was founded by the two founders of Kubernetes at Google. They took a hard pivot towards Kubernetes, and we were working on multi-cloud. It just didn’t fit the product strategy of the company any more, and we both got laid off. It was basically a layoff of the team.

Sramana Mitra: What year was that?

Jonathan Schneider: 2019.

Sramana Mitra: 2019 – right before the pandemic. And you were in Missouri.

Jonathan Schneider: I was, yes.

Sramana Mitra: And where was your co-founder, your product person?

Jonathan Schneider: Olga was in Toronto.

Sramana Mitra: She was in Toronto. Okay. So then what did you do?

Jonathan Schneider: We both sought different jobs. I ultimately went to work for Gradle, which is a developer tools company. I’d known its CEO, Hans Dockter, when I was working at Netflix. The idea of joining Gradle was to bring this large-scale refactoring technology that I had started at Netflix to Gradle. It was an additional product line.

I was there for maybe three months, and Hans called on a Friday and said, “I just don’t think Gradle can support another product line right now.” So, I got laid off a second time within that six-month period. It was a very difficult time.

But at the same time, he said, “It doesn’t make sense for Gradle to add this product line, but I think you should go do it on your own as a separate company. If you want to build a deck, let me know, and I’ll introduce you to the first investor.” That was Friday.

By Sunday, I had a pretty rough black and white deck that I thought made sense. He introduced us to an investor on Monday.

Sramana Mitra: And that investor invested?

Jonathan Schneider: Not initially. This was Puneet Agarwal from True Ventures. He looked at it, studied it for a while, passed it on, and introduced it to one or two other people. Ultimately, we found a pre-seed investor in Robin Vasan at Mango Capital. He was a pretty technical infrastructure investor, super smart.

Sramana Mitra: I know Robin.

Jonathan Schneider: He’d invested in HashiCorp and a number of other iconic infrastructure companies. Robin put that pre-seed in, which allowed Olga to quit her new job and join. I also pulled in Sam Snyder as our founding engineer from Gradle. We had a small group.

It took us five months to go from that point to raising a seed round. We went through about 25 firms and got a lot of no’s for a lot of different reasons. At the end of that five months, Puneet Agarwal, the very first investor that Hans had introduced us to, came back to look at it again, and wound up leading the seed at that point. We had to wander in the wilderness for a little while learning our way.

Sramana Mitra: When you were out there trying to raise money, you already had a validated problem. You have deep domain knowledge, having worked at Netflix and at Pivotal and have great customer understanding. Now, between when Robin invested and when Puneet invested, five months passed, you said?

Jonathan Schneider: Yes. About five months. There were two key problems. One was, nobody believed that it was technically possible to build the solution, even if we could show it to them.

What happens with venture capital research is, they’ll partly do market validation, they’ll partly do technical validation. The technical diligence partner was often Google, because Google had worked on a similar automated refactoring technology and failed to build it. When you reach somebody at Google, Google would say, “We tried; it isn’t possible.” It would kill the deal. We started to pray, “Please don’t reach anybody from Google, because they just keep killing this deal over and over and over again.”

The second problem for us was, we had this deep enterprise DNA, and in 2020, nobody wanted to hear enterprise sales. It was all PLG, bottoms up. They didn’t want to hear about enterprise sales. It was counter to the narrative at the time, go-to-market-wise.

This segment is part 2 in the series : Building a Venture Scale AI Developer Tool Company: Moderne CEO Jonathan Schneider
1 2 3