It’s been hard to raise money in most sectors in recent years, and many VCs will say that a startup needs to have a good product market fit before getting that check. But Contrary Capital’s Eric Tarczynski believes in investing in people rather than businesses, and the wisdom of this approach is demonstrated in his AtoB.
AtoB actually started out as something similar to Uber for buses, but the founding team was able to quickly pivot the company to become more like a Stripe platform for transportation. It is an integrated financial platform based on the fuel card core product for truck drivers. Since its inception in September 2019, AtoB has expanded to his network of 25,000 businesses and his 100,000 truck drivers in the United States. With only about 5% market share in the US, he can already project $100 million in revenue.
In fact, Arora himself provides a perfect example of why VCs want to find the gem of the world and let them do their job. Born and raised in India, the now 21-year-old founder dropped out of school at age 14 to pursue a more challenging career. At 16, she became a hit on the App Store and in 2018 she founded her Crypto Price Tracker, which was acquired by Redwood City Ventures. Arora represents the future of investing in her Girl Genius for the next generation.
Host Arora and Tarczynski at TechCrunch Live to discuss why VCs should invest in people rather than businesses, the red and green flags of founding teams, AtoB’s journey to build products around trucker pain points, and more I was. You can watch a replay of the session here. Read on for the highlights.
investment in people
Tarczynski had met Arora co-founder Tushar Misra about five years ago during the early days of Contrary. Misra, one of Uber India’s first employees, moved to San Francisco to start a Contrary-invested micromobility logistics company. The company didn’t do well, but Misra impressed his Tarczynski.
“We told him we want to support you in whatever you do next, so please let us know.
A few years later, Misra joined the AtoB founding team. The team was still working on the original idea, but by this point he had people hooked on Contrary.
“We said we don’t care what it is. Whether it’s Uber for buses or Stripe for trucking, we don’t care. I think so, I’d like to write a check and move on.”
The way you play AtoB epitomizes how Contrary does what he loves. Typically, VCs are made aware of a startup’s existence for fundraising, creating transaction dynamics.
“What if you could focus on actually identifying the person before the idea, knowing the person, and building a deep and authentic relationship with the person first? You can write your first check when you start a company,” Tarzynski said.
Given Arora’s unique and special story, she’s exactly the kind of founder investors want to keep an eye on, and Tarczynski says the VC world is hungry for more “Girl Geniuss.”
Founding team red and green flags
When researching a founding team, the first step for investors is often to dig into each team member individually. What do their peers, colleagues, and former managers think of them? Are they portrayed as people with high character and a strong work ethic? You can consider whether it works for
“Sometimes you find founders with really overlapping skill sets, so you probably have two people with more CEO-type skill sets and they start encroaching on each other’s territory,” he says. Tarzynski says. “Some of the best founding teams have very complementary skill sets, running two or three different parts of the business in parallel. There is enough context to understand, understand, and provide feedback, but not too much. Boundary.”
Another big red flag, Tarczynski said, is when founders talk to each other constantly. This “shows that this is clearly a group of people who still do not trust each other.”
Arora met her co-founder through the “magic of the internet.” His CEO of AtoB, Vignan Velivela, reached out to Arora after reading an article about it. At the time, Verivera was an engineer at Cruise, the self-driving subsidiary of General Motors. After several months of friendship, the two decided to start a company specializing in transportation. They found her Misra through an online network and after a few conversations found Misra to be the best fit as each could tackle a different problem.
“Tuchar [Misra] Arora is great at building strong operational processes and digging deep into data to understand what’s broken and how to fix it quickly,” said Arora. “As an example, in the fourth quarter he took over our company risk his team and Tushar went from making a negative contribution to a very negative contribution in fact.”
Arora says they are more product and engineering focused and are always thinking about how to build better products and for which customer segments. Velivela is one of the most long-term thinkers, strategizing what A2B should build next, further developing the overall addressable market and increasing growth opportunities.
Build your product around trucker pain points
Like many great entrepreneurs, Arora and her team spend a lot of time going to truck stops and talking to hundreds of truck drivers about their problems. The average truck driver is over 50 and doesn’t care much about technology, so it’s no surprise that many of them still use old fuel cards and payment systems. What’s surprising, Arora said, is that payments were still a big issue in 2020, especially as many fuel card companies were already gaining momentum.
“The first thing that stood out to us was reliability. These fuel cards, especially those built by legacy companies like Brex and Fleetcor, run entirely outside of Visa and Mastercard, so the same level of There is no acceptance and network time,” Arora said. “We, as consumers and businesses, take it for granted because it works all the time. It was a big eye opener for us.”
Then the AtoB team discovered how broken the drivers payroll was. Arora said many people she spoke to were still being paid by paper checks that hadn’t arrived for days, and that cashing would take longer if the driver was away from home on a gig. That’s why many truckers rely on payday loans, she said.
“We thought the technology already existed to make instant payments. We could easily build this for this customer base.”
These two pain points have led AtoB to develop a roadmap starting with fuel cards built on universal acceptability and reliability and expanding to instant driver payroll.
Arora says that with large, next-generation fleets like those of rental car company Kyte, the pain points are becoming more pronounced in how to manage fleets and deal with fuel theft and fuel optimization.
Fintech is not a side project. the whole project.
Think about it: Even tech giant Amazon uses Stripe to process a significant portion of its payments in the US, Europe, and Canada, including Prime, Audible, Kindle, Amazon Pay, and Buy with Prime. I’m here. According to Arora, that’s because Amazon understands how complex large payments can be and how important it is to get that expertise right.
“I haven’t seen many cases where a business has successfully paid out on their side,” she said.
Building a payments business involves many nuances and nuances, both in terms of core payments such as working with networks, banks and merchants, and the risks of fraud and credit risk, especially when customers open wallets and bank accounts on the platform. We have expertise.
“The economics of payments is that if you’re bad at risking fraud, you lose all your $100. You can do that,” says Arora. “Every mistake you make has an asymmetry in it.”
Investment in large-scale industry
Many start-ups see the trucking industry’s problems leading to a driver shortage and believe the solution is to automate trucking. But despite the hype about self-driving cars coming on a massive scale, we’re still quite a ways off.
“The reality is, as a venture company, we are looking to invest in large categories,” Tarzynski said. “And there’s probably no category as big as transportation bulk, except maybe healthcare. And when you look at payments in transportation, those are both huge categories. It’s very clear that it’s a multi-billion dollar company.”
Zooming in on A2B specifically, Tarczynski finds a company addressing a systemically broken financial system for fleets. And they’re doing it in a way that allows them to run the entire stack, from the basics of purchasing and payroll to next-gen issues like fuel management and ultimately EV charging.
When founders should stop multitasking and hire more staff
Early-stage startups often find themselves wearing multiple hats when building their business, and AtoB is no exception, Arora said.
“There was a time when we were doing too much, from underwriting applications to building products to supporting them,” she said. “I think it became clear at that point that there was so much multitasking and context switching that we needed more people…when you are context switching between five or six things in the same day. That’s when you really need to hire people, like.”
AtoB was in no hurry, though. The team set a high bar and persevered in bringing in a very good initial team. Arora starts by picking the two or he three most important things the company has to do right, looking at how much runway the team has, and then hiring based on that. I suggested And when it comes to finding the right fit, it’s always good to bring in someone who has worked on the problem before, or who has expertise in the area.
