Traction Podcast
00:21:08 · Roy Luo
[00:21:08] S1: Sure. Yeah. I would say there are two I could talk a little about. They're both pretty early bets, I would say. Last year, we made an investment in a business called Pepper. They really provide commerce tools for food distribution, actually. And when you talk to food distributors, like, traditionally, it's amazing. We're in 2025 or 2024 at the time. And the way grocers and restaurants order their food, they're still going through catalogs, making phone calls, and texting their sales reps as, Hey, I need chicken. Hey, I need rice. I need... Etcetera, etcetera. And that's how the commerce there is still done today. And what Pepper is providing really is a digital portal for these counterparties to really interact and transact with one another. And so you gotta ask yourself, hey. In order in 2025, how is it still done this way? There are many different end markets and verticals where you'd be surprised how little technology has really penetrated it and has really transformed. And so you talk to the food distributors that were in a world now where we're seeing a paradigm shift. Mobile's everywhere. I think the next generation of labor workers is a lot more tech forward than they used to be, and you can start to get the telemetry points from the market like this is something that is being a pull rather than a push, and you're starting to see that hockey stick moment. Now we'll see if we're right. We'll see if the the business and investment plays out. It's going really so far, but that's the kind of... Those are the kind of data points that we're looking for and the narrative and what we're hearing from the customers and, obviously, how the team at Pepper is really thinking about it, they really align well together, and that's what's exciting. We made a similar type of investment in a business called Primer, which provides infrastructure to manage your entire payment stack for merchants, big, medium, small. And there's a really compelling, I would say, idea and thesis there around how in the future, you have these amazing PSPs out there, but what merchants are gonna really want is intelligent management and... Of the infrastructure for payments. Not every merchant can afford to staff up hundreds of...
00:23:18 · Roy Luo, Lobo
Or hundreds of people, hundreds of engineers to manage multiple PSPs or create decision engines, manage fraud, manage identity, think through chargebacks, all this kind of stuff. And IBRAH provides software to be able to integrate, manage everything, analytics, and orchestrate all of it, basically. And that hasn't really been, I would say, mainstream today with merchants in today's world of commerce. If you talk to a lot of merchants and you walk them through this utopia of the future, they're excited by it. Right? And so you can start to see that the product market fit, the story really resonates with big decision makers. Right? Now you gotta build a product that can actually accomplish all that. There are a lot of different dynamics that I say would enable true success at scale, but you hear enough from these merchants. They're like, that is the future. That is what I want. And the first company that can deliver that to me on a silver platter, I will be so excited to buy that. Those are great data points. Those are great telemetry points. And our job is to get a really good pulse on the market, hear from these folks, these decision makers, and hopefully, we we do it right and we make the right call and make the right investments. [00:24:33] S2: Fantastic. Now you you built this reputation for deep long term partnerships with founders. What are the key elements that contribute to a successful relationship between investors and founders?
00:24:33 · Lobo, Roy Luo
[00:24:33] S2: Fantastic. Now you you built this reputation for deep long term partnerships with founders. What are the key elements that contribute to a successful relationship between investors and founders? [00:24:50] S1: So we talk a lot about alignment. I I really believe that. And I think with alignment, the most important thing is trust and mutual respect. I think firms are important. Brands are important. But what I do appreciate with a lot of different founders is that they really understand that ultimately, we're in a people driven business, and relationships really matter. And so I think a really healthy partnership starts with the acknowledgment that we are on the same team, and we are there to help you accomplish everything when we win together. And not every partnership in our industry always works out, and there's always some drama here and there. And I think that always stems fundamentally from misalignment, and that's why I think that matters so much. But I think with trust, communication, mutual respect, and alignment, that are... Those are the core pillars for any incredibly successful partnership. [00:25:46] S2: Trust is the cornerstone of all relationships, and great companies get relationships, great partnerships are built in an alignment of core values. Do you have a couple of nonnegotiables that you try to align on with founders or in general with any relationship?
00:25:46 · Lobo, Roy Luo
[00:25:46] S2: Trust is the cornerstone of all relationships, and great companies get relationships, great partnerships are built in an alignment of core values. Do you have a couple of nonnegotiables that you try to align on with founders or in general with any relationship? [00:26:02] S1: I think different firms have different principles, and different people, individual people have different principles for sure. And so in this industry, you've seen all sorts of different structures and colors. For us, I really value simplicity. And so when we work with founders, the the nonnegotiables, in my opinion, are really when it comes to the nature of your partnerships. We try to keep things as simple, clean, like standard terms, no structure, things like that. I think with complexity breeds misalignment in incentives. Obviously, when you're actually building a partnership with the founder, you need to spend time. You need to really get to know the person. And when you have that, that serves as a foundation for... From a commercial angle, hey. Are we rolling in the right direction in terms of building a great business? And then obviously, from there, making sure that everything about the partnership is as straightforward as possible so that there's really nothing to be thinking about other than how do we win together.
00:27:00 · Lobo
[00:27:00] S2: Makes sense. I like that. Oftentimes, every actually relationship, friendship in my life, when I reflect back that is... That has gone bad, it's like a fundamental misalignment of core values. And there's often this one thing where the core nonnegotiable value is in violent opposition with the others. And you could never see it because when you're starting out or when you're poor, you ignore those things. And then money doesn't change you. It just brings out your true values. Right? And then you start to see friction. Even in the companies I advise, it's just commonplace. So I like that focus on alignment. Has there been a crazy chaotic company situation where this co founder or relationship with the founders and collaboration with them were pivotal to saving the day. Can you maybe give us Yeah. Some indecent What's the you...
00:27:52 · Roy Luo
[00:27:52] S1: I would say during the Silicon Valley Bank saga, that was a really crazy time. I think everyone was stressed. There was real existential risk for businesses, our own business, other businesses in our portfolio. And how do you think about partnering in one of the darkest periods of time? I would say the onset of COVID was another one of those moments. But I just remember SVB very vividly because when that was really going down... I work with a double digit number of businesses, and I'm spending ten, fifteen, thirty minutes, an hour each. And so quickly, I'm working through my list, making sure I call everybody, and I'm in the weeds working with them, coming up with a game plan, coming up with contingency plans around how to manage this situation, reporting what we're hearing from other places, and just working deeply as partners with them. And then in that crisis moment, it was interesting because before you knew it, it was the evening, and I had started the day at 7AM making phone calls. And I was in my room doing all these calls, and I couldn't believe how quickly the time passed by, basically. That was a wild time. And I think that to be able to work in deep partnership and an intimate way with all your businesses, that comes from trust and vulnerability. Everything's on fire at the moment. No one knows what's going on. And to be able to make quick decisions, I think you can only enable that if you really have deep trust in your partners.