Traction Podcast
00:32:21 · Lobo
[00:32:21] S2: I a 100% agree. A lot of people... And I've been in this space of automation, like dating back to rules engine, to AI, to models, and so on. Right? A lot of people think like, they'll just ship a single agent application and it's gonna disrupt industries. You have the opportunity to disrupt industries that are largely service oriented. But if you're competing with people like Canva or sitting on so much data, in the AI space, these agents will get commoditized very quickly. Your real moat is a data network effect that gets you to a concept drift resilience, which is you can adapt in real time, built on voluminous data where workflows perform at high intensity, high velocity, high frequency. Canva has that. They have the data. A new startup for it to come and say, oh, I'm the AI version of Canva. And to make that fully autonomous, they're going to have to get the volume of data that Canva has and train it. And that's a hard thing to build. I think we are bang on. Companies that have already established brand and customer moats have volumes of data and they have the opportunity to build these AI agents on top of that data that become the standard. So, you build something like in the SaaS world, you could build an application that's better than an on prem clunky application that went from just put a veneer and didn't really have the product DNA and went from on prem to SaaS. You could crush them by some growth tactics. Think in the AI world, it's gonna be a lot harder because how are you gonna get proprietary high quality data?
00:34:21 · Roy Luo
[00:34:21] S1: Yeah. The other thing, which is a derivative of sorts, is that I do believe that with AI, you've lowered the barriers to entry in a way for new products to emerge. Right? The technical talent. A lot of these coding agents or copilots, it allows people who are maybe less technically inclined, but really experts in their end markets to be able to access and build products in ways that historically was less accessible before. And so I think you will see more point solution or emerging competition for any business, frankly. And what I believe it really highlights is that the winning businesses and the winning founders are those that really understand their customer. There are some industries out there where it could be like the coolest, most technically savvy, amazing product ever, but it's like this old analogy of selling a Cadillac or a Porsche to someone who just wants to drive a sedan or something like that. It's not necessarily going to really land with the customer. And sometimes I think what actually really wins is when you just understand your customer incredibly well and you build a product for that persona. And you don't have to be some rocket scientist engineer to be able to build that. You just need to know your customer and your end market really well. And what it also enables and will show is that true platforms have the unfair right to win, exist, and consolidate share. Point solutions can emerge. They can be ankle biters, but they're not gonna be able to have their day, especially when there's gonna be more of a crowding of point solutions that come up and they start to beat each other up. And so strong brands, strong advocacy from customers, and established platforms and strategic categories, I think, are going be the ones that accrue more value. And hopefully, the investments and the identification and processes that we've been a part of, you know, folks like Canva, folks like Ramp, folks like FloQast, I think are gonna be the winners of the day that we're really excited about.
00:36:32 · Lobo
[00:36:32] S2: Fantastic. How is this changing VC outreach? I'm I'm really curious. How do you get in front of such awesome deals? And does any of this change the way you outreach and get in front of prospects who are fundraising? So
00:36:49 · Roy Luo
[00:36:49] S1: in terms of how we outreach, not necessarily. I would say that this is still a human driven industry. At the end of the day, we're very focused on building relationships, spending time, whether it's on Zoom or in person, with these founders, being partners to them even in advance of actually making an investment. We have a large community and a ton of resources that we try to bring forth and actually be helpful to businesses in really unique ways even before we actually make an investment. So I wouldn't say it's necessarily changed how we go about that part. I will say that there is obviously tooling and things like that that will enable us to be more effective at our jobs, and it's transforming the way work generally is done. But, ultimately, how we find these, it's a combination of a few things. There's, I would say, thesis driven investing. There's just like the network and the world that we live in, and we just hear, like, the buzz. There's references. There's a network of people who've also invested either early or later stage in different businesses. We are talking regularly with buyers over the world, whether it's at the enterprise level or at the small business level around where their pain points are, what they're thinking about, the trends, and the macro dynamics that they're dealing with. And that helps guide us in thinking about, if this is a recurring problem for restaurants, we should think about different technology solutions that might be out there that is trying to solve this problem or something like that. And so it's an art at the end of the day. We have a great team at Iconiq that is leveraging every single tool and every single vector that we can think of that I've just talked about to try and find really great businesses out there. But nothing gets done without having a conversation and be able to meet these founders where they are.
00:38:31 · Lobo, Roy Luo
[00:38:31] S2: 100%, man. Anytime you incorporate more than two senses, you start to build stronger connections. We're like sound and sight. If we hung out, we'll probably spend more time. It would be taste, touch, smell, and then that starts the relationship for more and more meetings. I tell you, do you guys do a lot of events as well? [00:38:49] S1: I don't know what a lot of counts as, but we definitely do events for sure. We have a great team here that's putting stuff together. We also do really cool, I would say, like CEO gatherings within our portfolio, also outside of our portfolio. We have a technical advisory board with some really rock star engineers and technical leaders, and there are different topics and themes that we host fireside chats on, dinners, things like that. But there's a whole robust calendar, and none of it can be done without the amazing people that we have on this team here at Iconiq to make it happen. But it's a way for us to bring more to life the community that we've cultivated. [00:39:23] S2: Definitely. And and and a lot of people that you guys can bring as Iconiq are typically inaccessible. So you have that opportunity, not only cultivate the relationship with the founder, but actually be helpful for the founder. Right? If the founder can walk away with you or at your events with one connection that changes something mediocre in their business and makes it iconic, I think you've made a friend for life kinda thing. Right? They'll... Even if they may not do a deal with you, they'll pass through other deals when they come across.
00:39:23 · Lobo, Roy Luo
[00:39:23] S2: Definitely. And and and a lot of people that you guys can bring as Iconiq are typically inaccessible. So you have that opportunity, not only cultivate the relationship with the founder, but actually be helpful for the founder. Right? If the founder can walk away with you or at your events with one connection that changes something mediocre in their business and makes it iconic, I think you've made a friend for life kinda thing. Right? They'll... Even if they may not do a deal with you, they'll pass through other deals when they come across. [00:39:57] S1: Absolutely. We very much believe, again, it's a human driven business and world that we live in, and all you really have is your reputation and your credibility, and we're very results oriented. In the way that we want our businesses and our founders to be impact driven, we wanna be impact driven ourselves. And so we literally track how many introductions are we making, what are the outputs and outcomes of those introductions, What are the commercial impacts of those introductions? What are the... Who are the hires that we'll able to help reference? We are very relentless in analyzing and tracking what we're doing for our portfolio companies so that we can hold ourselves accountable for actually living up to what we're selling, which is partnership at the end of the day. [00:40:40] S2: Awesome. As you look through 2025 and beyond with this massive technological shift, AI, agentic AI, what are the biggest opportunities in fintech, and what specific trends will define the next generation of fintech?