It’s been tough to raise funds in the last few years for most sectors, and many VCs will tell you that a startup needs to have a killer product-market fit before getting that check. But Eric Tarczynski of Contrary Capital believes in investing in people over businesses, and the wisdom to this approach has been proven out with AtoB.

AtoB actually started out as something akin to Uber for buses, but due to the strength of the founding team, the company was able to quickly pivot and become a platform that’s more like Stripe for transportation. It’s an integrated financial platform based around the core product of a fuel card for truckers. Since its founding in September 2019, AtoB has scaled to a network of 25,000 businesses and 100,000 truck drivers in the U.S. To give you an idea of how huge this potential market is, Harshita Arora, co-founder of the company, says she thinks AtoB has captured only around 5% of the market share in the U.S. and can already project for $100 million in revenue.

Arora herself actually presents as the perfect example of why VCs might want to find the gems of the world and let them do their thing. Born and raised in India, the now 21-year-old founder dropped out of school when she was 14 to tackle more challenging pursuits. At 16, she founded the Crypto Price Tracker, which became an App Store hit and was acquired by Redwood City Ventures in 2018. In a startup world that has been defined by the so-called Boy Genius (AKA a hoodie-clad MIT dropout at whom VCs have historically thrown billions of dollars), Arora represents the future of investing in the next generation of Girl Geniuses.

We hosted Arora and Tarczynski on TechCrunch Live to discuss why VCs should invest in people over businesses, red and green flags of founding teams, AtoB’s journey of building a product based on trucker pain points and more. You can watch a replay of the session here — and read on for highlights.

Investing in people

Tarczynski had met Arora’s co-founder, Tushar Misra, around five years ago during Contrary’s early days. Misra was one of Uber India’s first employees and had moved to San Francisco to start a micromobility logistics company, in which Contrary invested. The company didn’t work out, but Misra impressed Tarczynski.

“We told him we want to back whatever you do next, so just keep us posted,” said Tarczynski.

A few years later, Misra joined the founding team at AtoB. The team was still working on the original idea, but Contrary was hooked by the people at this point.

“We said, look we don’t care what it is. We don’t care whether it’s Uber for buses or Stripe for trucking. We think that the three of you are exceptional people, so we want to write a check and move on.”

The way it played out with AtoB is emblematic of how Contrary likes to do things. Normally, VCs find out about startups when they put their hands up for funds, making for a transactional dynamic.

“What if you could actually focus on identifying the person before the idea and get to know them and build a deep, authentic relationship with that person first? Then you can help them however you can and write that first check when they’re starting their company,” said Tarczynski.

Given Arora’s unique and special story, she’s just the kind of founder an investor would want to keep tabs on, and Tarczynski says the VC world is hungry for more “Girl Geniuses.”

Founding team red and green flags

When researching a founding team, step one for investors is often digging into each team member individually. What do their peers, colleagues and former managers think about them? Are they described as people of high character and strong work ethic? Once you have that idea, you can bring them together and consider how they might work as a team.

“Sometimes we find founders that have really overlapping skill sets, so you have two people that maybe have more of a skillset of being a CEO type and they start to encroach on one another’s turf,” said Tarczynski. “Some of the best founding teams have very complementary skillsets, where you’re running in parallel on two or three different pieces of the business maybe with slight overlap and enough context to be able to push back, understand, give feedback, but not overstep boundaries.”

Tarczynski said another major red flag is when founders constantly talk over one another, which is a “dead giveaway that this is clearly a group of people that don’t have the trust in one another yet.”

Arora met her co-founders through “the magic of the internet.” Vignan Velivela, AtoB’s CEO, had reached out to Arora after reading an article about her. At the time, Velivela was an engineer at Cruise, the self-driving subsidiary of General Motors. After a few months of connecting as friends, the two decided to start a transportation-focused company. Through their online networks, they found Misra and after a few conversations, knew it was a great fit because they each could tackle different problems.

“Tushar [Misra] is really good at understanding how to build strong ops processes and get very deep into data to understand what is broken in something and take ownership of fixing it fast,” said Arora. “As an example, in Q4, Tushar took over our risk team and got us from contribution negative, highly negative actually, to being profitable.”

Arora said she’s more product and engineering focused, always thinking about how to build a better product and for which customer segment. Velivela is strongest at long-term thinking, strategizing on what AtoB should build next in order to unlock more of the total addressable market and expand the growth opportunity.

Building a product based on trucker pain points

Like many good entrepreneurs, Arora and her team spent a lot of time going to truck stops and talking to hundreds of truck drivers about their problems. The average trucker is over 50 and thus not likely to be very tech-focused, so it’s not shocking that many of them are still using outdated fuel cards and payments systems. What was surprising, said Arora, was that payments were still a huge problem in 2020, particularly as many fuel card companies were already gaining steam.

“The first thing that really stood out to us is around reliability. These fuel cards built by legacy companies like Brex and Fleetcor in particular are running completely outside Visa and Mastercard, so they don’t have the same level of acceptance and network time,” said Arora. “We as consumers or businesses take it for granted because it just works all the time, so that was a big eye opener for us, seeing how people have backup cards and backup cash.”

Then the AtoB team discovered how broken driver payroll is. Arora said many that she spoke with are still paid through paper checks that don’t arrive for several days, and will take even longer to cash if a driver is away from home on a gig. Many truckers resort to payday loans for that reason, she said.

“We thought, the technology for doing instant payouts already exists. We can just build this for this customer base easily.”

Those two pain points got AtoB rolling with a roadmap that started with fuel cards built on universal acceptance and reliability, and then expanding into instant payroll for drivers.

With bigger next-gen fleets, like car rental company Kyte, Arora says the pain points are even more visible with how they manage their fleets and deal with fuel theft and fuel optimization.

Fintech cannot be a side project — it’s the whole project

Consider this: Even Amazon, giant of the tech world, uses Stripe to process a significant portion of its payments across Prime, Audible, Kindle, Amazon Pay, Buy with Prime and more in the U.S., Europe and Canada. That, Arora says, is because Amazon understands how complex payments are at scale and how important it is to get that expertise right.

“I haven’t seen a ton of examples where a business successfully did payments on the side,” she said.

There’s a lot of nuances and expertise in building a payments business, both around the core payments — like working with networks, banks and merchants — and around the risk of fraud and credit risk, particularly when customers open wallets and bank accounts under your platform.

“The economics of payments is that if you are not good at risk of fraud, you lose the whole $100. But if you’re good at it and do the business as is, you will make 1% of that, so you will make $1,” said Arora. “For every mistake you make, there’s an asymmetry there.”

Investing in a large industry

Many startups look at problems in the trucking industry which have led to a driver shortage and think the solution is to automate trucking. But despite the hype of self-driving cars arriving at scale, we’re still quite a ways away.

“The reality is, as a venture firm, we’re looking to invest in massive categories,” said Tarczynski. “And outside of maybe healthcare, there is perhaps no larger category than transportation writ large. And then if you look at payments within transportation, these are both massive categories. So you can very clearly see that in a bull case scenario, a company like AtoB is a multibillion-dollar company.”

When you zoom in to AtoB specifically, Tarczynski sees a company that’s addressing a systemically broken financial system for fleets. And they’re doing it in a way that will enable them to run the entire stack, from the basics of purchasing and payroll to more next generation issues, as well, like fuel management and even EV charging eventually.

When founders should stop multitasking and hire more staff

Often early-stage startups find themselves wearing multiple hats as they build out the business, and Arora said AtoB was no different.

“There was a time when we were doing too many things, from underwriting applications to building products to doing support,” she said. “I think at that point, where you’re multitasking and context switching so much, it became clear we needed more people…Like when you’re context switching between five, six things in the same day, that’s when you really need to hire.”

That said, AtoB didn’t rush it. The team set a high bar and was patient with bringing on an early team that would really be a great fit. Arora suggested teams look at how much runway they have and then start by picking the two or three most important things that the company has to get right, and hire based on that. And when it comes to finding the right fit, it’s always good to bring in someone who has tackled the problem before or has expertise in that field.