Jared Klee: Stephan, when we first started talking, you gave me two quotes I felt were really emblematic of Lorimer Ventures. The first was we want to dream with the entrepreneur and then the second was we want to be the investors we wish we had.

I thought those were really interesting perspectives on what Lorimer Ventures is, where it's going, how it engages with builders. Talk to me in your own words. What does that mean for Lorimer?

Stephan Cizmar: Sure, Jared, thank you again for having me on the show. I'm a huge fan of the content you're putting out there. So I just want to give a shout out to what you're doing. It's incredible and it definitely spending a lot of time consuming your content.

Jared Klee: I appreciate it.

Stephan Cizmar: It's a great question. I'm a multi-time founder operator and I really define myself as an operator first, an operator that happens to invest.

The ethos that's underpinning Lormer itself is that we want to take that operator and founder first mentality. And bring that empathetic understanding of the entrepreneurial journey to every company that we back. We have to, in order for us to get to full conviction and really believe in the founders that we back in, the companies that we're devoting our time to, we have to see to dream of a world that entrepreneur is going.

Entrepreneurship as a course is hard. It's, you're going against the grain. You have a unique insight that doesn't exist within a market, or is something that may be just starting out and inevitably it's those bold individuals that dare to dream about a better world, a better outcome, a better solution. Those are the ones that energize us on the Lorimer side.

And our job is to basically help make that dream come true and validated of course, if we agree with it first, but then help it come true. And that's really like what it means to dream with the entrepreneur is to imagine a world where some function of work has basically made better, more efficient, cheaper, more effective, where it helps knock down either walls from a data perspective, drive efficiency to an organization, or have a net good outcome. And that's really what we're dreaming the entrepreneur is.  

My personal experience as an operator and a founder, you know, I've raised multiple funding rounds at this point, or been a part of companies that raise multiple funding rounds. This is not against again, the VC ecosystem, I don't mean this to come out as a hot take, but to be very transparent and frank with you, I mean, I've always felt a little tension with the difference or the discrepancy between the operator mindset and the investor mindset.

Because a lot of investors out there today focus on either some broad macro financial metrics. They're looking for signs of traction. But rather than leaning into the idea itself, the dream, there it goes again - how, how can you dream with that entrepreneur. We built Lorimer really to be the investors we wish we always had as founders and operators, where we have an empathetic understanding of the entrepreneurial journey.

We dream with our founders. And from there, we leverage our network, our expertise, and really bring it the entire village around every company that we back. I can't tell you the number of times I've had investors or worked with investors who come in and we're starting from basically the 101 conversation.

They don't have an understanding of what we're doing. We have to explain it over and over again. And that's fine, but that's all part of the discovery path to gaining conviction. But with Lorimer, what we're doing is we're coming in with a thesis driven perspective where we're only investing in six core areas of focus. Where we study it in an academic perspective, we understand to a certain degree where the worlds are going and in those markets who's disrupting and innovating within those markets itself and how work is getting done.

And our job is again, to dream with this utopian reality that an entrepreneur pitches to us, validate it, and then from there lean into it and help them work it out.

And from a very tactical and operational side, what that means is that we want to basically be there anytime something goes wrong or something goes right. We strive to be that first call to the founder, and we want to bring our network and our people around the companies that we back. But at the same time, we also want to get out of the way. We don't want to come to a board meeting with hot takes on a specific area. We, we rather in a collaborative sense, work through ideas in a full ideation phase, which is long-term test iterate.  

We get that by leaning into the markets, the companies, and the founders that we back, understanding of both from the people and the market dynamics itself. And so that's where really what it means to be the investors that we wish we always had is that we're building this firm from the ground up to be investors that take a hands on approach that are founder and operator first, and that we want to be the favorite investor on the cap table.

Jared Klee: It's a hugely compelling vision and there's a lot to unpack there. I want to start with a word that you repeated many, many times empathy. Empathy for the entrepreneur. You described the entrepreneur themselves as empathetic. It's not a word you usually hear in the investing context. Why the emphasis on empathy, both from the investor perspective and perhaps also in the founders that for.

Stephan Cizmar: To take even a step back further, I'm a big proponent and almost like a disciple of the Clayton Christianson perspective of disruption and I believe, you know, technology and software in particular is right now at the scale and velocity where disruption cycles are happening faster and faster.

But in order to be effective at disrupting a market, creating again, a product, a platform that fundamentally changes the way work is done, whether it be a small piece of work, let's say like sharing a file or even like a large laborious tasks like designing circuit boards. You have to have an understanding of what the process is today.

The means of doing businesses today, and you have to identify where the gaps and opportunities essentially the white space are to fully disrupt and innovate. And I think at its core, that sense of innovation or the perception of innovation and understanding where you would want to place your bets from a roadmap perspective, from a hiring perspective, from even a sales and go to market perspective. It's rooted in that, that empathetic understanding of, again, the journey that the end user, the end customer is going through, but also effective leadership and running a company.

This is underpinned by an empathetic understanding of the people that you're managing, the products that you're building again, and the market that you're disrupting. If you could understand that and leverage your humanity to basically lean in to where these openings and white space are. I firmly believe that's a strong start as you go down your entrepreneurial journey as a founder.

And it's something that I've seen time and time, again, really on the go-to market side. Effective persona mapping, effective marketing stems by understanding the person that you're selling to. It's rooted in empathy. Effective product management again, is understanding that the individual you're building the product for and how to make their life easier.

I see humanity and empathy really linked between, and I see it's a core piece of effective leadership and also a critical component that often is overlooked in entrepreneurship and disruption.

Jared Klee: I can hear you as you're speaking, you keep coming back to that operating partner side of Lorimer, in the weeds with the entrepreneur, early days, understanding the market. What does Lorimer look like in the early days of relationship when you're first meeting that person, when they're finding out there's this large network of advisors that you bring to bear. That you're planning on rolling up your sleeves.  

What is that early days of, how do you present Lorimer? How do you engage them? Is there a profile of the type of entrepreneur who self-selects for that type of really deeply personal relationship. Help me understand that first moments of you're building a relationship with a founder who may have a brilliant idea, but you two have never worked together.

Stephan Cizmar: A lot of this is actually self selecting on the thesis. So we only invest in categories that we understand and that we have takes on, you know where the world is going. Having a thesis driven approach where we're again, studying the market as if we're like, you know, writing a dissertation, I'll equate it to, where we have to go deep in, in very specific areas of markets. That allows us to jump to really, to 200 level conversation very quickly when we first meet founders. We typically do a lot of homework before we get on the phone with founders that we look to invest in, where we try to understand again, what is the unique insight that they're bringing to bear with the platform that they're proposing, the concept of their pre-product or even post-product, does the traction that they have lineup to essentially where the market is going.

And is there something where the market is pulling us or are they pushing it. And so we come into the conversation with a hot take on the market itself and that could be controversial at times, but what it does is it, it helps build that human connection.

The early stage of investing, is that it's all relationship driven at the end of the day. It's how well can you basically understand your buyers, the new hires you're bringing in, the market, et cetera, and then the investor relationships you have as a founder.

Those first couple of conversations is that we're planting the seeds and we're pushing the envelope to dream with the founder. If we have conviction that this is the founder we're speaking to, that they're innovating in a way that is changing how work is being done. There's disruptive potential or there's even blue ocean potential to fundamentally impact a specific type of work itself. We want to come in and basically be a thought partner with them throughout that process.  

That's really what the first conversation is like is that we want to basically simultaneously help draw out the vision of the founder and if we agree with it or their support it, or throw a counter at it, not to basically tear into them from a critical perspective, but just to add a different angle from how we've studied the market. Collectively that's the dream state that I keep talking about or going back to is how we can basically, again, in that first couple interactions, almost like have a mini innovation cycle with the entrepreneur itself.

And I think a lot of that then helps us as we start going through the memo process internally of writing up our investment thesis, it helps us bring us to conviction either for investing or passing based on again, the working dynamic and the dream dynamic, I should say, with the founder itself.  

Jared Klee: I'm excited to come back to the themes in a moment. There's so much still to unpack with the entrepreneur with that early engagement, the value that Lorimer is providing right at the beginning all the way through. You've made a number of comments that early go to market engine. And that grows up into a more formal sales organization. There's a bunch of ways of doing that. You can have product led, you can have sales led. There are many, many different ways to go after that.

Help me understand, how do you think about the go to market motions early on, say pre-seed, if you wanted to talk perhaps about a portfolio company, and then just walk me through the journey Lorimer's going on with its portfolio entrepreneurs to grow up into a more formal sales process that becomes repeatable and scalable.

Stephan Cizmar: The majority of the Lorimer partners who are making the investment decisions on the investment committee are either founders or operators themselves. Collectively, we've been through this point, hundreds of buying cycles of software. You know, software that we've adopted as an individual user, software that we championed in a larger organization to essentially bring to our department, or even were ex outside stakeholders for different department.

A lot of how we think about it, again, it goes back to that empathetic theme that we keep talking about. It's like, how would we react going through a buying cycle, executing a piece of work. We're looking for a piece of software or tool to help us execute that work better. A lot of the go to market motion in the early stages, when we're working with founders, I think depends on really the value that the platform is delivering.  

There's also an angle that has to, you have to account for which is basically how much friction is there with adopting this new piece of software, replacing old set of processes. Are you replacing essentially spreadsheets or an existing platform that you're ripping out? And also, what does the motion look like to the end user. Is this basically a tool that makes my individual work better? Is this a tool that makes my team better? And then what does that buying process look like?

There's a lot of talk these days, you know, in the venture community about PLG and product led growth. I'm a huge proponent of that. But I do believe that like in order to be effective on generating a go to market, you have to understand again, where the unique insights are, but then you're driving to the end user. How are you basically making their lives easier? How are you marketing towards them? And how do you basically drive that into your product roadmap to make it easy for someone to get started and start working right away?

A lot of that I think is what goes into account in the early days of forming a go-to-market strategy. And I think the final piece I want to mention too, is that it's critical for not just in the early days for any successful company, to ensure that their product and engineering teams are as close to the customer as possible.

And that they're seeing this in a, a very data-driven perspective where you're not just building features for your largest customers, you're building features, or you have an understanding of your entire customer base. Where they're going. And your individual users, what keeps them up at night, what gets them promoted, what gets them motivated to essentially work with you because the answers all right in front of you in the B2B context. It's really on the effective product management, engineering and customer facing teams to suss out all of that data. Again, leverage their empathy and understanding of that market. And then funnel that back into a roadmap ultimately going from concept to code to deployment.

Jared Klee: Let's get tactical for a moment. Lorimer partnering with the entrepreneur pre-product, maybe it's product, but pre product market fit. Tactically, how is the founder and Lorimer and kind of, if there's a splitting of roles there, how are they getting that early feedback from the user?

I mean, just the basics of how are they finding the initial users. And then if say they're selling into big enterprise that quote unquote network sales of how you meander through that organization to find the different roles you eventually need to engage.

Stephan Cizmar: This is actually what the human side of it comes into play and then the network that we've built. Typically in post-product pre-revenue, when you're looking for that product market fit, the way we work with founders is that we have a network of operators and founders ourselves. And our job as an investor and a VC on the cap table, we see when we're working with founders, obviously, if they agree for us to do this, is to bring in potential buyers, bring in opportunities where we can introduce them directly to companies that could end up being their customers or design partners with them. And then also on the backend help the entrepreneur collect the information and feedback that our network intros are making to essentially aggregate that in a data-driven way to figure out how to iterate and sharpen your go to market.

What is the tip of the spear that allows you to enter an organization? That's something I think quite a bit about when thinking about product strategy within the B2B context. And that there's varying ways of doing that. It could be product led. It could be free trial, self-service motion, or it can be top-down sales lead. But there is no right or wrong answer.

You just need to basically listen to the customer, listening to the user, collect that data and ensure that you're building towards, driving that efficiency and value to the then customer itself. And really how we help with that is that we can bring to people through our relationships, to the entrepreneur in a way where it's a low pressure situation. They get honest feedback.

What I've found too, is that the more people that we bring into these deals, what we're doing is we're almost like to a certain extent, crowdsourcing our conviction, our diligence. We're getting more people behind the entrepreneur that we're backing, more people who are invested in their success either because they're entering a design partnership with them, it's helping them accomplish a burning need that they've had for a while, or even at the very least just giving them honest feedback to go back to the drawing board and to rethink how they're entering the market.

Jared Klee: Not to put words in your mouth, but what you're talking about is that the likelihood of any startup succeeding is always low. It's the definition of being a startup. And what you're talking about is: we've got this massive network. We can shift the odds in their favor and we're going to bring that whole thing to bear to incrementally increase the odds. Whether that's people, whether that's the standardization of the process, whether that's intros it's, we are basically ensuring our own investment by bringing all of this bear.

Stephan Cizmar: And outside of capital, if you think of it, every one of those intros, early hires, design partnerships, those are all based on relationships. There's such a strong theme of the human element again, in the early stage that you have to think about almost like play matchmaker in your head. And this is something I do quite a bit and my Lorimer partners as well, who are the right people in our network that would, this concept has potential to resonate with.

How can we basically get feedback from both sides? The founder, as well as the network referral that we make on the concept. And then from there, how can we continue dreaming with the entrepreneur to help them iterate their go to market ultimately with the goal of finding fit and finding that market pull.

Jared Klee: We talked about a very human element of that, even more so than most, the sales process. And you, you gave three different examples. The freemium model or rather broad distribution model, the product led model, the traditional heavyweight sales model with the big team. I know you've thought deeply about the trade-offs and it's as much about the market you're selling into, the nature of the startup, but each one of those comes with pluses and minuses.

Be interested for your thoughts on when some are good, when some aren't, what the pluses and minuses are. How to think about that as a startup, what should the sales process, sales team eventually grow into?

Stephan Cizmar: Ultimately it comes down to the product that you're building and who you're building it for. I think with the top-down sales process, typically sell cycles are long. The go to market strategy, you have, since you're going top-down to basically get buy-in from key budget holders, because you're bringing again a platform that impacts oftentimes multiple users. The depth of the product as a result of that has to be deeper and more robust in that early stage when you're finding fit because you're impacting a team or a department and the work that they're doing. You don't necessarily need a virality loop early on, but you do need, again, some value that you're delivering a heavy ROI case.

With the product led, what's interesting is that we kind of flipped that motion in its head. And this is something that Eric Vishria at Benchmark, I love his perspectives on product led, but he's spoken a little bit about this, where you're building again for the end user, the individual. This is really a theme that's happened where in B2B software with the proliferation of SaaS, there was actually a consumerization trend that happened. Today in any organization, large enterprises, all the way down to, you know, SMBs, every individual in that organization, whether you're working on the product management team, the sales team, the facilities team has individual tools that make that individual's lives better.

And that's the consumerization at it. You basically have every individual in the company that becomes a software buyer because there's some sort of tool that they could increase. I think Calendly is a really good example of this in a large scale driving immense amount of value, just with scheduling, for a myriad of use cases.

With that product led, the strategy that underpins it, you need to basically adopt more of a consumer like product management perspective, where you're thinking about the individual, you're marketing to the individual, there's more of a virality loop that's going on. And typically the way to bring people on is with a low friction trial, a freemium, some sort of way where you could basically show value very quickly without having them jump through hoops or a complicated purchasing process.

Oftentimes the best companies do this through a self-serve signup where you could sign up on a credit card, or even just enter an email address and start using a tool. And once you start delivering value, there's virality that exists. You can't live without that tool. The end user justifies the value of the product versus the top-down, it is typically the single decision maker who holds a budget that justifies the value for greater team or department.

And so those are really the two differences I see between the model. Again, there's no right or wrong answer. It really depends on the product that you're building.

Jared Klee: We're talking about startup building. Ultimately, Lorimer itself is really a startup venture capitalist right now. You're coming out of stealth. You're in the process of launching. I'm not sure if you call it Fund One or Fund Two, but we'll call it the first outside round of capital. Just talk me through, what was the origin of Lorimer? What was Fund Zero or Fund One, however you describe it. Where are we going now?

Stephan Cizmar: I had an incredible opportunity and I honestly feel lucky to have the career experience that I've gotten in startups and building companies. I was part of a incredible company here in New York called Yext. I joined early and got to work various roles across operations, product strategy, corporate strategy, product marketing, et cetera.

Through the IPO with them. I spent six years there. Some of the best collaborators I have to this day come from that ecosystem. Overnight, effectively myself, my peers, my superiors, a lot of people had liquidity. The origin story of Lorimer is that myself, a few other Yext people internally, we decided to basically create an investment vehicle to ultimately start investing in companies with the liquidity that we had.  

I teamed up with my two co-founders Leo and Nick who actually were outside the Yext ecosystem, but both were investing already prior, before I was even and we decided to essentially create a structure where we want to first validate if we can find great opportunities, great entrepreneurs, develop a thesis. And that was really like stage zero.

It was like using our own money, putting it forward, to prove that we can do this. That we have the network to source, that we have the ability to diligence companies. And to be frank, I mean, we were, we were almost a little timid to, to think about outside money. We brought our friends into the structure you know, but people who were aware of the risks they also were aware of the upside. But we did it really to prove to ourselves that we have the capability to essentially scale this.

And now with Fund One or Fund Two, however you want to call it, we've gotten to the point where we've invested in 39 companies to date across multiple sectors that we've been studying and following very closely all in B2B, I should say all software based.

And we've gotten to the point where we have now the confidence where we feel that we've proven the model where we could essentially manage outside capital. Much like building a startup to the point you astutely called out, we're building Lorimer in a test and iterate matter where every step along the way we have internal goals and KPIs, objectives that we want to accomplish.

We're raising the stakes slightly as we go through, because we want to ensure that we have the accountability and ability to scale this in a thoughtful and intentional way.

Jared Klee: You talked about those initial hypotheses. Could we do it? Could we do it successfully? Could we bring in friends, could we develop a point of view, the thematic view, which we'll get into. And approach, the operating partner approach first, investor second.

But those hypothesis testing, it never goes away. You answer a couple and as you grow, you get more and more. What are some of those hypotheses you're looking to test now with the new fund

Stephan Cizmar: Internally we're developing new perspectives from a thematic angle. One I'll go into in a little depth is that we've been keenly interested in what is a software stack for essentially a gig worker, solo entrepreneur, very small business.

Increasingly knowledge workers are going to basically be working a larger percentage of them will be working in fractional capacities. And even outside of that in the healthcare industry, for example, like traveling nurses, physicians that work for multiple health systems.

This is an angle that we're developing that touches a little bit upon our FinTech perspective. There's tools that you need for taxation, accounts receivable, accounts payable if you're doing, let's say fractional work. But then also there's how do you market yourself? What does HR look like?

I mean, in the enterprise context, there's departments for every function to run a business. If you're a solo entrepreneur, what is the software stack to effectively run your departments to, to run your business. And so this is an example of a thematic hypothesis that we're working to validate right now. We made a couple of investments in this space but it's one where I wouldn't fully call it a thesis yet.

We're still in the process of learning and validating the market and figuring out again, using our empathy to understand what is the day in the life of a fractional growth marketer or a traveling nurse. And that's really one of the areas that we're developing.  

From the fund mechanics side. I mean like, one of the hypotheses we have is that since we do have like an active hand in a lot of companies are pre-product, pre-revenue the area we want to test with with this upcoming raise is that we want to see how much can we basically lean into like a soft incubation concept, I'll call it. We don't want the ownership stake of incubation, but we want to get as in-depth with the founder as possible without being in the way, but without being annoying.

It takes a certain type of founder. There's chemistry that needs to be involved. But for the most part, the majority of the founders we work with appreciate us. Rolling up our sleeves and lending a hand to that building. And I think that with this fund, with a larger amount of capital that we can deploy, and also at the same time, as we've grown our network and partner with larger institutions we can help lead rounds with and bring people together to invest in series, that's an area that we want to lean into a little more.

It's like, How can we basically help with the earliest stages of building? How can we help someone effectively not make the same mistakes we've made as operators and founders. And again, it goes back to that empathetic understanding of the entrepreneurial journey. But I could be very open with you, Jared, and say, like, I've made tens of thousands of mistakes as an operator, as a founder, as an investor.

In our pitch to entrepreneurs that we want to work with, and this is as authentic as it can be, because we really truly mean it. We want to help you not make the same mistakes we made. At the same time, if we back you, we back you fully, because we believe in you as a human, we believe in the concept you're building, we believe in your ability to innovate within the space that we have an understanding of. And we want to help you any way we can.

Part of that help involves like us stepping out the way when it's time to build, but when it's also time to roll our sleeves up, we're going to be there 200%.

Jared Klee: The admitting the mistakes and then trying to help entrepreneurs not repeat them. It reminds me of something my father used to say he used to tell me to quote go get my own mistakes, as opposed to having to relearn what he would do it with someone else or doing it stuck with me for all these years. I don't always listen, but at least it stuck with me.

I'm curious for you, what are some of the highlight mistakes that you've made in the past that got you to where you are? Maybe they were painful then. Something that didn't work out that got you to where you are now that's helpful advice for founders who are probably going to go through the same thing today if they don't have the benefit of your perspective.

Stephan Cizmar: I mean, I'll answer this from two angles. One is the investor angle and the other is from the operator angle. I think as an investor, one of the biggest mistakes that we made is when we almost become too opinionated with a space and we fail to dream with the entrepreneur. We fail to open our mind to a new way of accomplishing some task or some work because we're too in the weeds or we're too embedded in a concept.  

It's incredibly important for us to understand the market, to understand again, how things get accomplished within that market, how work is done. But we have to keep an open mind and almost like be an optimist, a perpetual optimist I'll say, in that there could be a better way of doing things. So I think that when we fail to dream and we let skepticism cloud our judgment, that's where we've made the mistakes as investors.

Jared Klee: I've heard Bill Gurley describe it as the, "well, what if it did work?" Not, not what's the probability if it worked. What if it did? What would the world look like?

Stephan Cizmar: Exactly. And you have to be like very, almost like deterministic dreaming. As an operator. I made countless mistakes, but I think one of the most pressing or, one of the first that comes to mind, I should say is when I was launching my first company, it was a FinTech company before FinTech was cool.

You know, it was like a mobile compliance company, you know, it was like 2013, 2014 time that period. I let my product strategy and my understanding of the market be clouded by essentially a couple very progressive early conversations we've had with design partners without fully understanding what the market looked like.

I got happy ears and I see founders go through this quite a bit where oftentimes the people that are the first ones to buy a platform and a software are outliers quite frankly, within the market that you're looking to do. And I, my co-founder and I, we built towards what we thought was a market that was further ahead than it actually was. And this is actually advice that I give to founders today. It's wonderful to get the early adopters, the progressive people within the space that are looking for new solutions that have the risk appetite to partner with you.

But fundamentally, Once you get that product market fit and you start getting that market pull, you have to almost reset your expectations to the lowest common denominator. What is essentially like the most backwards way of doing this? Who's a prospect of yours that is doing this in a way they haven't changed in five years. And that might not be someone to sell to immediately or target them. But if you be mindful of that spectrum, that there's going to be always at one end, the people who have a high risk appetite who want to adopt new technology, core kind of digital progressives, and then the laggards, you'll find a happy medium where you actually can build your ideal customer profile somewhere in between that.

Jared Klee: Crossing the chasm, which I know you've referenced in your writing. The book.

Stephan Cizmar: Yeah.

Jared Klee: That was life-changing for me when I first read it. Gave me a deep appreciation of what you're talking about, which of course I then screwed up all a bunch of times and learned the hard way again and again. I've kept coming back to it because it's such an important lesson. I love that one.

It's also a great lead in. I've pushed off the theme discussion long enough. There are entire sections of the world that we talk about cloud and mobile and data and internet, and take basically anything you want from about 1990 onwards. And there are still whole sections of the world that, it hasn't passed them by, they simply haven't caught up to it yet. And yet think you have a belief Industry 4.0, that this is starting to change. We're at an inflection point. Maybe we start, what is Industry 4.0?

Stephan Cizmar: It's a loose term. I think it's thrown around quite a bit in investing circles. But it's a loose term to define essentially the next generation of software that's being applied to manufacturing, industrial, sometimes logistics is also bucketed into this. We call them internally at Lorimer, we call it basically second wave SaaS.

And so it's like, what are the industries that are just starting to wake up to cloud right now that have large volumes of data that have reliance on automation, human machine interaction, whether that be through software like me entering it, puts it to a GUI or even in a manufacturing context, human to machine interaction from a physical standpoint with robotics.

It's a space that we think quite a bit about at Lorimer because we see this as the next frontier for cloud to essentially wake up into. In particular, I'll talk about some sub themes that we're tracking very closely into that. If you look at the percentage of global workers that are frontline, they outnumber by huge ratio, essentially knowledge workers and frontline workers.

But the process of capturing information from those frontline workers is very archaic. Oftentimes it's pen and paper, or you're essentially inputting information after a job, or when you have free time, when you essentially, your hands are not busy. We're looking for companies or we're trying to understand How are now large enterprises all the way down to, you know, SMB organizations, how are they activating these frontline workers and turning them into knowledge workers?  

How are they extracting the information and the data that they're picking up, leveraging that for more efficient processes, better knowledge capture, predictive analytics. It all starts and ends with the frontline itself.

From a macro standpoint, it's increasingly harder for companies, particularly within manufacturing to hire. There's a statistic that's thrown around. I believe it's like every week, 10,000 manufacturing workers in the US basically reach retirement age.

Jared Klee: That's wild.

Stephan Cizmar: There's a cliff of retirement and a lot of production is actually impacted by this. Factories can't stay open. A lot of these factories and industrial settings are 24/7. They can't stay open. They have to reduce production, reduce output as a result of staffing issues. And so an area of Industry 4.0 that we're looking keenly into is like, what is the role that automation software has first and like everything from staffing frontline workers to what is the role that innovative financing has for robotics within these settings.

And also what does that software stack look like when you're basically managing assets? You're thinking about uptime. You want to basically maximize the operational efficiency and the output of an organization. What does that stack look like? And it's an area where we think that they're just starting to wake up to SaaS because we, (a) we're placing bets in it, but we see the dominant platforms, the IBM's, the SAP's of the world starting to open up from their cloud offerings, their APIs. They're starting to produce documentation to build on top of it.  

And that we see as like almost a crucible moment within the space itself, because there's a lot of applications and intelligence that can be built on top of those platforms. To optimize processes, to generate more efficient output and ultimately, to deliver a higher ROI to the end organization.

Jared Klee: You keep talking about the software aspect of this, which I recognize is Lorimer's focus, but there is very much a people-based aspect to this, especially we're talking the depth of knowledge at the front line, understanding of it, engaging with them. When we talk about robotics, or we talk about 5G with the towers, I mean, there's no getting away, there's a deep hardware element about this. Help me think through, like, what is the interplay of the hardware aspect of this, the software aspect of it, the opportunity set that maybe one present that's different from the other, maybe one leads the other. Just help me think about the combination of the two.

Stephan Cizmar: Software opportunity is almost lagging hardware innovation. A concrete example to point out with 5G and Wi-Fi 6 coming online, that originates from towers to routers itself, cables that you're pulling, but what does that enable?

It enables larger data payloads to essentially be flowing through the air. And so as a result of essentially the hardware innovation that's happening within the industrial logistics settings, that's creating what we perceive as software upside. Kind of pulling the string on that 5G analogy, as you basically have greater bandwidth, larger amounts of data, being able to flow now through the air and powered by 5G, that opens up doors for new applications to be built.

And those applications then need to be monitored. They need to be secured. There's a new perimeter that you have to build around from a software standpoint. The hardware innovation is essentially one of the leading conditions for essentially software upside within these spaces.

Jared Klee: How deep does this software stack go? If I'm going to launch a startup, say in the FinTech space today, I'm probably going to throw a bunch of stuff on AWS. I'm going to grab a bunch of open source stuff. Maybe if I'm processing payments, I'm going to go use Stripe. If I'm doing in person I might use Square.

Just off the top of my head, rattling off 10, 20, 30 different things I can stitch together, then sprinkle my secret sauce on top the incremental 5, 10% stitch it together. And now perhaps I've got a very valuable company that's got a unique insight and can go out to market.

It sounds like what you're talking about, there is a lot to be built. We're talking deep in the stack here if that's right?

Stephan Cizmar: We're just getting started, I think, on that macro. I mean like, the platform opportunity within industry Ford auto is immense because while there are dominant players, particularly like, you know, in categories like CMMS, ERP that already exists within these logistics and factory settings, the cloud native or digital first opportunity it still remains open.  

There are companies that are vying for that source of record, the platform to be built on top of, what everything from asset management to data capture. But we're still early within that. I think that to use it, the FinTech analogy, we're probably about 7 to 10 years behind where API for companies like Stripe, you know, or like payroll embedded companies, Finch for example, are innovating.

There's still a lot to go, but that makes us excited on the longer side, to be very frank with you, as longterm patient investors, because we're excited for the upside.

It's gotten exponentially cheaper to start a software company today than it was five years ago, even 10 years ago, 20 years ago, when you had to use some of your capital proceeds on a raise to buy servers and host your software. Now you basically have AWS like capacity oriented pricing, Datadog companies like that, that to help essentially take out these little bits of work and make it very cost efficient.

That same thing to a certain extent is happening within the manufacturing side, albeit again, much more capital intensive business. They'll never get to the point of scale that we have within software, but it is starting to happen. And as a result of that, we're also seeing now within the the innovation landscape that there's new companies coming out, Tesla, I think on the grandest scale is a good example of this.

Tesla has a huge software engineering staff. They're building log internal tools to optimize their processes. They're digital first. They're built in the cloud. But there's a lot of innovation starting to happen within the manufacturing space. I want to call it, even companies like Boom Aerospace, for instance, which is building hypersonic jets.

These are digital first, digital native companies that are popping up and they don't have a lot of the technical debt that the legacy manufacturing companies play. And One of the takes, we have a Lormer is in the next decade, the industrial fortune 500 is gonna look very different than it does today because you're going to have a lot of these digital native companies entering the space, finding more efficient ways to produce the products that they're manufacturing, being built on software first, digital first protocols and platforms, output superior products and at scale and velocity, that a lot of the legacy players can't compete with.

Jared Klee: Is funding these companies and Industry 4.0, is it similar to, if you were say to fund a FinTech or an e-commerce or the like? And what I mean by that is it's relatively cheap to go launch an e-commerce company. It's relatively cheap to launch a FinTech company. Certainly if you compare a 5, 10, 20 years ago, because there's so much you can grab off the shelf. Because there's so much you can grab that's variable pricing. Because there's sophisticated ways of financing factoring and so on.  

Is the same true in this space? Or are the Industry 4.0, even the software companies, are they inherently longer term, more capital intensive companies that you have to think about funding balance sheets slightly differently than you do the existing startup space?

Stephan Cizmar: I would say that there are differences there, because a lot of industry for other software companies are selling into legacy manufacturing, super large enterprise organizations. And so by nature, their sales cycles are going to be longer because majority of them are top down. Albeit we'll put a pin in it, but there are some companies are innovating right now with product led motions particularly within the frontline space, which we'll get to in a little bit.

But there is a longer ramp time I think, to get them up and running. Cycle selling into large enterprises can take anywhere between six and 18 months. And the requirements to basically sell into them from a security standpoint, compliance standpoint are much stricter than if you're like a startup selling to other startups where you can move fast, innovate quickly. There's less margin for error. So there is a longer ramp period. As a result of that, you do need a slightly larger amount of capital again, to get started.  

But with that said, I think there's a lot of great entrepreneurs in the space who are taking best practices that exist within software companies selling to other startups and they're bringing them into this. Practices that include product management, being closer to the customer, rapid cycles of innovation. They're built on AWS. They're built cloud native. They're using a lot of the latest and greatest tooling to essentially deploy and manage their products.

And so there are some efficiencies you can gain. But overall, the net of that is that it's still a little longer in terms of ramp and a little more capital intensive. But I do think that that's changing over time and there's really two reasons for that. One is that I spoke about earlier is that there is a lot of disruption happening within the industrial sector right now. It's like you have to adopt digital in order to compete. And there's macros are compelling that where the engineering industrial processes are rapidly changing due to increased interconnectivity and smart automation that's coming online. That's being propelled by innovations and paradigm shifts like Wi-Fi 6 and 5G in these particular settings.

The second I think is that a lot of what's coming is that there is increased competition now among some of the digital first companies that are coming up within the space itself. You look at the EV boom. Digital first companies that are again producing large volumes of vehicles, the best ones are at least, in a very efficient way.

The legacy auto manufacturers now have a new barrier or a new beachhead of competition. And they have to adopt, or a lot of them are adopting the mentality, they have to transform their processes and update it to a digital first nature if they want us to remain competitive on the output and production they're generating as an organization.

Jared Klee: The way you're describing this reminds me of the mobile revolution in Africa. There was this expectation. If we've rolled back the clock, there is this expectation of, oh, it's going to take them decades to catch up. Because first that they installed landlines, they put up cell towers and they get mobile. And more or less across the Continent, they went, why the hell would we put landlines in we can go straight to mobile?

You're talking about bringing 30 years of best practices of sales cycle learning, of financing learning, of development learning, of product management learning. I mean, the list goes on and on to an industry that hasn't seen it. It's going to allow them, if your hypothesis is right, allow them to leapfrog ahead in very, very rapid order.

Stephan Cizmar: That's, what's driving so much conviction. There's been a cumulative, almost like tidal wave of essentially innovation that coming up, where we're now reaching to this tipping point where we're going to see a lot of disruption within the space in the coming years.

Jared Klee: Where are you seeing that product lead sales cycle in the industrial space? Cause that's a particularly interesting one. That's not just a shift for a startup. You're talking a shift in how a buyer consumes a product. That's a really big shift.  

Stephan Cizmar: We're invested in the company called Dash which effectively is creating a voice interface for frontline workers. You could think of it as like capturing knowledge from the frontline worker and a play-by-play setting, and then sending that over to a CMMS, like an IBM Maximo, for instance and having that data input and data capture in real time.  

That's an instance where their core ICP and buyer are the frontline workers. But what they're finding is that, and this was remarkable and that's something that, that we really dug into on the longer side is that through experimentation, they actually found that there's demand on the frontline managers looking for solutions to essentially help make their workers more efficient.

They're gathering search volume on Google for essentially desk-less workers solutions, hands-free data capture. And these engineering managers, they have corporate credit cards. They have again, the ability to purchase on behalf of the organization. They're seeing, again, a product led motion where you could have a very low friction entry point to it so long as you check the compliance boxes, you know, and integrate with the system.

But there's a way where the buyers are shifting lower from top-down CFO led purchase and procurement processes, now to essentially frontline managers and department leads. And that's something that we're tracking very closely and we're seeing it continue within the new industrial space.

It's very early days, but promising nonetheless from what we've observed.

Jared Klee: You have another theme around e-commerce and I want to shift attention to it because it really couldn't be further away from Industry 4.0.. E-commerce has been at the front wave of moving to the internet. Go back to Amazon 1994. What if we put a bookstore online, now the wave and payments and so on.  

Yet, you're betting with Lorimer, one of the themes: we are still in the early innings of what e-commerce means. There's still a wave to come of main street moving online, of the toolkit to go build that online store, the presence, the distribution. Where do you see that long arc going? Where are we in it? Where are the opportunities that you're looking at under that theme today?

Stephan Cizmar: I mean, we're still early within disruption within e-commerce and purchasing goods online. If you look at statistics like roughly before the pandemic, percentage of transactions in person versus online, it was about 15% in e-commerce. COVID happens, pulled that forward about a decade. Nike had a goal from a direct to consumer standpoint, I think it was in 2020 Q2 or Q3 where they wanted 30% of their sales to be direct to consumer. They ended up getting 50% of their sales going online, direct to consumer.

A lot of what we're thinking about is what is the tooling and the setup that empowers a smooth customer experience from essentially looking to product all the way to checkout, to basically re-engagement with the brand.

A lot of what's driving this and a lot of what's giving us conviction is the rise in headless architecture. So from a front end standpoint, what cloud and API enabled developers and really companies to realize is that you could have data interoperability between platforms. That's given rise to essentially a trend of really best of breed point products.

They're optimizing some piece of that consumer transaction that commerce interaction. Whether it be more efficient search for product search or a smoother checkout. We're seeing a Cambrian explosion of essentially companies that are taking on one piece of that customer journey, optimizing it, but again, through the power of data, interoperability, connectivity, and APIs, they're able to pass that information onto the decoupled stack and create a smooth overall experience for the end customer.

We're very bullish on this macro looking up and down the customer journey and looking for companies that again are optimizing pieces of that journey. Everything from images on carousels, down to, you know, the checkout process, down to re-engagement and marketing. And what does that connection that the consumer has from the experience that they're delivered to the loyalty that they're building with a brand.

But again, going back to this theme of empathy, we're all consumers ourselves. We shop in quite a bit online. We're leveraging our own experience as consumers combined with our technical understanding and our depth of the market itself to find companies that we feel that are innovating with this new stack of commerce tooling.

Jared Klee: It's fascinating to hear you talk about the interoperability, the data inter-operability from an investor standpoint. I had Matt Mullinex on from Huron, which is a men's care direct to consumer brand. He gave me a great quote. I challenged him.

I said, "why are you selling on Amazon? You've got this brilliant web presence. You've got engagement across Instagram. Why aren't you just driving people to your site?" I think they're close to 5,000 5-star reviews on Amazon. I mean, it's a big presence. And he said, we don't really want to own how you shop. We just want to own your bathroom.

Stephan Cizmar: Correct. And be everywhere where you are present.

Jared Klee: What you're talking about's simply a very different way of building a store online. You're pushing Amazon and Shopify and Etsy, can go down the long tail, deeper down into the stack, creating this universal presence, which opens up opportunities of now, how do I manage this at scale?

Stephan Cizmar: There's more places than ever, if you think about it, in an online capacity where you could buy the same good from the same brand. And a lot of it goes down to consumer preference, the experience of the delivered loyalty that's built. It's really in the best interest of emerging, direct to consumer brands, as well as legacy retailers to be present everywhere where consumers are shopping.

That is a whole new digital barrier that if you think about it didn't exist even five years ago, or it didn't look as dynamic as it did years ago.

Jared Klee: Oh God, if you have to manage Instagram and tick-tock, and, and, and, and and. It needs to be the same brand in every place. If someone engages you on one channel, you need to know who they are on the other channels. I mean, that you're right. it's a whole new world of challenges.

Stephan Cizmar: I'll give you a very tactical example of a portfolio company we invested in that, you know, we love on the Lorimer side, a the company called Knapsack. What they're doing is they're basically building a collaboration system for front end designers, software engineers, product managers and marketers to essentially have a source of truth for brand assets.

Because if you think about it, like if you're a Lululemon, if you're a large enterprise like Nike, you need to manage your brand logos across every marketing email you send out, landing pages, maybe for seasonal discounts, the product pages themselves, your corporate website and every single social, and any area of marketplace first or third party where your consumers are shopping.

What Knapsack does is it basically gives all of these different stakeholders a source of truth and a collaboration platform to ensure which brand assets and patterns is as they call it are basically the latest and greatest so that when you go out as a front end designer or an engineer, and you're coding a new page, you basically can have that on hand and you're not using essentially stale brand assets.  

The need for a product like this didn't exist or wasn't as pressing five years ago, it didn't exist 10 years ago.

Jared Klee: It brings us all the way back around you just said it, the empathy for the user. You will only discover, you will only understand that problem if you've lived it, if you've experienced it, if you've struggled to support the brand. I mean, the brand in Lulu's case really is the product across all the different touch points, same tone, same representation, you name it. And I love that we've come full circle on that.  

But before my closing question, I want to ask you one, and I'm a challenge you on this. If you look five years, 10 years, 20 years in the future of what Lorimer becomes. I'm curious, working backwards, like what does success look like for Lorimer, for you sitting in the co-founder chair, the general partner chair. But also from a founder's perspective, who's 20 years from now engaging Lorimer.

What is Lorimer to that founder? What is it to you?

Stephan Cizmar: I think success for Lorimer is, is pushing the entrepreneurs that we partner with to go for it. The Twitter sphere and media itself, they glorify funding rounds, they glorify exits. I think it's a misnomer to label that as success. It's a great outcome, if you get to that point, but we really see success and failure really on the entrepreneur just going for it. Executing, working towards fulfilling that unique insight that they have to create a utopian vision of how work is done.

And I think For us, success is being a trusted partner to the founders that we work with to help them get to the point of executing the dream that they're creating and dreaming with them.

I'm not quick to label like, you know, a company shutting down as failure. I would say that it's failure. If you didn't go for it with 100% of what you had. That is success to me is going for it. It's putting every ounce that you have behind it. It's making that dream come true.

And I want Lorimer to be a part of that on that entrepreneurial journey with everyone that we interact with. For us, I think success is backing companies that have breakout potential, but the ones that are bold enough and audacious enough go for it.

Jared Klee: That's powerful. It's a nice segue into the closing questions. Same question for every. What's the biggest win that you've had. It could be personal, it could be work. Anywhere you want to take it.

Stephan Cizmar: I think I'm going to go with a personal angle. The biggest victory, I think that I've had is I think being able to maintain deep, deep relationships with my Lorimer partners on a personal level, on a friendship level.

I'm proud to say that everyone I work with on the investing side, I consider a close friend and someone that I trust and want to understand and partner with them. But I think that the victory that I accomplished was being able to draw divide where friendship is and business is, constructing both relationships on a base of transparency and a base of mutual understanding and trust.

I think that's the biggest victory. It's always hard working with friends because it adds a whole different dynamic when you have understanding of someone. But I think if you could master it, there's no people I'd rather be working with than my closest friends who happen to be my partners here.

Jared Klee: That's a new and very cool answer. Stephan, really appreciate the time.  

Stephan Cizmar: Thank you, Jared. This was amazing.