Albert Malikov - CEO of Stacks, announcing their $23m Series A!

0:00Hello and welcome back to the Scaling Europe show presented by Deal. I am Seb Johnson and today I've got a great guest, Albert, founder and CEO of Stax. How are you doing today? Very good. Thanks for having me, Seb. You've got some amazing news to share? Yes. So we're very excited to share today that we are announcing our Series A round, 23 million, led by Lightspeed with our existing investors, General Catalyst, Equity Ventures and S16 VC doubling down on this round. Amazing, it wasn't long since your last round when you raced 10 million, what was it, nine months ago? It's less than 12 months ago and we announced our seed round exactly one year ago, it was February 19th Amazing, and what's happened, what have you achieved, what have you done that has unlocked this big Series A?

0:51Well to be honest the last 12 months was pretty insane in terms of the things that were happening in terms of the traction So in a very short period of time, we've seen a huge pool from the customers onboarded more than 30 enterprises to our platform and launched a number of different agents helping our customers to reduce their month-end time and bring a lot of efficiency to their teams. Amazing. For those who don't know, can you just touch a bit on the product that you've built? Absolutely. So our main workflow that we help enterprise customers with is monthly financial close. So every enterprise customer, the best practice is close their financial books every month.

1:37So such workflows as journal entries, reconcilations, reportings, we have a genetic platform that's allowing our customers to do these workflows much faster on our platform with a lot more accuracy. see so that's uh that's the main product that uh we work uh with our customers amazing where does this come from you know i know you spent time at uber and it played like why was this the problem that you realized was a huge problem and worth solving uh indeed um uh so i was a early finance product manager at uber uh in the bay area where when the company was scaling we were building a lot of automation so first time i saw this problem um during that time and in many ways inspiration to start Stacks started during that time.

2:23But technology wasn't fully there to really scale and challenge big legacy players in the space. After Uber, I came back to Europe to lead Plaza European expansion, another fintech from US. And during these years, I was playing out with the new technology, with Argentic technology, with AI. And that was the moment where I just realized that a huge problem that is still not solved in enterprise finance teams, such as monthly financial close, could be solved with the new technology much deeper, you can build much better automations. Amazing. And the journey seems to be accelerating. You raised a very small round, I think, two years ago, then a big, I think it was 10 million last year, now 23 million.

3:13How are you deploying that capital? Where is that money going? Well, to be honest, I'm super excited to accelerate our product development. We already have more than five agents in production with our customers and have more than 20 different agents planned. And this money will mostly go into just bringing forward that development and bringing these products faster to our customers. And when you talk about your customers, who is it you're selling to specifically? I know you're serving a lot of enterprise right now. Is it finance managers, CFOs, directors, CEOs? Who are the people that you're trying to sell to?

3:50Our main buyers and users of our platforms are VP of finance operations, controllers. And the accountants who are working on the monthly financial close, they are our main stakeholders within the enterprise teams. But we also very closely align roadmaps with the CFOs. as our product spans from simply just closing the book to more reporting products as well. And what's it like selling to that stakeholder? The finance teams, finance departments are not famous for their adoption of new technologies or risks. Or what's it like selling to them? I think there are a few things colliding in terms of what's happening in the space.

4:36One is, so we're seeing a huge shortage of CPAs in the world. So the number of people taking CPA exams in the U.S. has dropped by 40 % in the last 10 years. There is a shortage in the U.S. alone of 300 ,000 CPAs. So the problem is there, and it's difficult to just solve it by deploying more people. That's one. And then second, so what we're seeing is finance leaders are the ones who are leading transformation, efficiency transformation inside the enterprise for many departments internally. And then so just showing the leadership and showing that they're doing this transformation in their own department is also very important.

5:22So we're seeing a lot of changes in the space that's been, as you said, like the buyer is quite pragmatic. That's one. And then second is, so what's helping is just like a clear ROI because of the new technology allowing to significantly show the ROI from the product. And finance leaders are the ones that are very much numerically driven. And when they see the value from the product, ROI from the product, they get it. And what is that value for them? Is that time saved? There are a number of vectors how we add value. efficiency through time spent on core activities is one of them. So we're reducing time that it takes to complete workflows.

6:11One of our customers, Nivoda, they were spending eight hours on the journal entries and they reduced this with us to 15 minutes. Wow. So they were spending many hours on bank reconsolations and we together automated 95 % of this reconsolation. all in all they reduced a time that it takes to close the books by eight hours uh working closely with us so just imagine that you have a view uh in your financials uh eight uh eight days uh faster and um so that's a that's a huge improvement so those are the key areas where we um are delivering the roi that's amazing when you talk about the the kind of the ramp up of enterprise customers that you have.

6:53Where are you seeing that come from? You know, like you're European founded, I guess, but you know, you seem to be doing really well in the US. What's that balance look like? Today, we have a mix of the customers across US, UK and EU. We have around 30 % of our customers are in US, but we are actively increasing our presence there. and then 70 % split between UK and core European countries. And what's that expansion going to look like in the US? Are you going to get a team out there, build a presence out there? Are you going to be out there yourself? What's that going to look like? Yeah, so we have a small office in New York, so we haven't officially opened it, but at the moment, working on hiring the team on the ground there.

7:41Amazing, that's going to be really exciting. And so where has the, you know, you said 30 % of your sales is coming from the US already. Where's that coming from? Is that inbound? Are you selling from here to the East Coast? Most of it was inbound. So we got interest. So our customers were sharing feedback with their community. And so those customers were coming inbound to us. Amazing. You've raised a big Series A now. How are you thinking about the future and what's going to get you to that next milestone? whether it's a big revenue milestone, whether it's a Series B, what's going to get you there?

8:19Yeah, so I think we're in the lucky spot today where we're just having this significant pull from the customers. And so our sales team, our commercial team is fully booked, showing the demos of the product. So we need to scale the company across pretty much every dimension to satisfy that demand. And most of our efforts will be focused on that in the coming quarters. And what would you like to achieve this year? Do you have a number in mind? Do you have a number of customers that you're hoping to get to? So number of customers is definitely something how we measure the impact that we're making.

9:00We would like to deliver more impact. for us this year is incredibly important launching additional functionality. As I mentioned, so we have more than 20 different agents in our roadmap because we truly believe that we can transform the monthly financial close to a lot simpler process. We call it like one-click close. So we think that that future is not that far. And to be honest, for this year, seeing most of these agents being deployed and significantly cutting the time and improving the efficiency for our teams would be like a big milestone, essentially. Amazing. And you've started here with sort of like a month-end closing.

9:46Do you have visions to kind of automate more finance workflows? Are there other bits of the finance stack that you want to go after? I would like to say that the business that we're building is we're in the flow of data. and as a part of building out the workflows, we're also building very powerful data layer. I would call it AI-ready parallel ledger. It's allowing us to unify a lot of fragmented data within the finance team, but also allowing us to really bring the data into the layer that is ready for AI analytics. So we're delivering ROI immediately to the customers and in exchange building out something powerful on the data side.

10:31And eventually, so what it will allow us to do is just bring a lot more intelligence to the finance teams. We want CFO-level intelligence to be available to anyone in the company who is making any significant decision. Just imagine that you are making decisions whether you're investing in the market A, in the product B, and would like to get really a data-driven analysis for this decision. you just ask the question and we get C4 level intelligence for this so that's the future where we're going So you're going more analytical and insight driven as opposed to just sort of workflow and automation The analytics and intelligence is the workflow by itself too so at the end of the day sort of like it's all workflow driven but what we're doing is just going into a lot broader intelligence with the more powerful and unified data layer that we're building.

11:30Interesting. And have you seen your users kind of use the product in unexpected ways? Are they sort of helping to define your roadmap by using it in a particular way? Oh, yeah. So we have the journal entry automation product that's allowing, with a few clicks, to make entries into the Excel. Our users love it. we are receiving amazing feedback for this product because the work of creating the CSV files and manipulating them and then entering them into your core system of record ERP is just so boring and no one wants to do that. And so we were covering one part of the workflows there that were made on the payroll journals.

12:16And so we started seeing that our users are using it for the revenue for all other intercompany transactions. And when we don't support some of these new types of the data, yes, we're always receiving feedback and our team trying to react on that as quickly as possible. So just seeing that feedback from the end users is always very exciting and what really drives us here. That's amazing. It's great to hear. And, you know, I know that you were a founder before, before kind of getting back into operating again. What's it like getting back into kind of the founding seat again? so i had it uh i founded the business before it was not a venture-backed business one thing i realized during that time um i was missing size scale ambition i was missing working with the absolutely best talent and what a venture-backed business is really enabling you to get access to the best people and um to to build uh in the space and being as ambitious as you can actually just like imagine for yourself that's a big difference and uh the space that we are today is incredibly massive and the transformation that you can make is pretty much like touching every company in the world so we're super excited about that and we're also excited to have um seen great um bar of the talent in the previous companies that we work uh with and just bringing uh the same bar bar to to our team is something that truly amazing because we just like every day create innovate in this space.

13:56Is there anything that you're bringing from your bootstrap days to the business today? Yeah efficiency for sure especially these days you can achieve so much more with AI with a lot less capital. And so as we're raising CDs A today, so we haven't spent most of the money that we're doing this seed. So one may ask you, why do you need this additional capital? But I think that we're just seeing so much more opportunity of moving faster, but at the same time in a very efficient way. So a little bit of combination of efficiency is put here. Amazing. Look, if you succeed in everything that you want to do you know what does what does that mean for the finance function in five or ten years do you see a future where it is a much smaller much leaner organization that is focused on much more value-add activities is it going to be almost entirely autonomously run you know overall what's it going to look like in five ten years if you build the things that you want to build before starting stacks for almost six months we did extensive research we spoke to hundreds of finance leaders across the world.

15:12And one thing really stood with me during that time, one controller in a multinational company told us that their team spends 80 % of the time on manipulating the data in Excel and in different tools, and only 20 % of the time thinking, so what? Thinking about the insights, thinking about the impact of the business. So success for us is flipping that equation. And we believe that in the next couple of years with this phenomenal technology that is available for us, we can do that. Amazing. And what parts of the finance stack do you always think will be human-led? What would be human-led is business intuition.

15:57So I think what is difficult today in the finance teams is just collecting the data, processing this data, getting the insights from this data. So it takes a lot of time. But then, as we already discussed, you don't have enough time to act on this data. So I think there'll be a lot more abundance of insights. But then at the end of the day, on top of this insights, one has to make a judgment. So that intuition and judgment to make a right decision is going to be an incredibly important skill. And that's how the finance teams, in my view, will be structured with the people who are very good at that.

16:40Do you think that building agentic technology, workflow technology in finance has a different standard or rigor than maybe building in other parts of a business? You know, with accountancy, there's obviously a higher bar when it comes to accuracy, accountability, audit. does that mean that there's a higher bar for you and the things that you build? Absolutely. And so finance is the massive segment. And so what we're seeing today in the market, so in the segments like customer support, legal, we're seeing huge multi-billion dollar outcomes today. It takes a little bit longer in finance, exactly because of the reasons that you mentioned.

17:21It takes longer building out that foundational controls around what agents do. The way we're approaching this is on top of the data layer that we built, we're also building deterministic tools, machine learning tools that just do the math. And then we're using LLMs on top of that. So this additional layer allowing us to get to completely different level of accuracy and having a lot more control in terms of the outcomes. So we don't just throw data into the LLM and hope for the best. We just fundamentally sort of like building out those hard elements. That's one. And then second, so we build a platform with a lot of controls.

18:04We're working with the public companies that are listed on the, that are actually listed. And so that requires us to build out a lot of controls for everything that actually requires us to have a fully human in the loop system where you can do and complete the tasks using our tools in semi-manual, semi-automated way. Or you can use agents to do that in a fully autonomous way as well. Amazing. What's the pushback that you get? When you lose a deal or when a client has reservations or prospect has reservations, what are they and how do you counter them? Absolutely. Yeah. So I was just looking at the top reasons why we're losing the deals.

18:54And number one reason is mostly around us just not having the products that customers want. And that's why I was very excited about the roadmap because we just see those needs. And it's not like competitors have it. So customers have the need, they're going to the market. And yeah, it's just like there are no options to have those products out there. So that's why I'm super excited to accelerate the R &D development on our side, because we've seen clear opportunity how to make an impact to our customers. Amazing. Well, thank you so much for joining me. I'm really excited about the news. I think you guys are going to absolutely crush it.

19:34And I look forward to seeing you kind of grow more, deploy this capital and take the business to the next level. Thanks so much for having me, Seb. My pleasure.