B (8:15)

So I know that you are a big advocate for having intense focus. How did you apply that to the very beginning of the company? You know, kind of after you. Okay, decided, let me try this, Let me figure it out if it's a real company or not. You know how the intense focus manifested itself.

A (8:41)

Yeah. So it's both an intense focus, but also to have your center, your backbone, your belief system and understanding of the problem, the solution. The customer, in many ways, is not the one to ideate or to conceive new solutions and see the whole envelope of challenges that you need to deal with. Necessarily, it's up to the entrepreneur to come up with the ideas and to find the right fit. So in the first, I had two first customers, these two companies, One Infolinx that I mentioned and the other Plymedia. And through the work with both of them, I figured what the challenges were and how, what is the right way to serve to answer those challenges? Like how do you make a global compliance challenge accessible to a small company CFO that has maybe I think both CFOs had no direct reports like it was them, the finance department was them. How do you do that? How do you manage? Asking the payees for the unique code that is requested in India or in Russia or in every country has nuance like, how do you do that? And I found out a way to do that. And it had a certain technical profile, let's say. And when I presented it to Infolinx, to the head of engineering there, he just didn't like it. He thought it was the wrong approach, wasn't sexy enough, wasn't exciting enough, and tried to push me off of that approach. But I knew that if I follow his advice, it'll make it so much harder for my customer, who's the cfo. So he is a technical leader, didn't like it. It wasn't, again, wasn't exciting. It wasn't maybe the most modern way to solve problems, but it was the way to solve the problem for the cfo. So I actually rejected his request. So I have two customers and in a way they were the first customer and I'm turning down my first customer. And the only way to do that is if you have a very strong belief in the problem, the solution, how you deliver the value, and, you know, it come. It came up prior in my career and fortunately enough, because I already went through some of these exercises when the customer tells you one thing and all other signals tell you something else. And you need to keep your composure and your center. In all of these cases, I want the customers and more than that, I want their trust and, and beyond that. So, yeah, that's one demonstration of how to keep your center, to keep your vision for the customer, understand the Persona of the buyer and what is important for them and make sure that you serve them well.

B (12:05)

That's interesting. So it's not always about following the data, because you could argue that the data the customer was saying is like, no, this is not going to work, this is not what I need. But you had intuition that went beyond what that signal was telling you. So is it a combination of both?

A (12:25)

Yeah. Well, you can argue that the interviews and the shadowing of the CFO is a piece of data. Now, they didn't tell me do this or do that because they don't know how to tell me. They are finance people. It's not their place to tell me, oh, you should take that technology and implement it in that way. But yeah, it's harder when someone tells you, don't, don't do that this way versus you listening to someone else and kind of extrapolating and having your understanding of the situation. So these are two data points. One of them has an emotional challenge because you're facing someone and you need to remove that, remove the emotional aspect and just look at the data. What he's focused on. He was focused on being the geek that he was positively. I'm also a geek. But when you geek around, you like it shiny new objects. You don't like to go back to whatever you used two years ago. So that was his pain and what he was trying to optimize for. I was looking to optimize for ability to sell, ability to serve, minimizing user friction. Whatever a finance person needs from a technology to serve him well or her.

B (13:48)

Sounds like saying no is quite important when it comes to focus.

A (13:51)

Absolutely. Absolutely. Not only to customers, by the way. I had other experiences of saying no. But yeah, it's important to have your center to really follow your beliefs, your trust, your understanding of the situation. And yes. And saying no. Is the CEO part of critical part of the CEOs role?

B (14:12)

I mean sometimes it's easy to say no because it's clearly not within your mandate or your focus. But there's hard nos.

A (14:23)

How do you deal with those? How do I deal with those? I'm not sure. I think it's kind of part of my DNA. There are all kinds of personality profiling systems like the Disc and others. There's one called the Enneagram and you know, a friend did their PhD on that and like analyzed my personality and It's a type 8 for anyone who looks at the Enneagram and a type 8 cares less about what others think about him and more about protecting the family and protecting kind of. So yeah, I listen, I care about what you say, but the fact. But yeah, I guess I have the ability to kind of distance myself from the hard aspect of saying no, the emotional one and just focusing. And I'm very analytical, very data oriented. So if the data in past life, I'll give you an example. In past life I had a similar situation where I was a junior leader. A leader, but a junior leader just came out of business school and I came up with a product idea that the CTO of thousands of people organization, the top dog, like someone everyone bows to, said well you should be very careful because no one does it that way, it'll cause friction. But all the data we did, I did myself and a colleague did a lot of analysis and the data was very clear that the way we went we should go with was the right and eventually we won with that. So yeah, very analytical, very data oriented and yeah, always trying to do the best for the company and trying to put egos and emotions, they have a place but trying to put them in their own place.

B (16:13)

Let's talk a bit about your customers, maybe share the evolution of the type of customer that you started to work with and that you're working with now. And then we can maybe dive a little bit deeper there.

A (16:27)

Yeah, so I started with these two edtech companies, different edtech but edtech just the same. And then I tried to extrapolate from that. Again not coming from the field. I did my best, looked for more ad tech companies, looked for crowdsourcing companies, gig economy companies and the next ones. One was another ed tech and one was seeking Alpha which is a crowd finance knowledge platform. So continued with that and evolved from that and then went to the US and tried to source typical customers like that and had a lot of success in growing that ad tech economy. Crowdsourcing, e commerce, all these models, I'll bundle them together, digital if you will, mass pay. And then one of our customers and in parallel my head of product and myself started to think about that segment of the market versus the total market. And this part of the market is a fraction. It's single digit percentage points of the world are in ad tech and marketplaces and gig and all of that is a small part of the global economy. And we thought about how can we apply our product to the broader economy. And then one of our customers reached out to us and said, you know, I pay thousands of publishers with you and it takes me 15 minutes. And then I pay 100 bills for my purchase of laptops, for my rent, for my food in the refrigerator and that takes me half a day. Can you do your magic that you do on those thousands and apply it to those non publisher payments if you will. And yeah, we said very much so first because it was already kind of emotion that we were thinking and planning for. And then we had a customer that was kind of beat the or was a driver, a champion that we can work with. And that's when we started going into more traditional accounts payable. That was probably 11, 12 years ago. And yeah, and we evolved from that and we started adding invoice processing and PO matching and ERP integrations and just the whole notion of building a solution for these types of customers. And at some point that's kind of also probably 11 years ago I hired Rob, who's our president, he Came from netsuite. He was vice president of marketing in Netsuite. And when he looked at our customer base, he said, oh yeah, it's mid market. Netsuite is a mid market focused ERP system. And he looked at our customer profile and it was the same customer profile, the mid market. That's the first time I understood who we're serving. And then over time it took me a little bit of time to understand why is it that we're such a good fit for mid market? What are the challenges of the mid market finance leader? Why is small business so different from mid market? Why is enterprise so different from mid market? And now we are. That's our focus for all those years. It always was. We're focused on the mid market. Mid market for us are companies between 100 and 1,000 employees. And it's a very, very interesting market, very unique market, very challenging market. And obviously a challenging market that you solve is great because it creates moats and it's more defensible if there is a challenge there. In a way, small business is easier to serve. If you think about companies like Stripe and Marketa that enable these card first interchange first products, that makes for an easier entry to small business. Enterprise is complex, but you have a lot of resources. Deals are large, you can have the time, you bring integrators. It's a different process. When you think about the mid market, about a 200, 300, 500 person company and you think about the finance leader in that company. Finance is not where the resources go towards, right? In those companies, resources go towards building a product, building the brand, serving the customers. Just growing back office is an afterthought.

B (21:04)

But.

A (21:05)

But the level of complexity is already increasing. It's no longer your corner coffee shop that you know cuts a check at the end of the week and that's accounts payable for them. In a 200, 500, whatever sized company, it's already a little bit more complex. You may have subsidiaries in one or another country, you may have employees or suppliers in other countries. You may be working, obviously you're working more organized. You have accountants and auditors and maybe you need to manage approval workflows that are a little bit more complex than cutting a check at the end of the week. So on one hand you have a level of complexity of the business that is increasing, but a level of an ability to execute which is limited. These are very small teams, if at all, very few resources, if at all. So it makes for a tricky product. You need a product that solves A lot of the problem domains for this customer, right? You cannot be very narrow because that customer will not be able to buy a dozen discrete narrow products and integrate them and spend all the time in learning and integrating and educating the team and all of that that's not available for them. So you need to solve for an integrated platform, if you will, solution. But you need also to have depth because the level of complexity, the approval workflows, the currencies, the entities, all of those things. So breadth and depth and simplicity. These are the three legs of our product strategy. Breadth and depth to provide value and simplicity, to be able to sell, to be able to actually serve the customer. And that is a challenging product to build on the, on the first part and also challenging go to market because the more complex your product is, the less it is relevant for product led growth. For plg. You cannot sell a complex product online. You need someone, a solution consultant to sit with the prospect, understand what their pains are, understand what the unique situation of their environment is, explain how the product works in that environment and so on. And so it just makes for a more complex sales process, more expensive sales process. You need to go deep into the payments flow in order to create the value that you can monetize through payments. A complex problem domain, but when you crack the code for that domain, you hit it out of the park.

B (23:46)

Over the last 10, 15 years, obviously the world has changed. How have the needs of your customers changed, if at all? Like what have been the biggest changes serving the mid market over a decade ago to today?

A (24:02)

I think the biggest change was the education of the market. The pains were always there, but as the market is maturing, is there other players are there, we're educating the customers, we're kind of out there and the adoption starts. And the question we used to get in the past, or the comment we used to get in the past was, wow, I didn't know that was possible. I didn't know that you can go from an invoice to the payment, that you can abstract all of that, that I don't need to deal with all of these complexities. That was a very, very frequent feedback at the time. And now it still is a very greenfield market and very open market. Very small percentage of the prospect the addressable market is served. But there's greater and greater understanding of the availability of solutions. We just did a survey or research for the interest in the search for keywords like accounts payable, accounts payable, automation, some of the keywords that are important for our domain and that we are seeing a very strong uplift in the demand for those keywords. We're seeing our own brand and reputation taking a spike up. So I think the big difference is first of all continuing to invest in the breadth. So we're adding more and more. And the customers, we are now adding yet another functionality. And before doing so we went and interviewed the customers and asked them, is this a functionality that you need? They said yes. Is this a functionality that you think type should serve you with? They said very much so. We do not want to go and add like so one. They are now more comfortable in asking us to do more for them and they expect us to be the one delivering that value. So that, that's a big change over the last 10 years.

B (26:10)

I guess that's a good segue to talk a little bit about AI, because when I talk to founders serving a similar segment as yours, I've actually heard similar feedback.

A (26:23)

Right.

B (26:23)

It's like mid sized businesses are a lot more aware about tech tools out there and a lot more willing to give us control of some aspects of their business that even a few years ago they wouldn't. So have also the expectations changed of kind of what you should be delivering as a product? Do they expect also LLM capabilities? Has that changed at all?

A (26:55)

So first we view it as our responsibility to mediate new technologies for these finance leaders. Some of them will be tech savvy, many will not. And the tech savvy of us will use LLMs in our lives and will find applications and manipulation and we'll use it in a very advanced way for the less tech savvy and in general just to bring LLMs into the work. These finance leaders, this is our responsibility, so we're doing exactly that. And yes, it's the same expectation from the customer, from the customers that we will be the ones mediating between LLM and our solutions. And we've made some really exciting developments that we've launched and are launching. And yeah, there are some more exciting stuff coming out. Yeah, I can name a few if you want. By the way, we discussed it before the call. By the time people will listen to this, the LLM would have moved already. Yet another development cycle and it'll all look archaic. But for now, during our call, this is state of the art. So some of the things that we've done is like take ocr, which is an image processing technology, to take an invoice and extract the information. When you add LLM capability, where there is a context, it's an invoice. Once you find the name of the supplier, you can look at their past transactions. Like the ability to completely transform the accuracy of, of the information capture is tremendous. When you add LLM to just a mechanical optical character recognition solution recommending who the approvers should be, you have an invoice and the system looks at fast invoices, at how the changes in the approval workflows happened and recommends the right approval workflow so that the employee does not have to report generation. I use that for funky questions that I might have. Like I might ask how much did we spend on demand generation in the UK last year? And just write the text. It'll chart, provide a chart and a spreadsheet and you can download it and store it and then you can also tell it, you know, I need to purchase three laptops in the UK and five laptops in California and we'll build the purchase order with the right supplier, the right approval workflow, ledger code, et cetera. So we're trying to surround our system literally in every interaction the user can have with the LLM is being introduced. And yeah, it's extremely exciting.

B (29:49)

And on that note, something I've been thinking about is, you know, you have the new AI first companies getting started today. You know, in the last few months you have companies like the Party that are over a dozen years old. Obviously you have staying power, you have huge distribution, but in many ways you probably have to retrofit some of your internal systems to try to stay on the cutting edge. That, I mean that has to be a concern for you, something that you think about. Is that even possible? I'd love to hear your thoughts on this topic.

A (30:32)

Yeah, so I'll start first kind of at a high level when I thought about AI and the disruption it does for the software industry, if you will. The software writing industry is now really disrupted by AI and what used to, you know, now there's the talk about the first one person unicorn, right. A person that will self build a unicorn. I'm not sure if it is a unicorn, but a friend is the founder of Base44. I don't know if you're familiar. Yeah, and he's doing it. I think he's still almost alone. Either alone or almost alone. And he's building a fantastic, a fantastic business the way. So I thought about the disruption of the software side of De Palti and yeah, someone can come up and build something new, fancy, different and very quickly but what they cannot do is build the license portfolio that we have. We have licenses in 50 states in the US, UK, EU, Canada. Each license takes between 6 to 18 months. Many take 18 months. Each bank integration takes 12 months. If you need the level of integration that we need, and we do need very deep level of integration, it just takes a lot of time. We have a huge amount of data from our customers that is a treasure trove. We have the fund flow, which is a treasure trove and we have a reputation and trust that no LLM can replace. @ the same time, if someone, a disruptor comes, we need to be able to fend off the disruption just as fast. If we're capable, if we build ourselves to whatever that disruptor built in two months, we can also build in two months if we enable ourselves correctly. So that's the key. One of the key motions now in Tipalti is to ensure that once we see a great idea out there, once we see a disruptor out there, we can redisrupt the disruptor while having all those assets that disruptor cannot have. Trust. Licenses, data, volume, payment volume, bank integrations, all of those. There's no way to replicate that at a fast pace. So yeah, it's definitely something we think about strategically. We're organized for that and we're investing a lot in our own AI, we're investing in our own disruption. So when we think about our own developments, we think about it as a disruptor to ourselves. So yeah, I think it's a very important strategic change that happened in the last 18.

B (33:37)

Months. Let's say, speaking of just positioning yourself strategically, I mean, we're recording this in May of 2025. The last three months have been very rocky. If you think about just like macro disruptions. As a leader, how do you position yourself? How do you invest in growth for the future? Especially in a business that you're serving a lot of importers, exporters, you're serving customers that are making global international payments. What kind of conversations are you having.

A (34:12)

Internally? So for better or for worse, for the last five years, company leaders have been trained in once in a decade events every six months. So what used to be once in a decade since the start of COVID and everything else, we've been experiencing it every six months, if you will. I don't know, I don't have the exact math, but. So we had Covid, we had the economy pressures through Covid, we had recovery in certain segments through Covid. Then we had couple of bank collapses, we had financial stress, we have wars around the world. We need to adapt to all of that. So now there's a new Wrench thrown at us in. So yeah, it makes for. You're more, a little bit more immune to the drama at least. So first of all, you don't do knee jerk reaction. You wait, you pause, you don't do anything aggressive until you fully understand the situation or until the dust settles. We're just in May and there are already signs that maybe we are going. We're already on the path out of it. When you look at the stock market, the stock market believes that we are on the path out. When you hear the agreements that the administration is signing with countries, the tone that is kind of cooling down, some other developments. So you definitely don't over invest in growth when your prospects are hesitating. Right. Everyone moved to a hesitation mode in February. What's going on? Where is it going? How should I respond? So we did feel that there was hesitation. Right. Some sales process prolonged and you felt the hesitation. But now I think we'll see the recovery. So had we made knee jerk reactions back in February, it would have been in a tough position. Today we're still, I'm not saying that we're out of the woods, we're still tracking and investigating and monitoring. But yeah, my team, we looked into that. We made the adjustments like the verticals that are likely more impacted, like manufacturing, like retail, potentially, we knew what they are. And then there are verticals that are less impacted like health care and others that. So we adjusted our mix in terms of go to market. Our messaging works excellent in high growth years, works excellent in challenging years because we are helping with efficiency. Automation, we save a workload 80% of the workload associated with these processes we save through automation, financial controls, budget control, these are all key to the value proposition we deliver. So in challenging days, this is the buttons we press in an upswing economy. We'll talk about growth and expansion and scalability, which we also help.

B (37:19)

With. So you mentioned those let's call it black swan events, right. What's there to say that that's going to stop? Probably the. Do you think that the more sensible analysis is that we in a more interconnected global world where communication is instantaneous, payments are instantaneous. Do you think just we're going to have more black swan events in our economy going.

A (37:45)

Forward? Absolutely, absolutely. If anything the last five years taught us is that yeah, the one in a decade is now once every six months. So just brace for impact, try to enjoy the ride. I do. I think my leaders, my exec team and I know how to ride through that. Yeah, you have to Prepare for that. You have to have the patience. Sometimes you need to zig and you need to zag. It's not always pause and think. And sometimes when the data shows, then you need to make changes. So be brave in making the changes when you see them as well. And yeah, have an agile mentality, have a flexible mentality. Don't worry about the rules of the game changing. If the rules of the game change, change with the rules of the game. Don't play the game of yesterday's. Play today's game and tomorrow the game might change again. You have to have a center, you have to have a vision and all star. But the rules at the edges might change in that.

B (38:47)

Case. I mean, if it's been challenging for private company leaders, it's been extra challenging for public company leaders where the stocks are at the whims of the public market. Is that yet another incentive for companies to remain private? How do you think about that decision as a scale.

A (39:09)

Company? Yeah, first of all, you see it in the data, right? So there's a lot of interest in dry powder that is looking for IPOs in the investment world, there's a ton of dry powder. And when you survey, and we get those from the various banks that feed us with this information, they survey investors and the hunger for IPOs is higher and higher every month. So there's no lack of interest from the investment community. What's missing is interest from the tech or whatever company community to go public. I think some of it is post trauma from the 2020 and 2021 IPO and SPAC period where, yeah, many went public and for many, some of them are my friends. It wasn't a great ride. It wasn't neither for them personally, but also not for the companies. Right. Because the stock goes up and down and you know, all the pressures that are hidden in a private company, it's not that we are conceptually not going through the same, but it's just not as visible, if you will. So yeah, and I read a few, like there's a cohort of whatever, a dozen tech companies that are spoken for to go public. I read, I listened to interviews for some and yeah, they're still hesitant in going public, especially companies that invest in growth, invest in product growth where there's still a lot of changes and uncertainty in certain revenue streams and forecasting is hard. So yeah, I see a lot of hesitation from founders to go public. Some have to because the business model changes drastically. Like in certain, I think insurance domains and others, the business model just mandates or you know, lending businesses. The financial model just improves dramatically if you have access, better access to funds for others. You need to find the right reason and the right timing. For us we will go public. We're not ready to go public yet. Both in terms of what scale the I think IPOs are going out at right now it's kind of in the whatever 600 to a billion or you know that range. We're not there yet. And also some of the internal muscles to build. You know we still need kind of a couple of years before we can and go.

B (41:48)

Public. So maybe an IPO is in the future for Teapalti but tell us about other things that are kind of coming down the pipe for Forti. Maybe share a little bit of your long term product.

A (42:00)

Vision. Yeah. So it's, it's back to our ideal customer and the Persona and the profile and the uniqueness of the mid market. This is a huge opportunity. So let's size it for you. There are about a million mid market prospects companies worldwide. Those hundred to a thousand range with our licenses we can serve two thirds of them. The North American and European is addressable for us. The million represent roughly $100 billion per year opportunity. We're the leader in the market. We have a very unique metric which is 1% gross annual dollar churn, 99% gross annual dollar retention. Yeah. Second to none. The market is significantly underserved. I'm not sure where we are like 6, 7% penetration. It's mostly Greenfield. Most of the deals we compete on are non competitive. It's us versus status quo versus the customer changing the way they do business. So this is a huge opportunity. If we maintain our leadership in this and we will end up with 10, 15, 20% of the market. We will be 10, 15, $20 billion revenue company. So we will do very well. So our North Star is focusing on the mid market being the best at serving those finance leaders in the mid market being the de facto go to for everything mid market finance and maybe beyond finance at some point. So yeah, that's where we focus and that's what we're doing. Where there are motions on the breadth and depth and simplicity, adding more functionality that our customers can benefit from, adding more flexibility and range in the depth of the product, making it simpler, modernizing with AI and other functionalities and then building the go to market and continuing to build the go to market that can tap into that million prospects worldwide and and serve them as we.

B (44:07)

Do. Fascinating stuff and thank you for, for joining. You know I think especially the builders listening to this podcast. They're gonna enjoy your your insights. And you know, I'm excited for for the Paltry's.

A (44:23)

Future. Thank you so much. I'm also excited for the party's future. Thank you for having me.

B (44:27)

Here. Thank you. Thanks for tuning in. I hope you enjoyed this great episode with Hand from Tepalti. If you want more interviews, make sure to subscribe. Subscribe, follow and leave a review on Apple Podcasts, Spotify, YouTube or whatever you get your shows. It helps and means a lot. And if you have any suggestions or thoughts about the show, just drop me a line on Twitter or LinkedIn. Signing off till next week. I'm your host, Miguel Armasa. The Fintech Leaders podcast is for informational purposes only and should not be considered financial or investment.