How this AI founder is on track to hit $50M ARR just 2 years after launch. | Tarek Alaruri, Co-Founder of Stuut

Tarek Alaruri (00:00:00) :
You know, you hear a lot of investors, seed investors, early stage investors. That they're always like, "Hey, you're betting on the founder." Your early customers are betting on you and so you need to be able to start showing them progressive milestones. You got to show them week after week, hey, we're making progress here, we're building this, et cetera, and then also getting their thoughts. If they're so frustrated that they're like, "Hey, I'm going to find this random ass dude in New York off the streets, pay him $65,000 to solve this problem for me." Clearly they're pretty excited about trying to solve the problem and so you really want to find people that are just like, "I need to get shit done at an incredible clip, I am going to live like there is no tomorrow and I'm going to make decisions at a hundred miles per hour." They might be wrong decisions, but I'll quickly make a decision to correct it. I mean, sales is fucking brutal. If anyone's telling you they have a one out of five close rate, they're full of shit.

Pablo Srugo (00:00:49) :
For you, when was the moment when you felt you'd hit true product market fit?

Tarek Alaruri (00:00:53) :
I don't think I'll ever find that moment in my life. You know, my view is that it's consistently refining. You know, the minute that we feel we've found something or we've made something. Then, you know, you're kind of resting on your laurels and there's no more dangerous place to be in the world than just kind of letting life happen.

Previous Guests (00:01:11) :
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is Product Market Fit.

Pablo Srugo (00:01:23) :
Do you think the product market fit show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests, thank you. Tarek, welcome to the show, man.

Tarek Alaruri (00:01:40) :
Thanks for having me, Pablo.

Pablo Srugo (00:01:41) :
So, looking forward to this one, man. I mean, you just came off a pretty big, pretty big Series A, man. Almost $30 million from A16Z. Late 2025, the median Series A these days is $12 million. So, and that's already grown quite a bit. So, congrats on the fundraising side and maybe tell me a little bit about what you're building. And then we'll kind of jump into the storyline from there.

Tarek Alaruri (00:02:00) :
Yeah, a hundred percent, this is the second company I've started. This one is trying to tackle a lot of problems I've solved early on in my career, but I started a company called Stuut. We're an AI platform that helps do the receivable work instead of just assisting. So if you're not familiar with receivables, it's like you sell something and then you need to collect the money. See if it showed up in your bank account. If there's an issue, try to triage it. So we build AI agents for that, and we collect forty percent more revenue by autonomously handling it versus having people handle it. So our tagline is, you work nine to five and Stuut works five to nine. So you can punch off and have a family life.

Pablo Srugo (00:02:35) :
And, is it a replacement ROI that you're selling? You don't need AR specialists anymore or do you enhance? What's the positioning?

Tarek Alaruri (00:02:42) :
Yeah, it kind of just depends on the company. So, you know, we sell to flyover state businesses. I'm from Michigan, so think industrial, manufacturing, distribution, those types of companies and we really augment teams. Some people are like, "We might want to move accounts receivable back to sales." Sometimes there's people in warehouses that do it as a part time job or even our larger enterprises like Honeywell. They just don't have the account penetration, you know, think like somebody in accounts receivable can probably cover two hundred accounts a month. With AI, now you're able to cover five thousand and so, most companies actually are losing about five percent of their revenue trying to collect payments and matching up all the cash, and handling all the bullshit.

Pablo Srugo (00:03:21) :
And are you seeing one more of like, Oh, I've got ten people now I'm going to have three and your AI? Or more of the like, I have ten people now I'm just going to collect more and keep all ten.

Tarek Alaruri (00:03:30) :
Yeah, it depends on the business. But I'd say the vast, vast majority is we're keeping the team and we're just making the whole thing more efficient and we're able to get more.

Pablo Srugo (00:03:38) :
Gotcha, when did you start this, 2024?

Tarek Alaruri (00:03:39) :
2024, yeah and so we went live with our product at the end of '24 and then the last year was our first year really selling the product and trying to find product market fit.

Pablo Srugo (00:03:48) :
So you mentioned this is your second startup. What was the first one and kind of what was the outcome there?

Tarek Alaruri (00:03:52) :
Yeah, I started a company called Fairmarket with one of my former coworkers and the whole genesis of the business. The last one I started, was that no two people pay the same price for anything, or no company does and so we wanted to build a better sourcing or quotation engine for large enterprises. Another unsexy back office finance space, but I absolutely love trying to improve this kind of stuff.

Pablo Srugo (00:04:11) :
And so this was on the buy side? You'd help buyers negotiate better pricing by having better visibility?

Tarek Alaruri (00:04:16) :
Yeah, exactly. So the concept was, if you're a large company, some of our customers would be Amazon, BP, Boeing, ExxonMobil. You buy a lot of the same stuff, but you buy it from the same supplier, and you have multiple suppliers that can sell you the same thing. If you're buying a laptop, when you're a company like Amazon, you have fifty suppliers that can sell you the same laptop. People at Amazon don't have the bandwidth to go out and get multiple quotes for it and so that's what we would do using Fuzzy Bird and some algorithms on top of their ERP systems.

Pablo Srugo (00:04:48) :
And how big did that grow? What was the ultimate outcome?

Tarek Alaruri (00:04:50) :
Yeah, we grew it in six years to, you know, low, right around $20 to $30 million dollars in revenue. So think SaaS business, it's still going, learned a lot in the process. Well, I was getting married in 2024, also had a kid next year. So I wanted to try to knock out a new chapter of my life and try to take what I learned, and try to improve, and better myself. And then, you know, people around me every day trying to do, how do you win the day and how do you take what you learned, and build something new?

Pablo Srugo (00:05:19) :
But did you leave to start Stuut, or did you leave to think about something else that you might start?

Tarek Alaruri (00:05:24) :
Now I left to start Stuut. The whole concept, in my opinion, was really big business, really big opportunity here. You have multiple winners in the SaaS space. So you have legacy incumbent players. They have billion-dollar outcomes. No one's been like a $50 or $100 million business, and now with AI, you can actually start to roll in this service component. Which is about one hundred to two hundred billion dollars globally a year into the space and so trying to hit a home run one time in my career, take something public, hopefully build a generational business. You know, somebody's got to try it. Might as well be me.

Pablo Srugo (00:05:56) :
Can you tell me a little bit more about where the idea comes from? Because it's not easy to have ideas when you're like all in running. You know, $20, $30 million business. I think that's a great question.

Tarek Alaruri (00:06:06) :
I personally try to take notes on things that I see are pesky problems and keep a running list. So if there are any founders listening, feel free to email me, Tarek@Stuut.com, and I'm happy to send you the list over. There's a lot of things that I've, you know, I'd love to start. I don't know if I'm the right person to start. Also, it's kind of like a lot of this is luck. So you kind of got to be the right place, right time, work your ass off, try to maximize how you attack the day. Sometimes not making decisions is more important than just running to make a decision. But some of the other things I was looking at is, there's not really one medical for veterans or there's no real good thing that's privatization, and, I have a lot of friends that have been in the service. And, you look at the VA and they could definitely use some help. You look at some of the things in cyber around supply chain, there's definitely some areas of opportunity now with AI where you can get more coverage. I just thought that this problem alone in accounts receivable was a huge pain in my ass. From my first job out of college, I was doing trucking and transportation. Then I started a company and still had to deal with receivables.

Pablo Srugo (00:07:09) :
So did this come from what you were seeing in Fairmarket?

Tarek Alaruri (00:07:12) :
Yeah, and then my first job I worked at a company called Total Quality Logistics. It's a trucking business. I was a sales rep and spent probably forty percent of my time chasing down accounts receivable there.

Pablo Srugo (00:07:22) :
How do you transition out, by the way, to Stuut's 2? How do you make that happen?

Tarek Alaruri (00:07:25) :
I think it's just a conversation with the other founder of, what got us here might not get us there in the future and then, let's try to round out the team, build the team, and take it to the next level of growth. You know, I'm great at some things, but I would say things are starting to slow down a little bit, like reinvigorating the engine. It's also trying to figure out, what do you really want to do next in your life? And also where you want to spend your energy. And so if you've been doing something for a long while, and long enough. I don't think enough people are like, hey, I want to start something new. I'm comfortable quitting. I think Annie Duke has a really good book called Quit. You only have so many shots in life, and you might as well try to maximize your next one.

Pablo Srugo (00:08:03) :
What's your first move then? When you have that conversation, you're like free to go, what do you do?

Tarek Alaruri (00:08:07) :
I'm sure a lot of founders know about this, but you got to start with the QSBS clock ticking. So register your business in Delaware. That should be number one, right? I think anybody loves paying taxes on anything. So, that would be the first move and then I think it's trying to figure out this is a second company. And I think both companies are taking the same approach. Which is just try to talk to as many customers as humanly possible and really have an understanding of the space, what the problems are, are they happy? You know, I think my view is if you can find something where the customer service just absolutely sucks. It's a really good entry point and you can look at the businesses in the world that have really good customer service. And I would say their products are not that differentiated but customers are cultish around it. Like, I could say Chick-fil-A is a good example, Southwest used to be a good example. There's a lot of businesses that people are fanatical about because, even Amazon. If you have a package stolen and you message them, they send you the same package back again. And so a lot of these companies are just built on good customer service. It's really shocking to me how many companies get to scale in software and their customer service. People just don't get back to them for a couple of weeks and so that was the resounding thing we found among all of the legacy software businesses we were trying to compete against and so that was just even more conviction. And so when I say talk to customers, you know, I'd have a LinkedIn automation tool just running in the background, reaching out to people, connecting with them, sending them another message. I would scrub a list off ZoomInfo or Apollo and then just start cold emailing people and even cold calling people. Because you also want to find your message market fit. So what's the value? What's the problem? And then also, who is the right person to talk to? So I know a lot of people talk about ICP, but I also think it's important to find the persona, maybe even before ICP.

Pablo Srugo (00:09:54) :
What's the difference for you?

Tarek Alaruri (00:09:56) :
I mean, CFO versus CIO is huge, you know. So who holds the budget in the businesses that we talk to? Sometimes it's the CIO, sometimes it's the CFO, sometimes even the CEO. But it's like, how do you craft your message for each person? And the only real way to do that is experiment. So you might say something one time, you can kind of hear and be like, "Oh, that's really interesting." So that means that phrase that you said, like, "Hey, we help our customers do X, Y, Z." Like, OK, I should use that on the next call and so you might talk to somebody, and they say, "Oh wow, that's interesting." So you're like, "OK, I got something here."

Pablo Srugo (00:10:28) :
When you're talking ICP versus persona. The difference is, what ICP is a customer profile versus who in that company is the persona, is that how you're thinking about it?

Tarek Alarur (00:10:36) :
Yeah, exactly. So, ICP might be, hey, this is a trucking company that's five hundred people, versus who at that company. I think that's really important too, as you continue to build. Because when you look at companies, certain people in certain roles really don't have power. Whether they want to admit it or not. You want to make sure that you're selling to power, people who have budgets, et cetera, and so it's kind of like, hey, is this space good? Is it big? Is it growing? Are the customers there happy or not? Is there opportunity for someone to come into it? And then also, do people even have money to buy your thing that you're building? And if so, how big of a problem on a one to ten scale do they think it is? But I think that helps, you know, navigate really the maze of, is this a good idea or is this a good product, or a good space?

Pablo Srugo (00:11:18) :
Walking through more of the details of that. Did you start talking to people right away with a product idea and you were pitching them, and trying to sell them the thing? Or was it pure, classic customer discovery at the beginning? How did you set it up?

Tarek Alaruri (00:11:30) :
That's a great question. So I think a lot of people try to, I get notes, I'm sure you do too. But people will pitch you like, "Hey, I'm starting this company. I'm looking for an advisor. I'm looking for your thoughts on this space." I'm not fucking replying to that. I don't know if you would, right? I'd rather hang out with my daughter than hear my thoughts, right? How will VCs do the same thing? They're like, "Oh, I have a market analysis." It's like, alright, I'm not talking to you. I think my opinion is if you can go to a customer with a point of view of the problem they're trying to solve and then hear, and ask questions to be like, "Hey, Mr. and Mrs. CFO, you're a pretty big company. You clearly took time out of your day because something was interesting. Why was that interesting?" And you hear them out a little bit. OK, great. How would that impact your business if you can solve that? You kind of start to hear the business and the outcome and then, hey, if I was to solve this problem for you, would you pay two hundred thousand dollars? And they say, "Yeah, that'd be super reasonable." Then you can start pitching them on the solution. My opinion is you get a lot of better feedback when you try to close, and that feedback is less squishy versus asking somebody what they think, et cetera. So if you have a tangible outcome, and then you have a tangible product and you try to close on that. I think if the pain's big enough, people will just buy off a slide deck.

Pablo Srugo (00:12:41) :
Did that happen to you?

Tarek Alaruri (00:12:43) :
The first company, we found this customer called the MBTA. So at Fairmarket, the first one we started. So Mass Bay Transit Authority, it's the subway system.

Pablo Srugo (00:12:52) :
OK.

Tarek Alaruri (00:12:52) :
We originally were trying to build like a Glassdoor or a TrueCar that shows you pricing for software, and we had a couple customers on like $300 a month licenses, and so we cold called. I think actually my co-founder named Kevin, he cold called the MBTA and we talked to the chief information officer. And he was just like, "Well, actually, it'd be great to see software prices but all my purchases under $500,000. I need three quotes for, and it is extremely manual. If you guys can solve that problem for me. We could probably save like $20 million the first year." And so they co-built the platform with us, and we're off to the races.

Pablo Srugo (00:13:28) :
So that was Fairmarket. What about an institute? What was the reaction, when you're pitching people the idea?

Tarek Alaruri (00:13:33) :
Yeah, I think we got a lot of, OK, this is extremely beneficial for our company. Meet the accounts receivable people. I'd love for you to talk to them about how they do it, what's the process and the resounding thing from the people was just like, this is extremely manual. I'm in finance, I didn't sign up to just be cold calling my customers.

Pablo Srugo (00:13:51) :
Yeah, walk me through maybe just a day in the life. What's going on? What are they doing, and then what you're automating now?

Tarek Alaruri (00:13:56) :
Yeah, I mean, they have to handle a lot of complexity. A lot of interactions both internally and externally, and they work across very disconnected systems. So you have a sales system, you have a finance system, you have your bank accounts, you might have inventory systems, and human beings now have to go in. So like, Pablo, if you were to call me. You'd be like, hey Tarek, I got a question about invoice 1234. All of a sudden I have to go in, I have to look for the invoice, I have to manage all that. I have to go into these different older software platforms, I might even have to use my phone to use an RSA token. The ability now is AI can handle these manual tasks across this data, and then we can actually start to learn over time and execute these workflows. And then even place an AI phone call, an AI text message, or on the flip side. If somebody calls in, we can have AI just answer that question and then send what you need and triage it from there. Whereas, you know, if you put yourself in our customer’s shoes, you might have an office manager cleaning up the plant, trying to send out payroll, and they're in Texarkana. And now all of a sudden, their CFO calls them, and they're like, "Hey Steve, bills are late by two or three days." And they're like, "Hey, I got all these other things. Plus, I want to go see my kid's soccer game tonight." You know, trying to find a problem that solves that as a co-pilot is much better than just going in and being like, "Hey, we're trying to replace your jobs."

Pablo Srugo (00:15:14) :
Is that the ultimate endpoint though, just to replace? Is this just positioning? I wonder this with a lot of AI products, right? Is it just like you go in, you enhance, and then you replace? Or is there a reason why you think about the workflow of a full time AR specialist. Why they would always, in theory, have a role even as AI does more and more of the job?

Tarek Alaruri (00:15:34) :
Yeah, it's a good question. We're not trying to position this as AI is going to replace your job and I like to be a glass half full guy. The world is just getting better and better. AI is not taking anyone's jobs. It's making people more efficient. Sure, some jobs might move, lift, and shift. But then some people are going to find new opportunities that didn't exist before and, you know, if you look at humanity. Every year, everything in the world is getting better. Sure, it's fine to be like, hey, right now in the moment, the stock market's down, or it's so chaotic and polycot's, et cetera, but everything in the world is getting better. There's better birth rates for certain countries.

Pablo Srugo (00:16:14) :
For what it's worth, I agree with you. Like, high level, I fully agree with you. I'm wondering specifically when it comes to the AR specialist, what do you envision? Five years out, obviously, Stuut gets way better. What parts do you think remain forever human when it comes to delivering that?

Tarek Alaruri (00:16:28) :
Yeah. I mean, all the blocking and tackling of this manual work is going to be able to be automated, right? So, think being able to collect things, triage things, et cetera. There's so much more with accounts receivable you can do. Whether it's financing, insuring, understanding how your customers, like, where your sales team should interact with customers more. Instead of a reactive approach, taking something proactive. Understanding that a customer's credit might be going down so you can work with your sales team to maybe try to move pay terms. Things like that, is where they should be spending time and also looking at your accounts receivable or the stuff you sell as a portfolio. A financial portfolio of your business, and how do you better use that for leverage to drive more sales. That's where they should be spending time, not trying to handle, like, "Hey, I have a $150 deduction because the truck was late."

Pablo Srugo (00:17:16) :
So all the little things of reaching out, checking here, checking there, sending out an email, making a call. That'll all go, but all the stuff above that. Whether it's escalation or analysis, that's where you think that part would be potentially always human.

Tarek Alaruri (00:17:31) :
Yeah, absolutely and delivering better customer service too. If you're a company and you have your accounts receivable team. And they're only able to do so much. You want them to deal with your best customers and call them instantly, solve the problems, loop in your customer success team or sales team, and help really handle things. You don't want them just dealing with the blocking and tackling, and chasing paperwork, and files.

Pablo Srugo (00:17:52) :
And then going back to the narrative, how many of those initial calls would you say you had?

Tarek Alaruri (00:17:56) :
I probably had like three hundred to five hundred in the first couple of months and then I also, you know, like Tegas. And some of the others did a lot of Tegas calls on the competition or what the legacy software players were.

Pablo Srugo (00:18:11) :
What was the outcome of those? All that kind of market research you did and the Tegas stuff? What was the conclusion, let's say, or some of the insights or the findings?

Tarek Alaruri (00:18:20) :
Yeah, so it's a good question. The world of accounts receivable has really five core pillars. So it's credit, collections, cash application, deductions, and disputes. Obviously, you did not enter this call knowing anything about accounts receivable, probably. But it allowed us to understand, here's a good wedge in. Which we started with collections, and then allowed us to understand how to sequence the product. It allowed us the insights on what is the ICP we should go after to start, including the business size, and then what the sequence looks like for expansion from there.

Pablo Srugo (00:18:53) :
And what about those calls made you confident that this is a product worth building and that people will buy this thing?

Tarek Alaruri (00:19:00) :
It's a great question. It made me so confident that, I would say they probably had a one out of five customer satisfaction. 

Pablo Srugo (00:19:05) :
And they're just pure, I don't know who that is but they're pure software. I assume they're probably not an AI first company. 

Tarek Alaruri (00:19:11) :
I don't believe in kicking down. Notice I say kicking down, not kicking up but yeah. Yeah, so we'll remain nameless, but you know, I could full-heartedly say it's a business with over a billion dollar valuation. That's a legacy software incumbent, that their customers can't hear a response back for three weeks. The tool takes twenty four minutes to implement. If you can't beat that, then you should probably not be competing in the game anyway.

Pablo Srugo (00:19:36) :
And I assume it's, as you said, legacy. So it's probably more a system of record than something that goes out and actively replaces manual work.

Tarek Alaruri (00:19:44) :
Yeah, exactly and it's the fundamental difference of these older software tools. Their essentially, you know, we view them as dashboards that do some workflow automation. But they at least show you what's going on in this process and, really where AI is going now is like, hey, how do we automate this process completely? And then humans handle the exceptions where the process isn't automated.

Pablo Srugo (00:20:04) :
When did you raise the first money for Stuut?

Tarek Alaruri (00:20:07) :
I was going to bootstrap the business and then I found it really hard to hire engineers. I have some technical, I've taught myself how to do some coding, et cetera. I was a chemistry major in college, so math and science were always relatively easy. So I've taught myself some Python. Especially with AI now, you can code pretty much anything. But I found it really hard to find credible engineers that didn't think you were crazy and so I raised on a memo from Coastal Adventures and Active in Capital. And then some of my friends, and people I know that I raised from before their seed funds.

Pablo Srugo (00:20:41) :
How much did you raise in this round?

Tarek Alaruri (00:20:43) :
$3 million roughly.

Pablo Srugo (00:20:44) :
When was it?

Tarek Alaruri (00:20:45) :
Beginning of 2024. So I'd say like February, March.

Pablo Srugo (00:20:48) :
What do you do after that? What's kind of the first? What's the MVP, like V1 of what you built that's shippable?

Tarek Alaruri (00:20:54) :
Yeah, first, since it was mainly myself. It was like starting to hire and recruit people, and selling on a dream. And then it's also, while you're doing that, trying to sell to some customers and also trying to start hacking together a front end, or at least wireframes to the platform. So you can show customers that you're progressing toward what you told them you would do.

Pablo Srugo (00:21:12) :
Did you sell ahead of product? Did you pre-sell or did you get design partners?

Tarek Alaruri (00:21:16) :
Pre-sold.

Pablo Srugo (00:21:17) :
What kind of contracts? What kind of ACVs?

Tarek Alaruri (00:21:18) :
First contract was $65,000 a year.

Pablo Srugo (00:21:20) :
OK, so sizable.

Tarek Alaruri (00:21:22) :
Decent, I mean, sizable but the problem that we're solving is if we were able to reduce their overdue invoices. They're going to free up $500 million in the first year of cash.

Pablo Srugo (00:21:30) :
How do you get them to sign up ahead of time? The ROI is clear, but how do you get away from the objection of, yeah, I'd love this. When you build it, let me know. I'll happily pay you, $100k at that point.

Tarek Alaruri (00:21:42) :
It's an amazing question. The biggest thing early on is, you hear a lot of investors, like seed investors, early stage investors. That they're always like, hey, you're betting on the founder. Your early customers are betting on you and so you need to be able to start showing them progress-able milestones of what they want to solve and how it's getting better. You know, they're also buying in on how you're going to solve this problem for them. You got to show them week after week, hey, we're making progress here. We're building this, et cetera, and then also getting their thoughts. Because they want to invent, you know, if they're so frustrated that they're like, hey, I'm going to find this random ass dude in New York off the streets, pay him $65,000 to solve this problem for me. Clearly, they're pretty excited about trying to solve the problem and so you just want to start showing them these milestones along the way, like, hey, how we're building this, how we're solving this, how we're thinking about it, what's your thoughts? Does this automate this process for you? And that's really the fun part of competing as an early stage company.

Pablo Srugo (00:22:39) :
Did you go all in on this one customer or did you get five or ten of them pre-sold?

Tarek Alaruri (00:22:44) :
I'm a huge believer in that, you need at least five or ten, maybe twenty. You need different stages of a pipeline. So you maybe want three to four. Because, you know, the one thing you don't want to do is just build someone a science project. I also am very cognizant. I think there's a fine line between, you know, most of my background. All my background has been in B2B sales, there's a fine line between going after your Fortune 100s and building something for them versus lower enterprise or mid market. My opinion is it's much better to start in the lower mid market because it's more repeatable. There's more volume, et cetera and also have a couple of conversations with large enterprise to make sure that it validates for them as well.

Pablo Srugo (00:23:23) :
So how many customers did you have signed, pre-sold as we were building?

Tarek Alaruri (00:23:27) :
I'd say like six to eight.

Pablo Srugo (00:23:28) :
All in that kind of 10 to 100K ECV?

Tarek Alaruri (00:23:31) :
Yeah, right around. It was more fifty to start. So I'd say, approaching six figures, because the pain we're trying to solve is a pretty big outcome. My view is in back-office finance, or just businesses in general. There's kind of two processes, which is one, I need to buy stuff for the business and the other one is I need to sell stuff for the business. So cash going out the door or cash coming in the door. The first one was cash going out the door. So it's mainly you're only selling against cost savings. I always wanted to tackle cash going out the door, generating more revenue for businesses. So it's a much easier conversation. So what I found is when it's cash coming in the door and how do you generate more cash for the business?

Pablo Srugo (00:24:09) :
Because you're, I mean, it's collections like your core ROI is I'm just going to collect more than you're already collecting and so literally you're bringing cash into the business.

Tarek Alaruri (00:24:16) :
Yeah, exactly. I've never sold in sales tech, because it's a very competitive space and it seems everything changes every five to ten years. But I feel like anything you build in that space has to, once you find product market fit. I'm sure, like, you look at Gong or you look at SalesLoft back in the day, or Outreach. It seems like when you find something like that, it's just because it generates more money. It just takes off.

Pablo Srugo (00:24:38) :
We have tens of thousands of people who have followed the show. Are you one of those people? You want to be a part of the group. You want to be a part of those tens of thousands of followers. So hit the follow button. By the way, you talked about hiring. Curious to get your thoughts on hiring. Obviously, these days, there are so many low hanging fruit in terms of products you can build. If only you have the best people to build them and honestly, every space that shows promise gets really competitive. And then really becomes about teams, like the first few people you hire. Who were they? How did you get them? What's your thinking on just getting A level talent?

Tarek Alaruri (00:25:10) :
Yeah, I would say talent changes over time based on the stage of the business you're on and early on, I can't say this enough. Other founders I know will always talk about this. There's so much noise and vulture-ism in early-stage businesses. Especially when you're getting off the ground as a founder. Whether it's lawyers, VCs, if you're not a tier-one or tier-two VC. A lot of those are just trying to take advantage of people. They want your time. They're essentially like vampires, in my opinion and there's tons of these people that don't really work. They've never really worked a hard, earnest day in their life, but they want to advise startups. It's really hard when you're a founder. They might be like, hey, I got a friend who's great. Just started a business, blah, blah. You start talking to the person. Turns out they worked at Cisco for ten years. That's not a great person for you to hire and so you really want to find people that are just like, I need to get shit done at an incredible clip. I am going to live like there is no tomorrow and I'm going to make decisions at a hundred miles per hour. They might be wrong decisions, but I'll quickly make a decision to correct it. Because when you're starting a business, the market, the product, the space, it's a one way door decision, but it's only a temporary one way door decision. So there's a lot of two way door decisions that can be made, and so you want to try to run these experiments, and make these decisions as quickly as possible. And so you're really looking for people that can find that. And that's really hard, and I think the easiest way to do it is collaboratively work with people, test people out. But also, you can't be afraid to let people go.

Pablo Srugo (00:26:34) :
Do you care about? Especially those first five, ten hires. Do you care about, pedigree experience, whether they were founders before? Are you hiring people, like, extremely junior? Especially now with AI, where are you most focused on?

Tarek Alaruri (00:26:46) :
I think one of the biggest challenges from tier one and tier two venture capital firms is they're always looking for people that check a box on paper. Usually, the people that check a box on paper aren't the people that start generational companies and so you want to find the people that are a little rough around the edges. A little crazy, might not have that pedigree and so that's also probably because I might be one of those people. I went to a state school, grew up with a single mom in Michigan, I didn't grow up with a trust fund, stuff like that. I think you want to find people that better fit your personality, and that doesn't mean that those types of people that are not like me are not going to be successful. I think it just is the people that are like you and work well with you become successful. So it's also a company fit, founder fit, and working fit. Only when you find those people can you try to build something iconic.

Pablo Srugo (00:27:39) :
So back to narrative, you've got now like whatever six or so customers pre-sold. What is V1? What is the first version that's a full product. That you're like this is good enough to put in somebody's hands and then we'll build from here?

Tarek Alaruri (00:27:51) :
Great question, our V1 was really around audio AI. I can't speak more highly. I think there's a really big gap right now between audio AI and companies in the B2B space. I think it's a really big unlock from what we've seen for our customers. So, our V1 was just basic outreach with audio AI and then following up with emails.

Pablo Srugo (00:28:10) :
Like voice AI? Calling customers to collect? 

Tarek Alaruri (00:28:12) :
Yeah.

Pablo Srugo (00:28:13) :
OK.

Tarek Alaruri (00:28:14) :
Calling customers, and following it up automatically with an email or then being able to triage stuff. And so the last business started, we sat on top of the ERP systems. So, very familiar with the SAPs, Oracles, et cetera, of the world and so that gave us, I think, a leg up to start our company. Because we can deal with these more monolithic platforms or multiple fragmented platforms for bigger businesses and we're able to navigate them very quickly. And so that's been kind of a hack or a superpower of ours compared to competitors we might have. So we were able to find value very quickly on top of these legacy systems and just being able to collect via audio AI or emails, et cetera, and automate a lot of that process for these people.

Pablo Srugo (00:28:54) :
Because the calling out is the easy piece, since there are a lot of voice AI companies. The harder part, I assume, was knowing not just who to call but what to say and what you're supposed to collect, and making sure that all that stuff is accurate. Because obviously, if you call a customer and you tell them they owe something they don't owe, it's going to be a big problem.

Tarek Alaruri (00:29:12) :
Yeah, I think that was just when, you know, RAG was starting to. RAG was already around, but nobody was really applying RAG architecture in the space and so we hopped on that. And then we started, obviously, fine tuning and trying to take the step after that to more customize the larger data sets. It's a good point, just throwing a horizontal AI model on it won't work. But the good thing is it's not like we're dealing with heart surgery here or very technical life saving stuff. It's like, "Hey, you didn't pay. We think it's because of X, Y, Z. Can you clarify yes or no, and we'll release the funds." Like, yeah, great.

Pablo Srugo (00:29:44) :
What was the result, by the way? So you put this out with some customers. What kind of result are they seeing in terms of ROI?

Tarek Alaruri (00:29:49) :
Yeah, it's crazy. We see a forty percent reduction in overdue invoices in the first six months of deployment. That was our first year. Now we're seeing a forty percent. It's called DSO, or days sales outstanding. We're seeing a forty percent reduction in DSO in the first two and a half months of deploying Stuut, and we get deployed in about three and a half days.

Pablo Srugo (00:30:08) :
And this is independent of whether they already have AR specialists, like full-time? I understand where you're talking about, a manufacturing plant person doing it on the side of their desk and I've got a full time AI agent doing it 24/7. No brainer, you should get lift. But when you go into somewhere that has five to ten AR specialists already doing this full time. Do you still see similar amounts of lift? And if so, why? Do you know what I mean? Where does that come from?

Tarek Alaruri (00:30:30) :
Oh yeah, we see even better results. So the larger enterprises might have teams with seven hundred people, a couple thousand. You know, you look at some of our larger businesses, like a company called PerkinElmer. It's a medical device company out of Waltham, Massachusetts. The first year they collected $350 million with the platform, and they had a team of about fifty people in Krakow, Poland. They've used that $350 million to buy two businesses.

Pablo Srugo (00:30:54) :
Why does your AI out perform those fifty humans?

Tarek Alaruri (00:30:59) :
If you think about a human being, you probably can cover two hundred to five hundred accounts. Like your own customers and all the work that's associated with that. You got to think that twenty percent of a business's revenue probably makes up eighty percent of the work and so that's where we start. We tackle this long tail of revenue, and we work our way up through the value chain for our clients.

Pablo Srugo (00:31:18) :
So all of the smaller accounts that are just not getting as many calls or not getting as many touch points. All of a sudden they're getting calls or getting emails and you're recovering.

Tarek Alaruri (00:31:26) :
Well, just think about this too. It's like, you're somebody in accounts receivable, and you also have to see if the bill was paid. Which is called cash application, which we do. So that's the other part is, if a bill was paid. You don't want to just continually follow up with the person, that's crazy. So that's why we tie everything together. Then if the bill was paid, but it was paid less than it's supposed to be, you have to go out and find why not and that's called deductions. Which we also handle with AI, and then if the customer is not happy and doesn't want to pay, that's called a dispute. Which we handle as well. So being able to have context across all of that is what we've built now, and we have live with our clients. But when we just started in collections and cash application, those were the first two things we started. The biggest thing is, you might be able to, if you're a human being, tackle two hundred accounts and you might not be able to get the cash application done, or you might only be able to get the cash application done. Now we can allow a user to do two thousand to five thousand account coverage, you can do the cash application, you can do the deductions, and if somebody's disputing and not happy. That's where you should spend your time, but we will get you the evidence, the bills of lading, the POs, we'll get you all that documentation, summarize it for you in a nice email. So that you can call the customer, just read off of it, and just click send after. So that's the real money.

Pablo Srugo (00:32:39) :
When did you launch this V1?

Tarek Alaruri (00:32:40) :
We launched the V1 in November of 2024.

Pablo Srugo (00:32:42) :
And did you raise? I think you raised another seed round, right? Around that time?

Tarek Alaruri (00:32:47) :
We took like $3 million on uncapped saves.

Pablo Srugo (00:32:49) :
On top of the $3 million that you'd closed before?

Tarek Alaruri (00:32:52) :
Yeah.

Pablo Srugo (00:32:53) :
OK, so you had like $6 million in total. Let's talk go to market for a second. So you've got the product that's live in people's hands, you're seeing the ROI, you're seeing the results. What do you do on the go to market side to really ramp up? What are some of the tactics, especially in 2025, that really work for you?

Tarek Alaruri (00:33:07) :
Yeah, I got to give Mark Roberge, if you know who that is, he's the former CRO at HubSpot. He just released a book, I think it's called Scaling Scientifically, something like that. Anyway, his most recent book, I got to say, it's probably the best product market fit sales book I've read in a long time. Cause it talks about the three stages, which is like finding product market fit. How do you actually scientifically describe product market fit, which I think no one does really well. But he does a great job of it and then how do you find go to market fit? And then how do you get to scale? And then how does everything tie around? You know, he talks about is our sales leader. He worked with me on my past company, but his name is Dylan Rush. You got to kind of find somebody who's good at sales that can IC sell, but also really has an eye for product and understands, hey, this is a big build, this is a small build, et cetera. And then also isn't afraid to just be like, hey, I'm gonna get my engineers on the call. Can we scope this out and can we build it for you? If so, what's the impact if we build this? Will you pay us X or would you pay us Y? So finding someone like that, other than the founder, myself or Ben, who co-founded the company with us, and then one of our other co-founders, Adam. We had another co-founder named Mirage too. So, how do we all work together to start doing this and scaling this, and starting to spread it out? And so I think that's a really strategic hire that you need to get right. The other option that I don't think enough people do is hire a couple BDRs. So early cold callers reaching out to people and having them do a lot of the prospecting. But you as a founder do more of the sales, the scoping, and the product work. And then, naturally those BDRs are just going to start learning from you and eventually will be the people leading your sales team later on as you scale as a company.

Pablo Srugo (00:34:39) :
What's been your inbound-outbound split through 2025? 

Tarek Alaruri (00:34:43) :
We've spent little money on marketing until last year. I would say the summer of last year when we raised the Series A. So our first thing was just to do brand, but our number one source right now is referrals, by a long shot. So we get fifty percent of customers right now from referrals.

Pablo Srugo (00:34:59) :
Wow, what drives somebody to refer you and what's driving referrals you think?

Tarek Alaruri (00:35:03) :
Yeah, one of our biggest channels is like partnerships, private equity funds. You do well for one CFO, they're going to tell somebody else. So some of our earlier customers, they'll take any type of call and so I have a thirty minute sales call with a company. And I'm just like, hey, do you want to talk to our two customers after that? And they're like, yeah, sure. There's nobody better selling you in the world than your customers and so we lean on them very heavily.

Pablo Srugo (00:35:26) :
How do you get their time? Actually, that's a great technique, but how do you get that other customer to spend thirty minutes with you? I mean, it's one thing for them to tell their friend. It's another thing for them to just spend fifty minutes on the phone with some other customer they don't know. Why are they doing it?

Tarek Alaruri (00:35:38) :
Yeah, I'm sure it's pretty annoying, but, back to the comment I made of, a lot of these companies are betting on you and betting on the team to build, and solve something for them. Especially if they're just finding some random dude off the street to solve it for him or some random lady off the street to solve it for him and so try to have a great relationship with them. And they're more than happy to do it. I'm sure it's pretty annoying at some point, and hopefully they'll push back. But, I think one thing my mom was great at growing up was just, you always got to ask and if you don't ask, you don't know. And so always asking is great. I think one other thing that a lot of early stage founders forget is, when you're closing a deal or signing someone up. There's nothing better than to be like, hey, I will give you a discount if you can introduce me to five colleagues of yours that this would be beneficial for.

Pablo Srugo (00:36:20) :
Does that work for you?

Pablo Srugo (00:36:21) :
A hundred percent.

Pablo Srugo (00:36:22) :
Even before, I mean, it's one thing to do a referral after they use it. But people are referring you to get the discount even before they've closed, even before they've used the product?

Tarek Alaruri (00:36:30) :
Yeah, I think when you're buying something, you're excited and so when you're really excited to buy something. Obviously you want people to try to capitalize on that. It's like, I live in New York, so I don't really drive a car but last time I bought a car. I was really excited I bought a car. If you ask me three weeks later, I'm not really excited I bought a car. I was just like, yeah, it's a model.

Pablo Srugo (00:36:48) :
Right, yeah, yeah.

Tarek Alaruri (00:36:30) :
But in the moment, I'm like, oh, it's autonomous driving. I got to try it, blah, blah, blah, but then, it fades. You're kind of like, oh, what's next? So, I think there's no better time than the present to ask customers for it.

Pablo Srugo (00:37:02) :
Makes sense, then going back just to the first six months of selling. Because referrals obviously come in later. First six months, I assume it's mainly cold calling, mainly outbound. What's that kind of funnel look like? What's the SQL to close, demo to close? What were some of the early signals that you had something in those first kind of six months of sales?

Tarek Alaruri (00:37:18) :
I mean, sales is fucking brutal. If anyone's telling you they have a one out of five close rate, they're full of shit. I would say it's, at least me, maybe I'm just not that smart but it's definitely, like, you got to talk to at least a hundred people to get some kind of semblance of a deal and so, it's a numbers game. I'm a little, maybe a little bit different. I think everybody has kind of their shtick. I love cold calling. I love cold outreaching. I still do it, I'll probably hop on with some of our BDRs today and knock out some cold calls. There's no better way to lead from the front, right? And I think if you can try to get somebody, if you just call somebody like an average cold call and you're like, "Hey, I'm here to help," but instead, if you pick up the phone and somebody hits you with a hilarious line, like, "Hey Chris, I was thinking about you last night," you'd be like, "What the heck?" And so that'll start such a better relationship with a customer if you have a little humor in life. And so, or you take an opinionated view on a business and send them a LinkedIn note like, "Hey, I noticed your CIO has talked about AI, but I've looked, there's nothing in finance, XYZ." Put a little humor in it and just be like, you want to make sure you have a job in six months, or something cheeky. Some people respond really well to that, some people don't, but you want to find the people that want to buy from you and connect with you. And so, it's definitely a numbers game. It's not easy.

Pablo Srugo (00:38:34) :
What about once they're fully qualified to get them to a demo? What's that demo to close rate for you guys?

Tarek Alaruri (00:38:38) :
I think it's going to get better and better over time. Early on, it's definitely not going to be great. You know, as you start to build a product and the product scales, and is sustainable. Ours is much better, I think it's above the industry standard. So I'd say probably twenty percent of our demos turn into deals. But early on, it's probably one in a thousand. If you're lucky, if you find really good space, good product, maybe it's better but you know. I have a friend who started a company. He's a good friend of mine. His name's Jeff Roadman, and he always says if it's easy, everybody would do it, or it ain't easy. Which is very true and so, you got to be OK with it. You also have to understand that if you overpromise to a customer, you're losing their trust. So if you're like, hey, it's going to get better, also, this button might not work, by the way, and make a joke out of it. They might respect it and so the more you build, the better it's going to get and so the question you're asking is, how does that conversion rate get better? You want to see that conversion rate get better and better as you build a better product. And that's mainly a product thing, I think, less of a sales thing.

Pablo Srugo (00:39:35) :
The part where it does matter is, obviously if your ACV is really low and your close rate is really low. The spend is at some point it's gonna break, but your ACV was what? Like $50, $100k? Or was it more like a $10k ACV even like back then?

Tarek Alaruri (00:39:48) :
No, it's more in the high six figures.

Pablo Srugo (00:39:51) :
OK, that's a big difference. Because if you're selling $10,000 a year licenses, you've got to close at thirty or forty percent if you want that velocity. Just because if you think about a sales rep, it doesn't make any sense.

Tarek Alaruri (00:40:01) :
But I really think you have to think of it as an inverted funnel. Sorry to use my hands. You have to find the message market fit at the top, and then you kind of have to find the pain or the value statement. From there, you have to understand, does this resonate with the pain statement? And one of the things that I do a lot, and I'm guilty of, is you try to compress all this stuff into one. Whether it's pricing or message market fit. You try to look at everything holistically, but when you can really break this funnel out in different layers of a cake and treat them as independent experiments or tests. Then you can start to really isolate and go back continuously, and try to improve things through the life of the business. There's this other thing that a lot of people don't talk about is you also want to optimize the bottom part of this pyramid, not just the top of the funnel. If you think about an hourglass, you want to be able to really double down and improve how quickly your customers find value from the minute that you connect. Because if you can find that time to first value and continually iterate on that, that aha moment comes.

Pablo Srugo (00:40:59) :
Yeah, how fast is that for you guys?

Tarek Alaruri (00:41:01) :
It's usually seven days. They start to find at least some ROI or some success. Usually in the first week the product pays for itself.

Pablo Srugo (00:41:09) :
What about in the demo? Because I find with AI a lot of times you can take a demo pretty far and just show what's possible, and kind of have that eyes light up moment. What are you able to do or show in a demo that you found really triggers that lean in moment?

Tarek Alaruri (00:41:23) :
Yeah, so now it's a little different than it was at the start. But on the collection side, this concept of AI audio is crazy for people, fully mind-blowing. 

Pablo Srugo (00:41:32) :
You would show people a year ago, somebody an AI calling and just what it would say. 

Tarek Alaruri (00:41:37) :
I would just call you, Pablo. I'd be like, hey, what's your phone number? Let me give you a call. It picks up and speaks in different dialects of Spanish. 

Pablo Srugo (00:41:44) :
Gotcha.

Tarek Alaruri (00:41:45) :
And you're just like, holy smokes. Then it populates in the dashboard, pulls out an invoice from their ERP system, like an SAP on-premise, ECC six, and the customer's like, this is wild. That's kind of an aha moment for them. But as we've continued to scale, now that we do disputes, deductions, and also cash application. A huge benefit for a lot of our customers is actually being able to see the cash match. So, hey, did the money that's in my bank account actually get remitted in pay? You can actually see that starting to match instantaneously. A lot of CFOs are like, that's crazy.

Pablo Srugo (00:42:18) :
How fast did you hit a million ARR?

Tarek Alaruri (00:42:19) :
It was a couple of months, but I might be a little different than some founders you have on the pod or some founders you see on Twitter. My view is kind of like the customers that we sell to, these flyover state businesses. I think it's better to take your time to get to a million dollars in revenue or tap on the spigot and really double down. Making sure you're solving a problem, because now a lot of investors are just judging you so much on growth rate. I think anything in life that's really worth doing takes a lot of time. Whether it's a relationship, a marriage, being a great parent, building a company, playing sports, it's not overnight success and if it is, that's not always a good thing. And so, I think there's this huge hustle culture right now around trying to get to a million, trying to get to a hundred. Where it's really like, can you solve this problem where every single one of your first customers, whether it's ten or a hundred. Their just so happy that they'll refer you to other customers. How do you get to a thousand raving Winnipeg fans? How do you get to a hundred thousand? That's really our goal as a company versus trying to chase a revenue milestone. We've never lost a customer to date, and our goal as a company is to just never lose a customer and that every customer tells two friends of theirs about the product.

Pablo Srugo (00:43:31) :
I hear you, but in spite of that, you hit a million in two months. So, it's not like it's slow.

Tarek Alaruri (00:43:37) :
It was a couple of months, but we were also working with customers and finding product, building the product. So it wasn't like, hey, all of a sudden people are just raving to get this brand new product. The space exists, the product exists, sales exist. It's not like overnight. So it's kind of the story we tell investors, but also how do we ramp it up and find value for customers? The thing I'm most proud of is the benefits that our customers find, in our early customers, and how you've seen a couple of them get promoted. One of our champions at one of our first customers has gone from a manager in accounts receivable to now a VP in finance and that's what's really exciting for me.

Pablo Srugo (00:44:14) :
But then this focus on product value delivery. Does that mean you may not be as focused on going, you know, now that you're at one or when you hit one. Going from one to ten in a year is not really a top of mind thing for you?

Tarek Alaruri (00:44:25) :
Well, it takes care of itself and so, we'll finish the year. Probably, I think, hopefully around thirty to fifty. Depending on how things shake, who knows?

Pablo Srugo (00:44:35) :
Wow, crazy.

Tarek Alaruri (00:44:36) :
That comes if it's from a great product and so, we want to build the product in the world. Then it becomes easy because that first product experience is so magical if you can get it right for customers and so we want to build that. That is the mission and that comes from hiring world class engineers, a world class team, and then just executing like an absolute dog.

Pablo Srugo (00:44:57) :
Perfect. Well, let me stop it there and ask the last three questions we always end on. When for you, when was the moment when you felt you'd hit true product market fit?

Tarek Alaruri (00:45:05) :
I don't think I'll ever find that moment in my life. My view is that it's consistently refining, and the minute that we feel like we found something or we've made something. You're kind of resting on your laurels. There's no more dangerous place to be in the world than just letting life happen instead of trying to win the day.

Pablo Srugo (00:45:25) :
Has there ever been a moment where you doubted if Stuut would really work? Maybe you might fail?

Tarek Alaruri (00:45:30) :
Every single day, every single day, but then you got to wake up and bet on yourself. There's always going to be moments of doubt, always going to be like, hey, I'm not the right person for this role. Hey, I'm not the right person to sell to this customer. Hey, we might lose the deal. The book by Andy Grove, Only the Paranoid Survive, you have to be paranoid of yourself, paranoid of the company, paranoid of the space. But that's the fun part of doing this, is building the conviction to continuously bet on your team and bet on yourself. And try to be the best version of yourself every single instance that you can.

Pablo Srugo (00:46:03) :
And then last question, what would be a top piece of advice that you'd give an early stage founder that's still kind of looking for product market fit?

Tarek Alaruri (00:46:12) :
Yeah, it's a great question. I would go back to the original advice. I just think there's a lot of noise and a lot of vulture-ism these days in early stage companies. And, one of our investors, Vinod Khosla, says it best. I think he says like, ninety five percent of advice out there you shouldn't take, and it's really like, hey, the best advice is just customer advice, customer feedback, solving a problem, understanding that it delivers revenue for the business or helps them save costs. And so, I would just be careful with who you associate with and be careful of the advice you take.

Pablo Srugo (00:46:45) :
Awesome. Tarek, thanks so much for jumping on the show, dude. It's been great.

Tarek Alaruri (00:46:48) :
Thank you, sir. Anytime, and let me know if you're in New York anytime soon. Appreciate you.

Pablo Srugo (00:46:52) :
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.