S15E5: Finding Product Market Fit with Fazeshift Co-Founder & CEO Caitlin Leksana

I have this very strong belief now that like the more empathy you have for the person that you're solving their pain point, yeah, the more deeply you're going to solve it with a product and the more they're going to love the product and stay on the product.

Welcome back to a new season of The Room Podcast. Hi, Mads.

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Today on The Room Podcast, we sit down with Caitlin Laksana, co-founder and CEO of PhaseShift, the company using AI agents to completely revolutionize accounts receivable, one of the most tedious back office jobs, handling everything from cash application to collections so finance teams can stop chasing invoices and start getting paid faster. Let's open the door. And now a message from one of our sponsors, Rippling. One thing we constantly hear on The Room is that great operators don't just need more data, they need a faster way to turn that data into decisions. As a founder, I know how painful it is to wait days or even weeks for a report while a real business problem is unfolding. That's what makes Rippling AI different. You can ask Rippling AI, is our sales team at risk of missing quota? And Rippling AI instantly pulls real-time data from Rippling and your CRM into presentation-ready dashboard data showing quota attainment, headcount trajectory, and monthly revenue to quota by region. But it doesn't stop at the insight. Rippling AI can act on what it sees, recommending and building an automated recruiting workflow when open roles and slow time to fill are putting quota at risk, all while following your existing permissions and approval processes. Question answered, action taken, problem solved. Ready to rule your business? Head to rippling.ai/theroom and sign up for exclusive access.

And now a word from our new sponsor, Gradiel. Whether you're building a company, launching a product, or growing a brand, you know the idea is just the beginning. And marketing's bottleneck has never been creativity. It was always the work it takes to get an idea out the door. Gradiel handles the operations so that marketers can stay on craft. An agent will learn your process, work across the systems you already use, and delete point solutions you don't need. Designers will ship on-brand pages without counting prompts or tokens. Product marketers will launch across markets in days, not weeks. And digital experience teams test customer journeys, catch what's not working, and fix it all before launch. Gradio learns that your brand, business, and process and brings that continuous context to every workflow. Every task gets done your way with brand, quality, and approvals built in. No more token maxing, slop, or runaway AI bills. More time to think bigger and create the impact people remember. Gradio, the system of work for marketing. Ashurst Perkins Coie is a leading full-service international law firm known for providing high-value strategic solutions for startups and investors. Lawyers at Ashurst Perkins Coie support the most innovative entrepreneurs and investors in fast-moving and high-growth sectors across the country while addressing the myriad of legal needs that arise when fundraising and scaling their businesses. The firm's tailored legal services are informed by understanding of each of the client's discrete needs. To learn more about Ashurst Perkins Coie, visit their website, ashurstperkinscoie.com.

Aitlin, first of all, thank you so much for joining us today in the room. Thanks for having me.

We're so thrilled to have you here IRL in San Francisco, where we first met about a year ago.

Yeah.

Excited to be getting to tell your story today of Phase Shift. So before we dive in, we're curious to start with your own personal beginning. So where did you grow up and how has that shaped your view of the world?

I grew up in Maryland, right outside the DC line. My dad worked for NIH, so that's in Bethesda, Maryland. So that's where I grew up. That's how I grew up. And both me and my sister were always sort of steered into like STEM, math, science, computer science. So we went to all the magnet schools, we learned how to code from a very young age. And I think that just got us really interested in solving problems. And even now when I think about startups, uh, I have investors be like, oh, did you always wanna solve accounts receivable? And I was like, no, that's not like my life goal since I was born. But like naturally there's, I think, certain people who Like to solve really hard problems. And myself and my co-founder, like, that is us. And so when we are going into startups and trying to find ideas, like, we really gravitate towards the hardest problems. And I think some of that was just how I grew up.

Did your dad still work at the NIH during COVID

He does. Yeah. Yeah. It's still to this day. Yep. Through COVID and now.

Oh my gosh. Yeah. Okay. So that is interesting. Another podcast and another alpha. Well, you kind of alluded to this here, but I am curious, did you always think you were gonna become a founder?

I'm not sure I had crystallized what that meant or how I would become a founder, but I always knew I liked to build and I liked to create, and that you'd see sort of different moments of it sort of throughout. I grew up actually riding dirt bikes and ATVs, and I always like fix it, and that's why I went into mechanical engineering. I was like, well, maybe I can like create, race cars and build stuff like that. And then I couldn't get a job, so then I went and got a PhD, but I didn't actually finish my PhD. I dropped out and got a master's. But during that PhD, I went through the NSF I-Corps program, which is sort of an incubator program for people in grad school doing very technical things. And I was doing water desalination, which is basically bringing fresh water to people. So taking ocean water, turning it into fresh water. Because I was like, well, I just want this to be out in the world, and I want to do something different and do something new and build something. And then I realized you had to know business, and it wasn't like just build something really cool and people will buy it. Like, you need to actually find something that people will buy. So that was like a learning moment for me, which then took me into BCG and the rest of my career. So there was always a piece of it, but I think as like, even through HBS, which is where my co-founder convinced me to do a startup with him, There was always this little bit of like, but what if it doesn't go well? Like, what if this, what if that? And, and that was sort of the, like, what kept pulling me away from doing startups and entrepreneurship was like, well, what if this happens and this happens and it doesn't succeed and all this stuff? Um, and then finally it was my co-founder who sort of like pulled me into it and was like, no, like, let's do it together and let's figure this out. There's no better time than right after business school. But yeah, I've always been a builder.

Yeah. Well, a builder at heart obviously can mean a lot of different things. And you alluded to your unique education journey, having gone to Georgia Tech for undergrad Then no PhD, PhD moment. And then of course, where we initially met through the HBS community. Right. But it sounds like your co-founder was an important part of taking this education, kind of business orientation that you ended up doing in consulting to this next level. So tell us a little bit about how you guys met and how he became the person to influence that.

So we were in the same section at HBS, and we also went to HBS during COVID So instead of the 90-person section, we had like 70 people and we couldn't go to dinner or do any of the normal things. So we got really close as a section. Um, and there's only a few sort of very technical people, and he was one of them. And, um, he one day was like, I know I wanna do a startup, and, um, I just need someone to help me brainstorm ideas with. And I was like, okay, that sounds innocent and not— Yeah. Yeah. Safe. That sounds safe. Safe. Yeah. I can be a brainstorming partner. Um, and he knew he wanted to do crypto. So his background, he was MIT computer science undergrad and master's, and then 7 years as a nuclear submarine officer in the US Navy, taught cybersecurity at the US Naval Academy, and then Got his MBA from Harvard. So,

so total slacker.

Yeah, exactly. Um, and he was just really interested in crypto from like a technology aspect. And so I started brainstorming with him and through that, and you know, we had the like posters on the wall, we're just coming up with like crazy ideas. That was how we got to our first startup idea. It was just sort of this like very top-down, very MBA like ideation. Let's put the, the drawings on the wall and figure out what's missing in the market. And, and then we got to an idea and I was like, this is really cool. And then I had that moment of like, oh shit, am I really doing this? Like, I remember that feeling of like, this is risky, especially for like an HBS MBA grad coming out of that. Like, it was a very much like a very scary moment, but a very exciting moment. And I think as long as the like excitement outweighs the scariness by like just enough, then you jump in and do startups.

And no matter how structured your brainstorming sessions were and how many Post-it notes were on the wall, Things don't always go according to plan. There was always an idea maze. Yeah, it seems like, you know, crypto, water desalination, we end up in accounts receivable. Yeah, some twists and turns there. Yeah. Tell us a little bit around your initial aha moment with your co-founder where you decided, okay, this is the problem we've identified. We're going to start to build a company here.

Yeah.

And then peek forward a little bit around how did some early insights shift into what PhaseShift is today?

We started doing this crypto startup, we raised our pre-seed round, um, we built the product, and then we started to have to sell the product. And me and my co-founder were very sort of like engineers at heart. We just wanna build something really cool. We hadn't really thought through like, what's the go-to-market here and how are we gonna sell this thing? That was like always an afterthought to like, let's build this really cool product and like, let's talk about the tech stack we're gonna use and all of that. Um, and then I started to have to sell a product, and it turns out that selling a product that no one wants is one of the hardest things you'll ever do. And it was like one of the most painful things was like getting on calls and trying to pitch this product that no one really understood what we did. We didn't really understand what we did. Nobody needed it. We didn't understand the pain point. It was just like, hey, we built this cool thing. Do you want to buy it? And we got some customers that way, but it wasn't, it like wasn't taking off. And I think in my heart of hearts, I knew it for quite some time, but it took me some time to even admit to myself, like, I don't think this is it. And then we had to have the hard conversation with my co-founder and get him on board with the fact that maybe this isn't it after we had built something for like a year of that. We poured so much, you know, blood, sweat, and tears into the idea of pivoting. And even the idea of having that conversation is just a really hard thing to bring up. And I remember bringing it up to my co-founder and he was like, but Caitlin, we don't quit. Yeah. Like, we're not quitters. You know, all of those HBS cases where it's all about just like pushing through until it takes off, like, And I remember during, you know, when everyone tells you about startups, it's all about, you're going to feel the pull. That's what product market fit is. It's like, you're going to feel the pull. And I was like, I don't think this is what it feels like. This is like really painful.

I similarly had that exact experience where we like built something cool and we were like, hey customer, isn't this cool? And they were like, yeah, but we're not buying it.

And it took 9 months for us to come to that really like heartbreaking decision of like, No matter how hard we tried, this is not gonna work. It needs to pivot. What advice do you have for founders that are maybe struggling with finding product market fit in terms of when it's the right time to make that call versus they haven't tried hard enough? For me, I was starting to like fall out of love with startups. I was starting to have those thoughts of like, maybe I should go and try to find another job, or like, maybe I'm just like not fit for startups. And you just start having this like spiraling thinking. Mm-hmm. When, you know, 6 months ago you were like in love with the idea of doing startups and you're having so much fun. It's like, maybe the advice is just like, once it starts becoming like really not fun or you lose conviction in your own idea, then you know, like, I think that was, it was like when we first ideated in the room with all the whiteboards, it was like we had so much conviction and then we sort of started to lose that to a point where I was like, I have no conviction anymore in this idea and I'm not excited to continue to pursue it. Regardless of whether we can work hard enough to make it real, like, I don't wanna make it real. And I think a lot of founders listen too much to the outside world and not to our gut. Like, usually your gut is telling you something important. Yeah. Were you getting feedback from customers that then led you to what Phase Shift is now? Oh, so what happened was we probably went maybe 2 or 3 months through the hard conversations of Not only like we need to pivot, this isn't working, but the whole spectrum of like, well, should we just not be founders anymore? Should we give the money back? Should we shut this down? But we were like, we love being founders and we weren't ready to give up. And I think that's another thing is like pivoting isn't giving up. It's, it's like not failure. And I think that was the worry is like we had to tell our customers, our friends, our family, our investors that we were pivoting. And for some reason that felt like failure. But now looking back, like 100%, we should have pivoted and that's what we did. And now things are where they are today. So, um, we probably went through 3 months and then we spent about a month sort of shutting down the current product, which means like telling our customers, we can't support you anymore. Let's help you get your data out, all of that. 'Cause we still wanted to like make sure they were taken care of. Um, and then we had a whole brainstorming session again.

Fun.

But we did it right this time. And the difference is when we were doing our prior startup in, you know, the HBS campus, it was very top-down. It was like, what do we think is the right idea? What's a really cool product we wanna build? And then it comes to pivoting and I was like, I am never gonna do it again because then you end up selling a product that no one wants. And like the right way to do it, I've learned, is to start with customer discovery. That is it. And so what happened was, uh, we came up with some ideas and I remember sitting on my couch being like, okay, either we can find an industry that me and my co-founder like know really well and we have unique access to or something like that. But like, I'm a PhD dropout turned consultant and my co-founder is a Navy submarine officer. Like, I'm not quite sure unless we were building like nuclear reactors, there was much going on there. Mm-hmm. So then I was like, okay, well let me think about what makes my day hard. What is, what do I, what have I uniquely experienced that I can speak to that I wish something existed for? And that was the actual aha moment. And I remember the aha moment cuz it felt like what you'd imagine an aha moment was. Like what? The light bulb went off and I was like, I have one spreadsheet in my company that I have to do and it's customers and dollar amounts in cells, and it was color-coded, and it was super messy. And I was like forgetting to send invoices, and it was just really like almost embarrassing as a founder. And I was like, if this is like the thing that like keeps me up at night from operating a company, maybe other people have this problem too. But I didn't know. So I was like, I'm gonna come from a full outsider. I don't know if this is a problem, but let me just find out.

Mm-hmm.

And so, and at that point it was almost like you have nothing to lose because we'd already pivoted. We'd already fired all of our customers. So we're like, okay, fuck it, we have nothing to lose. Let's just like, let me cold DM like 100 people and just see if they would talk to me. And I got more responses to just that cold message than I've ever gotten before. And I have shared that message with a lot of people. It's like, I'm not selling anything. I'm actually pivoting my startup, but like, here's what I'm thinking about. Is this a problem for you too? Can you share more? And so many people responded to that. They sent me really long messages with a ton of detail. And people would just like message me back and be like, I don't have time for you, but if you solve this, like you're onto something really big.

Nice.

And that was the inspiration and that led to the MVP. And then we applied to YC with that and wow, we are from aha moment to first customer. It sounds like YC was a part of that journey. I think you were in the '24 batch. Yep. Tell us a little bit more about that experience, um, and how that ultimately helped you kind of go from idea to early signs of PMF. Yeah, so There was just a ton of discovery, probably like a lot of iteration between discovery and building between me and my co-founder. So he actually spent probably a month or 2 months investigating tech stacks and like what to build on, 'cause he was like, I'm gonna do it right this time around. Like, he's like, I, I think we have to change entire tech stack. So he was exploring that and I was exploring like all about the pain point. And so I did these like 100 discovery calls and people just talked about their process and would like screen share and be like, this is what I do every day. This is what I wish I didn't have to do every day.

Right.

And it was gold. Like everything they said, I was just like eating it up. And then I communicated it back to my co-founder and he would be like, I could build that. And then I would go through another call and be like, this is what they said they do. And he's like, oh, I can build that. And then that like compounded into our MVP. And then it wasn't fully built, but then we started talking to customers and you just, there's almost like a flip, like, okay, we've done enough discovery, let's go try to sell this thing. And there was just an immediate flip instead of me reaching out being like, hey, I am not selling anything, yada, yada. I was like, does anyone know anyone that like has a lot of invoices and might need some AR help? Um, and then we landed our first contract for $30K and, um, September. Yep. And then got into YC, moved out to SF, and then, so that contract basically came in right when we started YC. So we started with YC with no customers, but we did have a product because we'd been kind of iterating on the product. Um, and then we went from $0 to $100K ARR in 2 months during YC. And part of it was during YC, they, they post on LinkedIn. Um, and so basically it goes to all of like YC's followers and it's just an announcement that we're in the batch. And we got a ton of inbound just from that LinkedIn post. And I was like, that itself I think is another signal. And it was like, it is so different from the prior company because it was like signal after signal after signal. And like then we started to feel the pull and then like we had the hockey stick growth and it's like all the things that they tell you is gonna happen. I'm like, we definitely did not have that at the prior company. And now feeling that pull is like, now I know what product market fit feels like. And we had to, Pivot, and we had to do that other company to even land on this idea. So quite literally the definition of momentum. Yeah. Um, well, another amazing part of your journey is obviously fundraising,

especially coming out of YC. Um, today you've raised over $21 million. Congratulations. Thank you. With incredible investors like F Prime, Gradient, 2048. Fundraising, especially in the context of like building SaaS with AI as kind of the undercurrent, is sometimes not as straightforward as folks would think fundraising is in kind of 2024 to 2026 era. Tell us a bit about that fundraise and who the first person to say yes to investing in Phase Shift was.

Our fundraising journey has even been a little bit messy, just like our company building has been.

Fair.

Right. So when we graduated from HBS, we raised the pre-seed for the prior idea, and that was 2048 Ventures. Um, Zahn and Alex were 2048. They and we had Probably 99 investor calls before 2048 was like, we're gonna take a bet on you guys. And like, they've been incredible ever since. But it's like, you kind of just need the one yes. And that was also like pulling teeth, like having that many investor calls. But then we got the one yes and we were like, okay, someone believes in us. And then we built that. And then as we pivoted, 2048 stayed in the cap table. So they're like, we support you guys. They support us through the pivot. They support us, you know, through what we're building at Phase Shift. But they had invested in a pre— completely different company when they originally invested. I think that's why so many early-stage investors are, are always say that it's all about the founders because at the end of the day, like any company can become anything, um, which is what we did. And then we went, got into YC and YC was interesting. Gary Tan was our partner there. And I remember during the interview and YC's interviews are 10 minutes. So you have 10 minutes to like wow them and they, they make a decision and it was Gary and Um, I remember him being like, I sit on so many boards of companies and they always talk about AR. And like, I think this is a big problem and I see you guys can build a product and you have people using it and you really get it. Like, you're in. And that was just—

He said that on the interview?

Yeah.

Nice.

And then we got in and like, he's just such a strong believer and he's not, and I think YC is not the type of, of place where they're gonna tell you how to build it. They're just gonna support you as you build it. So that was then the next check was YC. Um, and then we went out for our seed raise, um, and that was led by Gradient. Um, so Darian and Clayton at Gradient, and they gave us a term sheet 15 minutes into the call. Wow. Yeah. And they, so much of it was just like, uh, us really sort of understanding the customer and then building really fast. So my co-founder and I did a lot of, uh, all-nighters through YC just to get the product to where we wanted it to be, to continue to sell. And then, yeah, we, we raised that seed round and then Gradient threw another $2.5 million. Um, and then our Series A was led by F Prime. So, yeah.

You've experienced what struggling to find product market fit looks like, and then you've experienced sort of this aha moment, which is led by all of this incredible momentum. Yeah. But despite that, things are never a straight line. Um, tell us about a time sort of post pivot. where things just didn't go as planned?

I mean, a lot of things didn't go to plan, but hiring was one that I've learned a lot about how to sort of hire the best people. Uh, but coming out of YC, it was kind of like we didn't really know what to do or who to hire or who, how to build each function. Now I know that it's like you sort of do the job and then once you figure out how to do the job, then you bring someone in to help take that off your plate. That's sort of my, my mentality to it now, but at the time it was like, Me and my co-founder, and then we brought on 3 founding engineers because we knew we needed engineers. And then it was like, okay, what now? And I had started scrolling through Work at a Startup, which is YC's job board, and just seeing who was on there and like seeing if anything sort of inspired me and made sense. And then I remember I found this, what I had thought was like the perfect head of sales. And through conversation, there was just so much like friction, like between the negotiation. He wanted to be in New York and I wanted to be in SF and just like, but I was like, oh, but like I want it so bad because like he'd worked worked at this company that was like a huge logo in our space, and I was like, I think we really need this, and I wanna go be able to tell our investors that I got this person on board. And he ended up not taking our offer, and I was really disappointed at the time, and I was like, oh man, like, what am I gonna do? Am I gonna find a candidate just as good? Fast forward a few months, I found the best head of sales who has grown the company and grown our sales org and is just, I could not imagine a better head of sales. And now we're like a 12-person sales function, and Um, uh, the other guy came back to me a month later and called me up and I was like, I made a mistake not saying yes to PhaseShift. And he's like, can we get coffee? And I was like, the ship has sailed, my friend. Oh. But it was like, in the moment it feels like such like a catastrophic loss. Yeah. And then you just realize that like you're gonna move on to the next thing and you're gonna figure it out. And I think part of startups is like a little bit of like playing whack-a-mole and just kind of like taking things as they come and trusting your gut and your conviction and like things will sort of Happened.

Yeah. I mean, we talked a lot about kind of your journey into YC and that experience ultimately, and how you grew your customers even like before basically you got in.

Yeah.

Um, there's just been like such a continued, I would say, aura around YC. And I, I'm just really fascinated with the success of their startup school.

Yeah.

Uh, and just because we weren't in YC and I don't think I will, I don't think I will be unless they take podcasts. Um, like, can you just maybe unpack that for a minute? And like, why do you think in the age of AI, when there's more emerging managers than ever, YC has been able to still capture this early-stage builder?

So much of it is like being a part of a community. Like, when my co-founder and I first started our last company, we'd just come out of HBS. And then of course, after HBS, everyone sort of, sort of travels to the city that they make their life in. And so we were like one of the few people still left in Boston. And so we started to build a the company in Boston, but there wasn't a huge startup community there. Um, and it sort of, this feels very much like everyone else is sort of moving on with their career and you're doing a startup and you're getting left behind. It's sort of the vibe that it feels like. Um, and then you get into YC and it's like other sort of really ambitious people also doing a startup, also struggling to get product market fit and traction. And then you have partners like Gary that have seen so many different startups and is like, this is totally normal. And I think part of it is like it normalizes the sort of hard, difficult, uncomfortable parts of building a startup, but it's like you have a community. And by the way, these other like 100 or several hundred people are also going through the same thing. They're also having to like cold email and cold call and pull all-nighters and figure out how to get their first customer. And like, yes, it's hard, but like we're all kind of doing this and like if it works, it works.

Yeah.

Um, I think that it creates a lot of people in my batch that it was like, it felt like a pressure cooker. little pressure cooker where you're like, you're supported and you have weekly meetings and you feel like you're being held accountable by both the partner and the other companies. And I think that sort of energy and mentality to like, just go do it. Like, I remember we had someone in our batch and Gary was like, just post on Reddit. I don't know, like, do something, like talk to someone, figure out someone that you can talk to and like start there. And I think startups feel very scary because they are scary and nobody knows where to start because every startup starts somewhere different.

Yeah.

So you just, you need a little bit of that. push and then the comfort that it's like, just try something.

Yeah. That combo of the community with institutional memory that then gets brought into play. I mean, clearly it had a positive impact on your experience.

Totally.

And, and getting you guys to this next stage.

It was huge. It was huge. Like both, like I think that, um, sort of momentum, especially as my co-founder and I had like been so drained by the prior company to have to pivot.

Mm-hmm.

And then YC was almost like another burst of energy. And then you, we had Gary and then we had all the other people in our batch and then we had all these events and They brought like talk Airbnb founders to come talk to us, and it's just like yeah, we can do this. Yeah, and I think like being at SF helps, and you know YC brings everyone out to SF, and then the fundraising out of YC is just like a whole other just incredible.

Completely.

One thing we constantly hear on the room is that great operators don't just need more data; they need a faster way to turn that data into decisions. As a founder, I know how painful it is to wait days or even weeks. Weeks for a report while a real business problem is unfolding. That's what makes Rippling AI different. You can ask Rippling AI, is our sales team at risk of missing quota? And Rippling AI instantly pulls real-time data from Rippling and your CRM into presentation-ready dashboard data showing quota attainment, headcount trajectory, and monthly revenue to quota by region. But it doesn't stop at the insight. Rippling AI can act on what it sees, recommending and building an automated recruiting workflow when open roles and slow time to fill are putting quota at risk, all while following your existing permissions and approval processes. Question answered, action taken, problem solved. Ready to rule your business? Head to rippling.ai/theroom and sign up for exclusive access.

And now a word from our new sponsor, Gradiel. Whether you're building a company, launching a product, or growing a brand, you know the idea is just the beginning. And marketing's bottleneck has never been creativity. It was always the work it takes to get an idea out the door. Gradiel handles the operations, so that marketers can stay on craft. An agent will learn your process, work across the systems you already use, and delete point solutions you don't need. Designers will ship on-brand pages without counting prompts or tokens. Product marketers will launch across markets in days, not weeks. And digital experience teams test customer journeys, catch what's not working, and fix it all before launch. Gradio learns that your brand, business, and process and brings that continuous context to every workflow. Every task gets done your way with brand, quality, and approvals built in. No more token maxing, slop, or runaway AI bills. More time to think bigger and create the impact people remember. Gradio, the system of work for marketing. Ashurst Perkins Kewey supports the most innovative entrepreneurs and investors in fast-moving and high-growth sectors, addressing their myriad of legal needs. But the firm doesn't just provide end-to-end legal and business business counseling to its startup clients. It also facilitates introductions to key advisors and sources of capital. Ashurst Perkins Coie's interactive website Startup Percolator offers access to programs, resources, and rich dynamic content designed to assist entrepreneurs in their startup journey. To learn more, go to startuppercolator.com.

Would you say it's fair to call PhaseShift a vertical AI company, like a task-specific company that has built a product in a way that goes after a vertical versus more of like a horizontal layer that plays across a lot of different things. And finance, I guess, would be the vertical through which you are a vertical AI.

Interesting. Yeah, I'd say so. I mean, we're, we're verticalized to like finance workflows, like accounts receivable, horizontal in the sense of we specifically chose to serve any industry, which is difficult because I realized every industry has different unique systems. Like elevator servicing companies use a specific software that maybe other HVAC services and construction companies don't use.

Yeah.

So our team spends a lot of time on integrations, but part of it is like we want to solve this end-to-end workflow that hasn't been solved before. We want to solve it for every industry. Nice. And that's what excited us.

I love also my own bias in asking you this question because in venture we always talk about vertical AI, vertical AI, or vertical SaaS. Yeah. And so even like my investor frameworks, I'm like putting on you as a founder and you're like, I don't really know. We solve—

I was like, we solve a problem.

I don't think we fit into a category. Um, so I'm, I'm feeling really humbled here in this moment. Um, if you can bear with me on the framing. Yes.

Yes.

Um, would you say that like the idea of doing this in an AI-native way has shifted from a go-to-market strategy perspective? And if so, you know, how would you say how you've thought about talking about the revolution of accounts receivable through PhaseShift is different than you might've if you didn't have AI tagged on?

We're at a weird moment in time where like half the people just wanna solve their problem and they don't really care what technology we use to solve it. Then we have other half of the world that's like, our board is telling us to use AI, how can we use AI to help me? And so part of it is like, We're trying to figure out who we're talking to at any given moment.

Right.

But if you can sort of do both, and I think we sort of check the box on both of like, we lead both with the AI and we lead with the like, we solve this problem that nobody else has solved for you. Those 2 things together usually get people pretty excited. Oh,

I have so many questions, but how much would you say is AI at the core of the— because like, like a lot

of interesting

workflows,

it's very interesting.

Did it necessarily need AI?

Yes.

But the paradigm shift has allowed the momentum For rethinking accounts receivable, perhaps?

So accounts receivable is interesting because I'd say it, it, it's one of those that really hasn't been solved with even deterministic software.

Totally.

So like you look on the accounts payable side and you have sort of the old school, like Coupa and Tipalti, and now you have Ramp and Brex, and there's tons. I just saw someone else get a Series A recently, and it's, it's crowded, but you still find a lot of winners, and new technology just brings new opportunity for like a new winner to pop up, but it's generally a crowded market. Then you look at accounts receivable and you, you maybe have some software that was around for like 10 years and it started 10 years ago and it's pure deterministic and they maybe solve for a specific piece of the market, but otherwise it's all humans. And so you have these very human workflows and there's about a million AR analysts in the United States, which is equivalent to the number of public school teachers there are in this country.

Okay.

That's like the workflow that like people, and like I didn't even know what an accounts receivable was before I had the problem. And I think this is the like, Like, I also have this theory that the best startup ideas are those that are the furthest degrees of separation from a software engineer. Oh, interesting. Because it means that they haven't tried to solve the problem themselves because they usually, they, they get very annoyed and they solve their own problem, but if they've never experienced the problem, no one's tried to put really like modern technology to that problem. And I think that was sort of that sweet spot where we found this market that is super manual and just people. And then we're like, well, how do we put the best technology in it? And we were actually coming at, we started the a company before ChatGPT came out. So we had actually tried to solve this problem with pure deterministic software. And we were like, there's, I remember my CTO being like, there's, and even during YC, he was like, there is no way we do this without AI.

Wow.

It is like an unsolvable problem because to do what we do would need a ton of if-then statements. That's like the only way to get that level of like configurability and nuance and customization. Now we can use AI to do that. And we really tried to only use AI where it's like absolutely necessary, and that's where we get the highest leverage. So, to your question, like probably 80 to 90% of the product's actually not AI. What we mostly focus on is the data. So, we have this big theory that AI is only as good as the data it has in context. We should focus on the data to make sure we're feeding in the proper full holistic picture of data, and that's just gonna make the AI even better.

Absolutely.

Especially as the AI layers start Layer starts to be more commoditized. So it's a problem that's highly manual, could not have been solved without AI. AI actually allows us to solve it end to end. But from a, what we focus on, we mostly focus on the data.

Absolutely. Well, in that vein of just the buyer then, 'cause it sounds like there's really 2 types of buyers, the AI transformation buyer and the end user.

Yeah.

Where have you found like more success in terms of both like ARR and also just like energy inside a company?

It's fascinating, uh, because within sort of finance, or there's CFO control and there's sort of like everyone within that organization, um, it's kind of like everyone wants to solve the AR problem.

Yeah.

And like ignoring the whole like, let's just try to find AI and figure out where we can slot it in, which is this whole thing.

Yeah.

Um, like everyone at each level is trying to solve AR because AR impacts DSO and dollars collected and it fundamentally changes how the business operates and it's reported onto the board. So it's a very high sort of visibility metric. And so it starts at the CFO controller level that they, they want to solve for AR, they want to solve DSO, and then you get to sort of further down. And I remember, so we have a new hire recently joined who was a prior customer and he now both does our internal financial operations and he's very AI-pilled. Nice. He said yes. He also does product for us because he was a prior customer and can speak to everything he wished existed. And he came in and was like, my prior head of cash application, which is one of our modules, it's like one of the multiple functions within AR, was so excited for Phase Shift because she's like, I get to go home to my kid at the end of the day with like all of the work actually done and feeling good. And so it comes almost top down from a metrics standpoint. Yeah. But then from the users, they're like, wow, I can like get more time out of my day and actually like, I feel like AR is this thing that it's like kind of like a, um, they're, they're kind of a little bit like sales reps, but they don't get commission because they have to like do all of this work and they get— there's— they have to hit their projections and their numbers and their metrics and their quotas. Um, and there's no benefit if they do, but if they don't, they just get yelled at to collect more money. And so I think I have this very strong belief now that like the more empathy you have for the person that you are solving their pain point.

Yeah.

The more deeply you're gonna solve it with a product. And the more they're going to love the product and stay on the product.

I mean, you allude to this inside of the product itself where you have different modules. So you have things like your billing agent, your credit agent, payment dispute agent. I'm sure I could go on.

Yeah.

Just from a framing perspective, um, and also maybe tactically, but like curious why on your website under product you split out these different agents versus selling like a monolithic solution. And well, I'll pause there.

It's an interesting, um, like go-to-market sales process question. And like what I've realized, and coming out of HBS, it's interesting, is like you both have to find what works for your company and what then molds into the buying process that people are used to. This is also my whole shtick with like usage, um, like token billing and usage billing. Like that is not how people buy software. They buy software by they have annual budgets and they buy contracts at a fixed price, or else they're like, I will never get that approved because that is an unknown variable. So when we started selling FeeShift, like we started very broad of like, we just do all of your order to cash, AR, financial operations, yada, yada, yada. And people were like, I don't know what that means, but I have this very specific problem. And so then we sort of shifted to selling more about understanding people's problems and being like, okay, tell me about your problem. We have a solution to that problem. We have a solution to this problem. And what that's done over time is just, it's taught us about all of the different pain points. And then we have these different modules that solve the pain points, but every company's different. So some companies might have a cash application pain point, but they don't have a collections pain point. Mm-hmm. And so it allows us to be like, well, let's just solve your pain point. And I think part of this is so many people are, have some trauma because they've been sold things they didn't want, or they get software sort of pushed down their throat. And that's what we feel from talking to folks is like, they don't want to be sold in the traditional way. They want partners that are going to sell them a solution to their problem and are going to handhold them through the implementation, which is why we have a whole separate deployments mentality of how we do it. 'Cause like buying an enterprise software like should not be so painful, even though it is. And everyone has baggage from it. Totally. Has been burned by a startup telling them they do something and they really don't. And I'm just very anti that. Like, the experience from the sales process all the way through to deployments, um, should feel very much like, um, kind of like a consumer experience. Like, it should be joyful.

Yeah, I completely agree. Our CMO here says that every marketing should be consumer marketing. Yes. Because like, even though there is enterprise B2B marketing, it's an individual who's usually buying and using the product, right?

Yep.

Um, it seems like that's at the heart of how you've packaged, if you will, um, how PhaseShift has deployed its different product lines, which is awesome. I think What I'm really curious about is under the hood a layer, is the product different? Like, did you have to build different agent stacks to empower these different point solution agents? Or actually, not that the customers need to know, but like for you guys, are you just managing like one unified product under the hood?

It's the second.

Okay.

It's the second. So it really is kind of at the, at the base of the, the platform, the product, we So, we sort of create data clones of all of their different systems. So, their CRM, their ERP, their bank data, their email data, all this flows into one system, and then we unify it. So, it's kind of like putting a bunch of databases together and then building relations between all the databases, essentially what we're doing. Hmm. So, we're— we know customer A in this system is customer B in this system, customer C, and we create that sort of graph, which is mostly in people's heads. is what we realized. Then once we have that, whether you wanna automate this thing or this thing or this other thing, like that's a tweak in a prompt, in a setting that we turn on and you're good to go. But once we have the data, and what I mean by the data is we both have read and write functionality, so we can read from all these systems and we can write to all these systems. Cool. Is really it. Because if you think about, it's, it's really interesting. We, I was in Atlanta pitching this really large staffing company. He's a 16-person cash-out team, which is again, a team within the AR broader category. He was like, the problem my team has is they are swivel chairing all day long. So, they have monitors with different softwares pulled up.

Oof.

And they're just constantly swivel chairing and playing detective. Like, oh, I see this in this system. Okay, what does that match in this system? Okay, I got this email. And like, that is their entire day. And so, we went about it, it was like, At the heart of what we have to do is pull data from these systems, unify it, and then be able to execute actions across all of these different systems. It's the only way to automate end-to-end.

So then naturally, by the derivative product of having to go through so many systems, I would imagine your runtimes can get kind of long. Very. For the agent. Yeah. How have you architected the agent to actually work consistently over those different times and across those different data sources?

Yeah, so the, I'll talk about the time first and then sort of like how we do it across the different data sources. So the time is interesting because like in enterprise software, I think the runtime matters less because, you know, it's not like they need it in an instant second, sort of like a chat experience or a conversation, like a support ticket experience.

Hmm.

We could get hundreds of transactions in the morning and they'll come in at noon and they'll just process it all. So the fact that it's running in the background is actually quite normal to these, to these people, and that's what they're used to. But I like to compare it to kind of like, you know how Cursor makes like a plan or any of these AI development tools, it'll make a plan of what it wants to do and then you approve it and it executes it. That's sort of what we're doing. So all of this is happening in the background. They log in, they see the plan, and then they hit approve, and then we actually execute all the actions. And again, that doesn't need to be live either. It can be happening in the background. So, it's sort of a little bit of a nature of the industry and the workflows that we play in. The data is interesting because it's so messy, and this is where we use a ton of different AI technologies. Like, it's not just one. Like, we're using— we use a lot of sort of AI transformation. We turn unstructured data into structured data. So, a bunch of PDFs and Excels and screenshots and just super messy data into structured data. And then, we also do things like vision agents. So, when there's no API, we'll just log into the browser, and you kind of need to stitch all these things together to make it work. So it's not like, okay, we like hook up the AI agent with some prompts. It's like we and our deployments, we have an FDE and an AI deployment strategist on every deployment because you need a little bit of— you need the technical and you need the non-technical to be like, here is how we're going to coordinate this workflow. And oh, you only need it for these customers and not these customers. And by the way, your data is super messy, so it doesn't actually sync between these 2 systems. Mm-hmm. But Faceshift needs to know when we do this action that it actually matches this customer on the other system. So I also have this belief that like consulting is sort of merging with AI agent deployments because there's so much like nitty-gritty you have to figure out as part of this and a lot of change management too, because these people's jobs are, are sort of changing.

So interesting. We've, we've spoken a lot about like solving problems in this podcast. And as we think a little bit to PhaseShift's roadmap and the future, how, how is the problem evolving?

I have this thinking that like As long as we make sure our customers have a good experience with the one module that we deploy, they'll keep coming back to us with more problems. And that is exactly what's happened. Like, we have no customer success, like, we don't do upsells, but we've had organic upsells because people come back to us and are like, hey, you guys are already in our systems and you already do this thing, can you do this other thing? And we're like, uh, maybe? Like, we'll try our best. So, So I think like it's, it's less of a, a top-down driven like sort of thing in our company. It's very much like let the customer sort of tell us their problems and we just need to make sure that if we solve it, and I think it's actually, we take this as a technical challenge. If they come to us with a problem, Mm-hmm. how do we build our technology in a way and abstract it enough that we can then solve another similar but different workflow for a different company so that it's not custom? Like that is the definition of us of like, we'll never build custom software. But we'll build sort of abstract software with a ton of different configurability and settings and prompting such that we can then solve another similar workflow for someone else.

And what's something on the roadmap that you're excited for, kind of maybe at this like primitive layer?

We are doing a, actually a whole rebuild of our, our vision workflows. So our browser agents.

Yeah.

Because even that technology has changed in the past year. So like going through YC was like, back in summer '24, there were people in our batch that were like trying to do this and it was still early. And I remember my co-founder being like, Caitlin, I don't think we could ever scale this as an actual product offering. Like, we just have to build custom Playwright scripts. Like, I don't think it's there. And then now, like, there's so much technology and even the ability to just use natural language to spin up a browser agent. And so he's like, we're gonna productize this. Like, the technology is there. We're gonna build this into our product and allow it to be self-served by our customers and easier to use by our FDEs.

Wow.

And like, that's happened in the past year. So I think that's also something that's interesting is like, there's a little bit of this, like, making a little bit of a bet on how the technology's gonna change and just sort of believing that AI's gonna keep getting better and new tooling and better dev tools are all gonna come out, and that just makes our product continue to get better.

Can I ask a question too, just on this? 'Cause you sparked my thinking of just like, okay, not to like say you're in an unsexy industry.

Oh, very much we are.

But it's a little unsexy. Um, but I think we're at that point in the innovation curve, right? Where like, it's not just coding agents that are disruptive. You're disrupting these normal functions that have been around for years and have had pain points for years.

Yeah.

Do you have like non-AI native go-to-market partners? who you sit alongside in the stack that have been helpful in getting into these customers or like telling your story? I'm honestly just genuinely curious.

So we do a lot of partnerships. Um, so we have both like the traditional sort of private equity partners. We work with accounting firms. Accounting firms are interesting because they've always provided services, but they've always said no to accounts receivable because they're like, it's too manual. It's not worth it. Uh-huh. And so now they're like, we, PhaseShift allows us to sell an entirely new like product/service as a firm that we weren't able to sell before, and now we can do it at the right margin. So that's an interesting one for us. Private equity is just always trying to figure out how to improve companies, and that's exactly what we do. So that's been a really great channel for us. And then on the, um, technology partnerships, it's interesting because we integrate with so many systems. So like industry specifics, like staffing uses a system called Bullhorn that we integrate with. We integrate with Epicor Eclipse, which is like a wholesale parts ERP. Never heard of it. Viewpoint, Trimble, like these are all like specific to these industries. And like, it's, it's sort of the things that have like, they've taken off because they've been so specific. Like we work with an elevator servicing company, um, that sells to like Target and Whole Foods and Wegmans. And these, you know, when an elevator breaks down, someone's gotta fix it. It's this company and they use a system called LiftKeeper, which is an elevator servicing specific software that tracks time tickets for technicians that service elevators.

As niche as niche comes.

As niche as niche comes. And their AR team was spending a lot of time in it. So we were like, we gotta figure it out. We gotta get in there. And so we use Vision Workflows 'cause they don't have an API, but it's like, you can't, that's the type of thing that's like, you have to just keep saying yes because otherwise you're not gonna solve their problem. But anyways, um, so these technology partners are interested 'cause a lot of them are, are not AI native and a lot of them have a seat-based pricing model, which also screws them because AI is gonna like disrupt their entire pricing business model. Um, so we do some partnerships with them because Because they are already sort of embedded within these different industries and markets and they don't solve it and they don't want to solve AR. And we go and they're like, we have no one in our marketplace that solves this. Like, it's sort of a really win-win situation. So interesting. Well, we've spoken a little bit about sort of like your roadmap, future of AR, how AI is changing all these industries. I'd love to shift gears to a touch more personal. What is something that you're personally excited about this year? Ooh, we have some exciting announcements coming up later this year. Um, and I think for me, my role has sort of shifted just personally from like when we first started, it was all founder-led sales. So I was like doing the outreach, I was doing all the demos, all the sales calls, then I brought on my founding AE, and then I brought on my head of sales. So like I've sort of moved away from that, and I do sort of the big partnerships. And, and now I think my role is really shifting to like, how do I build the best possible team? Out there. Yeah. And that's my sort of new exciting challenge. I, I think we have an incredible team and I'm just excited to, to grow that and raise the next round. But I realize how much, um, how much a really good hire can bring so much leverage to the company and to the team and just like bring more momentum than I could have ever imagined by myself.

Yeah. Such an inflection point as you continuously fire yourself from the next round.

It's what it feels like.

Well, as we come up on time today, it's been fascinating hearing your story, um, but we'd love to ask you the hero question of the podcast. We ask this of all of our guests, and that is, who is a woman who has had a profound impact on you and your career?

I'm gonna shout out Rocio Wu from F Prime, who was our Series A investor and really believed in us, the market, our product. And just had so much conviction and took a bet on us, and I'm excited to prove her right.

Chrissy is awesome.

Yes. I pitched her once, and she's like, deal or no way. I like how thoughtful she was. So, totally tag her on this episode. Um, okay. Thank you so much for joining us on The Room today. It's been such a pleasure having you. So, so fun. Thank you so much.

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