Nikki Varanasi, founder of Staax talks about building a social investment, peer-to-peer payment platform
After pursuing her finance degree in NYC, Nikki headed straight into working for one of the biggest players in the finance industry. After a stint at KKR she moved to Mackenzie where she was overseeing an $800 Million Fund.
It was during this tenure that Nikki realized there was a big gap when it comes to the making of investments between wealthy individuals and everyday college kids. As someone who always envisioned being a founder/investor Nikki always knew she wanted to build a fintech solution to bridge this investment gap through.
Just do it, just start. Take the idea and begin. Ideas come out half-baked. They never come out fully formed…People aren’t going to know what you’re interested in or your talent until you put it out there.
For Christmas 2020, when she decided to gift her friends with stocks, is when she finally found the problem she wanted to solve. She realized, that gifting assets was a complicated system, with much paperwork, additional fees, and taxes that were unnecessary.
So Nikki wanted to create a solution that can not only make it convenient to gift stocks but would also act as a social platform that encourages Gen Zs and Millennials to get into investments. In 2021 she quit her job and committed herself to build Staax.
Listen to the full podcast to learn all about Nikki Varanasi and her building journey with Staax.
Nikki’s Book Recommendations:
Where to Find Nikki:
Follow her on Twitter: @NikkiVaranasi
Find her on LinkedIn: Nikki Varanasi
Where to Find Staax:
in today’s episode, we have Nikki the woman behind stacks Nikki welcome to the show
Hi Desiree and Al, it’s so nice to be here thanks for having me
thank you for being here how are you today
i’m doing well how are you guys?
oh live and breathing So the question i will ask you is briefly tell us who you are and what are you building
So I am Nikki Varanasi I am the CEO and founder of Staax. My background is in finance so before this, I grew up in the Bay Area in California. I moved to new york city to study finance, and then I ended up pursuing a finance degree there worked at a few firms I was at KKR for a bit after that I was at Mackenzie and I was overseeing a fund of eight hundred million dollars and I realized there just was a big gap when it came to wealthy individuals investing versus my everyday college friends, so I knew that you know fintech was the route I wanted to go and that was the tools to bridge the gap. So I quit my job at Mackenzie and started Staax full time in 2021 and what we’re building here is essentially a Venmo meets Robinhood tech platform. It’s a social investment peer-to-peer payment so you can invest in your average everyday stocks and eventually crypto. But what makes us so special is it’s a social network. So you can log on to the platform you can see what your friends are investing in, you get a rolling feed of all the transactions happening and you can also send them their favorite stock or crypto for dinner last night or for their phone bill or for a gift so you’re really transacting in payments rather than cash on a transparent system. So our really big target market here is GenZs and millennials who tend to transact the most really love this transparency aspect of investing.
Superb, so how did you get the idea for this how did you come with the idea it just yourself or is that something your co-founder came up with how did that ideation happen
So my two co-founders and I met a few years ago in New York City. Funny story Lucy and I met at a Goldman Sachs interview. Her phone died after, and then she needed to ride to the airport. So I called her a ride and we’ve been friends since then. So we met a few years ago and then I met her sister they’re twins they’re located in Hawaii. Lucy’s our COO, before this she was at The White House and Goldman Sachs and Victoria was an engineer before this at Coinbase. So we three have known each other for a while, but the idea really came up when I started you know looking for ways to send my friends stock for Christmas in 2020. It was a very difficult way, to send it you had to buy the stock, to then sell it, to then send it which then triggered a tax event. I had to pay a lot of fees, I had to fill up paperwork, and then when the stock got to her, it came as a gift card to her email. She had to go redeem it and there was a lot of other issues around this whole gifting of stock. So I thought there has to be a better option for this it’s almost 2021 what are we doing here? Why is it so difficult to gift assets especially that was around the time of the crypto boom here so you know I think for me it was that starting point that initial pain point that started the company. But really how it formed into was just a lot more of a sophisticated model of like peer-to-peer payments for embedded daily transactions, a social network, and then adding on new features like crypto. So yeah that was my initial pain point that’s how the company started. I contacted Lucy and Victoria a few months after the ideation phase and said hey do you guys want to join I need some co-founders I really want to build this out. And then we just started building and we started you know getting into the pitch deck, and then the prototype, and then yeah ever since then it’s history.
superb and where you at right now? Is the product live? Or do you have beta users testing it? Where you are at?
Yeah so we are currently in beta yea we have almost a hundred people testing in beta currently. We have been under development since fall so about September. We’ve had some hiccups along the way and as founders, they can really expect that you know timing can be always pushed when it comes to technical, uh you know development just because there are a lot of fires to put out in your constantly fixing, improving. So at one point it just came to me that we just have to launch we just have to ship it we have to get out there see what users and customers think and then come back with feedback and make those fixes. And so we launched just about a month ago and we’ve been in beta for one month and we’re currently going to be launching this summer for the public and for our waitlist.
Superb in terms of funding where you at? Did you raise a preseed or is it bootstrap can you tell us a bit about that
Yeah, so our funding journey really started just a few months after we started the company. So we put together the prototype and the pitch deck and you know as you can imagine there’s three girls with a dream and a deck and a prototype and no money to build this and it was very very difficult at the time to convince VCs to give us money and it was a roller coaster. But we’ve been very successful with our hard work in the past year we got into Techstars in the Western Union Accelerator, so they gave us our initial 120K cheque that was really exciting to build out the first phase of the product. And then we go through a three-month program with them it’s just like a Ycombinator-type seminar program. And then when you when you’re done with that you actually go to a demo day you present and then you start raising your round. So right out of that Techstars program, we raised close to 2 Million dollars and some of our lead investors are Harlem, Lightspeed, Plug & Play, Hustle Fund so you know it’s been kind of a snowball effect once you have a really good investor on board I find it much easier to on board more and more. So right now we’re at a 2 Million dollar pre-seed, but we have gotten offers in the past or investor commitments up to 8.5 Million through a demo day we did we just had to cap that off. But my fundraising journey has been definitely a roller coaster I think that’s how a lot of founders feel. And um especially with this market downturn right now I think make sure you have runway and make sure you have you know enough in the bank to get you through if there is a market downturn in the US.
and the car market downturn has affected you in any way with the fundraising or no you only raise all the finance you need
Yeah, it was lucky. So we had raised it right before things started to go down in April-May. So we got lucky there with valuations and money and interest. But I do see that now valuations
are getting slashed, and founders are raising less because VCs are cutting back or doing freezes. There’s hiring freezes in the US, so it’s difficult. Then there’s layoffs, so you know it’s a lot going on right now, we were lucky to raise before this chaos but a lot of founders are extending their runway as recommended by YC. So I think there’s a big challenge here ahead is how can we conservatively build the business in the next one to two years that it’ll come out of this great and not just you know proceeding very slowly to build a product. It’s really about scaling quickly with less amount of money and I think that’s kind of something we’re working on internally.
and in terms of team size is it just the co-founders right now or have you brought in other people into the team
So it’s our three co-founders total, and then we have one engineer, he’s a founding engineer who came on board and he’s building our MVP essentially. And then we also have a marketing manager, so she manages a lot of our social media, we are a B2C company and we appeal to Gen Zs and millennial crowds so we do have a manager who’s overseeing this public facade that we have and then also we have six interns. So the total team is getting quite large soon and we are hiring for a second engineer right now.
Cool i mean in terms of gaining your beta users how did you get them how did you approach them m
So a lot of our beta users, and we’ve done tons of testing around this, and I find this to be really unique in this demographic, but if you think about how Venmo started 10 years ago in the US it was through college campuses and specifically sorority and fraternity groups. They marketed their app through them and it was a network effect yeah because your friends need to be on the app for you to pay them and transact and be social. So it naturally brought groups to the platform rather than one or two individuals at a time through marketing methods. So that was a very interesting case study we looked into and we did the same. So
we launched a university program recently where we hired brand ambassadors across 10 different universities and we asked them to promote Staax through their classes clubs and organizations on campus and we were able to 3x our waitlist just by doing that. So these students brought in thousands of interested users to our platform which was really exciting. Aside from that, we have also just done the traditional paid ads or campaigns which tends to work, but it takes time. It’s just about building an internet presence at that point.
Cool I mean just look back onto the founding journey I mean in getting funds did you have any issues being a female founder or no in raising funds
That’s a great question. There is you know a very less amount of money given to female founders. I think it’s tough to raise, especially not just being a female, but also being like an ethnic background, so I think what’s very very important here is that I used it towards my advantage. A lot of pre-seed funds, they want diversity, they want to invest in female-founded companies, and female founded companies tend to do better statistically. So you know, I think that might be skewed since there’s I don’t know how many female founders out there, but it’s really exciting to see this space grow. One of our lead investors who really has an emphasis on this is Harlem Capital. They make sure to invest a percentage of female founders per year or ethnic founders and I think that’s extremely important. I think it starts with the VC. So we really target the specific funds that go after this and honestly a lot of the VCs that you know I’ve spoke with I think most of the time they bring up early stage or traction or this and that but at the end of the day there might be some biases that we might know about so it’s really important to highlight that strong suit and show that even though you know you’re a female founder there’s not that many out there, you can still you can still do that and more. So yeah I think it’s just about setting your mind set straight and being being confident coming into the call.
going back to the product who are your competitors how you differentiate yourself
Yeah, so competitors in the US are mainly you know there’s no direct competitors doing what we do which is a curse and a blessing. It’s a curse because not many people understand this platform inherently. They have to do some research and see like okay payments and assets, social network with investments. It’s a new kind of new topic. But it’s also you know a blessing just because there is a lot that we can do in the space, we really see this moving in this direction in the next five-ten years in fintech so some of our competitors you know indirectly include Venmo, Robinhood, even Cash App you know so these are big platforms that already have infrastructure in place from a decade ago that have millions of users so they’re much bigger players. But again there are a lot of smaller startups arising in the last two years that are investing for Gen Zs or investing for teenagers so I see them more as a direct competitor, just because they’re at that early stage where anything can happen and we need to be ten steps ahead, and that’s how I see the level of playing field especially when it comes to competitors.
right again about the product so when somebody signs up do they get their own ACH account or no it doesn’t work like that how does that work, how do you manage their funds
So when you sign up with Staax, basically you’re going to create a profile just like you would on an Instagram page, where you fill out like your bio, your username, your profile and then you pick your top five favorite stocks. And then you have your portfolio as well that you can view and you can buy and sell and transfer stocks and crypto and you can also transact. So when you sign up you go through a KYC process, which is basically a fourteen-step process of just verifying your identity, so you will just put in your date of birth, citizenship et cetera and then when you’re in the platform and you’ve been verified, you’re able to send and receive assets. And so how that works is we work with Alpaca on the backend which is a brokerage platform. So they handle all the trades, they handle all the movements, they handle placing the orders and then selling the orders from your portfolio as well. So how it works when you send someone stock, it comes out as a ACH on the backend, connected to your bank account or your debit card through Staax, and then you receive, the receiver when they receive the payment gets notified saying Nikki sent you twenty dollars of Amazon stock do you accept? And then when the user clicks accept, it’s when it goes into your portfolio and starts investing, and it also goes on to a social feed where people can see that someone sent you Amazon stock you know for dinner last night or whatever it is. So that is kind of how the flow works in terms of the user userflow but in terms of ACH we work with Plaid, so we enable bank account integration with Plaid and we allow users to hook up their bank account through there and transact.
right and let’s say i want to send Desiree money right we had dinner I owe her money so to send her money through your platform so when i do that well show me her five preferred stocks or is it like a random thing
That’s a great question, yeah. So it will show your five favorited stocks. So Desiree’s stocks will pop up and it will have, you know exactly what she likes, you can click on any one of them and it will send directly that. Now we have a back up where, Desiree receives the stock and the next morning she wakes up and she sees the notification and she says I don’t really want to accept this anymore I change my mind. You can accept as cash, so it just swaps out for cash instead of stock, and you can later invest it at a date, it will just stay in your stax account as cash.
And as a founder who inspires you who are the founders that inspire you you look up to right now
Yes, So I have a big inspiration when it comes to the ClassPass founder. Her name is Payal Kadakia. I resonate so much Payal just because we have a very similar background. We grew up very similarly in an immigrant household. We have been through similar story I would say. And she went through TechStars as well in 2012 with ClassPass and I think what’s really interesting is you know seeing her build this massive company and selling it to Mindbody for over a billion dollars and you know doing that as also like you know a young Indian girl who’s immigrated here. And I think what’s very interesting to hear is that, stories like that really pushed female founders forward you know valuations were soaring high last year and I think that you know she did agree deal in terms of acquisition and I think that’s very inspirational in terms of what she’s what she’s built and her capacity to build further and I think the value that she brought to that company was immense. I look up to her a lot, I read her interviews and you know I try to resonate my values with hers all the time, so really, really you know excited hopefully one day I can meet her.
Cool um when you’re young who is who did you want to be let’s say you’re ten young nick who did she wanted to be be in finance be a doctor you had anything in mind when you were really young
Yeah that’s a good question too. Actually you know I wanted to, so I don’t know if you’re familiar with the show Shark Tank probably Shark Tank it’s a, it was one of my favorite shows growing up and I had binge watched that at one point and I got so inspired by all these entrepreneurs coming on the show pitching their ideas and making deals happen and changing peoples lives, building companies, hiring people, and then I saw the VCs behind the show, the sharks, and they were making the deals happen and they were funding these etrepreneurs dreams essentially. And I thought this is such a fulfilling job you know. Entrepreneurship might be a little rocky at first but it’s very fulfilling. But on the other side, in venture it’s actually very fulfilling as well, because you’re really investing in founders and you’re investing in companies and advancements and I think that’s what really inspired me in that show and I’ve always wanted to go into venture capital. I had a venture capital blog
where I wrote some articles in the last few years and so I thought I was going to go into that space. I worked in finance in New York city, so my you know gradual move into VC was inevitable because I was at a private equity fund and a hedge fund. But I, you know quickly turned those tables when the pandemic started and I realized like in order to be a VC I need to be a founder to understand the founders shoes and their journey they walk in, to invest correctly. So there’s no saying that I can’t be a VC still like, I can angel invest. I can become a VC ten twenty years later, but the thing is I really needed to live out this journey to really understand before I invest in other people so that was sort of my my dream growing up.
if you had to give advice to your younger self what would that be
Yeah okay. So I think for me it would be just do it, just start. Take the idea and begin. Ideas come out half baked. They never come out fully formed. And I think for me I’ve never felt that I was ready to just go out there and do something. I had great ideas in my mind all the time. I would write it down in a notebook growing up. I would have a whole note book just for inventions and silly stuff I would draw. And I think I think for like it was just doing it. It was it was being confident going out in the world and saying I don’t care what people think I’m going to build this and I enjoy building this. I was always very worried about what society thought you know I grew up in a very small knit community in california with my parents knowing everyone and you know I always thought you know what will I think if I quit my job if I start a company or if I, you know don’t go to college and become a founder or you know there’s a lot of paths that were running through through my mind back then too. And so yeah my advice is just start. People aren’t going to know what you’re interested in or your talent until you put it out there. I always had a passion for VCs I always had a passion for entremeneurships and founders but no one knew that. I worked in corporate finance and a hedge fund in New York, no one knew you know even remotely that I was interested in those stuff, so for me like the advice is just put yourself out there, make sure you’re, whatever you’re interested in is out there, so people know that this is someone who is going to do this and they know you already before you even meet them. So just having a presence and being an inspiration to others is really important to me. So that’s what I would tell my younger self to just start.
a question based on that what was staax initial idea and how has it changed over time now
Yeah. The initial idea was like I said the stock gifting. So it was just purely based on “Oh my God, gifting is so hard and especially in the US with regulation and all that, it’s like you need to pay taxes, you need to do all this”. So it was just purely a gifting platform but then it turned into something a lot more universal in the sense that it can be applied to everyday transactions, not just gifting so let’s say I go out to drinks with my friend and she doesn’t want cash because it’s just going to sit there in her account build up and do nothing for her and in fact lose money due to inflation and also it takes a long time to get that money out of your Venmo account, to your bank account, then from your bank to your investment brokerage and then you have to make a conscious decision to invest. So a lot of times this journey is inaccessible for a lot of people. So I thought you know how can we make that journey super efficient for just starters, for beginner investors who want to see what their friends are investing in before they make a decision or want to get paid back in Tesla for drinks last night instead of cash so it just doesn’t sit there and build you know, you know nothing for that long term. So I think these were all ideas that eventually evolved into, rather than just a gifting usecase that happens maybe once or a few times a year you know for for individuals. So I think in general it’s really evolved into a space where we see web3 going as well with the boom of crypto and blockchain what it really is it’s a decentralized ledger that allows you to see everything transparently and it builds community and that’s exactly what we’re doing. We’re building a community and building transparency around investing. That’s kind of our web3 touch and where we’re going into especially adding in crypto features but we we really placed an emphasis on community and that was one thing we did not start
with with Staax.
when you say crypto will cryptos be an option as well for investing going forward on your platform or something you have in your road map
Yes, we do plan to add crypto in our in our product, it’s in our roadmap so we’re hiring right now to speed that process up, but I do think that you know, this is a touchy space it’s very volatile so it’s really important educate your users before they’re investing in different crypto assets. But I do think that there’s a lot of interest regardless of the volatility. I think volatility brings opportunity. So at the end of the day like allthough crypto might go from six to twenty dollars in a week you know that’s great that’s the exciting part. Even it can go from six to zero in two days. So people are excited about the idea, but they don’t know much about it and they don’t know the coins and the meaning. So I think a big part of what we want to do on our platform is educate users to what this really means before they invest. We’re really going this long-term investing mindset where you don’t just buy a stock and keep it for a month or for a week and sell it to make a small profit. You keep it in there for a long-term gains. If you had invested like twenty thousand in amazon in 1999 you’d have over a million dollars right now in your in your brokerage just sitting there from twenty years just building long-term wealth. So that’s the mindset we go after when we’re building Staax and crypto
there’s a lot to learn in that space. So we’re very careful before we add that feature to make sure we’re doing the right thing.
Cool and something you brought up earlier was about taxes so how do you take care of people taxes right now in your platform
Yes. Taxes are handled all by our KYC provider which is Alpaca, they are the backend brokerage that, every user when they make a Staax account, on the backend they’re actually making a brokerage account with Alpaca who’s facilitating all these trades. They also issue the ten ninety nine forms at the end of the year yeah which is the tax form needed to report your gains. Taxes are avoided on the senders side so that’s one unique thing about us. It’s usually when you’re gifting assets or gifting stock, you are paying a tax for gifting because you’re selling that asset from your portfolio and gifting. The cool thing about Staax is you’re not touching your portfolio to gift, you’re gifting out of cash, so it does not trigger a tax event and so the only taxes apply on our platform are when you sell a stock and that is with the capital gains. So anything you’ve gained for the year whether short-term or a long-term you just get taxed on that, and so we issue tax forms for our users through Alpaca. They should be able to file for that and it should be a pretty smooth process.
name three non fiction books that change the way that you think
Okay this is good. I think non-fiction yeah I have one fiction so I’m gonna, I hope that’s okay. I think this is a life changing book in fiction and that’s rare to come across sometimes, but I’ll start with the first one and my favorite book is the Alchemist. That is one of the best books of all time. It teaches you how to find your path. How to stick true to your colors and really, you know the journey of life it’s how beautiful it is it’s not always reaching the destination. It’s all the people you meet along the way and the memories you make and the progress you make. So in a business sense it’s a very good book to read. It opens up your eyes and so you understand how to deal with a lot of situations in a fictional manner that can be applied to real life. Another book that I would recommend is The Art of Thinking Clearly. This book is very very interesting. It has many points on you know just the behaviors of humans and how we can combat those issues and thinking a certain way and we can be very clear in our mindset. There’s things like fallacies and they’re like okay there’s a you know I’ve waited in line for twenty minutes do I leave or do I wait more just because I’ve waited twenty minutes I don’t want to waste the twenty minutes I’ve already waited in line, if I skipped if I leave the line. So these are the mindsets like little things that goes over in the book that it’s like these are the mind sets you need to think about when you’re living life. It’s like just because you’ve spent five years on building a start up if it’s not doing well if it’s not the right idea if it’s if it’s stagnant you have to pivot, you have to you can’t be attached to the idea, it’s not the same fallacy that you’re standing in line for twenty minutes and now you can’t pivot and leave because you’ve been there for so long you don’t want to waste the time behind. So there’s a lot of really really good points in that book that can apply to founders specifically. And then I think lastly this would be the Secrets of Sand Hill. This is purely a venture focused book. It teaches you how the venture world really works and Sand Hill is very famous road in California near Stanford University and that’s home to a lot of the big VCs like Lightspeed or Sequoia. And so it really tells you how how that world started and you know it gives you some secrets as a founder to learn how to raise money and how to get into the mind sets of Vc’s. I love those three books.
So on that note Nikki, thank you for being with us and sharing us with your journey and that’s a wrap