Chargebee are a subscription billing platform for SaaS, founded by 4 friends in Chennai in India in 2011. They’ve subsequently raised $6.17 Million in 3 rounds with investors such as Accel leading series A and series B.
I asked Co-Founder and CEO Krish Subramanian to join me on this episode of The SaaS Revolution Show podcast, to talk about the customer acquisition strategies from zero to 100 paying customers and how it differs to what they’re doing today. Listen in or read the transcript below to get some great insights from Krish, who led the early Sales and Marketing efforts.
My guest on the show today is our first founder and CEO of a SaaS company based in India. Welcome to the show, Krish Subramanian, co-founder and CEO of Chargebee.
Thank you Alex. Pleasure to be here.
AT: I’m a big fan of Chargebee. I don’t use you guys myself but I read your blog, the SaaS Dispatch.
What I normally do, Krish, to start off the show is to allow my guests to give a bit of an intro to themselves and the company. Can you provide an intro to Chargebee? What do you do? When did you start the company? Where are you based? Who are your customers?
KS: Chargebee is a subscription management and a recurring billing solution. It’s built on top of Stripe, Braintree and all the payment gateways. Right now we serve customers in 48 countries and we serve customers in Software-as-a-Service space with customers like Freshdesk and in eCommerce subscription space with customers like Soylent and Vinyl Me Please.
We started the company some time the later part of 2011 as four founders, basically engineers who were just building this product out of an apartment. The product has been in the market close to 3 years now and we serve customers in these 48 countries.
AT: Your HQ is in Chennai, is that right?
KS: As a company, we are incorporated as C Corp Delaware. That’s the headquarters for all technical purposes but Chennai is home and is where most of the team members are.
So we have a 2-seater office in Sunnyvale and the rest of the team members are in Chennai.
AT: Is there a bit of a SaaS hub there in Chennai or is it just Chargebee?
KS: It is. We are trying to make it a SaaS capital with a bunch of enterprise SaaS companies based here. You might have heard of Zoho. That’s kind of like an alumni for all the founders of at least a few popular companies here.
Freshdesk, the helpdesk product that is taking on the world with customers in more than 200 countries, they are our neighbours. There is Indix and Chargebee. There is also Kissflow. So there are a bunch of Software-as-a Service companies in the enterprise space that are based in Chennai.
AT: And are they the Zoho mafia? Are you part of the Zoho mafia?
KS: Correct. That is correct.
AT: What I want to talk about is the early days of when you started the company, getting from zero to 100 paying customers. Are you happy to talk about that topic?
AT: Excellent. How did Chargebee get your first paying customer?
KS: From the beginning, definitely the most exciting phase of the company and the most worrisome one getting those first few customers. Getting the word out was a primary challenge, for a bunch of engineers. We started off looking at it as more of a customer service driven sales.
We would hang out in customer support forums of payment gateways or Hacker News, Stack Overflow. There were people who were asking questions about recurring billing or challenges around that. How do I solve this? How do I solve that? We would go and give a helpful answer and then we would also say, “By the way, we are building a billing system. If you would like to be part of the beta we would welcome you.”
We seeded the message around and we also started writing some blogs and that was how we got most of the inbound interest. Incidentally, our first customer was from U.K., a customer called Flavrbox. It’s a subscription box business and it became a key driver helping us with lots of inputs when it comes to what to build.
AT: From zero to 100 customers, was there more of the same or did you alter your strategy as you kind of ramped up? Now we’ve got our first paying customer, now we’re going for 100 paying customers. What else did you do to get to that, your first hundred?
KS: Well, from the beginning and even now, our tactics that have worked have remained the same primarily driven around inbound content marketing. So we did more of these blogs.
There have been few crazy stuff that I also tried like Whiteboard Mondays to teach a few things. I was inspired by Moz founder Rand Fishkin. I tried Whiteboard Mondays a bit. But the thing that worked well which came quite naturally was writing helpful blogs and that is what we did pretty much and that is what drove traffic as well as conversion for us. Through the first 100 to 200 customers, that is what we did.
AT: It’s pretty much the same now. you’re just continuing what you started?
KS: That’s correct. Even though we do identify a lot more channels that are working, it’s more about the primary challenge are the driver for the business has been 80-90% inbound leads that come through organic and direct traffic and that’s helping but at the same time you’re always looking for those additional channels that will keep working that would actually give you that ramp up in terms of growth.
AT: Were you tempted in the early days to employ any growth hacks to get early traction or initial traction? And do you think that SaaS companies, SaaS startups can growth hack their way to success, shall we say?
KS: Growth hacks can definitely give that jump in terms of things, that short-term burst, that boost that you need. In my opinion, growth they are not sustainable channels. It’s more about especially in B2B spaces, I believe in building sustainable channels for long-term and that could be anything. It could be about figuring out ways to do sales, or creating those cold leads and converting them into warm leads through outbound sales, or it could be inbound. But I believe that growth hacks are slightly sharp.
AT: Chargebee has four co-founders, all ex-Zoho?
KS: Three of them are from Zoho. I come from a services company. I used to work as a developer in different services companies.
AT: And who owned sales and marketing in the beginning? Was it yourself?
KS: I did. I know I’m the worst programmer for so naturally I gravitated towards sales, marketing, making tea, pretty much everything that’s non-technical was on my plate. And I just continued evolving, trying to learn everything all the way from differentiating what does work in marketing versus sales all the way through writing blogs around it and that is where I gravitated towards. And the rest of the team actually built an amazing product.
AT: Within that zero to 100 customers milestone that we’re talking about, did you make any sales and marketing hires? If so, what point? If not, explain why not?
KS: The point of getting the first hundred customers, we did not make any sales or marketing hires. Especially, we did not hire any salesperson for the simple reason being we actually focus more on the customer support part. It’s more like doing the non-scalable things when it came to onboarding customers.
So we focused on consultative customer support, which in turn turned into a sales engine in and of itself. Even now, the way we do sales is to only manage the CRM really well to not have a leaky bucket. But other than that, we pretty much focus more on consultative customer support and even the sales folks get into product demos and also providing customer support.
But when it came to marketing, we did hire somebody on the content side from the early days but it was more to create content on a regular basis so that we could actually push that at volume. Once we learned that certain things are working, I hired a consultant who could actually write for me. I would write the first draft and he would go back to finish the blog and come back and that’s pretty much how we bootstrapped that all the way through the first 100, 200 customers.
AT: We’ve talked or discussed that your marketing strategy today is pretty much been really inbound marketing. What point do you expect that to change at all? Have you an plans to start doing a bit more outbound marketing?
KS: Sure. There have been a few experiments that we did. Our AdWords is beginning to work extremely well so we’ve been doubling down on that. We also made interesting guerilla marketing in the recent conferences.
AT: Okay. Please Explain?
KS: Recently we went to San Francisco and attended Saastr.com. If you are into sales, are in any SaaS company which is focusing on growth you should definitely attend this event.
We went to this event and interestingly we came up with this idea to distribute what we call the funny SaaS commandments. Thou shall not steal thy neighbour’s growth hacks. Thou shall not bear false MRR. Thou shall not do false double-billing. Things like that. Just a funny take on commandments.
And then we printed these and later on what we did was to double down on that and how do we push that message more effectively is what we tried to do. So somebody came up with this idea to actually have a couple of interns dress up as nuns who were to walk around and start distributing these pamphlets, which were these nice scarves. But a strange thing happened, particularly even though it was happening outside the cathedral people were avoiding us thinking these were real nuns.
AT: Actually I was there at the conference and I remember that morning, I think it was about 8:30 in the morning. I was sitting down having a cup of coffee and I saw these nuns walking around and I was like, “What the hell is going on there?” So I do remember that but I didn’t know it was Chargebee. But that’s a nice little stunt.
Could you measure any ROI from that?
KS: Yeah. So the next day, when people were avoiding, the next day we actually printed bigger cardboards and started walking around and then something interesting happened. People started reading those. When we stopped giving anything to them they started reading what was printed and they were in big letters, and then it brought a smile and people started walking towards it, the sisters, and they wanted to take pictures. Then they started tweeting about it.
For the $400 that we spent on printing and then buying the dress for the nuns and all that, we actually had so much impact that people… we created a lot more impressions on twitter and we bagged, actually we landed an interview with 90 Seconds TV and official photographers also took photographs of the nuns and tried to understand what we were doing.
And we also got covered in the blogs and also we got an opportunity to guest blog in Tech in Asia. The coverage was pretty good. It turns up the things that things that we could do at the event and then followed through.
AT: That definitely sounds pretty good ROI there and perhaps we should encourage more early-stage, well, you guys are not so early stage anymore, but SaaS companies to employ some guerilla marketing in their marketing strategy. Out of the Mark Benioff playbook that one, it seems.
Looking at your website, one of the things that you guys do is you have within your pricing a launch plan and this thing is very much sort of aimed at startups. But could you give me and the audience some sort of insights and the idea behind the launch plan?
KS: I believe that pricing is a great filter. As any SaaS company through the first 2 to 3 years, we iterate on pricing quite a lot in terms of understanding the value proposition and then the type of customers that we attract and how much can we charge. And we all know that the right price is the one that the customer is willing to pay so which means that most companies say, most SaaS experts say that you should keep increasing your price to actually understand at what point customers push back. But of course the whole concept of Grandfathering in and keeping your promise.
Interestingly, we iterated around, tested around certain things around freemium pricing model. In our first version of freemium pricing model that we tried 2 years back, we tried having 10 invoices free per month. And it turned out many prospects were also thinking they were not going to grow beyond 10 invoices per month. These were service companies and they would come in and then stay free. But as a company, as a SaaS product, our intention was to attract companies which want to grow and eventually become a paying customer. Contradictory to our belief, these companies were coming in as free customers. So we understandably learned a bunch of lessons.
But we kept the promise. We moved on from the pricing model and we did away with our freemium tier. But interestingly the conversion jumped by 100% when we had `the freemium tier and then it continued to stay at that level even when we removed the freemium tier, which meant our revenues went up. And after a year or so, after we cancelled the freemium tier we could not let go of that learning but we wanted to still dabble with free at least a little bit.
So we went back, iterated on this and this time where by testing out a free $10,000 tier. But instead of saying $10,000 per month we said plus $10,000 is free on us. It’s how we started an experimental pricing using a form that people could opt-in. Interestingly we found a lot of them are opting in and we learned that, okay, so the customers are willing to come in to try a product and then make money and if it’s a great fit they are more than happy to stay with you.
And we said now let’s do a launch plan which would make it $50,000 free tier for early-stage companies so they do not have to build the tool internally and yet it’s a win-win situation where when they start growing, they start growing with us. And that’s how we launched the launch plan and it has been bringing us very good results so far in the last 3 months.
AT: How was your role as founder changed from inception when you were four guys in a garage or an apartment to now? What are the big differences in your role?
KS: The primary role changes from being an individual contributor to becoming more of a people person, enabling everybody to be at their best. That becomes the primary role. So which means that you try recruiting more and more smart people and surround yourself with smarter people who are especially doing specific functions and then help them deliver at that their best. That has become my primary role. That is how I look at it. And more of a glue to connect sales/marketing product, customer support and all the functions together along with industrial relationships, so that have evolved over a period of time. It’s focused more on the people aspect.
AT: What is your biggest advice to SaaS entrepreneurs listening to the show? What one piece of advice can we get from Krish Subramanian to our listeners?
KS: As an engineer turned into now a marketer or a sales person, my biggest piece of advice is don’t do premature optimization even in marketing or sales. To explain that, what I mean is just like in engineering, you don’t try to solve a problem that you don’t have. It should be a similar way in marketing where the focus must be on the right things at the right stage.
We read pretty much most things about optimizing the funnel, optimizing an entire product for a great onboarding experience and all that but yet I think we should not be obsessed too much about let’s say conversion even before you have enough number of visitors and leads coming in so which means that your top-of-the-mind problem determines what you focus on right now. I would say that approach to marketing would actually bring in good results.
When you have less than 100 visitors a day in the beginning then obsess yourself with the problem how do I bring in 1,000 visitors a day while having a little bit of inefficiency along the path in terms of people converting from visitors to trial to trial to paid user. And then keep going from one problem to the next. So that’s my advice which is to stay focused on the right one which will help you deliver growth.