Selling to SMB and Enterprise with Hiroki Takeuchi, CEO of GoCardless

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It’s funny actually, in the very early days, I remember we went through a period of probably 9-12 months where we used to call it growth by surprise because we were just growing like 30%, 40% each month but we weren’t doing any sales.  We weren’t doing any marketing.  It was all really coming inbound.  That’s where we really were able to sort of get the initial growth engine and get take-off, so to speak.

Hiroki Takeuchi is an alumni of Oxford University, McKinsey & Company and Y Combinator, and currently Co-Founder and CEO of exciting FinTech company GoCardless.

Hiroki joined me on The SaaS Revolution Show to discuss sales strategies in selling to SMB and Enterprise that have contributed to GoCardless fantastic growth.

You can listen to the full interview below and read the transcript, alternatively, subscribe on iTunes or Stitcher and never miss an episode.


Alex Theuma:

Really great to have you on the show, Hiroki.  I always kind of start off by allowing the guests to introduce themselves and introduce their company for the audience.

First question is who is Hiroki Takeuchi?


Hiroki Takeuchi:  I’m the founder and CEO of GoCardless.  I started GoCardless about just over 5 years ago with a couple of mates of mine, Matt and Tom, I’ve been running GoCardless since.  Before that, as you kind of said, I used to be at McKinsey.  I worked a lot with financial services companies and banks around the world actually.  And before that, I was at Oxford University studying Maths.


AT:  What is GoCardless?  What problem are you solving?


HT: What we do is we help businesses to collect recurring payments and we do that by building technology on top of bank-to-bank payment systems.  Really, the reason we do that is because we believe that if you look at the way that payments work that there’s not actually been that much innovation at a fundamental level.  And in the long term, we believe that actually what payment systems will look like is bank-to-bank payments as opposed to going through complicated networks like the credit card networks.

And so what we do is we build technology on top of those to give businesses access to those kind of payment systems that, right now, are quite clunky and old still but really great for specific types of payments like recurring payments.

we’ve been going for just over 5 years, as I said, and we’re now helping the 20,000 businesses across the U.K. and Europe to collect payments each month, and collecting about $2 billion a year for those businesses.


AT:   I understand that GoCardless pivoted from its original idea.  What was the original idea and why the pivot?


HT:  It’s a good point.  Obviously, we didn’t wake up one morning and say, hey, like we really want to create a bank-to-bank payment level.  It’s quite a specific thing to be working on.

The original idea that we were trying to solve was one that was something that we’d all experienced this as founders, which was trying to help groups to collect money.  Whether it was sports clubs where you’re the captain of your local football team, you want to collect subscription fees each week or you’re going on holiday with your friends and booking a villa together or something like that, managing money in those situations we’ve all had a lot of pain with.  And we were trying to build it for that kind of use case and as we were doing that, we learnt more about how payment systems worked.  We learnt more about just how broken the whole system was.  It was really through that experience that we hit on this much bigger and more important problem which is what we’re working today.



Each episode of the SaaS Revolution Show has a kind of particular angle whether it be sales, marketing, customer success ….  Today, I’m looking at a sales-focused angle particularly looking at strategies selling to SMB and enterprise of which I think GoCardless serve both.  Right?


HT:  Yes.


AT:  Are you happy to cover those topics?


HT:  Absolutely.  Yeah.  I mean, I think we’ve probably got quite an interesting story on that angle actually.


AT:  Excellent.  All right.  Let’s do this.

As the co-founder and CEO of the company, did you lead sales in the beginning?  The first year?  For the first two years?  Are you still leading sales?


HT:  Actually I think our story is a little bit different.  I wasn’t the one that was leading on sales.  It was actually my co-founder, Matt, that was focused more on the sales and the distribution side of things.  I was always more focused on the product historically.  I think one of the things that we’ve always had at the heart of the company is product.  We’ve always believed that that’s what’s going to be our competitive edge and that’s where we’re going to make the difference.

And we actually got away with not having a really meaningful sales function until relatively late on in the company’s life.  Because in the very early days, we were helping really quite small businesses, almost like micro-SMBs, to get access to this kind of payment infrastructure.  And most of our growth came from actually more organic channels.

We had quite a few partnerships that really offered distribution channels and hubs of potential merchants.   Our first example of that was KashFlow, which is an online accounting software that was pretty big in the U.K.  Those guys integrated with GoCardless.  They were actually our first ever integration and that was what really kick-started our growth.

It’s funny actually, in the very early days, I remember we went through a period of probably 9-12 months where we used to call it growth by surprise because we were just growing like 30%, 40% each month but we weren’t doing any sales.  We weren’t doing any marketing.  It was all really coming inbound.  That’s where we really were able to sort of get the initial growth engine and get take-off, so to speak.


AT:  Interesting to hear that.  And we know KashFlow.  We’ve actually had Duane Jackson on the show before.


HT:  Yes.  He’s a great guy.


AT:  I think he’s on his second SaaS startup now, Supdate, I believe it’s called.

You focused on product and a lot of the early sales were inbound.  One of your co-founders was leading sales or handling the inbound as such.  At what point did you actually hire your first salesperson that wasn’t part of the co-founding team?


HT:  I’d say it was probably about 2 to 3 years in.  Between 2 and 3 years in to the start of the company.  The reason we actually started was because… so really, the only way we interacted with our customers was through customer support.  That was very reactive.  It was sort of people who were self-serving on the product and we had an automated online signup process.  People would just get started using GoCardless without really talking to us.  We didn’t have anything in the way of real sales at that point.

And then we started noticing that we were getting phone calls from companies who were quite big.  One of the first ones was actually The Guardian.  We got in touch and they were like, “Oh, yeah.  We’re thinking about using GoCardless.”  You kind of realise that, oh, well that’s quite a big company.  That’s quite different from the micro-SMBs that we were working with up until that point.

We felt like actually maybe there was a bigger opportunity outside just the sort of SMBs that we really started with.  And in order to work with them, we quickly realised that you can’t just leave them to self-serve.  They really need more hands-on support.

In the very early days, actually our sales was much more like hands-on customer support to help these businesses get ramped up.  Then as that progressed, it quickly turned to sales.  We then started hiring sales people going through a few iterations of different models about how to sell and now we have a much more robust sales process and probably much more close to what a typical SaaS company would be looking at.


AT:   I think you’ve answered a part of the next three questions in that answer.

Would you, describe yourself as a SaaS company?  It’s more like FinTech.  I mean, you’re not the traditional SaaS model, right?


HT:  When I think about the business, the types of companies and the advice that hits home residents the most is always SaaS, SaaS companies.  In many senses, I see us actually very much as a SaaS company.  I actually think of us as almost like SaaS on steroids because, unlike a typical SaaS company where you’d be selling fixed contracts usually like $100 a month or $1,000 a month, something like that, our revenue is all tied to transactional volume.  And because we’re doing recurrent payments, that transactional volume is very sticky.

We’re almost constantly renewing our customer base, is one way to think about it.  We don’t have like fixed contract terms where we say, hey, you got to use the 12 months and then you’ll want to get to the end of your 12-month period.  We’re going to have a talk and we’re going to try and renew your contract every month.  Our merchants are thinking, okay, will I put volume through GoCardless?  And we’ve been able to create a very, very loyal customer base.  And off the back of that, we’ve actually, in many ways, we model our revenue and the way we think about financials in a SaaS way.

And we’ve got net negative churn, 30% on a revenue basis. It’s got a lot of the benefits of SaaS and actually even more so in certain regards.


AT:   In SaaS, there’s a lot of great advice out there from influencers like Jason Lemkin and others.  Particularly from Jason, he talks about the quickest route to $1 to $10 million ARR is focusing on the segment that works.  And if the SMBs are working, you stay there.  You focus on that.  You double-down.  And only after $10 million ARR, you then start to sort of move to enterprise or SMB, depending on what you’ve been focused on.

You mentioned earlier that after a couple of years, you had the likes of The Guardian starting to contact you on inbound. Did you kind of follow that path focusing on SMBs for the first few years to get to… you don’t obviously have to disclose in terms of the annual recurring revenue, but is that true to you?


HT:  Yes.  Actually, I think we pulled then moved towards enterprise earlier than Jason’s recommendation.  We didn’t know about that recommendation so maybe we should have focused just on SMB at the time.  But for us actually like moving towards enterprise helped us think about the product a lot and we’ve actually been able to improve the product quite a lot for the smaller customers through the direction that we were getting from the larger ones as well.  I think that, in a way, we found was that going into… and we say enterprise I mean like our biggest customers are still not what I would consider full enterprise customers, but going after that larger segment of customers is definitely helped us inform our product development and to strengthen both sides of that equation.

We definitely picked that part saying, well, we’ll focus on one customer so going to then move up, but we just did it earlier on.


AT:  Let’s pick one customer segment, the SMBs.  You mentioned a lot it’s self-service where you had no sort of direct sales team at the time.  It’s mainly any questions through customer support.  Any more insights into the sort of strategy and getting or selling to SMBs?  What worked for you?  What didn’t work?  Was there anything that didn’t work at the beginning that you quickly turned off and tried something else?


HT:  I think one of the things that we learned actually early on was outbound only really made sense on a larger scale.  One of the first things we tried actually was to start going outbound toward smaller businesses.  We don’t particularly feel that was ever going to be really that profitable enough to make sense, whereas we’re now experimenting again with outbound for the second time but focus much more on the enterprise clients where you only need to win a few deals to really make a difference.

All of our SMB activities have been very inbound-focused.  The things, the structures that worked well for us are really partnerships and having software providers integrate without a platform and enabling their customer bases to access GoCardless.  That’s been a very big driving force.

But both actually I think works, the small business but also some of the larger businesses as well.  We find that partnerships are really, really important strategy for us and then, secondly, in terms of marketing, we never found paid marketing has been as big a driver for us.  It’s all been actually more around content and driving search results through great content that has been the main driver in terms of online direct marketing.  Those are the two strategies that have worked the best for us so far.


AT:  I noticed your website had some great logos there. is a customer of yours.  Are you able to kind of share any insights as to how you manage to acquire Box as a customer?


HT:  Yes. is an interesting one because that one’s obviously a U.S. company that’s collecting overseas.  And this is one of the customers where actually our vision was really important.  They started working with us really because they believed in what we were trying to build.  And actually, even though when we first signed with them that we didn’t really have the full product they were looking for, that we just had one small piece of it, they were willing to sort of make the bet on that to build that relationship from early on because they really liked what we were trying to build in the long term.

That’s one where I was very much involved the sale.  When I met the guys over there in Silicon Valley and we were very much helped actually by the fact that our champion within Box was an ex-PayPal employee and had always been pushing to build what actually we’re building today.  She was very much a believer of what we were trying to do.  I think that really taught us the value of having champions really believe in the vision.

But I’d say that was a pretty atypical case for us.  I would say most sales don’t look like that.  And if I look at some of the early sales that we’ve done, I’d say that some of the approach that I think perhaps I’m most excited about that’s been working well for us is really the Land-and-Expand model where you work… we’ve had a lot of success getting into fairly large organisations on new projects that weren’t necessarily big revenue or volume drivers for us but were attractive to the merchant because we were the quickest way to get that project off the ground.  And then as we demonstrate our value and built the relationship, that’s been the platform we’ve been able to go and sell to other parts of the business with.

There’s a number of examples there.  The Guardian is actually one of where we worked from just processing a very small amount of that revenue for a particular part of the digital product and now they’re moving over all of their volume for that pay-per-subscription and everything else like that onto a new platform and that’s going to be powered by us.  We’re really excited about that.  But there’s quite a few examples like that which are really important to us.

I think one of the things I’d say is that I’m a big believer in picking out strategic deals that don’t necessarily contribute to volume on Day 1 and don’t necessarily contribute to value on Day 1.  Both are going to enable you to get that bigger sale in the long run.



Now, just the final two questions.  We’re moving off-topic from sales.

GoCardless has a roll call of amazing investors.  Some great names there: Balderton, Accel, Passion, Y Combinator, I think the original investor. Notion Capital.  These are top tier investors in the company which obviously gives great credibility to you guys.  What’s the secret to your pitch in getting these great investors on board?  Are there any hints and tips for founders that are looking to raise that are listening to this with such top-level investors that you can provide?


HT:  Yes, that’s an interesting question.  I thought about it a little bit before we talked and actually, unfortunately, I didn’t have any kind of like silver bullet that jumped out of me as the recipe to success.  I’d say that we were really lucky to get onto the YC program back in 2011 and that was definitely a really big help for us.  The brand recognition and the credibility that it gives you is huge, and that was definitely a big driver.

I mean, I think actually that the best example for me of raising money was actually our first round out was Y Combinator, and seed round, which is when Accel and Passion both initially backed us.  My lesson from that was really about tenacity.  We had to speak to a lot of investors and had to go through lots of nos.  I remember I think we got something like 85 nos before we got any kind of real investment in that round.

And I remember thinking at the time we were out in Silicon Valley and I was speaking to Matt, one of my co-founders and we were like do we think we should even go back to London.  I’m not sure we could face the shame of it if we didn’t manage to raise the round that we needed. There was real difficult points during that.

But we didn’t give up.  We kept on plodding along.  We kind of battered through the nos and eventually we met the guys at Accel.  And Adam Valkin actually, who was at Accel at the time, really believed in, I think, actually more us than the idea.  I think that he could sense our tenacity and wanted to back us and we were really fortunate with that.

And we kind of almost in the last 2 weeks of that fundraising process, I think maybe a 3 months fundraising process felt like a lot longer, it all came together in that last 2 weeks.  Up until that last 2 weeks we felt like we weren’t going to get anywhere near what we wanted and we really saw questioning whether we’d be able to continue the business.  So for me, it just goes to show that you can go through some really bleak times in that fundraising process but you just have to keep plodding along and believing in yourself and having faith that it’s going to come together in the end.


AT:  We had the founder of Aircall on here and they graduated from 500 Startups.  I think he went through 100 no’s before they finally got the yes.


HT:  Oh, maybe we got it easy then.


AT:  You did something a little bit better than they did maybe


HT:  Of course, the first 20 of those nos you kind of lose track, so it feels like the same.


AT:  I’m sure that a lot of people probably have the investor that they want to work with.  From the beginning, they know who the dream one is.  And maybe if it’s Accel or Notion, for instance, should you wait to meet them until you’ve had 50 or 60 nos?  So you’ve refined your pitch or…


HT:  I’m not sure. You can kind of over-optimise these things.  Actually, one of the lessons that I would say that I’ve had is that it’s much more important who you’re working with as an investor than the brand name of the investor that you’re working with.  We’re really lucky enough to have some really great investors on board but I wouldn’t just go to work with any of them just based purely on their name.  I’m sure they wouldn’t like me to say that, but it’s really important you get along with the people you work with.  And ultimately, these are the guys that you want to be accountable to and kind of be your boss in a way.  And so I think it’s really important that you actually build the relationships as soon as possible rather than wait.

If anything, I’d say that a particular investor you think will be a good fit for your company then I would go meet them before you’re ready to raise money and really build the relationship over time and that’s always been a much stronger position to raise money from.  Both Balderton and Notion came into our later rounds.  We’d met them years and years before they invested and we were able to, we had such a close relationship with them already that it almost felt like the next phase were in a very natural development of a relationship rather than pitching from scratch something that is totally new to them.


AT: Why are GoCardless seeing great traction with SaaS companies as I see and I understand?

HT:  Oh, well that is because what we’re building really is the best way to collect recurring payments and subscription payments.  We’re seeing a lot of traction with SaaS companies across all of our markets actually because we’re a payment method that’s almost designed specifically for these kind of companies.  We’re not focused on eCommerce, we’re not focused on one-off transactions, we’re just focused on making the best possible subscription experience and that makes a big difference to SaaS companies.

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Alex Theuma:  You’re most welcome.  And for those listening at home, if you liked this episode of the SaaS Revolution Show, we’d really appreciate if you rate us on iTunes.  And we’ll see you next time.

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