Ep. 278: Krish Subramanian is the Founder & CEO @ Chargebee, the startup that lets you go beyond billing, payments and recurring invoices — to delivering subscription experiences that “wow”. To date, Chargebee have “wowed” some of the world’s leading VCs to the tune of $38m including the likes of Insight Venture Partners, Tiger Global, Steadview and Accel Partners. As for Krish, under Krish’s leadership the team has grown to over 300 people and over 5,000 clients making it one of the next generation in truly global SaaS businesses started in India.
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In Today’s Episode We Discuss:
* How Krish made his way into the world of SaaS and came to found one of India’s fastest growing SaaS companies in Chargebee?
* What does Krish mean when he says, “In SaaS, you either sell to one of 2 customer profiles”? How does Krish think about purely serving the SMB market? Does one have to move to enterprise? Does one have to expand the product line to retain customers? How does he think about the mortality rate of SMBs?
* First, what is continuous customer development? Second, why does Krish believe it is one of the most important things any company must do? What is the process to do it efficiently? Does it have to be in person? What questions reveal the most? How should this data feedback into your product roadmap and pipeline?
* How does Krish think your customer acquisition and GTM strategy has to change with the movement from SMB to enterprise? What are the biggest challenges in making this transition? How does your customer success and customer support functions change with the move to enterprise?
Ep: 279: Glassdoor CEO Robert Hohman and Battery Ventures’ Neeraj Agrawal walkthrough Glassdoor’s $1.2 Billion story from its launch in 2008 to its 2018 acquisition by Recruit Holdings. Hear about the early days of Glassdoor; tactical lessons on scaling—from building a business model and recruiting an all-star management team to advice on building a compelling, innovative company culture; and learn whyGlassdoor’s $1.2 Billion acquisition is just one milestone in the early innings of the company’s story.
This episode is sponsored by Owl Labs.
SaaStr’s Founder’s Favorites Series features one of SaaStr Annual’s best of the best sessions that you might have missed.
This podcast is an excerpt from Robert and Neeraj’s session at SaaStr Annual 2019.
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Below, we’ve shared the full transcript of Harry’s interview with Krish Subramanian.
Harry Stebbings: Welcome back to another week in the world of SaaStr, with me, Harry Stebbings, at H Stebbings 1996 with two Bs on Instagram and I would love to see you there, but to the show today and a second timer on the show and a guest that I just always love my discussions with. And so I’m so thrilled to welcome back Krish Subramanian, founder and CEO at Chargebee, the startup that lets you go beyond payment, billing, and recurring invoices to delivering subscription experiences that wow and what they’re doing now in the world of rev ops, trust me, it’s pretty mind blowing. To date, Chargebee have wowed some of the world’s leading VCs to the tune of $38 million, including the likes of Insight Venture Partners, Tiger Global, Steadview, and Accel Partners. As for Krish, under Krish’s leadership, the team have grown to over 300 people and over 5,000 clients, making it one of the next gen of truly global SaaS businesses started in India.
Harry Stebbings: All thanks to Lee Fixel for making the intro a long time ago now. It would not have happened without that and I so appreciate that, Lee. However, I’m now very excited to welcome back to the show a dear friend Krish Subramanian, founder and CEO at Chargebee.
Harry Stebbings: Krish, it is absolutely fantastic to have you on the show today for a very special round two, so thank you so much for joining me once again today, Krish.
Krish Subramanian: Thank you so much for having me, Harry. It’s very exciting.
Harry Stebbings: Well, the pleasure is all mine, but I do want to start today, for those that maybe missed our first episode, how did you make your way, Krish, into what I always call wonderful world of SaaS and really come to found Chargebee today?
Krish Subramanian: We are software engineers by training. When I say we, it’s me and my four co-founders. My co-founders cut their teeth at Zoho for over 10 years building product and for over six years [inaudible] software products. And then we decided to start a company. We decided to bootstrap but later on we raised capital but stumbling into SaaS, I think it’s a default way to [inaudible 00:04:28], which is we love solving problems through software [inaudible 00:04:33] honestly, and when we start a company, they saw this as an emerging problem media. That’s how we stumbled upon Chargebee.
Harry Stebbings: But Krish, and I do want to start on kind of the two different company profiles in SaaS, because it’s selling to SaaS and then also selling SaaS to other SaaS companies. You see a huge variety of different SaaS businesses and I want to touch on the different profiles, how they acquire and retain customers, and more. So if we start on the first type of SaaS businesses that sell to SMBs and often one to five person teams, and they likely will always sell to those types of teams. I was chatting to a VC the other day who went, “Ugh, this business, no scalability of ACVs, not good.” How do you think about this type of business and how would you respond to that VC?
Krish Subramanian: Most businesses, when we look at a type one business like this where we are selling to SMBs, there is typically a very large market that it can grow into, a classic example is Squarespace or Shopify and the simplicity of that business is that you acquire one type of customer and your product does not become complex. As you acquire more and more customer insert, you are able to deliver so much polish and build the best in class product in that particular category and just focus on getting more customers. That’s the beauty of that business. Even though, the ACV does not rapidly expand with the business. Right? A classic example is a Shopify selling to, let’s say, contract. [inaudible 00:05:46] commerce business out of Squarespace delivering beautiful websites to contactors, freelancers, and small businesses. Yes, it does not scale, but the beauty is the product. I mean so simple that you get so much time and mind share to polish the product to create best in class, which compensates for a lot of competition that you don’t inherit with the business that grows with customer.
Harry Stebbings: Can I ask, in terms of the product simplicity, because of the products’ simplicity, if there is exceptional companies, brands within that kind of batch of customer base, is there ever a concern there that they’ll scale out of it and due to the simplicity, the product won’t have the depth for a scaling brand that now no longer is five people, but it’s actually a hundred people. How do you think about customers scaling out of that bracket and churn as a result?
Krish Subramanian: That’s a fantastic question, the assumption we are making here is that this is a classic case of again, a Squarespace competing with a WordPress versus a Volusion. When it comes to the category, does Squarespace have to compete with the Volusion or [inaudible]? My take is it they don’t have to. There is always an underserved segment of market that is pretty large and if you are able to see the trend, which is that pretty much every small business, which is a mom and pop, brick and mortar store wants presence digitally, that is your opportunity on which Squarespace [inaudible] and that is an underserved segment that a Volusion or a WordPress cannot come down to because they try to cater to a segment of customers which are always growing. Their product has become complex and that requires [inaudible 00:07:10], and suddenly you are able to identify an underserved segment [inaudible 00:07:13] category. My take is that in every category that you think of, there is always an underserved segment that you can serve profitably and that is a larger market [inaudible 00:07:21]. The segmentation could be global, where you see Latin America as an opportunity or Africa as your next opportunity. Or it could be a segment in terms of peers or am I selling through resellers, or am I selling directly the customers? You could be solid in any of these.
Harry Stebbings: Totally. You could. I guess my question to you then, and I’m sorry for going off schedule so quickly, but my question is we see everyone trying to go upmarket, everyone is doing an enterprise version of the simple product, not are they wrong, but do you think then that actually they didn’t need to and that actually this necessity to have enterprise to scale is actually wrong?
Krish Subramanian: I wouldn’t say that. There is nothing wrong about building value to business, but at the same time I think it is a question of what you commit to. If you raise a lot of capital with the commitment that I will deliver this value, then it sets you on a path where you have to deliver, right? And the pressure of actually trying to achieve it. You are trying to get to that, right? For example, the scaling through ascending business is a long, hard path to killing a business, right, which is you’re trying to acquire companies, more and more at the top, which requires a lot of dollars to grow your business, but at the same time you take the path of, let’s say take a look at Zoho. There is a very different way of scaling very slowly, carefully for a very, very long time serving the same segment [inaudible 00:08:35] and then you get the opportunity to increase your volume check. Shopify again has done that from 2004 to 2010 before they started scaling [inaudible]. I think it requires a lot more thoughtful construction on the business was scaling with [inaudible] in a certain category, certain segment of business, but as if you’re trying to rapidly grow the business in terms of basically [inaudible 00:08:55] trying to build a hundred million dollar business within an artificially imposed constraint of let’s say seven years, eight years, and then your solution could be, okay, let me more market more dollars and you start following the dollars.
Harry Stebbings: Totally get you in terms of start following the… Can I ask then, in terms of following the dollars, you know you mentioned earlier your bootstrapping in the early days and then obviously raising money from the likes of Accel, likes of Tiger, now Steadview, some incredible names there, did you see your mindset change as a founder when moving from bootstrap to VC funded business?
Krish Subramanian: This is a fantastic question. The sense that I was the one who was, while they actually answered the question. So the previous one saying carefully constructed very different things, staying in the same segments, [inaudible 00:09:38]. And my reasoning is that as a product category that we [inaudible 00:09:42], we are selling not just for the customers’ needs today, but also for their ambition of wanting to grow. Meaning this is a type of classic type two business where we sell to every idea stage founder who wants to build a multimillion dollar business. Not this customer does not want to stay as a sub million dollar business forever. And this mind shift had to happen to us the deeper we understood of our customer. So to go back to your question as a mindset change from a bootstrap company to a funded company to a large extent to the understanding of the market has changed for us and we are aware of the commitment to the path that we are taking. But at the same time, once you are a bootstrapped entrepreneur, then always a bootstrapped entrepreneur with respect to how you think about using dollars to build your business. I think that is like a switch that goes on and stays on for us.
Harry Stebbings: Listen, it’s a big switch to endure, one that you’ve done incredibly well. I do want to talk about, as you said, the type two business where we are scaling into enterprise in certain cases and scaling with our customers. When we spoke before about it, you said continuous customer development becomes so crucial. So before we dive into the process itself, again, we chatted before and you said you were paranoid about staying up to date with your customer. In terms of the paranoia, Krish, why is it so important to have the paranoia?
Krish Subramanian: So just for context, what we provide is subscription management billing for our customers, for SaaS and SaaS direct businesses and I think when we think that we have a product market fit in one segment and then we continue to sell there, we assume that we have product market fit, but really quickly the customer is growing for the next stage. The key for this type two business, which is scaling with your customers is that [inaudible 00:11:23] retention and that retention requires you to continuously evolve your product to the customers and use [inaudible 00:11:29], but for the future, which means that you’re always trying to meet a need for the next one year or two years because we are [inaudible 00:11:35] and this paranoia is extremely important from a product evolution standpoint is making because every stage your product market fit almost feels like it’s falling apart.
Harry Stebbings: I love that. In terms of the product market fit falling apart. Can I ask in terms of building out those secondary products with your scaling customers, is there ever a concern that with this scaling product range that you have, you’ll lose the initial customer base, which are remaining small and maybe taking a longer time to grow because of product complexity, because of less focus on the original products and original mission. How do you think about maintaining the core base while also expanding with the fast-growing customer base?
Krish Subramanian: I think a lot of us fall into the trap of trying to think that the only way to keep the customer is to introduce multiple products, which I don’t think is any longer the case because we might, [inaudible 00:12:21] and not necessarily [inaudible 00:12:23]. And if you think about it, what I mean by that is when your customer problem is continuously evolving and they need more and more, it is important to think solutions first and be able to partner with others and offer the solution to the customer, which automatically drives the engine for your car. Rather than trying to think about expansion. The reason I suggest this as an approach is that when you’re getting your pricing right as a partner, and to grow with your customer. When the customer grows you grow [inaudible 00:12:47] because they are consuming more of your product, they get more value, you get benefited through [inaudible 00:12:51], you capture the value to your price [inaudible 00:12:54]. When that is there is no need to try to think that I have to [inaudible 00:12:57] it is important to think solutions first. But I do have a [inaudible] You always watch your product [inaudible 00:13:06] problems are becoming more relevant to your customers. There you are solving a particular problem let’s say in [inaudible 00:13:12] this is a problem for the customer. You have to think how is the customer going to manage taxes globally and what am I going to do. Either then your part could be do I build it myself or do I partner with somebody and take care of tax filing for the customer and I think those emerging opportunities living in the customer world I think is the way to think about introducing second part and of course you want a large enough customer base to which you are able to introduce this product. Otherwise all the effort you put into it–you don’t want to building out [inaudible 00:13:46]. It should be an opportunity to process it rather than trying to sell one more product. And build on more marketing.
Harry Stebbings: I do totally get you. I guess my question there is, you mentioned that in terms of value extraction with the usage increasing from the customer. That’s in a case when pricing is successful. Have there been some lessons for you on the right way to think about an approach pricing in terms of we’re often told about pricing simplicity, but then also it may not align with optimal value extraction. How do you think about the right way to price a product as you move into enterprise?
Krish Subramanian: I think as any company that is evolving, that is when we think about our customers, many of them start as to scale up their businesses and they entered into the growth segment and then enterprises. And at every stage the customer is worrying based on what they understand about their future, but not necessarily thinking through everything about their business. Right, and every business that grows, evolves in people, process, and technology. [inaudible] in all three, in every stage of growth. And when we think about pricing are we optimally priced to continue to support the customer as a partner? Is something very important because when we think about simplicity, you don’t want to present an invoice every time they want additional help. Let’s say the customer is going to the next stage and they want additional help, let’s say in [inaudible] of security. Like we don’t want to be presenting an invoice to the customer saying, oh, so then we’ll charge you X number of dollars to help you with [inaudible 00:14:59] and that means that how we operate as a partner where you feel that you are sufficiently [inaudible 00:15:04] helping them to everything and the customer is also paying the price. So you bake that into pricing model. In our cases it could be volume up [inaudible 00:15:16] grows with the customer’s business and then you are invested in everything [inaudible] how I like to think about it. So the only [inaudible 00:15:26] think of how the pricing will grow with the customer when they consume more and more in terms of their growing niche in all three parameters, people, process, technology.
Harry Stebbings: I love the element of aligning pricing to the success of your customer. I do want to ask though, because we kind of jumped a stage there almost. In terms of pre pricing yourself, in terms of customer acquisition, how have you found that customer acquisition changes when scaling into the enterprise? Has that been some big challenges for you?
Krish Subramanian: Absolutely right. Because [inaudible 00:15:51] go to market process as we move up market continuously has to evolve in terms of the marketing and sales process and messaging and everything because how we sell to early stage when we start with a product is no longer the case when we are now selling to larger businesses. And I think it’s a constant challenge that every business that moves up market deals with and that requires just thoughtful orchestration across all three areas. It is not just, for example, we never hired a separate pre-sales solution consulting team within Chargebee when we were onboarding customers because it was intuitive and almost exploding the product on the CTOs and they would just bite. And today we sell to larger customers, primarily CFOs [inaudible 00:16:33] and that requires us to actually build a solution fund. So, this means there as part of the GTM process or [inaudible 00:16:38], you are rebuilding the entire engine with respect to how you go to market with the customer, we want to [inaudible 00:16:44] pre-sales and then present them with those options and before you are able to take it to the next one.
Krish Subramanian: So my take is whatever has worked in GTM process when you sell to an early shade segment that goes through continuous process of change and it is almost like you’re reinventing the GTM process for the next phase of the company and it has to be [inaudible 00:17:04]. The people may not necessarily–the same people who are extremely successful in SMB sales may not be successful in your mid market [inaudible 00:17:12] and those people really need that team. They need an upgrade your tools and infrastructure process, everything needs. I think we were just talking about how the customers go through it. I see the same happening through our own journey [inaudible].
Harry Stebbings: No, I love that. In terms of seeing it and aligning into your own journey. I do have to ask though, in terms of the enterprise customers that you do acquire, a lot of them require, in some cases, services and consultancy in terms of integration and onboarding. How do you think about that, because that’s one often talked about in the VC community with a lot of, not disgust, but concern in terms of having too heavy a services and consulting revenue stream. How do you think about services revenue streams today in SaaS, especially when scaling into enterprise?
Krish Subramanian: I think the big [inaudible 00:17:53] we have to–the concern is valid, which is we don’t want services revenue to become the crutch on which we build a business. If you’re relying on that too much then we start thinking, Oh my gosh, well it’s [inaudible 00:18:03] able to charge more for services of large customers. That might actually become the crutch and we may lose focus on the core value, our core offering, which is why do we have services in the first place? An analogy for me is what Michael [inaudible 00:18:18] talked about, customer support. The reason why a customer support team gets really involved is to solve for the lack of the deficiency. That is the fastest path to solving for the deficiency in your product is what customer support does most of, right? And then eventually you would [inaudible 00:18:37] want solutions to be self-evident in your product [inaudible], similarly, services, is the best way where you’re complementing the internal customers teams focus.
Krish Subramanian: To say, you can stay focused on your customers and [inaudible 00:18:45] product and let me help you do it, that’s how we think about services. And you don’t want this to be a continuous thing that we have to do for the customers simply because there is money and the way we [inaudible 00:18:59] how we should think about it and be ready to do it through a network of partners who implement for our customers and delivery as opposing constraints so we don’t delay on that revenue [inaudible 00:19:07]. Later on, maybe we can continue with [inaudible 00:19:11] project management capability and all that or say [inaudible 00:19:13] customers that, let me take it off this implementation or this integration and most of the time one common problem that all the SaaS companies–we all deal with this, our product might scale but the implementation that was done, let’s say three years or five years back may not necessarily scale with the customer. Which means that you have to revisit the implementation all over again to upgrade new features that you built over the last few years, to help the customer. In those areas, I think services is extremely important.
Harry Stebbings: It’s an interesting one in terms of the customers support, that you mention there because I had someone on the show the other day and they said you didn’t actually want your customer support to be amazing because if they’re so amazing, they’ll actually cover up for deficiencies within the product. Do you think that’s fair and how do you think about almost customer support acting as a bandage for product deficiencies ?
Krish Subramanian: I think that it’s only natural that this happens. Meaning, you think about building a product for a particular person or a user, the buyer [inaudible 00:20:05] many times we don’t realize that when your customer evolves, the primary user changes. But example, a quasi developer, like an operations’ person, may be the one who implements it so they can put all the legal lots of your product together in the [inaudible 00:20:17] and then they can make sense of it [inaudible 00:20:18]. And then sometimes it gets handed over to a user who is not necessarily with the same mindset, which means there are certain things that you assume that were obvious to your user is no longer the case. And it takes time. A long painful [inaudible] actually grappled with that problem and evolve with the customer to solve for it and the fastest [inaudible 00:20:39] after the solution has most of the time to customer support, so I 100% agree that you don’t want to rely on customer support as the only way for customers to find the solution. But the most responsive customer support it’s like just turning around to your expert in your own team. By turning around in your chair and being able to ask someone. do you have a responsive customer support that you’re able to rely on for a service that you use is how I like to think about and the more and more it becomes obvious and say the product [inaudible 00:21:03].
Harry Stebbings: I’m totally with you there. In terms of the more becoming obvious. I do have to ask though, because when we spoke earlier about retention, you said to me the continuous conversations with your customers is key. I guess, tell me, the subsequent question after that is, is this the role of customer success teams or is this the role of actually the team more broadly?
Krish Subramanian: Definitely customer success, but I would also strongly emphasize this role is important for product. The reason is many a times today for, for us personally, our 60% of the road map is driven by existing customers and we think it’s extremely important because we might come in the way of their business [inaudible] if you’re don’t build out the things that they need. I count it as important for customer success to conduct a regular quarterly business reviews, to gather in [inaudible 00:21:43] and ask them what are your plans for the next six months and twelve months? And similarly, I think it’s extremely important, but prior to stay [inaudible 00:21:51] to the growing customers, to pay attention to what is it that they should be anticipating instead of actually hearing what they want really. In that context, I think both the teams have a crucial [inaudible 00:22:02].
Harry Stebbings: Okay. Let’s get more granular then, Krish. How often should they check in with your customer base? What does that timeline look like?
Krish Subramanian: A regular check-ins monthly from customer success perspective, quarterly QBRs, quarterly business reviews with the customers and from a product perspective, I would say the product managers should always be talking, on a regular cadence. So the way we think about product team, they are continuously paying close attention to the pre-sales conversation, which is a solution conversation at the time of onboarding a customer and to the customer success conversation. So, that is a continuous process from a product perspective.
Harry Stebbings: Digging into the conversations they do actually have. Can I ask, are there questions that you find drive to really conclusive answers on potential product development strategies that you could implement and that you suggest and like the team to really be driving to on calls?
Krish Subramanian: Whether it would be engaged with the customer asking them questions related to how their day looks like. Right? And where does our product actually fit within the workflow generally reveals a little bit more than trying to understand how the user are. A case in point is when we ask about Chargebee and then let’s say feedback on invoicing access. It’s not sufficient to stop there. It’s important to understand what happens to the life cycle of that particular workflow beyond what we do to the life cycle of that one particular in why is it gets sent to the customer then what happens, which other system does it go through. Who takes responsibility for that particular workflow after it gets updated in the system. Right. So you think in terms of people involved, the tools that they use. So the questions, the moment you actually think in terms of what and life cycle, whatever document or artifact that you are creating through your product and try to map it out.
Krish Subramanian: Generally it reveals a lot more. And many a times we find that a very fast growing customer of ours could be saying, “Yeah, we do it in QuickBooks, all of this goes into QuickBooks and then we reconcile,” and then you probably want to understand, okay, so how was the experience with QuickBook,s not just Chargebee. You start asking them and then you realize that no, no, no, no, we are actually hitting [inaudible 00:24:03] we are thinking about migrating out of QuickBooks and thinking about [inaudible 00:24:06]. You suddenly realize that, Oh, so that is actually a change that is coming in right in the time horizon in the next six months. Right. And then you start understanding that they are going to need a lot more help in retraining themselves for a new product that they are introducing [inaudible 00:24:20] but change management is all this is painful. So the leading questions to understand change management and workflows are the best ways to understand a customer’s journey that they are on.
Harry Stebbings: Can I ask, should these conversations and should these discussions, this kind of insight into the customer workflow, should that be done in person?
Krish Subramanian: Oh I think probably behavior–especially with the buying behavior, and the customer behavior has significantly changed in the last five years is my pick. Actually we, we love Zoom calls and remote conversations because they are more efficient, and it really does not feel like… it’s normal, even with our colleagues, we do this all the time. I think it does not have to be because the moment you actually start putting a constraint that I want to do it in-person, it drives up the cost of serving the customer. Right. And you may do it infrequent. So it is important to think about all the… when we think about the method of actually doing it, it is important to think in terms of cost structure bill, because it will eventually drive the behavior and the type of people that you recruit. We recruit millennials who are very comfortable doing any of these, driving these conversations very closely with the customers and there is a reason for it. So my take is, it does not have to be, it’s always amazing to meet customers in person. But what we try to do with people, [inaudible 00:25:34] go meet them but on a regular cadence, I prefer remotely.
Harry Stebbings: Hey, listen, I’m totally with you. And, listen, I think we’ve built a firm friendship over Zoom, largely, and so I love Zoom too. So what can we say on that one? I do want to finish though, Krish, you know the drill here. It’s my favorite, I have to admit. The 60 second SaaStr. So I say a short statement. You hit me with your immediate thoughts. Are you ready?
Krish Subramanian: Yes sir.
Harry Stebbings: So, what have been some big learnings from working with the legendary Lee Fixel?
Krish Subramanian: Trust your team and get out of the way.
Harry Stebbings: I think that’s a great one. Tell me, how do you know when’s the right time to introduce a new product?
Krish Subramanian: When the artisan problems become more visible for your customers, it’s time to think about the solution first. Then you may, when it becomes more visible to a lot of your customers, that may be the best time to think about your next product.
Harry Stebbings: How has having kids changed the way you operate and think about building a business today?
Krish Subramanian: Be present, just forget about whatever bad happens. Immediately forget it and stay focused on the present.
Harry Stebbings: Tell me, final one. What do you know now Krish, so you wish you’d known at the beginning of your time with Chargebee?
Krish Subramanian: As a first time founder, I wish I had known that our customers are buying for the problem that they understand as it stands today, but, there is an underlying need of, they are thinking about the future but not really knowing what it is that the extent to which we have to educate them about their future needs and still sell something simple today or something I wish I had known a lot more earlier. That realization has been through a continuous customer conversations.
Harry Stebbings: Krish, as you know, I always love our conversations. There are always so many questions that are completely off schedule, so I’m so sorry for that, but I’ve so enjoyed having you on, so thank you so much for joining me again today.
Krish Subramanian: Thank you so much. I enjoyed it. Thank you.
Harry Stebbings: As I said at the beginning, I just always love my chats with Krish. I could not be more excited for Chargebee with their movement into the world of rev ops and if you’d like to see more from Krish and Chargebee, you can find him on Twitter at CB Krish. Likewise, it’d be great to welcome you behind the scenes here at SaaStr. You can do that on Instagram at H Stebbings 1996 with two Bs. I always love to see you there. As always, I cannot thank you enough for your support and I can’t wait to bring you another fantastic episode next week.