Show 150 – Unicorn Interviews – Krish Subramanian, Chargebee
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The 25th in our series of episodes that we’re recording in partnership with the European PR agency Tyto and their own Without Borders podcast, where we are interviewing leaders of unicorn companies to find out about the key issues, pain points and challenges that start-ups face and how they can address them with a strategic approach to communications.
Russell Goldsmith and co-host, Tyto’s Senior Partner, Holly Justice were joined online form Amsterdam by Krish Subramaniam, Co-Founder and CEO of Chargebee, a subscription management platform that automates the operations of over 4000 high-growth subscription-based businesses.
Founded in 2011, Chargebee reached Unicorn status in April 2021 and has now raised a total of $470 million in funding with a valuation of $3.5bn.
Krish started by giving a brief overview of Chargebee, which focuses on subscription and billing and serves customers in North America and Europe, working with customers from an early stage, pre-product market fit companies that start with their freemium plans. These companies look at billing as a simple solution that enables them to launch and get to product-market fit to pre-IPO companies through the high growth stage.
Previously a software engineer, he said launching Chargebee was an eight-to-nine-year dream, and his co-founder was a classmate of his when they were in their engineering days.
While Krish spent his days dreaming of being where he is today, he followed lots of companies such as Basecamp, of which the makers used to write a popular blog called Joelonsoftware.com. As developers they used to read these blogs every week, which inspired them to start their own company. They began their quest to fulfil their dreams by deciding they needed to save up, in doing so they saved up 20-30% of their salaries, so they could earn their own financial independence. Setting themselves a time frame, it was agreed that they’d start a product company by 2011 and it was particularly important that it was SaaS, and through picking this as a problem to solve, they built the organisation.
Krish explained that the idea of learning to build a good company never stops, and this still continues to be the mission. Their goal was to solve subscription building and management, he said that they’re actually quite boring people in some sense because they like to fall in love with good boring problems that are growing in complexity and infrastructure.
He said that they could have never foreseen the number of businesses that would embrace subscriptions as they do today, and for that reason they are fortunate.
The Subscription Model
He thinks that the number of companies using subscription-based models is due to the predictability of revenue, as it reduces the uncertainty of building a long-term profit-generating business. The other reason, being consumer behaviour, which enables the mode to be tailor-made for that individual’s behaviour.
In terms of shifts in the industry, Krish said there has been a fundamental shift that happens in every industry, whereby he would think, okay I need to build this CRM system myself, but everybody knows that you don’t buy a CRM system, you buy a CRM system. But the digital marketing automation of something like HubSpot is something that people used to do themselves. Whereas now with aspects like coding evolving, people don’t want to deal with it because they thought it was simple but it’s not.
He explained that the evolution of software and subscriptions is relatively recent, those that work in the subscription bubble or SaaS industry were born in this industry, and rarely know the old ways of doing things.
He said over the last 10 years things have been changing, as the focus used to be on acquisition, acquisition, acquisition, whereas now attention has switched to retention, where it’s much better to retain a single customer than acquiring seven new customers. This means that customer retention is a huge priority and has led to the business model evolving, after five years of starting Chargebee they invested in customer success, and then customer support as a separate function.
Multichannel experiences, whether that’s online, offline, B2B or B2C, the main focus is thinking about your customers experience across all channels, he said. With an increase in B2B appreciation, it means as a key stakeholder the buying process is something that has increased, putting an emphasis on treating documentation and APA as a first-class citizen in the product building service, he explained. The same applies to B2C, with it being like every other channel experience, whether you’re buying through the App Store or browsing Netflix, you should be able to renew the subscription on a mobile device whilst your kids are watching on another device. He said it’s crucial not to be left behind.
How the Company Changed After Reaching Unicorn Status
- Internally – He hoped that it didn’t change the internal perception of the company, as they don’t let any of the numbers or title changes get into their heads. He insists that they didn’t change a lot of things internally simply because they became a unicorn, because they didn’t get smarter because of that.
- Externally – He explained that naturally there is increased confidence from customers because they have the resources to continue to invest in the product.
- Talent – It brought in a calibre of talent that they didn’t have access to before, who are now part of the business, and helping them build a much better product, and service for the customers.
Krish explained that the investment they received is helping them launch in India and APAC as a market, which are just the core markets they’re operating in, with there being a sea of opportunity to expand within. All of their partners, including Salesforce, FreshBooks, Stripe, or PayPal, they all operate in a lot of other markets that they don’t operate in yet like LATAM, Japan and others.
He said in terms of their three-to-five-year goal, they want to be powering thousands of subscription businesses not just 5000, but they’ve had to think about how you go from 5000 businesses to 100,000 businesses. Another being supporting the scale of operations of their customers, with some of their customers being worth 500 million and others are post IPO companies. Their goal is to take many of their customers through an IPO journey and deliver their promise of a product roadmap to enable them to get there. Many of their customers are going from the subscription model to a pay as you go / usage-based billing model, which isn’t just changing your pricing on your website but it’s internally changing your sales incentives, your data fluidity to know how to predict your revenue for the rest of the year. He expects over the next three to five years, they’ll see a transformation of the nuance of subscription revenue and a shift towards a user-centric pay as you go model, which they are excited about.
He said a case point to reference in the B2B sector is Slack, who actually have a page they publish, which states that if you don’t use it for a month, for example if there’s users on vacation and you purchase 10 licenses, but three are away, then they actually give you credit for those users and make sure that customers don’t get charged for those. He thinks that it’s unrealistic that the customers would ask for it but, it’s the right thing to do and they do it, and in doing so it becomes a benchmark in the customer experience and expectations, which leads to others following it.
As a company they strongly lean on listening to customers and taking feedback to solve the multitude of problems they encounter, he said. They are really proud and caring when it comes to solving a customer problem. Allowing the customers to pay the way they want to pay every month is important, for example credit-card payments might work for one customer but not another. He said that understanding what their customer wants and makes them successful is at the forefront of their mission.
He explained that SaaS and SaaS like businesses are the industries that they see the most success in, but the underlying thing they’re seeing is SaaSification of various industries. He said 90% of their customers consume the API which they call SaaS and SaaS like because 70% of the customers are pure play and look like SaaS businesses. Then on the other hand there is 20% of the businesses that are getting SaaSified. He said he likes to use SaaSification because it’s not just slapping a product on top of services, it’s an inside out transformation of thinking about your revenue model. Most SaaS and SaaS like businesses are powered mostly by SaaS services, e-learning, and e-commerce.
He said they think of raising awareness as staying true to their DNA, which is the strength of understanding the depth of a problem and solving that really well. Their product is an APA first product, which means they build a solution for 90% of the core product but have also built a flexible way in which their customers can address those gaps yourself, he said. The interoperability of the product is something they’re extremely proud of, as well as the integrated solutions such as a CRM accounting system, payment processors or a host of other solutions.
He explained that for every industry that they work in they have an intricate solution, for example if it’s a B2B company customers might only buy from the website, which results in them trying the product, because in B2B context, they always try before they buy.
Krish explained that in the first six to seven years he said, “who are we, to actually say this is the right behaviour?” and for those years the company culture was undocumented. But as they were approaching more than 200 people, they decided they needed to determine what they celebrate, what’s frowned upon and how does each person belong here? To begin with they did workshops to survey what people like, and identified their values from that, and this meant they knew what behaviours they wanted more of. Their core values include the idea of not customer first, but customer centricity, empathy, which became very important in a time where COVID-19 affected the world, and curiosity, a crucial characteristic in the problem solving they do. Along with having values, they only see that as the first pillar, with the other being rituals, and the third being habits, which helps ensure they aren’t just leaning on the values but implementing certain rituals of how they do things, and with habits relates to simple things that will raise the standard of what they do. He said that those three pillars help them think about culture internally.
Krish said that if the companies core values aren’t practiced on a day-to-day basis, it becomes hyperbole, therefore it’s key to deliberately figure out how to tie them in together. One of their internal strategies consists of doing a podcast listening session to celebrate curiosity as a value, where they’ll sit down and join a zoom call where they listen to podcasts, which could be on any random topic. Sometimes they’re about product, marketing, or someone suggested learning more about the Black Lives Matter movement, which was at the time where BLM was huge, and as a company they thought it was crucial to have an increased appreciation for this. In doing so, they built up awareness of how to create an inclusive culture, which led to an initiative where over the period of 12 months they brought in external experts in to spread awareness about diversity and equality. He admitted that it was helpful in getting everyone including himself to admit “I don’t know enough about this topic, but you know what, we’re going to sit down and learn. It actually creates a particular type of comfort within the organization to get comfortable with the idea of just learning new things”. He said that “Even if you are a CEO, you surely are good at certain things, but you are really bad at a lot of things. So, get comfortable with the idea and then do this. Then it actually permeates the organisation and that’s what we are hoping will continue to happen”. He said that once message is out there it can be built on through a series of communications, whether that be in Slack or another type of message, which will be helpful when bringing new leaders into the organisation that will naturally follow these messages because this behaviour is celebrated in the organisation.
Krish admitted that he calls himself a trained extrovert and that’s because as an engineer his safe space is going into the intricate details, finding the problems and solving them, but right now it’s role play, and he’s enjoying learning on the job. As the company culture continues to scale, and he notices that the talent around the table can take ownership of certain problems completely on their own and his job is continuously changing on a 6–9-month basis. He explained that three years ago, he had full responsibility of overall revenue and used to take full responsibility for the new sales but then they hired a CRO who is now in charge of revenue. It’s almost like firing yourself from that position and then focus on something else, he said. His role is now centred around relationship building, making sure they have aligned execution for long term plans, and hiring and communication. Most of his time is now spent making sure they’re able to bring the right talent into the organisation and then communicating consistently internally and externally.
He explained that he’s listened to lots of different people talking such as Brian Halligan, Founder and Chairman of Hubspot, who he’s a huge fan of. He listens to him talk and realises that he can relate to him being a geek and an introvert, and it just goes to show that you can be someone who built a company to $1bn revenue and still be yourself, because there’s no reason to be fake. He said, “you can be yourself and still build a good company”.
He said: “I just try to listen to a lot more people and am very grateful for the number of people who actually put themselves out there in a very authentic way without actually looking different, trying to sound different. Instead, they are themselves and just listening to them, watching them are ways in which I’ve been learning on the job.”
Biggest challenge and overcoming it
Krish explained that one of the things he has struggled with and still does is being taken out of context, and that’s because being misquoted is one of his biggest fears and as there’s so much nuance to communication and it’s difficult to say something and it be understood within that context.
He said: “in a world that is actually so distracted, it’s actually hard to actually have room for nuance”.
He tries to give as much context as possible and more simply, because quick one-liners aren’t his thing, he would much rather give contextual answers.
He added that another thing he’s struggled with is learning to hire people that are extremely better than you, who have been executives in other companies. It didn’t matter when Chargebee was small because they were still figuring things out but then you suddenly realise that there’s a big gap in learning to delegate problems and trust them to solve it, he said. It can be quite a challenging transformation because your job changes to getting chairs out the way and allowing other people to make decisions, execute and make mistakes because ultimately everyone learns faster with mistakes. He said that the company culture is actually very similar in the sense it has to evolve with the relevance of the customers and market you serve, along with the talent pool and the organisation itself.
He thinks that the three key ingredients to building a great company are:
In terms of hiring above him, there is always a feeling that you are upgrading one part of the organisation first because you can’t go and hire up the entire organisation at the same time, as you’ve got to allow room for people to grow into certain roles he said. The company scales faster than the individuals but you have to leave room for them to scale too. He explained that they sequence their hires, for example they deliberately hired their product director before hiring another revenue leader, so that their segmentation could be right, and this was down to know who gets the most value out of their product.
Advice to his younger self
Krish finished by saying that he would have invested more time in deliberately watching/listening to more podcasts, because there is no better way that to actually watch and learn.
He said: “there is so much that you end up picking up by just watching other stuff and especially peer group or people who are just further ahead of you. There is so much to learn”.