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Here’s How Chargebee Makes Billing Frictionless For Over 4000 SaaS Startups Across 53 Countries

Here’s How Chargebee Makes Billing Frictionless For Over 4000 SaaS Startups Across 53 Countries

“You cannot be everything to everybody but you have to be something for somebody. Now who is that somebody for you? Once you know that, you try to slice the market to the point where it is very narrow, and then you go deep and try to build everything that is necessary to be the best in that one category for that somebody,” says Krish Subramanian, co-founder of subscription billing startup Chargebee.

For Krish and the other co-founders Saravanan KP, Rajaraman Santhanam, and Thiyagarajan Thirugnansambandam, thatsomebody’ was none other than SaaS products and ecommerce subscription products. So much that these two categories by itself were too much of a business to focus on for the company.

But this was hardly clear to the founding team when they started out in 2011, when Krish decided to take the plunge with Rajaraman and the others who, at that time, were working for Zoho. So while Krish came from a services background, having worked 10 years in the industry, Rajaraman and others had seen the transformation of Zoho from a startup to a powerhouse brand.

“Our intent was to build an interesting company. We wanted to get the experience of building an organisation from scratch. So it was not idea first, but more theme first. We knew we had the skill set and confidence to build a good base product,” reminisces Krish.

Of course, after looking at a few problems that they could actually solve, they realised their forte lay in solving B2B problems. Then they picked SaaS as the field, given its upcoming potential and the fact that subscription as a revenue model was taking off for most of the businesses. While diving deep into solving for the B2B vertical something stood out clearly to them i.e problems around billing.

Most of the subscription models of SaaS businesses only catered to enterprise customers, ignoring the early-stage companies which find managing payments a big drain on resources. What they needed was an easy and convenient way to process transactions which could support global clients, in different currencies.

This is where the team saw market opportunity and, thus, Chargebee was born to help businesses better manage recurring billings and online subscriptions. The aim was also to reduce the pain around processing cross-border transactions.

“Billing is an amazing opportunity for a conversation with customers but also a point of friction, if not done well. In a subscription-based business model it becomes crucial to deliver an amazing customer experience in billing as much as your product and we focus on delivering this,” reveals Krish.

So while Krish leveraged his service experience to deliver this experience through Chargebee, the rest of the team banked on their Zoho experience to build a ready-to-ship base product without depending too much on technical hires.

In 2012, Chargebee was up and running from Chennai, aiming to help startups, particularly those in the SaaS space, get more from their billing subscriptions.

4K Customers, 53 Countries, Millions In Revenue

Ever since its launch in 2012, the vertical SaaS product has amassed customers of different sizes – all the way from idea-stage companies to bigger enterprises like AB InBev (parent of Budweiser), Schneider Electric, Freshdesk, Zarget, KiSSFLOW, Soylent, and VinylMePlease among others. Chargebee works well for companies which have new revenue streams and subscriptions, ARRs ranging up to $20 Mn, and are actually launching new product revenue lines.

Today, after being in the market for almost 4.5 years, the total customer count has grown to almost 4K customers spread across 53 countries. Over 50% are in the US, followed by 25% in Europe, and the rest in the APAC region. While Krish declined to reveal actual revenue figures, he claimed that it is currently in the single digit millions. Meanwhile, the team count has grown to 88 people, with a VP of sales based out of San Francisco.

In order to keep track of changing customer requirements, the product has continuously evolved but without making it too complex for early-stage companies. Hence, the startup buckets its features based on the needs of its enterprises. Standard plans start from $99 a month, with enterprise plans going upto $599 a month.

As far as funding is concerned, Chargebee has raised a total of $6.2 Mn, till date. Over $370K was pumped in the company in 2012 by US-based private angel investors, followed by a Series A funding of $800K by Accel Partners in mid-2013. In March 2015, Tiger Global joined Accel to pump in another $5 Mn in Series B funding to help the startup set up satellite offices in the US, UK, and Australia.

While funding did not prove to be a challenge, what was a huge learning experience for the team was figuring out distribution and marketing sitting from India.

“We are engineers and we can figure out a problem, but learning distribution and marketing is another ball game. Take, for instance, SAP – their biggest strength is distribution. They can sell in any part of the world and they know whom to sell. But for early-stage companies, it is hard to penetrate remote markets, or even imagining the world of opportunities out there and figuring out channels through which you can reach them,” says Krish.

That learning, he realises, came from getting more and more exposure as the startup moved to higher levels of growth. Most of the time, startups underestimate the global opportunity and can’t imagine that there can be a huge market in one niche. Hence, learning about the size of the market, their own product potential is a continuous journey and so it was for Chargebee.

A SaaS Solution For Fellow SaaS Companies

And it was this journey that made them realise that they want to focus on just the SaaS and ecommerce subscription products market. These two categories were enough market for a company that’s starting out.

So, when a company like Freshdesk became Chargebee’s early customer, it was akin to a VC betting on an early-stage company.

“Businesses like these, (Freshdesk) become your brand ambassador as everybody else recognises them,” adds Krish. Or, for that matter, landing a client like Soylent in the early stages by reaching out to its founder who the team luckily spotted cribbing on Twitter, promptly responded to him, and converted him in a mere 45 minutes!

“Those are wow moments and the impact of having those brands cannot be quantified,” Krish  notes.

Gunning For The Next 10K Customers

While wow moments cannot be measured, some things can be quantified – for instance Chargebee’s goals to hit the 10K customer mark in the next 18 months. Krish believes it is possible despite competition from players such as Zuora, Recurly and Chargify, among others. His confidence stems from the fact that today Chargebee has broken into the top three solutions in the SaaS-selling space.

“We get recommended more than everyone else. So, we have come a long way and our intent is to keep growing with the growing requirements of our customers. So, if a customer is expanding to Europe, we need to facilitate that. We are more of an infrastructure enabler. We need to stay behind the scenes and enable them with some crucial pieces of infrastructure such as compliance, security, changing tax rule regimes,” he explains.

No wonder, as most of the businesses that use Chargebee are global in nature (Freshdesk  alone is selling in 200 countries), the product is designed in a way to enable a global experience through built-in functionalities that take care of  multiple languages, multiple currencies, global taxes, and multiple global payments options such as direct debit and others.

It is in this direction that the company has forged strategic partnerships with partners such as Stripe and Worldpay to penetrate into different markets. In the US and lot of other countries, Stripe is the preferred partner, while in APAC and enterprise segment, Worldpay comes to their aid.

As Chargebee guns for the next 10K, the team is also focussing on the product side – namely, revenue recovery. Says Krish, “We are doing a bunch of cool stuff related to revenue recovery. Telling the customer that you haven’t paid and that your account might be cancelled is a costly proposition for businesses and consumers. So, we are building features which take away the pain from customer churn.”

A Burgeoning Indian SaaS Market

While Chargebee sells in more than 50 countries, it has also become more cognisant of the world of opportunity that the domestic market itself holds. Krish points out that in the maturing Indian market, new products such as Zarget, Pipecandy are coming up,  for whom an early adopter market already exists.

“So nowadays, if you are launching a product for SaaS companies, you can easily get your first 500 customers in India itself.  Contrast this with the fact that Freshdesk had to get its first 10 customers from six different countries. This is a phenomenal change that has occurred in the past few years,” says Krish.

Given the fact that most companies struggle to get that validation from the first 100 customers, it indeed is a sign of the changing ecosystem. He adds, “It takes close to more than one year to get to the first 100 customers after launching the product. This means if you spend a year building the product, then you need one more year to get your first 100 customers. But now it is changing to a point which was earlier unimaginable. Today, if you come to SaaSx in Chennai, you get to meet 150 SaaS companies alone in one shot!”

And it is this transformation which is the key to where the market is headed in the next five years. Krish is confident that in the next few years, it will change to the point, where an Indian SaaS company will be able to make its first $0.5Mn-$1 Mn in ARR from the domestic market itself – before it even thinks of expanding to a foreign country. That, in actuality, will be a transformational change for the SaaS ecosystem in India.

Build A Culture Of Customer Service First

But for Indian SaaS companies aiming to tap global markets, Chargebee, with over 80% customers outside India, has some key learnings to impart. And the most important one centres around customer service. Krish says,

“We always underestimate how valuable customer service is. While startups may, at times, tend to ignore it but from the customer’s perspective it is the most noticed aspect. We have learned that you can win against your biggest competitors by actually doubling down on customer services. So developing a customer service first culture is extremely helpful.”

Support Team

The second thing he emphasises on is not compromising on the product. He explains that, early on, if one is taking on big enterprises, it tends to cannibalise one’s road map. So, it is important to have a product road map and sticking to it through the early days without compromise.

Third, startups should pay emphasis on early monetisation. ‘The cheaper is better’ philosophy doesn’t hold well and one should be careful in putting the correct value on the product from the very beginning. One rule of thumb he says is to price it with peer products one’s customers are more likely to consume and purchase i.e. pricing it according to one’s segment.

Or as he sums up, “Every customer has a different idea of premium. Decide early on what is the premium your customers are likely to pay for your product.”

[This article is part of Inc42’s SaaS series where we will be covering different aspects of SaaS in India and abroad.]

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