Hi Krish long time, hope to meetup in person again sometime soon!
So we originally thought the number of active subscribers was the best value metric for us, but a couple of years ago we switched to MRR-based pricing, where we charge 0.25% of MRR (unless you are on a custom enterprise plan). The main reason for that change was that we were getting a lot of B2C companies using our product with very high subscriber volumes and low revenues. So our pricing model sort of broke and we ended up discounting too many deals. On the flipside some B2B customers had huge revenues but very few customers and were on our lowest pricing tier of $35 (or whatever it was at the time).
So shifting to MRR-based pricing allowed us to eliminate discounting from our operations which has made managing our business just so much more pleasant. It also better aligns our pricing with our mission which is to help subscription businesses grow their revenue, so if we’re successful in helping them do that we also get to benefit from that upside (used right, ChartMogul should help inform decisions that result in inflections well in excess of 0.25% of incremental MRR).
The introduction of a free plan was in direct response to our integration partners like Stripe, Recurly and Chargebee (of course ) introducing (sometimes lightweight) subscription analytics into their billing offerings. When a company has under $10K in MRR then every penny counts and paying for advanced analytics probably doesn’t make a tonne of sense over using something that’s free and workable with low volumes of data. So our free plan (which is free until a company has over $10K in MRR) is to encourage startups to start using ChartMogul right from day one before they even have their first customer, for us this is a really exciting time and we never want to stop working with startups at their earliest days.
So our two direct competitors have both built out features for doing email dunning, and we have long resisted adding this (despite many customers and prospects asking for it) as well as other features and add-ons we felt aren’t really in our sweet spot. We want to be the best in the world at subscription analytics and reporting, so we’ve gone really deep there, building out a lot of functionality that’s very specific to our domain that no one else has done before.
With regards dunning specifically, we actually partner there with an awesome company called Churn Buster who are really the best at dunning and that partnership approach works well where we can present a combined solution to a prospect consisting of the two best solutions for their respective domains.
I think if you don’t go really deep on solving one problem better than anyone else then you can end up covering a broader range of use cases, but your product can start to look like a Swiss army knife and as your customers scale they end up needing to move to more powerful domain-specific solutions. Having said that, to me Intercom feels a bit like a Swiss army knife for startups and they’re doing fabulously well (and we’re a customer).
What is the biggest lesson you have learnt from your competitors?
So our two closest competitors are both very good at marketing and evangelizing their companies, and I think it’s something we need to get better at. Our approach has too often been to let the product do the talking, but you miss out on a lot by just doing that. I should to do more AMAs
The people part of company building is the hardest and most important part. Most other problems can be solved if you have the right people are on the bus (and the wrong people not on the bus, which is just as important though not a particularly fun topic).
I think if you have people who are excited about working together, and working on the product/problem you are trying to solve then failures don’t really matter too much in the big picture, there are good weeks and bad weeks in startup life but I think everyone understands that.
As CEO the most important thing is to hire and promote the right people and to set a clear vision. I’m still learning that
How do you educate customers when you are a category creator targeting SMBs? A lot of outbound may turn out to be costly, your unit economics may go for a toss. Inbound may not work at all, since you are a new category! What are some of the less costly education tactics?
Content is amazing, if you truly nail a piece of content then it can get you noticed, and get you leads. The news media are the masters at this, their articles, opinion pieces, etc. get thousands of shares, we should learn from them. Having an opinion makes people interested in what you have to say, that’s partly why the Basecamp guys are so interesting, they put out a constant stream of their opinions (sometimes even publishing books of them).
Subscription analytics is a category of product, and one that we lead in. However, over the years we realized that what we’re building is something that fundamentally works by ingesting subscription/revenue data from different primary data sources, cleaning and normalising that data, and then we generate subscription metrics and other revenue reports off of that. Now from that those datasets you can do Subscription Analytics, but you could also send those metrics into an external data warehouse perhaps, or into Segment to be used elsewhere in the organisation. At that point the use case is not for doing subscription analytics but for using ChartMogul as part of the data stack of a company.
It was this thought process that led us to articulate this category vision for a Subscription Data Platform, which is what ChartMogul has become. One of the things a subscription data platform enables is subscription analytics, and we certainly do that too, but the product category we’re creating is a subscription data platform which has a broader set of use cases.
Do you have any internal definitions / measures of how you can confidently say you have succeeded in creating a category? And if so, it would be fascinating if you can share them.
I think we were part of a group of companies who created the subscription analytics category. I think it took a few years before that became clearly a category. We’re not there yet with Subscription Data Platform, we only launched that in March. I think when we start hearing others talking about their need for a subscription data platform, without necessarily talking about needing ChartMogul, then we will have been successful, it will likely take a couple years.
Finally – what have been the toughest challenges so far in creating a new category?
I think the hardest part is keeping up the momentum, you have to remember to do it, to keep pushing, to continually publish content and thought leadership pieces, PR, etc. Zuora are probably the masters of this in the subscription space.
So we’ve been remote for about 1.5 years, but certainly the past 4 months or so has been the hardest, one way to solve for isolating impact of remote is to go with the team to conferences, or have off-sites, and that’s all gone away this year which has made it tough, but I’m hopeful that will return next year.
We’ve found tools like Notion invaluable for knowledge sharing and collaboration. I think timezones are the hardest thing to solve for with a remote model, making sure teams who need to work closely together aren’t too far apart in terms of timezone is important.
One thing we did last week which really helped was having our first ever hackathon, we split into 9 teams of 4 people who rarely work together and had 24 hours to build something new and each team had to present it using Loom and that worked great and I think got everyone energized working together.
We recently hired someone as Global Team Assistant, and part of that role is to look for ways at promoting collaboration and team bonding across the company.
Not a straight answer more than a string of thoughts but hope it helps
Thank you so much for taking the time out to answer all the questions with such openness. There are a lot of solid takeaways in there!
I am absolutely in awe of your approach to content, churn, and category creation. There’s so much nuance to your responses that I’m sure all of us will be able to take away some very actionable lessons. Also, I really loved the Swiss-knife analogy, it was so succinct yet profound.
Thank you, again, for sharing your hard-won lessons and insights. Hope to have you join us for another session very soon!
Thinking of early employees and the leadership team as co-founders makes so much sense, given how closely and deeply we work with them. And I agree, making time for oneself as a founder is — far more than we realize — one of the most critical decisions we can tend to. Without it, we risk straining (mostly unknowingly) all the other decisions that need our attention. Thanks for your time Nick!
long time, hope to meetup in person again sometime soon!
