How Paddle CEO Christian Owens grew to $90.9M revenue and 2K customers in 2024.

Intro all right guys so uh I'm Steven I am not a Founder so I am head of Parts Market at paddled so my role basically is to connect with information streams between the technical expertise and the ux knowledge of the products team as well as you know the communication abilities and the skills of the marketing team and so the real things we think about are you know number one how do we who do we sell to how do we talk about that product and how do we price and package by product um and so paddle Larry all-in-one you know payments billing and subscription management tax management solution but I actually come over to paddle from the acquisition of a company called profile last year which went for 200 million dollars we have uh free substitution Analytics tool we also have tools for uh automated your retention and optimizing the pricing strategy so a lot of today's presentation is going to focus on you know what I've learned in products marketing but also our work helping other companies with their pricing strategies themselves um and so over the next 20 minutes we're going to talk about number one process how do you actually get momentum on a pricing decision and who do you put in charge of it strategy how do you think about pricing what are the fundamentals when you're evaluating your products roadmap and your current project and maybe some quick hit tactics um hopefully we'll have time there's a lot to cover here but you can hopefully win so you can start getting momentum with York so you know I mentioned that we have this subscription analytics product we have 30 000 subscription companies a lot of them are SAS 20 to 25 of a SAS Market depending on how you count it so we have a pretty good macroeconomic view um into you know how people spending their time and how these different companies are growing and you know I have good news The bad news and bad news it's probably not a surprise so let's start with the bad news is the Market's not doing great right now right so we actually constructed an aggregated subscription index of how these different companies are growing segmented based off of you know how each vertical is going and we basically saw that um you know growth in the BBC Market basically flat lines starting late last year um Stanley this month the state is three months out of date um but when you look at the B2B side you know b2c is often very much a leading indicator for B2B so if you're assuming that bad trend is going to apply to B2B at some point then that's pretty worrying um and what's interesting is that you know starting stage lie August last year we actually started to see growth um slow down a lot on B2B space I've seen the uh an early cut of the fresh data we actually saw a bit of an uptick in this in January and February of this year but this is all below before all the Silicon Valley Bank stuff so who knows what that's going to impact things so how can The good news we go after this right and you know the good news is there's some fundamentals that you can focus on but we'll set you up for Success both right now but also will enable you to iterate much more quickly in the future ideally when your product improves or when marketing conditions improve so let's talk about those fundamentals How to think about pricing so how do you think about your pricing right and the first thing I want you to know is this is not a one-time deal you do not look at this once and then move on it's a process it's iterative and you keep doing it a lot of you probably already talked to customers and have some pricing out there but what I'm going to take you through is a systematic approach of thinking about it and hopefully if you can implement this you guys can actually get some you know low hang fruit at the beginning of this process so we've you know we get access to all this data and we've talked to thousands of Founders in our time and whenever we ask you know Founders what their like main focus is for increasing top line revenue are they generally fall in like three different um kind of levers this customer acquisition sales and marketing getting new customers in the door there's pressing and packaging figuring out what you're going to sell to your customers and how much you're going to get from them for that and then there's expansion Revenue selling them more products or you know the flip side which is obviously churn and inevitably we hear about people spending almost all the time on that sales and marketing stuff especially at the founder stage right spending all that almost all their time they mostly guest on the pricing work and they're not really working to gather Why is this bad data on it and why is this bad well like I said we gather data on what we're spending time on and we basically found that um you know there's way more impact on spending a bit more time on monetization a bit more time on retention compared to spending time on acquisition so you can imagine this basically as a Founder you know spend a couple more hours what's the impact of spending a couple more hours on a month on your pricing it's going to be enormous a lot of people leave retention on the table as well that's going to be pretty big so what I'm basically suggesting to you is just take a couple hours out of a week shift that from working with your BDO team or your marketing team and ship it over to thinking about your pricing and how much value your users are getting out of your product Create a pricing committee so how do we do this internally one thing we recommend is create a pricing committee um and you know we often see that this is a big barrier because if you know no one owns pricing then you never get any momentum and if everyone owns pricing everyone has complaints everyone gets into arguments you never get any momentum out of it so not having a pricing Committee of designated people to work on this is an enormous barrier who should be on this pricing committee well it should be leaders who can kind of surface feedback from different parts of your organization uh and also see kind of a force of a trees get an overlay of the land so someone product someone from sales someone from marketing probably someone from Finance in a capital allocation budgeting role as well and a lot of time we also suggest that you add someone as a project manager on this you know obviously you know Founders time is you know pretty precious so if you have you know obviously me from products marketing I'm biased I think someone product marketing could hold this since um this is traditionally a remit but if you have a product manager this is a very good idea for them to hold as well since obviously Bay Nova product Vision over Persona and obviously you know hitting deadlines of project management is part of a remit um and lastly you know you should have a main decision maker someone who you know puts their foot down and then decides what the group is going to go towards to break a time very often it's going to be CEO or CTO so you know um talked a little bit about this but you know what is this uh you know pricing coordinator look like well they should be you know housing all the data and all Version Control and all the documentation around the decisions made they should be you know taking that feedback and pushing through the politics navigating that and obviously they should be focusing on the project management making sure deadlines are actually set and hid Establish a research process um so you know next is what we I mentioned is establish a research process I'm going to get into the strategy a bit here but at a high level what this basically means is talk to the customer but I imagine you guys are already doing that but specifically set up a system for not just photograph customers but asking a well-defined set of questions knowing what hypotheses you're looking to test and collecting this data systematically so let's talk about the actual strategy here right so when I think about pricing I actually break this down to kind of almost three constituent players here number one is map your time or buyer segments and personas know who you're selling to it's match these people to the parts of a product that they value most so you can actually figure out how much value you're beginning and then lastly of course actually measure the value and you'll notice that like pricing is literally one-third of us two-thirds of this is just the legwork to get there I'm going to focus a lot about legwork because if you get that stuff right then hitting a pricing Point becomes easier and it's some becomes something that you can iterate upon over time Buyer personas and segments so talk about talking about buyer personas and segments buyers obviously have essential tenant of your business and many of you probably have a bunch of different personas a bunch of different um you know Target segments and so like I said the task is to figure out can we get enough information on these folks such that we can actually match into different parts of a product that they like and figure out how much value they're getting so you can price based off of that value and so when we construct personas we Customer personas don't just focus on the qualitative right um you know you've probably have a Persona that looks like this very qualitative what is this person's age very Graphics what um you know the seniority stuff like that I'm sure all of you probably have something that's at this level but it's not enough and the reason is it's all qualitative and certainly qualitative is necessary but you need to have more so what we normally do and what we actually do it price intelligently with our pricing software is um we help you design experiments um based off how to collectivist data um we help to collect the data for you and then parse through about to get the analysis now I know a lot of you are early stage and it's you know you're very and when that comes what I would suggest is you know obviously I would love for you to come work with us and do us robustly but if you're very early stage you're already interviewing customers interview 10 20 50 customers however many you need start from there because doing that is going to be much better than doing nothing and um so you know hopefully get you get a start and then maybe you know later on we end up working together right Value metrics and So eventually we end up ideally something like this right valued metrics what are parts of products do I value most and what elements um do I care for most about which variables we also you know I mentioned we have a subscription analytics product and we attach a lot of these characteristics to that as well so what is the love time value of every customer what is their willingness to pay how much are they willing to acquire and that's important for not just knowing you know what uh you know what how much you value them but it also you know helps to construct what we might actually call an anti-persona you know there's a lot of customers that you can probably technically service but they're going to distract you they're not your core Focus the unit economics isn't there so a lot of the time you know you might have personas but you can technically serve but they're going to distract Focus from your team and so a lot of the time it might actually serve to Simply say hey we can serve these people but we're not going to focus on them maybe we'll take inbound we're not going to go after vimond outbound Valley metric so let's start talking about you know how we kind of like match these people to how much value you've been getting right and the first thing is what we call a valley metric um you can kind of Define this as like the unit of measurement you actually use to set your prices or kind of more theoretically it's the unitary exchange that you put out in the world um a lot of people here probably price based off of pro user you're basically saying that number of users use responded is how much value we're getting out of this some people price based off of you know company size right the big of a company the more value they're going to get out of our product depends on depends on your particular company there's a lot of companies well that works but not always so one example I'd like to point to you since everyone probably knows this is HubSpot right HubSpot price is based their value metric is the number of Market contacts why because the size of your marketing operation is probably going to indicate how much value you're going to get from HubSpot if I'm a big company with a small audience I'm not going to get much value I don't want to pay that much vice versa you know like a profitable where we were relatively small but we had a pretty big marketing audience we have a lot more useful HubSpot so we should be charged extra for it so the first thing I would do is figure out okay what are potential value metrics but you can set your prices on that are going to be indicative of willingness to pay for your customers and if you're going to ask me you know like uh what are you know what is a good value metric generally we have like three um kind of characteristics number one is like I said at lines with customer value it scales with a customer you know if they get bigger and get more value then the value metrics should scale with them as well so you can alternate pricing and let's say it should be easy to understand obviously if it takes your sales rep 10 minutes to explain your pricing model that's not going to work right um and it's going to especially hurt if you're plg right like if it takes more than you know 30 seconds for your Target user to understand your plg pricing they're going to click off they're going to bounce you're going to lose them Get it right and so again if you get everything else right wrong but you get your value measured right that provides a foundation for you to revisit this and iterate later so absolutely get this right Feature packaging um something else to know about as well is um what we call uh feature packaging basically you know it's almost like whenever you see like you know a good better best like a three tier pricing structure what features do you put on each one based off of who you're trying to sell to um so how do you measure you know how do you figure out what's going to sort on H so uh what we what I like to do is actually kind of do an exercise of visby stuff of coffee you know everyone here probably drinks a ton of it and um we can kind of sort through a lot of the different characteristics of coffee but basically suggest how people might price right so let's talk about like you know characteristics like you might have taste country of origin like how exotic is the you know origin of coffee temperature you know is it hot is it cold is it sufficiently so um it has what impacts you know both um you know my will is to buy for Valium getting but also my willingness to pay and you know we actually did a quick exercise on this and we kind of graphed um how all of these characteristics got there taste is you know high impact and willing to pay hype actually let me step back so um you know I I have an admission to make which is I drink a lot of uh cheap crappy Dunkin Donuts coffee why because I don't drink coffee for the taste I drink it for caffeine and mostly so I have something hot to start a day off with in this in the winter something cold and something cold in the summer and so it's like you know as long as it gets that job done you know with the 20 sugars or whatever then I'm fine but if they were but if Duncan raised their prices to Starbucks's level I'd probably buy the Starbucks instead right so taste temperature is something where like you know it doesn't I'm not necessarily willing to pay just for that cup to be hot but if it's not hot then I'm not going to buy it at any price so it's almost like what we would call a cold core feature then we have taste right something that broadly increases the demand for that but also increases the willingness to pay for that product for um for that uh for those customers so you could think of Starbucks as being something that you know hits those basic requirements but also tastes a bit better they could command a higher price they can also go for a broad set of a market we call this a differentiable feature something that will actually help you compete across the board unless we have something like corn Street of origin It Takes a very specialized part of America to actually care about that stuff most of the time it's going to be real like local specialty coffee shop so the country of origin becomes something that has a high impact on willings to pay but not on relative preference there's only a small part of a markup it really cares about it but the part of a market that cares about it cares about it a lot and so you know we have we've generally often measure the relative preference for all these things and when we actually um gravies we actually kind of sort them into four different categories um and in particular there's like core features stuff that is necessary for your product but isn't going to impact their willingness to pay you have differentiable features stuff that a lot of people will in fact like and will increase your ability to charge broadly and lastly have add-ons stuff that only really applies for a small part of the market but the people who really do care are willing to pay more and so you know again this is a process your product should improve over time the market May improve and that impacts fullness to pay so as your product brand improves continue to iterate through this process and therefore you can tailor pricing based off of that product Market fit so Changing prices I mentioned it before like the idea of like changing prices we do in fact recommend you know changing prices relatively often and not making this a once in a generation thing so how do you go about this right way well the most important thing is get the proper messaging you know I think we can all think of companies like gumroad that have you know not gone this quite right in the past so proper messaging is key and there's generally three guidelines that we give number one is relate to the value delivered not internal factors don't say I gotta protect my Origins say hey I know this hurts for you guys but this is going to help us fund Improvement of our products and we have this stuff coming on that's going to increase the value you get and so related to that we also recommend being explicit about what you're changing and when you know we've had smaller competitors who gave a 30 paragraph email and then put the pricing change in the 28th paragraph that's just I don't think that's ethical but also it implies that like you have to hide the manual charging instead of being upfront about what you're charging but also about the benefit about the value you're giving them so be upfront but also do be empathetic and do show Goodwill and understand that hey maybe some of these customers you know they've been loyal to you they've signed up for you early on maybe it can take some flexibility in kind of in terms of Grants offering prices and it really depends on which kind of products you have right so you know we have a huge database of examples of this since we help with this messaging um and you know uh this is just one example I'm happy to email um these out if you uh if you get my email um but you know we have an example of like basically communicating with value and um showing being empathetic and um one thing we often do is at the end we'll put in the PS like hey if this materially impacts you like your crap you're gonna crunch for cash right now let's let's talk we want to work with you we really care about the relationship even if we think the pricing changes Justified cool um am I out of am I out of time got it cool um yeah so I'm gonna have to leave the add-ons out but uh yeah hopefully this was helpful thank you

yeah trip Brockway uh vpa Global sales at paddle uh it's gonna be a very different kind of talk so let's focus on sales funnel more focused on uh kind of broader Trends in how to deal with the economy getting weird uh which is really what we're going to focus on here so um let's keep this super conversational by the way uh so just like with Kyle like jump in with questions interrupt me at any point if you guys want to go deeper on on one of the topics here so you all are probably feeling this a little bit anyone feel like the everything's going great economy is great nothing's changed yeah cool um we're seeing the same thing so we sit on data for about 40 000 SAS companies um and so we have a little bit of a lens into this uh and so we aggregate this in two ways one is looking at b2c SAS companies so often a leading indicator as to how the economy is doing and what we've seen here is that growth is very much flatlined uh in in the past couple of months especially and when you look at it from a B2B perspective uh this trend also continues uh mostly in the form of churn so this chart's a little busy but basically churn is up a whole point in half um relative to two and a half years ago so things are harder if you're feeling that it's real it's Justified so if you're a CEO and you're nervous tell your board that yeah it's real everyone's feeling it et cetera so obviously the question from here is like what do we do um before I get too much into that though I want to make things a little worse for you uh things are are just broadly hard and they have been trending in that direction in general um this is over the last five years uh average competitors in a given industry and SAS is up 15 15 16x CAC is way up obviously people are demanding more money and they're leaving faster so things were already getting hard and now they've just gotten a lot harder and and worse so um say all this to say uh status quo probably isn't going to work so you do need to think about how do we how do we get ahead of this and start to make some changes so we're not surprised um so let's get into that a bit uh our view at paddle we're very opinionated about this is the right thing to do here is to focus and what I mean by that is on the things that your company is uniquely qualified to do to win uh so that's your team hiring great people having an anti-fragile sales team for instance making sure they're well taken care of I know what they need to do to succeed having a world-class product and understanding your customer better than anyone else um we did a survey of these 30 000 SAS companies 40 000 SAS companies that use our platform to ask them uh why can't you do this like what's in your way of actually focusing on on the things you should do to win by the way we also asked do you agree with this and they all said yes of course um or early 90 95 uh and what we saw from folks is there's sort of like six big buckets of things that were causing them to be a bit distracted from those core competencies um one is customer Acquisitions like how do we how do we grow how do we acquire more customers uh pricing and packaging expansion revenues how do we upsell all the operations around Finance billing compliance sales tax all the boring stuff and then of course churn uh and if you know our Patrick Campbell he does a 25 minute talk where he only says churn uh for 25 straight minutes so I suggest Googling that if you haven't seen it because it's fun um there's a ton of stuff underneath this that we also uncovered uh and we're actually going to get really tactical and talk about some of these things um because while we do think that you should be focused you know with almost all of your attention on your customer your team and your product obviously these things are real and they're going to be hitting you in the face every day and there's stuff that we can do to address some of them so let's get into it um the first thing we recommend thinking about right now in this moment given where the economy going is is your positioning so how are you talking to the market who are you talking to um and like tomorrow our recommendation would be to go look at this um you should probably change what you're doing if you haven't already tomorrow basically a couple things to look at um what is your sales messaging so to to Kyle's Point how is your team actually going to Market what are the things they're saying to customers right now if it's the same as it was 12 months ago you've got a problem second point is um who are you targeting as we talked about earlier a really smart question around how we optimize the funnel um thinking intelligently about focusing on who you're talking to right now what we recommend is is to really hone in there so rather than trying to talk to everybody who's over 100 employees blah blah blah looking at your data to understand where you win how you win and really focusing in on key core segments so a paddle for instance we were selling to every SAS company we've stopped doing that we were selling to only a very small subsection of the market right now and we're basically saying no to everybody else we know our effort is better placed there it's more likely to convert to revenue we're literally turning people away right now and not doing any outbound Outreach on companies that don't look exactly like the kind of companies we know are going to convert are more likely to convert expansion Revenue so um old adage I think most of you probably know this one it's easier to get an extra dollar from a customer you have than from a customer you don't so what we see when we look at this across the 40 000 companies in our in our portfolio um is that the highest performing ones 20 of their revenue or more is from their existing customer base unfortunately most uh the vast majority have zero or negative so what do we do to fix that um the first thing is multi-product so this is a little bit beyond sales and marketing obviously so for those of you who are VPS sales CMOS go yell at your product team or your CEO about this one of the first things you can do uh is is adding a different product or splitting your existing product out into multiple products um companies that do this grow at 30 50 faster rates than those that have a single product is another really easy thing to do with an existing product or platform that you could go sort of mess around with tomorrow um we see this as like very commonly under thought about in the market but companies that do this well have 18 to 54 higher lifetime value um when they have at least one app on all right this is one of my favorite topics uh localization so um I work for paddle we're a global company headquartered in London uh most companies in Europe and abroad think about this from day one um U.S companies often do not think about this and it's a big mistake if you look at asana's S1 uh 40 of their revenue growth was from International uh and it grew at a faster rate than their U.S volume did so this is often a thing that U.S companies just like ignore it's like oh the Market's huge but there's usually a big opportunity here that's not that hard to get um easiest thing you can do is cosmetic localization so if you have a checkout for instance or you know a sort of buy now page or talk to sales change the language change the currency you're showing on your pricing page to match markets you might want to penetrate super easy to do like there's widgets you can download tomorrow that do this for you automatically we recommend going a lot deeper than that and we see in the data the companies that do this well perform a lot better so adding multiple currencies companies that do that grow 12 faster those that have a lot of currencies 25 plus grow 25 faster payment methods again if you're just in the U.S you're thinking credit cards fine wire transfer ACH is fine around the world there are a ton of different payment methods that are preferred so for instance in Germany most people like to use PayPal to buy software kind of blew my mind when I learned that but 60 of our transactions from Germany are done via PayPal something as simple as that can dramatically increase your growth rates another really interesting uh thing to think about is um pricing power so it's again is the thing you can do tomorrow especially if you have a sort of self-serve checkout companies in the nordics and Western Europe are willing to pay 20 higher prices for the exact same product relative to the US so go increase your price by 20 in Western Europe and watch your conversion rates stay the same in other parts of the world they're they're not right purchasing power is lower Etc you can actually grow faster if you reduce your price in places like India and Brazil relative to us so again something pretty simple that you can look at tomorrow and improve growth rates um tax is a really fun one that if you want to go deep on we think a lot about it grab me after um it's a sneaky one that a lot of folks aren't thinking about uh and a fun fact we have is um in Europe uh the expectation especially from a B2B transaction um is that you essentially exclude the tax meaning you you show them the amount of tax that you're applying to the transaction instead of just bearing it in your product in your pricing excuse me so companies that are quote tax inclusive meaning they're just adding tax to their price instead of showing it as a different line item grow at 15 slower rates so you have to pay tax it's not an option this is all changed dramatically in the last seven years by the way so if you're not paying sales tax today you really need to look at that because um we had a company approach us a year ago um who owed five million dollars to the UK and back taxes um and and they were not giving up uh on collecting that money so it can be a sticky one that um Can can bite you if you're not careful all right I'm not going to dwell on this um because we did a talk earlier um here uh on this topic deeply if you want to talk more about this grab me we recommend you change your prices once a quarter I'm gonna leave it at that um because you're probably not thinking about this at all as a monetization tool um change your price once a quarter second thing is have a pricing committee so having a having a group of people come from from products sales marketing probably your CEO who are responsible for price and look at it monthly easy thing to do to start to think about how to actually get into a rhythm of changing your price frequently all right everyone's favorite topic churn um it's obviously getting worse right now uh a couple things you can do to stem the tide there's two types of charm there's voluntary churn someone says I don't really like your product that much I don't want to pay you anymore involuntary churn I actually like your product and I want to keep using it but for whatever weird reason I'm not going to pay you we're going to focus on that type of churn often it's like around 40 percent of total churn and folks to not think about it so one thing you can do is term length this is fairly obvious um ask for an annual deal instead of a monthly deal I think a lot of folks know that what's maybe a little more non-obvious is that you can do it after the customer has already signed up so whoop is one of our customers and what they do after month one and they look at usage data to inform this is they'll send an offer to a user who's really happy who's using a lot and say hey by the way you can get a big discount if it's Hannah for a year cancellation flows so when someone's going to cancel your product they're like on a freight train to I hate this I don't want to use it ever again see you later I'm mad for whatever reason so you're probably not going to save a ton of them but there's some subtle things that you can do to save some of them and a lot of that is just basic human psychology um so uh what we recommend folks do is add a little prompt that says hey like understand you're you're wanting to cancel y help me understand that better based on on the answer serving up a little bit of nostalgia why did you like us think about the best thing of of being a customer of ours what was that thing doing something as simple as that as prompting them to think about the positive we've seen can reduce churn by 10 to 25 percent again not a huge lift simple thing you can do Taps into a little bit of psychology that can reduce charm um how many of you guys look at payment failure okay everyone should raise their hand next time I ask this question um this is another sort of low-hanging fruit thing that a lot of folks don't think about um and it's typically the biggest bucket of involuntary churn um so a lot of things you can do to to fix this and again it's really not that hard um the simplest thing you can do is use our product retain otherwise just making sure you have some Dunning flow in place to get ahead of credit card failures so making sure you're understanding when a credit card is about to fail and prompting the customer ahead of that to change their payment information and then having recovery after that retries SMS email prompting them to update their information to to actually have that transaction go through again that's often 50 or more of involuntary churn which is usually about 40 of total churn so um simple payment recovery can increase your your recovery by um by 20 percent okay we're basically done uh let's turn it over to to q a anything you guys want to dive deeper on that we talked about I went very fast you mentioned the recovery the uh that we can anticipate the failure and try to direct from alternative the credit card there's tools to help you do this so I would just use a tool because kind of the easiest thing to do but it's based on when the credit card expiration date is uh I'd be a billionaire if I need the answer to that question yeah no idea I think it's going to depend obviously like things are very fluid um I think you know are we in a recession or not it's not up to me to Define I would argue based on our data like things are probably going to get worse before they get better unfortunately and I don't have an answer as to when it's going to get better again yep it's a localizations okay step one and let's start let's go into that process real bench is how you doing yeah some yeah and this Washington literally pops up constantly right and are you thinking about like your content base are you think about localizing the content itself rebuilding everything um that's that's going to be a lot harder than some of the stuff I suggested obviously and I don't have a great answer for for that depth um it gets a little Beyond you know what we've looked at the the buying experience is what we're normally thinking about um and that does matter and we see like we've seen um rates vary as much as 10 up to 50 on a checkout so um yeah it's wild um and it's a pretty low hanging thing that you can that you can go do um so you know if you if you do that in the inverse you're probably losing out on you know 10 of Revenue um potentially the payment failures we see is a big one um we look at this all the time with our customers and we'll see folks missing out both on the initial attempted payment and then on subsequent attempted payments yeah upwards of like 10 of their revenue 15 of their revenue and when you add all this stuff up it can be super super meaningful anything else cool if any of this stuff is interesting grab me happy to go deeper appreciate it [Applause]

hello everyone my guest today is christian owens he is the founder and ceo of paddle before paddle he created his first software business from his bedroom at the age of 14. having grown the business over a million bucks in revenue he decided to quit school at 16 to focus on building startups and founded paddle when he turned 18. christian are you ready to take us to the top i am all right tell us about paddle what's the company doing what's the revenue model um so essentially and kind of going to my background a little bit started my first software company sort of really early through that process noticed how um kind of difficult it was selling software b2c and b2b um all around the world and no one was really building the infrastructure around like payments taxes operations recurring billing customer management sort of optimization like all of these tools um specifically for software sas businesses um so i found that a reasonably interesting problem uh started focusing on that founder of the company in 2012 um and i've been kind of going from there revenue model is that we work with sas businesses so kind of recurring revenue um but we take a transaction fee on all of the sort of the kind of volume arl that flows through our platform okay so when you look over your past 12 months of revenue what percent was pure sas the flat rate sas fee versus your your transaction model so we didn't charge a flat weight rates offspring so we only charge a transaction model but all of our transactions are on underlying recurring subscription rates yeah so that's what i'm asking right is how much is the underlying is there a difference or is it all underlying recurring subscription so the underlying businesses of the volume that we're purchasing is all underlying like monthly annual subscriptions of which would take to the businesses yeah so what i'm asking you is so a lot of times people that follow this model we've had a lot of other companies in the space on they'll have a flat rate for a certain volume right so you're doing a million bucks or less than ar you're gonna pay 100 bucks a month plus if you go over a million bucks an ar you're gonna pay us two percent of all your volume over that amount d do you have that model or not no no so we charge a flat five percent across everything okay no matter what if you do a dollar a month or if you do 500 million a month you're charging five percent correct okay um that i assume that doesn't work at scale if someone's doing 100 million bucks in revenue they're not going to pay you 5 so they do so if you look at um if you look at the aggregate costs of doing all of the functions that we provide for example payment processing across like regardless of underlying payment method dealing with foreign exchange and currencies we take all of the liability for risk and fraud we pay their taxes for them um sort of like calculate and pay and remit sales taxes in 40 something different countries it's like if you actually look at a small scale if you're doing 100 grand a year sort of you don't really care how much it costs because it's probably cheaper than doing it yourself if you're doing 100 million bucks a year you can actually quantify the cost of like all of these different tools that you have to buy the amounts you're paying on kind of payment processor fees the teams that you're building internally the consultants that you have to pay to deal with sort of international sales tax whatever it might be is that more than five million yeah okay so you have customers at that level processing 100 million bucks or more through your platform paying five percent no so like right now and this is deliberate the law just probably does i think in the region of like 45 million area okay yeah that by the way that like strikes me as like i mean this would if i'm just starting a company you're like a saving grace i'm like i have zero interest in setting all this crap up myself i'd much rather pay you five percent but but what i'm saying is like at some scale like it may actually not by the way you might not have any interest in this customer segment right it seems like it's a harder decision to verify to say yes let's pay five percent so i think i think there's like two aspects to this like one we had the initial exact same assumption when we like started the business so we started the business we were building the product for people who look like us it was like a couple of people in a bedroom starting their business they don't really care how much it costs and we always had the assumption sort of like probably around when we had the series a we still had the assumption um that okay this is never gonna be applicable to anybody who does five million bucks 10 million bucks whatever the number is yep um and then eventually every single time that we set one of those upper ceilings for ourselves we found that willingness to pay was still there because the complexity and the amount of like resources these businesses are spending on solving the problem increases with their scale as well um there may there may be a ceiling we don't know what the ceiling is yet we have kind of inbound interest that we turn away from companies who are doing want just the dynamics the product is slightly different and we don't necessarily want to um kind of sort of go up market too quickly um and alienate existing customer base but sort of there is the demand there and it does exist so when you look over the past 12 months like total total kind of volume through your platform and are you in the billions yet or what's that number it's hundreds of millions hundreds of millions hundreds okay can we be a little more specific i mean is it like 400 million 500 million uh it's less than 500 million okay okay but but north of 100 yeah okay very good and and walk me through so 2012 was launch date did you pivot at all or was this always the concept from day one uh so very early concept was a version of this but it had a bit more of like a consumer aspect to it in terms of like a marketplace for also discovering sas products um we persisted with that for like a year or so before we kind of shut down the b2c discovery aspect of it and focused all on the like back end infrastructure and tooling and what's the teams i say what have you scaled to uh we're a hundred and forty people oh no oh great where's everyone based uh all in london at the minute oh great and bootstrapped or if you raise capital uh so we've raised 24 million oh christian i like i liked you so much until you tell me you went to the dark side you raised you raised capital huh yeah all right why raise capital why couldn't you stick it out in bootstrap so like we started the business we raised like angel money at least we raised like 150k to begin with uh and then in the first sort of four years of our existence like we'd raise we raised less than a million bucks um and then we and it's kind of with this realization that this actually does scale with company size uh like our ambitions got a bit bigger in terms of okay we got our first company that was doing a million bucks through the platform and paying us sort of like significant revenue does this scale then we got to the point where we realized it does and then we were like okay we actually think that there is an opportunity for somebody to build kind of this almost sort of like the second most important piece of infrastructure the software company buys which is sort of like the business infrastructure to aws's technical infrastructure um and that was sort of the motivation behind raising more money is sort of ambition kind of got a little bit bigger as we understood the market more and not not a horrible thing what have you scaled to in terms of total customers today uh so it's around about 900. 100. and walk me through like how you've gotten these folks obviously you have a great story because you essentially built the software for yourself um that story i'm sure sells but walk me through i mean how are you getting customers today what's the growth channel yeah so uh first four years of the business solely outbound sales and outbound sales in the loosest possible sense in terms of we basically just talk to people who we like their products from or what customers have already um and the problem really resonates and then they buy it um so we've like scaled that as a process for about 25 30 people in sales today um inbound marketing sort of like all of that stuff was pretty new for us maybe 16 18 months ago when we've hired our first vp marketing um started to scale that team it's about 10 people now it's probably 20 25 of new business inbound versus the rest outbound today so you said 20 inbound yeah yeah so how are you targeting when you you go outbound right i mean are you looking at like pitch book and owler and kind of ar ranges or how do you target accounts so it like happens on two dimensions so yeah there's the size dimension of kind of the real time that sas companies if they're sub a million sort of they experience this problem immediately if they actually go to market um then like we wait for a trigger so like the trigger might be that they raise money or they start to um hire the sales team for the first time or really begin to scale new market or kind of whatever it is so in terms of size we actually on the outbound side because the deals are bigger we look at companies doing one to 30 million arr and we talk to those businesses and usually there's sort of some pain point or anticipated pain point as they're scaling that they want to address that's not really working for them right now they're kind of throwing people at it um and sort of they're realizing that they're spending a bunch of engineering resource on this problem so there's the size bracket and then sort of like the second like thing that we look at is is kind of what's this like compelling event like are they in growing internationally for the first time have they sort of have they announced that we've got a bunch of big customers in like japan and then we visit the website from a japanese ip and it's not localized they don't support the payment method sort of uh they don't support the currency whatever it might be maybe there's a regulation change or of sort of like or a forced regulation change they open an office in a new country that changes how they think about like sales tax or something if they actually have a nexus or like they don't so like any of these compelling events and then we just we use a ton of data from um like crunchbase the stuff that you do um like all of these things to get kind of these signals um you're talking about you're talking about when you say what i do you're talking about the database that get lacka yeah um love that that's great yeah so like we use all of we like use all of these signals we build our own internal database um of these things we track a bunch of other stuff like what tools are they using because some of those things can be indicative of um like changes in the business or like maturity in the business so they just they just swapped out intercom for something else yeah you're using like siftery or built with or or you know one of these come yeah very good talk to me about so economics here is critical right so churn and i don't talk about logo churn here because i'm sure you have customers that like did one million last year now they're doing 500 grand it's not logo turn but that's revenue churn for you so what's your revenue turn look like annually and how do you keep that low so revenue china's actually so we see on average if we aggregate all of the customers we see about 25 to 35 growth um in underlying business each year um so the if we were to stop all sales marketing everything today with the 900 customers that we have um top line revenue um would grow roughly thirty percent sure split that out for me though so what you're telling me is net revenue retention is called 130 percent break that down though into gross and expansion so what's gross churn and then obviously you're expanding by more than 20 or 30 percent uh grocery is low like we look at it more on a low chain basis in terms of um sort of on the churn side because sort of like these businesses go in cycles so they might have um sort of an up here or down here but the general kind of trajectory is growth if we look at logo churn we have sort of 900 customers today um and like we've lost in terms of actual churn uh eight customers in seven years but by the way losing losing a losing eight customers that only do a million in ar is no big deal losing eight customers that do 15 million in ar is a much bigger deal that's why i'm trying to so why do you care about logo churn versus why not just only look at revenue churn since you're tied to revenue five percent so we look at both it's important for us to look at both and we look at the reasons behind the the logo chain the revenue chain piece um is less of a concern because sort of we actually consider revenue chan is going to happen in two instances or three one we screw up we do our job bad our product isn't great people don't like it they move away the second is that the businesses fail like they go out of business they decline sort of whatever but that's almost that is almost uh kind of sort of those customers are retained like not necessarily in customer success like those customers are sort of out of here it's out of your control yeah that revenue is retained in discovery of sales process so like we want to work with companies where sort of the biggest like facet of these companies um being successful we've seen is if their ambitions are aligned with ours so the company that is a million dollar arr company today who wants to be a 10 million dollar company like those are the customers that we want yeah but christian come on like who who's ever going to say anything except what you who's going to say i'm a million dollar company today and i have no interest in being a 10 million dollar company like the the well i think the distinction is like the lifestyle businesses the people who are happily running a lifestyle business and they're okay with making a million million bucks yeah like we don't we don't necessarily want those customers we want sort of um kind of people who have ambitions to grow a business and sort of they're doing that by by creating value in a product like they're building a product where people want they're not necessarily kind of doing some kind of arbitrage where they're buying they're spending 100 bucks on you see christian just be clear these are most your customers though are sas customers correct customers yeah okay yeah so i mean even a million dollar flat sas business if you're taking five percent that's 50 grand a year for you in terms of acv i mean even if they are flat and growing that's still good revenue for you no for sure for sure like in terms of the outbound sales if you think of like and you know this like if you think of all of the sas companies exist in the world yeah uh and we have 900 of them like so if we can afford especially in an outbound sales process we can afford to be reasonably picky about who we target of course otherwise we drown we drown in leads of course so yes there's going to be a pro there's going to be a point at some point hopefully like where where the solution that we've provided is so ubiquitous among these software companies that like yeah we're going to relax the sort of we're going to want the businesses who are going to do a million bucks a year and only going to do a million bucks yeah you'll have to you'll have to move downstream at some point yeah yeah i i don't mean to keep cutting you off but we're running out of time and i want to get in one or two other things here um i assume you're still burning cash today right because you've raised so much yeah okay okay so burning cat i mean do you have casual positivity in your crosshairs or no no you're not okay guys burning money investing in growth and then in terms of scale what can you give me a general sense in terms of ar what you guys are at today uh we're just north of uh like 10 million ten 10 okay good so that's healthy right so so 10 million uh that would mean you're processing about 200 million bucks over the past 12 months five percent of that is 10 million i'll leave you to do the math yeah sure well i just i just wanna make sure there's no other revenue models right it really is just that five percent plus 50 we don't charge professional services we don't do any of that stuff yeah yeah that's great um okay very good and then in terms of growth so if you're kind of pushing 10 million today where were you exactly a year ago uh we've roughly 3x revenue every year oh that's pretty good okay so we'll call it kind of 270 270 grand about a year ago now doing 830 840 grand a month uh that's healthy growth and most that growth is coming from expansion or new logos totally uh so the so we have so the 30 like expansion um has remained true pretty much at least for the last three years so the majority of the growth is coming from your revenue that's great congratulations very good um any plans to raise additional capital um sort of i think we're pretty well capitalized right now um in the last like 12 months we raised like 20 million bucks of the 24 that we've raced um so we're pretty well capitalized um we're reasonably opportunistic about fundraising it's sort of like when there's a business case we don't like doing it for the sake of doing it um maybe sometime next year and payback period real quick i forgot i skipped this so like when you're getting out and going like going after a million dollar ar com company what are you willing to spend to get that customer we target internally payback of about five months okay that's actually very healthy for a funded company i know most people are pushing 12 months so that's nice uh very good all right let's wrap up here with the famous five number one what's your favorite business book uh hard thing about hot things number two is there a ceo you're following or studying right now uh jeff bezos number three how many hours or what's your favorite online tool besides your own um zoom number four how many hours i sleep to get every night five christian unhealthy man how do you do that i know i know it's crazy i'll work on it what's your situation married single kids uh single okay no kids no okay and how old are you 24. yeah see there we go there there everyone listening who's older than 24 is going ah that's the reason all right and last question what do you wish you knew four years ago when you were 20 focus guys focus is key launched paddle back many years ago and he was doing trying many different things and marketplace everything now really just all in on doing all these things critical for a sas company serving 900 customers that have processed over 200 million bucks in terms of transactions through him over the past 12 months taking about five percent of that so he's pushing about a 10 million dollar run rate today uh they've about three xd over a year they're burning cash that's okay the economics look healthy net revenue retention 125 percent targeting a five-month payback period on new accounts 140 people in london again raised about 20 million bucks to fuel growth christian thanks for taking us to the top thank you very much