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Nick Franklin on starting ChartMogul and growing a SaaS business

ChartMogul Founder & CEO Nick Franklin recently took part in an “AMA” session on Inbound.org, where he answered questions on metrics, growing a SaaS business, his experience at Zendesk and more. Here are some highlights from the questions posed by the Inbound community.

You can read the original AMA thread here. Thanks to Diego Cordovez, Harry HawkAlex BeletskyVal Sopi, and Brian Lenney for the great questions!

Was it difficult for you to switch from being responsible for Zendesk’s business to creating your own product? Could you tell us a little more about the process?

As I had been on the commercial side for quite some years my limited coding ability had diminished (I’d previously worked in C++ and LAMP stack). So around 2.5 years ago I started to teach myself Ruby on Rails and then Backbone.js and D3.js, so these were the first things I did to help me transition back into making things.

I eventually hired two engineers to work with me and we got to our beta version (and then funding round) that way. From there we’ve expanded the team and I’ve stepped back from actual coding myself, but am still overseeing product development.

What are the most important things you’ve learned at Zendesk?

I had barely sold anything before joining Zendesk, so I learnt about software sales (the Zendesk way) and a lot about how a business scales – Zendesk kept doubling in size all the time so there was so much to learn there, e.g. I started hiring people and managing a team for the first time.

Which marketing channel you consider as the most promising for your company?

Word of mouth is starting to take off for us now we’ve reached a certain size, we also invest a lot of time in creating great content.

Is it difficult to promote an online product in Asia? What particular markets are we talking about? Could you share some advice for companies that would like to enter these markets?

We setup a Tokyo office to serve Japan, this is a market that I personally found very challenging but was lucky to find a great country manager to run things there.

What I call the ‘English speaking’ Asian markets (South and South East Asia) are certainly easier for someone from the US, UK, etc. to make progress in, e.g. India, Singapore, Hong Kong, Malaysia, Philippines, etc. these countries have a high level of english proficiency and feel culturally closer to the west in how business is conducted (history likely playing a part there).

Did you read any good book recently you think everyone should read?

While we’re on the subject of Asia I can recommend Asian Godfathers by Joe Studwell. He has a newer book, How Asia Works which I’m planning to read also. Just saw on Amazon it’s one of Bill Gates’s Top 5 books of the year so I have to read it now!

Around 28% of startups die because they run out of money, and that’s cruel. What would be your main advice on how to reach Product Market Fit before that happens? Is there any singularity for SaaS businesses?

I think the main thing is just to manage cash well. Create a financial model in Excel that tracks your cash in, expenses, and how you expect those variables to change over the next 12-24 months under some different outcome scenarios (e.g. good, ok, bad). Might be a bit simplistic but hope for the best and plan for the worst.

One of the main problems that haunts a young SaaS is to balance value and pricing, in order to close more deals. What are your thoughts about pricing your product in a smart way?

Price is an interesting subject with psychology playing a big part (e.g. if something is cheap it must be bad, right?), my gym in Berlin for example costs €20 per month, my first thought was that there must be something wrong with it, but it’s a great gym with modern equipment, etc.

Price is such a complicated subject with so many influencing factors I probably can’t give a comprehensive answer here.

One bit of advice I can give is if you do increase your price, always grandfather existing customers on their current plan (for a few years if not indefinitely), otherwise you alienate your early adopters and most loyal customers.

Another challenge of an early born SaaS is to keep users active and focus on stickiness. How to define an active user (in a practical way) and master product stickiness? Any special tools to use?

We’re using Intercom to give us this information currently, it tells us who is active, when they last logged in and who is slipping away. These are good indicators although there are more tailored tools out there for doing this analysis.

Assuming you have something people need and use I think one of the key things is to keep innovating at a fast pace, and continuously increase the value of your service, this will help keep your users engaged and active.

Despite all odds, some SaaS break the inertia and succeed. And then comes the time to control Churn, CAC and LTV to let the cavalry come, as Jason Lemkin says. How to decide which of these metrics is the most important and when to focus on each one of them?

I think you should be measuring all of these metrics from an early stage. You probably won’t get to the next level with a high churn rate so if this is high then you might want to work on this first over reducing CAC.

OK, let’s say the cavalry did come and it’s time to scale. What are the qualities that SaaS founders should look up on VCs?

We’re very fortunate to work with Point Nine Capital who are a fantastic partner. You need to find someone you respect and enjoy working with, and someone additive who can bring more to the table than just the money.

I’d love to get your general impressions of “startup” outside the USA? Is it dominated by US startup culture or are other influences and cultures at play?

I think the Silicon Valley pioneered tech startup culture has become startup culture in general. Zendesk was originally from Denmark but embraced this model and found success in the US and worldwide. We’re a B2B SaaS with more than half our customers in the USA, so I think our culture is closer to that of a SV startup rather than a traditional European business.

Since I moved to Germany/Berlin sometimes ago, I’d like to ask about starting a business here. Especially, I’m interested in charging customers through a payment processing platforms (e.g. Stripe), what legal issues should take into account? Is GmbH required? Special bank account, registration in Finanzamt?

We are headquartered in Berlin with a UK Ltd holding company. It was quite a bit of work to get setup in Germany so we could do everything properly and employ people, etc. We relied on our local lawyers and accountants, I don’t think we could have done it without them.
I don’t think there is a requirement for a special bank account to use a platform like Stripe. However it is certainly advisable to open a separate business account as early as possible so you can cleanly separate what income belongs to the business vs yourself.

After launching, what was the key moment that gave you a “Yes, ChartMogul might be something that people need!”. Overall, was it a key moment, or an ongoing thing combined with constantly pushing for success?

I’d used an enterprise BI platform to analyse subscription revenue in the past, and while it was a good platform, doing subscription revenue reporting wasn’t it’s primary focus.

So prior to launching ChartMogul I had a very strong sense that if we developed a BI platform specifically tailored to the needs of SaaS and subscription businesses then it would be useful, at least to some SaaS companies.

I think a key moment after launching was when we started to see adoption by non-SaaS subscription companies, e.g. monthly gift boxes, media streaming services, etc. we weren’t sure what the need or interest looked like here.

If you were starting over tomorrow on a bootstrap budget (from scratch) in a SaaS startup as the 2nd man on the team (after the developer)- what would be some of the first things you’d do to onboard BETA users?

I would reach out to people I know and ask if they would be willing to try our product. If you don’t know anyone who’s a good fit perhaps go to a meetup (Product Hunt meetups are great for meeting potential early adopters).

What is one thing you wish you had known when you were launching ChartMogul?

Something I knew little about was how to raise investment capital, so I had to get up to speed on this quickly, and it’s a huge domain so you can’t know everything, but it’s important to reach a certain level of knowledge and putting in the hours reading up on this was essential.

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