Learn how Nick Franklin has taken ChartMogul from $0 to millions in ARR by helping other SaaS businesses understand their recurring revenue analytics.
Davis Baer: What’s your background, and what are you working on?
Nick Franklin: My name is Nick Franklin, I’m the founder and CEO of a SaaS startup called ChartMogul. ChartMogul makes software to help subscription businesses measure, understand and grow their recurring revenues. We plug directly into our customers’ subscription billing systems (e.g., Stripe, Recurly, PayPal, iTunes Connect, etc) and automatically calculate things like monthly recurring revenue (MRR), churn rate, average revenue per customer, and even GAAP revenues. Users can then segment their metrics to uncover further insights and make data-informed decisions.
ChartMogul is used by over 2,000 businesses, including many top SaaS brands such as Typeform, Pipedrive and Calendly, as well as many consumer subscription services like LingoKids, brainHQ and BKOOL.
Today our ARR is in the single-digit millions, so we’re on the journey towards $10M ARR. Over half our team (of 34 people) is involved in product and engineering, so we’re still very much R&D focussed with quite a lean sales and marketing operation. Our second largest team is customer success.
Prior to launching ChartMogul I spent five years at Zendesk, where I joined as the 9th person on the team and was responsible for the EMEA and then Asia markets.
What motivated you to get started with your company?
Prior to joining Zendesk I was working at another software company in the product team, and product is really where my heart has always been. I’d also always had an ambition to try and start a company. So while I spent 5 years on the commercial side at Zendesk, the pull to get back to building product and also to try my hand at founding something was always there.
I saw the need for a solution like ChartMogul while working at Zendesk. We had built some custom dashboards to track our MRR using one of the early SaaS BI tools, but it was quite a poor user experience and I couldn’t quickly find answers to simple questions, e.g., if I wanted to see what the average revenue per customer was in Hong Kong vs Singapore, it wasn’t possible without writing some custom SQL. But despite these shortfalls it was still quite useful (and also addictive) to keep checking these dashboards, I was checking them a couple times per day, my boss was checking them…so I saw there could be something very useful and engaging there.
Once the initial idea was there I didn’t really spend time on additional validation — my personality is to trust my gut and see if people will use what we make. It’s probably a useful trait while things are getting started, though at our stage I now try to be more methodical with decision making. I also had little to no expertise in data and analytics, but did have nearly seven years experience working at cloud software companies.
I was working at Zendesk in Asia (we’d just finished opening an office in Manila), when I left my job and moved to Berlin (more about that decisionhere). I had some savings and used some of these to finance the initial beta development of ChartMogul until we took on our first seed round, which was $600K, led by Point Nine Capital.
I didn’t really have an alternative idea, I had dreamed of doing something for consumers as I thought this was cooler, but in the end my experience in B2B SaaS led me to take a path that I had more confidence would be successful.
What went into building the initial product?
It look us around six months to build our first beta version. The initial development was done by 2–3 engineers I found via UpWork + myself, and our creative director led on the design side. I initially went part time at Zendesk in order to have time to dedicate to ChartMogul, but I quickly realized I really needed to be all in to have any chance of success, so being part time only lasted around three months. We spent between $50K and $100K getting to initial beta release, with the majority of that money going towards engineering costs. While I understand our tech stack and can code Ruby and JavaScript, professional engineers run circles around me, so this was a necessary expense to get to market in time with a robust product.
The initial product was a Ruby on Rails app, on top of a Postgres database, with a single page JavaScript application build using Backbone+Marionette for the frontend. We also used D3.js for the charting visualizations. We always tried to buy vs. build, so used a tonne of SaaS and developer tools to speed up our time-to-market, from SendGrid, to Stripe and New Relic.
How have you attracted users and grown your company?
Through my time at Zendesk I was lucky to have a connection to Christoph Janz at Point Nine Capital. He was kind enough to invite me to their annual SaaS Founders Meetup in late 2014, where I met a bunch of other SaaS founders, had some of them take look at what we were building, and made connections that I could later use when we had something more robust for them to try out.
In the weeks following the meetup I remember Rodrigo (now a Partner at Point Nine) was introducing me to companies in their portfolio like Typeform, who are still a client today. We were extremely lucky to have Point Nine’s support, even before I raised the subject of fundraising with them.
We did a sort of official “beta launch” on stage at the very first Product Hunt meetup in Berlin, which was towards the end of 2014. This also led to us being featured on Product Hunt the next day, and that got us a tonne of signups, some of whom are still customers today. I also met Ed Shelley at that meetup, who became our first post-funding hire in Berlin, and is still with ChartMogul today.
We’ve tried a bit of everything to attract users: Product Hunt, Quora, creating content and syndicating it, paid advertising, social media, co-marketing with our integration partners.
For us building strong relationships with our integration partners (Stripe, PayPal/Braintree, Recurly, etc) and collaborating with them, as well as focussing on producing quality content have both been really huge, especially in the early days. We’ve also invested in building our brand and recently went through our first re-brand.
Of course there isn’t really a replacement for really nailing your product, as word of mouth always will be the number one growth driver for us.
What’s your business model, and how have you grown your revenue?
To date we’ve always been a pure SaaS company, 100% of our revenues are from selling software subscriptions. Most of of our revenues come from our core subscription analytics product, but we also have a second product which is billed as a paid add-on called Revenue Recognition. We’ll likely one day offer some paid services along with our SaaS offerings, but I think we’re some ways off from this, in order to remain focused we’ll probably be pure SaaS in terms of revenues for some time.
One of the advantages of our product is that you can combine revenue data from different sources and consolidate everything in one system. Because of wanting to test this benefit, we knowingly took the decision to create a bit of overcomplexity in our own payment stack. So we use a combination of Stripe, Braintree and Recurly to bill our customers, which does require a bit more maintenance than a normal SaaS startup would have to deal with at our stage (normally you’d want to start with just a single billing system), but it allowed us to build knowledge internally about how different systems work, and also dogfood ChartMogul’s ability to aggregate payment data from different payment systems.
While we’ve experimented with outbound in the past, we’ve not found it to be an effective channel for us, so today all our leads come inbound in the form of a free trial signup, or demo request. We then have our sales team, which is a small team of four people, work to try and convert these inbound signups into paying customers.
There are really only four high-level metrics to look at in terms of what drives revenue growth: Number of leads, conversion rate from lead to paying customer, average deal size and churn rate. Positively impacting revenue growth for us has really just been a never ending effort to make incremental improvements to these four metrics, e.g., create some great content to try and get more leads, refine our product to improve conversion rate, chip away at the reasons customers cancel, tweak pricing or focus on the needs of larger opportunities to increase deal size. Our focus recently has really been on reducing the reasons customer’s cancel, as we feel reducing churn is the thing that will have the biggest impact at the scale we’re at now.
Churn was something that kind of crept up on us, we had almost no churn in our first few months, so naturally we focussed on expansion vs. retention. But in reality we have some churn like every SaaS business, and in every B2B SaaS business retention becomes the biggest growth driver in a way, so it’s worth focussing on churn really from day one, perhaps even before you actually have any meaningful churn data to look at.
What are your goals for the future?
Our mission is to help businesses grow faster using their revenue data, and we’re still only scratching the surface of what is possible here. So we have a very ambitious product roadmap. Our long-term ambition is to build an iconic SaaS company whose products are used (and loved) by hundreds of thousand of people around the world every day…so we’ve a long way to go before we realize this vision for ChartMogul.
In terms of accomplishing these goals, I think the biggest challenge comes down to people. Will we be able to attract the people we need to accomplish these goals, can we get everyone aligned and working together well and will we be able to retain our people? Past a certain size (and we’re certainly past that size at 34 people) every problem is really a people problem. With the right people, in the right market, with the right incentives, all working together well, there’s very little that cannot be accomplished.
What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?
I’ve made countless mistakes, be it a hire that didn’t work out, a product decision that wasn’t right, not focussing my attention where it was really needed, micro managing (or under managing), etc. I feel like being a first-time founder & CEO of a startup is like the ultimate education.
I used to think something along the lines of… “yeah in big companies they always say ‘people are the number one asset’ but we’re a startup, our shiny new product is our number one asset”, and that’s completely wrong, everything that’s produced by the company is just a reflection of the quality and health of the team. So if I was to start over I would put far more focus on building a really solid foundation and culture earlier on. Jason Lemkin says it best, your job as CEO is to just to hire the best team you can possibly hire with the resources you have and then just support them. It sounds simple, but really hard to do in reality.
Moguls talking with ChartMogul customers.
Have you found anything particularly helpful or advantageous?
I think doubling down on content from day one was really a good decision for us, it’s a long-term investment but it really pays off to start making that investment early.
The job of founder/CEO has forced me to adapt and grow up a lot as a person. Being accountable to 30+ employees, thousands of customers, and our investors, is a job with a lot of responsibility that I’m not sure there’s any shortcut to getting good at. I’ve found being honest with myself and the people around me about what I do and don’t know, and making a commitment to constant improvement is the best approach.
Four years ago when we were getting started I think I wanted to appear a bit like the invincible founder who knew what he was doing (“We’re crushing it!“), and therefore was reluctant or show any weakness or ask for help from others. But in reality everyone is winging it to some extent (and few are truly “crushing it”) and asking for help actually shows strength and not weakness…so this is something I’ve learnt over time.
There are also a tonne of great books that have helped me, The Hard Thing about Hard Things and High Output Management are both invaluable. I’m not a very fast reader so audiobooks are really helpful for me here.
I’ve also found exercise to be really beneficial. I began going to the gym regularly around the same time as we started the company and I think this has really helped me with general wellbeing and managing the stresses of the job.
What’s your advice for entrepreneurs who are just starting out?
If you are still on the fence about starting a company, my number one piece of advice is to just get started. It’s not original, but it’s true! Don’t wait. You can always get another job or figure out some backup plan if it doesn’t work out. Often fear — fear of failure, loss of status and income at a good job — is the thing holding people back from getting started. I know it was for me! Making decisions (or worse, avoiding decisions) influenced by fear is never good. I love the saying “Hard choices, easy life. Easy choices, hard life.”
One book I wish I’d read before getting started is Play Bigger. It talks in depth about the concept of category creation, with the general thesis being that most founders spend their time on building a company and a product, but rarely do they consciously define and build their category at the same time.
When I meet SaaS founders who are just starting out, the thing that seems to regularly separate the ones who do really well vs. the ones who don’t do so well is this: When the product they’re building seems to be solving some seemingly small but well-defined problem, and just focusses on solving this problem, then they tend to always do well. When I see products that are trying to do many different things for different people at the early stages then this is usually a sign things are unlikely to go well. I guess “focus on doing one thing really well”, is tired advice but I’ve seen it play out quite a few times.
Where can we go to learn more?
You can find me on twitter at https://twitter.com/nick_franklin, and you can find out more about ChartMogul over at chartmogul.com. I’ll be very happy to answer any questions in the comments below.