This article was initially published on SeedToScale
Part 1 — The Early Days
I was in Chennai for a Chargebee board meeting recently. I had traveled the previous day, and met Krish for breakfast at his recommended south-Indian vegetarian restaurant. The company was in high spirits, ARR is doubling, customer NPS is good, employees are feeling good - the company was humming. During breakfast, Krish and I found ourselves recounting how our journey started, when Chargebee was a seed opportunity for Accel to invest in.
Here is the story of Chargebee, from its early days.
During our first years of the investment in Freshworks, during 2012 and 2013, I would frequently be on an early morning flight to Chennai for a day meeting with Girish. Typically, I would start meeting Girish and the team from 10 am.
I would take an early flight so that I can do an 8:30 am breakfast meeting in Chennai with a founder.
For a very long time, the day would invariably start with the Chargebee founders at a vegetarian restaurant that Krish would have researched and recommended.
This is my early memory of meeting the young, bright, and passionate Chargebee team.
These conversations are extremely fresh in my mind even now, perhaps because of the delicious filter coffee, conversations around mini-tiffin, sharing of photos with my wife on the scrumptious south-Indian breakfast.
But even then, the discussions were always foundational and opinionated. Krish and the team were just starting out at that stage, having a few Indian and global customers, with me trying to figure out how big this startup can become, before investing. The discussions were mostly about the product, how they discovered Chargebee, but, the most important question that I always asked: How would customers discover Chargebee and choose against competitors?
In one of those trips, Rajaraman, one of Chargebee’s co-founders, said something to me that stuck in my head, and in hindsight, seems prescient.
Rajaraman: “One of these days you will come to Chennai just to meet us, and we’ll let some other startup take the breakfast slot.”
That did happen. We invested in Chargebee in 2013, after meeting the team many times. Chargebee started to scale in customers and revenues. As predicted, soon the breakfast meetings were taken over by the next promising startup.
And Chargebee became the prime reason for my trips to Chennai.
Part 2 — Addressing the why
I had been talking to Krish and the Chargebee team for at least 9 months before Accel made the decision to invest. This might seem a lot of time to make a decision, but it wasn’t about the decision at all, as you’ll learn.
By this time Accel’s investment in Freshdesk had happened and they were moving into a slightly larger space in the same building. Chargebee moved into the same space immediately.
I was introduced to the rest of the Chargebee team in that little office, and it had only one conference room. When the co-founders and I were having meetings, interviews and support calls would have to happen outside. And when we moved out, support would immediately take the room again.
And this was where what I call the ‘why’ conversations happened, the discussions which I believe really helped Chargebee hone their value proposition early.
We had been trying to get an answer to the one question: What is the unique value that Chargebee brings to subscription businesses? Is it just transaction abstraction as a layer, that folks set up for their companies and not touch again?
If it was, we had a problem.
The analogy I had arrived at was comparing what Chargebee were attempting, to what Freshworks was doing to solve that problem. The Freshworks team had 6 engineers then, and one of them was building exclusively what Chargebee would do for it. This was the part that Chargebee was abstracting, the application layer core that they were going to replace. Not just for Freshworks, but for so many other companies.
Krish: This was something Shekhar helped us with. The question he asked was that if it was just a one-time effort, what was Chargebee’s recurring value? Why would people pay, and stay? Why won’t they set it up one time, and leave?
We realised later that this was complex — a company’s use cases here would grow as the companies grew — which was why they shouldn’t be building it themselves, and which was also why it wasn’t a one-time product.
It was the ‘why’ questions Shekhar asked us that got us to think about the recurring value proposition, and arrive at this crucial insight: Why should companies try to build all this themselves when Chargebee was already, and readily available?
From this insight, it became clear who to target — early stage companies setting up their processes, what we call the zero-to-one segment. This continues to hold true for us even now: Subscription management as the core value proposition, for young startups. And then as the company expands, Chargebee helps them scale.
Krish: Shekhar had helped us arrive at this, the core question of the Chargebee product — the build vs buy decision. This was the insight Chargebee needed: the separation of the billing platform from what the company was actually doing.
It became clear to us then that the founder and the founding team of companies were the ICP for Chargebee, and the persona was the founder-developer who falls in love with the product and makes a choice.
Once this was clear, the momentum that Chargebee as a company caught was really something to behold. There was no stopping Krish and the team.
And it was also here that the values I associate most with Chargebee came to the fore.
Part 3 — Why Accel invested in Chargebee
Chargebee had figured out what they were, and who they were for
There was still one other question to be answered, though: Why the customer should choose them and not someone else.
They had three answers, and the roots of at least a couple of them were already in their DNA.
The first was that Krish and team wanted to focus a lot on customer success, and even in the early days were discussing 24*7 support. They talked about what they called fanatic customer support. And they have actually been able to execute on this. Even now, Chargebee consistently has a customer or two sweet-talking them on Twitter or LinkedIn.
The second thing was understanding that since the product relied heavily on working with other products, the API should be fluent and smooth. The team understood that very early, and focused on making the integrations butter-smooth. Their aim was to make it ridiculously easy: So easy to use, in fact, that documentation shouldn’t be required. Co-founder KP Saravanan, or KPS, as he’s known, once told me that the API should be like poetry — it has to flow— and that’s the experience they wanted to give to customers. And they did so. That they are still able to, as the product matures, is credit to them.
The third thing was the efficiency and frugality of the Chargebee operation. KPS and Theyagu obsessed over servers, webhooks speed, and ultimately, availability. Now this wasn’t just an engineer’s pet quirk. If Chargebee went down, even for a small while, customers were hit where it hurts most — their revenues. And they were fanatical about making sure that didn’t happen — integrating with a lot of payment gateways so their crashes wouldn’t affect Chargebee, and publishing availability data publicly. They made themselves accountable and continue to execute and excel.
I never worried about Chargebee’s gross margins. I think I did that calculation once and then forgot about it. Because they were so efficient and frugal, I knew this was something they would never have a problem with.
Krish: This scrappiness mentality has always been there, I think. Both as a team and as co-founders, we were always aware of the need to be frugal and scrappy, and this held us in good stead.
Part 4 — What Accel and I learnt from you
This is one thing I have to write about. Krish was constantly learning — reading books, meeting people, travelling to have conversations. At one point I actually wondered why Krish was wasting his time with these things.
But then I realised only later how much Krish (and Rajaraman) and the rest of the team had adopted the learning mindset. The gap between what Krish as a founder and CEO knew when he started out vs what he didn’t know — it just kept narrowing down and down. I like to say that his learnability index is faster than the company’s. And we know Chargebee’s growth.
Krish: I’ve always read books, so that helped. I decided early to actually spend time learning new things, meeting people. and having conversations was something that would help me broaden my worldview and understand things more. Being students of SaaS is what we as a group wanted to be, especially because our audience is early stage founders. Understanding them at a nuanced level led to clarity and better decision-making.
This was something I learnt from Chargebee and Krish, and apply even today at Accel. With young founders now, I ask the question ‘what have you learnt in these last two weeks’? In fact I ask it so much that I think they will stop taking my calls soon. I do this with our analysts too. Maybe that’s why my meetings with them are getting rescheduled so much.
Part 5 — The Accel/Chargebee relationship
Krish and I used to speak at least 3 times a week, mostly while driving to work with either of us calling each other. These were usually 15 minute calls to check in on latest customer conversations, or product or just about the team.
Krish: I used to take these calls in the car on my morning drive to the office. So Shekhar would call me around 9 am, and I would get in the car. We would speak during the commute. These short bursts of Q&A, repeatedly, about who are our customers, how did they find us, what problem are we solving and how is this better helped crystallize the thoughts about our solution.
Accel was there very early for Chargebee. Even before we funded them, we had been talking for at least 9 months. This helped both us and Chargebee a lot, so I’m adapting this to the startups we have invested in now. I’m talking at least weekly to our startups in the seed stage, and with other founders perhaps even three times a week.
Krish: That time we spent was very important for Chargebee. And there were a lot of things I liked about Shekhar’s approach:
One, he had no prescriptive answers for us, but he did ask us the tough questions we needed so we could get our first principles right. That was a good coaching mechanism, giving us the frameworks, and then allowing us to arrive at our own conclusions. The transfer of knowledge that was happening then was critical for us. Two, because of the patterns Shekhar were seeing in other startups operating at scale, he was able to see how the decisions we were taking would affect us as we grow. Being the thought partner then helped us arrive at the right conclusions.
Not actually saying ‘do this, do that’ (what Krish mentions) is because in the end the ownership of these decisions rests with the product team. As partners, we are helping seed something, and we can help draw attention to the larger picture like we did with Chargebee — That the decisions you take in these first years as you get to a million dollars will fundamentally define you as a business.
It is not about where the next million in revenue is coming from.
It is getting the fundamentals right. And if we do, the wind will catch the sail, and there’s really no slowing down from there.
Part 6 — The End Note
Krish: There was this story I heard from a mutual friend about a conversation between Girish and Shekhar. Girish had asked Shekhar a direct question, “If you believe in the team and if the problem space is good they will do reasonably well at the very least. Why aren’t you funding them?”
Shekhar’s response was that Chargebee were at a stage when they were building conviction about the problem and solution. If it doesn’t work out, they will build conviction on another problem space and find their way again. And when we did figure it out — helped and encouraged by Shekhar — Accel was right there in the trenches with us, helping us grow.