Chargify CEO Paul Lynch discusses the era of ‘garage’ SaaS start-ups, his experience running businesses and why nobody likes fintech tools.
At this year’s SaaStock in the RDS, we caught up with Dubliner Paul Lynch, who is the new CEO of Chargify, a Texas-based revenue management tool for SaaS companies.
Chargify’s story began in 2009, when it was created as the billing engine for telecoms business Grasshopper. After an investment from American businessman and investor Mark Cuban in 2011, Chargify was spun out from Grasshopper.
In 2016, the growing business was acquired by Scaleworks, and Lynch came on board as chief executive earlier this year.
He described the company as having “a remote team and a strong business culture”. While these may sound like positive aspects, it was these two factors that were holding Chargify back.
“Not to oversimplify it, but I want the sales guys shouting at the marketing guys when the leads are bad and I want the marketing guys shouting at the sales guys when they can’t close,” Lynch said.
“You can’t get that in a remote culture. You want those guys together to create a healthy level of competition and cooperation to get to the end goal.”
What is Chargify?
Providing an overview of what Chargify does, Lynch said: “We’re a billing and revenue management company. What does that mean? On the billing side, typically the cycle of business around SaaS companies is the founder sets up the business, gets a couple of customers, and at that point he needs to start generating revenue.
“Invoices need to be raised, cash needs chasing and everything else. Often, people will get someone like their brother-in-law who’s an accountant to do this kind of work. For the first year, this guy’s doing the books. Suddenly he has 100 customers.”
At this point, however, the friend or relative who has been helping a start-up may begin to get fed up. “What happens is that founder has to pay the brother-in-law or set up a script to automate the process,” Lynch said.
“Automation happens. Recurring revenue happens. Invoices start getting sent. That works for a couple hundred customers, maximum.
“At this point, things start getting complicated, the founder notices missing revenue, invoices aren’t going out the way they should be and the founder doesn’t even know what their top-line revenue is.”
‘Saas is a great equaliser’
Lynch noted that SaaS is still a growing market and, according to Forrester, revenue from public cloud infrastructure, platforms and applications will reach $411bn by 2022. “It’s an era of SaaS garage start-ups,” he said.
“SaaS is a great equaliser for start-ups, because it’s so easy to get into sales cycles. Business cycles are really increasing in terms of speed and barriers to entry are so low.”
‘Nobody likes fintech tools. No one ever enthusiastically says, “Let’s get a billing solution!”’
– PAUL LYNCH
In a massive market such as SaaS, there are many leads for a company like Chargify. Lynch is aware of this and has to be selective of the businesses he targets.
He joked: “If you’re selling mangoes online, don’t talk to us. You’re not going to have a good experience with Chargify. If you’re selling a subscription based around marketing tools or DevOps tools, we’re the guys for you.
“We have a lot of large companies, too. People enter our sales cycle when they find it difficult themselves to invoice. There’s lots of larger businesses out there that have invested in their own systems which aren’t working now.”
‘We’re in an exploding global economy’
When asked if Chargify has any plans to seek further investment in the future, Lynch replied: “Oh, God no!”
“We’ll never raise again, we don’t need to. The path we’re on is a good one. I’ve been doing this a long time, running and founding businesses and start-ups, and the biggest problem you have is if you’re operating in a declining economy.
“Then, you’ve basically got a headwind against you every time you go to the office. We’re not in a declining economy. We’re in an exploding global economy. Chargify, at the base level, is a fintech tool. People will always need fintech tools.”
Adding to this, he admitted: “Nobody likes fintech tools. No one ever enthusiastically says, ‘Let’s get a billing solution!’ They go, ‘Jesus, we’re losing revenue, our invoicing is a disaster – what do we do?’ And on the revenue management side, you’d be amazed at the number of companies I speak to that don’t know their own revenue.”
Lynch said that, in his experience of acquiring businesses and going through due diligence, he has found that often the figures given to him by a business have been incorrect.
“Revenue management tools can take that enormous headache away,” he concluded.