Why do 40+ B2B SaaS Customers pay us $100K+ to fix their Usage-Based Pricing

Upendra Varma: 00:00:00

Hello, everyone. Welcome to the B2B SaaS podcast. I'm your host Upendra Varma. Today we have Griffin Parry with us. Griffin here is the founder and CEO of a company called Meter. Hey Griffin, welcome to the show.

Griffin Parry: 00:00:11

Hey, very nice to be here.

Upendra Varma: 00:00:13

All right, Griffin, so let's try to sort of get a sense of what your company does, right? And what your product does and why customers are willing to pay you money.

Griffin Parry: 00:00:21

So meter exists to help B2B software companies. So there'll be many listen to this podcast. Um, deploy pricing is a growth leader because it's highly effective, helps you grow faster and more profitability, profitable, profitably, um, in terms of. How we do that, we provide the operational capability they're missing. So, um, our products, we call a pricing operations platform and it helps B2B software companies who are using usage based pricing strategies, which is most of them, they'll painlessly distribute. about customer spend and usage wherever it's needed throughout the business and to make pricing changes, um, easily.

Upendra Varma: 00:01:06

Yeah, that makes a lot of sense, right? So, and I just want to get a sense of how you are different. So most of these B2B SaaS companies, right? So they use one of these subscription management sort of platforms, right? You heard about Chargebee or all of these platforms, right? Where you can sort of do all of this, where you can bring in all of your customer data and sort of have this, right? So where exactly do you sit in this space, right? So how exactly are you different or like, what exactly are you sort of doing here?

Griffin Parry: 00:01:30

We're complimentary, um, to those type of players. Uh, so charge me, you mentioned they're, they're a good partner of ours. Um, essentially we help them work in a scenario where the customer is, um, using usage based pricing strategies. And I'll tell you why. Um, you need to feed those systems with the amounts that need to go on the bill. And if you're doing usage based pricing, um, you need to bring usage data together, usage data together with pricing data and combine them to work out what the amount should be for each customer. Um, so that needs to happen before you get to charge me. So that's, that's what we do.

Upendra Varma: 00:02:06

And let's talk a bit about the product here. And so how exactly are you doing this? I could imagine, I mean, if I'm a software company, right? So my data could be sitting at any layer, right? It could be at the database level, or it could be, it could just be sitting in some other external platform, right? I could just store that data anywhere. So how exactly are you solving this from a product perspective?

Griffin Parry: 00:02:25

So our customers broadly fall into two camps. So, um, some of them are looking for a primary usage data tracking mechanism. And so they'll deliver us usage data by our API. And we do all the process of ingesting it and transforming it and cleaning it. Um, Other companies and remembering that most of our customers are scale ups who already been successful. So we're helping them sort of cope with increasing complexity in their business. They already collect this issues data. Um, and so we can just take it from wherever it exists. The last thing we want to do is ask people to rip and replace something. So if it's sitting, for example, in an analytics database, we can ingest from there as well.

Upendra Varma: 00:03:03

Makes sense. So just talk about these customers that you've been mentioning, right? So, so who are these customers, right? Who are you primarily trying to serve, right? So just talk a bit about, you know, your existing customer base today.

Griffin Parry: 00:03:14

I'll tell you, I'll tell a story about the individual because that'll bring it to life. So the broad comment is that, um, we, uh, our particular area of focus is scale ups. So it's companies who are being successful, but their, their success is creating pain in their organization, which is an obstacle to further growth and further success. But I'll, but I'll make it specific to an individual. So imagine you are a finance person in a company like this, and you've got to do billing, and Every month, and your your business is getting more complicated. Like, you know, a couple of years ago, you know, you had only had a few customers. You only had one product. You're only in one year. Um, you didn't do much private pricing. You didn't really have a sales team. Now your world is much more complicated. You've got, you know, Hundreds or thousands of customers, um, multiple products, multiple geos. You've got creative sales teams doing all this private pricing, and every month you've got this offer process where you've got to go and get usage data and ask an engineer or a product person to send you the right usage data. And then you've gotta get the pricing data from wherever it is and make sure that it's all up to date, depending on any renewals or, um, new deals. And then you've got this. Painful spreadsheet that you've got to, um, set up all this complex logic in and you process it and then you work out how much you need to charge each customer and then you've got to feed that information into your revenue stack wherever they sit. It's a nightmare. So it's incredibly painful, but more importantly, it's, um, It's very error prone. And so, you know, you're making errors on bills that undermine customer trust, but also, and you really care about this because you're a finance person causing a lot of revenue leakage. You're not billing for stuff that you should be. Sometimes you're aware of it. Sometimes you're not aware of it. So anyway, so that's, that's the person who we help. The, the, the burning pain point that our customers have when they first come to us is always about billing. We go on to solve other problems, but that's the first key pain point. And. It really becomes acute when the customer's being successful. So that's why I describe our ICP or our target customer as a scale up.

Upendra Varma: 00:05:23

Makes sense. And it just gives us a sense of what, you know, these customers, it's how many paying customers do you have on your platform today, approximately,

Griffin Parry: 00:05:30

So, I mean, we are, so in terms of our company stage, we're at classic series A business. So, you know, we did our series A raise nine months ago. Um, so, uh, we've got 30 or 40 paying customers in our ICP type of stage. Um, and. You know, they, they, they tend to be $50 million plus arr, got some that are slightly smaller, but, you know, a hundred or 200 people, plus they've got some complexity in the business. Uh, they're probably at series B or series stage funding or, or beyond. Um, and they pay us a reasonable amount of money because this is a big problem to

Upendra Varma: 00:06:09

how much is that rates and how do you price, right? So just give us a sense. I don't want the exact number. So, so I'll ask you three questions. Is it thousand dollars per year? Is it 10, 000 per year? Or is it like a hundred thousand dollars per year? I'm just getting a sense of, you know, Uh, this, so that we could understand your sales motion better.

Griffin Parry: 00:06:23

it, um, so the ACVs are higher because we have a direct sales motion and we need to, um, be able to support the cost of that. So it's, it's. Far to the extreme of the scale you just described.

Upendra Varma: 00:06:34

so it's more around a hundred thousand dollars, right? Something like that.

Griffin Parry: 00:06:37

Yeah, yeah, this is an important problem and it's business critical for our customers.

Upendra Varma: 00:06:42

And then how do you sort of charge, right? So like, how exactly do you charge your own, uh, software, for example? Right. So is it again, usage is metrics or is it based on the number of customers they serve? Like, how does it work?

Griffin Parry: 00:06:53

So, I mean, I would preface the answer by saying we're still a relatively early stage company, so we have experimented with, you know, various different ways of pricing, but we do seem to be settling on sort of a standard. Um, now our customers all deploy usage based pricing. of some description. That's the reason they're coming to us. So you'll be, you'll be unsurprised to hear that we also have usage based pricing. So we basically price based on the amount of data that you deliver into the platform and the number of times you're asking the platform to calculate a bill. So if you, uh, if you only ran billing Um, if only use me to run billing once a month, it would be the number of customers you have multiplied by, um, um, basically one by one for each month. But, um, it can, the number can be much higher than that because if you're using me to deliver up to date bills in mid month to sales teams who want to know. What the latest is or customer success teams, or maybe the product team is using it so that there's a, there's a billing dashboard exposed to the end customers. That's always up to date. So basically it's, it's amount data or bill calculations out our customers are those slightly mature businesses, they value predictability. So almost all our deals involve a significant minimum that includes a generous allowance. And then if they exceed the allowance, they'll pay us overages.

Upendra Varma: 00:08:18

And so just give us a sense of how you're growing, right? So last 12 months, right? So how many customers you had around 12 months before ago, right? Today, right? So approximate numbers.

Griffin Parry: 00:08:26

So, so they, I mean, so we're in that, we're in that phase where we know we've got a product, we know we can sell it. Um, we know that our customers love it. So I'm in tinkering mode at the moment. Like my whole focus is how do we scale the business effectively? How do we grow quickly and efficiently? So yes, we are, we are growing fast at the moment. Um, and my role as

Upendra Varma: 00:08:53

you had more than 20 customers 12 months before. Is that how it was?

Griffin Parry: 00:08:57

sorry, I didn't, I

Upendra Varma: 00:08:57

how many, how many customers you had 12 months before today? Right. So is it like 20, 10, 15? So I just want to understand like at which stage you are right in terms of, you know, number of customers that you're acquiring.

Griffin Parry: 00:09:08

I mean, we're kind of in the sort of. We are growing fast, basically. So we're sort of like revenues that sort of like the plane, um, year to year or more. So it's, it's at that kind

Upendra Varma: 00:09:21

that's, that's a good number that I can work with. Right. I think let's, let's move on to other things here. So like where you're, where you're growing, right. So I just want to get a sense of how your top of funnel works. Right. And then we'll talk about your conversion as well. It's so just from these are big deals, right? So how are you finding them? Like, what's that first touch point for you? Right. In terms of, you know, reaching out to these leads, like what channels. Are you really, you know, working on

Griffin Parry: 00:09:43

so we have, um, we have three channels, which is probably quite a lot for a business at our stage. Um, so underpinning it all is like, we do quite a lot of work around branding and Messaging and content because that supports all of our channels and then the three channels are we have an inbound channel. So we capture the demand mostly via, um, by the website, but it's generated by. All the work we're doing in branding, messaging and content, and that's, um, creates a steady drumbeat of opportunities, um, and some of our biggest customers has been acquired by that group. Um, then we do some, uh, we do targeted outbound. So, you know, we, we do the work of working out who, which customers we'd like to, to win, um, working out what's a good indicator of a good customer, creating lists, and then finding ways of reaching out and starting a conversation, um, with them. Um, In the early days, it was actually mostly focused on asking venture capitalists to introduce us to companies in their portfolio. It's an easy conversation to have, because we're a B2B company, it sells to B2B companies, so B2B are interested in talking to us as a potential investment, but it allows us to ask for introductions to their other companies. So, um, but then it sort of, uh, it progressed into a more sort of standard BDR, Progressive BDR approach. And then the third channel is, uh, is partners. And so you mentioned in your first question, like, you know, how do we work with subscription management and revenue management platforms like ChargeBee? Well, we partner with them. So, um, and ChargeBee is a great example of that.

Upendra Varma: 00:11:23

that makes a lot of sense, right? So I think at this stage, right, I think you're more worried about your conversion and how it all works, right? How do you convert that customer to convert that potential lead or the customer that you know, would be converted to an actual, actual customer. So just give us a sense of, you know, how your sales cycle work and also just talk about who these customers are, right? How, what exactly are they doing today to sort of solve this problem? Are they using something else or they're hacking it up or. What's what's happening? Who are these customers and how are you acquiring them? What's that sales cycle look like?

Griffin Parry: 00:11:52

so we're selling into the, the CFO or the office of the CFO. Sometimes we just sell them to product, but it's mostly into the office of the CFO. Um, there are other people on the buying committee, so engineers are important because they are the people who implement. And, um, and it needs to be built in a way that they respect and want to work with. Uh, and. various operations teams around the business, other users. So rev ops, sales ops, then ops, billing ops, you name it, but we're really selling it to the office of the CFO. Um, in terms of what they're doing now, uh, they are, they're either doing this. Based on spreadsheets. So very manual based process using spreadsheets, um, which can't cope as they scale and a successful. It just doesn't work anymore. And the consequences of it not working a really significant like revenue leakage, for example, it was a big problem. Um, or they have built bespoke tooling automate this, but the problem with bespoke tooling is. It's expensive, not just to build, but to maintain. Um, and it's also pretty inflexible and you're asking an awful lot of your engineering team to anticipate everything that that tooling will need to do. Whereas we're a specialist vendor and we've got lots of customers. And so we, you know, we're much more fully featured and we can deliver the capabilities as they're needed, but yeah, so they're either replacing a spreadsheet or a bespoke piece of

Upendra Varma: 00:13:16

It's mostly not one of your competitors, I'm assuming. Okay, so let's talk about the sales cycle, right? Now that we understand where they're coming from, right? What happens once you reach out to them, right? How long does it take to close a typical, you know, 100, 000 deal for you, right? How many touchpoints? What do you do during those times? Do you have any Implementation, right? Any paid demo? How does that even work? Just give us a sense of how it's working.

Griffin Parry: 00:13:37

um, so the sales cycles are relatively long. but it's not necessarily to do with Us as a product, but more the customer understanding the business process transformations they'll have to be going through. So the implementation of meter will be part of a broader change in the business because our customers have worked out that operationalizing pricing. usage based pricing is, it's quite hard. You need to change the way you do things in various places. Um, and it's not just about billing. It's about making sure that usage data is available wherever it's needed and you can make changes to pricing easily so that they're changing a bunch of stuff. And so a lot of what's going on in the sales cycle is. Explaining that meter can do what they need. And so there is quite a lot of high contact, sort of high value add, um, conversation because naturally a customer will be wary of whether a vendor can meet their business specific complexity. And it's one of the things that differentiates me to that they can, but then they'll reach a point where they go, right. I want to buy this. And then, and then it's sort of, you shift into a slightly different phase where we're basically providing them with reassurance that, They can minimize and manage the risks of what looks quite complicated. Remembering this is critical infrastructure. So, so yeah, so there is, I mean, look, it's not usually long, but it's, um, you need to hold the customer's hands because they're going through quite a scary transformation. Um, and once they've committed that there is, you know, the implementation depends on, uh, Whether they're doing this in a greenfield basis where they haven't had anything like this before, whether they're replacing an existing tool, most of our customers are replacing something. So, you know, there's a little bit of work to do to make sure that you're running everything in parallel, making sure that it's working effectively and going live. But it's what we do all the

Upendra Varma: 00:15:33

This is how long does it take? Are we talking about weeks, months, quarters, right? Is it?

Griffin Parry: 00:15:37

It's a bit difficult to give an average, but let's say from first sales contact through to go live is probably about six months and sometimes the sales cycle could be a little bit longer because they'll do more of their thinking and planning about implementation before they commit. Sometimes it could be a bit shorter, but then the implementation is a bit longer because you're answering some of the questions in an implementation phase, but it's roughly six months, something like that. I mean, if you're, if you're dealing with a Greenfield customer, somebody who's never done it before, then. This and has no customers, you know, it's a day. Uh, it's it's really the it's the migration of existing customers and billing for existing customers onto onto a new system that creates the the timeline.

Upendra Varma: 00:16:16

That makes a lot of sense. So Griffin, just talk about that zero to one journey, right? How did it all start and how did you get those first couple of customers? So just talk about that journey.

Griffin Parry: 00:16:24

So we're repeat founders and you know, we have that classic story where we're solving for pain when we had direct ourselves. So, uh, my co founder and I had a business called GameSparks before, which was a cloud infrastructure business, uh, focused on the video game space. And we deployed usage based pricing strategies and We experienced a lot of it worked for us. It was great as a go to market strategy, but we experienced a lot of operational and go to market pain associated with it. We sold that business to Amazon and then worked at AWS in our own app for three years, and they're also a usage based pricing company, and we saw that they had exactly the same problems. And we also saw the tooling that they built to solve for those problems. So. We left, we became convinced there was a big opportunity here and we left. AWS to found me to solve for it. Uh, We were still pretty humble though. We went we did a lot of discovery conversations So, you know, we talked to mean, I would say 60. I actually think it's probably more like 80 or 90 Companies and just to really understand the problem. Um, and then we started Propositioning some of those discovery conversation people and saying, look, we want to build this. Like, will you be a design partner? So, so we did the classic thing of recruiting a small group of design partners and co creating the platform with them, launching them, making sure they were happy, using it properly in production, and then go properly to market. So that, that was our, our nought to one journey. So it was actually nought to five, but you know, you get, you get the idea.

Upendra Varma: 00:18:00

That makes a lot of sense. And how much have you raised in terms of external funding so far and how big is your team today?

Griffin Parry: 00:18:07

We've raised about 31. 5 million bucks in external funding. So we, you know, we chucked in a bit of seed, pre seed funding ourselves. And then it's worth saying for context that we founded the company at pretty much the best time you could ever found. I can't be doing our kind of thing. So like we founded it in the autumn of 2020. And so, yeah, we were just, that was just getting into the go go times where, you know, it was very, there was a lot of money around and it was relatively easy, relatively easy to raise. And because we were repeat founders, we found, we basically raised quite a lot, quite quickly. So, so we raised the initial two and a half million dollars seed round. And then eight or nine months later, we got a preemptive offer for another 10 million from a big, um, US VC. And then another 5 million about. Five or six months later from another big U. S. B. C. Um, and then we raised a 14 million series about eight months ago, led by motion capital in the U. K. So it's one of those because because what we're doing is critical infrastructure. You have to build quite a lot of product to reach a genuine MVP. I'm not sure whether we would have been able to build me to had we not found it in those funding conditions, but we did. So we are where we are.

Upendra Varma: 00:19:21

Makes sense. And how big of a team are we talking about today?

Griffin Parry: 00:19:23

Oh, sorry about 60.

Upendra Varma: 00:19:25

60. All right. So, so just one last question here, right? So what's that next milestone you're targeting as a company and right? How do you intend to get there?

Griffin Parry: 00:19:33

What goes back to what I said before, like my whole, my whole world at the moment is about tinkering and tuning and building a machine that can scale for a long period. So, I just want to, we're very focused on the business at the moment. We just want to continue to deliver that growth and for that growth to be efficient and profitable. I suspect the next big milestone will be raising a series B. I mean, we're, we're relatively, um, committed to the VC funding path. Um, it's different from what we did last time. Uh, we're very lucky. We've got some great, we've got some great investors. So yeah, I think that's the obvious. Next milestone, but we'll see.

Upendra Varma: 00:20:11

And what are the internal goals, right? When, when you actually take that money, right? So what do you, what are you looking at? Is it in terms of revenue or what exactly are you looking at?

Griffin Parry: 00:20:18

I mean, there's some, there's some rules of thumb out there in the market about, you know, how much you, what kind of ARR you need to have to be sort of in the Series B zone, which is sort of, um, might, you'll know better than me, but it's about sort of 10 million ARR is sort of where you need to be for Series B. But for me, it's not just that we are, um, hitting the marks that would, uh, allow for us to raise. I also want to feel really confident that I knew what we would be doing with the money that we would raise because, you know, it's just a, it's just a milestone on the journey. It's not the destination.

Upendra Varma: 00:20:53

And what do you plan to do with that money that you're going to raise? So it's

Griffin Parry: 00:20:57

Well, I mean, the goal is to build, you know, a, uh, properly decent B2B software company. So, like, the goal that I have in my head is 100 million of ARR. That's where I want to get to. We have some unfinished business from our previous startup. We didn't get to that level. In fact, we, we, we didn't get that level by, um, quite a way. So I would like to experience the journey all the way through to that point. At that point, I've got no idea whether I'd be suitable for the business anymore, but I would love to go on the journey to that point. So, so yes, that, that's the, that's the goal in the middle distance for us.

Upendra Varma: 00:21:31

all different. Thanks for taking the time to talk to me. Hope you scale meter to much, much greater heights.

Griffin Parry: 00:21:36

Cool. Thank you. Thank you very much for having me.