Omer (00:11.520)
Welcome to another episode of the SaaS Podcast.
I'm your host Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
In this episode, I talk to Christian Owens, the founder and CEO of Paddle.
Paddle is a SaaS product that helps other software companies sell their products.
It provides checkout, subscriptions, taxes, licensing and insights in one unified platform.
Christian learned to build websites when he was 12 years old.
Christian he started walking into local businesses and asking them if they wanted a website.
Some business owners just laughed at him, but others hired him to do the job.
At the age of 15, Christian built an invoicing app for Mac.
But he had no idea how to sell the software and no money to spend on marketing.
So he started contacting other people with Mac products and persuaded them to do a special two week promotion where they'd combine all their products into a heavily discounted bundle and promote that to all their existing customers.
The promotion was a huge success and they made over $400,000 in sales in two weeks.
At the age of 16, Christian dropped out of school and focused 100% on this business and kept running these bundled promotions.
By the time he was 18, he had already made his first million dollars.
In 2012, Christian founded Paddle with his co founder Harrison.
They wanted to make it easier for software companies to sell their products, but they quickly realized that they had a big problem and it seemed like no one wanted their product.
Things weren't looking good, but they kept at it for a while and one day they had a surprising insight that completely changed the direction of their business.
Today, Paddle generates over $10 million in annual recurring revenue and Christian, at the age of 24, has become CEO of a company with over 140 employees.
In this episode, you'll learn exactly what the co founders did to take a business that looked like it was going to fail and turn it into an eight figure SaaS business.
It's a great story and I hope you enjoy it.
Christian, welcome to the show.
Christian Owens (02:37.100)
Thanks for having me.
Omer (02:39.260)
So what gets you out of bed?
What drives or motivates you to work on your business every day?
Christian Owens (02:43.660)
Well, I think like when I started Paddle, I was starting it to solve a problem that I had and I kind of just get really excited about trying to solve that problem for other people because I've lived it.
So I think that's the thing that sort of really gets me going.
Omer (02:58.300)
So for people who aren't familiar, can you give US a overview of what PADDLE is like, what problem are you trying to solve and for who.
Christian Owens (03:06.830)
We build a platform that essentially is kind of the goal is to cover all of these operational aspects of running a software and SaaS business.
So it's everything from payments, recurring billing, sales taxes, how you deal with currencies.
Basically it's the stack of tools that you use for kind of commerce, sales and operations in a SaaS business.
Omer (03:32.700)
Now, I want to spend some time going into depth and talking about, you know, how you came up with the idea and how you've built this business.
But you have a really interesting story that starts when I guess you were about 13 or 14 years old, which isn't actually that long ago.
Right.
Because you're what, 23, 24 now?
Christian Owens (03:57.550)
I am 24, yeah.
Omer (03:58.590)
24, right.
So tell me about that because you founded a couple of companies as a teenager.
So how did all that start?
Christian Owens (04:06.430)
I discovered the Internet when I was 12, 13, maybe a little bit younger than that, and was pretty taken by it.
And for some reason or another, I forget exactly why.
Kind of learnt how to like build a website and kind of really enjoyed that.
Really enjoyed sort of both the process of learning it and then this thing that was completely new, if you could start with sort of a blank document, write a bunch of stuff in it and end up with kind of something that people could use and see and experience.
And so I taught myself to build websites and then kind of naturally started building websites for other people, like local businesses and things like that.
Kind of the novel way to get customers tends to be if you're a sort of 12, 13, 14 year old and you go to a business and say, would you like a website?
They sort of initially laugh and then say, yeah, sure.
So that was my first taste of actually, like business and sort of making any money through the Internet and the things that I was learning.
Omer (05:11.490)
And then so you were literally just walking around, going into stores and saying, do you want a website?
Christian Owens (05:17.840)
Essentially, yeah, why not?
Yeah.
And I think sort of it was like the local sort of like Italian restaurant or sort of whatever it was, and then it kind of went through sort of like word of mouth of sort of, oh, you do a good job for one person.
And actually I was extremely cheap because I had no idea how to price this.
So I think like I was basically making like websites for people for the equivalent of like 50, $100.
So word of that spread and then I started doing more and more of those and then the thing that I didn't necessarily Enjoy so much about that was not being told what to do, but sort of not having like the full freedom to build the thing that I wanted to build.
And I think that naturally led me to sort of like continue learning, learn how to build software and kind of, yeah, when I was I guess 14, 15 ish, built my first product which was it was like invoicing software.
It was like a Mac native like application for the Mac for invoicing for like freelancers and web designers and kind of people who did like time based billing.
So very, very much enjoyed building the product as opposed to doing client work.
And then that became sort of my primary focus was it called Mac bundlebox.
So the invoicing product was called Envola.
Basically what happened with that is I built this product and sort of the way that I'd gone about learning how to build software was one, watching videos and tutorials online.
But two, just ripping apart other people's products and trying to figure out how do they make this button work.
That then would naturally lead me to sending them an email and saying, can you help me?
I'm trying to rip apart your product.
I'm 15 and I'm trying to teach myself this.
And generally people want to be helpful.
And it was sort of through that process that I got to know lots and lots of other people who were building software.
And as I stopped doing this work for clients of building websites for people and focusing all of my energy on building this product, I wanted to sell the product and it's much harder, harder it turns out to sell invoicing software by going into the local restaurant and asking them if they need invoicing software because they probably don't.
So I literally had no idea how to sell the thing and didn't have any customers, didn't really have any money to do any marketing or anything like that.
So came up with this idea, I think it had existed in like games for a while of working of like this was Mac bundle box and basically would partner with five to 10 other people who are building software products and this is like 2008 through nine kind of time.
So it was sort of less SaaS, more like desktop downloadable kind of perpetually licensed products.
So would partner with five or 10 other people who would build these products.
And generally these were the people who I was sort of ripping apart their products to try to learn how to code and then were emailing afterwards and kind of building up a rapport with them and put together this website where we'd bundle our products together for like a week, two weeks, massively discount them.
So it'd be like 500 bucks worth of software for 25 or 50 bucks for a couple of weeks.
And everybody would cross promote it to their own customer bases.
And at the end of it everybody would have made some money, but also everybody would have kind of this cross pollination of customers.
And when these were products that were, you would buy version 7 and then 612 months later version 8 had come out and they'd want you to upgrade it.
So for these businesses, actually loading up on people who bought version 7 three to six months before the new one came out was actually really beneficial for them because it was more people who potentially might buy the upgrade.
Omer (09:19.630)
How much money did you make from that business?
Christian Owens (09:22.190)
The first one that we did, the first two week promotion we did, did about $400,000 in sales in the, in its first week.
Wow.
Omer (09:32.480)
It's not bad at all.
Christian Owens (09:34.040)
Yeah.
Which is pretty great sort of as a 14, 15 year old as well.
And it was like a 50% like margin business.
Like we would take 50% of the like overall promotional revenue and the other 50 would be split between everybody else.
So that was sort of the impetus for me then when I was.
So this is when I was like 15, that was kind of the impetus for me to then kind of drop out of school when I was 16 and actually continue and develop this into a business.
And over the next 12, 18 months or so grew it to sort of a 3, 4 million revenue business.
Omer (10:12.700)
Wow.
Just by doing these kind of bundle deals.
Christian Owens (10:17.420)
Yeah.
So just getting smart about them.
Initially it was just cool products and then it was sort of started making individual promotions for like this is the one for photographers and this is the one for web designers and this is the one for creative agencies or whatever it might be kind of really targeting sort of the products around those and then building up one, an overall base of customers sort of kind of about a year in we were about five or six hundred thousand people in terms of like customers or people on the email list and the audience that we'd built.
But then also within that kind of quite deep understanding of like these people are web designers or creatives or run software companies or these are developers.
So actually had then the ability to do these kind of expanded from the bundles to then like daily deals and discounts of individual products among kind of verticals within that as well.
And yeah, just persisted with the same idea and kind of scaled from there.
Omer (11:17.990)
So how did your parents react when you decided that you were going to drop out of school at 16.
Christian Owens (11:22.870)
That was a sort of a pretty significant, I don't want to say argument, but point of contention.
I guess it was kind of one of these things where from 13 onwards, I'd come home from school every day and tell them how much I didn't enjoy it.
And I can't remember exactly how it went down, but I think when I was like 14 or 15, one of these days I came home and I was so persistent about it over and over and over again.
They said something like, if you can prove to us that you can make a hundred grand a year or whatever the number was, by doing the stuff that you do online that we don't fully understand, then we'll let you give up school because that's indicative enough to us that you probably won't like spongebob Bus for the rest of your life.
So that was partially the motivation around going from really enjoying building that invoicing product to then building this software promotion company, because I really enjoy building the product.
But in order to hit that goal and be able to drop out of school, I don't think they ever thought I was gonna hit it.
But in order to be able to do that, I needed revenue.
Omer (12:29.300)
And so from what you said earlier, you made your first million dollars in revenue before you were 18?
Christian Owens (12:36.510)
Yeah.
Omer (12:37.310)
Oh, that was a good bet.
That paid off, right?
Christian Owens (12:40.110)
I don't remember when it was.
Omer (12:44.030)
That's awesome.
So fast forward a couple of years from when you dropped out.
You continued to build and scale this thing and you said it was.
You were generating what, a few million dollars a year from that?
Christian Owens (12:56.190)
Yeah, I forget the exact number, but it was kind of more than 2, less than 5.
It was sort of like 2, 3.
Omer (13:03.470)
What did you do next with that business?
Christian Owens (13:06.430)
So I kind of went through this process.
And if you think about the time that this was.
So this was kind of late 2011, early 2012.
So if you think back to that time of the kind of companies that were growing and getting big, it seemed like it was every daily deals company in the world, right?
Yeah.
Groupon and Fab and basically everybody had a daily deals company.
It went from being these bundles that I really enjoyed doing with software products that I really love to being daily deals to being kind of.
And I think I just.
I got, at some point through that, I was about 17 and a half, seven something, and kind of got to this thing where I was just really sick of the fact that I was building this company and I was building it around all of these amazing products that Other people were building, but I wasn't actually building anything myself.
Like, the only thing I was building was a website with reasonably good marketing and an email list, really, and all of the infrastructure to actually sell the stuff.
But primarily I wasn't actually solving a problem.
I wasn't adding value to anybody.
And also, every time I'd open my email inbox in the morning, I'd have like 19 daily deals from every other company on the planet.
And it was like, do you want this restaurant 50% off?
Do you want to learn how to pole dance?
Or whatever it is?
And like right now I'm kind of just like adding to that noise with like the 15th photo editing app that we've done this year.
Omer (14:40.830)
So that was kind of a gradual process where, you know, you built this business up, you're generating revenue, things are going well, and then you're, you're getting less and less satisfaction or kind of personal reward from working on this business.
And you're seeing kind of more and more people out in the market getting into kind of like this daily deal type business.
So you clearly had a craving to build your own product.
And at what point did Paddle emerge, or the idea for Paddle?
Christian Owens (15:15.320)
It was a sort of like very slow light bulb moment that probably happened over about six to 12 months, which was like through the process of building that company and scaling it to a couple million in revenue and hundreds of thousands of customers and all of these things.
The thing that we were ultimately doing is we were like an E commerce website for buying software products.
And that was actually ended up being being in addition to organizing all of these deals and not really creating anything.
The only thing that I was building and spending time on was payment processor integrations and how do I deal with this currency and this sort of like, oh, sort of this country has a different tax rate to the UK or the US or like whatever it was.
And I was spending all my time building out these things and didn't necessarily have the time to do that.
It was literally just me running this company had zero other people.
And gradually, over the kind of time of sort of trying to solve that problem and constantly getting frustrated with it, be it sort of with like PayPal or bank accounts or like taking a credit card or like whatever it was.
And I started talking to the other people, mostly the ones who are in these promotions of like, how do you guys deal with these things?
Like, what do you use?
And over and over and over again it was the same story of, oh, I build it in a weekend.
And now I'm scared to change it because I have no idea how it works.
And basically everybody was home growing and building all of the same stuff from parts.
And that would be fine if anybody was happy with anything that they built at all.
Whenever I spoke to anyone about it, not only were they all building the same thing, they were all complaining about the same stuff.
And all of them hated the thing that they built.
And it was sort of like, why isn't somebody solving this?
And then I did sort of like research and things like that.
And there are lots of people building component parts to solve parts of it.
There were a lot of companies 10, 15, 20 years ago who started to try and solve this.
Like people like Digital river and these companies that sort of people haven't heard of in a long time, and then sort of nothing.
And that just seemed like I didn't fully realize it was an opportunity at the time.
It was more like, that's annoying that I couldn't actually be a customer of these products, because that's really what I was searching for.
And then kind of gradually, as I got more frustrated with the business that I was running, that became a much more interesting problem to try and solve.
Omer (17:51.490)
And that was around the time, I guess, where it was the early days for Stripe as well.
And so maybe some people were starting to use it.
But the problems that you were seeing were not just about payment processing.
It was all the other things around that as well, right?
Christian Owens (18:07.990)
Yeah, I mean, like, Stripe's great.
And it was roughly about the same time, or I think they were a bit earlier than us.
And initially, at that time, the problem that Stripe was solving was like there were two distinct issues with commerce online, and they were solving one of them.
And they've actually been the catalyst that solved it pretty much, period now, which is there were two stages.
The first one was having the ability to take money online, and then followed by integrating that into how you actually want to take money online.
And the real kind of innovation that they had was the ability to.
To go to a website, like a single website, sign up for one thing, and that one thing be everything that you need in order to accept a credit card.
Whereas previously that was a process of going to three or four different companies.
It was your bank kind of merchant account, an acquirer, and all of these things in addition to doing an integration to actually take a payment.
But the thing that I knew from running this software marketing company was very quickly you eclipse the functionality of just a payment provider in terms of like, the requirement, the things that you need.
So you start needing to take credit cards and then you get your first customer from a country where credit cards aren't as a significant portion of online payment volume.
It becomes, oh, we need PayPal or we need Alipay, or we need software or Ideal or local bank transfer or sort of any of these things.
And then as easy as any one of those things is to sign up for, set up, or integrate kind of, you get this compounding of not only do you have to do it individually for each of those things, but now you have to figure out a way to coordinate all of those things.
How do I run my business?
How do I find a customer, how do I refund a transaction?
And then it's sort of like all of the other things that then like all of the things that emit from those.
So it's sort of, how do I make sure I have all my customer information in one place if I want to get a report of like how much revenue I made?
If you're using five different payment providers, you have to get it from five different places.
If you want to deal with fraud or taxes or any of these things, you not only have to find us either buy a solution that integrates with everything that you use, if that doesn't exist, which often it doesn't, you then have to build it yourself.
And then you get this compounding issue.
Every time you want to add a new payment provider or a new currency, you have to do that work again across all of the other ones.
And then all of the solutions that you're using for tax and all of the solutions you're using for CRM or whatever it is.
And all of these becomes this big ball of messy integrations, data and things that isn't core to your business either.
It's just the thing that you have to do in order to facilitate the business that you actually want to build and the product that you're actually building and the value you're giving to those customers.
So it tends to be not the thing that you put that much energy or focus into when you're thinking about how it's built.
And it sort of just becomes this.
You start with one component and then you glue another component on the side, and then you glue another thing in, and then you try and figure out how it all talks together and it just becomes this mess really quickly.
Omer (21:32.890)
So I want to kind of try to understand sort of the positioning of paddle and how it's different to stripe.
And so let me explain what I think paddle does.
And then you can Tell me how wrong I am.
Right.
So the way that I see it is that if I want to handle payments for a SaaS product with checkout, I can use Stripe.
If I want to offer PayPal, then that's something I'd have to do side by side.
If I want to do subscriptions or managing recurring revenue, then I would probably have to look at some third party tools like Charge B or Recurley or something like that.
And what it seems that I get with PADDLE is all of that stuff in one product.
Is that kind of like the right way to think about it?
Christian Owens (22:26.060)
I think so, yeah.
That is essentially what the product is.
And I'd say that there are two distinct like reasons why it's greater than the sum of its parts, if you like, which is one, if you think about a payments company, if you think about a stripe or a PayPal or an Adyen or whomever, and you think about how their business works, so they take a pretty small transaction fee of which most of it they pay to a bank and they maybe make 20 to 50 basis points.
So 0.2 to 0.5% of all the money that flows through them as a payment provider in terms of their revenue.
Well, when you think about, okay, sort of in order for me to make $100 million or a billion dollars in revenue, like the amount of like, volume that we have to process through the platform as a payments company in order to be able to do that, if we're making 0.2 to 0.5%.
And then it becomes really, really obvious why someone hasn't built PayPal where their only customers are SaaS businesses?
Because why would you focus on building the payment layer for those businesses if you could build roughly the same product and sell it to E commerce or retail businesses, and the addressable volume is $4 trillion as opposed to $200 billion.
So you immediately have to think about, okay, how do I go really, really wide?
How do I make a product that's applicable to as much transaction volume as possible?
And then if you take the same thing with recurring billing like Charge B or Recurley or any of these things, or any one of the component parts that you need in order to facilitate this stack, like something that you might use for helping you calculate tax, sales tax, or deal with fraud or risk, each one of these products is probably making 20 to 50 basis points to a percentage of the revenue, the volume that's flowing through the platform, which immediately means they're in the same position as the payment providers.
They have to Go really, really wide.
And the problem with going really, really wide, as anyone who builds a product will know, the problem with going really, really wide is you diminish the overall value for any one person.
It no longer goes deep.
It no longer sort of really, really deeply feels like when you're using a product that it's built for you and it solves your problem.
Like if you look at recurley or like sort of these recurring billing management platforms, a lot of their customers aren't software companies that telecoms companies and subscription box companies and people like that, where the dynamics of how the customer is billed is the same.
However, the problem set is different.
As a software company, you have a couple of really distinct things about you.
You're probably very international, almost like immediately if you want to be.
And if you're a subscription box company, that's probably not true.
Even if you build people on a subscription, you also have logistics and shipping and like all of these things.
So it becomes like, how do you build the most valuable possible product that solves someone's problem when it's fiscally not feasible for you to do that for the market of I just want to do this for SaaS companies.
So our position was saying, okay, in order to be able to do this only for SaaS companies, what we need to do is instead of you paying 20 basis points or 50 basis points in six to nine different places, pay all of that to us and we'll solve every step of the issue from payment to checkout, to recurring billing management to taxes to fraud, to compliance to all of these things.
And we can do that not by just building a handful of components, but we can do that by building the components that you need as a SaaS business.
So understanding churn understanding that you actually want all of these components to be native to the applications that you build.
If someone's payment fails and they're on a web app, maybe it makes sense to send them an email or kind of pop up a notification in the app.
If they're in a desktop product, that should be a native experience as well.
And kind of like you can't go to that level of depth if you're building it.
Building a product for every subscription business that exists as opposed to every SaaS business or software business.
Omer (27:13.750)
Right, Yeah, I understand that.
So, so you saw this need, you were kind of hearing from people that they were having these problems and you saw potential opportunities slowly, as you said that there was an opportunity to build a solution here.
How did that sort of idea turn into A product like, how did you get started?
Christian Owens (27:36.060)
It was initially just building the thing that I kind of wanted.
It actually started in like two parts.
So it was one.
Let's build the best possible checkout for buying a piece of software online.
It was automatically localized, had all of the payment methods, it handled the taxes, dealt with the currencies, and it had all of these things that it could do afterwards in order to fulfill and give access to a product.
So if it was a piece of subscription software, it would integrate with the SaaS product.
If it was a desktop app, it would deliver it and give you a license key or kind of any of these things.
And then like one of the, I guess, missteps that we made or things that we thought, which thing that we thought was true, that actually just turned out to be reasonably superficial, was I'd obviously been building what was essentially a consumer business for the two years before, so I think had a little bit of that.
I want to continue building a consumer business DNA.
So built the E Commerce product and the checkout and sort of like all of these tools for the software companies and then also tried to build a marketplace for software on top of it as well.
So the initial sort of product that we were selling to these software companies when we talked to them about this issue was we built this marketplace for software also.
It handles all of that operational stuff that you don't like anymore.
Maybe you should just send all your customers to our marketplace, which, when you describe it like that, seems like, why would anyone ever do that?
But it was the thing that we're sort of used to from the bundle and the discount sphere of like, one of the conditions of being in that promotion was you sent to all of your customers this promotion.
And we were thinking, okay, maybe we just take a lower fee.
We make this really nice buying and discovering experience and people will still send their customers to it.
Omer (29:44.990)
Yeah, it's funny, isn't it, that you have a slight nuance like that in terms of understanding your market, how that translates to how you think about the product, how you position it, how you pitch it.
I can totally understand why especially a SaaS business would look at that and say, why would I want to turn your website into a destination where I send all my customers to?
So how long did it take for you to figure out that you needed to come up with a different approach?
Christian Owens (30:21.790)
Slightly too long, which I think is always the case.
We were really quite persistent about this marketplace idea, but the underlying reason that we were, the reason why the marketplace was once doomed for failure was it's not like we were saying, okay, we're Amazon for software and we were going to build the best possible consumer experience for discovering, buying, maintaining your relationship with reviewing, discovering software.
We were saying it's really hard to sell software.
Let's build a bunch of infrastructure for software companies and then kind of stick a marketplace on the front.
So our customer was never the people.
And the very fact, very reason that we were telling the software companies to direct their customers there meant that our customer was never really the people who were buying software from the marketplace, it was the software companies who were selling in it.
Like I think one indicatively that was a reason it was doomed for failure almost.
But the thing that made us realize that wasn't the fact that the story is that we started the company in August 2012, built the marketplace or obviously already knew a bunch of software companies who kind of gave us the benefit of the doubt of we'd done this thing in the past, they'd made some money, they'd got some customers, cool, they'll give it a try.
So launched this marketplace early 2013 and the first two months of sales, two months of like actually being open for business, I think people bought about 800 bucks worth of software total, like gross.
And we were just like, oh, it's just going to take time.
We just have to build up kind of this base of like people and trust and it's about our brand and all of this stuff.
And persisted with it for a couple more months just trying to grow sales.
And we did a little bit and then we were basically noticing that sales were starting to go up, but traffic to this marketplace was going down.
We dug into it, we were like, why is this happening?
And a handful of the indie software companies, the really small 12 person shops, were just building a product, had basically just hacked their way around this marketplace so that they didn't have to send people to the marketplace anymore, but they could send people directly into the checkout flow.
And it was basically like this hosted checkout page that they could use and they would pre fill all these parameters to make it like a guest checkout so the person didn't have to sign up for an account and all of these things and they sort of hacked their way around it and, and sales started to going up, going up.
Because when you'd go to these people's websites, they would have the buy now or subscribe button would go to our checkout page and these customers wouldn't necessarily feel like they were buying from Marketplace.
It Just felt like, oh, it's a reasonably because we'd done a lot of work on making it a nice kind of high converting checkout page.
And then this continued to happen and sales continued to come to those from those places.
And then we just sort of said that the marketplace thing is something that we want like as like Christian wants, that the customers don't want it in terms of the people buying software and the businesses don't want it.
But they do want the guts of the marketplace.
They want all of this, all of the sort of internals and the checkout pages and the things that we can do around giving insights and kind of helping them with pricing and localization and taxes and fraud and all of these things is they want all the guts of it.
They don't necessarily want the skin around it.
So that was the thing that it wasn't really a pivot, it was more of a like, let's just shut down the consumer bit.
So we shut down the consumer bit and that was probably mid, probably a little bit after the middle of 2013.
And then ever since have been focused on the same thing, just with sort of significantly more focus around the actual problem that we were always trying to solve anyway, which was how do we make it so that no software company or SaaS company that gets started ever spends any more effort than absolutely necessary on anything other than building a product and growing a business.
Omer (34:49.839)
So from 2013, where you made $800,
Christian Owens (34:55.199)
that was growth as well.
So we made like nine bucks through
Omer (34:59.990)
to where you are today is you're doing over $10 million a year.
Christian Owens (35:06.470)
So if we're doing like, for like comparisons, we're doing north of, we're in the hundreds of millions of dollars in gross sales of which our cut of it, our revenue is around just north of 10 million.
Omer (35:20.790)
Okay, so what was the primary drive, the growth vehicle there?
Like what did you do to go from.
You've sort of figured out how to better focus on the right product for the market.
So you're getting to some sort of product market fit.
But how are you kind of getting the word out there and how are you growing this business?
Christian Owens (35:44.410)
We basically just tried to scale the thing that we'd always done, which was talk to people, which we later found out was called outbound sales.
Omer (35:52.650)
There you go.
You have a word for it now as well.
Christian Owens (35:55.650)
Exactly.
It's great.
It's funny as well.
While you're scaling a company or a software company, especially as a first time founder, the amount of things that you think that you've iterated into a solution that actually just already has a name.
Outbound sales being one of them.
We started with just talking to people that we knew, and then it went from being people that we knew to being products that we liked.
And then essentially just tried to galvanize a few of the things.
Things around what types of companies it worked for, what sizes of businesses.
Kind of obviously this is natural reference ability to it of software companies tend to buy software from other software companies.
So you win one project management SaaS product, sort of the smaller project management SaaS companies tend to look up to that one.
So sort of they try and emulate the things that they think that they've done well.
So you get these network effects and reference ability.
But it was all sort of outbound sales.
And we continued that way basically until about a year, a year and a half ago, where we started to build out essentially trying to leverage this reference ability that we had.
And this I guess somewhat of viral coefficient that you get of if somebody really hates doing something and moans about it and complains about it a lot, probably not with the same magnitude as people moan, but if you solve that problem, they'll also talk about kind of how nice it is not having to deal with that thing that they hate about hate dealing with.
So that was kind of about A year ago, 18 months ago, we started doing marketing, kind of building a brand for ourselves, doing inbound, writing, content, sort of all of the usual stuff.
And so we've gone from about being 100% kind of new business coming from outbound to.
To I think we're probably 75% from outbound now and kind of inbound and kind of marketing driven new businesses is sort of 20, 25% of the business.
Omer (37:56.250)
Now.
You raised, if I'm correct, $150,000 to start paddle.
Christian Owens (38:04.650)
Yeah.
Omer (38:05.610)
How big was the team when you started out?
Christian Owens (38:09.290)
It was me and Harrison, my co founder.
It was initially us and we hired a couple of people initially, like day one to help out.
But one, they were the first people that we'd ever hired.
So I think there were four of us initially like day one, I think like day nine, it was back to two of us.
Omer (38:31.270)
Because of the marketplace not working out?
Christian Owens (38:35.430)
No, I think it was more of like we just didn't know.
We know what we thought we needed in terms of people, but we didn't need what we thought we needed.
We knew the tasks that were taking up time for us.
Harris and I was building the thing.
He was getting people to sort of like content to Use it.
And we knew the tasks that were taking time and we did the foolish early first hire mistake of trying to get the people to sort of just like extend our own bandwidth of like, I can only do this so many times a day or I can't do these tasks.
I'm going to hire somebody super junior who can just help me with all this admin stuff.
Rather than saying, okay, the thing that I'm like, that admin stuff is actually like writing documentation or content or whatever it is.
And instead of saying let's hire a content person, it was let's hire a junior person who can sort of I'll dictate stuff and they can write it down.
So we realized that quite quickly and then scaled it back to the two of us and then kind of gradually started hiring actual people who had experience and in different areas that we knew that we were lacking.
Omer (39:47.220)
And what did the outbound sales process look like?
How are you building a list of leads?
How are you getting in touch with people?
Were you doing demos?
Were you going out to meet people?
Just give us a sense of what that looked like.
Christian Owens (40:05.730)
So initially it was basically just all the stuff that we bought and that we would use.
And we talked to those.
And then as we needed more, we started just looking for characteristics in the things that we bought, the products that we used that would eventually go on to use Paddle.
We looked at the characteristics in those businesses and then tried to automate the discovery aspect of us finding leads as much as possible.
So it was never geographically focused, but it was initially companies of a certain size.
So it would start with, okay, less than 10 people and then it was like vertical specific of okay.
We knew like we were developers and we knew this problem really resonated with developers of they actually just want to build a product.
They don't necessarily want to do this other stuff.
So we start selling to developer focused companies, so people building developer tools or software for other software engineers and then gradually just build up.
As we were starting to scale that process, it was taking all of these things that we'd learned and we'd take a very engineering data driven approach to it as we kind of do everything and we would build lists of SaaS products and software products and companies from LinkedIn and Crunchbase and Owler and like all of these different places.
And then we would scrape what tools that they were using or technology they're using.
We'd find out.
We automatically try and find out how much money they raise or how many employees they'd have.
We kind of over engineered that as a process.
And we built like a bunch of internal tools that helped us do it.
And those internal tools got so good.
And it's one of the reasons why our sales process stayed so much of like a founder cell for too long.
And even when we were hiring sales reps, we were trying to hire sales reps who could do everything.
And it's because like initially we'd started by building this tooling.
And this tooling would do everything from find us A list of SaaS, businesses or software companies that we should talk to.
It would filter out the ones that were the right size and kind of had the right number of employees.
It would understand like who they're using to solve this problem already and what tooling that they were using.
It would look at their website, for example, in different countries and see if they'd localized it in different currencies and different languages.
It would then see if like that process that they were doing, if like, if there's like, hey, they're selling it in Japan, are they using the right tax rate?
And it would pull in all of this data and scrape all of this information to give us a really clear picture of if our product was going to be immediately valuable for that company.
And then we'd sort of enrich that with all of this publicly available data about the company, the price point, how much traffic they were getting, all of these things.
And then built a bunch of algorithms internally that helped us predict revenue and size.
And we got to the point where we were able to do, we were able to predict the company's SAS companies revenue just from running this thing on their website to about 85, 90% accuracy of like MRR, which meant that the whole like SDR LDR process that a lot of these companies go through initially we kind of skipped because we built this tool.
So it was like very much we were swimming in leads because there are tens of thousands of software companies.
And now as we've tried to scale that process, actually we're bringing some of the more human element back into it.
Of all of these leads still exist, but actually there are some nuances in a business and triggers and things like that you can't necessarily pick up in software.
Omer (43:57.960)
And then what would the outreach look like?
Were you sending emails?
Were you calling people?
Christian Owens (44:05.400)
We only ever did cold email outreach.
It was just trying to add value.
We knew that we were solving a problem.
We just needed a reason for these businesses to want to solve that problem right now and want to solve it with us.
We knew we were building a valuable solution.
So it was like, oh, we noticed that you get about the same amount of traffic in France as you get in the us but if you visit your website from France, none of your prices are in euros.
And it doesn't look like if you try and check out that you're charging tax correctly to European or French software companies.
And did you know that in France this is the number one payment method and we see conversion rate increase by X amount if you offer it alongside what you're doing already.
And this is how much doing that same thing with language, translating it to French will kind of do to sort of that process as well.
So it's very much about like highlighting issues that these businesses already knew about.
Like, these people aren't stupid.
They know that, okay, they're a US SaaS company.
If somebody from France visits, they probably want to see the price in Euros.
But as a SaaS business with like 10 people or something, building a product like sort of make website work in Euros is probably pretty far down the to do list of all the stuff that's on fire right now.
So if we can go in and say, look at all these reasons of why you should do it.
And then also here is the solution of how to do it.
And also it's super easy to integrate and it's the last thing you'll ever have to buy in order to solve this problem in any country.
Was sort of the pitch.
Omer (45:52.010)
So these don't sound like automated cold emails.
It sounds like you were using automation to gather data about leads, but you were then manually writing these emails to people.
Christian Owens (46:05.080)
Yeah, we hate outbound email automation.
Or did.
I don't know what we do now, but like, Harrison and I had a distinct displeasure for poorly automated outbound emails.
Like, they're too easy to mess up and it's too easy to know that it's not present by a human as much as you put the like, kind of fake spelling mistakes and things in them.
And like, whatever it is, there is something that you get from just writing an outbound email in terms of response rate and open rate and reply rate and engagement that you miss with like doing that in a mass automated fashion.
And there's like two parts to that.
There's like one, okay, you miss like the ability to add nuance to these outbound emails.
You miss the ability to go to the person's LinkedIn and see that they went to a certain, like, see they went to the same college that your brother did and mentioned that in the email and you also like, you're selling to like a pretty.
When you're selling to another SaaS company, typically a founder or a CEO or a CTO, you're selling to a really sophisticated buyer who doesn't have time to read your outbound email.
They don't want to be sold to.
And also if they're technical and we were going off the technical people and we were selling it as a technical solution, as like a set of APIs and things that solve this problem, you're also the most skeptical buyer because you know that you've hacked together the thing that does some of this stuff before you have full visibility into the problem set.
You just don't necessarily know the full scope of the problem set and how it's going to compound as you, as you scale.
So we were always very against sending these automated outbound emails in the early days, partially for those things and partially through actually your first ten hundred.
However many customers give them a really great experience like sort of including in the sales process and I'll pay dividends later in terms of when you ask them to do a reference call or something with a, with a potential new
Omer (48:22.020)
customer after you send that first mail, were you following up if people didn't respond or what was kind of the.
Christian Owens (48:30.340)
We'd honestly just try and build like actual friendships with these people.
In a lot of cases, we were fangirling at the fact that CEO of Business X, whose product we loved, was actually replying to our email even if they didn't want to buy the thing.
We kind of just wanted to have a conversation with them anyway and sort of learn from them.
So it was, yes, a case of following up, usually pretty persistently to the point that we were annoying.
But sometimes it wasn't even to talk about our product.
It was just to talk about running a software company in general and like building that rapport and building that relationship over time.
And then it's one of those things of like, we had confidence.
We had enough confidence in our product and the problem that we were trying to solve that we kind of knew that sort of maybe arrogantly that they probably were going to buy it at some point or if not by hours, they were going to buy, try and solve this problem at some point.
So why wouldn't we just want to have a dialogue and a relationship with those people?
Omer (49:35.970)
And so this kind of outbound sales approach that you sort of described, that was like the number one way that you went from basically zero to over $10 million ARR.
Just by repeating that process and then sort of inbound marketing was something that you started about a year and a half ago.
What were some of the hard or difficult things you had to deal with during that process?
Because so far it sounds great.
Hey, we've got a product.
We're really confident that people are going to want to buy it at some point or solve it, as you said, you know, we've got plenty of leads because we've been smart about how to gather data and get those leads.
We've got a process in place where we're trying to go out and talk to people and build relationships, and that approach has paid off.
But tell us about some of the difficult times or challenges that you had while you were trying to do that.
Christian Owens (50:34.760)
It kind of comes back to that thing that we were saying earlier.
We started just talking to people and then later realized that was called outbound sales.
It was like, okay, the next step of once you realize that's outbound sales is you want to scale it.
And in our sales process, we tried to scale this idea of the founder cell for too long.
And then when we started to hire sales reps, trying to replicate that, rather than trying to build, like, a real process and refine it and understand every detail of it and kind of break it out into chunks that sort of.
We could actually hire people to do and then processize.
It's really difficult to hire salespeople if you're trying to hire everybody who can touch on all of the areas of the product and the value and are interested in.
As interested in talking to the, like, the person that you're selling to as sort of Harrison or I were.
We should have, like, galvanized that process so much earlier and built, like, a clear, understandable, scalable process for selling, like, training for salespeople, rather than just trying to hire people who we thought could tick every single possible box.
Basically, you're trying to hire people who are effectively founders or have at least the same traits and ability to, like, empathize with the customer and sell the product as, like, Harrison and I had.
We were obviously going to be the most passionate people in the world about this thing, because it was our thing, trying to train somebody or hire people who are going to have that same kind of level of, like, passion or persistence or like, whatever it is about this thing when talking to somebody else about it.
And also sort of then the expectation that, okay, they kind of have to know every detail about the product and everything that it does and every.
Because we're not going to target this process at all because we haven't built a process.
They're just going to go out and talk to people.
So I think that was the thing.
It was sort of trying to scale the founder cell and then thinking that that wasn't working or we couldn't hire people because it was just a really difficult product to sell.
And actually it's kind of difficult to sell any product if there's no process and you're not trying to build a scalable process.
So I think should have realized that a lot earlier.
We should have started designing a sales team and a structure and hiring management and sort of like people who had done it before and sort of knew how to motivate a sales team and kind of what are the component parts of a sales team and all of the different pieces that a customer might go through in that process and mapping that out and building it and kind of designing it deliberately rather than just trying to say, okay, Harrison going on a call with a guy and talking to them for an hour or two about the product and the pain and then following that up in sort of a couple of weeks time with another call and a bunch of emails.
Maybe that isn't scalable.
Maybe you can't just take one person doing everything and hire lots of one people doing everything and expect that to be your sales team.
And instead you have to break this down into its component parts, which sort of.
You've read literally any book, blog post, anything on outbound sales.
It's like less than zero of like, define the process and understand the discovery and understand the like, why people buy and what the requirements are and like how to qualify a lead or how to what stage a thing has to get to before you're pretty certain you want to win it.
And we didn't do that.
And we sort of tried to rely on individual people that we could hire into the sales team to own the whole thing and kind of that just doesn't scale.
Omer (54:19.230)
And you know, eventually things worked out.
You're at what, how many employees do you have now?
Christian Owens (54:26.800)
140.
Omer (54:27.840)
Wow, that's a long way from where you were with those first two hires five years ago.
That's two hires for a very short time.
Is it nine days?
Christian Owens (54:37.000)
Yeah.
Yeah, I think it was pretty short.
Omer (54:40.720)
Okay, we should wrap up.
So I want to get onto the lightning round.
Just two quick questions I had for you was number one was like, how did you and Harrison meet?
Christian Owens (54:51.050)
I was actually supposed to hire Harrison's best friend and he took a job on the day that I got that I raised the 150k for paddle.
And the day that Harrison and I first met was literally the first day in the office and like sight unseen said, yes, I'd hire him and sort of like he'd be part of this and kind of co founder and like all that stuff.
And the first day that.
So it was an introduction through somebody who was act, who was supposed to be Harrison.
We met the first day in the office and so hindsight that could have gone horribly.
Turns out he's amazing and it went really well.
But don't take any advice from me on how to find a co founder.
Omer (55:31.080)
Okay?
We'll have to.
There's so much in there that we'll have to kind of unwrap that.
But yeah, we should get you back.
The other thing was like what happened with Mac bundlebox?
You were making some good money there.
So what happened with that once you started focusing your efforts on Paddle?
Christian Owens (55:47.570)
So it still ran for a while and hired somebody to run it.
But this was the discount daily deal discount like time.
So in addition to discounts happening with everything, we went from being the only company, like in addition to everybody doing discounts, we went from being one of two or three companies who are trying to do discounts and deals for software to there being, I think like 2 or 300 clones of both the bundle business and daily deals on software within that 18 month period.
So it was kind of like a diminishing returns sort of.
Every deal, every bundle that we did or every deal that we did would sell less than the last one simply because everybody else was running them as well.
So that still ran for kind of several years afterwards with, with somebody else running it.
Omer (56:38.090)
And then eventually it just got shut down.
Christian Owens (56:40.890)
It still exists under a different name today called Creatable, but it sort of fizzled more than anything.
Omer (56:47.530)
Yeah.
Cool.
Okay, great.
Well, you've got better things to focus on now anyway.
I'm sure that keeps you busy.
So let's get onto the lightning round.
I'm going to ask you seven questions and just try to answer them as quickly as you can.
You ready?
Cool.
What's the best piece of business advice you've ever received?
Christian Owens (57:04.240)
Every 6 to 12 months, draw a pie chart of how you're spending your time and try and remove the things from that pie chart that you shouldn't be doing or don't want to be doing.
Omer (57:15.040)
What book would you recommend to our audience and why?
Christian Owens (57:18.240)
The Hard thing About Hard Things.
I think it was sort of like the most honest, detailed look at scaling a company and sort of makes you realize you're not the only person struggling through the scaling process.
Omer (57:30.870)
What's one attribute or characteristic in your mind of a successful entrepreneur?
Christian Owens (57:35.670)
Persistence.
Omer (57:36.950)
What's your favorite personal productivity tool or habit?
Christian Owens (57:41.830)
Like completely clearing my inbox to zero.
At least sort of like once a week.
Omer (57:46.950)
Yeah.
I go nuts if I don't do that, too.
What's a new or crazy business idea you'd love to pursue if you had the extra time?
Christian Owens (57:55.270)
I still think that, like, dealing with expenses and purchases is broken, kind of both.
People expensing things that they buy as employees, but then also just businesses buying stuff.
There's a bunch of companies working on it, but I'm not sure anybody has fully nailed it yet.
Omer (58:11.620)
What's an interesting or fun fact about you that most people don't know?
Christian Owens (58:16.740)
They might know this now, but this is technically my first job or I've never actually had a job either.
One of those.
Omer (58:24.270)
Yeah.
Yeah.
And finally, what is one of your most important passions outside of your work?
Christian Owens (58:31.630)
I think just reading, like, anything to kind of clear my head.
Omer (58:35.710)
Cool.
Christian Owens (58:36.150)
And it'd be amiss if I didn't say podcasts as well, so that podcast.
Omer (58:40.070)
Yes, of course.
Awesome.
Christian, thanks for joining me.
It's been great talking to you, learning about Paddle.
And as I said to you before we started recording, you know, there's so much we could cover here just in terms of what you were doing as a teenager and how you built those businesses out.
There's a lot more we could get into paddle.
I know there are a lot of people here who'd be listening to this who could potentially haven't used something like Paddle.
And it'd been great to talk about that as well.
And then also that little cliffhanger you left us with about Harrison, that on its own was.
Well, this is to be continued.
So I definitely have to get you back at some point and sort of continue the conversation.
But if people want to find out more about paddle, they can go to paddle.com and if people want to get in touch with you, what's the best way for them to do that?
Christian Owens (59:33.550)
ChristianADL.com is my email or Christian Owens on Instagram because I'm banned from Twitter.
And that's a different story for the next episode as well.
Omer (59:45.490)
Okay.
All right.
Yeah.
So what's Instagram?
I'll include a link in the show notes to that.
So that's great.
Great conversation, great story.
Thank you for kind of sharing your experiences, the highs and the lows.
And I wish you and Harrison.
All the best in the future.
Christian Owens (1:00:00.610)
Cool.
Thank you very much.
Omer (1:00:02.010)
Cheers.
