“There is a huge opportunity for SaaS companies in 2021”: Interview with Paddle’s co-founder Christian Owens

With countless startups jumping on the bandwagon each month and well-established enterprises seizing the chance to capitalize on the growth of the SaaS industry, Software as a Service has been marking remarkable peaks year in year. 

London-based Christian Owens’ own experience of running a full-time software business as a teenager, and the pain points that limited its growth, led to co-founding Paddle in 2012 with Harrison Rose at the age of 18. It was their mission to build the tools and products that remove barriers to growth for scaling software businesses. By integrating checkout, payments, subscription management, and financial compliance within a single revenue delivery platform, Paddle helps ambitious software businesses grow from day one without the operational headaches. Over the last eight years, it has grown into a global revenue delivery platform for SaaS businesses, helping more than 2,000 software companies scale and sell into 200+ markets worldwide.

In this interview, Christian takes us through his journey of growing Paddle, as well as sharing a wealth of data and insights into how software sellers can capitalise on growth opportunities in 2021, how important localisation is for scaling up globally, what’s the current state of the European SaaS scene and how the industry will evolve in the future.

Hello, Christian! Thank you for joining us. Could you give us a short overview of your story? What led you to co-found Paddle?

Thanks for having me. Today, Paddle is a leading Revenue Delivery Platform for B2B Software-as-a-Service (SaaS) companies. But, Paddle’s story really began with my experience of starting and running a software business when I was 15, and the pain points that limited its growth. 

The business was taking off within 18 months and I was introduced to my co-founder, Harrison Rose, when looking for someone to help me scale the fledgling business. We saw that as the business grew, more and more of our time was being taken up with the operational side of running the business, like taking payments, rather than building and selling the product. Determined to find a solution, we pivoted the business and decided to focus on providing a complete solution to help software companies sell their products without operational headaches. 

We set up Paddle in 2012, with a mission to build the tools and products that remove barriers to growth for scaling software businesses. That’s what’s driven us ever since. Today, we’re focused on creating a SaaS ecosystem where companies succeed based on the strength of their own products rather than their ability to manage and scale complex operational processes. 

How does Paddle power the growth of B2B SaaS companies? What makes your approach stand out from the market?

At Paddle, we help ambitious software businesses grow from day one by integrating checkout, payments, subscription management, and financial compliance within a single revenue delivery platform. Unlike other players in the market, Paddle also handles market localisation and currencies, freeing up resources and manpower to enable software companies to expand across markets stress-free. Today, Paddle powers the growth of more than 2,000 software companies, enabling them to scale and sell into 200+ markets worldwide.

What has Paddle’s startup journey over the years been like? What have been some of the major challenges and how did you overcome them?

Paddle became a full-time obsession in 2012 when we moved to London, with our kitchen serving as the main boardroom for many of the company’s early stage decisions. Of course, it hasn’t all been plain-sailing since then. I’m reminded of the first piece of post we ever received. We couldn’t wait to tear open the envelope, only to be confronted by its contents, which was a legal notice informing us that we were being sued over the company name. Needless to say, we persevered through that unique challenge!

As we grew, we needed to grow our team, as well. We realised we had to rethink our approach to hiring when, having allowed the size of the team to lag behind the growth of the company, we tried to grow from 20 to 120 people within a year. We learned some really valuable lessons, and spent time refining and refreshing our approach to hiring as a result. Today, we really focus on alignment with values and culture, as well as capacity to learn, as opposed to experience listed on a potential hire’s CV. Hiring a huge amount of new talent also led to a drop in productivity, so we learned the importance of planning hiring in line with growth, so as not to overwhelm the existing team. 

Despite these challenges, we’ve successfully expanded the team from just myself and Harrison in 2012 to over 140 incredible employees today. We’ve also recently raised over $68 million (€57 million) in Series C funding to power that growth and I’m proud to say we’re now one of Europe’s fastest growing SaaS startups.

How important is localisation for SaaS startups to scale up globally? What role has it played in your company’s expansion?

That’s a great question. Localisation is crucial as software is an inherently global business, with few of the barriers to international trade that most industries face. But, for too many software companies, selling internationally and localising sales across markets is an afterthought, rather than a central part of their growth strategy. 

For many early stage SaaS businesses, international sales often start to trickle in organically as customers from across the world stumble across software products online. These sales are often seen as ‘free growth’, or something that happens without making any effort. But, those international sales are coming at the cost of all of the other potential customers that are being ignored or put off by a failure to localise your offering. The importance of thinking internationally from day one, whether by turning on different currencies or adding language options, can’t be underestimated. 

Paddle was really built to ‘scratch its own itch’ in the early stages of  the business, and part of that was developing the tools to better localise sales. Today, we strive to remove the barriers to growth for SaaS businesses, helping them to sell in over 200 countries and territories across the world. 

What has the coronavirus pandemic meant for the European SaaS scene and how it will affect the further development of Europe’s tech ecosystem in general?

Initially, most software companies faced a reckoning in the wake of the coronavirus outbreak. Businesses needed ways to cut spending on anything that wasn’t considered essential. As a result, March 2020 was the biggest month ever for churn in SaaS history. This huge spike in churn was followed by rapid growth for many SaaS providers, as new working patterns drove businesses and consumers to adopt new tools and services. As a result, over the first nine months of 2020, the SaaS industry saw growth equivalent to what we would expect to see in three to five more typical years. 

This has resulted in European software finally competing at the global stage, with European SaaS driving the continent’s tech industry growth like never before. In 2020, UiPath became the first European Cloud decacorn and Visma, a Norwegian company, became the world’s largest ever software buyout with a $12B+ valuation. Investment in European SaaS is now outpacing the US for the first time, signaling the maturing of the ecosystem and the development of a mindset that’s unique to Europe.

What’s the future of SaaS? How do you see the industry evolving in the next five years?

In the coming years, software will continue to change the way we work, shop and keep in touch with the people around us, becoming more fundamental than ever before. 

Software will also become the competitive differentiator. As technology evolves, people are going to care much less about what device they can use for something. It will be all about accessing the right applications, services and operating systems, and people will expect a coherent experience as standard across any device. 

Lastly, the notion of software companies defining themselves by geography will also become outdated. The future of running a business is about being global and international, servicing as many countries as possible. This opens up the global talent pipeline and results in a team built of people from across the world with experience gained across the world. 

How can SaaS companies capitalise on growth opportunities in 2021?

The long shadow cast by Coronavirus, coupled with some high profile successes and failures from across the tech sector in 2020, means that the era of ‘growth at all costs’  for SaaS companies is over. Tech businesses with global aspirations will need growth strategies that allow them to scale quickly and sustainably, enabling them to capitalise on growth opportunities in 2021. 

There is a huge opportunity for SaaS companies in 2021, but, as software sellers and their customer bases grow, their compliance burden will grow as well. Teams need to be thinking about capitalising on global market opportunity without allowing compliance to become an unsustainable burden on the business. 

SaaS companies will also need to be thinking about how they’re planning for growth and measuring success. We know that the only certainty as we look ahead to 2021 will be uncertainty, so a critical component of successful growth strategies will be a revenue delivery strategy focused on Net Revenue Retention (NRR), a metric that effectively measures the health of any business and its potential for growth. We’re seeing NRR as the common factor in our sellers’ growth, as well as the biggest software successes of the past few years, and it will be essential to sustainable growth in 2021. 

Given that COVID-19 has changed the landscape of work, what tips do you have for building a strong tech startup team?

Having begun as teenagers working remotely for more than two years before we ever met in person, Coronavirus has in many ways seen myself and Harrison come full circle, so we’ve really reflected on what we learned from that experience and how we could bring it to a growing team. As a founding team, we’ve seen the importance of staying in close contact with each other, evolving our dynamic over time to meet the needs of the business as it’s grown. In a remote environment, this is more important than ever for founding teams to crack.

As the industry continues its rapid growth, startups really need to be thinking about when and how to hire, to ensure they have team growth strategies in place. Hiring remotely means it’s even more important to ensure your culture and values are in place, and accepting that it’s better not to hire anyone than make the wrong hire in today’s business environment. 

While COVID-19 has brought unique challenges, there are fundamental principles that haven’t changed. Any founder can only succeed as the leader of a fast-growing company if they are able to learn and grow faster as an individual than the business is growing. Building a strong team is also about surrounding yourself with people with the same hunger for learning and the ability to develop. At Paddle, our guiding principle is that in a fast growing company like ours, you have to be able to completely relearn your role every six months and we’re relentless in our focus on candidates’ capacity to learn as a result.