Software powers our economy. Last year, software companies contributed €170bn of total UK value-added growth, and supports 2.7m jobs As we look to the future, the impact of the industry is expected to get larger, as more subscription-based software startups (SaaS) successfully scale.
As the co-founder and CEO of Paddle said, I’ve seen the complexities that come with scaling a startup. I’m not alone in these experiences. Recently, I sat down with Patrick Campbell, who founded subscription growth platform Profitwell, to talk frankly about what it means to be a startup CEO. I’ve long-admired Patrick. He always provides clear and honest insight into what it takes to build a million-dollar business the good, the bad and the ugly.
I also respect that he and his team are building a company that will help the SaaS market grow. While we took slightly different paths to starting our businesses (Paddle is venture-backed and Profitwell is bootstrapped), we found that, as founders, we shared similar experiences, and have developed similar lessons on how to grow and scale software businesses.
Here are our top five take-aways.
- Avoid part-time co-founders. When talking about his own experience, Patrick related the importance of setting expectations and evaluating when a part-time founder needs to become full-time. It will ultimately allow you to avoid clashing egos or significant conflicts later down the line.
- Freemium is misunderstood, it’s about acquisition, not revenue. Patrick believes that every company will eventually have a freemium product in some manner. Going freemium doesn’t mean just having a free version of your product; it could be a tangential free version that helps to get the lead invested and nurtured into your service. Once the potential customer has got to know your brand, you can then interest them in your service.
- The freemium recipe for success is: the product can’t suck. It has to be better than your competitor’s product and has to absorb an amount of effort to be created. It took Patrick two years to have a freemium product offering ready.
- Realising that you’re the CEO and this impacts others. As you grow from a small startup crew to a far larger team, CEOs will have an ‘a-ha moment’. A realisation that you’re the CEO, and that your actions and comments have the potential to make, or break, someone’s day. It’s tough, but you need to look inwards, and assess whether you are communicating in a fair and balanced way. You also want your team, especially new recruits, to feel they can speak up, and give feedback to the senior team.
New employees can arrive with a “this person is my boss” mentality and, if they don’t know you, they can attribute the worst qualities of somebody they have dealt with before to you. We’ve all seen this happen. To combat this ‘title bias’, and any preconceived notions people had about CEOs or Founders, required a deliberate effort on my part to become the kind of CEO I wanted to be, and to outwardly project and communicate that to the ever-growing Paddle team.
- A CEO can align everyone with a vision for the company (even if it is changing!). I see it as a gradual process, the first six people in at Paddle got to know the vision well. As Paddle grew, it got harder simply because there were more people in the room. We needed a solution to help us communicate the vision with clarity and simplicity. Our solution was to be more deliberate and repetitive about what you say. It can get annoying if you’re saying something for the fourteenth time, but your fourteenth might be somebody’s first. So for clear vision alignment, it’s all about repetition.
Even though Patrick and I have had very different experiences as founders in many ways,the lessons we have learned are similar. We both hope that the points raised in this article help other founders to overcome some of the barriers to growth.
However, in addition to these points, I believe success is underlined by three core elements that founders need to stay on top of: founders need to maintain a vision of what your company wants to achieve; pay close attention to team culture, especially as your company scales; and continually dedicating time to ensuring your company into the best possible version of itself.