Finding the billing solution that’s the right fit is critical for startups. Not only is it literally the gate through which your revenue will flow, it also plays an important role in winning customers by creating a seamless user journey—and it can make or break your ability to scale down the line. Video sharing platform Sendspark found that fit with Chargify. To learn more, we invited Sendspark’s Founder and COO Bethany Stachenfeld to join us at the 2021 Monetize Forum. In this conversation with MGI Research analyst Andrew Dailey, Bethany also gives her thoughts on why prioritizing your billing solution early is so important and how Chargify is enabling her company to innovate against ingrained habits in the market.
Key Issues
Why should companies with relatively simple billing requirements consider sophisticated billing solutions?
How should companies weigh best-of-breed billing solutions against all-in-one platforms?
Why is the right billing solution particularly key for companies looking to drive behavior change?
Guest Profile
Bethany is Co-Founder and COO of Sendspark, a platform for businesses to record and share personalized videos with customers. Bethany is a business graduate of Washington University in St. Louis and moved to San Antonio through her Venture for America fellowship in 2015. She served on leadership teams for startups Filestack and VidGrid before launching Sendspark in 2019.
Andrew Dailey
Welcome everyone. This is Andrew Dailey of MGI Research, and this session is “Usage Billing in a Dynamic Startup.” When it comes to monetization, the grass is always greener, and one of the things we’ve learned at MGI is that organizations always think or want to believe that it’s easier for the other company. For startups, the belief is that the established, mature organizations must surely be able to do so much more when it comes to monetization, given the seemingly rich resources they have at hand.
On the other side, the well-established global giants look longingly and jealously at the fast-moving startups who don’t have the weight of baggage or the constraints of doing business in 150 countries with all the regulatory requirements and the tens of thousands (or hundreds of thousands) of demanding customers that have complex, one-off deals.
So, in truth, large and small companies have a lot to learn from each other, and to provide monetization insights and perspectives from the fast-moving startup point of view, I’m delighted to have Bethany Stachenfeld, the founder of Sendspark, join me in conversation today. Welcome, Bethany.
Bethany Stachenfeld
Thank you. Thanks for having me here.
Andrew Dailey
For those who don’t know Sendspark, let’s start with a little background on what you do and the scope and scale of your business.
Bethany Stachenfeld
Sure. As you said, we’re a startup. Sendspark is a video messaging platform for businesses, so we have a web app and a Chrome extension that make it really easy to record and request videos to send to customers. We’re all asynchronous, so it’s not like Zoom; rather, you can create these quick messages and then send them through email, LinkedIn, or any other channel. So, anytime it’s better to show or personally say something rather than writing it in text, Sendspark can be really helpful—throughout the funnel in business development, customer support, onboarding, et cetera. This is especially true right now as it’s getting harder and harder to really connect while we’re all online.
Andrew Dailey
Yes. As an early-stage SaaS company, you guys must have looked at a variety of different monetization models from subscriptions to usage-based to per user—the whole gamut. What’s your current model today?
Bethany Stachenfeld
Yes. We’ve definitely looked at a lot of options. Right now, we have strictly user-based pricing, so we charge $15 per user, per month, and that comes with all the features and unlimited videos. We don’t want to restrict people from using the product, which is why we didn’t go for a model based on something like number of videos. We’re still able to grow with the size of a team this way because a single entrepreneur using Sendspark is paying $15, but as we’re working with larger and larger customers with bigger sales and support teams, we’re able to charge them more effectively.
Andrew Dailey
Right. How do you see the model evolving over time? Obviously, there must be some resource costs on your side that you may not be capturing yet. What are you thinking about in terms of how it’s going to change going forward?
Bethany Stachenfeld
Yes, we’re definitely looking at a few different things. We need to make sure that it makes sense for us and that, for example, we’re not paying too much in storage costs. Another thing that we’ve been kind of thinking about, especially for larger teams, is that we don’t want every instance of inviting a new user to be a purchase decision. We’re coming up with more holistic plans that are better for teams so that they’re able to add more users and grow the team without asking themselves, “Does this person really need to be sending videos?” In that way, we’ve definitely been playing with the model, considering charging for storage and giving bigger discounts to teams so they’re buying bundles instead of paying for individual users—things like that.
Andrew Dailey
How do you currently do testing of the new models? Everybody talks about A/B testing, but what do you guys do in terms of putting new things out there and figuring out what works best?
Bethany Stachenfeld
A lot of it is pretty manual on our side. We’ve also worked with Run Pricing Tests, a company that went through 500 startups with us, and they’re doing really cool things in the pricing optimization space. Ultimately, a lot of it is really just asking customers what feels right and what makes sense to them. I think it’s a little tricky to use A/B tests on pricing because you don’t want to be showing one model to one group of customers and then something else to another. I think that’s just kind of a recipe to get people upset.
Instead, we’re very honestly asking questions like, “Hey, would this be easier for you to get approval to buy this way?” or, “Does this feel right?” For example, I talked to someone today, and they asked how much it would cost. When I said $15, they responded pretty clearly, “You’re not charging enough.” So, I think you can kind of get the feedback just by being really honest and working with customers. That said, if you have any tips for running more efficient experiments that aren’t going to rub people the wrong way, I would be super open to that.
Andrew Dailey
We’ll get back in touch at the end of the session! Another thought in looking at your model is whether you’ve considered affiliate selling and if that figured into looking at the requirements for what you need from a billing and monetization capability point of view. Were you already thinking about affiliates, and how do you handle revenue splits and allocations? What do you think about there?
Bethany Stachenfeld
Yes, that’s a good question. There are actually additional revenue streams that we have now and others that we’re working on, so we had to make sure those would be supported. Affiliates are definitely involved in that, and we have an affiliate program live right now. We use LeadDyno for the affiliate program, and then that all syncs up with our billing system, which is Chargify—that’s kind of our hub for everything. So yes, we do have an affiliate system in place connected to that.
In addition to user-based pricing, we’re also working on building out a video API that we plan to sell to email developers, which is more of a usage-based component. So, even though everything is user-based right now, we had to make sure that our billing system could support all of these different streams.
Andrew Dailey
So, even though you started with a relatively simple model, you’ve been thinking about how you’ll scale up with a lot more complexity from the beginning. I’m sure when you started Sendspark, billing or monetization beyond needing a revenue model to go raise capital wasn’t at the forefront of your mind, but you’ve now learned an enormous amount about billing and monetization in these different models. What advice would you give to fellow entrepreneurs and CEOs who are beginning to think about their monetization and billing requirements? What have you learned so far that you wish you knew back then?
Bethany Stachenfeld
I think the main thing to keep in mind, as a startup founder in general, is just that everything changes. Things can change really fast, and you always want to be able to iterate; you never want to have to repeat what you’ve already done because, if you already did it, you need to move on to the next thing. Making sure that your billing system is really flexible, dynamic, and able to grow with you is huge because you don’t want to find yourself trying to charge a really big customer and not able to support it or experiencing issues with the infrastructure that should have already been taken care of.
It comes down to making sure you’re using something that can scale with you. With Sendspark, we started off with Chargify before we even had the billing portal, so we were just sending out Chargify public pages to charge people, and we built it the right way from the very beginning. At another company I was with in the past, they didn’t do things that way, and it ended up creating these huge problems down the road in how to track things and how to continue to bill recurring invoices. If these kinds of issues hit you when you’re already doing a million in annual run rate, you’re in a really bad spot because now you’re trying to fix it when really important deals are on the line. At Sendspark, we set it up so early that we haven’t had any problems. Billing is something that, aside from changing our pricing plan, we don’t have to worry about in terms of logistics now. I think that’s been huge, especially having seen how much pain it caused another company. At the end of the day, you should be focused on how you get customers now, not how you bill them.
Andrew Dailey
Right. I think that concept of thinking about billing and monetization early in the product development process is really critical because we see, in larger organizations, it’s often forgotten or kind of left to the side. Once they get down the product roadmap and develop quite a ways, then they say, “Oh yeah, we have to go monetize this,” and it’s a lot harder to do it after the fact.
Bethany Stachenfeld
Yes, it is hard. It’s tricky because a part of me wondered why I’m charging for this when I haven’t even built it yet. But the fact is that the two things are so interrelated: you’re building and making sure that people find value, and you’re charging them at the right time and with the ability to bill them seamlessly. It’s really important to think of that early on and make sure that you’re building things the right way.
I think there’s a common mindset that we definitely had early on and, luckily, were called out on, which is, “I just need to get this up, and I’ll come back to it later.” I think if you’re a founder and you’re thinking like that, you need to smack yourself in the face because you don’t want to come back to it later. You need to build it right the first time because later, you’re never going to have time. If you don’t have time now, you’re not going to have time later, so you need to make sure that if you’re spending any time, you’re doing it right.
Andrew Dailey
Yes. If we look at that beyond just the lens of billing, you guys have really tried to focus a lot on building this frictionless customer experience and making it as easy as possible for people to adopt the product and start consuming it. What did you think about early on in terms of the payments piece and connecting billing into operations and the product? How much of that thinking did you do early as well?
Bethany Stachenfeld
Yes—it’s all so related. If you’re going to have a frictionless user experience, that needs to be thought of through the entire customer journey. At Sendspark, we have a product, but our product really requires a behavior change. We’re telling you that instead of writing an email, you should send a video and communicate differently. If that’s not super easy to do, people just won’t do it, even if the results are there. Even if they know they’ll get a better reply, people just want what’s easy.
Therefore, every aspect of Sendspark is really intended to be super frictionless and easy to use. We have a freemium model so people can sign up for free, start using it, send out videos, and get a feel for things. Then, once they hit certain trigger points, they’re able to convert to a paid plan for which we have a billing portal in-app. As soon as you get a little “upgrade now” button and click it, you can enter your credit card and you’re on the paid plan. We even make it very easy to expand your plan, so you can invite more users. We don’t have too many other components; that’s the main one. If you add more users, it will ask if you accept the additional payment, yes or no. You can click yes and then keep using it—because the last thing we want to do is add friction when people are trying to pay. So, we make it really easy to get started and then expand your plan over time.
Andrew Dailey
When you were putting this together, did you think, “I want to have one supplier give me payments, billing, financials—everything all in one”? Or, were you saying, “No, I’m going to get the best billing, the best payments, the best financials, et cetera”? How did you think about it in terms of getting a single solution versus components that you would stitch together?
Bethany Stachenfeld
We really wanted one platform that was going to kind of do it all, mostly because we’re really a typical SaaS-type business, and we’re not trying to reinvent the wheel with really innovative payments here. In our case, we wanted to have the industry-standard best practice. On the payment side, we need things working well, but then there are additional details that I would rather not think about and just have work. For example, we wanted to make sure our platform could deal with charging tax. Like I said, we’re using Chargify, and they have an integration where, with basically one click, you’re able to make sure you’re compliant with all the tax laws. This is an area where I wouldn’t want to call a tax lawyer and do all that myself.
We wanted to make sure that everything we thought of was handled and that our platform could also support things that we maybe wouldn’t have thought of as first-time founders who aren’t necessarily super experienced in this space. So, yes, we definitely wanted something that could kind of do it all. Another example is that, with the actual charging of customers, a big part of that is reporting it and making sure that I have insight into what’s going on, especially with recurring payments. This means being able to know what came in last month, what’s coming in next month or next year, and having flexibility so we can control different plans. We wanted an all-in-one solution that wouldn’t create any holes we might miss and then, for example, accidentally charge someone or do something else that could be bad for our customers.
Andrew Dailey
Yes, that makes sense. As we look forward into 2021 and 2022, what’s on your roadmap, and what are you thinking of in terms of the next level of monetization capabilities? You talked about monetizing APIs. Tell us a little bit more about that and whatever else you’re working on.
Bethany Stachenfeld
That’s kind of the big monetization thing we’re really excited about. Right now, all of our customers are teams that are using Sendspark to record and send videos, but we’re very excited to build out an API for email platform developers. With this, if you’re creating your own platforms to record and send videos and you want your users to be able to send videos within your email platform, you’ll be able to integrate Sendspark as a kind of widget with a couple of lines of code so that they can just press a button to record a video which gets put in the email, and we’ll handle the rest. That’s going to have a usage-based component—we’ll charge based on API calls and more on the number of videos, versus unlimited for $15 per month. So, we’re pretty excited about that. It’s like a different product. In a way, it’s the same thing, but it’s embedded differently, and I think that’s going to be a really cool feature and very helpful to a lot of people.
Andrew Dailey
I have to ask the obvious question, which is, as an early-stage company with an early-stage product, you’re looking to get as many customers and as much revenue in the door as you can. How do you balance the sales desire to give the customer everything they want (even if that’s not on the standard price list) against trying to have relative order over your price book and your order plan?
Bethany Stachenfeld
The way we think about things is that if one person asks for it, we don’t do it. However, if two people ask for it, there are probably 10 people that want it that haven’t said anything. So, we keep track of who asked for what and how prevalent interest seems. At the moment, we’re just trying to build as fast as we can. I think there’s a lot we’re trying to build right now. We have a great team, and we’re able to release features pretty much every week. In an ideal world, we would do everything, but we try to stay focused and just build the most important features that really lead to a better experience.
Andrew Dailey
To finish up, what’s one thing about Sendspark that everyone should know but doesn’t yet?
Bethany Stachenfeld
I think for a lot of people, when they think about sending video emails, they’re thinking of business development and outbound sales, but I believe if you’re only using video for prospecting, you’re completely missing out. Sendspark and video email can add value throughout the entire customer journey, from onboarding to answering questions to just checking in and being a bit more personal with your customers. So, I think the key thing is that no matter what your job is, give it a try and see if video can improve your communication, help you achieve your goals, and save you some time in Zoom meetings.
Andrew Dailey
Terrific. Well, with that, I’d like to thank Bethany Stachenfeld of Sendspark for joining us here at the Monetize Forum. Bethany, I know your contact details are in the networking area, and I’m sure you’d be happy to tell everybody about the Sendspark journey and get connected. So, thanks again for joining us, and thanks to everyone else as well. Enjoy the rest of the Monetize Forum.
Bethany Stachenfeld
Thanks so much.
