Chargebee, a SaaS company, experienced the most severe volatility in 2022. With a capitalization of $3.5 billion, up roughly 1.5 times from its earlier fundraising phase, it started the year brilliantly.
It secured nearly $250 million from financiers led by Tiger Global and Sequoia. Just nine months later, it undertook workforce reductions in an attempt to reduce expenses and increase productivity.
There have been layoffs at some of the other SaaS companies alongside Chargebee. Global SaaS powerhouses like Salesforce, Zendesk, and Freshworks have also cut off workers to counteract a pandemic of aggressive hiring throughout a slowdown.
Chargebee co-founder Krish Subramanian talked to Moneycontrol’s Chandra R Srikanth and Bhavya Dilipkumar in his first appearance since the announcement of the job cuts about what triggered the downsize and the firm’s company development despite denying speculations of a down-round or sale.
What is your advice to young SaaS founders? Can you share your playbook to survive 2023 when macroeconomic conditions are going to get tough?
The first point is that the community is larger than the person. Several tough choices will need to be made, or at the absolute least, considered as opportunities, like layoffs, if you intend to fight for the organization’s survival.
However, if I were to give one piece of advice, it would be to prevent being in ignorance and hope that market dynamics will miraculously improve. Each one of us can only accomplish these two things: base our scenario planning on your controllable (like solid numbers and an understanding of consumers), and take charge of our personal destiny.
Are layoffs the ultimate solution? Did Chargebee undertake any other measures before considering layoffs?
You can reduce your sales and marketing costs, but if you want to keep adding to your customer base, you’ll need to invest in tried-and-true tactics like promotion and other things. You can minimize your payroll costs as an additional internal variable. But if you decrease the salary for your best employees, you may find yourself in a situation where you lose several of your best employees. We have to choose deliberately at that period.
Is an IPO still on the cards? Has any timeline been set?
If you analyze our financing history, the majority of our investors and all of the contributions took place after 2018. Therefore, there isn’t any special compulsion to say, “Oh, we must exit soon,” from a time horizon perspective.
There isn’t a set schedule for an IPO. I assume some of those judgments will be determined in response to market conditions.