SaaS Interviews with CEOs, Startups, Founders
51 year old dad raises $31.5m to help companies do meter based billing
07 Mar 2024
Chapter 1: What inspired Griff Parry to create Meter after selling Gamesparks?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Guys, Griff sold his last company to AWS.
And through that process that I've got a great idea, which he launched in 2020, it's called Meter. And it helps companies that are generally doing more than $50 million of revenue more accurately capture and bill based off usage. You've got to capture the product usage data, then bill against it resulting in billions of API calls per year. in some cases.
Chapter 2: How does Meter's usage-based billing model work for companies?
Today, Meter is working with between, call it, 10 and 100 customers. They have about 56 on the team with, quote, a majority being engineers and, quote, plenty of runway as Griff and his team looks to invest in the long term. Hey, folks, my guest today is Griff Perry.
Him and his co-founder, John Griffin, started Meter after building and selling a backend as a service company for video games to AWS. The experience brought the challenges and opportunities of using usage-based pricing into sharp focus, inspiring them to found Meter, an intelligent metering and pricing engine for SaaS companies. Griff, you ready to take us to the top?
Yes, absolutely. Where would you like me to start?
Well, it's great to have you. I will say there's a lot of people that think the future of SaaS is actually going to be pure usage-based pricing.
Chapter 3: What challenges do companies face with traditional billing systems?
We saw Chargify try and pivot into this. It didn't really work that well. They sold to SaaS Optics. We see Paddle and some others in the UK trying to capture this. Now, Stripe is a big player.
How do you fit into this ecosystem? Two things you said in turn. I definitely don't think it's the case that everything is going to be usage-based and everything is going to be sort of an extreme variation of usage-based.
But what creates the tailwind for our business is that there's been a rapid adoption of usage-based pricing strategies, often used in conjunction with more traditional subscription pricing. So there's probably a minority concern as recently ago as three or four years.
Chapter 4: How does Meter integrate with existing tools in the Quote2Cash stack?
But now the majority of B2B software companies are using some kind of usage-based pricing. And that's the longer spectrum. So you've got the AWSs and the snowflakes of this world doing pretty pure usage-based, but you've got a whole bunch of other players who are basically doing subscription 2.0. So it looks like a subscription, but it's got usage-based elements.
It could be an allowance that you've got to track where you pay overages if you exceed that allowance, that kind of thing. And moving to your second point, the reason that something like Meta exists is that the existing stack doesn't anticipate the usage-based pricing components. And so what they don't do is rate product usage. When I say rate product usage, I mean, apply pricing to usage.
So you've got to capture the product usage and then you've got to apply pricing to it to work out how much you would pay.
Chapter 5: What kind of customers does Meter typically serve?
And that's what, that's what Meta does. So Meta comes along and we automate that bill calculation. And so for the most part, we integrate with those other logos that you're talking about because we're doing the thing that they haven't anticipated. And for the most part, our customers are already committed to tooling in their Quote2Cash stack and we absolutely don't want them to rip it out.
We just want it to work the way it needs to. Now they're using these slightly different pricing approaches and effectively we're helping them modernize their Quote2Cash stack.
So I guess when I hear you say that in order for a meter to work or for anyone to do, you know, metered pricing, they first have to capture the product usage data and then sort of bill against it. Those are two, I mean, Pendo only does, you know, product usage and they're a multi-billion dollar company. There's others that only do the billing and their multi-billion dollar companies are there.
You have to do both of them to sort of make this work.
Chapter 6: What is the significance of having a majority engineering team at Meter?
Give me an example of a customer using you today and a version of sort of usage based or product tracking that they would do in their specific business that then they bill against.
So SIFT is a good example. So if you know SIFT, they used to be called SIFT Sciences. They're a great business and they're doing fraud detection for online retail effectively. And the core metric that they charge against is based around APIs. So they have naturally usage-based pricing. But they have big customers and their big customers want quite a high degree of predictability.
So a lot of their deals involve minimum commitments, which includes certain allowances and sort of discounted rates above those allowances, that kind of thing. So that's a typical pattern that we would cater for. And we need, as a meter, as a business, we need to...
Chapter 7: How does Griff Parry view the future of pricing models in SaaS?
integrate with whatever their source of truth for product usage data is. And if it exists already, we'll take from there. If it doesn't, then Meta itself can act as that source of truth. And we also need to integrate with their source of truth for account data and for pricing data. So again, we integrate wherever that currently sits. And what we're doing is pulling the product
usage, the pricing and the account dates together and processing it. And what you're spitting out is bill amounts. And then we deliver those wherever they're needed across the stack. So they're needed once a month for billing, but they're also needed at any given moment so that customer success staff or sales staff know how much customers are using.
Chapter 8: What lessons does Griff share about building a successful startup?
The product team might want to build dashboards so that the end customer can see how much they're using and how it converts the spend at any given moment. the FP&A team might want to export it to the BI stack so that they can analyze the business effectively. So that's the key thing. It's not just for billing. It's actually to power a whole bunch of functions all around the business.
That makes a lot of sense. So I guess today, and we'll go back to your founding story here in a second. I just want the snap and shot today first, and then we'll go get the story. But today, how many companies like SIF Science actively use meter to do their usage-based billing?
Forgive me, we don't disclose those numbers, but we're a solid series of A business. We've got great customers like Sift or Onfido or Clickhouse who love our product, have a transformative impact, and they're happy to tell their friends about it.
Can you give a, I understand you have to say slightly vague, but can you put us at least in the right sort of world? Are we talking like five enterprise customers or like 5 million low ARPU high volume customers?
so okay so that provides okay for context our focus is definitely on scale up and above so what we're looking for is or our customers are looking for is um solutions to quite a high degree of complexity so our customers are typically of the size of those examples i gave there's the sifts and the albedos you haven't attached a number to them is it number of employees is it revenue they're doing is the number of customers they're managing like what's the numerical value of the customer you're targeting
So I would use, simplistically, I would say revenue. So it's $50 million ARR and above. Okay, got it. But a better way to think about it is it's really about maturity. So a company in their early stages only has a few customers and they maybe only have one product and they might only operate in one geo.
But when they get more complicated, they have lots of customers and multiple products and operate multiple geos. And they will probably have an enterprise sales team that has quite a high appetite to do custom pricing deals to win and retain key accounts. It's when customers get to that point that whatever solution that they had in place before to do what Meta does becomes overwhelmed.
You know, they would have had a manual-based spreadsheet system or they would have built something themselves. And it's when they get overwhelmed that we come in. So we are at that, you know, our typical customer is $50 million an hour and above. And the stage of our business is that we had tens of customers like that and growing fast.
Thanks for that range. It puts us at least in the right ballpark. So fair to say you guys started between 10 and 100 customers and you're focused on ones that are doing it ideally north of 50 million of revenue because it requires more complexity.
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