Unlocking Growth: How Startups Can Optimize Pricing & Packaging

Intro 00:01
Finn, welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup Success starts now.

Kate 00:17
Welcome to Startup Success today. We have Fynn Glover in studio, who is the co-founder and CEO of Schematic. Thank you for being here today.

Fynn Glover 00:29
Thank you so much for having me.

Kate 00:30
Yeah, I’m looking forward to talking to you, and I want to get into Schematic and everything you’re doing there, but you have such an interesting background. You’ve had a lot of experience in the startup ecosystem. A successful startup. Maybe you could kind of quickly walk us through your background, just to set the stage.

Fynn Glover 00:47
Sure, yeah, let’s see. I mean, if we go way back, I think I spent most of my childhood wanting to play soccer as long as I could. That took me through college.

Kate 00:56
Okay, you played in college?

Fynn Glover 00:58

Kate 04:01
Okay. And I want to get into Schematic, but first I want to go back to that pivot and that first startup that you sold, you know, as like a roll up. What an awesome experience.

Fynn Glover 04:12
Yeah,a hard slog is the way I would describe it.

Kate 04:16
Yeah, I’m looking at it in hindsight, right, but at the time. But seriously, that’s pretty neat.

Fynn Glover 04:23
Yeah, a lot of learning. There’s a lot to crack in there, if that’s useful to people. But it was, you know, it was about a 10 year journey, and, you know, really, they were kind of two businesses within that 10 years, all rolled up into the same company. And then after the acquisition, the team stayed at the acquiring company for some time. I was there for about six months before I went to the cybersecurity company.

Kate 04:45
Okay, yeah. I mean, I can only imagine that is a tough journey, but it had a good ending.

Fynn Glover
Yeah, yeah, decent.

Kate
I mean, yeah. But trust me, I see a lot…

Fynn Glover
I’m not sitting on a beach, right?

Kate
Yeah. That’s true. That’s true. So, tell us what you’re doing now, like explain the motivation, why you founded this company, walk us through it.

Fynn Glover 05:06
So I think it’s important to understand the context that I was operating in. So in 2021 I joined a company called Automox, which is they do patch management, which is kind of IT operations. It’s adjacent to cyber security. They had just raised quite a bit of money from Insight as a part of their Series C. I was hired to run growth, and ended up running Growth and then becoming Chief of Staff, and then becoming VP Ops, and then sort of across all of those functions, pricing and packaging fell in my lap. And, you know, that’s sort of the beginning of where I think this is interesting, because, you know, effectively, there was no real pricing practice at the business. Just sort of like, who could own this, you know, it’s somebody who can be kind of a generalist and cross functional and get the business aligned. And I was fascinated by pricing, largely because I felt like one of the biggest mistakes that I’d made in my first company was pricing, and I’m happy to talk about that, but I had really not been mature or disciplined or insightful around the market’s willingness to pay and how that was evolving. And at Automox, I suddenly had the opportunity to go do enormous amounts of primary research with customers. I mean, 1000s of customers. I could go talk to anybody I wanted and really dig into how they perceived the value of the product, how they perceived the value of different features, how that translated to packaging decisions that we’d make, price points that we’d consider. And so there was sort of strategic consideration. And from there, you had to really work hard at a business of that size that was scaling to align everybody in the executive team, as well as their kind of key directors around changes, because it was a big deal to make changes. Changes hadn’t been made in two years. But then suddenly, even when everything got aligned and you were like, Okay, we’re going to go do this, it took two quarters or three quarters to actually make the change. And largely that was related to like we needed engineering resources to make these changes. We could not make these changes without developers. And that was for me, a moment of like, wow. Why is it so hard for companies that are growing so fast, whose core competitive advantage is speed as it relates to disrupting an incumbent, Why can’t they adjust pricing and packaging on the fly? Why am I waiting two quarters here? Why are we diverting engineering resources or developers to go like, think about billing and pricing initiatives, And so anyway, that led to an enormous amount of like, research and discovery to try to understand the technical root complexity, and I can talk all about that, but that led me to founding Schematic a couple years after being at that company, to try to solve that problem. And make it much easier and much faster for companies to evolve pricing and packaging on the fly without code changes, without needing developers, because pricing packaging should evolve as quickly as your product roadmap is evolving, right?

Kate 07:55
And lots of times, like you said, it’s a struggle, probably for a lot of people listening, because it doesn’t work that way.

Fynn Glover 08:02
It doesn’t work that way. It’s amazing how broken it is in B2B software.

Kate 08:06
I mean, you saw that in your first startup. You were saying?

Fynn Glover 08:10
I saw it in my first I mean, we certainly had sort of the operational kind of implementation challenges. Like, okay, if I want to change pricing, I need to go talk to my CTO, right? Which is crazy to me. But yeah, we had also kind of screwed up on the strategic side in some ways, because we had not deeply understood the market’s willingness to pay. And you know, to me, that’s, you know, for founders listening, willingness to pay as a literal tool or exercise that one does regularly with customers and prospects and design partners is amongst the most powerful tools that a founder has access to, to kind of pursue product-market-fit and constantly drive the business forward.

Kate 08:50
Yeah. I mean, can you delve into that a little bit more? Because I think a lot of people don’t really understand that.

Fynn Glover 08:56
I mean, a lot of people, they’ll go build products.
Kate 09:01
And they’re great at that, because that’s the passion, right? But, yeah.

Fynn Glover 09:04
It’s like, I want to build this product to solve this problem that I’ve had. Turns out there’s no market for it. (exactly.) Or I built a product and it’s working and there’s a market for it, but I don’t know what to charge for it, and I’m leaving x amount of value on the table over charging, and I’m kind of slowing down deal velocity or lots of ways it can go wrong. But willingness to pay is literally just a set of questions that you ask a customer or a prospect or a design partner that give you an amazing ability to proxy the market’s perception of your value in terms of your pricing and your package. You can run these interviews kind of in a variety of ways. I usually run them with literally eight questions. Takes 30 minutes on a call. But you walk out of the room with just like, an incredible kind of understanding of how the market thinks about you relative to other tools; how they think about price points against which you would be prohibitive for them to even consider; how your packaging schema would kind of be considered, you know, how they’d want you to package; your price metric, like, what’s the value metric that is most intuitive to them based on what your product is doing for them? Those kind of things, having a vocabulary and a framework for those types of questions, as you’re building product, as you’re scaling, as you’re achieving, constantly having those conversations is just like enormously insightful for a founder.

Kate 10:26
And do you find that customers are willing to do that with you, for people listening?

Fynn Glover 10:31
Yes. It’s a great question, because you have to set those conversations up with a lot of intention and a lot of respect for the fact that the customer is willing, is basically agreeing to engage in what is kind of an emotional conversation. When we talk about pricing, it’s emotional. And they could easily feel like they’re negotiating against themselves. And so there are ways to structure this and make the request and make them feel at ease and do all that which, you know, I can talk about those tactics, but that’s really important if you’re gonna pursue those types of conversations.

Kate 11:05
And so how does your current startup help with all of this? The pricing and packaging like walk us through it.

Fynn Glover 11:11
What we realized is, like, the reason this gets so hard, yeah, and brittle and broken at a company like Automox, which was, you know, as a 200-300 person company by the time I was working on this stuff. It also comes back to early decisions made around how we will implement pricing, and those early decisions are often engineering decisions, meaning we need to somehow figure out a way to charge a customer, manage their subscription, but also manage what they have access to in the application based on their subscription or based on their contract. And so often, kind of a common pattern we see is, if you could describe it in a couple different ways, but like, one simple way to think about it is like, I’m hard coding pricing logic into application code. It lives in a config file or something like that. And so immediately the implication is, if I want to change pricing, I’ve got to go into application code to change it, right? And so what we’re trying to do is effectively decouple pricing and packaging and what a customer has access to in a product based on their subscription or based on their contract. We’re trying to decouple all that from the code. (Okay? That makes sense.) So that the engineer, the developer, all they have to care about is releasing great features. And the application doesn’t have to care about the billing state of the customer, and then the business user, who we typically serve somebody in product, because product, in our opinion, should be really responsible for monetization, like you shouldn’t be, like, releasing features if you don’t have kind of some context as to they’re going to make you money, right? But that gives the product person the ability to go run feature trials, run upgrades run downgrades, create these great self serve experiences for the customer, for, you know, usage meters and visibilities and checkout, and it’s a bunch of control around the pricing and packaging that they currently lack because they have to go talk to engineering every time they’d want to do something.

Kate 13:17
Yeah. I mean, for product people, they must get so excited about this.

Fynn Glover
We are seeing excitement. We’re early days still, but we’re starting to see excitement.

Kate
Yeah, (13:19)so your early days, are you working with a couple of like, clients?

Fynn Glover 13:24
Yeah. And the way we went about this is we said to ourselves, look, this is going to be pretty hard, complex infrastructural software to build. So in the first year, we just want to prove that we can build a product that a handful of good companies would trust in production. If we can prove that that is, like a major point to de-risk. And then we could consider going out and raising seed capital. That happened, and then kind of the next kind of wave of, sort of, our approach was, okay, we’re kind of working with a couple design partners. Let’s go win a real cohort of early adopters. They’re still going to have to accept a rough around the edges product for another year, but we’ll learn a lot. We’ll build, we’ll build fast, and that’s sort of like, we’re kind of at the tail end of that. We’ve got another quarter or so before we’ll sort of really kind of release what we would call is not a beta product. And go from there, yeah.

Kate 14:15
Are those core customers that are using your beta product, have they found a lot of, like, good success? Can you share anything, I mean, not naming names, but anything kind of general?

Fynn Glover 14:28
I think so. One thing that, you know, I’m incredibly attuned to is, you know, is their churn. (Yeah, that’s huge.) And so far, there has been no churn. And that needs to be true for a product like this, because it’s infrastructural, because there is implementation. If there’s churn, it says that either the product is really not performing, it’s falling down, from a latency and reliability perspective, something like that. So that we haven’t seen churn, to me as very, very positive. I think. We’ve also seen delight in the sense that, you know, part of the value here is, I’ll just kind of give you kind of the typical story, like, typically, a startup will build the product when they’re ready to start monetizing, they bring in Stripe to manage payments and manage billing, and eventually what they have to start doing is building all this additional infrastructure around Stripe and their product. And our customers don’t have to build that infrastructure, like developers aren’t having to build feature flags and entitlements and metering and sort of all the components that go into the purchasing experience. And then product people are able to go be, I think, more creative around the way they monetize, and I think also they’re able to align their product roadmap with their packaging and pricing roadmap. (Wow.) And that, to me, is something that I’m personally really excited by, because, like in all the companies I interviewed, and at Automox, like so many times, we just stopped having conversations about pricing and packaging because it had become too brittle, it was too much of like a taboo thing to talk about. That’s crazy to me, like that you can’t talk about your pricing packaging is insane to me. So I kind of hope that that’s sort of where this leads to is like, Yes, always talking about pricing, because it is something that should be evolving as fast as a really good software product is a lot.

Kate 16:15
Oh yeah, we’ve had some of the most successful founders on the show, and like, one of the areas that when they got it right, they saw that success, was when they changed their products and pricing, and we’ve gotten into that with them. I mean, it can really make or break a company. (It can.) And the way you’ve just laid it out, how you’ve approached your product development and, you know, doing a beta with some core customers who are willing to accept, you know, some changes, or (rough around the edges.) Rough around the edges, as you would call it, yes. I like that. And then doing your seed round, that’s a really nice, calculated approach to starting a company. I mean that that’s commendable, right there. I don’t normally hear such a well thought out approach. Is that you think based on your previous experiences?

Fynn Glover 17:10
Yeah, probably. I think I’m that, you know, I consider myself, like, you know, solidly middle aged at this point, with little kids and like, you have to kind of time down risk. Okay, we’re gonna take a real risk here. How long are we comfortable taking this risk? What must we have proven to ourselves? In fact, I think, like, one of the most powerful questions for not just founders, but just companies, is, and this is not my own thing. I learned this from the founder podcast. I think I listened to it the founder of Whoop but he said, like, the best founders and the best companies know what they must prove in a very specific amount of time. Yeah, it’s hard for a lot of people to be really disciplined with what must we prove in this six month window or this 12 month window?

Kate 17:43
That’s great. I bet that’s kind of helped with how you approach things. Did it help in fundraising? Are you good at fundraising?

Fynn Glover 17:50
I don’t know if I’m good. I’ve raised money. I don’t know if that makes me good or not. I mean, it kind of comes back to like, have I gotten good valuations and all that kind of stuff.

Kate 17:59
But, yeah. Did you kind of take that approach with fundraising, like laying out exactly what you wanted to accomplish in your pitch deck?

Fynn Glover 18:08
Fundraising is such an interesting thing. I mean, I think my big takeaway on fundraising is that fundraising is the art of telling big stories.

Kate 18:16

See, I love that. That’s kind of what I think, too. You got to tell the story,

Fynn Glover 18:22
Yeah. And I think if the story gets overly rational, it can actually hurt you in fundraising. You’ve got to find a way to strike that balance, really. Because, like, and this is also stage dependent, like, when you raising seed capital, like most investors are betting on the team. You know, they’re betting on, kind of like, do I believe that there’s, like, a really big market here, and they are well suited to execute for some reason. When you get a little bit bigger, it’s like, more about the business. And so, you know, the storytelling becomes more rational, more based in fact, more based in like, objective opportunity, than it does vision.

Kate 18:57
Yes, I hear that a lot from VCs on this show, that the team is so important. You’re the co-founder. Was the team that you’re with right now – do you have prior experience with them?

Fynn Glover 19:08
They were all with me. We were all together at our first company. Matcha.

Kate 19:14
Oh, okay, great. So you all saw this problem, yeah?

Fynn Glover 19:18
Well, yeah. So we all worked together at that company called Matcha. And then in 2020, we all sort of ended up in kind of two different places. Two of us were at a company called Relay Payments, which is a FinTech company in Atlanta that’s done quite well. And then I was at Automox. But at night, we were all moonlighting and trying to figure out what do we want to start next.

Kate 19:37
And this came up, yeah,and you seem like you’re all like, you must all be very close to it based on the way you describe the different experiences.

Fynn Glover 19:47
Well, pricing is one of those interesting problems where it’s quite cross functional. Yeah, it has impacted engineering because they’ve had to go figure out, like, all this complicated billing logic that’s nested in code. It’s impacted Product because, hey, I want to roll out a feature trial, and, like, I can’t. And then, you know, on my side, which is kind of large, even more like marketing, product marketing, sales, ops, it’s like, Hey guys, like, we’re really struggling with Rev ops here.

Kate 20:15
Yes, yes, absolutely, I think even more so I feel like talking to founders right now, they’re under a lot of pressure from their VCs right in this area, a lot of pressure, like they have to get this right. Do you see that with your clients?

Fynn Glover 20:34
So one thing that’s been interesting to me is that a year and a half ago, I thought that we would go focus on larger companies, because my hypothesis was like, It’s not until you’re a relatively large mid market company that you like, are starting to become sophisticated and you’re thinking around pricing, or you’re at least aware that this is like a real lever, or whatever we want to kind of describe it as. But I think in the last year and a half, what I’ve seen is earlier stage companies are feeling much greater pressure around pricing and packaging as levers. And I think some of that is, like, you could say is just kind of this is usage-based pricing gaining maturity. I think what I might say is like, you know, so much of this is AI driven, and AI is basically, like a big driver of a variety of usage-based billing models. And usage-based billing drives more complexity into how you handle pricing and packaging from a technical perspective, between billing systems and CRMs and application code.

Kate 21:33
That’s a great point. And I think you’re right about the AI factor for sure. Absolutely. We’re getting close on time, and we always kind of wrap up with this question. Just general advice you have for startup founders listening. I mean, you’ve kind of walked us through, you know, your whole journey, which was fascinating, and I love how you delved into pricing and packaging with us. We haven’t really done this on the show, so thank you. But just general advice for those listening.

Fynn Glover 22:04
Well, if you’re if you’re founding a company, I maybe just to keep in theme, I think willingness to pay is a really powerful tool that you could run tomorrow, and if you have never done it before, it’s really accessible and it’s really easy to go do, and kind of the upside from it’s quite large. So that might be, that might be one thing.

Kate 22:27
When you say accessible, like, you mean, you can find information on how to get started online?

Fynn Glover 22:33
Yeah. I can, I mean, I can send you a Googled off with, like, the eight, the eight questions to go ask.

Kate 22:41
There’s eight questions, okay. And you said earlier in the show, you just have to be very careful with how you approach it, with, you know, these customers, or potential customers, anything you want, can share there for us?

Fynn Glover 22:56
I think it’s just, it’s careful, but it’s just intentional and direct and honest. I mean, the way I often do this personally is, let’s say this is an early customer or design partner, it’s one thing that is so important to us, is that we understand how you value our product, because that shapes so much of how we think about our business. Would you be open to a 30 to 45 minute conversation with me where we go deep on your point of view around our value, and see what they say? Some people might feel uncomfortable. Some people might be like, yeah, we’d love to.

Kate 23:31
And you must learn a lot too, just in general, about what they’re facing, what they’re struggling with, too, right? (It’s really cool. Yeah, it’s really cool.) And then you’ve kind of built a connection there, right? Trust, some trust, which is so important,

Fynn Glover 23:50
yeah? And early customers, right? Like, yeah, they are trusting you, yeah, you’re trusting them. Like, it’s an important relationship.

Kate 23:57
Yeah, that’s great. I think that was really helpful. Anything on a personal level? Like, do you keep a network of other founders around you? Like, how do you stay sane? You mentioned you have little kids and you’re a co-founder. Any advice there?

Fynn Glover 24:11
I do have tons of other founders that I talk to all the time. I get a lot of energy from other people, I exercise a lot.

Kate 24:19
Yeah, that’s helpful. I think that’s important that you share that – that you take the time for yourself too. You’ve talked a lot about this on the show, that some founders kind of lose that.

Fynn Glover 24:29
Yeah, I just, I perform a lot worse when I’m not well exercised. Had some family time. Balance. Watch a sitcom with my wife.

Kate 24:40
Yeah no, balance is so important and it’s forgotten. For those listening that want to learn more about Schematic, where do they go?

Fynn Glover 24:45
SchematicHq.com, is our website,. We have lots of interviews with great founders on our own podcast where we go really deep into their journeys with pricing and packaging.

Kate 24:59
Oh, great. You do? (Yes.) Oh, good. So for people that want to learn more about this, that would be a great resource.

Fynn Glover 25:12
I hope so. Yeah, and we mix it up between interviews with founders and where we kind of say, tell us your journey with pricing and packaging. What have you learned, where the mistakes you’ve made so it gets, hopefully useful from a tactical perspective, and then we have tear downs of great companies and how they approach their pricing page and their billing experience, and kind of the extent to which they are really extending pricing and billing as core components of their actual products.

Kate 25:33
I love it. I love it. I will say, for those people listening, I interviewed the founder of Segment, you know, which had a huge acquisition, and that’s what he said. It all came down to changing his pricing.

Fynn Glover 25:45
Well, it’s funny that you say that. Segment has an incredible pricing story, and I’ve interviewed their VP Eng about that journey, as well as the guy that was on the pricing team. It is one of those great startup stories.

Kate 25:56
Exactly. You know what I’m talking about. It really, really shows that it matters and it matters greatly. Oh, it was really fun to talk to you. Thank you for joining us today.

Fynn Glover 26:10
Thank you so much, Kate.

Intro 26:12
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