UK startup Paddle and its twenty-something founder has the ambition to become the ecommerce platform for software makers, but the company's journey so far has been a bumpy one.
Computerworld UK sat down with founder and CEO Christian Owens to hear the Paddle story from the beginning - and dig into the company's goal to take all of the pain out of the selling process for small-to-medium sized software vendors.
Owens, from Corby, Northamptonshire, built his first piece of commercial software at the age of 14 to help invoice the customers he was building websites for.
The self-taught developer didn't enjoy school and asked his parents if he could drop out when he turned 16.
"I don't remember exactly how it turned out but they were basically like: 'If you can make £100,000 a year doing this by the time you can give up school, we will allow you to do that'," said Owens.
Owens won that bet by bundling Mac software together and selling it online at a discount, in the days pre-App Store. This venture was bringing in £300,000 in its first week. His parents were horrified but kept their word.
Next, Owens and his cofounder Harrison Rose looked to expand beyond software bundles into a broader marketplace. In short and full of youthful exuberance: they had ambitions to build the Amazon of buying software.
"So we raised some money, built the first version of the marketplace and rented this small office in Corby," Owens explained.
They shortly moved to London and worked out of the office of their first investor - the founder of Myvouchercodes.co.uk, Mark Pearson - before launching the first Paddle software marketplace in 2013.
"It fell flat on its face," Owens said. "We could have sold more software door to door than we did on this website." The site made $842 in sales in its first month.
The element Owens and Rose had missed in transition was their customers' appetite for discounts. The site's traffic dwindled from almost nothing to basically nothing, yet sales were going up.
"It took us a few weeks to see that these early customers, software businesses, had hacked their way around the marketplace and if you went to their website and clicked the buy button, it immediately took you to the checkout page for that company on the marketplace we build."
It turned out that these companies didn't want another sales channel taking a cut of their profits, but they did want an easier way to complete sales. They wanted an ecommerce platform.
Paddle is looking to solve a big range of problems for a small niche of customers: how to sell software regardless of who is consuming it, how they are paying for it and where they are in the world.
As software-as-a-service and the subscription pricing model gain ubiquity in the enterprise world, Paddle has a growing market to tap. In fact, Paddle is looking to carve a niche for itself in a global software-as-a-service market, which is pegged at anywhere between $70-$115 billion a year.
Through Paddle companies can set up customer billing, including free trials and licensing, set pricing dynamically according to geography and seamlessly sell their software to customers all over the world and regardless of the device they are using, all with analytics on top.
According to Owens, building and selling downloadable software means having to think truly globally – to consider every person in the world a potential buyer, irrespective of device, language, currency, payment method or price.
"As a ten-person software company trying to build the next great project management app," for example, "you just don't have the resource to consider how every person in the world is going to want to buy and use your software."
In exchange for all of this customers must give up a flat five percent cut of all of the transactions driven through Paddle.
So Paddle looks to abstract these issues from their customers, which are small to medium sized software businesses.
"The whole idea is to get the whole operational side of running a software company away from you. So you never have to do a deal with a payments processor again, if you want to take PayPal or credit cards or Alipay or local bank transfers in Brazil, we do it for you. You never have to file another VAT return, we file and pay taxes for you.
"Our overall goal is to be the second thing these companies buy, with the first being AWS. They are going to want to buy tech infrastructure and then business infrastructure, and we want to be the business infrastructure."
It's already seen revenue grow by 3,000 percent in the past three years and can count itself as one of the UK's fastest-growing software companies, according to Deloitte's Fast 50 list 2017.
Now Paddle is really focused on the sort of insights it can deliver to its customers to help it sell more. This could be Paddle investing in checkout optimisation algorithms that customers can leverage, to predictive insights into the optimal price point of a piece of software when selling in Poland.
"The expansion is to use all of this data and context from selling hundreds of millions of dollars worth of software every year, from having millions of customer interactions every year, to use that context and information to help these SME software companies get better, price better, better understand geographies and understand their customers better to grow their businesses," as Owens put it.
From a product perspective Owens admits there are “a few significant things” that Paddle is working on.
“[There’s] a couple of which I can’t talk about, but one is focused on increasing the ways that a software business can understand its customers – the usage and the most valuable piece of insight: how customers are using the software,” Owens explained. “What is the inflection point where someone using my trial version?
"Where is the moment it clicks that they want to pay for Spotify or whatever the app is?"
Fresh off of a $12 million Series B funding round in December 2017, Paddle is expanding its headcount and geographies too, with Owens currently "working on" opening a US office - probably San Francisco - and has pushed total staff close to 100, more than double what it had at the start of the year. Owens wants to add another 60 people by the end of 2018, including the US office.
"We are just trying to continue the growth we have today, we've had reasonable growth so far," Owens said, with the type of modesty you don't expect from someone who has built a multi-million pound company before his thirtieth birthday.