The Hero's Journey
The Startup Journey
- Identify the market where the pain point exists
- Identify a core pain point
- Raise capital to work on solving the pain point
- Face significant challenges in PMF
This is where startups face the abyss and most die here. Then there are ones that cross this chasm and achieve PMF
- Start scaling up
- Capture the market and become a leader
- Get ready to provide an exit event
- Provide a liquidity event - go public or get acquired
Now, this is the story of how Togai was born from Hypto.
Hypto started off as a B2C offers app that became a neo-bank for SMEs which became a payments infrastructure company. In the pursuit of the holy grail, that is PMF, we achieved it in our avatar of being a payments infrastructure company supporting crypto/web3 platforms as a fiat on/off ramp in India.
We became a market leader in this space within a short span and can proudly say that we processed over 100 Mn transactions worth US$ 30 billion within the last 2 years. We were an API-first company that built the most reliable and scalable payment infrastructure product. However, while this space was red hot globally, there were a whole host of uncertainties and challenges in India owing to macroeconomic factors outside our control. This was one of the classic situations where a great product & team met a bad/average market and the market won.
While a big strength of Hypto has always been to persevere longer and harder than most, we think our ability to not worry about sunk costs and always look ahead has helped us survive, no matter the surrounding factors. So, we decided to listen to our current market and started a period of introspection. We wanted to solve a problem that was close to our heart, leveraging our strength and capability as an engineering-first infrastructure company.
The biggest problem that we faced was obvious - no matter whom we spoke to about Hypto, everyone was amazed by the amount of payments that we were processing. They were equally, if not more, shocked by the value we captured out the payments we processed. While we processed over US$ 30 billion in the last 2 years, we captured a little under US$ 3 million as the value. This caused such a burning hole in our hearts and when we decided to move on from Hypto, we started thinking of solving this problem. We spoke with many SaaS company founders who felt the same and were feeling handicapped by the amount of value they were able to capture in relation to the value they provided to their customers.
We started digging deeper into this problem to the extent of understanding how are SaaS companies conceptualized and brought to life by founders. This takes us back to the lifecycle of a successful startup at the beginning where we mention founders raise capital to bring their ideas to life. While capital is necessary, it does not help founders answer the boring but hard questions -
—> What is my business model
—> How do I price my product
—> What is the value my customers see from my product
—> What are the different pricing strategies possible for my vertical
—> How do I experiment on my business model at scale to extract maximum value
We realized that we were not alone in what we faced at Hypto. Every SaaS company and founder faces the same problem of capturing the value they have created in the market. The question then became ‘How do we help SaaS companies capture the value that they create?’ It was a huge ‘aha’ moment when the answer struck us - the single biggest lever on a SaaS business is pricing but SaaS companies do not think of pricing as a controllable lever to unlock untapped business potential.
In fact, 95%+ startups we spoke to, gave their product for free at launch. Pricing was an afterthought and it was never analysed in detail. SaaS pricing has become synonymous with subscription pricing. While traditional software has preconceived ideas on how the buying experience should work (via subscription), new categories of software bring fresh business model problems as customers are more sceptical to try out. They value flexible terms more than companies in established software categories will.
Upfront commitments via subscriptions do not align with end user's need to identify the best solution by trying out multiple options. While subscription provides predictable costs, it does not create a transparent buying experience. The value proposition for customers is not clear in a bundled subscription plan of a SaaS product - especially if the product is still not quite there yet in terms of features, which is the case for all early stage startups.
SaaS companies also lose out on unlocking revenue opportunities by not being able to tie in product usage with revenue metrics in a holistic manner. The single biggest lever on your business is pricing. There are multiple business models with different pricing strategies - based on industry, product, customer base and SaaS companies do not think of pricing as a controllable lever to power their growth. The SaaS world is going through a shift where the speed and flexibility of pricing iteration needs to match the velocity of product iteration, but the bottleneck almost always occurs around their billing system.
The tech effort required to create multiple business models and pricing strategies is nontrivial and requires a lot of effort and time to build something that is not ‘technically core’ to your product functions. The few companies that do invest in such models build large engineering teams to track usage at a granular level and then build an aggregation + metering system on top that is used by their internal business teams to create pricing strategies.
How are we making pricing infrastructure as a product?
A run-of-the-mill recurring billing software helps you automate your billing operations in a simplistic manner. If you even have one additional level of complexity (say track usage of one feature), it requires you to invest engineering bandwidth into building the complexity into your product while the billing software handles only the billing (& invoicing).
We are solving a data problem here - observe, track and measure events that can then be transformed into value metrics that feed into a SaaS company’s monetisation strategy. At a high level, this involves
- A highly available and fault tolerant ingestion system that can handle billions of events with inbuilt idempotency
- An event processing and storage system that can handle concurrent requests atomically without latency
- A pricing configuration engine that first aggregates the events into usage metrics in real-time and transforms it into revenue metrics for the SaaS company and cost metrics for their customers in near real-time. The complexity here is in providing the flexibility to create and apply any type of monetisation strategy for the SaaS company within a single customer’s lifecycle as well as across different customers they have
- All of the above needs to be done with zero developer effort to identify what data to push, how to push the event data or writing the code to push the data (We are solving this problem by thinking of UBP through an APM lens - by being a part of the observability and authorisation stacks)
Also Read: Togai - Our vision
A usage based pricing platform’s core job is to capture streams of event data without any data loss in real-time with extremely low latency and then converting this into usage data based on which monetizable metrics and pricing strategies are created. We had built our own custom billing service at Hypto capable of handling 100+ millions of transactions and billions of API requests and we understand the complexity of building such a system that needs to scale as you scale up.
We are building a low code usage-based pricing platform for SaaS companies to observe, measure and compute revenue metrics from your product usage data without developer effort.
Introducing Togai
Togai is derived from the Tamil word ‘Thogai’ which means VALUE. Conceptualised from Chennai, Tamil Nadu, India we are building for the world of SaaS to unlock the untapped value in SaaS businesses by enabling them to launch UBP models without effort. At Togai, we understand that as a SaaS company, you are the hero in our journey. We need to empower you with the right tools to identify what works for you. Pricing strategy has been a one-way door decision (irreversible), until now. Togai is the product that makes your pricing strategy into a two-way door and reversible. Focus on creating value, we help you capture it.
