September 23, 2025 • 45 mins
Dan Balcauski speaks with Fynn Glover, co-founder and CEO of Schematic, about his extensive journey from pursuing professional soccer to founding several successful companies, including Schematic. Fynn shares insights into the importance of flexible pricing and billing strategies in SaaS, highlighting the complex relationship between engineering and finance in implementing these strategies. They discuss the evolving landscape of usage-based pricing, the challenges of transitioning from vertical to horizontal markets, and the impact of AI on pricing in the software industry. Fynn also offers unconventional advice for SaaS founders on understanding and leveraging willingness to pay as a critical monetization component.
01:58 Meet Fynn Glover: From Soccer to Startups
03:33 RootsRated: The Birth of an Outdoor Content Platform
05:37 Pivoting to Content Marketing Software
08:07 Challenges of Scaling and Horizontal Expansion
11:36 The Birth of Schematic: Solving Pricing and Packaging
16:01 Understanding Entitlements and Organizational Challenges
22:15 Communication Gaps in Complex Organizations
23:37 Understanding Feature Access Terminology
23:59 Engineering and Finance Perspectives on Billing
25:25 Challenges in Software Categories and Pricing
32:52 The Complexity of Usage-Based Pricing
38:59 Monetization Strategies in the AI Era
Guest Bio
Fynn is the co-founder and CEO of Schematic, a platform that helps digital businesses monetize AI products. He also hosts the Monetizing SaaS podcast. Before Schematic, he founded RootsRated and Matcha, and later served as Chief of Staff and VP of Operations at Automox. He lives in Colorado with his wife and two young children.
Guest Links
https://schematichq.com/
fynn@schematichq.com
https://www.linkedin.com/company/schematichq/
https://www.linkedin.com/in/fynn-glover-b0410015/
https://x.com/fynnglover19
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
fynn-_1_05-21-2025_130921 (00:00):
The trade is, a very likely
profitable lifestyle businessthat you can run for a long time
versus something that has to gobe very big very quickly.
Like speed is everything at thisstage.
Usage-based pricing, usage-basedbilling is.
It has surprised me.
The customer's super empoweredto go buy whatever they want to
(00:21):
solve, whatever problem theyhave.
they're demanding of vendors, SASaaS and AI vendors is
flexibility.
You let me buy how I want to buyyou, let me, get, build and
priced how I want to get billedand you let me buy what I want
from your product.
dan-balcauski_1_05-21-2 (00:57):
Welcome to SaaS Scaling Secrets, the
podcast that brings you theinside stories to the leaders of
the best scale up.
B2B SaaS companies.
I'm your host, Dan Balcauskifounder of Product Tranquility.
Today I'm excited to speak withFynn Glover.
Fynn is the co-founder and CEOof Schematic, a platform that
helps digital businessesimplement and manage pricing
Before schematic.
He founder, roots rated andmatcha acquired by Springbot,
and served as Chief of Staff andVP of Operations at Automox He
(01:19):
also hosts the wonderfulMonetizing SaaS podcast.
Let's dive in.
Welcome, Fynn to SaaS ScalingSecrets.
fynn-_1_05-21-2025_130921 (01:26):
Thank you so much, Dan, for having me.
dan-balcauski_1_05-21-2025_ (01:29):
I'm really excited to talk to you
today, Fynn again.
And because, I relish theseopportunities to have another
person who is as passionateabout the world of pricing as I
am.
We're few and far between, sowhen I fell find a fellow
pricing nerd, I relish theopportunity to dive deep and
hopefully allow some others to.
Understand what the complexityis in this world and s
(01:51):
schematics reason to for being,to help folks navigate that
complexity from a infrastrupricing infrastructure layer.
But before we get intoschematic, I wanted to go back
kind of early in your journey.
You started your career pursuingsoccer, if I'm not mistaken, and
then founding roots rated in theoutdoor industry.
Tell us a little bit about yourkinda early journey.
(02:12):
What led you to start your firstcompany?
fynn-_1_05-21-2025_130921 (02:14):
Yeah.
Yeah.
So I I had long wanted to beplay pro soccer.
That was a dream.
I pursued it through college.
I played semiprofessionalafterward, but it was like late
in college that, you're kind ofasking, at the time, like the
MLS was paying.
Players like 30 grand a year.
Like you're kind of starting torecognize, even if you take it
(02:35):
all the way to the top in theus, like there's gonna be a, a
point where you have to build acareer.
I had no.
idea what I wanted to do, it waslike, do you go be a lawyer?
I grew up in Tennessee, was, Idid not grow I did not grow up
like.
there was this world of startupsand SaaS that was very
unfamiliar to me until, about mysenior year and college and.
(02:58):
a soccer team that I was playingfor was a guy who was like
starting software companies inChattanooga, Tennessee.
And he said, have you everthought about Thought And I was
embarrassed to admit at the timeI didn't even know what the word
meant, but I kind of jumped infrom there.
I did an internship with aventure backed startup.
I did a internship with a fundof funds, started to get really
(03:19):
interested in.
Business and startups inparticular.
And then I went on this sort ofbig road trip.
I left the head, the fund offunds.
I went on this big road trip totry to figure out what company
to start, what I wanted to do.
And at the time I was verypassionate about outdoor
recreation's, impact on peopleand society generally.
(03:41):
And I was able to raise somemoney from a variety of outdoor
industry companies and brands.
go interview, thousands ofcollege students about how they
find and discover and engagewith the outdoors.
And through that journey, whichalso kind of, happened to take
me about 20,000 miles around theUS and Canada, I realized that
(04:02):
it was exceptionally difficultat that time to find great
places to go outdoors.
This was 2011, and you'd becoming into a new town with, an
early iPhone or a Blackberry.
And you'd Google for where to gohiking in Denver or Portland or
Austin, and your results at thetime on Google were like, Yelp
reviews for botanical gardens.
This was about six months afterall trails had been founded.
(04:26):
And so I just felt there's thismassive and important
informational gap online abouthow we discover outdoor access,
outdoor recreation, connect withit.
So I built a company to try tosolve that problem in that
company.
Ended up being a really greatexperience, ran it for four
years where we became a decentlywell-known company in the
(04:47):
outdoor space.
We worked with many of the bethe best brands and we became a
content publishing business.
Functionally, we were creatingeditorial content about great
adventures and places to go allover the world, that ultimately
kind of led us into.
See an opportunity to pivot thatbusiness into content marketing
(05:08):
software, which we did, and Ican get into that, but that's
how that journey started and howit began.
dan-balcauski_1_05-21-2025_ (05:14):
So, it's funny that, I feel like a
lot of technology companies,especially as they try to
wrestle with the beast that isSEO, often feel that they become
a content publishing platformjust as much as they are a
technology company.
I've had my, my fair share ofthat as well.
I guess so, so, so leads fromthat story, I guess you go from
focusing on the outdoor industryso tell us about how you end up
(05:34):
then in the SaaS world fromthere.
fynn-_1_05-21-2025_130921 (05:37):
Well, so this is about, been about
2015, and the way that companymade money is like big outdoor
brands like think the North Facewould pay us for content
creation.
And that content creation wasn'tlike product content, it was
like reviews and trail reportsand destination profiles for.
Every sport imaginable.
(05:58):
And so what we ended up becomingvery good at is creating
hyper-local editorial contentsat relative scale.
We had hundreds of professionalwriters working for the
business, creating lots ofreally good content, whole sort
of editorial layer.
And what sort of became apparentto me is we can build, a cool
lifestyle, profitable businessin this space, doing this work,
(06:20):
also big brands in the industrywere starting to pivot to
towards e-commerce.
And so content marketing wasbecoming very important for
their e-commerce businesses.
And they were actively paying usfor content, and they were
actively trying to find ways toget us to create more content.
And so the opportunity thatpresented itself was to begin to
(06:41):
productize portions of ourpublishing stack so that we
could license content to brands,enable them to commission
content from a platform, enablethem to run really high leverage
content analytics.
to look at impact not only froma brand awareness perspective,
but also attribution down to thesale in the context of like
(07:02):
content driven email marketing.
And so that was sort of how thatopportunity happened.
And so we spent 2016 kindabuilding that platform.
I remember we, we pre-sold abouta half million dollars in a RR
into brands, like before evenlaunching the content marketing
platform.
then we grew relatively quicklyand.
(07:23):
That growth
dan-balcauski_1_05-21-202 (07:24):
that.
fynn-_1_05-21-2025_130921 (07:25):
us raising around a venture capital
in 2018.
And the opportunity at thatpoint was how do we take this
brand, this content marketingsoftware business that's very
vertical and start to expand itacross verticals and sell into
e-commerce, for any type ofthing.
Not just outdoor, but beauty andbroader health and wellness and
(07:46):
sport, and so.
That's what that was all about.
And we did that until about 2020when an email marketing platform
that was also selling intoe-commerce businesses acquired
the company and merged the teamand merged two products I.
dan-balcauski_1_05-21-20 (07:59):
That's a fascinating journey there from
that you guys recognize thatopportunity and were able to
sort of capitalize on it.
I wasn't planning on going here,but I am curious.
Around this idea of, having thisvery vertical focused business
and then looking at, okay,expanding cross horizontal as
you kinda look back at thattime.
(08:19):
I guess are there were theresurprises or sort of lessons
that you learned to be able todo that?
Because I think this is kind ofa, this is one of these core
challenges I think a lot ofcompanies face as they try to
kind of expand their market.
If you kind of go back and do itagain, were there things that
you didn't realize of, like howchallenging they would be to
kind of expand horizontally?
fynn-_1_05-21-2025_130921 (08:36):
So many lessons learned.
I mean, I think, for anyfounders listening, right, like
I was in the midst of pivoting amedia business into a SaaS
business, that in and of itselfis exceptionally hard to do,
just.
Just think about the culturethat, that, the cultural change
that transpires for a companythat's trying to do that.
You go from a company that'sbuilt itself on great writing
(08:58):
and great editing to a companythat is building itself on
software development.
I mean, it's just a massivetransformation.
I think, when you think aboutmoving from a vertical to going
horizontal, well, why would youdo that?
You do that because you believethere's a venture scale
opportunity in going horizontal.
As opposed to, and there's not aventure scale opportunity in
(09:19):
vertical.
And I think that that was true.
But I think that when you decideto go horizontal, when you
decide to take venture you'regoing for a, go big or go home
type business.
And The trade is, a very likelyprofitable lifestyle business
that you can run for a long timeversus something that has to go
be very big very quickly.
(09:40):
And I, at that time in my lifewanted to go pursue the venture
outcome.
That was what was motivating me.
I think the more soberentrepreneur of, a decade later,
looks back on that and kind of,says to myself, Hey, you had
something really special in thatvertical and there were so many
great relationships.
Why did you do that?
And, no regrets, but those aresome of the trades and some of
(10:00):
the lessons and there's, thereare kind of.
things going out in the outdoorindustry now.
Like Outside Magazine is tryingto create this huge media
conglomerate in the outdoorindustry where they're bundling
all the media brands and they'retrying to become like the fat,
like the Facebook for outdoormedia.
And I think it's, I ultimatelythink it's not going to be very
successful.
(10:20):
I think it's extremely hard todo.
I think there were other lessonstoo, like content marketing as a
category was, it was trying tomake content available to
companies at scale and what noneof the content marketing
platforms like mine that raisedmeaningful amounts of venture
capital, maybe sort ofappreciated or knew was coming
(10:42):
was chat.
GBT.
dan-balcauski_1_05-21-2025_14 (10:44):
I don't know if anybody saw that
necessarily.
Right.
Unless you were deep.
Unless you were deep in theresearch labs at at Deep Mind or
otherwise.
Very few of us saw thisdisruption.
Well, and look you made somereally good points there.
Yeah, there's.
The world is littered withcompanies that tried to pivot a
services business into asoftware business.
It is an incredibly hardtransition.
(11:05):
And, I would say no less adifficult transition, as you
pointed out, than going from avertical business into a
horizontal business.
And I think the other good thingyou noted was that, the world's
full of trade-offs.
And you're taking a veryspecific bet when you sign up
for institutional capital, likeventure capital and you're
signing up for a very specific,maybe bimodal set of outcomes as
you go big or go home as youmentioned.
(11:26):
And, that's super helpful,right?
'cause there's sure, there's alot of other entrepreneurs out
there who maybe.
That is not as apparent to them'cause it's their first rodeo.
So appreciate you sharing bothof those.
I guess kind of fast forwardingthen, I guess, was there
particular challenges that yousaw across those experiences
that ultimately inspired you tocreate schematic or how'd you
(11:47):
get into the monetization space?
fynn-_1_05-21-2025_130921 (11:50):
Yeah, it was a little bit of a two
step.
So, after Macho was acquired,about six months later, I was
recruited to a company calledOx.
And Ox at the time I knew theCEO because he had raised his
series A from the same fund thatI had raised my series A from.
And we had become friends.
He had just raised a reallymeaningful series C he asked me
(12:13):
to come and build a growth teamat ox.
And that was, again, six monthsafter matcha had been acquired
the exact same week.
I remember it vividly.
My independent board member frommatcha got on the phone with me
and I said, Hey, it's been sixmonths since the deal happened.
I'd love to kind of know how youthink about the company, what we
(12:34):
did well what we did poorly,things like that.
And he said, one of the thingsthat I think you and we, the
board did poorly is pricing.
I think it was our biggestmistake.
I think that we as a boardshould have come in and really
helped you understand.
Value to price.
We really should have helped youunderstood helped you understand
(12:55):
how to go talk to customersabout willingness to pay,
packaging preferences, pricemetrics we didn't, and I think
it, it ultimately was like oneof the biggest challenges for
the company.
I joined I.
and three weeks later, like oneof the first big things thrown
onto my plate is go figure outpricing business hasn't changed
pricing in two years.
we've got thousands of customersand let's get this show on the
(13:18):
road.
And that presented this reallyincredible incredible.
for me.
It was fascinatingpsychologically.
It was fascinating from a dataperspective.
but it also but it also.
closely with insight VenturePartners Center of Excellence on
Pricing.
And that happened to be a guy atthe time named James Wood, who
had.
(13:38):
Trained at Simon Kucher and donepricing for Segment, and you had
just like all this incredibleexperience.
And so got this MBA in pricingand packaging outside of like my
operating mistakes, likeovernight, and suddenly that
translated to here I aminterviewing dozens and dozens
of customers doing primaryresearch on price sensitivity
and packaging preferences, andleader, filler killer, and all
(14:01):
this stuff.
At the helm of a really, like acompany with an incredible
product market fit with tons ofpotential to grow, tons of
potential to leverage pricingand packaging to drive
meaningful top line, year overyear growth rate on top of
already strong growth rate.
And so that's how it all, kindof monetization really sort of
hit me in the face.
(14:23):
What led me to startingSchematic is after we came up
with the initial recommendationsfor how OX should evolve its
pricing and packaging.
It took us si well over sixmonths to implement just
portions of the recommendation.
We wanted to introduce a thirdtier and a couple add-ons.
(14:44):
Six months later we'd likebarely introduced a third tier,
no add-ons, and by that pointour recommendations like were
effectively stale given how fastthe market was moving and how
fast the product was moving andthat it took so long for us to
make changes.
Really lit up my curiosity, andcan go into that in some detail,
(15:05):
but that's ultimately what ledme to founding schematic and
trying to solve problem, which Ican talk about in more detail.
But that's how it, that's how ithappened.
dan-balcauski_1_05-21-2025_ (15:16):
Got it.
Got it.
So you had you kinda had, thismeeting with your former
colleague, Hey, we really couldhave done better job on
monetization.
You get thrown sort of, feetright into the fire at Ock.
To go solve that problem.
And I love that term, youphrase, you used to hit you in
the face.
I feel like a lot of people,first time they come up against
pricing, it's very relatableexperience.
(15:37):
And, I know James very well.
He is.
Everything you talked about tobe he is.
Fantastic.
And I believe you guys had awonderful conversation on
monetizing SAS as well.
You were in very good handslearning from him.
I guess I'm curious kind ofcoming out of that so you get
the strategy recommendation andthen, it's this long slog to
implement it, I guess.
How did you decompose?
Is this a just an operationsissue?
(15:59):
This is a technicalinfrastructure issue.
This is actually a problem withkind of not everyone buying into
the strategy, I guess kind ofwhat was your signal that you're
like, yeah, now I guess thatbirth sort of you focusing on
schematic.
fynn-_1_05-21-2025_130921 (16:10):
Well, it wasn't apparent to me that it
was a technical issue initially.
It felt To me that it was anorganizational issue.
And when we say this, I mean,we're talking about just like
the very slow time to value.
Here is
dan-balcauski_1_05-21-202 (16:24):
Yeah.
fynn-_1_05-21-2025_130921 (16:25):
that the executive team has agreed
on, takes us a very long time toexecute it.
Therefore.
Time to value.
Time to realizing the benefit ofthe recommendation is just
excruciatingly long, especiallyin kind of the context of, a
series C startup that is makingthe argument to itself and to
its market and to its investorsthat it can massive incumbents
(16:49):
because it can be faster.
Like speed is everything at thisstage.
And so initially my thought waslike, this is just like a
cross-functional hard thing todo.
It requires a bunch of cycles.
But then I started digging inmore, and I would spend a lot of
time asking people in finance,people that were kind of
handling billing and finops,like, why is this so, so hard to
(17:12):
do?
Like, why does this billingsystem feel so fragile?
Why am I always talking aboutlike the constraints and stripe
billing that are preventing usfrom hitting these deadlines?
And like was the reality ofbilling fragility and like the
billing system wasn't well setup for kinda things like
usage-based pricing.
And there was that, but youwould often hear the folks in
(17:36):
the finance org say things like,well, we just can't get enough
engineering resources.
We just can't get enoughdeveloper time.
We're having to argue for likesprints outta the engineering
team.
We're having to.
Lobby the engineering team topull developers off of core
features and into the billingand pricing initiative.
(17:57):
And that was
dan-balcauski_1_05-21-2025 (17:58):
That was.
fynn-_1_05-21-2025_ (17:58):
interesting to me.
I wasn't aware of that really.
I started just interviewing ourCTO.
I started interviewing billinglike people that were kind of
engineers working on billing andwhat they started to say, and
they would always say it withdifferent words at the time,
what they started to say becameconsistent and they would say
something to the effect of.
came, it comes back.
All this brittleness, all ofthis slowness that you feel
(18:22):
comes back to how we'veimplemented what are called
entitlements into ourapplication.
And that was like, okay, cool.
Well what's an entitlement?
And I know, you know whatentitlements, for those that are
listening that don't know whatentitlements are, like a simple
way to think about entitlementsis they're like the rules that
(18:42):
determine.
What features, limits, andproducts a customer can use
based on like commercialcontext, based on their
subscription plan, based ontheir trial status, based on
their contract.
And entitlements are sort ofthis between application your
product and typically thebilling system and entitlements
(19:05):
are kind of there to answerquestions like, can this user
access feature x?
How many seats is this companyallowed?
Has this company hit their usagecap?
Are they on a trial with liketemporary access to a feature
that we extended to them?
And at Auto Moss, what we haddone is we had hard coded the
(19:28):
entitlements into theapplication and then tied them
closely to plan IDs in thebilling system.
And what I learned was thatbecause we had hard coded all
this.
Anytime we wanted to make achange, no matter how small,
like just granting an overrideto a customer, engineering was
critical path.
We had to go ask an engineer tomake a change in the code.
(19:50):
And if you think about that,that scale across, thousands of
customers, dozens of plans, lotsof different permutations.
You're sort of entering a worldof pain where to make any change
to pricing and packaging,whether it's a global, I just
wanna introduce a third tier to,I wanna go do something to drive
(20:11):
growth.
Like I wanna launch an AIfeature and I wanna test it with
a promo across this cohort ofour commercial segment
customers.
It's just impossible because yougotta go back and you gotta get
the engineering team to give youdevelopers to support that.
So that's how this kind of hap,that's how I got that's how I
kind of found where the realconstraint was.
(20:34):
And at that
dan-balcauski_1_05-21-2025_1 (20:34):
Mm
fynn-_1_05-21-2025_130921 (20:35):
what, what started to kind of
crystallize for me is, okay,this is the problem at ox.
This is like an entitlementsproblem.
I wanna see if that's true for alot of other companies.
dan-balcauski_1_05-21-2025_1 (20:46):
mm
fynn-_1_05-21-2025_130921 (20:47):
And so I
dan-balcauski_1_05-21-202 (20:47):
Well, one.
fynn-_1_05-21-2025_130921 (20:48):
I went out and I interviewed like
hundreds of comp a hundred, 150companies and they were all
doing entitlements in a varietyof ways, and they were all
constrained in similar ways, andI thought, okay, feels like the
kernel of something that couldbe abstracted and solved.
dan-balcauski_1_05-21-2 (21:02):
There's so many threads in good threads
in what you said that I wannapull on, and I don't think we'll
have time to, you can touch onall of them that you just
introduced with that littlestory.
But I.
So first of all for folks whomaybe still be lost about
entitlements we'll useeveryone's favorite car company,
Tesla maybe not favorite at themoment, but we'll leave that
aside, right?
If you wanna enable fullself-driving, you pay them
whatever,$10,000, they flip aswitch over the air, all of a
(21:25):
sudden your car can driveitself.
So that would be like a versionof an entitlement.
And.
All the other car companieswould've love, would love to do
that.
But most of them, you'd have totake your car to a shop, but
they'd probably have to plugyour car in in order to change
that, et cetera.
Tesla has built it from theground up to make those type of
things seamless and easy.
Much like your iPhone updates tothe latest version probably
whether you don't want it to,but it will anyway.
(21:47):
So, your photos app stopsworking, but you know that,
we'll leave that aside for now.
So, but then, I am curious, kindof going back into your.
So, and look, none of this is tosay anything about any of the
specific companies we're talkingabout because obviously this is
a pervasive problem that, that Isee.
And that obviously youidentified enough to build a
company around it, right?
So it's not, it has nothing todo with the individuals on the
(22:08):
finance or engineering team orthe organizational function or
dis or dysfunction of thatparticular company.
But, this is sort of a realproblem.
I am curious when you starttalking to.
The finance leaders or team,even the ICS potentially who are
dealing with like the billingsystem versus the engineering
teams.
I'm curious about like what arethe communication gaps going on?
(22:28):
It sounds, it's like when youunderstand the system and you
know exactly what needs to beasked for and why I, my sense is
that you can get everyone.
Relatively on the same page,right?
Obviously priorities are alwaysgonna be a struggle.
Engineer time's always alreadygonna be a struggle.
But I guess what were thecommunication gaps that you
found that really sort ofprevented those teams from sort
of really getting their armswrapped around this problem
efficiently?
Were they because you mentionedbefore even different team
(22:50):
members, when you talk to them,they would, they would use
different language to kind ofdescribe it.
Were there common sort ofcommunication gaps that you
found as you've had more andmore of these conversations?
fynn-_1_05-21-2025_130921 (22:59):
Yeah and I would say the question
that you're asking to me is afascinating one because it can
be, it can extend beyond sort oflanguage gaps and into just the
nature of complex organizationsand different scopes of
interest, different incentives,and also just the way categories
have evolved.
So let me see if I can riff fora sec.
(23:21):
Like on the language piece,entitlements was a term that I
heard more often than not fromlike ops and rev ops people.
And when you talk to an engineerand you introduced the word
entitlements, they'd immediatelygr it.
But they probably would not haveused that word.
They probably would've saidsomething to the effect of
feature access or feature access
dan-balcauski_1_05-21-202 (23:43):
Yeah.
fynn-_1_05-21-2025_130921 (23:43):
or feature
dan-balcauski_1_05-21-2025 (23:44):
Hmm.
fynn-_1_05-21-2025_130921 (23:46):
Limit or AP golf API like, there just
wasn't sort of like consistencyin the termina terminology
around this intersection betweenbilling and product.
Right?
And it's easy to see why theengineer is building an
application.
They start to kind of thinkthrough things like, well, what
(24:06):
should my What.
care about?
Should my application care aboutwho the user is, what plan
they're on, what featuresthey're allowed to have, and
from a finance perspective, likewhat do they care about?
They care that the customer getsinvoiced the right thing and
they care about the customerhaving, making sure that what
they have access to, lines upwith what's on the contract and
(24:28):
what's on the invoice.
there's kind of differentspheres of.
Different scopes of interest, ifyou will.
And sort of what started to dawnon me at that time was like,
okay, this is like prettyfascinating because you got this
problem that is impacting boththese teams plus all the
downstream teams that can't likeuse monetization.
(24:48):
They got language issues, theygot tools that don't talk to
each other.
Engineering is being asked to gobuild and maintain a bunch of
logic between the applicationand the billing system.
So what engineering's beingasked to do is maintain a bunch
of billing logic in the codebase.
And if you go down and you liketalk to A-A-C-T-O or like a
(25:09):
technical architect, and you'relike, do you think it makes
sense that an application shouldknow this?
They'd be like, no.
Like, all the applicationsshould know is does the user
have access to this?
Yes or To No.
And making sure that theapplication is like a great
application application.
Mm-hmm.
more you try start to peel thatback, the more you just start to
see the way software categorieshave evolved.
(25:31):
And what I mean by that is likein the context of pricing, what
I mean by that is in a typicalsoftware company, pricing and
packaging are governed by likemultiple stacks, functional
technology stacks.
So if you think about likesales, right?
(25:52):
Sales have CRM and they havequoting, pricing and packaging
are often governed by the CPQproduct, the quoting product in
a traditional sales ledenterprise business in a more
product led business, like maybeit's the billing tool that and
owns pricing and packaging.
It's where like the productcatalog might sort of initially
(26:14):
be housed.
And then if you look at theproduct stack basically a
question of.
Provisioning and configurationand access tools like feature
flags do this.
These are all discretetechnology categories sold into
engineering, finance, and sales,and they don't really talk to
(26:36):
each other well.
So what you end up with is likediffuse product catalogs.
That obviously leads to hugedrift.
That obviously means that a.
Change to pricing and packagingin one place is a change in many
different places across manydifferent teams.
And here you and I are talkingabout
dan-balcauski_1_05-21-2025_1 (26:55):
I.
fynn-_1_05-21-2025_130921 (26:55):
We're like, Hey, well this is like
clearly the right way for thebusiness to price and package,
but oh, it's gonna take you sixmonths or a year or whatever to
implement what I'm sayingbecause all these systems so
siloed.
You asked him a narrowerquestion than that, but I think
the question of language gap isalso related to.
Siloed software stacks,functional stacks, pricing and
packaging being governed indifferent places by different
(27:18):
tools with different spheres ofinfluence in a business.
dan-balcauski_1_05-21-2025 (27:22):
It's funny that you mentioned that
because, or, this whole threadis hilarious because there's
I've worked with companiesbefore where literally the head
of sales was mad because thecompany bought a billing system
and was just like, well, whydon't the engineers just bill
it?
'cause we just move faster.
And and the billing system impthe reason the salesperson
(27:42):
didn't like it is because thebilling system imposed
constraints that the.
Head of sales didn't want tohave to abide by, they wanted to
be able to sell anything at anytime to anyone.
Just infinite likeconfigurability, which of course
the rest of the business didn'twant.
But all of the ire, like inevery exec meeting we get thrown
at the, oh, it's this billingsystem's fault, blah, blah.
(28:03):
So you're talking, why did Ibring that up?
Is because, you're talking aboutdifferences of incentives.
Well, but yeah, you don't wannaAlso, there's this whole notion
of comparative advantage.
Like you don't want yourengineers who should be building
the product that only yourcompany can build best suited
for your market to have tore-implement.
(28:23):
Commercial business logic thatevery company around the world
right, is you're not gonna sendyour engineers to go rebuild A
CRM or Salesforce unless you'rethe CEO of Klarna and they're
losing money anyway.
So I probably wouldn't payattention to his advice, but in
general, we do not want to likereinvent the wheel where it's
like other companies like, yeah.
Yeah.
All day, every day they're inthe CRM business.
Let them, same thing likebilling solution people, they're
(28:44):
in that business.
Let them solve that problem.
But you're, you did point outall these sort of incentives do
come together in a, in veryinteresting ways.
I guess, I'm wondering like, arethere sort of.
Mistakes that you see kind ofearly stage companies make then
that sort of sow the seeds ofthis downstream, these
downstream problems.
(29:05):
I'm wondering is this sort ofthat, the inevitability or I
think are there like things thatlike, like cer certain decisions
that like kind of make this, it.
Inevitable, right?
I mean, you were hinting beforeabout if you're talking to a
technical architect, you'resaying, Hey, should this piece
of code have knowledge ofcommercial billing?
And they would say, of coursenot.
Is that kind of the, is that theroot sin or is there, are there
(29:26):
sort of a cluster of thesethings that you see that, that
kind of cause this to, to spurinto six to 12 months to
actually implement a strategy?
fynn-_1_05-21-2025_130921 (29:33):
I think it's a great question.
I mean.
I think that this type of thing,so when I started really
researching the problem and whatthat meant was like interviewing
a lot of engineers at a lot ofdifferent companies that had for
whatever reason ended up workingon billing and pricing.
One of the things that theywould often say is something
that you just said, they wouldsay, I feel like I'm always
(29:54):
reinventing the wheel here, whenit comes to pricing and
packaging and billing.
And I'd say, well, well tell memore about what you mean, and.
What they kind of meant was liketwo things.
One was up until I had beentasked with this project, I had
never done billing engineeringbefore.
Like I'm a trained computerscientist, like I know how to
(30:14):
build products.
I did not know how to build likebilling logic.
And it feels like this shouldjust be done.
Like it feels like this shouldbe like drop in, like this
should be like a standard orlike a protocol.
Like it feels like this shouldjust have been solved.
Some in some ways, they wouldoften reference like
authentication, like companieslike auth zero, like people
would roll their own auth andthat was really hard and it was
(30:37):
like fraught and people werereinventing the wheel.
And then after companies likeauth zero, people just,
abstracted off away.
so that was like one side ofwhat engineers were saying is
this desire to be able toabstract this thing away that
they didn't have a lot ofexperience with.
The other thing that they wouldsay is like.
do a billing initiative and thenit's three months later, six
(30:58):
months later, one month later,whatever it is, the business
will change its mind on how itwants the pricing package.
And they'll
dan-balcauski_1_05-21-2025 (31:04):
That never happens.
That never happens.
They're always consistent.
fynn-_1_05-21-2025_130921 (31:07):
yeah, and then they'll pull me back in
and it's
dan-balcauski_1_05-21-2025_ (31:10):
and it's
fynn-_1_05-21-2025_130921 (31:10):
I go build like this infinitely
flexible system, then constantlypulled into these billing
initiatives.
But here's the problem.
I don't have time to go buildsome infinitely flexible system
like I got, I have time to getexactly what the business told
me to get done, and I don't evenhave time for that.
(31:31):
And so I think to,
dan-balcauski_1_05-21-2025_1 (31:32):
is there.
fynn-_1_05-21-2025_130921 (31:32):
your question, why does this happen?
Well, it kind of happensbecause, there are not a ton of
engineers that have a ton ofexperience doing a bunch of
billing engineering.
Pricing impacting is alwaysevolving.
And the engineer working on thiscan't predict how the business
is going to evolve.
And you wouldn't want them to,that's not their job.
And then I think,
dan-balcauski_1_05-21-2025_14 (31:50):
I think
fynn-_1_05-21-2025_130921 (31:50):
of all, and it kinda gets back to
just like the reality of startupevolution is like when you're a
startup, you're just trying to
dan-balcauski_1_05-21-20 (31:57):
trying
fynn-_1_05-21-2025_130921 (31:59):
And so you'll make all these
trade-offs.
just gonna figure out how to
dan-balcauski_1_05-21-2025_ (32:02):
out how.
fynn-_1_05-21-2025_130921 (32:03):
way for this customer and billing
for this way, for this.
We just gotta get through thisand survive.
And because there isn't some.
Pattern or drop in set ofcomponents or off, make those
trades and then you revisit themlater.
Should you achieve productmarket fit?
At which point you gotta gothrough paying and refactoring
and you've gotta now address,are we gonna make
dan-balcauski_1_05-21-2025_1 (32:24):
we gonna make,
fynn-_1_05-21-2025_130921 (32:25):
and entitlements and pricing a first
class citizen from anarchitectural perspective, gonna
keep band-aiding.
This homegrown system that'sfragile between our application
and our billing system, and nowour CRM and now our ERP stuff
like that.
dan-balcauski_1_05-21-2025_14 (32:42):
I I want to.
It is not a pivot but kind of aslight nuance.
'cause everyone these days can'tstop talking about usage based
pricing.
And I'm, I imagine this is inthe mix of those conversations,
as folks, maybe have a moretraditional sort of subscription
and now are going to what, a payas you go or some sort of
metering based upon some other,usage component that's not just
(33:05):
your traditional seat.
What are the challenges, Iguess, that you see kind of
specific to that type ofinitiative that, maybe it's the
same thing we've been talkingabout I guess are there hurdles
from an infrastructure thatyou're seeing sort of repeatedly
as folks try to bring that intotheir pricing and packaging
approach?
fynn-_1_05-21-2025_130921 (33:22):
Yeah, I think, usage-based pricing,
usage-based billing is.
It has surprised me.
And what I mean by that is twoyears ago when I founded
Schematic, I thought, yeahusage-based pricing is gonna be
a thing.
Schematic's gonna have to handleit well.
(33:43):
But I kind of viewed it as likea fraction of companies are
gonna be adopting usage-basedpricing.
you're gonna see relativediversity in terms of pricing
models across sas.
Some will remain really good forseats.
Some might be good for usage,some might be good for, think
what's going on right now, atleast in my experience, building
(34:04):
schematic and that because of AIusage base is accelerated far
faster than I thought.
And it's just like a biggernumber of companies, a much
larger number of companies willuse usage or hybrid to go bill
and price.
And so from a technicalperspective like.
does that mean?
It means you have to figure outmetering and you have to figure
(34:28):
out, do you wanna buildmetering?
Do you wanna outsource metering?
Are the tools that you'reoutsourcing metering good at
good for the job?
Are they,
dan-balcauski_1_05-21-2025 (34:36):
When you say metering, when you say
metering, can you just unpackthat a little bit for folks who
may not understand what thatmeans?
fynn-_1_05-21-2025_130921 (34:41):
Yeah, like metering, can, it can
certainly be like confused.
But the way I think aboutmetering is I want to track, how
often, frequently much a featureis used.
And I may want to against thatusage and well, what if I wanna
(35:03):
bill an arrears?
What I want?
What if I wanna bill onoverages?
Wanna, what if I wanna bill apay as you go?
What if I wanna do almost likecredit burn downs?
What if I wanna do, usage basedbands like now there's all kinds
of complexity on the way I couldbill against metered usage,
depending on what kind of pricemetrics that my market has
anchored to, depending on thenature of my product, all that
(35:25):
kind of stuff.
And so
dan-balcauski_1_05-21-2 (35:27):
Mm-hmm.
fynn-_1_05-21-2025_13092 (35:27):
that's complex to build, especially if
you start to see scale and ithas to be really good really
fast.
Really accurate.
Right, because you're nowgetting into the ultra, the most
ultra sensitive thing, which islike you calculate usage wrong
and you send that bill to thecustomer and like you're risking
churn if you've miscalculated.
(35:50):
So, that's one of the technicalchallenges, like we could go
into this in a lot more depth,of course.
But that's one, right.
And that's that also kind ofgets back towards entitlements,
right?
Well, what if you have said.
People can use this much in thisplan.
Well, what if they exceed theirplan?
(36:10):
Are you going to enforce that?
Are you gonna enforce it with asoft limit?
Are you gonna enforce it with ahard limit?
Are you gonna use that limit topotentially drive expansion
revenue?
Do you want that expansionrevenue to be driven via
self-serve?
you fired a paywall or you sortof n nudged them to go kind of
like self-serve, adjust theirplan.
(36:31):
do you want that limit drive asales conversation because it
happens to be a Fortune 500company and they buy through
sales and they've hit theirlimit.
'Cause they were just testingout the product with a team
within the big company.
Like kind of move into thisworld of to me, fascinating.
It's like revenue complexity.
It's like I'm supporting LEDgrowths.
I'm supporting sales led growth,supporting hybrid billing, I'm
(36:54):
supporting multi-product and Igotta find a way to do that.
And it's infinite permutationsof SKUs, and it's all connected
between product tools andbilling tools and sales tools.
that's what's happening in theworld right now.
dan-balcauski_1_05-21-202 (37:07):
Well, I, yeah, you laid out a bunch of
points there and for folks,right?
So you mentioned the you'rerisking churn.
If you send an incorrect bill,you're at least risking you're
for sure gonna get an angryphone call.
That's gonna be the minimum.
It may be also a cancellation,but you at least have to deal
with that.
And especially if you, duringthat at scale, you're getting a
lot of angry phone calls all atonce.
Which is no fun for any customersupport or finance operations
(37:27):
team to have to deal with and gorec.
Re reconcile everything, letalone if that trickles across,
months or quarters and you'vegotta go re tell your board or
revenue numbers were wrong forlast quarter'cause our billing
system was not acting properly.
That's not a fun conversation asCFO will attest.
And then, you just highlightedin that explanation nuances in
(37:49):
detail that you were highlightedbefore, which is like the
engineer sitting there saying,look, they always want.
This additional thing a monthlater, right?
Where it's like, Hey, with thismonth, we're, we are gonna
enforce overages when last monthwe weren't, or this time, we're
gonna we wanna also triggerthese, transactional
notifications or, changes in theproduct, or we want to be able
to charge overages at adifferent rate than we did
(38:12):
before, with some other slidingscale of, monetization.
And there's also, just knowingabout the space as well.
Right?
There's, you mentioned having tobe fast and accurate depending
on what you're monitoring.
You might be throwing offthousands or tens of thousands
of these events.
Very rapidly.
And so you don't want tonecessarily store all those
(38:33):
individual data points, soyou've gotta figure out, okay, I
need to aggregate it, but then Ineed to make smart choices
around when I aggregate it andwhat I store so that I can, I,
there's audit capability all theway back through, and these are
just the things that, like whenyou're.
Sitting in that conference roomfor the first time telling
engineers, Hey, we wanna do someusage based stuff, everyone's,
oh yeah, that'll be easy.
Right?
And then it's alright, sixiterations later, everyone's I
(38:55):
wanna kill myself.
Why did we go down this road?
But you did throw out somecatnip I can't let go away,
which is, you mentioned AI andhow AI's really sort of driving
this conversation.
So I'm curious like.
What is, I guess, how are theseproducts kind of approaching
monetization differently thantraditional SaaS?
And I guess, are you noticingany patterns in how these
(39:17):
companies are structuring theirpricing?
As people I think everyone'ssort of in this mode of
experimenting and trying to makesure there's value and, are
these things actually productionready or fancy demo.
But I guess in terms of.
The world you're in, you'reprobably seeing a lot of folks
try different things.
Are you noticing any sort ofpatterns or common ways folks
are trying to approachmonetization in the AI world?
fynn-_1_05-21-2025_130921 (39:38):
Yeah, I think.
Well, so the pat, so I'll saytwo things.
One is the patterns that Inotice typically come from like
the companies Mm-hmm.
Come to schematic looking forhelp.
And those companies arecompanies that are trying to
support some flavor ofusage-based pricing.
Really companies come to us forthree reasons.
(39:59):
That is the, by far, the mostimportant reason and sort of
the.
The sub bullet reason of tryingto support usage based is I'm
really trying to enforce limits.
And there's something notable tome about that, which is four
years ago when I was buildingmatcha and then Spring bot and
ox, like we were pretty okaywith being lenient on limits.
(40:24):
It was like, yeah, we'll talk tothem at the next renewal cycle
if they've been way over.
I see companies being a lotmore.
about limits, and I think it'sbecause of two things.
I think it's because likethey're actually real costs
under, underneath these productsto make calls to the LMS and to
kind of leverage theinfrastructure, but also because
(40:46):
it's like, great opportunity todrive revenue growth if somebody
is approaching a limit or goingover a limit abusing a limit.
It just like an exceptionalgrowth opportunity for a
company, and I'm seeing startupsway earlier than their life
cycles realize that and want todo something about it.
(41:11):
And so that's the first thing Isee.
I think the second thing I seeis kind of back to that sort of
like complexion of a lot ofthese companies.
They're not often just sales ledor founder sales led.
They're not often just productled.
They're often both.
And they're often like not justselling like a simple single
(41:33):
tier, they're selling multipletiers.
They're even getting intoadd-ons even as early stage
companies.
And I kind of chalk all of thatup to you gotta B2B sas and AI
customer sort of totallyempowered, like there's an
exponentially growing amount ofsoftware.
The customer's super empoweredto go buy whatever they want to
(41:54):
solve, whatever problem theyhave.
they're demanding of vendors, SASaaS and AI vendors is
flexibility.
You let me buy how I want to buyyou, let me, get, build and
priced how I want to get billedand you let me buy what I want
from your product.
If I don't want the whole thing,should be able to buy portions
of it.
(42:14):
And I think that is, that's likea pretty fascinating evolution.
And it's a challenge forsoftware companies.
'cause now you have to build allthis flexibility into the way
that you.
Develop product and monetizeproduct
dan-balcauski_1_05-21-2 (42:25):
There's so many areas we've opened up
here that we just do not havetime to explore.
Maybe we'll have to haveversions two or three through 10
of this conversation.
'cause there's so many doors wecould walk through.
But I've gotta wrap things up tobe respectful of your time.
I do wanna close out with acouple of rapid fire kind of
close out questions.
If you're up for it, you readyfor it?
Fynn
fynn-_1_05-21-2025_13092 (42:44):
ready.
dan-balcauski_1_05-21-20 (42:47):
What's one unconventional piece of
advice you'd give SaaS foundersabout monetization that goes
against the conventional wisdom?
fynn-_1_05-21-2025_130921 (42:57):
I don't know how unconventional it
is, but I still believe that.
It is pervasive amongst startupfounders that they don't have
the tool, the vocabulary go havewillingness to pay conversations
with their customers, whetherthey are pre-product to
(43:19):
post-product market fit.
And I think that founders whoinvest in the tool, the
vocabulary to invest inwillingness to pay massively
increased their odds of.
because they massively increasedtheir understanding of how the
market views their value.
dan-balcauski_1_05-21-2025_14 (43:39):
I love that question.
I know This's supposed to berapid fire.
I'm gonna ask a follow up'causeit's my show.
I can do what I want.
If you had to give someone likea 32nd primer on, like when you
say vocabulary, what are thethings that they need to go
throw it to Chachi PT after thisconversation and just spend some
time researching.
fynn-_1_05-21-2025_130921 (43:56):
Like the vocabulary of willingness to
pay, in my opinion, is what isthe most, what is my most
intuitive price metric?
How valuable is my productrelative to other products that
you have bought and are payingfor?
How should I package my product?
Which features are, kinda musthave versus nice to have versus
don't matter.
(44:17):
What is the maximum you would bewilling to pay for this product?
What's the price at which thisproduct is prohibitive?
What are other influences onyour willingness to purchase?
And, probably add a couple more,but those are like the key ones
in my opinion.
dan-balcauski_1_05-21-2025 (44:32):
Love it.
What do you think is the biggestopportunity in the monetization
space over the next few years?
fynn-_1_05-21-2025_130921 (44:38):
So a little self-serving here, but I
think if we move into a worldwhere let's assume there's
70,000 software companies in theworld, and let's say that AI
means that there're gonna beanother 70,000 over the next
five years, or 50,000, whatever.
Who knows?
If a vast majority of thosesoftware companies decouple
(44:59):
pricing from code, thosecompanies will be able to use
the tools and the tactics andthe experiments of monetization
with far more agility andflexibility and control than,
the last 25 years of softwarecompanies ever had the
opportunity to do it.
dan-balcauski_1_05-21-2025 (45:17):
This conversation's been fantastic.
Fynn for our listeners wannaconnect with you, learn more
about schematic, how can they dothat?
fynn-_1_05-21-2025_130921 (45:23):
I'm on LinkedIn, Fynn Glover, FYNN,
and schematic is schematichq.com.
dan-balcauski_1_05-21-2025_14 (45:31):
I will put those links in the show
notes for our listeners.
Thank you so much, Fynn,everyone that wraps up this
episode of Sask Getting Secrets.
Thank you to Fynn for sharinghis journey.
For our listeners who foundFynn's Insights valuable, please
review and share this episodewith your Network.
The trade is, a very likely
profitable lifestyle businessthat you can run for a long time
versus something that has to gobe very big very quickly.
Like speed is everything at thisstage.
Usage-based pricing, usage-basedbilling is.
It has surprised me.
The customer's super empoweredto go buy whatever they want to
(00:21):
solve, whatever problem theyhave.
they're demanding of vendors, SASaaS and AI vendors is
flexibility.
You let me buy how I want to buyyou, let me, get, build and
priced how I want to get billedand you let me buy what I want
from your product.
dan-balcauski_1_05-21-2 (00:57):
Welcome to SaaS Scaling Secrets, the
podcast that brings you theinside stories to the leaders of
the best scale up.
B2B SaaS companies.
I'm your host, Dan Balcauskifounder of Product Tranquility.
Today I'm excited to speak withFynn Glover.
Fynn is the co-founder and CEOof Schematic, a platform that
helps digital businessesimplement and manage pricing
Before schematic.
He founder, roots rated andmatcha acquired by Springbot,
and served as Chief of Staff andVP of Operations at Automox He
(01:19):
also hosts the wonderfulMonetizing SaaS podcast.
Let's dive in.
Welcome, Fynn to SaaS ScalingSecrets.
fynn-_1_05-21-2025_130921 (01:26):
Thank you so much, Dan, for having me.
dan-balcauski_1_05-21-2025_ (01:29):
I'm really excited to talk to you
today, Fynn again.
And because, I relish theseopportunities to have another
person who is as passionateabout the world of pricing as I
am.
We're few and far between, sowhen I fell find a fellow
pricing nerd, I relish theopportunity to dive deep and
hopefully allow some others to.
Understand what the complexityis in this world and s
(01:51):
schematics reason to for being,to help folks navigate that
complexity from a infrastrupricing infrastructure layer.
But before we get intoschematic, I wanted to go back
kind of early in your journey.
You started your career pursuingsoccer, if I'm not mistaken, and
then founding roots rated in theoutdoor industry.
Tell us a little bit about yourkinda early journey.
(02:12):
What led you to start your firstcompany?
fynn-_1_05-21-2025_130921 (02:14):
Yeah.
Yeah.
So I I had long wanted to beplay pro soccer.
That was a dream.
I pursued it through college.
I played semiprofessionalafterward, but it was like late
in college that, you're kind ofasking, at the time, like the
MLS was paying.
Players like 30 grand a year.
Like you're kind of starting torecognize, even if you take it
(02:35):
all the way to the top in theus, like there's gonna be a, a
point where you have to build acareer.
I had no.
idea what I wanted to do, it waslike, do you go be a lawyer?
I grew up in Tennessee, was, Idid not grow I did not grow up
like.
there was this world of startupsand SaaS that was very
unfamiliar to me until, about mysenior year and college and.
(02:58):
a soccer team that I was playingfor was a guy who was like
starting software companies inChattanooga, Tennessee.
And he said, have you everthought about Thought And I was
embarrassed to admit at the timeI didn't even know what the word
meant, but I kind of jumped infrom there.
I did an internship with aventure backed startup.
I did a internship with a fundof funds, started to get really
(03:19):
interested in.
Business and startups inparticular.
And then I went on this sort ofbig road trip.
I left the head, the fund offunds.
I went on this big road trip totry to figure out what company
to start, what I wanted to do.
And at the time I was verypassionate about outdoor
recreation's, impact on peopleand society generally.
(03:41):
And I was able to raise somemoney from a variety of outdoor
industry companies and brands.
go interview, thousands ofcollege students about how they
find and discover and engagewith the outdoors.
And through that journey, whichalso kind of, happened to take
me about 20,000 miles around theUS and Canada, I realized that
(04:02):
it was exceptionally difficultat that time to find great
places to go outdoors.
This was 2011, and you'd becoming into a new town with, an
early iPhone or a Blackberry.
And you'd Google for where to gohiking in Denver or Portland or
Austin, and your results at thetime on Google were like, Yelp
reviews for botanical gardens.
This was about six months afterall trails had been founded.
(04:26):
And so I just felt there's thismassive and important
informational gap online abouthow we discover outdoor access,
outdoor recreation, connect withit.
So I built a company to try tosolve that problem in that
company.
Ended up being a really greatexperience, ran it for four
years where we became a decentlywell-known company in the
(04:47):
outdoor space.
We worked with many of the bethe best brands and we became a
content publishing business.
Functionally, we were creatingeditorial content about great
adventures and places to go allover the world, that ultimately
kind of led us into.
See an opportunity to pivot thatbusiness into content marketing
(05:08):
software, which we did, and Ican get into that, but that's
how that journey started and howit began.
dan-balcauski_1_05-21-2025_ (05:14):
So, it's funny that, I feel like a
lot of technology companies,especially as they try to
wrestle with the beast that isSEO, often feel that they become
a content publishing platformjust as much as they are a
technology company.
I've had my, my fair share ofthat as well.
I guess so, so, so leads fromthat story, I guess you go from
focusing on the outdoor industryso tell us about how you end up
(05:34):
then in the SaaS world fromthere.
fynn-_1_05-21-2025_130921 (05:37):
Well, so this is about, been about
2015, and the way that companymade money is like big outdoor
brands like think the North Facewould pay us for content
creation.
And that content creation wasn'tlike product content, it was
like reviews and trail reportsand destination profiles for.
Every sport imaginable.
(05:58):
And so what we ended up becomingvery good at is creating
hyper-local editorial contentsat relative scale.
We had hundreds of professionalwriters working for the
business, creating lots ofreally good content, whole sort
of editorial layer.
And what sort of became apparentto me is we can build, a cool
lifestyle, profitable businessin this space, doing this work,
(06:20):
also big brands in the industrywere starting to pivot to
towards e-commerce.
And so content marketing wasbecoming very important for
their e-commerce businesses.
And they were actively paying usfor content, and they were
actively trying to find ways toget us to create more content.
And so the opportunity thatpresented itself was to begin to
(06:41):
productize portions of ourpublishing stack so that we
could license content to brands,enable them to commission
content from a platform, enablethem to run really high leverage
content analytics.
to look at impact not only froma brand awareness perspective,
but also attribution down to thesale in the context of like
(07:02):
content driven email marketing.
And so that was sort of how thatopportunity happened.
And so we spent 2016 kindabuilding that platform.
I remember we, we pre-sold abouta half million dollars in a RR
into brands, like before evenlaunching the content marketing
platform.
then we grew relatively quicklyand.
(07:23):
That growth
dan-balcauski_1_05-21-202 (07:24):
that.
fynn-_1_05-21-2025_130921 (07:25):
us raising around a venture capital
in 2018.
And the opportunity at thatpoint was how do we take this
brand, this content marketingsoftware business that's very
vertical and start to expand itacross verticals and sell into
e-commerce, for any type ofthing.
Not just outdoor, but beauty andbroader health and wellness and
(07:46):
sport, and so.
That's what that was all about.
And we did that until about 2020when an email marketing platform
that was also selling intoe-commerce businesses acquired
the company and merged the teamand merged two products I.
dan-balcauski_1_05-21-20 (07:59):
That's a fascinating journey there from
that you guys recognize thatopportunity and were able to
sort of capitalize on it.
I wasn't planning on going here,but I am curious.
Around this idea of, having thisvery vertical focused business
and then looking at, okay,expanding cross horizontal as
you kinda look back at thattime.
(08:19):
I guess are there were theresurprises or sort of lessons
that you learned to be able todo that?
Because I think this is kind ofa, this is one of these core
challenges I think a lot ofcompanies face as they try to
kind of expand their market.
If you kind of go back and do itagain, were there things that
you didn't realize of, like howchallenging they would be to
kind of expand horizontally?
fynn-_1_05-21-2025_130921 (08:36):
So many lessons learned.
I mean, I think, for anyfounders listening, right, like
I was in the midst of pivoting amedia business into a SaaS
business, that in and of itselfis exceptionally hard to do,
just.
Just think about the culturethat, that, the cultural change
that transpires for a companythat's trying to do that.
You go from a company that'sbuilt itself on great writing
(08:58):
and great editing to a companythat is building itself on
software development.
I mean, it's just a massivetransformation.
I think, when you think aboutmoving from a vertical to going
horizontal, well, why would youdo that?
You do that because you believethere's a venture scale
opportunity in going horizontal.
As opposed to, and there's not aventure scale opportunity in
(09:19):
vertical.
And I think that that was true.
But I think that when you decideto go horizontal, when you
decide to take venture you'regoing for a, go big or go home
type business.
And The trade is, a very likelyprofitable lifestyle business
that you can run for a long timeversus something that has to go
be very big very quickly.
(09:40):
And I, at that time in my lifewanted to go pursue the venture
outcome.
That was what was motivating me.
I think the more soberentrepreneur of, a decade later,
looks back on that and kind of,says to myself, Hey, you had
something really special in thatvertical and there were so many
great relationships.
Why did you do that?
And, no regrets, but those aresome of the trades and some of
(10:00):
the lessons and there's, thereare kind of.
things going out in the outdoorindustry now.
Like Outside Magazine is tryingto create this huge media
conglomerate in the outdoorindustry where they're bundling
all the media brands and they'retrying to become like the fat,
like the Facebook for outdoormedia.
And I think it's, I ultimatelythink it's not going to be very
successful.
(10:20):
I think it's extremely hard todo.
I think there were other lessonstoo, like content marketing as a
category was, it was trying tomake content available to
companies at scale and what noneof the content marketing
platforms like mine that raisedmeaningful amounts of venture
capital, maybe sort ofappreciated or knew was coming
(10:42):
was chat.
GBT.
dan-balcauski_1_05-21-2025_14 (10:44):
I don't know if anybody saw that
necessarily.
Right.
Unless you were deep.
Unless you were deep in theresearch labs at at Deep Mind or
otherwise.
Very few of us saw thisdisruption.
Well, and look you made somereally good points there.
Yeah, there's.
The world is littered withcompanies that tried to pivot a
services business into asoftware business.
It is an incredibly hardtransition.
(11:05):
And, I would say no less adifficult transition, as you
pointed out, than going from avertical business into a
horizontal business.
And I think the other good thingyou noted was that, the world's
full of trade-offs.
And you're taking a veryspecific bet when you sign up
for institutional capital, likeventure capital and you're
signing up for a very specific,maybe bimodal set of outcomes as
you go big or go home as youmentioned.
(11:26):
And, that's super helpful,right?
'cause there's sure, there's alot of other entrepreneurs out
there who maybe.
That is not as apparent to them'cause it's their first rodeo.
So appreciate you sharing bothof those.
I guess kind of fast forwardingthen, I guess, was there
particular challenges that yousaw across those experiences
that ultimately inspired you tocreate schematic or how'd you
(11:47):
get into the monetization space?
fynn-_1_05-21-2025_130921 (11:50):
Yeah, it was a little bit of a two
step.
So, after Macho was acquired,about six months later, I was
recruited to a company calledOx.
And Ox at the time I knew theCEO because he had raised his
series A from the same fund thatI had raised my series A from.
And we had become friends.
He had just raised a reallymeaningful series C he asked me
(12:13):
to come and build a growth teamat ox.
And that was, again, six monthsafter matcha had been acquired
the exact same week.
I remember it vividly.
My independent board member frommatcha got on the phone with me
and I said, Hey, it's been sixmonths since the deal happened.
I'd love to kind of know how youthink about the company, what we
(12:34):
did well what we did poorly,things like that.
And he said, one of the thingsthat I think you and we, the
board did poorly is pricing.
I think it was our biggestmistake.
I think that we as a boardshould have come in and really
helped you understand.
Value to price.
We really should have helped youunderstood helped you understand
(12:55):
how to go talk to customersabout willingness to pay,
packaging preferences, pricemetrics we didn't, and I think
it, it ultimately was like oneof the biggest challenges for
the company.
I joined I.
and three weeks later, like oneof the first big things thrown
onto my plate is go figure outpricing business hasn't changed
pricing in two years.
we've got thousands of customersand let's get this show on the
(13:18):
road.
And that presented this reallyincredible incredible.
for me.
It was fascinatingpsychologically.
It was fascinating from a dataperspective.
but it also but it also.
closely with insight VenturePartners Center of Excellence on
Pricing.
And that happened to be a guy atthe time named James Wood, who
had.
(13:38):
Trained at Simon Kucher and donepricing for Segment, and you had
just like all this incredibleexperience.
And so got this MBA in pricingand packaging outside of like my
operating mistakes, likeovernight, and suddenly that
translated to here I aminterviewing dozens and dozens
of customers doing primaryresearch on price sensitivity
and packaging preferences, andleader, filler killer, and all
(14:01):
this stuff.
At the helm of a really, like acompany with an incredible
product market fit with tons ofpotential to grow, tons of
potential to leverage pricingand packaging to drive
meaningful top line, year overyear growth rate on top of
already strong growth rate.
And so that's how it all, kindof monetization really sort of
hit me in the face.
(14:23):
What led me to startingSchematic is after we came up
with the initial recommendationsfor how OX should evolve its
pricing and packaging.
It took us si well over sixmonths to implement just
portions of the recommendation.
We wanted to introduce a thirdtier and a couple add-ons.
(14:44):
Six months later we'd likebarely introduced a third tier,
no add-ons, and by that pointour recommendations like were
effectively stale given how fastthe market was moving and how
fast the product was moving andthat it took so long for us to
make changes.
Really lit up my curiosity, andcan go into that in some detail,
(15:05):
but that's ultimately what ledme to founding schematic and
trying to solve problem, which Ican talk about in more detail.
But that's how it, that's how ithappened.
dan-balcauski_1_05-21-2025_ (15:16):
Got it.
Got it.
So you had you kinda had, thismeeting with your former
colleague, Hey, we really couldhave done better job on
monetization.
You get thrown sort of, feetright into the fire at Ock.
To go solve that problem.
And I love that term, youphrase, you used to hit you in
the face.
I feel like a lot of people,first time they come up against
pricing, it's very relatableexperience.
(15:37):
And, I know James very well.
He is.
Everything you talked about tobe he is.
Fantastic.
And I believe you guys had awonderful conversation on
monetizing SAS as well.
You were in very good handslearning from him.
I guess I'm curious kind ofcoming out of that so you get
the strategy recommendation andthen, it's this long slog to
implement it, I guess.
How did you decompose?
Is this a just an operationsissue?
(15:59):
This is a technicalinfrastructure issue.
This is actually a problem withkind of not everyone buying into
the strategy, I guess kind ofwhat was your signal that you're
like, yeah, now I guess thatbirth sort of you focusing on
schematic.
fynn-_1_05-21-2025_130921 (16:10):
Well, it wasn't apparent to me that it
was a technical issue initially.
It felt To me that it was anorganizational issue.
And when we say this, I mean,we're talking about just like
the very slow time to value.
Here is
dan-balcauski_1_05-21-202 (16:24):
Yeah.
fynn-_1_05-21-2025_130921 (16:25):
that the executive team has agreed
on, takes us a very long time toexecute it.
Therefore.
Time to value.
Time to realizing the benefit ofthe recommendation is just
excruciatingly long, especiallyin kind of the context of, a
series C startup that is makingthe argument to itself and to
its market and to its investorsthat it can massive incumbents
(16:49):
because it can be faster.
Like speed is everything at thisstage.
And so initially my thought waslike, this is just like a
cross-functional hard thing todo.
It requires a bunch of cycles.
But then I started digging inmore, and I would spend a lot of
time asking people in finance,people that were kind of
handling billing and finops,like, why is this so, so hard to
(17:12):
do?
Like, why does this billingsystem feel so fragile?
Why am I always talking aboutlike the constraints and stripe
billing that are preventing usfrom hitting these deadlines?
And like was the reality ofbilling fragility and like the
billing system wasn't well setup for kinda things like
usage-based pricing.
And there was that, but youwould often hear the folks in
(17:36):
the finance org say things like,well, we just can't get enough
engineering resources.
We just can't get enoughdeveloper time.
We're having to argue for likesprints outta the engineering
team.
We're having to.
Lobby the engineering team topull developers off of core
features and into the billingand pricing initiative.
(17:57):
And that was
dan-balcauski_1_05-21-2025 (17:58):
That was.
fynn-_1_05-21-2025_ (17:58):
interesting to me.
I wasn't aware of that really.
I started just interviewing ourCTO.
I started interviewing billinglike people that were kind of
engineers working on billing andwhat they started to say, and
they would always say it withdifferent words at the time,
what they started to say becameconsistent and they would say
something to the effect of.
came, it comes back.
All this brittleness, all ofthis slowness that you feel
(18:22):
comes back to how we'veimplemented what are called
entitlements into ourapplication.
And that was like, okay, cool.
Well what's an entitlement?
And I know, you know whatentitlements, for those that are
listening that don't know whatentitlements are, like a simple
way to think about entitlementsis they're like the rules that
(18:42):
determine.
What features, limits, andproducts a customer can use
based on like commercialcontext, based on their
subscription plan, based ontheir trial status, based on
their contract.
And entitlements are sort ofthis between application your
product and typically thebilling system and entitlements
(19:05):
are kind of there to answerquestions like, can this user
access feature x?
How many seats is this companyallowed?
Has this company hit their usagecap?
Are they on a trial with liketemporary access to a feature
that we extended to them?
And at Auto Moss, what we haddone is we had hard coded the
(19:28):
entitlements into theapplication and then tied them
closely to plan IDs in thebilling system.
And what I learned was thatbecause we had hard coded all
this.
Anytime we wanted to make achange, no matter how small,
like just granting an overrideto a customer, engineering was
critical path.
We had to go ask an engineer tomake a change in the code.
(19:50):
And if you think about that,that scale across, thousands of
customers, dozens of plans, lotsof different permutations.
You're sort of entering a worldof pain where to make any change
to pricing and packaging,whether it's a global, I just
wanna introduce a third tier to,I wanna go do something to drive
(20:11):
growth.
Like I wanna launch an AIfeature and I wanna test it with
a promo across this cohort ofour commercial segment
customers.
It's just impossible because yougotta go back and you gotta get
the engineering team to give youdevelopers to support that.
So that's how this kind of hap,that's how I got that's how I
kind of found where the realconstraint was.
(20:34):
And at that
dan-balcauski_1_05-21-2025_1 (20:34):
Mm
fynn-_1_05-21-2025_130921 (20:35):
what, what started to kind of
crystallize for me is, okay,this is the problem at ox.
This is like an entitlementsproblem.
I wanna see if that's true for alot of other companies.
dan-balcauski_1_05-21-2025_1 (20:46):
mm
fynn-_1_05-21-2025_130921 (20:47):
And so I
dan-balcauski_1_05-21-202 (20:47):
Well, one.
fynn-_1_05-21-2025_130921 (20:48):
I went out and I interviewed like
hundreds of comp a hundred, 150companies and they were all
doing entitlements in a varietyof ways, and they were all
constrained in similar ways, andI thought, okay, feels like the
kernel of something that couldbe abstracted and solved.
dan-balcauski_1_05-21-2 (21:02):
There's so many threads in good threads
in what you said that I wannapull on, and I don't think we'll
have time to, you can touch onall of them that you just
introduced with that littlestory.
But I.
So first of all for folks whomaybe still be lost about
entitlements we'll useeveryone's favorite car company,
Tesla maybe not favorite at themoment, but we'll leave that
aside, right?
If you wanna enable fullself-driving, you pay them
whatever,$10,000, they flip aswitch over the air, all of a
(21:25):
sudden your car can driveitself.
So that would be like a versionof an entitlement.
And.
All the other car companieswould've love, would love to do
that.
But most of them, you'd have totake your car to a shop, but
they'd probably have to plugyour car in in order to change
that, et cetera.
Tesla has built it from theground up to make those type of
things seamless and easy.
Much like your iPhone updates tothe latest version probably
whether you don't want it to,but it will anyway.
(21:47):
So, your photos app stopsworking, but you know that,
we'll leave that aside for now.
So, but then, I am curious, kindof going back into your.
So, and look, none of this is tosay anything about any of the
specific companies we're talkingabout because obviously this is
a pervasive problem that, that Isee.
And that obviously youidentified enough to build a
company around it, right?
So it's not, it has nothing todo with the individuals on the
(22:08):
finance or engineering team orthe organizational function or
dis or dysfunction of thatparticular company.
But, this is sort of a realproblem.
I am curious when you starttalking to.
The finance leaders or team,even the ICS potentially who are
dealing with like the billingsystem versus the engineering
teams.
I'm curious about like what arethe communication gaps going on?
(22:28):
It sounds, it's like when youunderstand the system and you
know exactly what needs to beasked for and why I, my sense is
that you can get everyone.
Relatively on the same page,right?
Obviously priorities are alwaysgonna be a struggle.
Engineer time's always alreadygonna be a struggle.
But I guess what were thecommunication gaps that you
found that really sort ofprevented those teams from sort
of really getting their armswrapped around this problem
efficiently?
Were they because you mentionedbefore even different team
(22:50):
members, when you talk to them,they would, they would use
different language to kind ofdescribe it.
Were there common sort ofcommunication gaps that you
found as you've had more andmore of these conversations?
fynn-_1_05-21-2025_130921 (22:59):
Yeah and I would say the question
that you're asking to me is afascinating one because it can
be, it can extend beyond sort oflanguage gaps and into just the
nature of complex organizationsand different scopes of
interest, different incentives,and also just the way categories
have evolved.
So let me see if I can riff fora sec.
(23:21):
Like on the language piece,entitlements was a term that I
heard more often than not fromlike ops and rev ops people.
And when you talk to an engineerand you introduced the word
entitlements, they'd immediatelygr it.
But they probably would not haveused that word.
They probably would've saidsomething to the effect of
feature access or feature access
dan-balcauski_1_05-21-202 (23:43):
Yeah.
fynn-_1_05-21-2025_130921 (23:43):
or feature
dan-balcauski_1_05-21-2025 (23:44):
Hmm.
fynn-_1_05-21-2025_130921 (23:46):
Limit or AP golf API like, there just
wasn't sort of like consistencyin the termina terminology
around this intersection betweenbilling and product.
Right?
And it's easy to see why theengineer is building an
application.
They start to kind of thinkthrough things like, well, what
(24:06):
should my What.
care about?
Should my application care aboutwho the user is, what plan
they're on, what featuresthey're allowed to have, and
from a finance perspective, likewhat do they care about?
They care that the customer getsinvoiced the right thing and
they care about the customerhaving, making sure that what
they have access to, lines upwith what's on the contract and
(24:28):
what's on the invoice.
there's kind of differentspheres of.
Different scopes of interest, ifyou will.
And sort of what started to dawnon me at that time was like,
okay, this is like prettyfascinating because you got this
problem that is impacting boththese teams plus all the
downstream teams that can't likeuse monetization.
(24:48):
They got language issues, theygot tools that don't talk to
each other.
Engineering is being asked to gobuild and maintain a bunch of
logic between the applicationand the billing system.
So what engineering's beingasked to do is maintain a bunch
of billing logic in the codebase.
And if you go down and you liketalk to A-A-C-T-O or like a
(25:09):
technical architect, and you'relike, do you think it makes
sense that an application shouldknow this?
They'd be like, no.
Like, all the applicationsshould know is does the user
have access to this?
Yes or To No.
And making sure that theapplication is like a great
application application.
Mm-hmm.
more you try start to peel thatback, the more you just start to
see the way software categorieshave evolved.
(25:31):
And what I mean by that is likein the context of pricing, what
I mean by that is in a typicalsoftware company, pricing and
packaging are governed by likemultiple stacks, functional
technology stacks.
So if you think about likesales, right?
(25:52):
Sales have CRM and they havequoting, pricing and packaging
are often governed by the CPQproduct, the quoting product in
a traditional sales ledenterprise business in a more
product led business, like maybeit's the billing tool that and
owns pricing and packaging.
It's where like the productcatalog might sort of initially
(26:14):
be housed.
And then if you look at theproduct stack basically a
question of.
Provisioning and configurationand access tools like feature
flags do this.
These are all discretetechnology categories sold into
engineering, finance, and sales,and they don't really talk to
(26:36):
each other well.
So what you end up with is likediffuse product catalogs.
That obviously leads to hugedrift.
That obviously means that a.
Change to pricing and packagingin one place is a change in many
different places across manydifferent teams.
And here you and I are talkingabout
dan-balcauski_1_05-21-2025_1 (26:55):
I.
fynn-_1_05-21-2025_130921 (26:55):
We're like, Hey, well this is like
clearly the right way for thebusiness to price and package,
but oh, it's gonna take you sixmonths or a year or whatever to
implement what I'm sayingbecause all these systems so
siloed.
You asked him a narrowerquestion than that, but I think
the question of language gap isalso related to.
Siloed software stacks,functional stacks, pricing and
packaging being governed indifferent places by different
(27:18):
tools with different spheres ofinfluence in a business.
dan-balcauski_1_05-21-2025 (27:22):
It's funny that you mentioned that
because, or, this whole threadis hilarious because there's
I've worked with companiesbefore where literally the head
of sales was mad because thecompany bought a billing system
and was just like, well, whydon't the engineers just bill
it?
'cause we just move faster.
And and the billing system impthe reason the salesperson
(27:42):
didn't like it is because thebilling system imposed
constraints that the.
Head of sales didn't want tohave to abide by, they wanted to
be able to sell anything at anytime to anyone.
Just infinite likeconfigurability, which of course
the rest of the business didn'twant.
But all of the ire, like inevery exec meeting we get thrown
at the, oh, it's this billingsystem's fault, blah, blah.
(28:03):
So you're talking, why did Ibring that up?
Is because, you're talking aboutdifferences of incentives.
Well, but yeah, you don't wannaAlso, there's this whole notion
of comparative advantage.
Like you don't want yourengineers who should be building
the product that only yourcompany can build best suited
for your market to have tore-implement.
(28:23):
Commercial business logic thatevery company around the world
right, is you're not gonna sendyour engineers to go rebuild A
CRM or Salesforce unless you'rethe CEO of Klarna and they're
losing money anyway.
So I probably wouldn't payattention to his advice, but in
general, we do not want to likereinvent the wheel where it's
like other companies like, yeah.
Yeah.
All day, every day they're inthe CRM business.
Let them, same thing likebilling solution people, they're
(28:44):
in that business.
Let them solve that problem.
But you're, you did point outall these sort of incentives do
come together in a, in veryinteresting ways.
I guess, I'm wondering like, arethere sort of.
Mistakes that you see kind ofearly stage companies make then
that sort of sow the seeds ofthis downstream, these
downstream problems.
(29:05):
I'm wondering is this sort ofthat, the inevitability or I
think are there like things thatlike, like cer certain decisions
that like kind of make this, it.
Inevitable, right?
I mean, you were hinting beforeabout if you're talking to a
technical architect, you'resaying, Hey, should this piece
of code have knowledge ofcommercial billing?
And they would say, of coursenot.
Is that kind of the, is that theroot sin or is there, are there
(29:26):
sort of a cluster of thesethings that you see that, that
kind of cause this to, to spurinto six to 12 months to
actually implement a strategy?
fynn-_1_05-21-2025_130921 (29:33):
I think it's a great question.
I mean.
I think that this type of thing,so when I started really
researching the problem and whatthat meant was like interviewing
a lot of engineers at a lot ofdifferent companies that had for
whatever reason ended up workingon billing and pricing.
One of the things that theywould often say is something
that you just said, they wouldsay, I feel like I'm always
(29:54):
reinventing the wheel here, whenit comes to pricing and
packaging and billing.
And I'd say, well, well tell memore about what you mean, and.
What they kind of meant was liketwo things.
One was up until I had beentasked with this project, I had
never done billing engineeringbefore.
Like I'm a trained computerscientist, like I know how to
(30:14):
build products.
I did not know how to build likebilling logic.
And it feels like this shouldjust be done.
Like it feels like this shouldbe like drop in, like this
should be like a standard orlike a protocol.
Like it feels like this shouldjust have been solved.
Some in some ways, they wouldoften reference like
authentication, like companieslike auth zero, like people
would roll their own auth andthat was really hard and it was
(30:37):
like fraught and people werereinventing the wheel.
And then after companies likeauth zero, people just,
abstracted off away.
so that was like one side ofwhat engineers were saying is
this desire to be able toabstract this thing away that
they didn't have a lot ofexperience with.
The other thing that they wouldsay is like.
do a billing initiative and thenit's three months later, six
(30:58):
months later, one month later,whatever it is, the business
will change its mind on how itwants the pricing package.
And they'll
dan-balcauski_1_05-21-2025 (31:04):
That never happens.
That never happens.
They're always consistent.
fynn-_1_05-21-2025_130921 (31:07):
yeah, and then they'll pull me back in
and it's
dan-balcauski_1_05-21-2025_ (31:10):
and it's
fynn-_1_05-21-2025_130921 (31:10):
I go build like this infinitely
flexible system, then constantlypulled into these billing
initiatives.
But here's the problem.
I don't have time to go buildsome infinitely flexible system
like I got, I have time to getexactly what the business told
me to get done, and I don't evenhave time for that.
(31:31):
And so I think to,
dan-balcauski_1_05-21-2025_1 (31:32):
is there.
fynn-_1_05-21-2025_130921 (31:32):
your question, why does this happen?
Well, it kind of happensbecause, there are not a ton of
engineers that have a ton ofexperience doing a bunch of
billing engineering.
Pricing impacting is alwaysevolving.
And the engineer working on thiscan't predict how the business
is going to evolve.
And you wouldn't want them to,that's not their job.
And then I think,
dan-balcauski_1_05-21-2025_14 (31:50):
I think
fynn-_1_05-21-2025_130921 (31:50):
of all, and it kinda gets back to
just like the reality of startupevolution is like when you're a
startup, you're just trying to
dan-balcauski_1_05-21-20 (31:57):
trying
fynn-_1_05-21-2025_130921 (31:59):
And so you'll make all these
trade-offs.
just gonna figure out how to
dan-balcauski_1_05-21-2025_ (32:02):
out how.
fynn-_1_05-21-2025_130921 (32:03):
way for this customer and billing
for this way, for this.
We just gotta get through thisand survive.
And because there isn't some.
Pattern or drop in set ofcomponents or off, make those
trades and then you revisit themlater.
Should you achieve productmarket fit?
At which point you gotta gothrough paying and refactoring
and you've gotta now address,are we gonna make
dan-balcauski_1_05-21-2025_1 (32:24):
we gonna make,
fynn-_1_05-21-2025_130921 (32:25):
and entitlements and pricing a first
class citizen from anarchitectural perspective, gonna
keep band-aiding.
This homegrown system that'sfragile between our application
and our billing system, and nowour CRM and now our ERP stuff
like that.
dan-balcauski_1_05-21-2025_14 (32:42):
I I want to.
It is not a pivot but kind of aslight nuance.
'cause everyone these days can'tstop talking about usage based
pricing.
And I'm, I imagine this is inthe mix of those conversations,
as folks, maybe have a moretraditional sort of subscription
and now are going to what, a payas you go or some sort of
metering based upon some other,usage component that's not just
(33:05):
your traditional seat.
What are the challenges, Iguess, that you see kind of
specific to that type ofinitiative that, maybe it's the
same thing we've been talkingabout I guess are there hurdles
from an infrastructure thatyou're seeing sort of repeatedly
as folks try to bring that intotheir pricing and packaging
approach?
fynn-_1_05-21-2025_130921 (33:22):
Yeah, I think, usage-based pricing,
usage-based billing is.
It has surprised me.
And what I mean by that is twoyears ago when I founded
Schematic, I thought, yeahusage-based pricing is gonna be
a thing.
Schematic's gonna have to handleit well.
(33:43):
But I kind of viewed it as likea fraction of companies are
gonna be adopting usage-basedpricing.
you're gonna see relativediversity in terms of pricing
models across sas.
Some will remain really good forseats.
Some might be good for usage,some might be good for, think
what's going on right now, atleast in my experience, building
(34:04):
schematic and that because of AIusage base is accelerated far
faster than I thought.
And it's just like a biggernumber of companies, a much
larger number of companies willuse usage or hybrid to go bill
and price.
And so from a technicalperspective like.
does that mean?
It means you have to figure outmetering and you have to figure
(34:28):
out, do you wanna buildmetering?
Do you wanna outsource metering?
Are the tools that you'reoutsourcing metering good at
good for the job?
Are they,
dan-balcauski_1_05-21-2025 (34:36):
When you say metering, when you say
metering, can you just unpackthat a little bit for folks who
may not understand what thatmeans?
fynn-_1_05-21-2025_130921 (34:41):
Yeah, like metering, can, it can
certainly be like confused.
But the way I think aboutmetering is I want to track, how
often, frequently much a featureis used.
And I may want to against thatusage and well, what if I wanna
(35:03):
bill an arrears?
What I want?
What if I wanna bill onoverages?
Wanna, what if I wanna bill apay as you go?
What if I wanna do almost likecredit burn downs?
What if I wanna do, usage basedbands like now there's all kinds
of complexity on the way I couldbill against metered usage,
depending on what kind of pricemetrics that my market has
anchored to, depending on thenature of my product, all that
(35:25):
kind of stuff.
And so
dan-balcauski_1_05-21-2 (35:27):
Mm-hmm.
fynn-_1_05-21-2025_13092 (35:27):
that's complex to build, especially if
you start to see scale and ithas to be really good really
fast.
Really accurate.
Right, because you're nowgetting into the ultra, the most
ultra sensitive thing, which islike you calculate usage wrong
and you send that bill to thecustomer and like you're risking
churn if you've miscalculated.
(35:50):
So, that's one of the technicalchallenges, like we could go
into this in a lot more depth,of course.
But that's one, right.
And that's that also kind ofgets back towards entitlements,
right?
Well, what if you have said.
People can use this much in thisplan.
Well, what if they exceed theirplan?
(36:10):
Are you going to enforce that?
Are you gonna enforce it with asoft limit?
Are you gonna enforce it with ahard limit?
Are you gonna use that limit topotentially drive expansion
revenue?
Do you want that expansionrevenue to be driven via
self-serve?
you fired a paywall or you sortof n nudged them to go kind of
like self-serve, adjust theirplan.
(36:31):
do you want that limit drive asales conversation because it
happens to be a Fortune 500company and they buy through
sales and they've hit theirlimit.
'Cause they were just testingout the product with a team
within the big company.
Like kind of move into thisworld of to me, fascinating.
It's like revenue complexity.
It's like I'm supporting LEDgrowths.
I'm supporting sales led growth,supporting hybrid billing, I'm
(36:54):
supporting multi-product and Igotta find a way to do that.
And it's infinite permutationsof SKUs, and it's all connected
between product tools andbilling tools and sales tools.
that's what's happening in theworld right now.
dan-balcauski_1_05-21-202 (37:07):
Well, I, yeah, you laid out a bunch of
points there and for folks,right?
So you mentioned the you'rerisking churn.
If you send an incorrect bill,you're at least risking you're
for sure gonna get an angryphone call.
That's gonna be the minimum.
It may be also a cancellation,but you at least have to deal
with that.
And especially if you, duringthat at scale, you're getting a
lot of angry phone calls all atonce.
Which is no fun for any customersupport or finance operations
(37:27):
team to have to deal with and gorec.
Re reconcile everything, letalone if that trickles across,
months or quarters and you'vegotta go re tell your board or
revenue numbers were wrong forlast quarter'cause our billing
system was not acting properly.
That's not a fun conversation asCFO will attest.
And then, you just highlightedin that explanation nuances in
(37:49):
detail that you were highlightedbefore, which is like the
engineer sitting there saying,look, they always want.
This additional thing a monthlater, right?
Where it's like, Hey, with thismonth, we're, we are gonna
enforce overages when last monthwe weren't, or this time, we're
gonna we wanna also triggerthese, transactional
notifications or, changes in theproduct, or we want to be able
to charge overages at adifferent rate than we did
(38:12):
before, with some other slidingscale of, monetization.
And there's also, just knowingabout the space as well.
Right?
There's, you mentioned having tobe fast and accurate depending
on what you're monitoring.
You might be throwing offthousands or tens of thousands
of these events.
Very rapidly.
And so you don't want tonecessarily store all those
(38:33):
individual data points, soyou've gotta figure out, okay, I
need to aggregate it, but then Ineed to make smart choices
around when I aggregate it andwhat I store so that I can, I,
there's audit capability all theway back through, and these are
just the things that, like whenyou're.
Sitting in that conference roomfor the first time telling
engineers, Hey, we wanna do someusage based stuff, everyone's,
oh yeah, that'll be easy.
Right?
And then it's alright, sixiterations later, everyone's I
(38:55):
wanna kill myself.
Why did we go down this road?
But you did throw out somecatnip I can't let go away,
which is, you mentioned AI andhow AI's really sort of driving
this conversation.
So I'm curious like.
What is, I guess, how are theseproducts kind of approaching
monetization differently thantraditional SaaS?
And I guess, are you noticingany patterns in how these
(39:17):
companies are structuring theirpricing?
As people I think everyone'ssort of in this mode of
experimenting and trying to makesure there's value and, are
these things actually productionready or fancy demo.
But I guess in terms of.
The world you're in, you'reprobably seeing a lot of folks
try different things.
Are you noticing any sort ofpatterns or common ways folks
are trying to approachmonetization in the AI world?
fynn-_1_05-21-2025_130921 (39:38):
Yeah, I think.
Well, so the pat, so I'll saytwo things.
One is the patterns that Inotice typically come from like
the companies Mm-hmm.
Come to schematic looking forhelp.
And those companies arecompanies that are trying to
support some flavor ofusage-based pricing.
Really companies come to us forthree reasons.
(39:59):
That is the, by far, the mostimportant reason and sort of
the.
The sub bullet reason of tryingto support usage based is I'm
really trying to enforce limits.
And there's something notable tome about that, which is four
years ago when I was buildingmatcha and then Spring bot and
ox, like we were pretty okaywith being lenient on limits.
(40:24):
It was like, yeah, we'll talk tothem at the next renewal cycle
if they've been way over.
I see companies being a lotmore.
about limits, and I think it'sbecause of two things.
I think it's because likethey're actually real costs
under, underneath these productsto make calls to the LMS and to
kind of leverage theinfrastructure, but also because
(40:46):
it's like, great opportunity todrive revenue growth if somebody
is approaching a limit or goingover a limit abusing a limit.
It just like an exceptionalgrowth opportunity for a
company, and I'm seeing startupsway earlier than their life
cycles realize that and want todo something about it.
(41:11):
And so that's the first thing Isee.
I think the second thing I seeis kind of back to that sort of
like complexion of a lot ofthese companies.
They're not often just sales ledor founder sales led.
They're not often just productled.
They're often both.
And they're often like not justselling like a simple single
(41:33):
tier, they're selling multipletiers.
They're even getting intoadd-ons even as early stage
companies.
And I kind of chalk all of thatup to you gotta B2B sas and AI
customer sort of totallyempowered, like there's an
exponentially growing amount ofsoftware.
The customer's super empoweredto go buy whatever they want to
(41:54):
solve, whatever problem theyhave.
they're demanding of vendors, SASaaS and AI vendors is
flexibility.
You let me buy how I want to buyyou, let me, get, build and
priced how I want to get billedand you let me buy what I want
from your product.
If I don't want the whole thing,should be able to buy portions
of it.
(42:14):
And I think that is, that's likea pretty fascinating evolution.
And it's a challenge forsoftware companies.
'cause now you have to build allthis flexibility into the way
that you.
Develop product and monetizeproduct
dan-balcauski_1_05-21-2 (42:25):
There's so many areas we've opened up
here that we just do not havetime to explore.
Maybe we'll have to haveversions two or three through 10
of this conversation.
'cause there's so many doors wecould walk through.
But I've gotta wrap things up tobe respectful of your time.
I do wanna close out with acouple of rapid fire kind of
close out questions.
If you're up for it, you readyfor it?
Fynn
fynn-_1_05-21-2025_13092 (42:44):
ready.
dan-balcauski_1_05-21-20 (42:47):
What's one unconventional piece of
advice you'd give SaaS foundersabout monetization that goes
against the conventional wisdom?
fynn-_1_05-21-2025_130921 (42:57):
I don't know how unconventional it
is, but I still believe that.
It is pervasive amongst startupfounders that they don't have
the tool, the vocabulary go havewillingness to pay conversations
with their customers, whetherthey are pre-product to
(43:19):
post-product market fit.
And I think that founders whoinvest in the tool, the
vocabulary to invest inwillingness to pay massively
increased their odds of.
because they massively increasedtheir understanding of how the
market views their value.
dan-balcauski_1_05-21-2025_14 (43:39):
I love that question.
I know This's supposed to berapid fire.
I'm gonna ask a follow up'causeit's my show.
I can do what I want.
If you had to give someone likea 32nd primer on, like when you
say vocabulary, what are thethings that they need to go
throw it to Chachi PT after thisconversation and just spend some
time researching.
fynn-_1_05-21-2025_130921 (43:56):
Like the vocabulary of willingness to
pay, in my opinion, is what isthe most, what is my most
intuitive price metric?
How valuable is my productrelative to other products that
you have bought and are payingfor?
How should I package my product?
Which features are, kinda musthave versus nice to have versus
don't matter.
(44:17):
What is the maximum you would bewilling to pay for this product?
What's the price at which thisproduct is prohibitive?
What are other influences onyour willingness to purchase?
And, probably add a couple more,but those are like the key ones
in my opinion.
dan-balcauski_1_05-21-2025 (44:32):
Love it.
What do you think is the biggestopportunity in the monetization
space over the next few years?
fynn-_1_05-21-2025_130921 (44:38):
So a little self-serving here, but I
think if we move into a worldwhere let's assume there's
70,000 software companies in theworld, and let's say that AI
means that there're gonna beanother 70,000 over the next
five years, or 50,000, whatever.
Who knows?
If a vast majority of thosesoftware companies decouple
(44:59):
pricing from code, thosecompanies will be able to use
the tools and the tactics andthe experiments of monetization
with far more agility andflexibility and control than,
the last 25 years of softwarecompanies ever had the
opportunity to do it.
dan-balcauski_1_05-21-2025 (45:17):
This conversation's been fantastic.
Fynn for our listeners wannaconnect with you, learn more
about schematic, how can they dothat?
fynn-_1_05-21-2025_130921 (45:23):
I'm on LinkedIn, Fynn Glover, FYNN,
and schematic is schematichq.com.
dan-balcauski_1_05-21-2025_14 (45:31):
I will put those links in the show
notes for our listeners.
Thank you so much, Fynn,everyone that wraps up this
episode of Sask Getting Secrets.
Thank you to Fynn for sharinghis journey.
For our listeners who foundFynn's Insights valuable, please
review and share this episodewith your Network.
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