Lessons from Silicon Valley
1 like601 views
The document discusses the shift from a manufacturing economy to a subscription economy and the challenges this poses for business software. Specifically: 1) Traditional on-premise software and ERP systems were built for the manufacturing economy and do not work for the subscription economy, which involves recurring billing, usage-based pricing, and flexible plans. 2) A new type of software is needed to manage the complexities of subscriptions, including product catalogs, flexible pricing, billing, usage tracking, and integration with CRM and finance systems. 3) Zuora was founded to build subscription management software to help businesses manage this transition to the subscription economy. It has experienced rapid growth, signing $1 billion in committed transactions in one quarter
Lessons from Silicon Valley
- 1. The move to a Subscription EconomyLessons from taking Salesforce.com from zero to $1 Billion and trying to do it again with Zuoratientzuo, ceo, zuoraLife in Industry Seminar2010 June 26www.zuora.com1
- 2. 2Brief Introduction to Today’s Speaker
- 3. Key Message for TodayThe Essence of Silicon ValleyisTransformation3
- 4. Key Question for Anyone in Silicon Valley:What is the Change That is Happening ?And What Does It Mean ?4
- 5. A Technique to Visualizing Change5Visualize both what’s there and what’s not there
- 6. Dialing Up The ContrastWhat’s ThereWhat’s Not There6
- 7. What’s In ScopeWhat’s Not In Scope7
- 8. What Do We DoWhat Won’t We Do8
- 9. BeforeAfter9
- 10. Where We WereWhere WeNeed To Be10
- 11. Example: Zuora Product Team in 2008Past World7 developers 1 PM1 product0 live customers Future World20 developers2 PM’s3 products10 live customers11The things that made us successful in the old world no longer applyWhat does it take to succeed in the new world?
- 12. 12Change: Question: Existence of a Ubiquitous NetworkWhat Happens to Business Software ??
- 14. On Premise On Demand Client Server Client / Service Software No Software14
- 15. 15Change: Question: Everything is Moving OnlineWhat Happens to Business Software ??
- 18. 18
- 19. 19Initial SubscriptionPromotion: Free Trial SubscriptionCustomer1 ProductMonthly RecurringUsageMonthly BillingTerm 12 Months1 MonthFree TrialChange Order #1(Add Product)Renewal Order(+ Upgrade)Add 2nd ProductCo-TermRenew 3 yearsUpgrade to New PlanChange Order #2(Upgrade)
- 20. 20“CMRR”Committed Monthly Recurring Revenue“Cash Flow”“Churn”“CAC”Customer Acquisition Cost“CTLV”Customer Total Lifetime Value
- 21. 21ERP SYSTEMS:Unit X PriceSKU-basedNo concept of product catalogNo rate plans, no charge modelsSingle OrderNo recurring elementNo concept of change ordersNo concept of termsNo UsageNo concept of usage No concept of rating/billingNo concept of bill cycles for usageERP Systems were built for a Manufacturing Economy!
- 22. 22Why Would You Build This? Product Catalog
- 23. One-Time Pricing
- 25. Volume Pricing
- 26. Tiered Pricing
- 27. Overage Pricing
- 29. Billing Triggers
- 31. Rating & Billing
- 32. Usage
- 33. Proration
- 34. Taxation
- 40. ACH Support
- 43. PCI Compliance
- 44. Credits
- 45. Refunds
- 46. Adjustments
- 48. CRM Integration
- 50. Localization
- 51. Quoting
- 52. Custom Fields
- 53. Search
- 55. User Interface
- 56. Gateway Support
- 58. Metering Support
- 59. ISO Compliance
- 60. Post & Lock Capabilities
- 61. APIs
- 62. Online Portal
- 63. Self Service
- 64. Renewals
- 65. Upgrades
- 66. Change Orders HardwareSoftware Consultants Infrastructure Dedicated Staff UpgradesCharlie Peters, CFO RedhatPacific Crest Securities Conference, August 4, 2008
- 67. 23WebsiteWebsite OrderSelf ServiceAccount CreatedWebsite OrderQuoteSubscriptionsPayment ProcessedProvisioningUsage DataInternal Systems
- 68. 24Customization (Configuration, Custom Fields, Custom Templates)Pricing & Packaging Account Management Billing Operations API Layer (Create/Read/Update/Delete, SubscribeNow, Provisioning, Usage)Out-of-the-BoxPayment Gateway IntegrationQuote to Cash Subscription Management Payment Operations Multi-Tenancy PCI Level 1 Compliance Security RedundancyBilling OperationsBill RunsUsageProrationBilling TriggersTaxationMulti-Currency Product CatalogProductsPrice PlansCharge ModelsVolume & TiersOffersQuotesAccount ManagementBill-to / Sold-toPayment MethodsSubscriptionsInvoicesPaymentsAdjustmentsMetrics Payment Operations Payment RunsUsage Batch or Real TimePayment MethodsGateway IntegrationPayment ExceptionsSubscription & AmendmentsSubscriptionChange OrdersRenewalsAuto-RenewalsAdd-on OrdersAudit Trail Out-of-the-BoxSalesforce IntegrationTaxation ModuleHosted PCI Storefront
- 69. 25
- 70. 26 SaaS Online Media Cloud Computing Telcom Open Source Wireless400% Growth Year Over Year
- 72. Fastest Privately Held SaaS Company
- 73. Global Enterprise Clients – EMC, Ricoh, Thomson Reuters, Reed Elsevier, Concur, Tata, Adaptive Marketing
- 74. Pandora Media – 45 million Registered Users
- 75. Proven Scalability with EMC – 9 million transactions/day
- 76. $1 Billion in Net New Committed Revenue Transactions in Q1!Our VisionTo Help The World Move to a Subscription Economy by building the next great business application platform27
- 77. Thank You!28