Live from the Stanford AlwaysOn Summit

by Tien Tzuo

I was thrilled to have the opportunity to speak on the "Will the next salesforce.com please stand up" panel this morning. After the session I was thinking about how great it is to be among those on the cutting edge of the SaaS industry when it struck me, it's more than just needing the next salesforce.com we need the next 100 salesforce.com’s. Our SaaS industry is at a critical juncture, and we need to see many, many SaaS businesses at scale to validate our nascent industry.

In many ways that's what inspired us to start Zuora -- to provide the tools that make it easier for companies to build and scale SaaS businesses. As it turns out, we learned at salesforce.com and WebEx that running a subscription based business is hard. It's hard to get your pricing and packaging right, it's hard to handle subscription change orders like adding new licenses, it's hard to get at metrics like MRR that you need, and it's hard to scale the business. Hopefully that's starting to change. At Zuora, we're building a subscription billing platform designed specifically for the SaaS business, and hopefully we'll start seeing many more tools that will help break down the barriers for all SaaS companies to become the next salesforce.com

To view the “Will the next salesforce.com please stand up” session in its entirety click here

Oh the pain -- Product based billing systems in a subscription world

by Tien Tzuo

One word that surfaces often in conversations we’re having with companies is “pain.” The pain of managing all of those spreadsheets. The pain of manually generating so many invoices and collecting revenue. The pain of closing the books at the end of the month with Quickbooks. The pain of having to hire yet more temps to reconcile changes. They are clearly in a lot of pain.

One of our customers was using nine different spreadsheets to manage their subscriptions before we saved them from the dark side of billing. I even experienced it myself while working on the billing solution for salesforce.com, on one side, we had an army of finance temps processing changes to subscriptions while on the other, 40 percent of our development team was focused on creating an automated system to manage the process more effectively. I recall a great deal of pain.

The lesson here is that if you’re a SaaS or subscription company, traditional billing systems will overwhelm you as you’ll quickly outgrow them. They are simply not built for the subscription model. All that time you’re spending on managing the billing is time you should be spending on growing your business. This lesson was learned early on by Zuora customer TopRight, a start up providing marketing database solutions to online retailers. This one man show realized quickly if he’s going to quickly grow his subscription business to a million in revenue (and he will) he can’t spend his time and money on traditional billing practices.

If you think you may be in pain, check out our “Top Ten Signs You Need an Online Billing System.” Running a subscription business doesn’t have to be hard.

Recurring Billing and the Investment Community

by Tien Tzuo

We've been touting the benefits of the subscription model to business owners and customers, but one audience we've left out is the investment community. Subscription businesses are extremely attractive to investors these days because of the recurring revenue and (if you use Z-Billing) low cost to get started. If you look at most investment firms in Silicon Valley, a large percentage of their portfolio is in subscription based businesses. Here are two interesting articles from the last few weeks that talk about this.

Tell us what you think.

This first one is written by Javier Rojas and Maximilian Bleyleben of Kennet Partners for Sandhill.com: http://www.sandhill.com/opinion/editorial.php?id=194

The second is by Phil Wainright, SaaS blogger for ZDNet: http://blogs.zdnet.com/SAAS/?p=532