Zuora + Google: Living the Subscription Dream

by Tien Tzuo

As our readers know, we believe the world is moving towards subscription services. That's why when we started the company, we knew we that all of our infrastructure had to be SaaS like services.  And that’s why we’re big users of Google Apps. 

Recently, I emailed Google to let them know how much we love Google Apps here at Zuora. Since day one, we've run our whole company on Google Apps—Gmail, Calendar, Documents, Translate, Sites, Analytics, and more.  We even use the new Google Video that comes with Google Apps.  In fact, Google Apps have transformed Zuora, allowing us to keep the nimbleness of a startup, but be even more productive than larger companies with lots of resources.  

Turns out, Google loved the idea so much they posted it on Google enterprise blog and asked that I share our story in a recent Google Apps Webinar.  Check it out!

Subscriptions for Going Green

by K. V. Rao

Recently we announced our new product Z-Payments and partnership with PayPal. It was a very exciting launch for us and we’re thrilled to have formed this alliance. And while visiting PayPal last week, I learned something really cool. Well actually, a couple of things.

The first is that PayPal resides in an entirely green, LEED certified building. As announced in this May 2008 blog entry by Scott Thompson, PayPal’s new building is solar powered, energy efficient, reduces water usage by 30 percent and is built from recycled materials.

The second cool thing has to do with the above-mentioned recycled materials and our sweet spot – subscriptions. It turns out that PayPal actually subscribes to their carpet! It’s made of recyclable materials, and they have an annual subscription to replace and recycle the carpet.

We’ve been touting the value of a recurring revenue streams at the heart of subscription businesses. It seems that subscriptions are also about renewable resources. We applaud the innovative carpet company that PayPal subscribes to and hope to see more examples of using subscriptions to help people and companies “go green.”

The Pending Convergence of Commerce and Apps (oh, and also the launch of Zuora's 2nd product)

by Tien Tzuo

We've had a busy summer here at Zuora. In May, we launched our first product, Z-Billing. In July, we announced that Z-billing had been deployed to 17 customers in just 2 months since launch. In August, we announced our advisory board, and in September, we announced that Scott Thompson, President of PayPal, had joined our board of directors, and we were named Startup of the Week by InformationWeek.

Today marks another major milestone for Zuora. Today we announce our second product, Z-Payments, along with a partnership with online payment giant, PayPal. By teaming up with PayPal, we were able to build the first complete payment solution for subscription businesses.

As it turns out, collecting payments is a pain for subscription business, as big a pain as billing. Lots of things can go wrong when you need to collect every month. Transactions fail, due to expired credit cards, credit limits being reached, or cancelled credit cards. Some customers want to pay by checks, others by credit cards, and others by PayPal. Some customers demand payment terms, such as Net 30, or a Net 60. Some customers want to be put on an auto pay plan, so that they are never late in their payments, and other customers want a big Pay Now button on the invoice so that they can control the payment process.

That's where Z-Payments come in. Z-Payments takes the pain out of recurring payments, so you can set up workflow and notification rules to automate your payment process, offer your customers multiple payment options, and ultimately get paid faster. And through our partnership with PayPal, Z-Payments comes pre-bundled with PayPal, so you can use PayPal's award winning service to accept credit card, debit card, ACH and, of course, PayPal itself, all in an easy and secure way.

But we think this is bigger than us. We think Z-Payments is an early example of the coming convergence between commerce and applications. Traditionally, we've always thought of commerce and applications as separate, but when both are transformed as services living in the cloud, as they are today, why should they continue living in their separate worlds? Shouldn't the services that you use to manage your business be the same as you use to conduct commerce, e.g. acquire customers, send invoices, and receive payments?

Let us know what you think.

And here are a few good articles on Z-Payments that hit today:

CNET News - If the Economy Tanks, will Subscriptions Become a Panacea?

SFGate - Helping Companies Make Money Online

VentureBeat - Zuora's New Product Helps Companies Collect from Customers

Looking Beyond SaaS – What’s in Store for Silicon Valley?

by Tien Tzuo

Robert Scoble was in our office on Monday. What a way to start the week, eh? We were very excited to tell him about what Zuora has in store, as we’re making a big announcement next week. But it didn’t take long for us to start talking about what’s going on outside of the Zuora office. Last week I blogged about how SaaS will survive this market downturn. On Tuesday, Scoble wrote a blog on how Silicon Valley in particular will get through this. It’s very insightful reading if you haven’t seen it yet. Here’s the link: http://scobleizer.com/2008/09/30/silicon-valley-prepares-for-financial-storm-of-century/.

Are Subscriptions The Light in This Dark Tunnel?

by Tien Tzuo

It’s hard not to feel great concern over what’s happening on Wall Street. Entire banks are going under, thousands of people are losing their jobs, and millions more are losing their retirement. This is a very sad situation indeed. But not every business is doomed, and some are actually thriving despite hard economic times. According to many reports, the companies that are going to remain stable, even grow, during this turbulent market are subscription businesses. Why?

For one, the cost to subscribe is much more affordable than it is to buy. Look at Zipcar for instance. It’s far less expensive to subscribe to an entire fleet of cars vs. purchasing your own. Not to mention, many can’t get the credit they need to buy a car or other goods right now, making subscriptions the only option. Likewise, it’s more cost effective for businesses to use SaaS applications. Companies operating under this model have an advantage to win more business for that reason alone. Salesforce.com, as an example, thrived during the recession from 2001-2002.

Also on the subject of cost savings, it’s less expensive for companies to offer their apps as a subscription. Building a web app can be very inexpensive compared to a desktop app or one that you buy off the shelf. Paying for server space vs. manufacturing and shipping is also a consideration that many businesses are taking into account as they build out their products.

Almost as costly as purchasing new applications is paying for the IT support to integrate the new systems into the entire infrastructure. Small companies and startups, which are still relatively healthy, find it easier to integrate a web app that they subscribe to vs. a desktop app that they buy at the store and have little to no immediate support with.

Finally, convenience and less commitment are going to be huge driving factors. Not knowing where your business will be in six months of a year makes it scary to commit to a big system purchase. Companies are much more likely to agree to monthly or annual subscriptions simply because it’s easier to swallow right now.

It’s no wonder subscription model businesses are on the rise, over 30 percent this year. It’s possible that these businesses will be the ones to help create some semblance of economic security. They’ll do this the same way we did at Salesforce.com -- by creating new jobs, and creating applications that help other businesses continue to build, mange and grow.