Zuora Launches Subscription Billing Offering and Closes 70 Customers in 2008

by Z-Team

Z-Friends -

It's hard to believe that 2008 will soon come to a close. It's been quite a year here at Zuora.

In late 2007, a bunch of friends from WebEx and salesforce.com got together and shared a common experience -- that building successful subscription businesses were hard -- and a common vision: that they shouldn't be. Our vision with Zuora was to create a world with thousands of Salesforce.com's and WebEx's, all subscription services, and all operating in the cloud.

In March 2008, we launched our vision onto the world, and found that it really resonated in the marketplace. We launched our flagship product, Z-Billing, in May, and then quickly followed up with Z-Payments and a partnership with PayPal. In November, at Salesforce.com's Dreamforce conference, we announced Z-Force, 100% built on the Force.com platform and fully integrated into Z-Billing and Z-Payments.

By the end of the year, our vision of the subscription economy and the power of on-demand billing and payments had resonated with more than 60 customers.

2008 was good to us.

This year ends on a high note – It is an honor to be included in Paul Greenberg's list of 'Companies to Watch in 2009'. As well, Elise Ackerman of the San Jose Mercury News did a nice write up of the reach and power of cloud computing, including a profile of Zuora.

We face 2009 with enthusiasm and encouragement. Even though the economy is struggling and there is much uncertainty in the business world – we strongly believe that innovation remains strong, that subscriptions are the business model of the future, and that now, more than ever, companies are looking for easier ways to build and monetize their subscription businesses.

The best to you and yours. See you in 2009.

The Z-Team

Netflix for Toys - Baby Plays Offers Toy Subscription

by Jenny Dixon

The other day, I stood in disbelief as I surveyed what was once the formal dining area of my home. My son is barely 2, but already his toys overtake the room. A pile of puzzles lay forgotten in one corner. A bead maze he couldn’t keep his hands off 6 months ago collected dust in another. The dump truck he begged for at Target last month sat forgotten on a shelf. Been there, done that. No amount of bins, crates, caddies and other storage solutions could hide the simple truth: toddlers get tired of their toys-- quick. There had to be a better way. A way to inject novelty into my child’s play without breaking the bank or adding to the mountain of plastic in my dining room.

Turns out the answer is out there—in a company called Baby Plays, the “Netflix for Toys.” It works like this: instead of buying new toys that get forgotten in a few weeks, I subscribe to Baby Plays and create a “wish-list” of toys for my son. For about $30/month, I get 4-6 toys Fedexed to my home. After 30-60 days, or longer if I want, I simply return the toys via Fedex, and the next set of toys on my wish-list gets delivered to my door. No time lost shopping for toys that lose appeal after a few weeks. No stress over finding toys that will last until my son’s next birthday. No square footage lost to clutter in my home.

With Christmas approaching, I’ve decided that Baby Plays is the ultimate gift. Why buy a single toy doomed for the dusty corner, when I can subscribe to a constant stream of new toys from Baby Plays? Sorry Santa.

Better Place to Offer Electric Car Subscription Service

by Tien Tzuo

As many of our blog readers know, I'm an avid New York Times reader.

In Tuesday’s issue, I read an interesting article on a promising company called Better Place—otherwise known as "Shai Agassi's electric car venture." Several years ago, Shai Agassi famously left SAP to head up this new, ambitious venture to bring electric cars into the world.

Hawaii Endorses Plan for Electric Cars

Given all the buzz around the collapse of the American auto industry and the future of electric cars, Shai's initiative is quite timely. Better Place already has endorsements from Israel, Denmark, Australia, California's Bay Area, and now Hawaii to roll out his electric car initiative. In addition, he has over a billion dollars in committed venture funding for these large scale rollouts.

What’s so intriguing about the Better Place vision? How does it stand apart from the vision of Tesla or GM's Volt, or the new electric Mini Cooper from BMW?

Shai isn't just producing cars. He's envisioning an entire network of thousands of recharging stations in every region where Better Place is rolled out.

And it's more than just new technology. It's a new business model. And guess what? It's subscription-based! On their own Website, Better Place compares its business model to that of mobile phones. Here’s the excerpt:

Think of it like this: we pay mobile providers for minute-by-minute access to cell towers connected together in cellular networks. Truth is, we pay comparatively little—or next to nothing—for the phones themselves. After all, what you're really buying is air time, not a box with buttons.

The same model works for transportation. Just replace the phone with an electric car, replace the cell towers with battery recharge stations, and replace the cellular networks with an electric recharge grid. Now you're buying miles, not minutes.

When you think of it in those terms, suddenly a seemingly revolutionary business model becomes something a lot more proven—and more than a little appealing.

Why pay for an addictive, expensive and harmful substance like oil when you can simply pay for transportation as a sustainable service? Why produce pollution when you can bring your emissions to zero and produce economic advantage as the only by-product? The proposition sells itself.

In Shai's vision -- you don't buy cars -- you buy miles! You pay based on how many miles you expect to drive, just like you pay only for the minutes you use on your cell phone. It's brilliant!

In fact, in the NY Times article, Shai talks to the superiority of the subscription model, especially in this economy:

On Tuesday, he said that he was optimistic about his project despite the dismal investment and credit markets because his network could provide investors with an annuity. Users of his recharging network would subscribe to the service, paying for access and for the miles they drive.

Given the downturn in the mortgage market, he said that investors are looking for new classes of assets that will provide dependable revenue streams over many years. "I believe the new asset class is batteries," he said. "When you have a driver in a car using a battery, nobody is going to cut their subscription and stop driving."

In this blog, we’ve shown that subscriptions are everywhere—from Sex in the City to alternative transportation systems. What was once a revolutionary idea is now mainstream.

Companies like Better Place are proving that business model innovation is just as important as product innovation. Especially in our economic downturn. We’ll definitely be watching out for Better Place’s next move.

Recurring Billing - Build vs. Buy

by K. V. Rao

There are so many emails, articles, television news stories – you name it – beginning with "In these economic times…" and continuing with a negative or depressing story about businesses suffering.

At Zuora, we don't claim to have the answer to bailouts or the housing crisis, but we do consider ourselves experts in SaaS and subscription businesses. Popular during the first tech downturn and again during the offshore outsourcing craze, the Build v. Buy debate is back.

From our perspective, it makes perfect sense to reengage in this discussion – it's something we discuss with our customers and prospects on a near daily basis.

What you build, you should sell.

Our customers are realizing they are diverting precious resources into critical, but non-core activities like subscriber management, billing, and payments instead of dedicating them to building and enhancing differentiation in core products. They fall behind in product differentiation and competitive advantage leading to loss of market share and revenue when operational laundry lists and details are usurping time that could be spent on revenue-generating activities.

What you can't sell, you should buy (or preferably subscribe).

This becomes even more important in tough economic times, when businesses get lean and mean, regain focus on building differentiation in the core business, and divest non-core activities or outsource them.

Today, business agility is made easier by advances in cloud computing, SaaS, and service oriented architectures. These technology trends are making it easier and easier to plug and play best of breed components without having to re-invent or re-build everything.

And with pay-as-you-go pricing (also re-emerging with consumers in the form of 'layaway'), the price is right as well!!!

Most of our customers get it - they chose to invest their precious development resources in gaining market leadership in their chosen domain, be it marketing tools like Marketo, online analytics like Coremetrics, or online storage like Box.net, they made the wise decision to subscribe to our billing service instead of building this critical (but not core) functionality themselves.

Subscription-based services are becoming a strategic advantage, especially in this economy. With the availability of subscription-based offerings for everything from cloud computing (Amazon Web Services) to payroll (ADP, Paycycle) to billing (Zuora!), today's businesses have no excuse. There is enormous flexibility, efficiency, cost-effectiveness and business agility just a few mouse clicks away.