Lessons from Silicon Valley

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Slides from a presentation at the Life in Industry Seminar held at Stanford, and organized by the Tsinghua Alumni group

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Lessons from Silicon Valley

  1. 1. The move to a Subscription EconomyLessons from taking Salesforce.com from zero to $1 Billion and trying to do it again with Zuora<br />tientzuo, ceo, zuora<br />Life in Industry Seminar<br />2010 June 26<br />www.zuora.com<br />1<br />
  2. 2. 2<br />Brief Introduction to Today’s Speaker<br />
  3. 3. Key Message for TodayThe Essence of Silicon ValleyisTransformation<br />3<br />
  4. 4. Key Question for Anyone in Silicon Valley:What is the Change That is Happening ?And What Does It Mean ?<br />4<br />
  5. 5. A Technique to Visualizing Change<br />5<br />Visualize both what’s there and what’s not there<br />
  6. 6. Dialing Up The Contrast<br />What’s There<br />What’s Not There<br />6<br />
  7. 7. What’s In Scope<br />What’s Not In Scope<br />7<br />
  8. 8. What Do We Do<br />What Won’t We Do<br />8<br />
  9. 9. Before<br />After<br />9<br />
  10. 10. Where We Were<br />Where We<br />Need To Be<br />10<br />
  11. 11. Example: Zuora Product Team in 2008<br />Past World<br />7 developers <br />1 PM<br />1 product<br />0 live customers <br />Future World<br />20 developers<br />2 PM’s<br />3 products<br />10 live customers<br />11<br />The things that made us successful in the old world no longer apply<br />What does it take to succeed in the new world?<br />
  12. 12. 12<br />Change: <br />Question: <br />Existence of a Ubiquitous Network<br />What Happens to Business Software ??<br />
  13. 13. Everything Changes<br />13<br />
  14. 14. On Premise On Demand<br /> Client Server Client / Service<br /> Software No Software<br />14<br />
  15. 15. 15<br />Change: <br />Question: <br />Everything is Moving Online<br />What Happens to Business Software ??<br />
  16. 16. 16<br />Digital <br />Economy<br />Manufacturing <br />Economy<br />
  17. 17. 17<br />Services<br />Products<br />
  18. 18. 18<br />
  19. 19. 19<br />Initial <br />Subscription<br />Promotion: <br />Free Trial Subscription<br />Customer<br />1 Product<br />Monthly Recurring<br />Usage<br />Monthly Billing<br />Term 12 Months<br />1 Month<br />Free Trial<br />Change Order #1<br />(Add Product)<br />Renewal Order<br />(+ Upgrade)<br />Add 2nd Product<br />Co-Term<br />Renew 3 years<br />Upgrade to New Plan<br />Change Order #2<br />(Upgrade)<br />
  20. 20. 20<br />“CMRR”<br />Committed Monthly Recurring Revenue<br />“Cash Flow”<br />“Churn”<br />“CAC”<br />Customer Acquisition Cost<br />“CTLV”<br />Customer Total Lifetime Value<br />
  21. 21. 21<br />ERP SYSTEMS:<br />Unit X Price<br />SKU-based<br />No concept of product catalog<br />No rate plans, no charge models<br />Single Order<br />No recurring element<br />No concept of change orders<br />No concept of terms<br />No Usage<br />No concept of usage <br />No concept of rating/billing<br />No concept of bill cycles for usage<br />ERP Systems were built for a Manufacturing Economy!<br />
  22. 22. 22<br />Why Would You Build This? <br /><ul><li>Product Catalog
  23. 23. One-Time Pricing
  24. 24. Recurring Pricing
  25. 25. Volume Pricing
  26. 26. Tiered Pricing
  27. 27. Overage Pricing
  28. 28. Billing Frequency
  29. 29. Billing Triggers
  30. 30. Billing Notifications
  31. 31. Rating & Billing
  32. 32. Usage
  33. 33. Proration
  34. 34. Taxation
  35. 35. Multiple Currency
  36. 36. Invoice Calculation
  37. 37. Invoice Templates
  38. 38. Invoice Generation
  39. 39. Credit Card Processing
  40. 40. ACH Support
  41. 41. Wire Transfer Support
  42. 42. Debit Card Support
  43. 43. PCI Compliance
  44. 44. Credits
  45. 45. Refunds
  46. 46. Adjustments
  47. 47. Revenue Recognition
  48. 48. CRM Integration
  49. 49. Financials Integration
  50. 50. Localization
  51. 51. Quoting
  52. 52. Custom Fields
  53. 53. Search
  54. 54. Unit of Measurement
  55. 55. User Interface
  56. 56. Gateway Support
  57. 57. Provisioning Support
  58. 58. Metering Support
  59. 59. ISO Compliance
  60. 60. Post & Lock Capabilities
  61. 61. APIs
  62. 62. Online Portal
  63. 63. Self Service
  64. 64. Renewals
  65. 65. Upgrades
  66. 66. Change Orders </li></ul> Hardware<br />Software<br /> Consultants<br /> Infrastructure<br /> Dedicated Staff<br /> Upgrades<br />Charlie Peters, CFO Redhat<br />Pacific Crest Securities Conference, August 4, 2008 <br />
  67. 67. 23<br />Website<br />Website Order<br />Self Service<br />Account Created<br />Website Order<br />Quote<br />Subscriptions<br />Payment Processed<br />Provisioning<br />Usage Data<br />Internal Systems<br />
  68. 68. 24<br />Customization (Configuration, Custom Fields, Custom Templates)<br />Pricing & Packaging Account Management Billing Operations <br />API Layer (Create/Read/Update/Delete, SubscribeNow, Provisioning, Usage)<br />Out-of-the-Box<br />Payment Gateway Integration<br />Quote to Cash Subscription Management Payment Operations <br />Multi-Tenancy PCI Level 1 Compliance Security Redundancy<br />Billing Operations<br />Bill Runs<br />Usage<br />Proration<br />Billing Triggers<br />Taxation<br />Multi-Currency <br />Product <br />Catalog<br />Products<br />Price Plans<br />Charge Models<br />Volume & Tiers<br />Offers<br />Quotes<br />Account Management<br />Bill-to / Sold-to<br />Payment Methods<br />Subscriptions<br />Invoices<br />Payments<br />Adjustments<br />Metrics <br />Payment Operations <br />Payment Runs<br />Usage <br />Batch or Real Time<br />Payment Methods<br />Gateway Integration<br />Payment Exceptions<br />Subscription & Amendments<br />Subscription<br />Change Orders<br />Renewals<br />Auto-Renewals<br />Add-on Orders<br />Audit Trail <br />Out-of-the-Box<br />Salesforce Integration<br />Taxation Module<br />Hosted PCI Storefront<br />
  69. 69. 25<br />
  70. 70. 26<br /> SaaS Online Media Cloud Computing Telcom Open Source Wireless<br /><ul><li>400% Growth Year Over Year
  71. 71. Cash Flow Positive
  72. 72. Fastest Privately Held SaaS Company
  73. 73. Global Enterprise Clients – EMC, Ricoh, Thomson Reuters, Reed Elsevier, Concur, Tata, Adaptive Marketing
  74. 74. Pandora Media – 45 million Registered Users
  75. 75. Proven Scalability with EMC – 9 million transactions/day
  76. 76. $1 Billion in Net New Committed Revenue Transactions in Q1!</li></li></ul><li>Our Vision<br />To Help The World Move to a Subscription Economy by building the next great business application platform<br />27<br />
  77. 77. Thank You!<br />28<br />

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