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Subscribed SF: CEO's Keynote


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Zuora's CEO's Keynote for Subscribed in London. Subscribed is Zuora's first annual global conference series for the Subscription Economy, landing down in San Francisco, London and Sydney in the Fall of 2012. Learn more about future dates and keynote replays at

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Subscribed SF: CEO's Keynote

  1. 1. SAN FRANCISCO September 20121
  2. 2. BUY NOW Subscribe The Past! The Future We  Call  this  Shi,  the  Subscrip2on  Economy™  2
  3. 3. Why  the  Subscrip2on  Economy  ?   Technology  Trends   Demand   Business  Model   Smart  Money   Cloud Consumers want to It’s a better business Mobile subscribe to services model for growth Social Businesses want to subscribe to services Wall St. and Sand Hill Value Subscription-Based Companies Subscribe3
  4. 4. The    Subscrip2on  Economy    is  a    Green  Economy   “ The average car is idle ” 92% of the time4
  5. 5. The    Subscrip2on  Economy    is  about  Customer  Rela2onships   Product Focused Rela2onship  Focused   BUY NOW Subscribe5
  6. 6. The    Subscrip2on  Economy    Requires  a  Completely   Different  Approach  to  Building  Businesses   Product Economy Subscription Economy Sell  Units     Mone2zing  Customer  Rela2onships   Pay-­‐as-­‐you-­‐Go  Pricing  Plans   Price  Per  Unit   The image cannot be One-­‐Time  Orders   Mul2ple  Orders  Over  a  Life2me   Forced  to  Pick  a   B2Any:  Sell  to  Consumers  &   Customer  Segment   Businesses   Complex,  Interrelated  Bookings,   Simple  Financial   Metrics   Billings,  &  Revenue  6
  7. 7. The Subscription Economy Foretells7
  8. 8. One Year Later …8
  9. 9. The Media Industry is Moving to the Subscription Economy9
  10. 10. The Tech Industry is Moving to the Subscription Economy10
  11. 11. The Telecom Industry is Moving to the Subscription Economy11
  12. 12. The Retail Industry is Moving to the Subscription Economy12
  13. 13. Craft Coffee SweetBox Steepster The Fruit Guys Kiwi Crate FabKids Coffee Chocolate Fine Teas Fruits & Veggies Crafts & Books Clothing BirchBox GuyHaus Focus N Fly Test Tube Wonder Sitter Spotify Beauty Guy Supplies Fitness Beauty Samples Baby Sitting Music Hoseanna Put This On Bag Borrow or Rent the Runway Babbaco Mystery Tackle Box Steal Hosiery Men’s Handbags Women’s Kids Toys/ Fishing Accessories Dresses Activities Equipment Sweet Petula McSweeneys Meundies Dollar Rubber Club Bespoke Post Spice Guides Soaps Shirts Underwear Condoms Luxury Items Date Idea Guide13
  14. 14. Making the Web’s Subscription Economy Hum “ As Web businesses embrace subscription business models, the benefits are clear: reduced customer acquisition costs and ” steady cash flow June 12, 201214
  15. 15. “ By 2015, more than 40 percent of media and digital-products companies around the world will use subscription services for their ” fulfillment, billing, and renewals15
  16. 16. “ The new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to what might be called a Rentership Society, far from being a drag, will unleash a May 4, 2012 wave of economic efficiency that ” could fuel the next boom.16
  17. 17. Mar 4, 2012 “ Consumerism is being redefined for the mobile age, and the model is spreading among professionals and families in ways that were little anticipated, even by the venture capitalists funding this17 new era of cooperative capitalism ”
  18. 18. “ C.E.O.’s are beginning to appreciate the value of recurring revenue in a way never before … the software industry adopted it, which caught people’s attention. Now you’re seeing companies in just about every ” kind of industry embracing it Mar 7, 201218
  19. 19. One Year Later We are at the Tipping Point19
  20. 20. YOU Are The Tipping Point20
  21. 21. 21 “ Q108   ARR Q208   Q308   Q408   Q109   Q209   Q309   subscription systems. Q409   Q110   ” Q210   Q310   Q410   In short order, Zuora has become Q111   the dominant player in cloud-based Q211   Q311   Q411   Q112   Q212   Q312   Q412   Q113   Q213   Your Success Has Powered Our Growth
  22. 22. Your Success Pulses Through Our Servers22
  23. 23. $12 Billion Total  Invoice  Volume  23
  24. 24. 24
  25. 25. Customer Satisfaction Graph – pie chart of 95% customer satisfaction25
  26. 26. 26
  27. 27. 27
  28. 28. 28
  29. 29. But We’re Only Just Getting Started…29
  30. 30. 1494  A.D.     Luca  Bartolomeo   Pacioli       invents  the  system  of   Double  Entry   Bookkeeping  30
  31. 31. For over 500 years, the system has worked… Double  entry  accoun;ng   To  the  CFOs  of     becomes  the  cornerstone   of  modern  accoun;ng   the  modern  era    31
  32. 32. Until Now32
  33. 33. The Problem: You Need to Differentiate Between One-Time and Recurring Amounts A $100 is a $100 is a $100. The rules say it all goes in the same account.33
  34. 34. The Problem: You Want To Spread Revenue Over Time The rules don’t allow me to spread these amounts over time. Now you’re just being a rebel.34
  35. 35. The Problem: Your system doesn’t know what to do when subscriptions change I don’t have a rule for that. You’ve got yourself into quite a mess…35
  36. 36. The Result: Revenue managers are drowning in spreadsheets •  Revenue  Recogni2on   •  Subscrip2on  Metrics  (MRR,  ARR,  CLTV)   •  Changes,  Adjustments,  Credits   •  Complex  Recurring  Billing  36
  37. 37. The Result: It takes Weeks for finance teams to close the books “We  need  more  2me”   - Finance Team37
  38. 38. The Result: CFOs are maintaining 2 sets of books “PwC  will  love  these.”   Debit   Credit   AR   600M   Revenue   600M   Appease  the  auditors  here.   Actually  run  the  business  here.  38
  39. 39. The Result: CMOs are prevented from implementing new innovations39
  40. 40. The Result: CEOs have a hard time explaining their success to Wall Street Page 1140
  41. 41. The Result: And Wall Street fails to value Subscription Businesses correctly “ CRM shares look heavily overvalued because rising revenue growth has actually translated to falling net income. “ Maybe CEO Marc Benioff will one day be able to translate all of this low-margin selling into huge profits, but for now it kind of looks more like the Napster model than the iTunes model, and that concerns us.41
  42. 42. The world of Finance is broken…42
  43. 43. It’s time to fix it43
  44. 44. Introducing Z-Finance The World’s first finance application built for the Subscription Economy44
  45. 45. Z-Finance is built on a new foundation Mul2  dimensional  Ledgers   Spread  revenue  over  2me   Differen2ate  between  one  2me  and  recurring   Intelligent  Algorithms   revenue   Revolu2onary  Data  Model   Calculates  key  subscrip2on  metrics   Powerful  Rules  Engine   Adapts  to  subscrip2on  changes  45
  46. 46. Define  rules  to  manage  complex   ✔ revenue  recogni2on  policies       Tag  charges  with  revenue  revenue   ✔ and  deferred  revenue  GL  accounts       Tag  charges  with  with  revenue   ✔ recogni2on  rules       Control  revenue  recogni2on  trigger   ✔ dates       View  earned  and  deferred  revenue   ✔ reports   Accounting Close Tools tools to accelerate your month end close46
  47. 47. Define  rules  to  manage  complex   ✔ revenue  recogni2on  policies       Tag  charges  with  revenue   ✔ revenue  and  deferred  revenue   GL  accounts       Tag  charges  with  with  revenue   ✔ recogni2on  rules       ✔ Control  revenue  recogni2on   trigger  dates       View  earned  and  deferred   ✔ revenue  reports   Revenue Recognition Tools that handle complex revenue rules47
  48. 48. Create  or  import  your  chart   ✔ of  accounts         ✔ Tag  charges  with  GL  account   codes         Tag  transac2ons  such  as   ✔ payments,  credits,  refunds,   adjustments  etc  with  GL   account  codes     Chart of Accounts to track charges through the revenue lifecycle48
  49. 49. ✔ Generate  debit  and   credit    journal  entries  to   simplify  your  general   ledger  updates       ✔ Align  journal  entries  with   GL  accounts   Easy Accounting Integration to unburden your IT team49
  50. 50. ✔ Create  custom  user  roles   Reuse the audit     peace of mind Associate  roles  with  granular  user   screen shot from ✔ permissions     the website   Control  visibility  and  user  ac2ons  on   ✔ sensi2ve  financial  data   Tight Security Controls for audit peace of mind50
  51. 51. Tames your revenue recognition processes Upgrades,  downgrades,  cancella2ons,   refunds  etc.  are  all  taken  care  of!   “ We use SAP. We run our broadband business on Zuora … we get all our journal entries from Zuora … without time consuming and expensive ” customization Vignessa Moorthy, CEO of ViewQwest51
  52. 52. Unburdens your finance team, enabling your growth Unleash  your  growth  strategies  without   burdening  finance   “ …Z-Finance makes it easier for us to scale as our business grows ” Vince Zumbo, CFO of Autotask52
  53. 53. Gives you audit peace of mind Rapidly  review  details  of  any  transac2on   from  closed  accoun2ng  periods     “ …they have nailed it with Z-Finance, providing the next level of audit ” friendly automation … Bruce McFadyen, CFO of Firehost53
  54. 54. •  300 accounting periods created •  Over 5 million financial transactions analyzed •  207 accounting periods closed Get up close and personal with Z-Finance Join Z-Finance PMs at 3pm in the Colonnade54
  55. 55. w w55
  56. 56. Our Second Big Announcement …56
  57. 57. Subscribe57
  58. 58. Chasm   The Future The Present58
  59. 59. Why Can’t I Make My Processes Why is it so hard Why Can’t I Find FLOW to GROW my What I Need to business KNOW59
  60. 60. Product Relationships60
  61. 61. Goal: Goal: Ship More Units Build Valuable Relationships61
  62. 62. The Strategies Required to Grow a Subscription Business are Very Different62
  63. 63. Product Business Design Make Sell Product Product Product63
  64. 64. Subscription Business Increase the Value of Your Customers Acquire New Customers Reduce Churn64
  65. 65. Packaging  &  Pricing   Acquire  New   Increase  Value  Per   Reduce  Churn   Strategy   Customers   Customer   Launch  First  Product   X   Add-­‐on  Op2ons   X   Monthly  vs  Annual   X   X   X   Op2ons   Higher  Edi2ons   X   X   Lower  Edi2ons   X   X   Product  Bundles   X   Pricing  Tiers   X   X   Usage  &  Overage   X   X   X   Mul2ple  Currencies   X   X   Renewals   X   Pricing  Changes   X   X   Regional  Pricing   X  65
  66. 66. Your Existing Systems Can’t Support the Pricing & Packaging You Need to Grow66
  67. 67. The Processes Required to Make a Subscription Business Flow are Very Different67
  68. 68. Product Business Quote-To-Cash68
  69. 69. Subscription Business Quote-To-Cash Renewals Payment Failures Account Suspension Amendments Account Management69
  70. 70. Product Business Commerce   Billing   Finance               Order   Invoice   Revenue   Book Order Invoice & Recognize & Ship It Collect For It It70
  71. 71. Subscription Business Order   Invoice  71
  72. 72. Subscription Business Invoice   Revenue  72
  73. 73. Subscription Business Invoice   Orders  73
  74. 74. Subscription Business Cent to  co Orders   Invoices   Revenue  74
  75. 75. 75
  76. 76. Subscription Business Billing Invoice   Commerce Finance Revenue   Order  76
  77. 77. Your Existing Systems Can’t Support the Processes Needed To Make Your Business Flow77
  78. 78. What you Need to Know with a Subscription Business Model is Very Different78
  79. 79. Traditional Income Statement79
  80. 80. Revenue ARR $100 $080
  81. 81. Subscription Economy Income Statement ARR $100 Churn (10) Retention Rate Net ARR 90 COGS (20) G&A (10) R&D (20) Recurring Profit 40 Recurring Profit Margin Growth (40) Growth Net New ARR 40 Efficiency Index Ending ARR $13081
  82. 82. The Three Key Metrics of the Subscription Economy Retention Recurring Growth Rate Profit Margin Efficiency How  much  of   ARR  less  Churn   How  much  does   your  ARR  you   less  Non-­‐Growth   it  cost  you  to   keep  every  year.   Spend   acquire  $1  of   ACV     “ The metrics for Cloud computing is fairly different ” from traditional enterprise software. Bessemer  Venture  Partners  –  Top  10  Laws  for  Cloud  Compu;ng  82
  83. 83. Your Existing Systems Don’t Have the Metrics You Need to Know83
  84. 84. I Need a System That Helps me Grow , Flow and Know in the Subscription Economy84
  85. 85. Your Systems Today CRM   ERP   GL  85
  86. 86. Products Relationships86
  87. 87. Goal: Build Goal: Ship Valuable More Units Relationships87
  88. 88. Enterprise Relationship Resource Business Planning Management88
  89. 89. We’re Here Today to Announce Z-Business, The World’s First Relationship Business Management System89
  90. 90. Z-­‐Business    Is  Built  On  a  Founda2on  For  the   Subscrip2on  Economy  90
  91. 91. Z-­‐Business    Solves  Your  Rela2onship  Commerce   Needs  91
  92. 92. Z-­‐Business    Automates  Your  Billing  and   Payment  Processes  92
  93. 93. Z-­‐Business    Revolu2onizes  your  Finance   Opera2ons  93
  94. 94. Z-­‐Business    Plugs  Into  Your  CRM  and  GL  94
  95. 95. Z-­‐Business    Helps  You  Grow,  Flow  and  Know   Our  Mission:     Help  you  succeed  in  the  Subscrip2on  Economy     GROW:     FLOW:     KNOW:     Build  and  grow  your   Run  and  flow  your   Have  the  right  metrics   subscrip2on  business     subscrip2on  business   to  op2mize  your   and  revenue.     processes  efficiently.   subscrip2on  business.    95
  96. 96. thank  you.  96