Title   Builds, Manages, and Grows your Subscription Business                         Santa Clara University         Sophi...
MarketComputingCloud Opportunities          Allows Companies to focus on the Product, not the                          Inf...
Trend Toward SaaS                            Growth of Cloud Computing                                                    ...
The Four Waves of E-Commerce         1st Wave: 1995                     2nd Wave: 1999                       3rd Wave: 200...
Customer Needs                           App Developer             Small/Mid-sized          Large Enterprises     Types of...
Products           Optimizes Every Step of Your Subscription Business                                              Launche...
Products              With Zuora, Billing is as Easy as 1,2,3       1                                      2              ...
Business ModelWide Range of Potential Customers + Wide applicability                                          $$$Take 2% o...
Market Opportunities                 Large Enterprise Software   A total market size of $47.5B in fees and services       ...
Management Team                 Highly Talented and Experienced Team                            •   Built Salesforces orig...
Competition                                    Start-ups                         Payment          Traditional             ...
Financials                                                 Projected Incomes (in Thousands)Assume each customer earns     ...
Risks        Risks/Concerns for Zuora Large enterprises reluctant to                     Already has cost-effective billin...
Exit Strategy SaaS Software                Traditional                                       Other Potential              ...
Q&A    Index                 AppendixCloud Computing    SaaS Trend             Board of Directors                         ...
Board of Directors                               Strategic Board of Directors  Scott Thompson       •   Brings extensive k...
Partners Key Partners                    Added Value                             Easy Integration with the CRM Leader     ...
Solving the Problem                      Application            Small/Mid-sized        Large Enterprises                  ...
Historical ExamplesSimilar Space with Similar Growth Trajectories •   Pioneer in CRM nine years ago •   Now has a Market C...
Salesforce Growth Rate            Salesforce Revenue and Net Income                Revenue & Profit Growth From 02-09     ...
Market Risks      Risks/Concerns                      Mitigations                                   Could be in the future...
Revenue Calculation                                                                     Assume on                         ...
Expense Calculation                                         Salary       #               Total Employees                  ...
Return on Investment                                         2009             2010             2011         2012       201...
Special Thanks and Sources           Aria Systems         Other Sources:           Chris Fowler         www.crunchbase.com...
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Zuora - 2009 Venture Capital Case Competition

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Our presentation during the Venture Capital Case Competition at Stanford University on why Zuora was a strong investment opportunity in 2009. No slide on IRR.

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  • Animations: Add Xs and a line saying Existing Systems Don’t Solve Customer Pain Points
  • -”The Salesforce of Online Billing” - TechCrunch
  • where he built the infrastructure that took the firm from pre-revenue to market leader
  • -”The Salesforce of Online Billing” - TechCrunch
  • Zuora - 2009 Venture Capital Case Competition

    1. 1. Title Builds, Manages, and Grows your Subscription Business Santa Clara University Sophia Boettcher | Sol Tran | Endalk Yitref | Dennis Ding
    2. 2. MarketComputingCloud Opportunities Allows Companies to focus on the Product, not the Infrastructure End Infrastructure Users Web Server The Cloud manages Business developer’s Infrastructure Web Server Local Model on-demand: Balancing Web Server Router Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    3. 3. Trend Toward SaaS Growth of Cloud Computing ...worldwide spending 26.5% on Cloud services will grow from $16 billion byProjected Market 2008 to $42 billion in Annual Growth 2012. Rate* IDC Research *Source: Gartner Inc. More Demand for On-Demand Developers’ Shift towards SaaS Confirms Trend ~100,000 ~150,000 ~400,000 Millions of .NET developers developers developers developers Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    4. 4. The Four Waves of E-Commerce 1st Wave: 1995 2nd Wave: 1999 3rd Wave: 2002Simplified Online Commerce Automated Online Payments Monetized Eyeballs paymentsThe 4th Wave: 20091. Builds, manages, and grows subscription businesses online2. Generic billing system for the SaaS and apps market3. Growing market due to a huge need to monetize the burgeoning business Cloud Zuora is uniquely positioned to dominate the market Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    5. 5. Customer Needs App Developer Small/Mid-sized Large Enterprises Types of Companies Customers Wants to monetize Wants a billing Wants a billing Customer Pain their application, but subscription service system that can be Point can’t afford to create that adapts to complex set up fast for their a billing system customer needs Sun Cloud InitiativeManual Systems Standalone Gateways Tradition ERP SystemsCannot be scaled to Does not support Not flexible enough for different sizes of complex billing & the dynamic e-commerce business invoicing environment. And does not support subscription Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    6. 6. Products Optimizes Every Step of Your Subscription Business Launched with Launched with On-demand Billing & Integrated Payment 100% Native Force.com Subscription Management Solutions for Subscriptions 1. Generates sales quotes 1. “Salesforce.com of billing” 1. Manages recurring and create orders in Z- payments Billing 2. One efficient system that records all billing 2. Allows subscription 2. Synchronizes invoices, information, subscription, business to get paid payments, & subscriptions and invoices 3. Automates payments and 3. 360 degree visibility to allows business to focus on sales reps and customer their products service Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    7. 7. Products With Zuora, Billing is as Easy as 1,2,3 1 2 3Create your pricing Automate your and packaging billing and payment Take orders from your strategy operations web site Supports any type of billing need you have Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    8. 8. Business ModelWide Range of Potential Customers + Wide applicability $$$Take 2% of sales Take 1% of sales Enhances the performance Increases Sales 100+ Companies More Value More Revenue Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    9. 9. Market Opportunities Large Enterprise Software A total market size of $47.5B in fees and services SaaS 1. The global market is expected to grow to near $20B by 2011 2. 26.5% long-term annual growth rate Potential Future Markets PayPal Financial Newspaper Online Online Utility Facebook Transactions Institutions Magazines Entertainment Education Subscription AppsFacebook Application Market -> Each user pay $1 a month for one app $72 Million200+ Million Users $1/Month $2.4 billion a year a year Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    10. 10. Management Team Highly Talented and Experienced Team • Built Salesforces original billing system Tien Tzuo • Former CMO and Chief Strategy Officer at Salesforce CEO • Handled integration with billing systems at Crossworlds K.V. Rao • Headed strategic marketing and business development while President working at WebEx Communications for 5 years • U.S. patent in computing technology Cheng Zuo • Launched the order-to-cash OSS system at WebEx CTO • Designed and built software products at WebEx • Co-Founder and CTO of BeyondWork Gary • Managed G&A functions as CFO of KnowHow Hagmueller • VP of finance and operations for Vinfolio CFO • Senior Director of Finance for RouteScience Technologies Investors: Salesforce CEO Marc Benioff, Benchmark Capital, Shasta Ventures, Lehman Bros. Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    11. 11. Competition Start-ups Payment Traditional In House Gateways ERP SystemsCompleteness of Features Scalability Flexibility Total Cost of Ownership Poor Excellent Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    12. 12. Financials Projected Incomes (in Thousands)Assume each customer earns 2009 2010 2011 2012 2013 $2.5M in Revenue No. Customers 100 450 1,035 1,915 2,776 Revenue / Customer 50 50 50 50 50 Sales Revenue $5,000 $22,500 $51,750 $95,738 $138,819... And a 26.5% growth rate COGS $750 $3,375 $7,763 $14,361 $20,823 for the business cloud Gross Margin $4,250 $19,125 $43,988 $81,377 $117,996 Operating Expenses $8,500 $12,500 $27,500 $42,500 $62,500Zuora takes 2% of total sales EBIT -$4,250 $6,625 $16,488 $38,877 $55,496 in subscription business Revenue & Profit Growth $160,000 $140,000 Break-Even by 2010 $120,000 $100,000 $80,000 $60,000 Revenue Hit $100M in revenue by $40,000 2013 $20,000 EBIT $0 -$20,0002009 2010 2011 2012 2013 Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    13. 13. Risks Risks/Concerns for Zuora Large enterprises reluctant to Already has cost-effective billing switch over to Zuora system Cloud giant, like Has happened in the past like Amazon, building up their own Google outcompeting Accenture billing service Other Start-ups enter the With a big market, other start- market ups are going to join Risk/Concern for Investors Already have a lot of money in Late-Stage Investment the bank Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    14. 14. Exit Strategy SaaS Software Traditional Other Potential Enterprise Software E-Commerce Companies Acquirers Financial Institutions •To provide •Further enables •Allows eCommercebilling system for entry into Cloud vendors to further apps on their Computing control the platform payments value chain Expand existing market base and produce services in IPO order to obtain financial and strategic position as excellent investment opportunity for public market investors. Background | Product | Business Model | Market | Team | Competition | Financials | Risks | Exit
    15. 15. Q&A Index AppendixCloud Computing SaaS Trend Board of Directors Partners The Next Wave Solving the Problem Customer Needs Historical Example Products Salesforce Financials 3-Step Process Market Risks Business Model Revenue Calculations Market Expense CalculationsManagement Team Return on Investment Competition Financials Risks Exit Strategy
    16. 16. Board of Directors Strategic Board of Directors Scott Thompson • Brings extensive knowledge of online payments to the board President, PayPa • Key partner in integration of PayPal into Zuora l Jason • Build Walmart.com into one of the leading commerce sites Pressman on the web Shasta Ventures • Savvy in software and tech-enabled services sectors Peter Fenton • Software, digital media, and technology-enabled services guru Benchmark • Has experience as an entrepreneur and strategy consultant Capital Also on the Board: Zuora CEO Tien Tzuo and Zuora President K.V. Rao Advisory Board: Elizabeth Tse (eBay), Dan Halabe (Accenture), Michael Everett (Cisco), David Welsh (Adams Street Partners)
    17. 17. Partners Key Partners Added Value Easy Integration with the CRM Leader Pre-integrated to deal with PayPal payments Helps integrate Zuora’s products with SMB accounting software like QuickBooks and Financial Offerings like NetSuite Partnerships with hosting providers, cloud players, other Future: payment gateways and more accounting software providers.
    18. 18. Solving the Problem Application Small/Mid-sized Large Enterprises Developer Companies Wants to monetize Wants a billing Wants a billing their application, but subscription service system for their Customer Pain can’t afford to create that adapts quickly to Sun Cloud Initiative Point a billing system customer needs Application Zuora offers Right model, right How Zuora Developer can solutions for every team, and right Satisfies this integrate with aspect of the billing capability to fit Need Zuora’s billing process their needs platform
    19. 19. Historical ExamplesSimilar Space with Similar Growth Trajectories • Pioneer in CRM nine years ago • Now has a Market Capitalization of $4.5 Billion • 55,400 Corporate Customers and 1.5 million individual subscribers • Over $1 billion in revenue last year • At the forefront of the 2nd wave (automated online payments) • Grew rapidly, Q1 of 2002 totaled $48.8 M, 248% growth from Q1 of 2001. • Sold out to Ebay for $1.5 Billion
    20. 20. Salesforce Growth Rate Salesforce Revenue and Net Income Revenue & Profit Growth From 02-09 $1,200 $1,000 $800 $600 $400 $200 $0 2002 2003 2004 2005 2006 2007 2008 2009 -$200
    21. 21. Market Risks Risks/Concerns Mitigations Could be in the future, large Not cost-effective for large enterprises still exploring it as an enterprises option The technology is constantly Reliability improving, so the Cloud will be more and more reliable The cost savings aspect Security outweighs the downside of losing control
    22. 22. Revenue Calculation Assume on Given 100Around $5M in Revenue by average, Zuora customers at the end of Year 1 earns $50k a year end of year 1 from each customer 2009 2010 2011 2012 2013Market Growth Rate 25% 25% 25% 25% 25%Customer Growth Rate N/A 350% 130% 85% 45%Total Customers 100 450 1035 1915 2776Average Customer $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000Subscription SalesZuora Fee 2% 2% 2% 2% 2%Zuora Revenue $5,000,000 $22,500,000 $51,750,000 $95,737,500 $138,819,375
    23. 23. Expense Calculation Salary # Total Employees $110,000 25 $2,750,000 Upper Management $150,000 7 $1,050,000 Misc. $80,000 10 $800,000 Total Salary $4,600,000 Server Cost $ 800,000 Other Costs $ 600,000 Total Operating Expenses $6,000,000 *Note: Salary expenses are expected to grow with revenue and EBIT, considering bonus, pay raises, and new recruitments
    24. 24. Return on Investment 2009 2010 2011 2012 2013EBIT -4250 6625 16487.5 38876.88 55496.47Amount Invested 21500 21500 21500 21500 21500Return on Investment -19.77% 30.81% 76.69% 180.82% 258.12% Return On Investment 300.00% 250.00% 200.00% Average Return on 150.00% Investment: 100.00% 50.00% 105% 0.00% -50.00% 2009 2010 2011 2012 2013 ROI -19.77% 30.81% 76.69% 180.82% 258.12%
    25. 25. Special Thanks and Sources Aria Systems Other Sources: Chris Fowler www.crunchbase.com www.zuora.com www.ariasystems.com Zuora www.undertheradarblog.com Kelly Jane Rosenblatt www.google.com/finance Amy Pruitt www.451group.com The McKinsey Report on Gary Hagmueller Cloud Computing Box.net Aaron Levie Sebastien LeMenager Canaan Partners Bryan Chao

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