Personal blog of Yzmir Ramirez

Zuora has been known throughout its 12-year history as a company that helps manage subscription-based businesses. Today, at its Subscribed San Francisco customer conference, it announced that it’s adding a new twist to the platform with a new service called the Zuora Central developer platform.

The latest offering gives developers a workflow tool to build connections between systems that extend the given service using both Zuora’s service set and any external services that make sense. Tien Tzuo, founder and CEO at Zuora, sees this as a way for his customers to offer a set of integrated services that take advantage of the fact that these individual things are connected to the internet, whether that’s a car, an appliance, a garage door opener or a multimillion-dollar medical device.

And this isn’t even necessarily about taking advantage of your smartphone, although it could include that. It’s about extending the device or service to automate a set of related tasks beyond the subscription service itself. “So you create a workflow diagram in Zuora Central that’s going to convey all of the logic of this,” Tzuo said.

Zuora Central lets developers connect to both Zuora services and external services (Diagram: Zuora)

As an example, Tzuo says imagine you are renting a car. You have reserved a Ford Focus, but when you get to the lot, you decide you want the Mustang convertible. You don’t have to pull out your phone. You simply walk up to the car and touch the handle. It understands who you are and begins to make a series of connections. There may be a call to unlock the car, a call to the music system to play your driving playlist on Spotify, a call to your car preferences that can set the seats and mirrors and so forth. All of this is possible because the car itself is connected to the internet.

Zuora workflow in action (Screenshot: Zuora)

Under the hood, the workflow tool takes advantage of a number of different technologies to make all of this happen, including a custom object model, an events and notifications system and a data query engine. All of these tools combine to let developers build these complex workflows and connect to a number of tasks, greatly enhancing the capabilities of the base Zuora platform.

As Tzuo sees it, it’s not unlike what happened when he was chief marketing officer at Salesforce, before starting Zuora, when they launched Force.com and the AppExchange as a way to allow developers to extend the Salesforce product beyond its base capabilities.

Tzuo also sees this platform play as a logical move for any company that aspires to be a billion-dollar-revenue company. The company has a ways to go in that regard. In its most recent report at the end of May, it reported $64.1 million in revenue for the quarter. Whether this new capability will do for Zuora what extending the platform did for Salesforce remains to be seen, but this is certainly a big step for the company.

Zuora, the SaaS company helping organizations manage payments for subscription businesses, announced today that it had been selected as a Premier Partner in the Amazon Pay Global Partner Program. 

The “Premier Partner” distinction means businesses using Zuora’s billing platform can now easily integrate Amazon’s digital payment system as an option during checkout or recurring payment processes. 

The strategic rationale for Zuora is clear, as the partnership expands the company’s product offering to prospective and existing customers.  The ability to support a wide array of payment methodologies is a key value proposition for subscription businesses that enables them to service a larger customer base and provide a more seamless customer experience.

It also doesn’t hurt to have a deep-pocketed ally like Amazon in a fairly early-stage industry.  With omnipotent tech titans waging war over digital payment dominance, Amazon has reportedly doubled down on efforts to spread Amazon Pay usage, cutting into its own margins and offering incentives to retailers.

As adoption of Amazon Pay spreads, subscription businesses will be compelled to offer the service as an available payment option and Zuora should benefit from supporting early billing integration.

For Amazon Pay, teaming up with Zuora provides direct access to Zuora’s customer base, which caters to tens of millions of subscribers. 

With Zuora minimizing the complexity of adding additional payment options, which can often disrupt an otherwise unobtrusive subscription purchase experience, the partnership with Zuora should help spur Amazon Pay adoption and reduce potential friction.

“By extending the trust and convenience of the Amazon experience to Zuora, merchants around the world can now streamline the subscription checkout experience for their customers,” said Vice President of Amazon Pay, Patrick Gauthier.  “We are excited to be working with Zuora to accelerate the Amazon Pay integration process for their merchants and provide a fast, simple and secure payment solution that helps grow their business.”

The world subscribed

The collaboration with Amazon Pay represents another milestone for Zuora, which completed its IPO in April of this year and is now looking to further differentiate its offering from competing in-house systems or large incumbents in the Enterprise Resource Planning (ERP) space, such as Oracle or SAP.   

Going forward, Zuora hopes to play a central role in ushering a broader shift towards a subscription-based economy. 

Tien Tzuo, founder and CEO of Zuora, told TechCrunch he wants the company to help businesses first realize they should be in the subscription economy and then provide them with the resources necessary to flourish within it.

“Our vision is the world subscribed.”  said Tzuo. “We want to be the leading company that has the right technology platform to get companies to be successful in the subscription economy.”

The partnership will launch with publishers “The Seattle Times” and “The Telegraph”, with both now offering Amazon Pay as a payment method while running on the Zuora platform.

Zuroa’s founder and CEO Tien Tzuo had a vision of a subscription economy long before most people ever considered the notion. He knew that for companies to succeed with subscriptions, they needed a bookkeeping system that understood how they collected and reported money. The company went public yesterday, another clear sign post on the road to SaaS maturation.

Tzuo was an early employee at Salesforce and their first CMO. He worked there in the early days in the late 90s when Salesforce’s Marc Benioff famously rented an apartment to launch the company. Tzuo was at Salesforce 9 years, and it helped him understand the nature of subscription-based businesses like Salesforce.

“We created a great environment for building, marketing and delivering software. We rewrote the rules, the way it was built, marketed and sold,” Tzuo told me in an interview in 2016.

He saw a fundamental problem with traditional accounting methods, which were designed for selling a widget and declaring the revenue. A subscription was an entirely different model and it required a new way to track revenue and communicate with customers. Tzuo took the long view when he started his company in early 2007, leaving a secure job at a growing company like Salesforce.

He did it because he had the vision, long before anyone else, that SaaS companies would require a subscription bookkeeping system, but before long, so would other unrelated businesses.

Building a subscription system

As he put it in that 2016 interview, if you commit to pay me $1 for 10 years, you know that $1 was coming in come hell or high water, that’s $10 I know I’m getting, but I can’t declare the money until I get it. That recurring revenue still has value though because my investors know that I’m secure for 10 years, even though it’s not on the books yet. That’s where Zuora came in. It could account for that recurring revenue when nobody else could. What’s more, it could track the billing over time, and send out reminders, help the companies stay engaged with their customers.

Photo: Lukas Kurka/Getty Images

As Ray Wang, founder and principal analyst at Constellation Research put it, they pioneered the whole idea of a subscription economy, and not just for SaaS companies. Over the last several years, we’ve heard companies talking about selling services and SLAs (service/uptime agreements) instead of a one-time sale of an item, but not that long ago it wasn’t something a lot of companies were thinking about.

“They pioneered how companies can think about monetization,” Wang said. “So large companies like a GE could go from selling a wind turbine one time to selling a subscription to deliver a certain number of Kw/hr of green energy at peak hours from 1 to 5 pm with 98 percent uptime.” There wasn’t any way to do this before Zuora came along.

Jason Lemkin, founder at SaaStr, a firm that invests in SaaS startups, says Tzuo was a genuine visionary and helped create the underlying system for SaaS subscriptions to work. “The most interesting part of Zuora is that it is a “second” order SaaS play. It could only thrive once SaaS became mainstream, and could only scale on top of other recurring revenue businesses. Zuora started off as a niche player helping SaaS companies do billing, and it dramatically expanded and thrived as SaaS became … Software.”

Market catches up with idea

When he launched the company in 2007, perhaps he saw that extension of his idea out on the distant horizon. He certainly saw companies like Salesforce needing a service like the one he had decided to create. The early investors must have recognized that his vision was early and it would take a slow, steady climb on the way to exiting. It took 11 years and $242 million in venture capital before they saw the payoff. The revenue after 11 years was a reported $167 million. There is plenty of room to grow.

But yesterday the company had its initial public offering, and it was by any measure a huge success. According TechCrunch’s Katie Roof, “After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.” Today it was up a bit more as of this writing.

When you consider the Tzuo’s former company has become a $10 billion company, that companies like Box, Zendesk, Workday and Dropbox have all gone public, and others like DocuSign and Smartsheets are not far behind, it’s pretty clear that we are in a golden age of SaaS — and chances are it’s only going to get better.

 Zuora has always been a bit ahead of the curve when it comes to the subscription economy. Company founder Tien Tzuo recognized something in 2008 when he left a comfortable job at Salesforce to launch a new company. The world was about to change dramatically with a huge influx of cloud services, and it needed a platform for tracking the new way companies recognized revenue. Until the advent… Read More