How did you get the idea of a billing & invoicing company system for subscriptions & make it into something big?

Answered by: Tien Tzuo, CEO Zuora

Category: Marketing and Sales

There are two big factors to software. You have to understand the buying behavior. If the buying behavior is an individual who wants to try new things, then you can offer a freemium model. Open source is a great way to get developers. Salesforce is a more complicated departmental sale but it is a department sale so the free trial model made a lot more sense. At Zuora, we're a multi-department decision. There's no department that can sneak in a billing system. We didn't realize that but it’s certainly obvious now. So we have to go in and help the company navigate this decision because they're not going to do it themselves. It's strange to say that. But it's true. We're forced to help companies come together in a cross-functional way and make a decision. Oftentimes when working with us, we’re the first time that multiple departments actually talk about some of the common issues they face.
So you have to build go to market aligned to the buying behavior. Secondly, you have to understand your market. One of the things I often ask entrepreneurs is to pretend you're a hundred million dollar company. How many customers do you have? Do you have one customer giving you a hundred million? Ten customers giving you 10 million? A hundred customers giving you one million? You need to visualize that because the freemium model means that you've got a big long tail and you're going to have hundreds and thousands of customers. This freemium business model can work for Dropbox. It can work for Slack. But with a hundred million dollar business model that is similar to ours where we've got a thousands of companies giving us a hundred thousand dollars each, what's the point of the freemium model? Right. You've got to understand where you sit in the spectrum in order to know whether the freemium model is right for you. That's why these things aren't one-size-fits-all strategies.