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July 8, 2009

Zuora Doing the Billing for Subscription Companies, or Does It Work as Advertised?

Filed under: Start-up Companies Reviews — admin @ 12:42 pm

With the advance of the internet, many magazines or newspapers started going onto the internet, subscriptions have also been done online, however, doing an online subscription is not easy. Zuora is a service that attempts to solve the problems that online subscription companies face.

To use Zuora, you must sign up for its service, and it does not cost anything to sign up. The only problem is that when you sign up for Zuora’s service, you will not be prompted to type in a user name or password like you do with other internet based sign-up forms. Zuora is designed differently, because instead of prompting you to type in a user name or password, you need to type in your name, your business name, your email, and your phone number. You will also be prompted to choose from a menu that asks you what your company offers. You have the option to choose either subscription based products, software as a service or SaaS, or neither. You also have a second menu that asks you what status your company is in. You can choose pre-revenue, less that $1 million, $1-5 million, $5-20million, $20-100 million, or $100+ million. You will need to select any one of these. The required fields will be marked with a red asterisk and you can also fill out optional information, such as your title, city, or country. When you are done filling out the form, you click on the “submit” button, and you will get an email that thanks you for your interest in Zuora, but no user name or password. The question is that how can someone use a company’s products if he does not have any access to them?

The one product that Zuora has featured on its homepage is Z-Billing. Z-Billing is a billing system that is supposed to be designed specifically for online subscription companies, and the advertisement for Z-Billing 2.0 basically states that there are many kinds of subscription products that web-based subscription companies offer, from music to software to DVDs and other services or products.

Some of the features that Z-Billing is supposed to have is that it can scale according to the growth of your business, provide full pricing flexibility, to allow you to constantly introduce new products; it supports any subscription model, allowing you to have a one-time subscription fee or a recurring monthly or yearly fee; tax automation and compliance, which is a new feature added to Z-Billing 2.0 and allows you to figure out your taxes with relative easy; an automatic currency converter; and many more features needed for a web-based subscription business.

The main problem with Zuora is how to gain access to its products. According to its overview on TradeVibes.com, Zuora is considered as a bearish company. Some of the viewers on TradeVibes commented that Zuora’s pricing not sustainable, furthermore it is impossible to log into Zuora’s service. Therein lies the question on how can users access the products that Zuora has to offer? Most people who do business on the internet like to have things running smoothly and not have to constantly contact tech support to get a problem solved.

Zuora is a privately owned corporation that is based in Redwood City, California and was founded in 2006. Zuora has four people on its management team and its main founder is Tien Tzuo.

Tien Tzuo is the driving force in the company and has also founded other startups as well. Mr. Tzuo helped in the founding Zuora after working at Salesforce.com, where he was also a cofounder. Mr. Tzuo also currently works at Zuora as the company’s CEO and is also an adviser to Cloud9 Analytics and also sits on Zuora’s board of directors.

Zuora’s investors include Benchmark Capital, which invested $6.5 million in series A funding in March of 2008 and Shasta Ventures and Lehman Brothers Venture Partners, which invested $15 million in series B funding in October of 2008.

Benchmark Capital is a vc firm that is focused on helping talented entrepreneurs build successful companies. One of the key phrases at Benchmark is team work. This is what makes Benchmark Capital unique among other vc firms, they like to consider themselves as part of the team of their portfolio companies. Benchmark Capital is usually the first investor in a company’s life, providing seed and early stage funding to companies in the tech industry. Some other companies in Benchmark’s portfolio include Mazu Networks, Atrica, Blue Coat, Decru, Securify, and others.

Shasta Ventures is a vc firm that is dedicated to backing early stage companies run by outstanding entrepreneurs and mainly invests in companies that are in a wide range of different industries. The goal of Shasta is to provide entrepreneurs not only with the capital they need, but also help them set realistic objectives to make their companies succeed in the marketplace. Some other companies in Shasta’s portfolio include Apptio, ArchRock, Asterpix, BabyCenter, BlueNile, Click Forensics, and others.

Zuora does have some competitors, but the most noteworthy one is Paypal. Paypal is an online bank, which allows you to deposit or withdraw money digitally to your bank or credit union. You can also use Paypal to make online purchases. Paypal is safe to use and your money in Paypal is secured by all kinds of different security features. Paypal is used by most of the world’s most prominent online merchants and auction sites. In fact, eBay only uses Paypal for online transactions. Paypal is a subsidiary of eBay and was founded in 1998.

For more information about Zuora, click here.

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