EXCLUSIVE INTERVIEW

The Subscription Prescription: Q&A With Zuora CEO Tien Tzuo

Zuora, a provider of on-demand subscription billing and payment services, was cofounded in March 2008 jointly by Tien Tzuo, who serves as its CEO; Cheng Zou and K.V. Rao. It received $6.5 million in Series A funding later that month and $15 million in Series B funding in October of 2008. It has been profitable since.

The company’s more than 100 customers include Thomson Reuters, Box.net, Rearden Commerce, Pandora Media and HD Cloud. Its suite of products includes Z-Payments 2.0, a complete payment solution for subscription businesses built with PayPal X; three versions of Z-Commerce (for Facebook, Media and AppExchange); and Z-force, a billing and payment system fully integrated with Salesforce.com and 100 percent native to the Force.com platform. Zuora plans to unveil version 3.0 of Z-Force on Wednesday.

E-Commerce Times: How many employees does Zuora now have?

Tien Tzuo:

We have over 75 employees, and will be going to 100 by the end of the year.

ECT: Like Marc Benioff, you’re a former Oracle employee; further, you’re an ex-Salesforce employee. What did you learn from these two companies?

Tzuo:

That was a fantastic experience. These two companies were a fantastic place to spend my time and they were at the heart of both their industries, and I was in the thick of the client/server and SaaS revolutions. Today, we’re trying to take the lessons we learned from our previous companies and bring them to our company.

From Oracle, we learned about building great product and understanding enterprise applications; from Salesforce we learned what the Internet means and how you redefine it as SaaS.

We focus on a monthly release cycle that allows us to get an enormous amount of product out in a short time, and we focus on our sales force.

ECT: You seem to do billing for SaaS companies — handle the billing cycle for them.

Tzuo:

At Salesforce, we talked about two big changes — how the technology was different, and multitenant systems, which people now call “cloud-based systems.” The business model has changed away from a manufacturing-centric view of business — shipping CDs is a manufacturing exercise — to a services view, where companies pay as they go on a monthly basis.

Our premise is that this trend is not limited to SaaS or software, but that the whole world is moving this way, whether you’re talking about software or hardware or automobiles transforming into services like Zipcar; music transforming into services like Rhapsody or Pandora.

The interesting thing for us is, if you need to run this subscription-oriented business, you need a whole new infrastructure to allow your customers to not just place the initial order but go back in and add five more licenses or add text messaging, or upgrade to a bigger calling plan, for example, and you need a whole different system to track metrics like churn, renewal rate and so on.

We’re in the heart of information — information on SaaS, information on the cloud, the monetization of online content.

ECT: So what is it that you do? You look like a billing service.

Tzuo:

The telephone companies spend 5 or 6 percent of their revenues on billing. The market there is at least $10 billion a year.

We do commerce, billing and payments. We allow our customers to design price plans, for example. Take AT&T — it has a 450-minute plan, an unlimited plan, a family plan, each of which has different fees, activation fees and monthly fees and if you go over your monthly allowance of minutes they measure that and charge, say, 45 cents a minute for overage; and they also have a cancellation fee.

We allow our customers to design how they charge their fees and publish this information on their website and in their CRM applications, and take not just initial orders but also subsequent orders, all with a point and a click.

The whole commerce capability is what we do.

The second piece we do is the billing. In the old world you’d ship me my products and you’d invoice me for that and you’d be done. In a recurring world, that’s not the end; it’s hopefully the first of many interactions and you’ll invoice me on a monthly basis.

We take care of that. We’re a big calculating machine. We calculate how much each of your customers should be invoiced on a daily, weekly or monthly basis. In our office, there’s a huge abacus on the wall.

Third, we do the payments. We plug into PayPal or Pay Tech to process credit card transactions; we plug into your banks; and we track all your payments so you can see how much customers owe you, who’s got an outstanding balance, who’s got a credit card on file, and whom you want to send a reminder to.

All that complexity — pricing and packaging, taking orders, collection, the storing of files in encrypted formats so you’re PCI-compliant — we do all that on a pay-as-you-go basis.

ECT: You don’t have a telephone company customer though, do you?

Tzuo:

Open Range Communications is a telephone company and we’re deploying there right now.

ECT: Many of your customers, such as Rearden Commerce, Pandora and HDCloud, seem to be cloud companies. Is that correct? Why is this the case?

Tzuo:

Being a SaaS company in Silicon Valley, a lot of our early adopters were technology companies. A whole block of SaaS companies fueled our early growth. But if you look at our Q1 results, in the most recent quarter, when we signed on $1 billion of contracted revenue we signed on companies across the board. We’re just now seeing strong adoption of our services across the board.

ECT: So the more traditional companies with in-house systems won’t find it as advantageous to use your services?

Tzuo:

They don’t typically think of themselves as using a subscriptions-based model. But, if you have a coffee-of-the-month sale, you’re a potential client.

ECT: So are you going after those guys even if they’re legacy companies?

Tzuo:

We are interested in being the engine of the subscriptions economy.

ECT: You signed more than $1 billion in contracted subscriptions revenue for the first quarter of your fiscal year which ends April 30. What does that mean — that you’re handling $1 billion-worth of contracted subscription revenues for clients?

Tzuo:

That’s exactly right.

ECT: How do you work? For example, do you charge X dollars then give discounts on that to larger customers?

Tzuo:

Our list price is 2 percent of how much you invoice through our system on a monthly basis. That’s if you want it completely in arrears. But if you know how much business you’re going to do, we give you a better deal. That’s business.

ECT: Do you look for large companies or those with a minimum number of subscriptions?

Tzuo:

That’s the great thing about being a cloud company; you don’t really care. Our pricing model lets us support all kinds of companies of all sizes.

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EXCLUSIVE INTERVIEW

Cryptocurrency Custody Concerns: Who Holds the Digital Storage Keys?

cryptocurrency wallet

Got Crypto? Make sure you own and have access to it in a secure digital stronghold.

Having self-custody of your crypto keys and managing your digital assets can help stave off digital bankruptcy or loss through theft, warns cryptocurrency storage provider CompoSecure.

Cryptocurrency is an increasingly familiar term since Bitcoin emerged in 2009. Since then, numerous cryptocurrencies have joined the digital asset marketplace and, despite the recent decline in valuations, the cryptocurrency market value has skyrocketed.

Market watchers valued the global cryptocurrency market size at $1.49 billion in 2020. Some project it will reach $4.94 billion by 2030, rising at a compound annual growth rate (CAGR) of 12.8 percent from 2021 to 2030.

The cryptocurrency market represents the start of a new phase of technology-driven markets that can potentially challenge traditional market strategies, longstanding practices in business organizations, and determined regulatory perspectives, according to Vantage Market Research.

Control of Crypto

Cryptocurrencies have the innovative potential to allow people access to a global payment system in which participation is barred only by access to technology. It could replace traditional standards based on having a bank account or a credit history.

However, buying and selling crypto coins and using digital currency to pay for products in the physical world is not the same as opening a bank account and depositing a paycheck. An announcement by Coinbase may have dislodged the elephant in the crypto storage room.

Coinbase is an app that lets people buy and sell various cryptocurrencies — Bitcoin, Ethereum, Litecoin, and many others — and lets users convert one cryptocurrency to another. Users can also send and receive cryptocurrency to and from other people.

In its 10-Q filing last month Coinbase disclosed that it would have the right to hold crypto assets of its retail users as property of the bankruptcy estate, if the company were to file for bankruptcy.

So, what about crypto providers and digital storage centers that hold your crypto funds?

That disclosure is driving awareness and highlighting the importance of self-custody, according to Adam Lowe, chief innovation officer of CompoSecure and creator of Arculus.

“As cryptocurrency is becoming more mainstream, many people are jumping in feet first and not properly researching and educating themselves. It’s important users know how their cryptocurrency works, who owns it, and what control they have with their digital assets,” Lowe told the E-Commerce Times.

Crypto Cold Storage Solution

CompoSecure is a pioneer in the premium payment cards industry. The company also developed and provides an emergent cryptocurrency and digital asset storage and security solution it calls Arculus.

The new cold storage wallet solution approach for securing crypto uses the name of the ancient Roman god. Arculus was considered to be the guardian of safes and strongboxes the Romans relied upon to ensure the protection of their cherished possessions.

The company applies that same nomenclature today. Arculus is the contemporary incarnation of this vigilant deity, ensuring the safe, strong security of critical digital assets and identity.

Think of this storage solution as a token, much like the physical device some people rely on to keep their computers under lock and key. For crypto, ownership is directly linked to the owner’s private key.

For example, if you purchase crypto through an exchange and leave it there, you are trusting the exchange to give you your digital assets when you ask. But since they keep ownership of the private keys, the exchange has full control to comply or not comply, Lowe cautioned.

“This is why self-custody wallets are important. By storing your private keys in a self-custodied wallet, such as a hardware wallet, only you have full ownership and control of your cryptocurrency and other digital assets. As we say, your keys, your crypto,” he explained.

Fuss-Free Ownership and Access

Dealing with digital assets is not the same as walking into to your local bank. Crypto security works much differently. When a traditional bank is insured by the Federal Deposit Insurance Corporation (FDIC), if the bank is robbed, defaults, or goes bankrupt, deposits are protected up to at least $250,000 per depositor.

Not so with cryptocurrencies. Those digital assets belong in an unregulated asset class that does not have the safeguards of traditional fiat currency. Crypto is currently not subject to FDIC protection, noted Lowe.

“As of now, if your cryptocurrency is hacked, it is gone. This is the main reason why properly securing and protecting your digital assets offline is important,” he advised.

No holistic regulations governing cryptocurrency exist. That is why cryptocurrency is a highly volatile asset.

“The Biden administration is discussing U.S. regulations. While we expect to see movement in that direction, it could be a while until widely accepted regulations are in place,” he added.

Holding the Right Card

CompoSecure’s recently launched storage hardware wallet enables consumers to have self-custody and manage all their digital assets in one offline place. This approach gives ownership of the crypto keys only to the user.

Arculus Wallet NFT support
Arculus Wallet product capabilities now include NFT support. (Image Credit: Business Wire)

The company’s innovative solution is the Arculus Key Card which uses a CC EAL6+ secure element to encrypt and store your digital keys. It is not connected to anything. If you lose it or it gets stolen, no one else can use it.

When a crypto owner makes a transaction in the Arculus Wallet App, it requires the user to tap the key card to his or her mobile device. This is an important security step in the three-factor authentication that Arculus uses to keep crypto keys safe and secure.

The card communicates with the wallet app to authorize a tap-to-transact secure near-field communication (NFC). It involves no Bluetooth, no Wi-Fi, no USB, and no cords.

CompoSecure on Tuesday announced the same approach for non-fungible token (NFT) support.

Cashing In on Crypto

Dealing with cryptocurrency issues can become much like a rabbit hole. The more your dig, the further into a financial abyss you fall. To ease the transition into crypto banking, we asked Adam Lowe to shine a light on the subject.

E-Commerce Times: Do crypto platforms provide digital protections?

Adam Lowe: Some cryptocurrency platforms do provide types of cyber or crime insurance, but like most insurance policies there are limitations and loopholes.

So, must consumers understand about the basic guidelines for digital asset ownership and who owns the keys to the crypto?

Lowe: The most important thing to understand is who owns your keys owns your cryptocurrency. Consumers need to educate themselves on custodial versus non-custodial assets.

Additionally, utilizing exchanges or hot wallets that use a continuous internet connection keeps the door open to threats of hacking and theft.

It is also vital to utilize multifactor authentication (MFA). Three-factor authentication is extremely valuable because it ideally looks at something you are such as a biometric, which can be a fingerprint or facial recognition. It requires something you know, such as a personal identification number or PIN.

Lastly, it needs something you have, such as our Arculus Key Card. This added step of security is crucial to ensure only you have access to your assets.

How does self-custody work?

Lowe: That means you own your private keys. The keys are what grant access to full control of someone’s digital assets instead of trusting a third party to be the custodian and arbiter of your digital assets.

Utilizing a hardware wallet, such as Arculus, will provide self-custody as only you can access your private keys and manage your digital assets.

What makes this method different from other custody arrangements with crypto brokers?

Lowe: Crypto brokers and centralized exchanges are third-party custodians. They have control and access to your private keys to purchase, move, and invest your digital assets accordingly. Non-custodial agreements hand over the keys and limit the layers of protection to the end-user.

How can self-custody protect consumers from online hackers and retain their digital assets even if they go bankrupt?

Lowe: With self-custody, no one can access your digital assets without your consent. This provides the necessary level of protection from hacks.

When it comes to an individual user going bankrupt, cryptocurrency is not considered income but rather property. Bankruptcy law is complex and very fact-specific, so I cannot give you guidance on what could happen to cryptocurrency in a user’s bankruptcy.

Is crypto investing for everyone or just those who can afford to lose?

Lowe: Cryptocurrency is currently being adopted at a faster rate than the internet. It is becoming mainstream. For some, it is their first investment venture. But like any investment, there is a risk of loss. As long as people understand the lack of regulations and high volatility, they can invest according to their level of comfort.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Buyer Personas: Digital Marketing’s Secret Sauce

Trying to sell to your target e-commerce audience without a buyer persona is like seeing in the dark without a flashlight.

You have to resort to potentially wrong perceptions based on inaccurate details and guesswork. Buyer personas — also known as customer, audience, or marketing personas — although fictional, rely on research-based insights collected from prospective customers.

E-commerce and social media platforms like Amazon, Facebook, and Walmart are no different. They need to shine a light on potential buyers, so marketers are not making sales pitches in the dark.

Data-Driven Personas

Buyer personas are generalized characterizations of a type of customer. They do not represent an exact buyer because marketing to one specific person instead of marketing to groups of people with similar interests can eliminate the possibility of reaching wider audiences, according to Data Hawk Head of Marketing Raphaƫl Menesclou.

DataHawk provides sellers with purpose-built tools to access to 21 Amazon marketplaces around the world. The benefit is a gateway for e-commerce players to no longer try selling in the dark.

Why is data needed to create buyer personas? Creating one without data is like answering a specific question without basing such responses on research, he replied. The result is inaccurate and speculative at best.

“Data is used to substantiate claims. In today’s digital age, data is woven into the fabric of our daily lives. Mostly everything we do leaves behind a digital footprint, and these footprints can be very telling of our behavior,” he told the E-Commerce Times.

By examining such behaviors through data, sellers can target consumers more effectively, he added.

Buyer Persona Beginnings

No, tapping into buyer personas is not some crazy new digital innovation spawned by the latest software tracking mechanisms online. However, the ability of websites to track your every move, gather your financial details, and sell that information to database providers is a big part of the buyer persona picture.

The first buyer persona was called Kathy and was created by software engineer and design consultant Alan Cooper in the late 1990s. Cooper is widely regarded for his books on hypothetical archetypes as a practical interaction design tool.

Kathy was a tool used for design thinking back in the day when software and applications were notoriously difficult to use. The software was burdened with problems related to how a typical user would most frequently interact with it. Cooper worked out those kinks and later succeeded in defining a new product category.

Avoiding Mixed Results

Building personas that trigger shoppers’ accurate responses depends on the type of research that marketers conduct. Personas can be accurate, but they can also be flawed, noted Menesclou.

For example, knowing the kind of shopping behavior of a potential customer is a clue for recognizing when in their customer journey shoppers will be most receptive to buying. It takes extensive qualitative research for marketing teams to successfully curate marketing and advertising strategies to accommodate a particular buyer persona’s shopping behavior.

Accurate research must link up with key persona factors, Menesclou offered. Some of the factors used to create a buyer persona include name, demographic details, interests, goals, pain points, and personality type.

“All of which can influence your marketing strategy,” he said.

Marketers get this information by collecting data through quantitative and qualitative research about existing and prospective customers. The best way to get these insights is through surveys, focus groups, and interviews.

Less Is More

The same customer can be targeted with multiple personas. But more is not necessarily better.

“It is more advantageous to create fewer well-researched personas than multiple broad ones. Ultimately, creating too many buyer personas can cause you to dilute your messaging and lose focus on your initial marketing strategy, explained Menesclou.

Multiple buyer personas are not the only mitigating situation marketers must consider. Personas might differ for the same customer on Amazon versus Walmart marketplaces, for instance.

Studies have shown that the demographics of the average Walmart and Amazon buyer do not differ much and that perhaps the only difference between the two would be a question of income level, he offered.

“It is possible to do too much segmentation when creating a buyer persona for Amazon and one for Walmart,” Menesclou continued.

For example, a buyer persona divided into several segments can potentially ignore other consumers who fall into a similar persona.

How Personas Work

Buyer personas work as marketing tools in the sense that they allow marketing teams to understand their target audience better and subsequently promote to them accordingly. They keep you focused on addressing your customers’ buying priorities instead of your own selling goals.

What drives the personas? The marketer builds a detailed description of someone representing the target audience based on deep research of existing buyers or desired audience.

They help you to align your ad content to the right influencers. They show you how to segment your emails or newsletters, plan the timing of your advertising campaigns, and not waste energy marketing to unqualified prospects.

In essence, buyer personas help brands target customers who are more likely to buy their product, according to Ethan McAfee, founder and CEO of Amify, an Amazon-as-a-service platform.

“For example, if a brand knows you live in California and are 15 to 40 years old, you are much more likely to buy a surfboard than someone living in the Midwest and 70 years old,” he told the E-Commerce Times.

Knowing your name or email address enables brands to combine that data to get a wealth of data about where you live, how much you make, if you have kids, and many other statistics that help them narrow down who might buy their product, McAfee explained.

With all this information, they can target customers who are five times, 10 times, or even 100 times more likely to buy their product.

“This is very effective advertising for brands,” he said.

Custom Recommendations

Buyer personas are a primary marketing method for outlets such as Amazon and other online marketplaces, McAfee agreed. For instance, Amazon and Facebook — along with a host of other marketplaces — use buyer personas to target which ads you see on websites.

“Most of us have likely seen an advertisement on the web that recommends certain items to you. Those recommendations are different for each person based on the buyer persona,” he offered.

One person might get a product recommendation for hockey equipment on Amazon. Another person from the same household logged onto a separate Amazon account might get one for a clothing item. That happens because Amazon knows your interests.

Persona software and platform developers drive the process of creating buyer personas through research. But you can find ample sources online that guide you through the process and provide some software support and support materials.

“While there are very sophisticated and expensive software systems you can use to create buyer personas, Facebook and other platforms are trying to make this as easy as possible for you to create and spend money. For instance, if I was an owner of a yoga studio, I could zip code target people in my neighborhood that meet buyer personas that would more likely go to my studio,” he explained.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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