Tien Tzuo is the epitome of the Silicon Valley dream.
Despite holding an electrical engineering degree from Cornell University, his career started off at Oracle in the early 90s where he worked in sales for over 6 years. After leaving the company to earn an MBA from Stanford, he found himself at Salesforce, where he eventually became the company’s chief marketing officer and chief strategy officer. A huge achievement for anyone.
But in 2007, after realising that the entire software market was changing, he set off to create his own company, Zuora, a software as a service provider for the subscription economy.
Today, Zuora has raised almost $US250 million, employs over 600 people and is valued at around $1 billion. Other big companies like Box, News Corp, Fairfax Media and Zendesk are all customers across the world.
While at Salesforce, Tzuo noticed the huge shift happening in the world, where customers were no longer buying software or products, but rather looking to subscribe, forcing companies to keep pushing and innovating to earn their business.
“We realised that the whole world was going this way and this was a new opportunity,” Tzuo told Business Insider.
“We said that’s a big idea, because SAP and Oracle are the ones powering the world’s companies today but they will not be tomorrow. So we set off to be the thing that will power the world tomorrow.”
This shift hasn’t just happened in software too, but with entertainment, newspapers and transport. The huge disruptions the likes of Netflix and Uber have caused in their respective industries are prime examples.
The reason it has become so successful Tzuo says, is because people inherently just want outcomes — they don’t want to worry about how they get there.
“We want outcomes from somebody and want an outcome from someday who does a better job than ourselves. We just want to get from point A to point B,” he said.
“If I want to be entertained why should I have to worry about if I have the DVD or if I have to go to the store? That’s where the world is going.
“Once you’re on Netflix you don’t buy DVDs anymore, it doesn’t make sense. And the more people who use Uber are wondering why do I need to buy a car.”
The subscription business model is disrupting every facet of the consumer world, with every single industry feeling the heat.
“You think about GM, Ford, Toyota – how are these companies going to survive in a world where people are buying less cars?
“How are Oracle and SAP going to survive in a world where people are buying less software?”
While most of Zuora’s success has come from jumping on this huge consumer behaviour shift, another big part of that is the company’s view on the world. Tzuo doesn’t see the world as a bunch of individual companies, but more as regions split up depending on what language they speak on the internet.
So for him, expanding internationally to other English speaking countries was a priority at the start of the company, including Australia. Interestingly, he found that in Australia, we wanted these alternative models more than anywhere else.
“We did a survey with the Economist on the rise in these subscription models, in the US, UK and Australia. The US actually lagged in terms of companies wanting these alternating models and Australia was actually number one,” he said.
“If you can use the application in English, why shouldn’t you be automatically be able to use it in Australia or the UK?”
From both his Salesforce days and Zuora, Tzuo has spent a lot of time in Australia and has been able to keep track of what the local startup scene is going through. For companies, he sees Sydney or Melbourne as the second English speaking city you would go outside of the USA after London.
“What I’d love to see in Sydney is a stronger local VC community,” he said.
“It’s easy for the New York and Bay area VCs to set up an office in London, but Sydney has the unfortunate aspect of just being really far away. It’s still really hard for Australian companies to find capital.”
But most importantly, for an Australian startup to succeed, Tzuo says they need to have lots of tenacity, grit and patience. And of course, pointing to Atlassian as a company possessing all three of those traits.
Interestingly, he believes that some of Australia’s existing big companies are on the leading edge of the global digital transformation.
“We’ve found that our Australian companies are very good with technology,” he said.
“I think there’s something where in the US, that if you’re really good with technology you aspire to go work for Google or Facebook. But in Australia, you also go work for Telstra, you go work for Australia Post.
“We’re really bullish on Australian companies doing well on the global scale and we’re going to continue to invest in that.”
Despite Zuora’s overall success, it hasn’t been smooth sailing the entire time for the company, much like most Silicon Valley startups. The company had a fairly easy time getting the product to market due to a strong demand for the product in the market, but an oversight of how easy it would be to set up almost caused huge problems in Zuora’s early stages.
“We got lulled into thinking that because it’s SaaS (software-as-a-service), that it’s all online, that customers wouldn’t need help implementing. Like how hard could it be? There’s nothing needed to be installed, it’s all point and click,” Tzuo said.
“But it turned out that it’s all new, the subscription economy business model was all new and there wasn’t a lot of experience inside the companies on how to be successful with these systems. So we gave our software to companies who then struggled to get it set up and how to use it.
“Now, we sit down with a customer and give them a detailed plan and show how we can go through and implement this plan with them.”
These types of mistakes are common with early tech startups, often where they have great ideas and a great technical knowledge but after working with their product forget how new it is for customers.
Another common problem Tzuo said is startups who have a great initial product but don’t know how to keep customers.
“When you see tech companies with scale issues, it’s usually because they focus on gaining new customers,” he said.
“If you’re a social platform, it’s easy to get 1000 customers quickly, but how do you make it truly sustainable and an engine of growth?”
But for Zuora, they’re past that phase, and are firmly focused on becoming the next big thing in technology.