Zuora CEO: why you may never have to own anything again
Employee number 11 at Salesforce, Tien Tzuo, knew there would be 2 new business models setting the precedent for the future of the software-as-a-service industry.
The first, a technology based model, would deliver software and technology via the Internet rather than CD.
The second, and more important, model was something entirely new.
Based around the idea “that no one should have to buy software” but rather engage with services on a pay as you go basis, its wild success has more or less changed the face of the software industry.
More industries are starting to dip their toes in the subscription service business model honeypot.
This is what Tien defines as the subscription economy: the idea of throwing ownership to the curb.
And since coining the term in 2007, it’s caught on.
Whether you had heard of Zuora before reading this doesn’t matter, because the likelihood is you will have indirectly used its subscription service.
Do you listen to Spotify? Use Netflix? Or Zipcar?
Then yes, you guessed it. You’re a part of the subscription economy.
Tien’s long term goal is to enable subscriptions to just about anything. And before you ask, yes, its product is sold on a subscription basis.
And with the Internet of things increasingly becoming a tangible reality, more industries are starting to dip their toes in the subscription service business model honeypot.
Take General Electric as an example. They sell jet engines at prices of around $75 million each.
“They are putting sensors on all of their jet engines and saying, ‘you know what, rather than selling you the whole thing. Maybe we can sell it to you based on the number of kilometres flown?”
Caterpillar is doing something similar with its tractors, charging by metric tonnes of earth moved.
These innovations suggest a radical move to wrap products in services, creating the illusion of ownership, whilst focusing more on outcomes.
To find out more about the subscription economy, listen to this weeks edition of the Hot Topics podcast.