Zuora: Powering the Netflix economy?

February 21st, 2008 | Category: Launches

In the tech world, the belief is that innovation is mostly about creating great systems and solutions. Yet, when you look at some of the top growth companies - such as Netflix (NASDAQ: NFLX), Salesforce.com (NYSE: CRM), and ZipCar — it is often “business model” innovation that’s the big competitive advantage.

No doubt, that is something that Tien Tzuo understands. After all, he was the 11th employee at Salesforce.com and became the company’s Chief Strategy Officer. Basically, he helped to evolve a disruptive trade model; that is, selling software on a subscription basis.

“Buying something is an old-economy way of doing trade,” said Tzuo, in an interview with me. “Why pay a fixed price for something?”

It’s a good point. And yes, he has a new company, called Zuora, which plans to be the platform to help companies supply rentals and subscription services. “It’s not easy thing

to do,” said Tzuo. “You need to deal with different versions of a product, different pricing levels, and additionally potentially many customers. It can be mighty to manage.”

The good news is that Tzuo has assembled a strong team, with top-notch folks from places like Accenture (NYSE: ACN), WebEx, Salesforce.com and Oracle (NASDAQ: ORCL). He was additionally able to snag capital from Benchmark.

“It was a great run at Salesforce.com,” said Tzuo. “The company is quickly approaching $1 billion in revenues. Now, I want to see whether we can take Zuora to a billion.”

Tom Taulli is the author of various books, including The total M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He plus operates DealProfiles.com.