SaaStr 094: The $100m Question All SaaS Founders Must Ask, Learnings From Working with Marc Benioff at Salesforce & Scaling Zuora To A $Bn Valuation with Tien Tzuo, Founder & CEO @ Zuora

**Harry Stebbings** (0:00)
Hello, and welcome to another week in the world of SaaStr. With me, your host, Harry Stebbings at H Stebbings on Snapchat. And this time next week, we'll be recording live from San Francisco at the main event. Yes, SaaStr annual is finally almost upon us. And if you've not got your tickets for the main event yet and do want to hang out and drink Mojitos with me, the main man, Jason Lemkin, and legends like Brad Feld, then all you have to do is enter the promo code DRINKSWITHHARRY when you purchase your tickets. And you'll not only get 20% off the ticket price, but of course, tickets to the main Mojito party. I do also have another little announcement, and that's that Fred Destan, general partner at Excel, and I will be running the London Marathon in April, and we'll be running for MSUK, a charity that's very, very close to my heart, having seen the devastating effects of multiple cirrhosis firsthand with my mother suffering from the disease. Now, I've included a link to our fundraising page in the description of the show, and whatever you can afford, I would so appreciate your support. However, to the show's day, and it seems every week, we have a different unicorn startup founder. And this week, I'm delighted to be joined by an individual who's widely recognized as a thought leader in SaaS. Joining us in the hot seat today, we have Tien Tzuo. Tien is the founder and CEO at Zuora, one of the fastest growing SaaS companies that's been at the forefront of the rise of subscription business models. They've raised funding from some of the best in the business, including the likes of Benchmark, Sequoia, Redpoint, and Marc Benioff, just to name a few. As for Tien, before Zuora, Tien was one of the original forces at salesforce.com, joining as employee number 11 In his nine years at Salesforce, he served in numerous different roles, including as Chief Marketing Officer for two years, and most recently as Chief Strategy Officer. However, before we dive into the show's state, if you do make the wise decision of coming to SaaS to annual, then you'll see the incredible Algolia team in person. Algolia is the robust search API that allows developers to integrate lightning-fast, typo-tolerant search into their SaaS product. Out of the box, Algolia offers developers a powerful platform for building great search experiences by owning the entire stack from engine to server. Algolia free up development teams to focus on adding intuitive search that delights users. This is perfect for existing search teams looking to spend less time on maintenance and infrastructure management and more time on user experience. For small SaaS teams, Algolia is a perfect investment on top of your existing stack that requires no specialist engineers. And you can learn more about how Algolia helps SaaS scale search and get started on their 14-day free trial at algolia.com forward slash sass to podcast. However, it's now time for me to hand over to the main man, Tien Tzuo, Founder and CEO at Zuora.

**Tien Tzuo** (2:29)
That's perfect. Okay. I think we're warmed up.

**Harry Stebbings** (2:31)
Tien, great to have you on the show today. A huge thanks to Jason Lemkin for the intro, but thank you so much for joining me today.

**Tien Tzuo** (2:37)
Absolutely. Thanks for having me.

**Harry Stebbings** (2:38)
Now, I'd love to get started today with a founding story of Zuora and how the business got off the ground in the early days with you.

**Tien Tzuo** (2:45)
Yeah, sure. Well, the company was founded towards the end of 2007, early 2008
And the idea for the company was actually hatched in Marc Benioff's office. And Marc Benioff being the CEO of salesforce.com. And it was a meeting between Marc and one of the founders of WebEx. And I don't even remember what the meeting was about, but I was there and my co-founder, who was working at WebEx at the time, was there as well. And instead of talking about the meeting, we found ourselves spending, gosh, half, 60, 70% of the meeting complaining about our billing systems. And both of us realized that we had a shared experience that in order to be successful building these new software as a service business models, really required us to invest millions of dollars every single year on a system, a set of systems capability, because existing ERP solutions from NetSuite and Oracle really didn't do the things that we needed to do around billing, around pricing, around subscription management. And so we said, look, if Salesforce is having this experience, as WebEx is having this experience, all other software vendors and SaaS vendors must be going through the same exact thing. But then what we really excited, what really excited about us is when we said, okay, but if it's just technology companies, is that really a big enough market? And we picked our heads up out of sight of our industries and noticed that there's actually multiple industries going in this direction. We looked at Zipcar, because at the time there was no Uber, there was no Lyft, but Zipcar showed us the world that one day people might not have to own cars and they would simply subscribe to services. And after Uber and Lyft and all these other transportation services, like Surf Air and CitiBikes came out, you can really see that this is where the world went. And we also looked at Netflix, which at the time was selling DVDs, but they were using this new subscription business model to disrupt Blockbuster. And we can see a world where people would no longer buy DVDs or CDs, and that's exactly what's played out since 2008 So we said, look, it seems like this world of subscriptions goes way beyond just the software and technology industry. It feels like all companies can really shift to the subscription economy. And if that's the case, then all companies would experience the same pains we experienced at Salesforce and WebEx in terms of having to spend millions of dollars on these backend billing and payment systems. And we said, that makes an exciting idea. I got Marc Benioff to support this. He was one of our initial investors.