Subscriptions, the new horizon of companies

October 16, 2019

This article was first published in Le Figaro with the title “L’abonnement, le nouvel horizon des entreprises” by Bertille Bayar


At a time when everyone wants to rethink – or destroy – capitalism, the concept of ownership is particularly debated. Thomas Piketty, the economist and author of Capital and Ideology, imagines a property made temporary by taxation. Jeremy Rifkin, in The Age of Access published in 2000, predicted that ownership would be overtaken by an access economy favoured by the Internet. His theory has spun over. And in San Francisco, it even inspired entrepreneurs. Tien Tzuo is one of them. This Salesforce alumnus founded his company, Zuora, in 2007. The company has been a great success, listed on the stock exchange since spring 2018 and valued at nearly $1.7 billion.

Tien Tzuo was born in Taiwan but he is a child of Silicon Valley. He likes to call himself an “evangelist”. He defends the advent of an economy of usership rather than ownership. And he has translated this conviction into a business model: Zuora provides its customers with software solutions to move to a subscription model. Subscription is as old as capitalism. But new technologies have given it a new sense of purpose. This model has allowed new companies to shake up established markets. The oligopoly of razor manufacturers has been shaken more by startups that have provided subscription offers than by Chinese competitors. Netflix was built on subscription….

Lawn mower

What Tien Tzuo is saying is that the model is not only suitable for “B to C” companies, where the customer is the final consumer. The “B to B” manufacturers can also become subscription suppliers. They gain from this in terms of recurrence and predictability of their income. The concept is in line with the growing tendency of manufacturers to redirect their strategy towards services. Nowadays, anything can be a connected object, provided to the customer by subscription. For the CEO of Zuora, there are treasures to be exploited in the data emanating from the use that customers make of the goods produced by a company. Treasures that make it possible both to develop the offer and to build customer loyalty. For example, a Japanese short-term car rental company discovered that many of its customers did not drive, but used the vehicle as a temporary office or perhaps to take a nap. The subscription solution can therefore be applied to all sectors of activity. Tzuo likes to quote those of a lawn mower manufacturer. Even the giant construction and civil engineering machinery giant, Caterpillar, has done it on a large scale.

France is a land of conquest

“Maybe the French are more sensitive to the idea of going beyond property, which seems a little romantic to them,” he shares when he is in Paris. His book Subscribed, published in 2018, has just been translated into French. He tells his own story, that of an entrepreneur who, despite the recent setbacks of Uber or WeWork, believes deeply in disruption. However, the book is mainly intended for professional readers, as a kind of “tool-box” with which Zuora hopes to make new customers in France. The American company already works for esteemed French companies such as Schneider Electric, SNCF or Saint-Gobain.