The battle for your SaaS billing system is going to be fun to watch.
In the Goliath camp:
“Zuora is the leader in subscription billing and recurring payments. Our Z-Billing and Z-Payments products make it fast and easy to launch new products, scale operations, and automate recurring billing and subscription payments in one solution. “
From the outside, it looks like Zuora has everything imaginable going for it. Their CEO was a very early employee at Salesforce, and launched the company with Marc Benioff’s backing. The team he has recruited is extraordinary on paper. Their President used to be the CEO of Savvion, and took a position demotion to come to this start-up. Their CMO bailed on ReadyForce, a stealthy start-up with plenty of high profile backing. The CFO bailed on Obopay. The rest of the team had very significant roles at Webex and eBay. When you see people leaving important jobs and hot start-ups in droves for a new company, that is a clear sign something good may be happening.
Vindicia, the old man in the group founded in 2003, looks like it’s at least on par, or even a little ahead, of Zuora on some key metrics, including having billed $1.6B in revenue.
Add to the mix that there is a little company called Paypal in the market and it would seem this space would be deemed done by the venture capitalists. Not so! Polaris and some high profile angels just backed Recurly, which certainly has a prettier face than either of its more senior competitors.
Both Recurly, and the bootstrapped Chargify, are focused on a lower priced, simplified product design, and are coming to market with a freemium business model that charges based on usage. They sound very similar, with both emphasizing ease-of-use and simple integrations. The final two entrants in this battle, Spreedly and Cheddargetter, look like a couple of very small teams throwing Ruby against the billing wall. Spreedly does seem to have real customer traction and should get the attention of a venture firm in the Southeast where its based.
I do have one concern about this whole space. In 2009, Vindicia billed $1.6B but was only able to keep $4.4M in revenue (per the Inc 5000 list). That means, to build a $100M business, a billing company would need to have $36B of revenue under contract. That figure is the equivalent of 30 Salesforce.coms. Last time I checked, there was only one. As a result, one has to wonder how many years of SaaS revenue growth it will take before a SaaS billing company has a payout of its own.
The Tale of the Tape
| Company | Employees | Pricing | Key Public Milestones |
| Zuora | 85 | Not public | $1B revenue signed up Q110 |
| 102% revenue growth | |||
| Vindicia | 58 | Not public | $1.6B billed in 2009 |
| $4.4M in revenue | |||
| Recurly | 4 | $699mo. per 10K transactions | $1.6 raise from Polaris/Angels |
| Chargify | 6 | $749mo. per 10K customers | Lance Walley, Engine Yard, CEO |
| Spreedly | 4 | $19mo up to 5K customers |
Hey, thanks for including Chargify!
Just wanted to note that Chargify is part of the 50-person, 6-year-old, profitable GrasshopperGroup.com.
So we get the flexibility of a startup – plus the solidity of a larger, self-sustaining organization. This gives our customers comfort that we’ll be here year after year, 24/7.
Thanks.
— Lance Walley
— Chargify
thanks for the clarification Lance. Good luck with it .. looks great!
Thanks for pointing this out.
For me it looks like the agile startups of your list need ot find their niche to get profitable because as you pointed out the mass market has not a high margin.
As a European based startup we suffer from the lack of recurring providers a lot, maybe some of the mentioned companies can find their “profitable niche” in becoming the leading provider of such services in Europe?
Where do Aria and Monexa fall?
I don’t know. I will do an update in a little while.