Welcome! This week we’re talking subscription product strategy with Sri Srinivasan, Chief Product and Engineering Officer at Zuora. This week Zuora announced a lot of exciting new product features during our big Customer Day event, so I thought it would be fun to peek inside the hood and find out how Sri thinks about building new products. Sri is an expert in enterprise software, of course — he was previously a VP at Cisco and a CTO at Microsoft — but he’s also a big picture thinker and a sharp communicator who offers helpful insights about subscription offerings of all kinds.
Welcome Sri! Let’s start simple: How do you prioritize new features in a subscription offering? I discussed some of these issues during a Q&A with our customers last week, but I’m curious to hear your thoughts.
If you look at the way software used to work, everything used to be sold like a product in a box, as opposed to creating a service in the cloud. Some of our competitors still do it that way. But there were a whole bunch of problems with that, right? Adoption, feedback cycles, you didn’t know what the experience of the end-user was. Then along came the cloud, which basically started with infrastructure as a service. And then, eventually, we got to this concept of consumptive add-ons for specific use cases, which broadly speaking is SaaS. One of the basics with SaaS is that all the listening systems were embedded. We could finally see and hear what was going on.
Today you’re seeing your users in action every single day. You’re able to do things like basic flighting, which is when you try something out to see how your users respond. You can look at the feedback cycle and either cull back or move forward. And so we’re living in a continuous feedback cycle, which is what subscriptions are all about. So to answer your question, I don’t prioritize. I let the data prioritize. At Zuora we’re listening to over 1300 customers every day. So the usership of our service, as opposed to the ownership of a box of software, defines our priorities.
But there are also business incentives to consider as well, right?
Of course, we’re always listening for where the market is headed, and it’s a confluence of a lot of input streams, right? There’s the Subscribed Strategy Group, for example, which is talking to management teams. As a platform company, we’re always looking at where customers hitch to us, and where they want to push our capabilities, and often that activity is congruent with where the market is headed. And then when you get back to brass tacks usage, you always know what’s going on in each tenant. All of this informs a growth mindset, which is also the title of a book by a psychologist named Carol Dweck that I recommend and live by. So it’s a combination of where the market is going, competitive positioning, customer’s current usage patterns and where they’re pushing our systems. Those three inform our prioritization. The fourth, of course, is what are our prospects asking us to do, and often those requests are really good leading indicators of where the market is headed. Lately, that’s been an imperative to move beyond subscriptions into point purchases and monetize anything as a service.
On the flip side of that coin, how do you decide what to deprecate? How do you cut stuff, how do you triage? We recently discussed this issue with Gitlab.
I don’t really think in terms of negatives — let’s not do that, let’s cut that — so much as amplifying the right behaviors with data-driven decision making. If you do it that way, then the editing takes care of itself. Everything we do in SaaS based solutions has to be scalable. There’s no room for hero work.
But here’s the thing — it’s extremely hard to do in practice! This is my ninth year in pure SaaS services, and it takes a lot of discipline to stay customer-focused, stay tuned to listening systems, and make sure that emotion doesn’t get in the way of what the data is telling you.
Every single software role has to change in this new world, including the product manager, who is traditionally in charge of managing and defending a particular feature at all costs. It just doesn’t work that way anymore. If it’s not working out for whatever reason, you have to let it go. However, it makes things a lot easier when it’s the data making that decision, not the proverbial loudest voice in the room. At this point we have a very sophisticated funnel of inputs, a well-oiled listening machine, and I’m really excited about that.
On the topic of psychology and software, I’m sure you’ve heard of Conway’s Law, which basically states that organizational structures tend to inform coding structures, and vice versa. How does Conway’s Law inform the way you think about organizing and hiring?
Sure. It’s a clever idea, but the question is: what are you going to do with it? If this new world is about putting the customer at the center of your business as opposed to your product, then how do you apply that framework to customer success? How can I make customer obsession as ingrained into my organizational structure as our coding structure? Because getting on a call every now and then with a customer and then trying out a few different things isn’t a truly applied way of staying customer-obsessed.
There’s nothing wrong with talking to customers, of course. But for those interactions to be truly meaningful, they need to be part of an ongoing future design initiative that’s built to scale. Design is about future-proofing. I have a very simple adage when it comes to design. I believe in hiring lazy engineers. Because they’re the ones seeking the most elegant solutions. And that’s the kind of design thinking that causes the least amount of friction in a Conway’s law framework, where the organization is really defining itself by the code it writes.
It’s been fascinating to watch this kind of mindset spread into so many different industries outside of software. With the rise of digital services, I’m seeing all of these SaaS-intrinsic concepts like beta testing, iteration, and flighting starting to appear in banks, governments, industrial manufacturers, the list goes on. It’s not that software is eating the world, it’s that SaaS is eating the world.
Exactly. Everyone has their own dashboard now, their own way of measuring usership. The entire global economy is waking up! The Subscription Economy still has a huge amount of room to grow, but you’re seeing a maturity in terms of the markets and strategic thinking now. At this point, if you’re not involved, you really have to ask yourself why not.
And the big lesson for a new launch is that you need to design your offering with that listening system baked in from the outset. Lots of times I see companies that are struggling with adoption of a new product, but they don’t have the inputs to tell them exactly what’s going on. And spinning up that dashboard is really the whole point. It gives you the agility to pick a different direction if you need to, without emotion and driven by data.
I talked about this in my product keynote — there are always going to be twists and turns. But going back to subscription product design, it’s all the same set of questions: What did the subscriber do? When did they do it? How did they sign up? What did they renew? What did they upgrade to? Why did they churn? What does their life cycle look like? What does their payment behavior look like? How do certain behaviors affect how revenue gets closed? What are the financial implications?
And once you’ve got that information, then another thing that keeps me ticking is converting all of it into benchmarks and insights, as well as actions and automation. So with Zuora, we’re tethering all that subscription data to Snowflake with their infrastructure expertise and Microsoft BI with their visualization capabilities. What comes out of that trifecta? Information at the ready, so our customers can act with Agility.
Should you work with outside vendors, or try to build those kinds of systems yourself? There are differing opinions on this issue. What are your thoughts?
It’s quite simple, right? You can’t innovate in a sandbox where you’re the only person in there. You just can’t. You’re making a huge mistake if you don’t take advantage of all this collective intelligence that’s happening in the cloud. It’s not just about no maintenance and ease of use. You’re leaving yourself out of the journey to usership if you decide to build it yourself.
So how do you do that? By building a network of loosely coupled systems that are based on finite but fully supported contracts. Of course, you need to put some care into who you work with and how you engage. So pick your partners carefully, but you want to be riding that innovation wave. That’s what this week was really all about. Again, think in terms of loosely coupled systems that keep you innovating continuously and help you stay ahead of market trends.
So it’s not just about simplicity and modularity. Best in class SaaS solutions also give you superpowers that you can’t find anywhere else.
Download Zuora’s Journey to Usership™ white paper.