It was an incredible week at Supernova- Wharton School of Business’ annual conference that brings together leaders in Tech, Government and Education. The goal of the yearly conference is to create discussion surrounding change and the trends impacting us as a tech community, economy, and society.
Recurly was invited to Supernova as one of the spotlight innovating startups, which enabled us to present our service to attendees. More importantly, it let us attend the various sessions. These ranged from panels focusing on the evolving “real-time web” to the changing landscape of venture funding to the future of global internet policy. The common thread through all of these areas was rapid, real-time change. Rapidly changing times, rapidly changing customer needs and rapidly evolving business models.
How Subscription Billing Fit in
We were really curious to see how the movement towards subscription billing and Freemium models would be discussed. Over the past few months, we’ve spoken to companies ranging from SaaS companies to small newspapers and nonprofits- all of whom are looking at new ways to gain revenue and donations. It was encouraging to hear that the trends we’ve seen over the past year- a movement from traditional ad based revenue models to subscription models- highlighted several times by the panel speakers. One particular presentation stood out in this area- the panel on building startups today in the aftermath of the recent recession. Rashimi Sinha (Slideshare) , Christine Heron (First Round Capital) and Dave McClure (Founders Fund) discussed their thoughts on building a company now, how to fund it and guide it to success.
What was mentioned time and again was that now is the time is right for creating a new company. More can be accomplished with less capital- thus the reasoning for the drop in the size of funding rounds and the increase in the quantity of smaller fuding rounds. For many startups, pure bootstrapping is a very viable and real option. With the drop in dollars put in by VCs to startups, Dave felt VC’s now offer an even greater level of support for startups in non-tangible resources (assistance with marketing, partnerships, advice on social media). Most interestingly, Dave and Christine suggested if you’re building a startup today, you should be looking at a subscription-based revenue model for success.
What does this mean?
As time goes on, there is going to be a larger shift towards service paid for in smaller- but recurring- increments. Multiple attendees I spoke to from several larger enterprise software executive to the manager of a nonprofit agreed that this shift towards subscription billing/donations is a direct factor of the economy. By lowering the bar to trying a new service (or donating to a charity)- it makes it much easier for an end user to sign up for. Even if the cost of the service over the user’s lifetime is higher, the value of being able to amortize the cost over time is a great incentivizer to using a product. With the explosion in the area of subscription billing and the growing amount of businesses interested in subscription billing, we see this number only growing, And we look forward to assisting make it easy.