We’ve seen why SaaS businesses want to offer flexible deals, and why existing solutions are holding them back.
The question still to answer is, what would a successful solution look like?
Modestly, we’d say it would look like Subskribe.
The reasons go all the way down to the foundation of Subskribe’s design.
In a typical quote-to-revenue system, everything starts with the quote. In Subskribe, everything starts with the order. Almost like commits log in a database, orders in Subskribe record all the changes — and upcoming changes — in the financial relationship between a company and its customer. Subscriptions are simply a snapshot of the current state of the financial relationship — analogous to a database “view.”
It may sound trivial, how Subskribe combines quotes and orders into one master record stored in one data repository. But it makes all the difference. You would be shocked at the millions of dollars companies spend each year trying to integrate their quote and order objects across siloed CPQ and billing systems. Subskribe completely eliminates this cost by making the quote object identical to the order object.
Subksribe’s unitary architecture also eliminates the need for manual reconciliation. Once an order has been executed by both parties, Subskribe creates a subscription contract and our billing module takes over.
[Order (quote)] → [Order (signed)] → Creates Subscription → Billing Magic Happens
This is the part that floors CFOs when we demo Subskribe: when they experience a truly unified quoting and billing system.
Another important aspect of Subskribe’s design is that it’s both an order management system and a subscription management system. To generate invoices, our system looks at every subscription, then finds all the orders associated with it. This enables true order-based invoicing, as stipulated by ASC606, without hacking the system in any way.
If a subscription is modified multiple times through an amendment order, the order lines related to each amendment show up on the invoice. However unlike some existing systems, we do not generate multiple invoices. We can do better. Subskribe combines all the invoices related to an order so that a customer is not befuddled when they receive their invoice.
Subskribe also co-terms by default, so that even if a customer buys multiple products at different times of the year, they are all going to renew on the same anniversary date.
Moving further along, our Order object travels to the revenue recognition module (which we are actively building). The rev-rec module will perform order-line-based revenue recognition. This is about as compliant/purist as you can get with ASC606. Throughout this process, each module refers to the same product catalog and pricing engine, which means no duplication of data or logic.
Subskribe has native support for cutting edge consumption billing. From highly scalable APIs to support for leading usage pricing models such as drawdown, Subskribe has it all.
The appeal of a unified system is clear. But as we’ve seen, there is no way to automate the quote-to-revenue process for post-subscription SaaS without a clean-slate approach. You simply cannot combine multiple systems with different logic, metrics and data models into a single, consistent quote-to-revenue system.
We’re not the only ones to realize this. Incumbents claim to have created unified quote-to-revenue systems. But none have delivered on the promise because they weren’t willing (or able) to strip the quote-to-revenue process down to its bare bones.
Before Subskribe, SaaS companies had to put up with expensive customization, duplication of product catalogs and pricing engines and never-ending headaches from reconciliation issues. With Subskribe, everything that used to be hard suddenly becomes easy, and SaaS companies can finally focus on building solutions, not billing solutions.
Anyone who has seen “Halt and Catch Fire” or lived through the 80s and 90s knows how different B2B business models — and sales — used to be.
The most successful software companies have always been the ones that adapted best to the sales models of the day. In that regard, three distinct eras of B2B software sales stand out:
Until about a decade ago, software was sold using a license model. Think about buying Microsoft Word. You paid once and received lifetime access to that version of the software. Major updates, like the upgrade from Word 97 to Word 2000, cost extra.
Since the advent of the cloud, software has been sold on a recurring basis, with updates included (think Office 365). This is generally referred to as the subscription model. Most early subscriptions were quite simple. They consisted of static deals, in which the terms didn’t really change over time.
Now we’ve entered a new era. Today, B2B SaaS companies have moved toward a more dynamic model for pricing and selling — deals that don’t fit the simple “subscription” mold. They are dynamic deals, ones that are designed to change across one or more dimensions.
Teams throughout the business want to offer dynamic deals — or to support them. Product teams want to offer usage-based pricing and bundles that appeal to customers. Sales teams want the flexibility to structure custom-tailored offers like creative upsells and cross-sells, and ramp deals that provide increasing discounts as usage grows. At the other end of the sales cycle, finance teams need to accurately bill and recognize revenue from these deals while remaining compliant. And of course software buyers want flexibility too. They only want to pay for the products and services they’ll actually use.
With all these factors in play, we aren’t surprised to find that companies that embrace dynamic deals grow their customer base and revenue faster than competitors. It makes sense. Dynamic deals reflect the overall trend toward greater market efficiency, where buyers get better deals and sellers are better able to maximize their revenue. It’s a true example of a win-win.
The problem is, quoting, billing and revenue systems weren’t designed to support flexible deals. The concept of a static deal is practically inscribed in their DNA.
In talking to more than a hundred SaaS companies of all sizes ($1M - multi billion revenue), we haven’t seen a single example of a company that is successfully supporting dynamic deals across their quote-to-revenue process using any of the systems available in the market today.
They’ve found various ways to cope:
The problem is bad enough if just one of the systems in your quote-to-revenue process is lacking. It’s compounded when you have multiple systems built by different vendors, all lacking in some way. Sometimes, those different systems have been acquired from different companies and sold as one, but the problems persist.
The solution? That’s the subject of our next post, where we strip the quote-to-revenue process all the way down to the studs.
Today we’re publicly launching Subskribe, and announcing our Series A and Seed funding led by 8VC and Slow Ventures. Subskribe is the Adaptive Quote-to-Revenue platform for the Post Subscription Era.
Having spent years in the industry, we realized that existing billing systems prevent SaaS companies from reaching their revenue potential. Today’s SaaS companies are offering complex ramp deals, usage-based pricing, bundling products and services together. Sales teams struggle to even quote for those.
If you think through the quote-to-revenue process, sales teams quoting dynamic deals is just the beginning. The deal then has to flow through its lifecycle across the billing and revenue systems with integrity:
This is where the trouble really starts since quoting, billing, and revenue systems were just not designed to handle dynamic deals. For example, your quoting system might not know how to create a quote for a ramp deal. Or your billing system might not know how to create invoices for products that are billed by usage. Or your revenue recognition system might not know how to allocate revenue for the dynamic deals you've already closed. It’s a problem that hits sales, finance, and compliance teams.
We felt that the industry needed a truly unified system architected from a clean slate to handle modern SaaS use cases from day one. We have experienced the pain first-hand and are deeply motivated to create a world where CFOs and sales teams alike love their quote-to-revenue systems.
So we started Subskribe, spoke to more than 100 businesses, and collaborated with leading SaaS companies (public, pre-IPO, and midsize) to design and build a breakthrough product. To achieve this, we have built a “Google-caliber” dream team of engineers and designers, shipped product at a blazing pace, and crafted a Customer-First, API-First, Remote-First, Empathy-First (CARE-First) culture that our employees love.
As Frank Slootman the Snowflake CEO says, architecture matters. We agree. A superior architecture is foundational to a delightful customer experience.
Putting on our product manager hats, the requirements sound straightforward:
1. Build a product that supports the dynamic SaaS deals that customers want, natively
2. Make sure it works end-to-end, flawlessly
The only problem? This is a really complex multi-module system, and you have to think about all the corner cases that might break the design, evaluate if they matter, and if they do then figure out a way to handle them.
Working through the problem, we realized that we needed a completely new architecture: one that was highly flexible yet consistent end-to-end. The answer turned out to be elegant in its simplicity: a versatile data model based on an ‘order’ that travels across quoting, billing and revenue to provide consistency, and a highly performant, modular service architecture for flexibility. So that’s what we’ve built at Subskribe: an Adaptive Quote-to-Revenue platform for the Post Subscription Era.
Of course, we are not the only ones to realize that post-subscription billing is broken. Incumbents too will claim to have a unified quote-to-revenue system. Usually, they have acquired multiple systems and bolted them together. But the underlying problem remains in the data model. The shift from licensing to subscriptions was fundamental, and the transition to dynamic deals based on consumption, bundles, and ramps is no less significant. That’s what’s exciting for us and our customers.
As we welcome this new day for new deal types, and the launch of Subskribe, I do want to take this chance to thank my co-founders Yibin Guo and Prakash Raina, as well as the entire Subskribe team. Plus of course Sam Lessin at Slow Ventures for his early support in our Seed round, together with a star-studded list of angel investors from the likes of Amplitude, Asana, Coupa, Dialpad, Okta, Plaid and UIPath. Then Alex Kolicich at 8VC led our A round funding and has been fantastic to work with. Finally, it’s an entrepreneur’s honor to have design partners engage to help guide the development of the platform and to see early customers like Gremlin and BigID take the leap with us. Thank you all.
Today we celebrate our official launch. Tomorrow we get back to work shaping the future of quote-to-revenue. Come join us, we’re hiring!