When it comes to Internet business models with recurring revenue, both investors’ and entrepreneurs’ ears tend to perk up. A frequent topic at industry and business school events, many future leaders are eager to understand how companies using these particular models are succeeding or failing at the revenue game. Brent Chudoba, our Vice President & General Manager of SurveyMonkey Audience, was recently invited to be a panel speaker at Cyberposium 18–the largest MBA technology conference in the world, organized entirely by current MBA students at Harvard Business School (HBS).
Brent and his fellow panelists discussed some of the challenges that subscription-model businesses currently face and shared their insights with conference attendees on how these challenges may affect their future strategies.
It’s all yours, Brent!
A few months ago, I had the honor of sharing the SurveyMonkey story with some of the best and brightest aspiring business leaders at Harvard Business School. In a panel moderated by the great Paul Maeder from Highland Capital Partners, I was joined by folks from several fantastic companies such as Atlassian, Polycom, and InsightSquared.
Little did I know, the nuts and bolts of subscription business models are apparently a hot topic! We conducted our panel to a standing-room-only lecture hall at Harvard, where we shared some of our learnings with an enthusiastic and engaged audience. Our panel discussion covered many common subscription model topics such as “expected churn” (a.k.a. cancellation) rates for businesses; capital considerations needed to build a subscription model versus the more traditional licensed software model; and how investors value recurring revenue models.
When it came time for the Q&A portion of the session, many of the questions asked came from the entrepreneurs in the crowd who were considering subscription models in their future endeavors. Of the many questions asked, my favorite was this: “What innovative approaches have you seen in subscription models?” This question gave me the opportunity to put SurveyMonkey’s unique experience into context alongside business models that would be actionable for the crowd of potential entrepreneurs. Simply put, we have a fantastic business model. I explained to the audience that our customers love our product and for us, it’s a model that works, and works well. We provide a free tool that delivers quality results and offer an upgradable set of products that many customers opt into to leverage our additional features particular to their surveying needs.
That being said, it’s important to point out that we’ve had more than a decade to build upon and strengthen this model. When I look at other business models that have recurring revenue, the first that comes to mind are the companies that deal with physical goods and materials. They’ve turned what was previously a frustrating retail-shopping experience into a hassle-free (and even fun) online shopping experience. Amazon was the pioneer in this category. They proved to the consumer that purchasing items from clothing and personal accessories to home appliances and entertainment can all be done online and much more efficiently than purchasing within a brick and mortar space.
Although this trend isn’t a new one, its full potential is still yet be realized. When you look at a company like Modify Watches and see how they were able to create a subscription service for a new watch every two to three months, it proves just how powerful e-commerce and subscription models can be when they join forces. It’s changing the way that businesses evolve and in how they are addressing consumer needs.
All in all, it was a great day in Cambridge and many thanks to the hardworking MBA organizers of Cyberposium 18 for the invitation to speak. I learned a lot while there and hopefully shared some useful insights on what we’ve experienced here at SurveyMonkey. The future of subscription models is a bright one and we’re excited to see how the entrepreneurs and innovators out there today will apply the subscription-business model to their own.
If you’d like to check out some photos we took at the event, click here.
Brent Chudoba is SurveyMonkey’s Vice President and General Manager of SurveyMonkey Audience.
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