Aria Systems

Globalization

Just read a  great post by Fred Wilson where he displays some very telling numbers regarding the adoption of the Internet by the rest of the world.  At Aria, we learned this lesson accidentally, a sort of happy accident.  When we started the company our intent was to serve largely North American entities and their language, localization,  currency and availability requirements. 

This picture illustrates what happened to us just in the past 24 months.  Because of the leverage of the Internet we ended up with clients around the globe.  These clients quickly drove us to learn about global payment method adoption, inter/intra country privacy compliance and payment processors we would consider "non-standard" in North America.

Additionally, the complex integration challenges were largely unforeseen when we started Aria.  For instance, our original system could handle taxation for relatively static tax rates but because of the global commerce our clients required us to  determine the tax rate on software and services around the globe on a real time basis.  We've also had to integrate call centers in India and Asia which provide support for our clients and their end users 24x7. 

These requirements are driving us to become an always on utility.  It's hard for us to have a maintenance outage even at 2am est on a Sunday since it's in the middle of Monday in Asia.  My advice to software companies everywhere:  read or reread  "The World is Flat"!

We have over 1Million end users in 236 countries and territories.  We even have end users with billing addresses in Antarctica!!

New Board Member for Aria

Dave Labuda formerly of Portal Software (CTO and CEO) has joined Aria's board.  This announcement is getting us lots of positive attention!

We connected with Dave via Mark Gorenberg, who worked with Dave  at Sun Microsystems and have been speaking with him for the past few months.   He has added tremendous value in this short time and I look forward to working with him more closely in the years to come.

Welcome Dave!!

MSFT vs. YHOO: Fully Hostile?

Marc Andreessen has asked some experienced attorneys to contribute their thoughts and analysis...very interesting.  I'm not sure which will be more exciting...hockey playoffs or a proxy battle for yahoo!

Future of SAAS Billing

I had a great discussion with Phil Wainewright recently and he posted some thoughts on our discussion and billing for SAAS.

Berkshire Hathaway Annual Report

I’ve been traveling a lot the past two weeks and I’m a bit behind in everything but I spent some time reading the annual Berkshire Hathaway letter from Warren Buffet this past weekend.  As always, it’s chock full of great information but this description of their portfolio company FlightAware is great:

This company delivers benefits to its customers that are the equal of those delivered by any business that I know

of. It also possesses a durable competitive advantage: Going to any other flight-training provider than the

best is like taking the low bid on a surgical procedure.

Billing isn’t brain surgery, but going with the low bid can be detrimental even fatal to your business.

 

Tags: buffett, berkshire

Amazon Dev Pay...at least one reason to be concerned

I’ve been getting a lot of questions about Amazon Dev Pay recently.  On the surface, it seems like a great idea and a cost effective way to start a web-based service.  After digging a little deeper, I found several red flags and one BIG game stopper if you plan on growing your business.

Read the entire Processing Agreement.  And pay special attention to paragraph 8.2 which I abridge below:

 

8.2 Purchase Data.  In order to allow you to manage Subscriptions, we may provide to you certain information pertaining to End Users, including, the name, e-mail address and any other information that we make available to you ("Purchaser Data").  We own all Purchaser Data that we provide to you and you have limited rights to disclose and use Purchaser Data. 

So…you don’t own the customer, Amazon owns them.

The following was an additional scary bit of fine print in the same paragraph:

Specifically, you will not directly or indirectly:use any Purchaser Data for any purpose, other than as is necessary to manage Subscriptions you sell through the Service, including, without limitation, marketing or promotional purposes

I’m not an attorney, but it seems clear, if you send an email offering additional services to your customers Amazon can terminate the agreement and keep the money in your account:

7.2 Suspension or Termination by Us.  We may suspend or terminate the Service, for any reason at any time without prior notice to you.  Termination of the Service will result in the closure of your Payment Account and termination of this Agreement.  Without limiting the foregoing, we may suspend the Service and access to your Payment Account (including without limitation the funds in your Payment Account)

Seems fair to me!!

Hot or Not/Lecayla

Two acquisitions caught my attention today: 

1.  Hot or Not acquired by Avid Life Media

2.  Lecayla acquired by OpSource

Hot or Not is interesting to me because of my curiosity regarding Internet businesses especially where entrepreneurship and exit valuations are concerned.  According to the Tech Crunch article linked above, Hot or Not received $20M in total consideration which is an estimated 4x revenue and 10x profits.  Apparently, Hot or Not had no outside professional investors, so the full amount gets returned directly to the existing shareholders.  James Hong, one of the founders of the site has a post here regarding the restarting of the site in 2006.  Assuming their option plan was 15% of the outstanding equity, it was probably a good return for the owners and employees.  It definitely wasn’t an IPO type of exit, but seriously, it’s a picture rating web site!!

Lecayla is interesting to me for many reasons.  First, I’ve come to know Conor, the CEO of LeCayla, fairly well through SAAS events, deals we’ve worked on together and deals where we’ve competed and I like him.  Second, LeCayla is a great comparable for Aria since they are a SAAS “billing” company and are at least adjacent to us in functionality.  Third, OpSource has been a good partner for Aria and sells a lot of our software. 

From the sparse details regarding the deal, it seems it was an all stock deal, meaning no cash changed hands.  The existing LeCayla investors are now the proud owners of OpSource stock.  (hopefully they got some preferred, but most likely, it was common burdened with at least $40M in preferences.) 

Unlike the Hot or Not deal, LeCayla had some real potential.  The SAAS delivery model is still emerging.  None of our SAASy peers have come close to creating meaningful revenues yet.    (In my opinion, SAAS won’t be taken seriously by the software industry until at least one company reaches $1Billion in revenue…market cap doesn’t count!) And, maybe more importantly, Billing is a mission critical application where existing ISV competitors have REVENUES in the BILLIONS! 

 

 

Who Owns Your Data?

cross-posted from here:  http://www.ariasystems.com/thepit/

Recently, after 4 + years of using Aria for their customer management needs, our first customer Seawave (www.seawave.com)  was acquired by one of their competitors:  Globe Wireless, and has transitioned their billing to Globe’s existing system.   This transition provides an excellent case study for those concerned with ownership and transition of customer data at the end of a commercial relationship.  While it’s a bummer to lose such a great customer, transitioning data to another provider was an important step in Aria’s evolution and something to consider when analyzing mission critical SAAS applications.

After a few weeks of planning and coordination, we executed a “balance-forward” billing conversion and transitioned Seawave from our system to the internal Globe Wireless system.  As a B2B service provider to the Marine industry, Seawave has very complex billing logic including over 400 different  service rates and several layers of parent-child relationships.  Adding to this complication, they also have a mix of payment methods including net terms invoicing (paper and electronic) and credit cards. 

While Seawave owns the data, they don’t own or have access to our schema therefore, they had to do a bit of heavy lifting on their end to determine how to map the data and accounts to their new system.  Inevitably, this will lead to a mismatch in functionality between the two systems, so compromises had to be made.  The initial phase of the transition has been completed but because their business is seasonal, it will probably take a few cycles of close observation before its declared a success.  We are providing them with “read only” access to the system, frozen in time after the transition period.

When considering an on-demand provider for mission critical functions, make sure you own the data and the provider has a plan and experience transitioning to other providers. 

 

 

 

 

 

Tags:  billing, saas, data

The Industry Standard

It's back:

http://thestandard.com/

Is the "new bubble" topping?

Aria now backed by Hummer Winblad!!

At first I was against taking venture money but, as we grew our need for "strategic" money vs. tactical money became more urgent.   Our larger customers became intently interested in our balance sheet and not only  our features and functionality. 

Having HumWin has definitely shut the door on this typical customer concern. 

It's only been a few weeks and there have been several positive unintended consequences!!  Our new board member will be Mark Gorenberg, who I think may be more connected than Kevin Bacon!!