 Hey, welcome back everybody. Jeff Frick here with theCUBE. We are live in downtown San Francisco at Zora, subscribe 2017. 2,000 people talking about the subscription economy and subscription equals freedom and coming right off the keynote. We're excited to have the founder and CEO, Teens Yao, founder and CEO of Zora. Well, first off, great job on the keynote. Oh thanks, thanks for having me on the show. Great energy. We hear a lot about subscription economy. Obviously a lot of people have Amazon Prime, a lot of us subscribe to Costco. We've got streaming music services, like Spotify, but I don't think people think of companies like Caterpillar or Fender Guitar as companies that really have a subscription-based relationship with their customer. So before we get into specifics, I want to talk to you, how is our subscription relationship different than a regular one-off transactional relationship in the way that you are connected to your customer? Right, right, well, I mean, we all know that the world's changed, right? And we've been evangelizing at this event. This is the sixth year we're having this event. There's over 7,000 people that actually come to these events around the world that the world is moving to a subscription economy. And starting two years ago, people said, you know what, we get it. This is a subscription economy. I can feel myself. I don't buy products anymore. I simply tap into services that I use. And the great thing about these services is these provider of these services really care about you. They want you to come back and use the services. They're constantly updating it. And it really frees us all from the shackles of product ownership and we want to get from point A to point B today. We don't have to worry about cars. We pull out our phone. We tap into our service and we're able to get what we need when we want it. Yeah, you had that as a really big theme, kind of shackles of ownership, shackles of obsolescence. You know, this idea is that if you'd have a subscription to a service, you don't have to worry about the oil change. You don't have to worry about whether it's last year's model. You pulled up some funny pictures of CDs and the CD wasn't even in the CD case. The CDs, and that wasn't that long ago that we had these CD cases. And I have empty CD cases all over my garage. I'm guilty as charged. But let's dive into a specific example. So Caterpillar's cool example, already having autonomous vehicles driving these big mining. That's all right, but let's talk about the Fender example. Because I think that's a really interesting one. What is Fender doing in terms of a subscription or relationship with their customers to change who they are and what they are as a business? Well, we talked to companies that are going through this transformation. What they bring it down to is this shift in mindset of selling a product to thinking about customers. And so when Fender did this, an amazing transformation happened. They sell a lot of guitars. And when you look at shipping products, how do I sell more guitars? And they said, that's not looking at that way. Let's look at our customers. And what they found is over 40% of the customers or the guitar purchases are first time customers. And then 90% of the customers quit after about three months. Because it's just too hard. It's just too hard. And so when they look at it that way, they say, gosh, we have a 10% retention rate for our customers after 90 days. Now, if we can just extend that, extend it out, and oh, by the way, the 10% of customers that stay, they stay for life. They buy additional guitars. They buy additional amps. They buy sheet music. They buy picks. And so that's how we have to think. We have to not think about selling more guitars. We have to think about how to hold on to our customers for life. If we could just go from 10% to 15% to 20%, and we are going to find so much more revenue and we're going to double the triple size of our company. So then how do they execute that with your guys' software? So what they need to do is they need to establish a subscriber ID. So when you buy a Fender now, there's a whole set of digital technologies that they draw you into. There's a tuning app that you can use to, because it's hard to tune your guitar. There's applications that teach you how to play a guitar. There's applications that you can use to play like the Edge or play like Flea or play like your favorite guitar. So they draw you into the process. They create social communities, social networks. And what we do is we help them turn a guitar purchase into a subscription service that the customers opt into for life. So interesting, right? Because it's just not a transaction. It's an experience and it's an engagement. And one of the other things you said in the keynote that caught my attention, that there's all these different transactions now. You can buy, you can upgrade, you can pause, you can turn off, you can turn on, you can change the level. So it's just a much more dynamic, engaged process and relationship between a person selling the service and arguably guitar enjoyment, not offender guitar, versus an actual piece of wood and some metal strings and everything else. Right, what we try to talk about is this whole world of subscriptions. Ultimately, when you're successful is when you deliver freedom to customers. Freedom to customers I didn't have before. The story of Netflix is if you have 20 or let's say Spotify, so you have $20 to spend, you don't have to buy one song, one album, one CD. You can access the whole library of music ever created and there's a freedom to that. Now what that means for businesses to react to that is that puts a lot of constraints on businesses, right? Before they just simply take orders, give me a guitar, give me a song, give me five units of this widget. Now they have to react to what customers want. I want this, I want this now, I want it like this, I want to upgrade, I want to downgrade. And so this creates all these constraints on businesses and what we want to talk about today was in this new world, businesses need freedom to. Businesses need freedom to. To price, to experiment, to design customer experiences, to get the information they need. And what's holding them back is their IT architectures of the past, these ERP systems. And so what we presented this morning was an alternative view, a post-ERP view that of a new set of systems that we provide that help companies be successful and grow in this new subscription economy. Right, that's a linear, basically that was your theme, right? Not just linear. Right, these linear systems in the past, they don't work anymore. Well the other thing I think that's really compelling that I think needs more attention is now if I have to pay 20 bucks a month to Spotify, which I do, we're on the family plan, I love the service, but they have to keep delivering new value because for me to keep paying every month, you know, it's a much deeper relationship because they got to keep keeping me on the hook. They got to keep innovating. They got to keep delivering new things. And so that's what I think that's really interesting about this is the relationship between the buyer and the seller when you have an ongoing touch point every single month versus that one-time transaction. Well, the key word there is relationships, right? In the old model, which I'll call an asset transfer model, let me convince you to buy my product and now you own it, right? I've gotten the money and I'm going to go focus on the next customer. This new model really requires me to care about the relationship, to care about the value that I'm creating, to continue to add to it, to make sure that there's not an alternative out there, that's moving faster and delivering things that I'm not. That relationship becomes really, really important and that's why this model is better and that's why when you use services like a Salesforce, like an Uber, a Spotify, or Netflix, an Amazon Prime, you get the feeling that the other person, the vendor on the other side, really cares about you because of course they do. Right. All right, so I know you're super busy. You got a lot to do, but before you leave, just get your impression that you've been at this for a while, how this has grown. Is it grown faster than you expected? Is about the same line? You know, as you've seen the subscription economy grow from your initial vision six, seven years ago, what's your kind of takeaway as you sit here amongst 2,000 people that are arguably the center of this universe right now? Gosh, when you look at the subscribed event, when you look at the energy here, then when you look at the companies here, I would say five, six, seven years ago, we had a lot of software as a service companies here. Box, they're great customers, they continue to be customers, but do we think that we would have Ford showcasing their electric bikes here or caterpillars showcasing their autonomous vehicles? And these are gigantic vehicles that are carrying 200 cars into what they talked about on stage. I mean, the world's clearly being transformed. Did I think it was going to happen? We always knew the subscription economy was going to be here. We always knew the size and scope, but once you hear the stories, you can really tell how much our world is going to change and how much it's going to become just simply a better place. All right, team, well congratulations to you and thanks for taking out a few minutes and stopping by the team. Good, thanks a lot, thanks for having me. All right, he's team, I'm Jeff, you're watching theCUBE from Zora Subscribe. Thanks for watching.