 Hey, welcome everybody. Jeff Frick here with theCUBE. We are in the Palo Alto studio. It's actually the last day that we're going to be in our old Palo Alto studio. We're moving to our new studio next week, which we're pretty excited about. I'm Jeff Frick, you're watching theCUBE and we're going to have a CUBE conversation today with David G, the CMO of Zora. Dave, welcome. Well, great to be here. Thank you and great to be here on the last day. Yeah, and I hear you guys are moving offices too. So it's something in the air. That's right. This weekend we're moving to our new headquarters as well across the street from where we were pretty much in San Mateo. Right, right. And Happy New Year. Did New Years go well for you? Yeah, all good. All good. Ready to take 2017 by storm. Okay, great. So Zora's an interesting company. You guys have been at it for a while, but for those that aren't familiar with the company, you're very, very focused on a very specific thing. And I wonder if you can give people kind of an overview. Yeah, so a quick kind of snapshot on us is we've been around for about seven, eight years. We're about 600 employees. About 800 customers today. We've raised close to a quarter of a billion dollars of venture funding over a series of rounds. And we're very focused on delivering value to an emerging space, which is this movement, the shift to a subscription economy. As more and more businesses and consumers move from the world of owning products to subscribing to services, whether in your personal life or in your business life, we've built a platform, a cloud-based platform that is a subscription relationship management platform for businesses to deliver what they do as services, as subscriptions to their customers, their subscribers, whether they are consumers like you and I, or other businesses. Right, so I love the music industry as kind of the proxy, if you will, of how things move and change. And to see what happened versus digitization with iPods and what Apple did, but then really the subscription-based flip that Apple missed really, that Spotify has really grabbed hold of as kind of a nice proxy to see what happens when you shift from really a product model to a services model. So it's a completely different game changer and they're grabbing off the traffic now because now I subscribe to the service and I have infinite music versus buying one track at a time. Yeah, so at the end of the day, it comes back to owning the subscriber ID. So in your example about Spotify, and then we'll move on to Apple, Spotify knows a lot about you. You're paying them a certain number of dollars a month. You may have a family plan where you have the kids on there as well. Sometimes you might add your kids. If you've fed up with your kids, you might take them off that plan. Or expand your family and we don't know about it. Maybe something like that. But Spotify knows a tremendous amount about you and your family in this case and what your listening preferences are. And they can curate and customize a very unique experience specifically for you. Now let's talk about Apple for a minute. If you were to look back at Apple three, four, five years ago, you would make the case it was a hardware business with some services associated with it. And in fact, the big flip in calendar 2016 for Apple was that services revenue number has grown to be a material and meaningful part of their revenue growth and certainly their profit engine. As the number of net new iPhone sales has begun to decline, that growth number has begun to shrink, the monetization of those iPhones using your Apple ID has grown exponentially. So you're in their Apple iCloud, for example, you might have iTunes and their music service, you might be storing your photos in their cloud and their ecosystem. And so the dollars that they are grabbing from you or you're subscribing to have increased pretty significantly and you could make a case that really they're now increasingly in the subscription business. Well, what's interesting about the subscription business is you touch on so many mega trends and you just talked about three or four of them. One is cloud, right? Cloud really enables you now to deliver a service via a mobile phone to anyone anywhere with basically unlimited capabilities behind that application on the phone. So that's a big one. You talked about data and now having such a more robust stream of data on the activity and the consumption of the person that you're serving that you just didn't have before when you shipped a product to your distributor, they shipped it to the retailer, somebody bought it, maybe they send in a card, maybe they don't send a card net, but now you know exactly how people are using your product. But what's even more interesting is the relationship is an ongoing, constantly touching, never ending connection between the service and the company behind the service and the client, very different kind of a model. So that's exactly right. And in fact, that creates a whole different business model. And for companies here in the Bay Area as an example, probably bleeding edge, anybody who's building a new business today is almost certainly, particularly in the software or in the entertainment space, is not delivering a product, you're delivering a subscription based service. And so those born on the cloud businesses require you to have an intimate relationship with who you're using your subscriber is going to be. And those business metrics are very different, whether you're selling software, whether you're selling service, whether you're selling entertainment, all of those things. The other thing that happens is there's a tremendous amount of analytical data that's now generated. Those phones you talk about are generating in your Spotify example, lots of data about your music habits, but think about all those devices that are in your home, your thermostats, your cameras and the like. And then we can talk about transportation as another leading indicator here. All of those are delivering enormous amounts of telemetry data. You marry that with your subscription data and you have a tremendous insight into what value can be delivered and upsold into your customer set or your subscriber. And that's a very different model to your point of going to the hardware store and buying some thing that you plug in, that's a coffee machine or your oven or some physical capital expenditure asset. The model is going to change where more and more of those are going to be devices that you're going to subscribe to over time. It changes the model. And they would shoot me if I didn't mention Uber in an interview probably in 2017, but that shows really the difference between ownership versus using it as a service and what a fundamentally different relationship it is when I just need to get someplace and it's just as easy to use my phone, something comes and picks me and drops me off where I want to go versus managing a car. And that's exactly right. And so if you're one of a large auto manufacturers today, you're looking at that going in a world where potentially there's multiple generations who this is maybe the last generation is going to own vehicles. You're going to just subscribe to transportation. Uber is clearly at the leading edge of that, but those vehicles become autonomous or you want to subscribe to fractional ownership of vehicles or things like that, parking spaces, bicycles in the cities, all of those are going to require a subscription relationship management platform to deliver those services to folks like you and I and the next generation behind us. So another huge impact here is the way that you deliver your services in terms of designing them versus when you were designing a product. You had to do a PRD and an MRD and do a whole bunch of PowerPoints and make a big bet, put the spec down, go build it for a while and then ship it. And while agile has been in software development for a long time and people talk about DevOps, really thinking of that in a more holistic way about going to market, this enables you to do that that you just couldn't do before. And I was looking, preparing for this, looking at some of the keynotes from last year's from your show and is it great, Grace? The example is fantastic, and I'll let you tell the story, but they basically came to a new country and rather than doing the PRD and the MRD and making this huge investment up front, they use a subscription connection with their customer base and an agile methodology to basically create a US based version of what had been really a UK service. So that's exactly right. So if you think about how we've traditionally built product, go out and do a bit of research, get some materials together, put it into our ERP system, manufacture something, put it into a distribution network, have it shipped to a retailer, the retailer sells it and you might get some insight into who that end user is, but you really don't get a whole heck of a lot of feedback in any of that loop, right? So that's a very linear process. In the world of subscriptions, the consumer, the subscriber is right at the center of that and you have enormous flexibility to create experiences that are unique and curated. So in the case of snacks on demand, which is what this one is, and there's lots of food delivery services that do this as well, the ability to be able to show up and curate an experience that is specific to you, using the data that you're getting from your early adopter subscribers and then extrapolate that out to other markets is incredibly valuable and takes multiple steps out of it and gives you instantaneous feedback and that's the key in a subscription economy is that you're getting this regular data-driven feedback loop as to what's working and what's not, who your most profitable and loyal subscribers are, who your least profitable or most likely to churn and it's a whole different set of metrics and it's a whole different vocabulary and it has pretty profound impact on if you're an established business making this transformation, what your P&L and your business metrics are as well. So there's just tremendous transformation that's taking place, not just in snacks on demand and music and entertainment but large software and technology companies who are making this transformation, transportation companies who are making this transformation, we're seeing all kinds of innovative use cases that are being driven by a need to transform and really understand who your end user is and the change in the business model from delivering something like a jet engine or a car as a large capital expenditure but shifting that to being an operating expense a shift from ownership to subscription. Right, and before we get into the transformations I want to drill down that. I just want to make sure we're clear that this is not just a B2C thing and you just talked on a couple of great examples, cars, automotive, GE who wants to get out of the jet engine business and get into the thrust business if you will and I think Amazon, Amazon Web Services specifically Andy Jassy and team have really demonstrated that this is something you learned in business school, right? You don't want to compete on undifferentiated heavy lifting let the specialists do that. We've been using ADP forever. I don't know why ADP doesn't get more pub as the first kind of application service provider that all B2B companies have used but AWS has shown, move it from CapEx to OpEx, use what you need when you need it, spin it up, spin it down and really change the way that now people think of IT delivered as a service really enabled by cloud and so it isn't just a B2C thing this whole subscription economy and the value delivered via a subscription business model. I think that's right. I think there's a couple of thoughts in there. One is the metric of delivery has changed pretty dramatically in the world of Amazon you can spin up, spin down a set of capacity and the infrastructure enables you to be elastic in how you do that and charge for it in an on-demand world and you have to have a very flexible infrastructure to do that and same as no company today would go build their own payroll system, I would say you're not gonna go out and build your own email system you're not gonna build your own ERP or customer relationship management system in a world that's moving to a subscription economy you wanna be working with businesses who wake up every day who know as much about this as possible and are delivering a platform that is specifically designed for that which is a new and emerging kind of daylight space as these transformations take place. Okay, so I wanna dig into the transformation thing a little bit, cause we talk often on theCUBE about people processing tech it's never the tech is the hardest part it's always the people in the process. So I wonder if you can share some examples and once it jump into my mind maybe you do or don't have data on it is obviously like Adobe went with Creative Cloud from a very expensive subscription you would just find your friends that worked there in December, hope they hadn't used their two buys a year please can you buy me Creative Cloud for 800 bucks? They moved to a subscription obviously Office 365 is probably one that jumps into everyone's head who's familiar with Microsoft Office. So when a company is going to make this transformation A, how do they do it successfully? Is it eat the elephant one bite at a time? What type of support do they need? And then from the back and in the metrics and what they're measuring their KPIs how does that get executed? And then when they finish, what's the aha that they had no idea that they suddenly discovered? So that's a lot of moving parts. I think Adobe is probably the poster child for it that they changed the P&L and if you look at their market cap today versus the peak of when they were at their license revenue numbers, their market cap today is significantly higher. And part of that is engaging with investors and communicating this transformation that's taking place. It has to be tops down. They get the elephant as a whole and we're seeing that in a couple of the large technology companies that we're engaging with today who are doing exactly that. Probably the, our poster child for that is Symantec who you would think of, they're a security antivirus you would think of the Northern business but they own a number of other businesses as well. They are going through a massive transformation today which is exactly moving from perpetual on-prem don't know who my end user is calling on them once a year to putting almost all of their products and their capabilities through a subscription billing relationship management experience. And so in order to do that, that has to come tops down. It is something that you take on across an organization. It's a, not something you would do half-hearted, right? It's pretty binary, it's all or nothing. And we're seeing that take place in lots and lots of different businesses. Another one would be one of the large manufacturers of earth-moving equipment. So there's a handful of those and we're not ready to come out and tell you exactly who it is but it's a small universe. It's probably yellow or green or orange. It's a small universe. And in their world, their use case is they don't actually know who the end user is past the dealership for certain parts of this business. And these are massive pieces of equipment that send up enormous telemetry data. And they're gonna move to a subscription model for part of that telemetry and be able to monetize that telemetry in ways that they've never been able to go do before. Other examples are heating and lighting controls in buildings. So when you show up in a building or you're building a new building, wouldn't it be better to have your heating and lighting as a service versus paying the CapEx that's involved in putting in all of that infrastructure to drive economic efficiency and drive a different cash flow model? All of those things are happening today in multiple different ways. What do you see happen? So it starts from above, it kind of goes down through the sales and the marketing mechanism is a way to go to market. When that flows back up into the project management, that's gotta be a complete disruption. Yes, what it delivers to product management is far greater insight into usage of the solution. Right, because it flips it, right? It flips it from working on a whiteboard to three of us together on a Friday afternoon to actually listening to our customer behavior. And in the end, what it also allows is enormous pricing flexibility. Whereas in a historical one-time delivery of a software package or a building or a large tractor, it was a kind of very singular pricing experience. With delivering as a subscription, you have a lot of flexibility to experiment with pricing and packaging by region, by territory, by demographic. There's lots of opportunity to be much more thoughtful about how you price and package for particular marketplaces. And you can do it by cohort, you can do it by all manner of different ways. And you can do like what, I mean, people are used to airlines now, right? No two seats are the same price, and now you start to apply that to lots of different areas. And you have the flexibility to absolutely do dynamic pricing. Oh, actually, you're somebody who hasn't interacted with us for the last 30 days, maybe we come back to you with a special offer in some shape or form because we know that today. Right, right. It's a fascinating topic and I think, well, you think like Symantec, I thought I was already paying that thing monthly, but it's slowly getting bigger and larger. And really it's just focused on services delivery versus buying that box at the retail store, right? And for large enterprise, what you tend to find is large numbers of disparate ERP systems at the back end and no real understanding of who the customer is. When you move to a world of subscription, the customer, the subscriber is at the center. And that creates all manner of transformation opportunities to be a lot more efficient and really understand the usage and the needs of a customer. Okay, and the traditional CRM systems are kind of tied back to the traditional ERP system, very single transaction based, not really designed for this kind of ongoing iterative and two-way relationship. I always describe it as, in a world where you have a CRM and ERP almost every mid to large size organization has those in some shape or form, they're very order-driven, right? So you quote, you order, you build, you recognize, you deliver, right? And it's a very linear set of activities that are handled at one end by your CRM organization, the CRM systems, and at the other end by your ERP systems. In the world of subscriptions, it's very non-linear, it's very event-driven. You show up, you sign up, you upgrade, you downgrade, you suspend, you resume, you add family members, you add 50 employees, you take off 50 employees, you do a merger, you do an acquisition, you divest a business. All of those things are event-driven and that non-linear world is not a world where ERP and CRM have the capabilities to handle. So we built Zora and we built this subscription relationship management platform specifically to handle those things. I just think of the classic kind of big data, schema on read versus schema on write. You guys are really schema on read, right? And adjusting based on whatever the behavior is or what you're gonna execute. And that requires a different object model, a very different data model that is unique to this particular set of business processes, exactly. Dave, fascinating conversation and I know you guys have a big show coming up, I'll let you get a plug-in for your show for people that wanna learn more because it is a really interesting way and like you said, there's a lot of old school businesses, old line, old line business that see the value of this new way to interact with their customers via a service model on an ongoing basis versus sell something to the distributor. So thank you for the opportunity to do that. So we run our annual user conference which is subscribed. It's gonna be the first week of June in San Francisco. It's grown exponentially over the last few years. We're excited to host probably close to two plus thousand of our loyal customers but it's a great opportunity to learn CFO metrics. We have sessions for product management. We have sessions for finance. We have sessions for IT. So if you're in any of those organizations and you're thinking about how to do that transformation whether you're a large company beginning to think this through a mid-sized highly transactive business or you're emerging you've raised a few million dollars or tens of millions of dollars of venture funding and you're building a new service. Zora is a great place to learn how to go do that. And I would also make a plug that Zora.com has enormous amounts of resources and a place we call the Academy where you can learn about metrics and go to market and drivers that are enabling this big transformation to the subscription economy. Yeah, exciting times. Well, David, thanks for taking a few minutes to stop by. Thank you for having us. Absolutely. David G, I'm Jeff Frick. You're watching theCUBE. We'll catch you next time. Thanks for watching.