>>Okay. Thanks Adam. In the studio of Jeffery David Lonnie, back on the cube set here in the middle of all the action of mobile world Congress is cloud city telco DRG, digital revolution, Michael Speranza CEO of separate tells here with us. Great to see you. Thanks for coming on the queue. Thanks for having me, Dave and John. Appreciate it. All right. So we're in the middle of the act we were just talking about while we're waiting to come on camera, uh, east coast, I'm from California days in Boston, you're from the New York area. We're back to real life. This is what's happening here. It's a hybrid event, so not fully packed, but good showing a lot of action. So let's get to it. Yeah. What do you guys do? Take a minute to explain what you guys do real quick. And I got some specific public cloud. The questions >>Were excellent. So Zephyr tells a global provider of telecommunication solutions, uh, to everyone across the stack, tier one, tier two and tier three CSPs throughout the world. We've got 300 customers. And I think the, probably the most interesting part about us as a company is that we actually probably started our lineage in the traditional sense in terms of these on-premise legacy, large systems. And we are a provider that has jumped in feet first. So the cloud revolution, and we're taking the effort now and the investment to move all of our solutions to the public cloud. And we're super excited to be here and showcase that to everybody >>I ask you, because one of the things that we've been documenting, Dave and I for the past 10 years is the enterprise transformation. I mean the digital digital transformation has been going on for quite some time on the enterprise side. Telco now is, seems like it's getting tuned up nicely to be disrupted and transformed. You're in the middle of it. You're on bolt. You've been on both sides of the table. Now you're on the full throttle, transport transformation. What's, what's your take? What, where are we at? >>Yeah, it feels as though we're at an inflection point. I think the, you know, the last call it 12 or 18 months, maybe that's been the industry pause where we kind of look back and reflect around what their long-term strategies are and more and more just over the last 12 or 18 months, we've seen more announcements, more big names, jump in feet first, be a little bit more public. Uh, no pun intended about what their, what their intentions are, what their investments, um, that they're making into the efforts that they're trying to deploy and their networks. And we feel like we're at an inflection point and we're ready for it. >>It's interesting that Zephyr tell, had a legacy business on-prem business and you're transitioning. What was the catalyst for that transition? And what does it take into would that journey look like? >>Yeah, I think the catalyst is really figuring out how to enable our customers to compete on a ladder that has more rungs to it. Right? If you look at these legacy on premise solutions, we could pour mountains and mountains of dollars into R and D. And at the end of the day, we would still be struggling to offer them something that really creates a true competitive disadvantage or a competitive advantage for their business. And really when you make the move to the public cloud and you start leveraging some of the platforms that are out there, it changes your PR your profile dynamically in terms of what you can offer to the customer. So for us, that realization is what happened. And we jumped in feet first and just the ability to get products to market, to give them a different cost structure is something that we would have never been able to do with our traditional legacy. >>So how did you do it? Because you have a balancing act, there you go to your existing business. Did you sort of fence that off and sort of start with the cloud native approach? And what did you find was the sort of before and after, and some of the benefits that you see? >>Yeah, that's a great question. So it's, it's a difficult conversation with the customer, right? I think you have to go and engage the customer and be our, our approach has been to be very open and transparent with them. Um, we're not telling them that what they're using is doesn't have a future. We're just telling them that we believe the future is bright or somewhere else. And that's what we're choosing to invest. Yeah. >>And they won't, they shouldn't even know it. I mean, if they get, cause the cup of cloud is bringing in new things, one of the things we've been riffing on in the past year is the three RS reset, reboot phase one, you gotta reboot things. Then you replatform with the cloud. And then all the winners, once they replatform to the cloud, they refactored their operations. And so this seems to be like the secret recipe. Once you get to the refactoring, then you're introducing net new opportunities. So you do some cost recovery, you'd be platform. You get some things going and then boom, new things >>Are happening. Yes, absolutely. Yet you have to have a long-term horizon. You can't, if you're trying to make these types of transitions over quarters or even years, it, it's not something that's easy to do with the business. >>Did you move the whole house into the cloud? We're working on it. Okay. Okay. But, so when you think about the telco industry, this is to me anyway, there's clear workloads that can and should go into the cloud. Like immediately. I mean, I, I think about it like mainframe downsizing in the day. I mean, anything that could go did go fast, you know? And so is it a similar parallel here? >>we've got maybe 10 products in the portfolio. We probably have half of them really in the public cloud already. Uh, it doesn't mean every customer is using them in that dimension, but we have half of them already in the public cloud as an option. Yeah, absolutely. As an option. And then the other is it's really, I think I'm understanding this paradigm of kind of, um, when we get into more detail, I got of this no feature left behind mindset that you have to challenge where you really have to convince the customer that no industry disruption ever started by making the new, innovative product, do everything the old one did great. And they have to kind of take that journey with you and lean into the change and understand what the long-term benefits >>And, and talk about those, the business. I mean, you remember John, when we got started, John was driving to the data center and, you know, racking cabling. And then when we entered the public cloud was like, wow, we saw the light. So until you do it, sometimes you can't experience it. What are they seeing in terms of the benefits? >>Yeah. I mean the two major benefits are obviously cost and agility, right. And you know, you talk about agility and just what it enables them to do from a subscriber experience, perspective, deploying new services, adapting those services to, uh, the new business paradigms and really improving the customer experience. Right. There's no mistake. You look at this industry, it's probably got one of the most depressing statistics around customer experience and NPS of any industry in the world. >>Right. So cables up there. Yes. >>It's hard not to improve that. And the other is cost, right. And that's an undeniable discussion that you can have if you get to the right level of the customer about what the long-term benefits of the cloud are. >>Yeah. You know, it's funny as you usually hear NPS in the context of how great the MPS is, but you hear it a lot in this industry and the different contexts. >>One of the things we've been talking about, and this is the big theme we're going to get to tomorrow the next day, the open, open side of this open arrangement. And rather than ran alliances got more and more members were reporting on that. As you look at the stack, the tech stack, you got a lot of OT and it is coming in with, because it's digital a lot more IP based systems. So you have this OT legacy culture of just, okay, we have sometimes regulation drives it, but sometimes it's just old ways of doing things. Is that going to be encapsulated with, with like say containers or is it does have a di does it have to like be, let go, or could you, can you, can you nurture it like something, we still have mainframes. I mean, big banks have mainframes. You don't go away. They do one thing. So is there a coexistence between that old legacy on top and abstracting away that >>Nonsense? I think certainly there, there can be. And we've, we've employed that approach with customers where if they're looking at deploying new services or tackling a new emergent market or rolling out a new kind of tiered service offering that might be under a different brand or label from their core brand, we've certainly approached it that way. Um, the big thing for us is really approaching that discussion with the customer and really talking about what we can do, not what we can do and can't emphasize that enough. And the other piece is really having the right decision makers in the conversation. Right. And understanding that you're talking to, um, someone who understands the impact on the P and L not just on the making kind of virtuous technical decisions about the way things are >>Michael. I got to get your thoughts on the agile because obviously cloud speed agility. We just heard from Microsoft on the interview, I did with him around, um, high density chips and, you know, low power and that's going to enable more stuff. So there's more stuff coming in the hyperscale of more cloud. And you start to see them. It's like snowflake built on top of AWS, hugely successful. So this is an enablement market. And she'll be these key, how, as the CEO, you're looking at this, okay, you're refactoring, replatforming, agility is a benefit. How does that change? How you run the business, how you serve customers. >>Yeah. So really changes where our investment dollars go. Uh, that's probably the number one impact. So if you look at AWS as a platform, you know, it started 15 years ago, it had one service right today, it's got over 200. So understanding that these platforms receive billions and billions of dollars of investment every single year, regardless of which one you're, you're aligned to and leveraging that to power, the services that we provide, we don't have to build everything right. We can leverage the capabilities that they provide to us, really focus our energy and our dollars and the things that make our application unique to our customer. So that was really one major tradition as leading an organization that you have to make. And then you have to convince the organization to go in that direction. It's different and you have to be very overt and transparent with the customer. >>Well, the early days of financial service cloud was an evil word. And now every financial service organizations leaning in big time, there's obviously reticence among public telcos moved to the public cloud. There's a lot of discussion about openness. It's hard to replicate the reliability of the network, et cetera, et cetera, maybe some of that, you know, rational and founded, but w what do you see in terms of the reticence and the risks and how are you helping mitigate those? >>Yes, my perspective it's really just been this kind of cascade of excuses and explanations as to why not to go, right. And it started with, you know, things that could have been done, legitimate issues at the time of data sovereignty or security they've been solved, right? You move on and now it's, uh, you know, that, that notion of no feature, no man left behind there. We have to have feature parody. We can't go. Um, we've, you know, every other industry has debunk that myth. And now the one that I think is most important to challenge is, is organizational dysfunction, where it's really about accessing the right levels in the customer to have that conversation, to neutralize the power or importance of any one dimension of decision-making and have an overt business discussion about what are the numbers behind, um, the solution and how you're providing it. You have to include the cost discussion and it, and you have to actually get the finance person to really understand the technology and not just outsource that decision to somebody else. Um, cause that person is often faced with making a decision that, um, you know, it could be deleterious to their role, their business, uh, their own organizations. And that's something that needs to be arbitrated at a senior level. I think >>So, no, we've seen this before. I love it. It's protecting turf. Exactly. No. And just internal politics. It does that. And that's what we saw in the financial services business, and then forget it. >>It's just, well, the thing too, though, with, with the skill set is not only is it a skill retraining going on, new roles are emerging. So for instance, the SRE was, we've been covering in a lot of these big companies. You've got site reliability, engineers pioneer by Google. That's a new role dealing with infrastructure. And as infrastructure as code comes out, it gets more fuzzy. What's under the hood because now you've got Lambda, you've got serverless. So that entire program ability is going to put pressure on these old OT stacks. Yep. What's your forecast. >>And that's what I'm saying. That's what broke the barrier in a lot of these regulated industries was infrastructure go all the developers to your point, want it in. And that was like the penguins off the iceberg, >>The pressure on the OT stacks, or does the abstraction at the top driving innovation? Is it going to be disrupted down here or is it going to be at the top of the stack? What's >>Your team? Yeah. So I think, you know, I've seen that traditional financial services, et cetera, a front row seat and financial services in a different role. And the way I saw it actually unfold was having some sort of role that sits between the CFO and the CTO. Someone who's responsible for the, not only the technical evolution of the architecture, but the financial evolution of the architecture that can actually be a compatriot to the CFL, making those decisions. That's how I've seen it really traditional, unless there's buy-in from the top down, it will just be kind of pressure from the bottom up. And we'll never see it take hold >>If bottom up, bottom up will not work and less top-down. It's got it. It's gotta >>Be the top down, bottom up, as you were saying. Yeah. >>I mean, what drives that? There's the legal come in and drive that a little bit now because you've got a lot of pressure with cyber. So you've got cyber, you've got regulatory pressure with telcos. I mean, let me carry as they get more. Are they still >>Blockers? Is that the legal still a blockage? >>Yeah. Uh, w we haven't seen legal really enter the decision making process for us and, you know, for us, we probably wouldn't involve them unless we needed to. Quite honestly, I think it could be more of a blocker than then someone, uh, you know, they can always say, no, they can't really say yes. Um, is our view of that. So they're an important person to be, uh, on the journey, but probably not someone that we were, we would seek to include >>In the decision. All right, Michael, I want you to take the last minute to just take a minute to explain what you guys do. What's your vision of the company, obviously you're on the right wave, the wave big, you get your surfboards out there. You're gonna ride the wave. What are you going to do? What's the big goals. What's your plans have to put a plug in. Yeah, >>Look, we see the future as a marketplace of cloud-based solutions, right? We feel that we're, um, someone that's trying to lead that innovation. I think it's fantastic to see what's happening here right now with cloud city and giving all the disruptive vendors, a voice in the industry that they probably did not have before. And we really see the vision as that open marketplace, where things are leveraging API APIs. All these systems can communicate across the stack, and we're going to be part of that journey. Uh, we're showcasing solutions here today, around subscriber management to drive ARPU. We've got, um, solutions for managing the customer experience in the home that will increase retention. And really everybody has to just open their minds to learn about what's possible with the public cloud, and then translate it to how it can actually benefit their business. >>Are you guys looking to hire and he think you want to share plugged for >>Look, we're growing we're we we've got solutions here that we're looking at positions to customers across the SAC globally, tier one tier twos and tier threes. And please come by the booth and visit us and learn about us. >>No, John, the big difference between the cloud this decade and cloud last decade is such an ecosystem. Now that's built in that's forming that you can leverage, right? That, you know, it was kind of really immature last decade. And it's not just one company going after this. It is the ecosystem. >>Well, not the problem. The opportunity is, is that the telcos are going to get punched in the face with the edge now, driving with 5g, because now they cannot ignore the fact that you now have a cloud edge that it's explosive and functionality low costs, Silicon identity. It's just a game changer that consumer technology is coming to the edge and it's going a forcing function so that they, if they don't, if they blink, who blinks first, yeah, telcos are cloud. So public clouds, great train Blake. The freight train of public cloud is coming into the telco. And if people don't adapt to it, they're going to be toast. And I think the opportunity is for entrepreneurs and founders and CEOs to drive, drive that innovation, okay. Innovations here. And we're going to continue bringing the coverage and we're going to go right to the studio where Adam and the team are there.

>> Hey, welcome back, everybody. Jefe Rick here with the Cube Were its roar subscribed in San Francisco. David, Jeez. Here. Last we saw you, David, I think was January when this was all building up. Now you said you have 1,500 of people passionate about subscriptions right here in downtown San Francisco. Congratulations. >> Thank you. It's great to be here, and it's great to be on Graham and on site. Like, last time we talked, we were at your office. Is you're getting ready to move? >> That's right. You have to come see the new spaces, like, way bigger >> we're looking forward to it would be great. >> So great selection of customer stories up here today. We love the customer stories and, you know, you think of classic subscriptions like Adobe Creative Cloud or you think of spotify and these things were used to You don't think about caterpillar. You don't necessarily think about Ford. So to see those guys up on stage with you and team this morning was pretty impressive. >> Yeah, So we're very excited about how the description economy is really expanded into the mainstream and large infrastructure companies who are changing the way people interact has really taken hold. I mean, a couple of examples. You mentioned So caterpillar here today, and they're showcasing today. They have all of this machinery out in the field, spin out terabytes and petabytes off telemetry data, and they're able to monetize those. They have autonomous vehicles, virtual reality drones over job sites. All of that is available now as a subscription. We have Ford here today who are talking about the next generation off the company, moving from a car and all my bill company to a transportation company. A meeting that customers where they need to be meeting met where, whether it's Van Services here in San Francisco, like chariot on bicycles and knowing their customer from the moment they pick up their vehicle from they call it from bed to bed from waking up in the morning till the lasting negative at night and having the whole transportation structure around them, enabling them to do some things like that. It's over exciting. >> I thought it was funny. Todd Buckler, who was up on stage from caterpillars, explicitly said, We're not going to be a software company. We like making big iron things, but man, oh man, listen to the description of the services that they're delivering to their customers that benefit the customers, get the benefits they get. As you said, with all the telemetry data, it's very different than just building a unit, shipping it to the dealer. The dealer sense. Tow the farmer, the construction worker. And maybe you get some data back when it comes in for maintenance down, then totally changing >> it totally changes. And what it does, is it. It helps predict downtime that helps predict offline activity, which could be in the hundreds of thousands or millions of dollars. In the case of aircraft engines with G We who we had, I stayed well today when those things go down in an unpredictable fashion that causes enormous impact from a revenue, profitability and forecasting standpoint, so that telemetry data can understand their stresses and strains based on environmental factors in Miami does it? I'm gonna call whether acclimate I'm a jet engine, doing short hops versus long harps that provides enormous insight and sophistication for a customer to enable them to plan. And it's all based on this data, which in turn is delivered this part of the subscription >> right and then take it to the next level. Right? This whole theme around democratization of data, democratization of the tools to the data. Yeah, obviously a plane operating in Alaska is going to have different characteristics and one operating in the desert. But what about pilot characteristics? You know, you could just you can You can leverage the power of all the people in your company to start developing hypothesis, testing those hypothesis and driving innovation around a much broader kind of front, if you will. >> Absolutely. And what we're seeing is that the senses air going into everything. So we think about senses and engines. But the aircraft frames themselves of now increasingly having sex, right? How many stresses and strains, we know how many takeoffs and landings. But are they short hop of a long? Are they going over the pole of the growing of the Atlanta They're going over the United States as an example? All of those have different implications for the service and the support, longevity and also the economics. And that data telemetry has intrinsic value that is now being monetized in ways that we've never seen before. >> So the other interesting thing to me that I don't think it's enough talk. David is, is thinking of your customers is either in a club or as a member with this recurring membership, as opposed to transactional customer we had in speech in sporadic on You know, they have a club we had, sir. Fair on. You know you're a member. It's a very different way to think about the people that are your customers. And because you have this ongoing repeat revenue process with them, you know you have to keep delivering value. You have to keep them subscribed, if you will, because it's a very different way to build a relationship on engagement. >> Yes, so we see that is this evolution of from ownership to being a subscriber. Whether it is a second vacation home is a great example. In the case of in Speranza Oh, they've gone from 0 0 to 15,000 members in just a few short years, and they're offering this highly curated, personalized luxury vacation experience that is very individual, very individual and curated. That's a whole new market place, and it's disrupting high end hotels. It's disrupting whether you want a second vacation home, but you always have to go back to write, but also on the show floor. Here we have companies like 11 James. So if you're a watch fanatic and you have a fancy watch, guess what? When you have one fancy watch you pretty one another one right instead of owning them and putting those assets in the safe or in the drawing for months at a time, once you have a new one sent you every single month or every quarter and just change them out for variety. So we see that time and time again as we move from ownership to subscription, you see it in cause you said an asset. Music is part of the case that most people are familiar with. You've gone from your case full of CDs, your case full of DVDs to your streaming services and you're seeing with entertainment. >> Right? Is interesting. Teen in the Kino talked about being free of the shackles of time ownership obsolescence. So when you do consume these things as a service, it really changes the week consume because as we all know, once you get stuff and they get a garage full of stuff, stuff all breaks, it gets out of date, so it's a really an interesting way to think of it. Now. It's supports this whole kind of experience based economy. I want to share a funny story waiting with Esperanza. Oh, is that they see your commitment to subscribing. To there Club is really a demonstrated commitment to your family that you now have put on the dotted line. You're going to take quality vacation time with your family, and if you could afford it, you're probably pretty busy person, so really interesting twist on what their value proposition is. A wide support of their members. >> And actually what they said this morning was really interesting. And you think about a vacation club on a you know, a luxury curated experience. Maybe that's a week or two weeks a year. They're also filling in the gaps for the other 50 weeks a year with all kinds of local events as well. I'm building this lifestyle so it's fascinating, you know, physical experience off this description economy, and they're very sophisticated how they look at the data and looking who their subscribers, their customers are on this subscribes and customs. By definition, I suspect very demanding, >> right. So you've been doing the emcee job did a great job this morning. I'm just curious as you're walking around the show now that the keynotes air done and you can kind of walk around the exhibit hall and bumping into people any surprising stories. What are you hearing? What kind of the buzz that you that you're hearing a lot of hard work? A lot of teams. >> So So first, what? We have an amazing group here and we're so proud of of the work that we do bring the subscription economy to a physical life. You know, we had this vision some months ago when you and I talked about having a showcase and having our customers tell their stories. And you can see from the energy that we have on the show floor today there are hundreds. We have 1,500 people here this week who are experiencing lots and lots of different customers and companies. Subscription economy experiences. Tomorrow we'll hear from Andy Mooney, who is the CEO of Fender Guitar. So you think about you walk into a store, you buy a fender guitar, they're fabulous. The shadow casters and you leave. They never hear from you again. They want to turn that into a life long music experience and really change the way from learning how to play an instrument to being part of a community and having a long term relationship first is just walking out the store with a guitar >> I love. I love the fender story because again, you know it's easy to think of spotify and digital assets that you're subscribing to and deliver digitally. But they're really redefine your relationship with your customer and then to get the lifetime value. The benefits of that. Because they claim or they buy more sheet music, they buy another guitar. You know, they hang out at the store and becomes a hobby and part of a community engagement. What a brilliant, brilliant move >> exactly. And I would say if if I leave you with one final closing thought, you know the other bigger heart is that there is a looming financial accounting change that's coming where the way subscription economy cos any company with recurring revenue is going to have to change the way they account for their revenue and their expenses. It's something called 606 If you're in the financial community. You're having sleepless nights right now because it's as important as socks. Sarbanes Oxley White. Okay, right on. That's an accounting standard that's coming down the line. We'll be mandatory in December 17 or December 18. Dependent, whether you're a private or a public company. And we just acquired a company that is the market leader in automated revenue recognition. So educating the market in what is a very compelling value proposition on a compelling event that's going to hit almost everybody, >> right? All right, we'll leave that there. We'll pick it up next time, and we'll have a little bit more accounting talk. >> Sounds great. >> All right, well, thanks for taking a few minutes out of your busy day. And again, congratulations on to prevent >> we appreciate you coming. Thanks for having us. >> Absolutely. Alright. He's David GM Jefe Rick. You're watching the cue from Zor subscribed 2017 in San Francisco. Thanks for watching