>> 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

(can opening) >> Hey, welcome back everybody. Jeff Frick here with theCUBE. We are live in downtown San Francisco at Zuora 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, Tien Tzuo, founder of Zuora. >> Great to be here. >> Jeff: Well first of all, great job on the keynote. >> Oh, thanks. Thanks for having me on the show. >> Great energy. You know, we hear a lot of about subscription economy. Obviously, a lot of people have Amazon Prime, a lot of us subscribe at 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 have a subscription-based relationship with their customer. So before we get into the specifics, I want to talk to you, how is the subscription relationship different than a regular, one-off transactional relationship in the way that you are connected to your customer? >> Right, well, we all know that the world has changed. And we're even 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. 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 the provider of these services really care about you. They want you to come back and use their services. They're constantly updating it. And it really frees us all from the shackles of product ownership when we want to get from point A to point B today. We don't have to worry about cars. We pull out our phone, tap into our service, and we're able to get what we need when we want it. >> Yeah, you have that as a really big theme. Kind of shackles of ownership, shackles of obsolescence. This idea that if you 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've pulled up some funny pictures of CDs and the CD wasn't even in the CD case. >> The CD, and that wasn't that long ago that we had these CD cases. >> I have empty CD cases all over my garage. I'm guilty as charged. Let's dive into this specific example. So Caterpillar is a cool example. Already having autonomous vehicles driving these big mining. That's all right, but let's talk about the Fender example, 'cause I think that's a really interesting one. What is Fender doing in terms of a subscription relationship with their customers to change who they are and what they are as a business? >> Well, we talk to companies that are going through this transformation. What they bring it down to is the shift in mindset of selling a product to thinking about customers. And so when Fender did this, an amazing transformation happened, right? They sell a lot of guitars. And when they look at shipping products out, how do I sell more guitars? And they said, "Let's not look at it that way. "Let's look at our customers." And what they found is that over 40% of their customers, 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 that 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%, we are going to find so much more revenue and we're going to double or triple the size of our company. >> So 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, 'cause 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 guitarist so they draw you into the process that creates social community, 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? 'Cause this is not a transaction; it's an experience. And it's an engagement. And what are the other things you said in the keynote that got my attention? That there's all these other 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 this much more dynamic, engaged process and relationship between person selling the service and, arguably, guitar enjoyment, not a Fender 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, right? Freedom to customers that didn't have it before, right? The story of Netflix is if you have, 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 too, right? Businesses need freedom to price, to experiment, to design customer experiences, to get the information they need and what's holding them back is their IT architectures are the past. These ERP systems, and so what we presented this morning was an alternative view. A post-CR view, P, ERP view, of a new set of systems that we provide that help companies be successful and grow in this new subscription economy. >> That's a linear. Basically, that was your theme, right? Not because it's linear. >> That's right. >> It's those transaction types. >> These linear systems passed, they don't work anymore. >> Well the other thing I think is really compelling that I think needs more attention is now, if I have to pay $20 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, 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 is 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 keyword there is relationships, right? In the old model, which I'll call an asset transfer model, let me convince you to buy my product. Now you own it. I've gotten your 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, a 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. >> All right, so I know you're super busy. You got a lot to do but before you leave, just give your impression, you've been at this for a while, how this has grown. Has it grown faster than you expected? Is it about the same line? 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 in, arguably, the center of this universe right now? >> Gosh, when you look at this subscribed event, when you look at the energy here, And then when you look at the companies here, I would say five, six, seven years ago, we had a lot of software as service companies here. Box, they're great customers. They continue to be customers. But did we think that we would have Ford, right? Showcasing their electric bikes here? Or Caterpillar showcasing their autonomous vehicles? And these are gigantic vehicles that are carrying 200 cars in what they talked about on stage. And the world's clearly being transformed. Did I think it was going to happen? You know, we always knew the subscription economy was going to be here. We always knew the size and scope. But once you hear the stories, right, 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 Tien, well congratulations to you and thanks for taking a few minutes to stop by the table. >> Thanks a lot. Thanks for having me. >> All right, he's Tien, I'm Jeff. You're watching theCUBE from Zuora Subscribe. Thanks for watching. (can opening)

Hey welcome back everybody Jeff Frick here with theCUBE we're in San Francisco at Zuora Subscribed 2017 about 2,000 people talking about the subscription economy but what I liked is when Tien had some sample stories up he went with the big iron he went with GE and he went with Caterpillar companies that you probably don't think of a subscription economy like maybe do Spotify or Amazon Prime so we're really excited up Tom Buckler he's the Director of IOT and Channel Solutions for Caterpillar Tom welcome >> Yeah I appreciate it thanks for having me >> So I love that you had a ton of industrial internet stories I mean this is real this is not like coming down the road but it's here today >> no absolutely  you know we've I mentioned during the keynote that since the mid 90s we've been connecting equipment since the mid 90s we've been on our autonomous journey and and you know it's just today we can talk about the largest industrial fleets of over five hundred thousand assets connected all of that valuable information coming in to help our customers and then the fully autonomous fleets in the mines which it's pretty exciting stuff >>   right I mean you and you touched on something we talk about often in the context of GE we've had GE on a number of times where those GE sell engines or do they sell propulsion to the airlines and you talked about do we sell you know this big earth-moving equipment or do we sell X number I know how you measure big giant masses of rock and gravel move but really selling it as a service not necessarily just the truck >> yeah I think that you know that was an important part of our discussion because when we talk about IOT and digital it's really a very customer centric strategy so we're going to get into services like IOT type or digital based services which is our cat connect portfolio if it's going to help serve our customers that we have today in the industries we play be more successful increase their operations increase their efficiency so we're not looking to build a platform or be a software company right you know when we get into this space it's focused on those customers and increasing their profitability and that's what leads us into these areas we're going to be a heavy equipment manufacturer we're going to sell big iron that's what we do we're going to leverage digital to help our customers be more successful >> you say that but I'm telling you I can I can turn the lens a little bit I see a whole lot of software company behind that big iron >> so no I'm not you know and there's there's there's a lot of software on those machines right you know there is a lot of software that's coming off those machines and and certainly we want to take all of that information we want to put analytics on it helped our customers go from being reactive to predictive right and really that's why we're at this conference right because when you get to what we call our cat connect services a lot of those are subscription-based you know when we're connecting a you know five hundred thousand machines or we're able to go out and you know enable grade assist on a machine over the air or we're going to have these predictive health services to make sure uptime is maximized all of those are data driven services through CAD connect and they're all subscriptions right so it's a natural fit for us to migrate into that along with our product business it's um >> just interesting numbers that you shared in the keynote five hundred thousand connected machines you talked about you know the obvious stuff no and unplanned downtime these are huge assets that need to run as close to 24/7 as they predictably can but then you mentioned just looking at some other data and not even really heavy lifting data but customers getting tremendous utilization gains right by leveraging some of the software that you guys have incorporated in the machines >> yeah it's powerful stuff I mean if I talk about construction you know the customer we mentioned is they asked us to connect all 16,000 pieces their equipment you know 3,000 of those work at earthmoving machines you know the other 13,000 weren't they were a variety of other types of machines but with the customer with that information and when they can get put it on one screen and they can look at utilization they can look at location they can look at idle time they can increase their utilization significantly so basic data with a fleet that size can help customers realize 10 almost 20 percent utilization gains and across the fleet that size it's big money right and it's big customer value but even all the way down to the person who's got 10 machines you know they can start to look at idle time they can look at you know operator abuse and how you know where they can train their operators better to perform better so basic information on some of these machines is very valuable it's >> it's such an interesting concept because you keep talking about your customers doing better with the assets that you guys provide them you know when you're in a subscription relationship and you have this ongoing back and forth repetitive connection it's a very different relationship than when you just sell something and you ship it and you take the money and you go on to the other one it seems like that's really kind of the secret sauce of the subscripts economy that's not enough people really highlight yeah you know in some cases >> that's a great point and you know one of the strengths of Caterpillar is is our global dealer network and and so you mentioned about selling the product you know when when when we sell the product our dealers provide that product and sell it to our customers they generally have a long-standing relationship with that customer everything from helping them with uptime to machine selection to operations operator training so we're in the business of working with customers through the long haul but to your point that these digital services you know they create a digital relationship that's ongoing along with our dealers relationship that they've had for four decades right it's it's a really powerful kind of combination >> and then I  would imagine the data that you're now getting back off these machines which before before they were all connected you know you kind of saw them at the maintenance cycles and you could kind of see you know maybe what happened or didn't happen or maybe there's some patterns that are at Geographic or type of job or whatever but now you know I love that the quote we used to take a sample of old data and now we take all of current data it must be tremendous value for you guys to develop better products have better maintenance on your own products see how these things can do much much better >> yeah you're absolutely  right and you know when we talk about the data of the products a lot of people initially go to telematics and certainly when we talk about you know five hundred thousand assets where I'm talking telematics but we also do about 5 million fluid samples a year off different compartments we've got visual inspections they're on electronically through can't inspect that's all the data coming back so all of that information is really rich information and to your point we can take that all the way back to new product design and make sure that our next products are optimized >> pretty exciting stuff solutely and it who doesn't love a big yellow tractor truck actually all right Tom well thanks for a taking a few minutes out of your busy day and congratulations >> all right thanks for having me Tom Buckler I'm Jeff Frick you're >> he's  watching theCUBE we'll be back after this short break thanks for watching

>> Hey, welcome back, everybody. Jefe Rick here with the Cube. We're in this war subscribed conference 2017 downtown San Francisco. 1,000 2 1,000 people talking about the subscription economy, I think is like the sixth year they've been doing this show. First time we've been here. We're excited to be here, but we're joined by a company that we spend a lot of time talking about. I ot in the industrial Internet, and that's G, but a new gas guidance bar. Ducasse. He's the head of predicts product management for Jean Digital. Welcome. >> Thanks, Jeff. Thanks for having me here. >> So you guys I mean, we were there in 2013 when Beth and Bill lost the industrial Internet initiative at the juiciest museum just across the street. So you guys have been in this space for a while. The G predicts cloud industrial cloud. You guys have been doing a lot of stuff there, so give us kind of an update. Where are you? Obviously picked a highlight. One of the key stories here. People don't think of G as necessarily a subscription economy type of play, but that >> so why are we here >> yet? So why are you here? >> We're here because we are subscription economy. I mean, what we're really focusing on with predicts is building a platform that allows third parties and first party applications to be built around the industrial space. And so a lot of what we're hearing from our customers is that they want to subscribe to those services, right. They want to subscribe to either the production of the services, but more importantly, maybe the different elements that bring the other solution. So the thing about the hospital like a digital twin, a virtual representation with physical asset A lot of times when people want to do is they want to build twins specific to specific asset. But they want to bring together the analytics and the data associated with that. Maybe some environmental factors that they subscribe to from 1/3 party, right, bring those all together doing analysis, right? And then basically give that stuff back. So they want to subscribe to things like analytics they want subscribe to data and the imports. So that's why we're here. We've been using Zamora a CZ part of our subscription service since the we kicked off G predicts last year way Wendy and February, and it's it's going to be a very flexible solution for us. >> So the parts and I don't think it's enough talk, and it really wasn't a lot of talking. The keynote is how a subscription relationship changes the way that you engage with a customer, because if you just sell him something, thank here's the transaction. You know, go off, you run your jet engine, go run your turbine. But if you have a subscription and it's an ongoing value delivery to pay for that ongoing money that they're giving you, it's a much kind of deeper relationship in kind of a single transact, well, >> it can develop. Do you have much deeper relationship? I think the thing that allows you to do is that allows you to experiment a little bit. Try a couple things, figure out what works best for you as a customer, right, and then invest in those areas. You don't have to make a big purchase order, right? Right. You don't have to go off and spend a lot of money on a bunch of software that may eventually go away, right? You can. You can. You can almost try before you buy or try as you buy, right? Probably better way of putting it right. And so what we're saying is you give people the ability to experiment. I think, you know, we talk within G about productivity, right? And the impact we could make him our own productivity to meet predicts, is much about innovation, right? Right. It's giving people the ability to try different things. Teo, Try on DH. See what happens when you bring in environmental factors. Right? Or usage data, right or operational data? Or, you know, we talked about jet engines lot looking at the different pilots. How do they operate the engines? Right, you know. So there's there's there's all these scenarios you can sort of experiment with on a subscription model. Find out what works and then go deep is necessary. >> It's interesting. 10. And the Kino talked about. What's different now is that you can buy. You can upgrade, you can cancel, you can downgrade. So again, this this interaction, as you just described, allows for a bunch of different types of engagement, not just the Big Bang and the other thing that's consistent with we hear over and over. I is a democratization, democratization of the data, democratization of the tools so that somebody does have a hypothesis that, you know, we've been looking at Obviously, a plane operating in the southwest United States is goingto have different characteristics. Is one operating in Alaska. But as you just said, maybe we should look att, pilot characteristics. Maybe we should look at, you know, back in. So when you open up that innovation platform now, you have so many more people coming up with hypothesis, testing hypothesis and you you open up the resource into your company to do so much better >> Well, and you have little innovation like so we have a partner based on Israel Plantain who's doing some stuff in the manufacturing space with G is we start thing about additive manufacturing. You want something about the composites and the materials that actually go into the engine, right, and sort of how of those and held up over time so you could build a much more longitudinal view of that. And again, it could be a subscription service where you start experimenting, you start understanding, especially with additive being sort of ah, mechanism to decentralize a lot of the manufacturing. You don't need to make a huge investment too. Doing that at those analytics. You put some software alongside the additive systems, and you've got the ability to innovate and understand better. Like what? Composites work better. I mean, you talk about the operation of the engine. But how about the manufacturing, the gym? Are there optimal environments right where you want to build those engines? And I think we've done great work. Is an industrial company to understand how to optimize systems and probably even like what the environmental factors are to build an engine effectively. But when you start distributing that, you really want to gauge that real time to understand what the impact would be, >> All right, So we were on short time leash here, actually, but I want to give you the last word. Give a plug for the critics. Transform show Coming up is part of minds of machines. We live for the first year. Last year that was 2,000 developers. Right? Ready? Great turnout for for really a development platform for an industrial Internet cloud. >> Yeah, s. So what we've done this year was a rain together transform, which is the event for our developer community with minds of machines, which is more targeted towards the business leaders were some of the leaders in the organization, and bringing them all under one roof will be here in San Francisco mid October. I don't have the exact dates, but I probably should. But it's like a roundabout on the >> Internet looking over there. >> But we're bringing those together, right? So we can have a dialogue that spans the complete spectrum. Yeah, right. It's the people that are building will have hackathons will have places where people can actually work on that will judge those those different solutions that are being hacked together on. Then we'll be presenting sort of the business value and the impact we're seeing with a lot of the industrial customers again. Many of them are, jeez, existing customers. We've got customers in different, you know, the auto industry elevator escalator industry, you know, fixtures manufacturing spaces that we haven't traditionally played. So we'll be talking about all the benefits were bringing this customer's Blessem new product introduction talk about >> All right, great event. I team meets ot. We went last year. Jeff was there. Beth was there, Bill was there all that? All the players that great show. Well, congratulations on your successful Zorro. And we look forward to seeing your minds machine. Okay, Thanks. Alright, He's Geeta Som Jeffrey, you're watching the cube crumbs or subscribe 2017. We'll be right back after this short break. Thanks for watching.

(theCube jingle) >> Hey, welcome back everybody! Jeff Frick here with theCube. We are in San Francisco at Zuora Subscribe 2017, about 2,000 people talking about the subscription economy. But what I liked is when Tien had some sample stories up, he went with the big iron. He went with GE, and he went with Caterpillar, companies that you probably don't think of as subscription economy, like maybe you do Spotify or Amazon Prime. So, we're really excited to have Tom Bucklar. He's the director of IoT and Channel Solutions for Caterpillar. Tom, welcome. >> Yeah, I appreciate it, thanks for having me. >> So, I love that you had a ton of industrial Internet stories. I mean this is real. This is not coming down the road, but it's here today. >> No, absolutely. I mentioned during the keynote that since the mid 90s, we've been connecting equipment. Since the mid 90s, we've been on our autonomous journey. And just today we can talk about the largest industrial fleets of over 500,000 assets connected. All of that valuable information coming in to help our customers. And then the fully autonomous fleets in the mines. It's pretty exciting stuff. >> Right, and you touched on something we talk about often in the context of GE. We've had GE on a number of times where do they sell engines or do they sell propulsion to the airlines, and you talked about do we sell this big earth-moving equipment or do we sell x number of, I don't know how you measure big giant masses of rocking gravel move, but really, selling it as a service, not necessarily just the truck. >> Yeah, that was an important part of our discussion because when we talk about IoT and digital, it's really a very customer-centric strategy, so we're going to get into services like IoT type or digital based services, which is our Cat Connect portfolio, if it's going to help serve our customers that we have today in the industries we play, be more successful, increase their operations, increase their efficiency. So, we're not looking to build a platform or be a software company. When we get into this space, it's focused on those customers and increasing their profitability, and that's what leads us into these areas. We're going to be a heavy equipment manufacturer, we're going to sell big iron, that's what we do. We're going to leverage digital to help our customers be more successful. >> Yeah, you say that, but I'm telling you, I can turn the lens a little bit. I see a whole lot of software company behind that big iron, so... >> No, I'm not. You know, there's a lot of software on those machines. >> You're right. >> There's a lot of software that's coming off those machines. And, certainly, we want to take all of that information. We want to put analytics on it, and we want to help our customers go from being reactive to predictive. And, really, that's why we're at this conference, right, because when you get to what we call our Cat Connect services, a lot of those are subscription-based. You know, when we're connecting 500,000 machines, or we're able to go out and, you know, enable grade assist on a machine over the air, or we're going to have these predictive health services to make sure uptime is maximized. All of those are data-driven services through Cat Connect, and they're all subscriptions. So it's a natural fit for us to migrate into that along with our product business. >> Yes, some interesting numbers that you shared in the keynote. 500,000 connected machines. You talked about the obvious stuff, unplanned downtime, these are huge assets that need to run as close to 24/7 as they predictably can. But then, you mentioned looking at some other data, and not even really heavy-lifting data, but customers getting tremendous utilization gains by leveraging some of the software that you guys have incorporated in the machines. >> Yeah, it's powerful stuff. I mean, if I talk about construction, the customer we mentioned, they asked us to connect all 16,000 pieces of their equipment. You know, 3,000 of those were Cat earth-moving machines. You know, the other 13,000 weren't. They were a variety of other types of machines. But with the customer, with that information, and then when they can get put it on one screen, and they can look at utilization, they can look at location, they can look at idle time, they can increase their utilization significantly. So basic data, with a fleet that size, can help customers realize 10, almost 20% utilization gains, and across the fleet that size, it's big money, and it's big customer value. But even all the way down to the person whose got 10 machines. You know, they can start to look at idle time, they can look at operator abuse and where they can train their operators better, to perform better. So basic information of some these machines is very valuable. >> It's such an interesting concept because you keep talking about your customers doing better with the assets that you guy provide them. You know, when you're in a subscription relationship, and you have those ongoing back-and-forth repetitive connection, it's a very different relationship than when you just sell something, and you ship it, and you take the money, and you go on to the other one. And it seems like that's really kind of the secret sauce of the subscription economy that no enough people really highlight. >> Yeah, you know, in some cases, that's a great point. And, you know, one of the strength of Caterpillar is our global dealer network. And so you mention about selling the product. You know, when we sell the product, our dealers provide their product and sell it to our customers, they generally have a long-standing relationship with that customer. Everything from helping the with uptime to machine selection, to operation to operator training. So, we're in the business of working with customers through the long haul. But to your point that these digital services, you know, they create a digital relationship that's ongoing, along with our dealer's relationship that they've had for decades. So, it's a really powerful kind of combination. >> And then, I would imagine the data that you're now getting back off these machines, which before they were all connected. You know, you kind of saw them at the maintenance cycles, and you could kind of see maybe what happened or what didn't happen, or maybe there's some patterns that are geographic or type of job or whatever. But now, I love the quote, you used to take a sample of old data, and now we take all of current data. There must be tremendous value for you guys to develop better products, have better maintenance on your own products, see how these things can do much, much better. >> Yeah, you're absolutely right. And, you know, when we talk about the data off the products, a lot of people initially go to telematics, and certainly, when talk about 500,000 assets, I'm talking telematics. But we also do about 5,000,000 fluid samples a year of different compartments. We've got visual inspections that are on electronically through Cat Inspect, that's all the data coming back. So, all of that information is really rich information. And, to your point, we can take that all the way back to new product design and make sure that our next products are optimized. >> Pretty exciting stuff. >> Absolutely. >> And who doesn't love a big yellow tracker truck? (laughs) Absolutely. All right, Tom, well, thanks for taking a few minutes out of your busy day and congratulations. >> All right, thanks for having me. >> All right, he's Tom Bucklar, I'm Jeff Frick. You're watching theCube. We'll be back after this short break. Thanks for watching. (theCube jingle)

>> Hey welcome back everybody. Jeff Frick here with The Cube. We're in downtown San Francisco, at Zuora Subscribe 2017, about fifteen-hundred people according to David Gee, talking about the subscription economy. And a big part of that when you collect money, you got to collect the taxes. And we're excited to have Simon Geach with us. He's a VP of Sales Billing in Commerce Platforms from Avalara. Did I repeat that right? How do you pronounce it? >> Geach. >> Geach. No, Avalara. Did I get that? >> Avalara. >> Avalara. Alright, so welcome. (laughs) >> Thank you. >> Collecting taxes: everybody's got to do it, everybody's got to pay 'em. >> Not fun though. >> It's not fun, and not simple, right? And usually with sales tax especially, you got the state, you got the county, you got special assessments, you got this, you got that. So that's what you guys do. >> That's right. So, if you think about the subscription economy, one of the most important things in that is making sure that what's on the invoice is accurate for the customer, because of course, the subscription economy is built around that engagement through an invoice, and that can be the important document that a customer gets, as you're building that long-term relationship. So, ensuring what's on that document is accurate, including the taxes, is really important. And for some companies it can be actually fairly simple. But for a lot of companies, particularly as they're growing and expanding their business requirements, it becomes ever more complex, and the costs of dealing with it manually can really sneak up on you and start to increase, and before you know it you're investing a lot of time and resource in trying to manage it, with really no guarantee of accuracy, and then of course, there's the longer term risk that comes if you get something wrong, you miss a rate, there's a change in product taxability that you don't capture, you can get hit and penalized really heavily in an audit. >> Right, and then in the subscription economy there's a lot more transactions, right? So the opportunity to mess it up goes up dramatically. >> Exactly. Tax legislation changes really frequently. So if you're billing customers on an ongoing, constant basis, the need to be up to date with the latest changes is really important, because if you're not, and you miss it, it can cost you a lot of money. >> So where's the "they're" there? So if I, buying something on a subscription, which tax do I pay? Do I pay where my residence is? Do I pay where my phone happened to be when I said "go". Do I pay where my phone happened to be when the end of the month hit? I mean, what are some of the jurisdictional rules? >> Right, so if you think about, Colorado's a really good example of this. Think about Colorado's estate, it not only has state-level assessments, it has then county and city level assessments as well. So it very much depends on where you live. We could be neighbors, and you could pay 4 percent less tax than me, literally being next door to each other. Because tax jurisdictions don't correlate with zip codes at all, and people make the assumption that they do. So it's very easy for that tax rate to change, even across the street. So then you have to factor in origin rules, and destination rules. So some states have origin rules, and some states have destination rules, and some states, like California, have a combination of both. So you really have to have a way of capturing all of that and managing all of that, and as I said, as it gets bigger, and revenue for states is more of an issue, because they're looking to generate more and more revenue to deal with budget deficits, sales tax is a really easy way for them to do that, so the states are paying more and more attention to how accurate you are in doing that. >> And you got to have it right at the invoice, you can't go back and fix it after the fact, right? >> Well, you could, but then >> It's coming out of your, it's coming out of your pocket. >> Right, and if you get it wrong and you get assessed for the difference, it's coming out of your pocket potentially, or you're overcharging the customer, which the state doesn't care about, they just want what you've charged the customer. So being accurate with it not only optimizes the efficiency within your business, it also means your resources can actually be used for other activities, because sales tax compliance is just a cost of doing business. It's not going to help your business grow, it's not going to make your business more profitable. >> So, so, what's the smallest granularity that you look at then, when you're trying to figure out which of the many rules impacts the decision that I'm making? Is it zip code? You're saying it's even smaller than zip code? >> Yes, so we actually determine the tax rate, using a latitude and longitude coordinate, overlaid by a tax jurisdictional boundary of the US. And that's proprietary technology that we maintain. Then we overlay that with product taxability content. So, for example, in Kansas if you buy a Kit-kat, or you buy a Snickers, the Kit-Kat has a lower, or zero tax rate, because it has flour in it, the Snickers doesn't. So (laughs) if I'm in New York, and I sell-- >> More benefits to gluten-free, less tax! >> If I sell you a bagel in New York, and I don't cut it, it's tax free. If I slice it, it's taxable, because I rendered you a service. >> 'Cause one's a grocery item, and now it's like a restaurant item. >> So, the different tax rates apply just based on what you do with the product. >> And how do you capture that in your rules? >> So we have a content team of over 100 people who are managing state compliance legislation, and are working to ensure that our tax engine is always up to date, and we actually guarantee the accuracy of our calculations. >> Is it easier just to put a 20 percent flat rate and then you figure it out on the back end? (laughter) I mean, it's got to be amazingly complex, so you got people by jurisdiction, you've got it by state, you've got it by content type. >> You've got also special taxing jurisdictions, so if they build a new stadium, or a new transit system, the tax may apply for a period, and then go away again, so really having someone who universally can supply you with an engine that's going to take care of all that and update all of that, it not only helps your profitability, it also helps your customer experience, because you don't have customers ringing you, going: "Why have you charged me this?" >> Right, right. >> We automate everything about the returns and remittance process, and the exemption process on the back end as well, so it isn't just the way that we calculate, it's a full end-to-end process of remitting and filing those taxes, responding to tax notices, and then managing exemptions. So universally we can help people outsource this burden. >> So you guys do that for transactions regardless of whether it's subscription or not subscription, correct? >> Right, correct. >> So from your point of view, what's different now with the growth of the subscription economy? How does that impact your business, or does it, or does it just make more transactions, more complexity? >> Well, I think to your point earlier, about the fact that because rules change, and they're not uniform necessarily in the way they change, sure, if a state decides to change a rule, they'll publish a date when they're going to change the rule by, they're not always uniform. There's not always just one time a year when those rules change. And of course if you're a national company or a growing company, trying to stay abreast of that across the 45 states that charge sales tax can be really challenging and time-consuming and costly, long term or short term. So what we're doing, whether it's a subscription customer or not, is making that really easy for them to scale. So you think about a subscription customer, they want a scale, they want to a scale fast, the last thing they want to have to do is worry about how are they going to implement their tax policy. We take that away, so they can concentrate on growing their subscription base. >> Simon, I think you got great job security. (laughter) >> Death and taxes, right? >> Alright, well thanks for taking a few minutes out of your busy day, appreciate it. >> Thank you. >> Alright, he's Simon, I'm Jeff. You're watching The Cube, from Zuora Subscribe. Thanks for watching.

(computer mouse clicking) >> Hey, welcome back everybody. Jeff Frick here with theCUBE. We are at Zuora Subscribe in downtown San Francisco talking about the subscription economy. What's different about the subscription economy? Why is it taking off? And how does it really change the relationship between the provider and their customer? Or in this case, a club member. So, we're excited to have somebody that's been doing this for a while, Sebastian Gnagnarella, he's the SVP Tech in IT for Inspirato. Did I get that right, Inspirato? >> Yeah, you got that right. >> Awesome, so first off, welcome Sebastian. >> Thanks, Jeff. Glad to be here. >> So what is Inspirato? >> So, Inspirato's a private luxury destination club. We try to provide the affluent consumer a single trusted source for all their travel needs. >> So it's private, it's luxury, and it's destination. >> Exactly. >> But the big thing, it's also a club. >> It's a club. >> And you said it's been a club since the beginning. >> It's a club. >> So what makes a club a club versus having a regular kind of client/customer relationship? >> Well, absolutely. We think that traveling with the club gives the customer a more intimate experience. People are used to buy vacations one by one. With us, they salvage their relation with their personal vacation advisor. When they join the club, they get a personal vacation advisor that knows everything about them, everything about their family, and everything around their travel patterns. And we also give them curation. We give them certainty when you travel with us. And we also give them an extremely great care team. >> Can you share any numbers in terms of number of destinations? Is it your own private destinations? Do you just help them arrange to go to destinations that anyone can go to? How does that work? And give us a little bit of the size and scale of the company. How many trips, members, whatever you can share. >> Absolutely, so, we have 15,000 members right now. When you join the club, you get access to different things. One of them is you get access to our 290+ members-only properties. Properties that we fully manage and control and they're only accessible by our members. You get access to our portfolio of hotels. We have curated deals with different hotels around the world. And you also get access to what we call Bespoke Experiences, which are tailored experiences only for our members. Imagine if you wanted to go on that safari to Africa, you come to us and we take care for you. >> So, then you'll put it together? Or do you usually have a safari to Africa? Or you'll put a custom package together? >> We put it together either with partners, our network of partners, or in some cases, we have member-only trips already in the schedule. Like last year, we did a members-only cruise to Antarctica with I think it was like -- we took like 200 members to Antarctica on that trip. >> So, do people use the service more frequently as a club member? How does it actually change your engagement with them? >> So, I do think they use it more frequently, right. They have that personal relation with their vacation advisors, with their personal vacation advisors. So, we give them extremely good service around where to go, when to go, tips on when is the best time to visit a place, and what is a great occasion to visit a place. We also try to think of ourself as a lifestyle club, not just as a destination club, so we try to be present 52 weeks of the year with local events. So, you are a member, you get access to Superbowl tickets, you get access to backstage tickets for a concert in town, or you get access to members-only cooking classes. >> That's interesting. So not just the big destination vacation. But you've maintained an on-going relationship with a number of smaller events as well. >> Exactly, exactly. >> So, that begs a question, which I think is really interesting one here, about having a relationship with someone through a subscription, or as you say, a club, as opposed to a transactional deal. Because it's not really -- there's transactions within the subscription, but the transactions don't define the relationship. >> Yeah, absolutely. And I said this during the panel few hours ago, is that for us, a subscription has two components, right? One component is the company component. The subscription give us and allowed us to forecast and to scale and build that platform to give more to our members. On the members' side, the membership is their commitment to spend time with the loved ones, right? For us, subscription is that ongoing power that help us help our members to spend time with their loved ones. >> And do you guys promote that? That's a great concept. >> Absolutely, absolutely. It's like for us there's nothing more important than our members spending time with the people they love. >> Right, right. And they're probably very busy, or they couldn't afford the service. >> Absolutely, absolutely. You're exactly right. >> (laughing) That's great. So it is a defined commitment, and that's very different relationship than just buying a vacation package. >> Totally, totally. >> Very cool. Alright so you've been at this for a while. Why Zuora? How long have you been a customer of Zuora? You've been in the club space forever, but why Zuora? >> So, Zuora, we've been customers since 2016. Since last year. Since April last year. And we were managing our subscription charges through a home-grown system. And that worked good, right? When we had 5,000 members, when we had 7,000 members. We knew that the day that climbed to 50,000 members in the future we needed something else. So, we started searching different solutions and we knew we wanted something cloud, we knew we wanted something with strong APIs, so the strong foundation. And we also knew we wanted someone that was strapped into business, because that's how we felt about ourselves, right? We feel that we are strapped in the travel business, and we wanted to partnership with a likewise company, and that's how we picked Zuora. >> Alright, Sebastian, great story. I love it. >> Alright, well thank you so much. >> Absolutely, so show your commitment to your family by signing up with Inspirato. That shows that you're going to take them on really nice vacations. Alright, thanks a lot Sebastian. >> Thanks Jeff, thank you so much. >> I'm Jeff Frick, he's Sebastian, you're watching theCUBE from Zuora Subscribe 2017 in San Francisco. Thanks for watching. (computer mouse clicking)

>> Hey, welcome back everybody! Jeff Frick here with theCUBE. We're at Zuora Subscribe at downtown San Francisco, and every time we go out to conferences, there's a pretty high probability we're going to run into this Cube alumni. Sure enough, here he is, Ray Wang. He's the founder and principal of Constellation Research. Ray, always great to see you. >> Hey Jeff, this is awesome, thanks for having me. >> And close to your hometown, what a thrill! >> This is, it's a local conference! What else can I ask for? >> So what do you think? Subscription economy, these guys have been at it for a while, 1200 people here, I'm a big Spotify fan, Amazon Prime, go back to Costco if you want to go back that far. But it seems to really be taking off. >> It is. About three years ago, digital transformation became a hot topic. And because it became a hot topic, it's really about how do I get products to be more like services. How do I get services to get into insights, and how do I make insights more like experiences and outcomes? And that natural transition as companies make a shift in business models is what's driving and fueling the subscription economy. >> It's interesting. Do you think they had to put the two and two together, that once the products become services now you can tap into that service, you can pull all kinds of data after that thing, you can have analytics, as opposed to shipping that product out the door it goes and maybe you see it every 15,000 miles for a checkup? >> You know what it is? It's basically, about three years ago, people started to realize this. Tien's been talking about this for ages, right? He's been talking about everything's a subscription economy, everything is going to be SAS-ified. And in tech world, everybody got that. But it was when companies like GE, which we saw together, a Caterpillar or a Ford, started to realize, "Hey we can do remote monitoring and sensing "with IOT on our cars, "and I can now figure out what's going on "and monitor them or give an upgrade, "or give a company an upgrade on their appliance, "or give an upgrade on their vehicle, "or do safety and compliance." Then people started realizing, "Oh, wow. "We're not just selling products. "We're in the services business." >> Right. It's funny, if you read the Elon Musk book, how the model years of Teslas, there's no such thing as a model year. It's what firmware version are you on, and then they upgrade. >> Oh, no, that's what we do all the time. You click on a little T, and it's like, boom, firmware. Oh, I get a new upgrade. Only the other day, you touch your head seat, there's like a lumbar support thing, the software popped up for headrest! I never knew I could change the headrest! It literally showed up two months ago. It's unbelievable. >> So, the cool thing, I think, that doesn't get enough play is the difference in the relationship when now you have a subscription-based relationship. That's a monthly recurring or annual recurring, you got to keep delivering value. You got to keep surprising you every morning, when you come out and get in your car, as opposed to that one time purchase. "Adios, we'll see you in however many years "until you get your next vehicle." >> Oh, that's a great example. And the Tesla, we got the Easter eggs over Christmas, right? So the Christmas holiday thing with the Model X that actually did Trans-Siberian Express to the Bellagio fountains with the doors that popped up. You're like, "Hey, what is this thing?" It's just an upgrade that shows up. You're like, "Okay." But you do. You do have to delight customers, you're always capturing their attention, and the fact is, hey, I might buy a toaster. And in that toaster, I might get an upgrade two to three years out. Or maybe, I just buy toasters, and I subscribe to them. And every three years, I get a new toaster. And I can choose between a model L or I can go upsell, get a different color, or I can change out a different set of features, but we're starting to see that. Or maybe, I get a hotel room or a vacation. And that hotel room is at level X, and if I get a couple more members of my family, I get to level Z, and I get to another level, where I lose all the kids, I go back to level A. But the point being is I'm buying a subscription to having an awesome vacation. And that is the type of things that we're talking about here. It's that freedom that Tien was talking about. >> Because he talked about the freedom from obsolescence, freedom from maintenance. There's a whole bunch of benefits that aren't necessarily surfaced when you consume stuff as a service versus consuming it as a product. >> It does. And sometimes it may cost more, but you're trading the convenience, you're trading the velocity of innovation, right? For some people, they just want to own the same thing, they're not going to make the move, but for other people, it's about getting the newest thing, getting delighted, having a new feature. And in some cases, it's about safety, right? This is regulatory compliant or I'm actually doing rev rec correctly, as they were talking about, ASC606. >> Alright, so you're getting out on the road a lot, it's June 6, and I won't tell anyone on air how many miles you already have, because Tamara is probably watching, and she'll be jealous, but biggest surprise is you see here or recently as this digital transformation just continues to gain speed. I'm doing a little research now, and maybe you can help me out. Looking back at digital photography, because it's like, "No, no, no, no, no." for the film, and then it's like, boom. I think these really steep inflection points, or up if you're on the right side, are coming. >> Let's stick to digital photography, that was a great one. There was the point, remember, where we actually had all those disposable cameras at parties that'd get developed, one hour developing. Then we get to back to the point where you just showed up at Costco, dropped something off, you'd get the disk and the photo. Then we had O-Photo, and now we have nothing. Everything just went away because of the phones. These things changed everything, right? I mean, they changed the way we look at photography to the point where, do we even have an album? I was breaking out albums basically three weeks ago, showing my kids, like "Hey, this is what a photo album looks like." And they were completely mystified. "Oh, you print these, how do they get printed?" I mean, they're asking the basic questions. That transformation is what we're having right now. "You own a car?" "You actually buy a PC?" I'm buying compute power. Kilowatts per hour for artificial intelligence in the next year. It's not going to be, I bought the server, I loaded it up, I got it tuned, I got it ready. So yeah, we are in the middle of that shift. But it's the fact that companies are willing to change their business models, and they're willing to break free in the post ERP era. A lot of this is just, my old ERP does not do billing, it doesn't understand the smallest unit of something I sell, and I've got to fix that. And more importantly, my customers, they want to buy it today. The want to buy it in pieces. They want to buy it even smaller pieces. They might buy it every other week, they might buy it-- we have no idea. Yeah, I've got to make sure I can do that. >> It's just interesting too that this is happening now. We're talking about autonomous cars. We see the Waymo cars all the time. The guy from Caterpillar, he's got to a whole autonomous fleet of mining vehicles that are operating today. >> 500,000! He's got 500,000 little trucks. Well, they're not little trucks, they can't fit in this building. >> They're big trucks. Apparently, they tried. >> But they're trying to get these trucks in. We used to think about, like "Hey, these are agricultural vehicles that can be remotely controlled by GPS, they also work for tanks." These are things that are actually doing runs. Now, it's a great reason. Think Australia. Out in Perth, it's about $150,000 to hire a driver. Just to go back and forth. So they figured, "This is just getting ridiculous. "We don't have enough people out here. "We can't convince enough people "to come drive these trucks. "Let's go automate that." That's a lot of the story of where a lot of this came from. >> Or he had a bad night, or broke up with his girlfriend, or distracted about this or that. The whole autonomous vehicle versus regular people driver-- all you've got to do is ride around on your bicycle in your neighborhood, and watch how many people stop at stop signs. Should we answer that question real fast? >> Oh, I do that in California. That's kind of bad, actually. >> Alright Ray. Well, thanks for taking a few minutes. I'm glad you get a weekend at home. Where you off to next, I should ask? >> Oh, it's going to be a crazy next few weeks. I'm going to be in London and Paris and Boston all next week. >> Oh, you're going to eat well. >> I'll try. >> Alright, he's Ray Wang. I'm Jeff Frick. You're watching the Cube from Zuora Subscribe. Thanks for watching.

>> Hey welcome back everybody, Jeff Frick here with theCUBE. We are at Zuora Subscribed in downtown San Francisco. I think it's like 1200, 1500 people talking about the subscription economy. They've been doing it for six years but it really seems to be getting a little more critical path growth. We're excited to be here. And we've got a company you've seen on theCUBE time and time again, we're going back to their event in DC in a couple weeks. I'm happy to have Raj Bandarinath, did I get it right? >> Close enough. >> Close enough. >> He is the head of Corporate Communications for Nutanix, Raj great to see you. >> Jeff, thank you for having me. >> So you guys are enterprise play, you're cloud play. What are you doing here? At Zuora Subscribed, we think of you know Spotify and all these other kind of subscription type of interactions. It's not your guys' space at all. >> Well that's what you'd think at first glance, wouldn't you, but the reality is that you know, Zuora is a vendor, so we are a customer of Zuora's. >> Jeff: Okay. >> And funnily enough, what we're seeing in our market is a huge shift. It's not only about capex, it's also about opex, and it's about providing a continuum of consumption models, if you will, and what Nutanix does is really try to provide all kinds of ways that customers can purchase software from us, and what we are looking at Zuora to do is to be the billing and monetization engine as we embark on this interesting new journey, and it takes us into new wordicals, like internal of things, extending the data center from a central cloud to all the way to drones and edge computing, and that's why we're here. >> So really like you say it's about choice. It always kind of comes back to choice. People don't what to buy it, Ford is here joking about buy any color you want as long as it's black from back in the day, but really you need to offer customers choice, and there's a lot of different consumption models that you need to support. >> Absolutely right, and you know, this is an evolution for us as an industry, right. Look, our CEO said it best, a couple of days ago, and he said it's all about how IT is changing, and is getting colored. The overhang is about the public cloud. Now, we have a lot of other larger players as you know, in the infrastructure space, who are not changing us fast. Who are not essentially giving the range of choices that you need to match with the public cloud. So what Nutanix is here saying is look, not only are we going to give you the delivery models, right of the public cloud, we're going to give to you with a user friendly way of consuming this, and essentially bringing the same economics of the public cloud into the private cloud paradigm, and that's through choice. It's a choice of consumption models, it's a choice of delivery models, and it's a choice of business models. We hit the trifecta. >> It's funny, cause people often think of cloud as an example as just a delivery mechanism, but it's really so much more than that. It's the delivery mechanism that then opens up a completely different way to do business, a way to think about it, a way to consume it differently, and ways to purchase is part of that equation. >> It absolutely is. >> You've got to have it covered. >> It absolutely is, so you know we are you know frankly the only independent lender right now. You've seen a lot of consolidation in our space. I don't want to enumerate that at this point, you guys know this, but we are trying to be is to be kind of the Switzerland for the IT infrastructure industry, and we want to give you the most amount of choices, we want to give you the cutting edge technology, and we just want to be where customers want us to be. >> Right, and you're selling yourself short, that you said they invited you guys here to be part of their digital disrupter. >> That's right. >> You've been doing nothing if you haven't been disrupting for the last couple of years. >> You've said it Jeff, I think we are honored to be invited by Zuora. We think very highly of a company like Zuora, which not only pioneered a new space, put a wonderful, memorable theme around it called subscription economy, and is able to progress and grow so well, and for us the parallels are actually quite remarkable. We pioneered a new space in hyper-convergence. We have grown the space significantly, into what we call invisible infrastructure, and we are at what our leader calls the act two phase, right. The reality is, what he said awhile ago is absolutely true. Every billion is like a new zero. So we have to start over. We can't rest on our laurels. We got to figure out how do we continue invest, how do you continue innovate. We've got to be in places that you least expect us, but we're all the time, talking about solving higher order bits of IT. We're talking about solving what does IOT mean, what does artificial intelligence, and machine learning, how do these concepts come together. How do you have a single cloud operating system that can extend from the data center to the drone. Why should our IT customers have to worry about all of these. Why shouldn't they just be focused on what they do best, which is coming up with new pricing models, new packaging, and so on, and the infrastructure just works. >> Jeff: Right. >> That's we're we want to be. >> Right, which is what the customers want. >> Exactly, right. So, before I let you , I'll give you a little plug, Cube is coming back, Nutanix next, I think it's, I don't even know, second or third year. We've got to European show, a U.S. show. >> That's right. >> So, for the people that don't know, give 'em a little plug for what's happening in D.C. in a few weeks. >> Yeah, I would love to have you guys join us in Washington D.C. We're having Dartnex from June 28th to the 30th, and this is going to be the largest show that we're going to have. Last year we're about 2,400 people. We're going to aim to double that this year, and we have a terrific set of news, a terrific set of speakers. Of course, theCUBE, you guys are going to be there. >> We'll be there. >> We look forward to having to having all the interviews. So we'd love to welcome you to Washington D.C., all do it personally, I'm going to be there. >> Alright excellent, and I'll give you guys a shout out for supporting Girls and Tech Catalysts. It's a show we've covered in the past. We love what Adriana and the team are doing over there, so good move by you guys. That's a good community effort. >> Absolutely, it's critical to us. It's all part of our .heart initiative, and you know, we continue to invest in every way we can. >> Alright well, great to see you Raj. >> Same here Jeff, thank you very much for having me. >> Alright that's Raj, I'm Jeff. You're watching theCUBE From Zuora Subscribed in San Francisco, thanks for watching.

>> Hey welcome back everybody, Jeff Frick here with theCUBE. We're at Zuora Subscribe 2017 in San Francisco. You know, I go to these events a lot. We love to talk to customers and clients and there's just some customers that are a little bit more personal than others. And this is one here. We're really excited to have Ken Cornick on. He's the co-founder, president and CFO, a busy guy, of Clear or affectionately known as ClearMe. >> ClearMe >> In the twitter-sphere. >> ClearMe.com, that's right. >> Jeff: Ken, great to meet you in person. >> Nice to meet you as well, thanks for your support as a customer. >> As you say, I'm an unabashed happy customer. >> That's great. >> Except when you get the nasty looks from people when they escort you past them all in the security line. >> Well, everybody can be a Clear member if they want. >> Exactly. >> And we give free trials, so they don't have to pay. >> How can you miss? So, where'd you come up with the idea? Just give us a little bit of the history for people that aren't familiar with Clear. >> Actually we don't have a not-invented-here mentality. We actually bought the business out of bankruptcy. >> Oh that's right >> 'Cause it was completely shut down. >> I actually ran into someone the other day at the airport, she said, "I had Clear before and then it went away." And then she was so happy you brought it back. >> Right and for our, we call them, legacy members that were members of the old company, we give their time back for free. So, I shouldn't say free because they paid for it. So, if you had a year remaining when the old company went under, we'll honor that year and you can use Clear for a year without paying and then hopefully you'll continue to pay us as an ongoing customer. >> And what people maybe don't know or are not as familiar with, is it's not just for airports anymore. I was so thrilled, not that long ago, I went to a Giants game at AT&T and I see the ClearMe sign. >> That's right. So we're in eight stadiums across the country with more to come. I live in New York so we have Yankees and Mets which makes me happy. I'm a Yankee fan, my kids are Mets fans so we're covered there. But we're looking to increase the number of places you can use Clear and to increase value, add to our members. So the more you use it, the happier you'll be, and the longer you'll stay with us. >> Right and how do you describe the service? Is it identity as a service? Which is something that just popped into my mind. How do you describe what Clear is all about? >> Funny enough, we do talk about identity as a service not relative to the airport business. The airport business is what we're known for. But really, we bought the business out of bankruptcy and we started it to become a biometric identity platform. Our view is, we want to remove friction. Wherever identity is important, up until now, any time you want to increase security, it diminishes the consumer experience. >> Right. >> So we think, our technology can change all that. We can increase security while making better consumer experiences as you witnessed at the Giants game. >> Or the Orlando airport which is my favorite Clear airport. >> So we are expanding in the airport but we are also looking to expand outside of the airport, even beyond stadiums. So things like, payment applications or it could be healthcare applications, we're building a biometric ecosystem. You've enrolled in Clear once, you can use that enrollment wherever we are. >> God, I can imagine you could integrate with building access points? All these types of things. >> That's exactly right. So there's smart cities, smart cars, all of those applications have biometric angles to them. >> So, good space to be in, good move. >> We think so. >> But we're here at Zuora Subscribe. So you guys chose to have a subscription relationship with your customers. So, why and what are some of the things that have come out of that that you've learned both kind of surprises as well as validations? >> Well, we're big believers in the subscription economy which is the sort of buzz word here. But for us, we want Clear members to not have to think about it. Part of the draw of Clear, is obviously you are saving time in the airport, but it's also the mentality of no stress going to the airport. So I flew out of JFK the other day at a seven AM flight. I live downtown. And I woke up at 5:15 for a seven AM flight, knowing that I could get through JFK, through the Clear lane in five minutes or less. That change in behavior is the true value add, that once our members experience that they love the service. And so, I don't want you to have to think about, well, it's a monthly, am I active am I not active? It's an annual, once a year subscription. You pay it, you don't worry about it again until you renew the year later. >> Yeah that's funny too that you put it in kind of an experience point of view. Because it is the experience. We just had the No-Stress Guy put a thing on the back of your head. Get the Clear card and that'll lower your stress on the way to the airport. >> Absolutely. >> Quite a bit because you just never know what's waiting for you at those security lines. >> You never know and it could be five minutes. It could be 30 minutes. And that uncertainty causes you to carve out a bunch of your time ahead of getting to the airport. You know that you can look at Waze and see what the traffic is. You know you can check online to see what kind of delays there are for your flight. But you just don't know what's going to happen at the security checkpoint. >> Right, right. >> It's the last frontier. >> So, any special, exciting new places that you want to highlight before we have to go? >> Sure so, we started in 2010 with two airports. Denver and Orlando were our first two airports back. We've been growing fairly rapidly. And we're about to open our 22nd airport in about a week to 10 days and that's Los Angeles which is a huge airport. >> Male: Oh, you're not at Los Angeles. >> We are not at Los Angeles yet. So that is a big piece of the network for us and especially if your in Bay Area base, really, really important. >> Right, how many terminals do you have to go? 'Cause you guys do it kind of terminal by terminal right? >> Yeah, we're going to be ubiquitous in L.A., besides the international terminal, we're going to be in seven check-points I believe. It's a very big operation, a big undertaking. >> Alright, well Ken like I say, I'm an unabashed fan so I won't pretend to be bias at all. Love the service. >> Great, thank you so much. >> And congratulations and again, great opportunities to go way beyond the airport. >> Thanks for hosting me. >> Alright my pleasure, Ken Cornick, I'm Jeff Frick. He's from ClearMe, I'm from theCUBE. Thanks for watching.

>> Hey welcome back here everybody. Jeff Frick here with theCUBE. We're at the Zuora Subscribe Conference 2017, downtown on San Francisco. 1,000, 2,000 people talking about the subscription economy. I think it's like the sixth year they've been doing the show. First time we've been here. We're excited to be here. But we're joined by a company that we spent a lot of time talking about IOT and the industrial internet, and that's GE, but a new guest, Gytis Barzdukas, he is the head of Predix Product Management for GE Digital. Welcome. >> Thanks Jeff, thanks for having me here. >> So you guys, I mean, we were there in 2013 when Beth and Bill launched the industrial internet initiative at the Jewish History Museum just across the street. So you guys have been in this space for a while, the GE Predix Cloud, industrial internet cloud, you guys have been doing a lot of stuff there. So give us a kind of update, where are you? Obviously picked to highlight one of the key stories here. People probably don't think of GE as necessarily a subscription economy type of play, but, >> So why are we here? >> Jeff: Yeah, so why are you here? >> Well we're here because we are a subscription economy. What we're really focusing on with Predix is building a platform that allows third-parties and first-party applications to be built around the industrial space, and so a lot of what we're hearing from our customers is that they want to subscribe to those services. They want to subscribe to either the production of the services, but more importantly maybe the different elements that bring together a solution. So think about the concept like a digital twin, a virtual representation of a physical asset. A lot of times what people want to do is they want to build twins specific to a specific asset. But they want to bring together the analytics, and the data associated with that, and maybe some environmental factors that they subscribe to from a third-party, bring those all together, do an analysis, And then basically give that stuff back. So they want to subscribe to things like analytics. They want to subscribe to data and the inputs, so that's why we're here. We've been using Zuora as part of our subscription service since we kicked off GE Predix last year. We went GA in February, and it's proven to be a very flexible solution for us. >> So the part that I don't think gets enough talk, and there really wasn't a lot of talk in the keynote, is how a subscription relationship changes the way that you engage with the customer. 'Cause if you just sell 'em something, here's the transaction, you know, go off, go run your jet engine, run your turbine, but if you have a subscription, and it's an ongoing value delivery to pay for that ongoing money that they're giving you, it's a much kind of deeper relationship than kind of a single transaction relationship. >> It can develop to be a much deeper relationship. I think the thing that it allows you to do is, it allows you to experiment a little bit, try a couple things, figure out what works best for you as a customer and then invest in those areas. You don't have to make a big purchase order. You don't have to go off and spend a lot of money on a bunch of software that may eventually go away. You can almost try, before you buy, or try as you buy is probably a better way of putting it. And so what we're seeing is we give people the ability to experiment. I think, we talk within GE about productivity and the impact we can make in our own productivity. To me Predix is as much about innovation. It's giving people the ability to try different things, to try and see what happens when you bring in environmental factors or usage data, or operational data, or we talk about jet engines a lot. Looking at the different pilots, how do they operate the engines? So there's all these scenarios you can sort of experiment with on a subscription model, find out what works and then go deep as necessary. >> And it's interesting, Tien in the keynote talked about how what's different now is that you can buy, you can upgrade, you can cancel, you can downgrade, so again this interaction as you just described, allows for a bunch of different types of engagement, not just the big bang. >> Yep, yeah. >> And the other thing that's consistent with who you're over and overwrite is the democratization. Democratization of the data, democratization of the tools so that if somebody does have a hypothesis, we've been looking at obviously a plane operating in the southwest United States is going to have different characteristics as one operating in Alaska. But as you just said maybe we should look at pilot characteristics. Maybe we should look at back ends, so when you open up that innovation platform, now you have so many more people coming up with hypothesis, testing hypothesis, and you open up the resources to your company to do so much better. >> Well, and you have little innovation, so we have a partner based in Israel, Plataine, who's doing some stuff in the manufacturing space with GE as we start thinking about additive manufacturing. You want to start thinking about the composites and the materials that actually go into the engine, and sort of how have those held up over time? So you can build a much more longitudinal view of that, and again, it can be a subscription service where you start experimenting, you start understanding, especially with additive being sort of a mechanism to decentralize a lot of the manufacturing. You don't need to make a huge investment to doing those analytics. You put some software alongside the additive systems, and you've got the ability to innovate and understand better what composites work better. You talk about the operation of the engine, but how about the manufacturing of the engine? Are there optimal environments where you want to build those engines? And I think we've done great work as an industrial company and understand how to optimize systems and probably even like what the environmental factors are to build an engine effectively, but when you start distributing that, you really want to gauge that real time to understand what the impact could be. >> All right, so we're on short time leash here, unfortunately, but I want to give you the last word, give a plug for the Predix Transform Show coming up as part of Minds and Machines. We went for the first year last year. It was 2,000 developers, pretty great turnout for really a development platform for an industrial internet cloud. >> Yeah, so what we've done this year is we're bringing together Transform, which is the event for our developer community with Minds and Machines which is more targeted towards the business leaders or some of the IT leaders in their organization and bringing them all under one roof. It'll be here in San Francisco mid-October. I don't have the exact dates. I probably should, but I think it's like-- >> I can look it up on the internet. That's why we have the internet. >> But we're bringing those together. So we can have a dialogue that spans the complete spectrum. It's the people that are building, and we'll have hackathons, we'll have places where people can actually work on that. We'll judge those different solutions that are being hacked together. And then we'll be presenting sort of the business value and the impact we're seeing with a lot of the industrial customers. Again, many of them are GE's existing customers. But we've got customers in the auto industry, elevator, escalator industry, fixtures, manufacturing, spaces that we haven't traditionally played, and so we'll be talking about all of the benefits. We're bringing in those customers plus some new product introductions which I can't talk about now. >> All right great event, IT meets OT. We went last year. Jeff was there, Beth was there, >> They will be there. >> Jeff: Bill was there, all the players. A great show. >> okay, Jeff. >> Jeff: Congratulations on your success with Zuora and we look forward to seeing you at Minds and Machines. >> Okay, thanks Jeff. >> All right, he's Gytis, I'm Jeff Frick. You're watching theCUBE from Zuora Subscribe 2017. We'll be right back after this short break. Thanks for watching.

(clicks) >> Hey welcome back everybody. Jeff Frick here with theCUBE. We're in downtown San Francisco with Zuora Subscribe. About 2,000 people all focused on the subscription economy. And we're looking at some really cool products. We've had GE on, we're going to have Caterpillar on, but this is something new. You know, kind of these medical devices. Fitbit on steroids. I don't know how you describe it. Dr Sumon Pal. He is the cofounder and Chief Scientific Officer for Thync. Welcome. >> Thank you, thank you for having me. >> Absolutely. So give us a little bit of background on Thync, and then we'll jump into the device. >> Absolutely. So we're the first subscription service for wellness and better mental health. >> Okay. >> And the way it works is that there's hardware which is a neuromodulator, and they interface with your skin which is some pads and basically you put this on the back of your neck. There's software, there are programs that come along in the app and what these are are algorithms that have been developed to stimulate certain nerves in the right way. Those nerves in turn connect with your brain stem and that is the center for stress, for sleep cycles, for mood in general. And over the last five years we've developed a way to safely stimulate those nerves, such that you can sleep better, your mood is improved and you can de-stress. >> Okay, so let's back, back way up. You covered like a, you went the whole enchilada there. So you basically did some research. You guys figured out that nerve can stimulation can give better wellness. >> Right. >> And is that just during sleeping hours, during waking hours, all the above, kind of? >> Yeah, so it's both. I mean a session lasts about 10 to 15 minutes. >> Okay. >> In that time, what's happening is that it's dampening the stress response in your body. >> Jeff: Okay >> So if you do this on a daily basis or you do this in the evenings when you come home from work, you are kind of detaching from that stress that's built up during the day. >> Jeff: Without drinking a glass of wine or a bottle of beer. >> Absolutely. Without really any toxicity, without any side effects, without any addiction. Without any of the issues that come along with pills and substances. >> All those other things. Okay so then you put this thing on. >> That's right. >> So you put it on like right after you get home from work, or? >> Sure. >> Or when you go to sleep? Does it make a difference? >> Or if you just had a bad meeting. You had a rough morning. If there's kind of an acute occasion where you're anxious or highly stressed then you can use it then, too. >> Okay, so it's kind of yoga in a box. If I would be so presumptuous. >> Without any effort, right. >> No damage to the knees. >> Right, right. >> All right, super. So, a little bit in terms of the history of the company, so you said this is version two that you just came out with >> Right. Yeah, we've been developing the product, the technology in general for about five years. We've done three published studies. We've tested thousands of subjects. The first product has over two million minutes of use without any adverse side effects or, you know, we know that it's a really safe and powerful method to help people. >> Okay, and what does it retail for? >> So the hardware costs 149. >> Okay. >> And then there's the subscription. And the subscription is because there's a consumable involved, which are these pads. Which are actually a proprietary formulation so that this is absolutely painless, absolutely comfortable. And we have algorithms, so you're actually streaming these programs and those programs are highly complex, changing over time and constantly being updated. So for the software, service, and for the pads you pay either $29.99 a month or you pay $19.99 a month depending on a longer commitment. >> Okay. And when you decided to go with the subscription pricing, versus just selling it and if I need more pads, I order a 12-pack of pads or whatever. What were some of the things you thought about and then what are some of the outcomes that you have found? Both kind of expected and unexpected in having a subscription relationship with your customers. >> Yeah, it's a great question. So, one of the things that's really important about, so stress leads to a huge number of health issues. Everything from cardiovascular issues to being linked with diabetes, to being linked with premature aging. And so it's important to chronically reduce your stress levels. And you want to have all the components around when you need it. It's not one of those things where you've had a terrible day, you're extremely anxious. You know, you want everything to be there. You don't want to go and then order some pads online, order what you need online. >> Right, right. >> So that's one aspect, and the second is that you want access to the programs that are being updated all of the time. And what we find is that when people are on a subscription service, that kind of constant use which is so critical for your health, mental health, general well-being, is maintained in a better way than if you're kind of having to reorder these things or buy them. So really it's about supporting and promoting this kind of continuous regular use and routines. >> And I would presume that then you also get the benefit too 'cause you're getting all those data. >> Absolutely. >> Points that are feeding your algorithms. >> Absolutely. >> So you can make changes to the application, changes to the algorithm. >> That's right and also we have a library, about a thousand programs. And it's also about, we can, for any customer switch out the programs that they have if it's not working for whatever reason. So to kind of rescue people, it's also important to get that data of, what is happening month to month. >> So is a program the sequence of, of, I don't want to say charges but stimulations or whatever. >> Yeah, that's right. >> That set a different pattern, a different frequency and that creates like a program. >> That's right. >> And you experiment to find out what works best for you? >> That's right, it's a lot like music. It's a stimulation pattern that's built in blocks and those blocks change over time. And that is one of the things that we figured out how to do, that no one really had done before. >> Alright, well, pretty exciting stuff. >> Thank you. >> I look forward to watching you guys grow and see how things continue to progress. >> Absolutely, thank you very much. >> Alright, thanks for stopping by theCUBE. Alright, he's Dr. Sumon Pal, I'm Jeff Rick. You're watching theCUBE from Zuora Subscribe. Thanks for watching. (clicks)

>> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We're at Zuora Subscribe in San Francisco. David Gee is here. Last we saw you, David, I think was January when this was all building up. Now you said you've got 1500 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--

>> Hey, welcome back, everybody, Jeff Frick here with the CUBE. We're at Zuora Subscribe 2017 in downtown San Francisco. 2000 people, it's all about the subscription economy, and really what the subscription economy does in terms of the relationship between a client and a customer. And that's I think what's the important story besides the mechanics and the accounting and all the other stuff that's going on. We're excited to have our next guest, Barry Holmes. He is the chief revenue officer of Surf Air. Barry welcome. >> Thanks Jeff, glad to be here. >> Absolutely, so for people that aren't familiar with Surf Air, give them a quick background on the company. >> Sure, so Surf Air has been around for four years. It's a membership-based club where you save two hours every time you fly. You're flying out of executive airports on smaller, executive planes. You get the private experience, except it's on a schedule. Everything's on your app, et cetera, so we're really addressing that pain point that your business traveler has in wasting time at big airports to fly short haul trips. So currently, we're only in California and Las Vegas. We have big, aggressive growth plans in Texas, Europe, and the rest of the world, because for short haul city pairs, like San Francisco-L.A, L.A-Vegas, et cetera, they exist all over the world. Those big population centers are getting wealthier, busier, more time-pressed, yet the infrastructure and the commercial world hasn't kept up. >> Right, right. You mentioned the big airports, but you fly into the Bay area. I know you fly into San Carlos, right? >> Right, so that's how we solved the problem is when you're still going to the market that you want to go to from the market that you're coming from, but you're flying out of San Carlos in the Bay area to Burbank or Hawthorne in LA, or you're flying into an FBO attached to Burbank airport. So that's how you save so much time. You show up 15 minutes ahead of your flight. You book everything on your app. We basically give our members back two hours every time they fly, or a whole day if they fly weekly. So every month, you're getting a day back, and so our members are high-powered. They know how to use their time, and when they do that, they're able to create a life out of the time we give them. >> And yet, unlike, say, some of the net jets or some of those things, you're actually getting the, it's not a schedule. So you guys have added the schedule component to it, and you've enabled that using a mobile app. >> Yeah, so the schedule basically gives you the frequency that you need, and it mitigates the cost associated with typical charter travel. >> Jeff: Right, right. >> So you're getting a private experience, but you're not chartering the flight, paying for dead legs. You know, to charter a flight by yourself to San Francisco from LA is going to be $8,000 to $10,000, whereas you fly with us weekly, it's going to be an average of $650 a flight. >> Interesting, okay. We're here at Zuora Subscribe. So, subscription, why did you choose to go with a subscription model as the way to interact with your customers? >> So I've been in the membership business or subscription business in several businesses now, and I think there's a distinct difference between the relationship a company has with its members, and the relationship a company has with customers. So there's obviously- >> Funny, you don't even use the customer phrase, you say members. >> I don't use customers, they're members of ours. >> Okay. >> So when you're a member of the club, you're going to get treated differently, and in all honesty, sometimes we get scathing feedback, but it's good. We learn from that and improve the business based on how the members use it, and how they interact with us, because they're part of the family. A customer, if they don't like it, they often leave. You have to come up with surveys and things like that to find out what's going on, but with us, we can see how often a member engages with us, which flights they take, which flights they enjoy, and we have member care people or member management resources that deal with these members every day. >> Right. >> The feedback loop, it really improves the value of the membership and it also improves the business. And it clearly, a recurring revenue model is good, if you put the member first and handle their needs, that's ultimately going to drive your revenue. >> Right, because you got to keep delivering value over and over and over and over per time period. >> Right. >> You can't just rely on that first big pop and maybe a maintenance fee or whatever. >> No, exactly, we look at it as we don't want to get into the discount game. We want to charge a fair price for what we deliver, but we want to make the experience worth it. And we found that our members really don't blink at the price as long as the experience is there, because they realize it's a much lower price versus say charter, but if we keep innovating and give them the options they want, the times they want, the service level that they want, then it builds value for us and we put value back in it for the member. That's the symbiotic relationship. >> Okay, and how important was the subscription model to the business of Surf Air in terms of the founding. I don't know if you were there at the beginning. Is it really an integral part of it? Or is it kind of a nice to have that you guys added on after the fact? >> No, I was not there for the founding, but I do believe it was an integral part, because they realized that in order to create a different business model, they saw the value of a subscription business. Anytime you look at business models, knowing that when you wake up on June 1 or July 1, you've got recurring revenue there, that's going to be more appealing. >> Jeff: Right. >> How you treat those members to grow it is obviously the question. >> Right. Certainly not an inexpensive business to run, a small airline, so- >> No, and that's- >> It's nice to have that recurring revenue. >> It's a heavy asset business, so you have to get the value right. You have to get the pricing and the usage right, and those are the lessons that we've learned over time. Now we know how often people fly, what they expect, and what kind of price makes sense for both us and them. >> Right, right, I'm going to give you the last word before you have to go. What's kind of your sense of what's going on here at Zuora Subscribe? Water cooler chat, what are you hearing? Any surprises, what's kind of the feel as this subscription thing really starts to go. >> Yeah, I mean, I think, to think that you've got a conference built around a business model is unheard of, and so I think it's extremely valuable, because when you're talking to people in completely different businesses, yet they serve their members or their subscribers in the way that makes sense for their business. You can actually take a lot back into what makes sense for your business. So feeding the model, knowing that you've got a base of people that you have to serve the right way, you can really learn a lot from all sorts of businesses. That's what's cool about this. >> Very good. All right, he's Barry Holmes. I'm Jeff Frick. You're watching the Cube from Zuora Subscribe. Thanks for stopping by. >> Thank you. >> All right, thanks for watching.