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(chill electronic music)

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Welcome to "Lenovo Late Night I.T.",

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where we eat alphabet soup for breakfast.

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I'm your host Baratunde Thurston,

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and the subject of our episode
is the subscription economy.

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I'm joined by the man who coined the term,

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subscription economy, Tien Tzuo.

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Tien was an early hire at Salesforce

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where he built the company's
original billing system.

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He's since gone onto found Zuora,

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one of the fastest growing
SaaS companies in the country.

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He's the author of "Subscribed:

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Why the Subscription Model
Will Be Your Company's Future

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and What to Do About It.

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Also with us is Matt Kimball.

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Matt has 25 plus years
experience working in areas,

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ranging from hardware
to software engineering,

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enterprise IT and product management.

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Now he spent 11 years in
AMD server business unit,

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and was also an IT director
for two different states,

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Florida and Oregon.

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Couldn't be more different,
but he unites them.

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He's currently a Senior
Data Center Analyst

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at the global consulting firm,
Moor Insights & Strategy.

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He's also the proud owner of a dog,

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named Wallyford Theodore
Franklin, adorable.

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The dog's initials, spell WTF.

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Tien, Matt, thank you
so much for being here.

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Good to have you.

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- Thanks for having us.

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- Tien, I wanna start with you.

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Do you think we're moving
toward a subscription economy?

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- Oh, we are absolutely, absolutely

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moving towards the subscription economy.

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And you probably notice

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when you look at your credit card bill.

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- I do.

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- And when we need something,

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instead of reaching for a product,

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we're reaching to our favorite service.

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- So moving towards services,

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Matt, I wanna get your take on this.

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And you have a perspective of someone

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who's worked in these
massive organizations,

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AMD, the state of Florida.

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Do you also sense that we're moving

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toward a subscription economy?

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- Yeah, I would agree with Tien.

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You know, I look at the world

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through the lens of the data center,

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and there is a consumption model

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that is being driven across
both hardware and software

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that is largely subscription based.

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- I suspect Tien, that is,

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I know you're a strong proponent of this.

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You wrote a whole book about it.

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- True.
- And helping people do it.

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But what are the risks you see

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associated with becoming a more
subscription-based economy?

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- The subscription model

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is not about like, am I
better off if I own something?

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It's really about trust.

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You know, the vendors ultimately,

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are going to want to earn your trust.

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And so I would say that,

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this is probably the more
natural business model, right?

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People in people, you know,

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there's a trust, there's a
relationship with services.

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And the product model
really introduced itself

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at the start of the 20th
century with mass production.

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And we're really returning
back to, you know,

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what makes us human,

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which is to know each other,

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and to provide services to each other.

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So product model-

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- Oh, you're good, you're good, okay.

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So when we enter the subscription
model, prices change,

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you know, features change.

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The dynamic of that
relationship can change.

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So Matt, how do you manage that change?

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Because it is such a
different way of approaching,

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operating a business, when you
actually no longer fully own

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the capability that you need

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to be able to run your business?

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- Yeah, I think there are a couple of ways

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of looking at this.

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And I would agree with Tien wholeheartedly

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in the notion of subscription-based.

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I think IT organizations understand

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the value that the cloud brings

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from an agility perspective,

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but they're turned off by some
of the large costs they see.

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So, you know, what is
that perfect marriage

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of cloud economics, and
still having some control.

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And I think this is where
subscription-based computing

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within the data center
makes perfect sense.

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I don't have enough data
scientists on staff,

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and enough IT folks on staff

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to stand up a large analytics environment,

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or AI environment.

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So what if I went to an
OEM, a server vendor,

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and bought their
subscription-based service?

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You know, there are a couple
of things that are great there.

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I service the needs of my customers,

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my internal customers
immediately, or near immediately,

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The server vendor or solution vendor

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manages that environment for me.

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So I'm not bogged down from
an operational perspective.

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And I'm paying for it as I use it.

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So my costs should go down
dramatically over time.

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So the question is, do I give
up control at that point?

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And that's really your question.

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I don't look at this
as an IT organization,

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giving up control over their environment,

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or giving up control over their data.

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I look at them leveraging, you know,

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a great team of experts from,
that are standing behind them,

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helping them have more control
over their environments,

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quite frankly, and do the things

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that they're being tasked to do.

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- But you have to have
trust, like you said earlier.

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You have to have almost a
level of faith, I think.

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One, that that provider, that
vendor, that SaaS partner,

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is gonna exist three years from now,

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now that you've become dependent on it.

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That they're gonna maintain

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that sort of product development path

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that's still in line with
your business growth,

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or your household growth.

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And that they're not gonna pivot someday.

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We don't do that anymore.

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- You should.

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- How do you see the culture
shifting within organizations,

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whether it's the CEOs,
the marketing people,

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the various technology leadership

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around a subscription model?

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What does it do to the
organizational culture?

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- Well, so to Matt's point,

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it obviously gives you incredible agility.

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But I think there's a bigger
picture for organizations,

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which is, if you think
about as an organization,

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you're starting to subscribe
to all these services.

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Well, your organization has a mission,

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your organization has customers.

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And so your organization's customers

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are actually going through the same thing,

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because this is all happening
in our personal lives.

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And so what's going on in
your organization right now

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is they're probably transforming
to a subscription business.

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They're probably saying, you know,

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we have to turn our
customers into subscribers.

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We have to transform as well.

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And so there's a broader thing.

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When we talk about shifting
to subscription economy,

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this isn't just something
that's, you know,

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instead of buying software,

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I'll simply subscribe to
some SaaS applications,

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or I'll use the cloud.

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This is a whole economic
shift in the world around us.

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And it's affecting the companies.

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It's actually creating new
demands on IT in today's world.

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- I wholeheartedly agree with that.

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A couple of points in there.

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There's a term that's
used out in the industry

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called digital transformation, right?

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And that is the digitizing of businesses

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in response to the market.

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which is huge, and every
company is going through it.

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But we talk about that in such
an abstract way sometimes.

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We forget about the downstream effects

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within the organization.

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And to what Tien said, you know,

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as businesses transform those
IT groups that support them

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have to transform as well.

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And I kinda take issue
with that a little bit

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in that it's not that IT
organizations have to transform,

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they have to do more.

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Their day-to-day jobs
have not gone away, right?

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That break-fix capability, or support

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that they provide to the organization,

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that has not gone away.

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Maintaining the operating
environment has not gone away.

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But now they're being asked to
do more in addition to that.

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And that's where, as I
was talking about earlier,

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that's where subscription-based,

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or consumption-based computing

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from the server all the
way up to the software

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really can be used as a tool by IT

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to offload a lot of those mundane tasks,

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and allow them to reorient themselves

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to what this new world, brave
world looks like, right.

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So I think that's a pretty big part of it.

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- A lot of this makes sense to me,

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and most people for digital
goods, digital services.

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It's all ephemeral anyway.

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But what about physical goods?

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I've got gotta be subscribing to mugs,

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and index cards, and
pens and not own tables?

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- You absolutely will.

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I know it's weird.

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I know it's a strange concept,

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but there's definitely some
misperception out there

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that subscription services
are really for digital.

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But the fact is that every
single physical product

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is connected to the internet, right?

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We're talking to companies
that are building smart tables,

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tables that actually says-

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- Why does a table need to be smart?

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It's a table.

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- Well, so you haven't seen

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what engineers can
design with these tables.

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And so imagine you're running a facility.

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Maybe you're running IT in facilities,

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and you wanna know,

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you wanna know how often your employees

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are coming to the office, using
their desks, moving around,

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and what if your table,
and what if your desks,

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what if your chairs,

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can actually tell you
all that information?

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- Dude, you gotta stop right now,

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'cause you're describing
the greatest snitch network

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I've ever heard of.

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My desk is gonna rat on me? (laughing)

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- Well, we'll look through

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the privacy aspects.
- I was at the office.

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The table says no.

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- Well so, but imagine that
you can actually walk down

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to the table and says,

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I wanna check into this table right now.

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I can put my fingerprint down.

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A computer monitor comes up,

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it has all my applications on it.

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And it gives you the
flexibility to move around

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in offices to offices.

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And so,
- Ah, man.

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- So what's happening now,
is because physical products

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have the ability to be
connected to the internet.

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You buy a washing machine today,

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it's connected to the internet.

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- How does a business decide?

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It's not just about the customer ratings

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on the performance of the product,

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but it's about the
reliability, the security,

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the communication style of this provider,

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because we're putting
all of our businesses

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into these distributed
financial relationships,

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all of our personal lives, into those,

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that feels so different from the idea

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of like, but I own the, I
don't own the bed anymore.

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I'm renting everything.

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So I've got to trust the landlord.

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- Absolutely.

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- How do you find a way
to that level of trust?

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- I'll give you,

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you talk about appliances.

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It's not really about the appliance.

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It's about the outcome
that you're looking for.

258
00:09:45,501 --> 00:09:46,627
- Clean clothes.

259
00:09:46,627 --> 00:09:47,461
- Clean clothes, clean clothes.

260
00:09:47,461 --> 00:09:51,424
So now now imagine, you're an engineer

261
00:09:51,424 --> 00:09:52,925
building a washing machine,

262
00:09:52,925 --> 00:09:54,468
and it's a smart washing machine.

263
00:09:54,468 --> 00:09:55,303
And that washing machine

264
00:09:55,303 --> 00:09:57,054
is now collecting all the information.

265
00:09:57,054 --> 00:09:57,888
You're seeing these customers

266
00:09:57,888 --> 00:09:59,974
are actually putting too much detergent.

267
00:09:59,974 --> 00:10:02,059
These customers, aren't
putting enough detergent.

268
00:10:02,059 --> 00:10:05,146
These customers are using
our product completely wrong.

269
00:10:05,146 --> 00:10:06,397
And what your natural inclination

270
00:10:06,397 --> 00:10:09,150
is gonna do is you'll wanna
take over more and more of that

271
00:10:09,150 --> 00:10:10,860
and actually deliver the outcome

272
00:10:10,860 --> 00:10:11,902
the customer is looking for,

273
00:10:11,902 --> 00:10:14,030
which ultimately, is clean clothes.

274
00:10:14,030 --> 00:10:16,532
And so you're gonna see the
products that start to evolve

275
00:10:16,532 --> 00:10:18,451
towards these types of capabilities.

276
00:10:18,451 --> 00:10:20,786
And the business model
that allows it to happen

277
00:10:20,786 --> 00:10:21,996
will be something like that.

278
00:10:21,996 --> 00:10:24,123
There will be some monthly service

279
00:10:24,123 --> 00:10:25,166
where you get clean clothes.

280
00:10:25,166 --> 00:10:26,876
And it's not just gonna
be the washing machine,

281
00:10:26,876 --> 00:10:28,336
but it's going to be all the stuff

282
00:10:28,336 --> 00:10:30,254
that goes on around the washing machine.

283
00:10:30,254 --> 00:10:31,797
- You know the fact is,

284
00:10:31,797 --> 00:10:34,383
some folks may not want their outcome

285
00:10:34,383 --> 00:10:36,218
to be completely clean, right?

286
00:10:36,218 --> 00:10:37,345
They, clean clothes,

287
00:10:37,345 --> 00:10:39,805
they might want something
slightly different.

288
00:10:39,805 --> 00:10:40,640
And-
- Dirty clothes.

289
00:10:40,640 --> 00:10:42,850
- I do believe that
it's not always the case

290
00:10:42,850 --> 00:10:45,186
where the customer is
using the product wrong.

291
00:10:45,186 --> 00:10:48,105
They're just not using it as
you envisioned it to be used.

292
00:10:48,105 --> 00:10:50,441
And the smart companies figure that out.

293
00:10:50,441 --> 00:10:51,525
And to what you said,

294
00:10:51,525 --> 00:10:53,611
it becomes more of a dialogue

295
00:10:53,611 --> 00:10:55,821
and there's a learning process.

296
00:10:55,821 --> 00:11:00,451
And this is an age old kind of issue

297
00:11:00,451 --> 00:11:02,536
that product managers
and software developers

298
00:11:02,536 --> 00:11:03,996
face all the time, right?

299
00:11:03,996 --> 00:11:07,583
I build a product for
these specific functions.

300
00:11:07,583 --> 00:11:09,502
And lo and behold, there
are these edge cases

301
00:11:09,502 --> 00:11:10,961
that really aren't edge cases.

302
00:11:10,961 --> 00:11:13,089
They're, you know, they're quite popular,

303
00:11:13,089 --> 00:11:13,923
and you learn,

304
00:11:13,923 --> 00:11:16,676
and you incorporate that
back into your service.

305
00:11:16,676 --> 00:11:19,053
But there is a balance you have to strike

306
00:11:19,053 --> 00:11:22,556
between driving to outcomes,

307
00:11:22,556 --> 00:11:24,058
and understanding what those outcomes are,

308
00:11:24,058 --> 00:11:25,768
and giving too much flexibility.

309
00:11:25,768 --> 00:11:28,354
Because before you know it, 
you’re right back to square one

310
00:11:28,354 --> 00:11:32,233
where you’re just making 
software and throwing it out there

311
00:11:32,233 --> 00:11:34,527
and its benefit is never
fully realized.

312
00:11:34,527 --> 00:11:36,987
- You used the word
conversation, it's a dialogue.

313
00:11:36,987 --> 00:11:39,782
And that's really what digital
transformation is about.

314
00:11:39,782 --> 00:11:41,283
If you can have an ongoing dialogue

315
00:11:41,283 --> 00:11:43,077
with each and every one of your customers.

316
00:11:43,077 --> 00:11:46,122
And now imagine that
now coming back to IT.

317
00:11:46,122 --> 00:11:49,792
'cause what makes us all
this possible, is technology.

318
00:11:49,792 --> 00:11:52,086
And so what you're
seeing is a shift in IT.

319
00:11:52,086 --> 00:11:55,005
There's a merging of say the
CIO and the CTO function,

320
00:11:55,005 --> 00:11:58,217
where IT is not just about
running a bunch of applications

321
00:11:58,217 --> 00:11:59,760
or running the infrastructure.

322
00:11:59,760 --> 00:12:04,140
IT has to be about how do I
enable that ongoing dialogue

323
00:12:04,140 --> 00:12:07,268
between my company, all the
way down to the engineers,

324
00:12:07,268 --> 00:12:08,519
and my customers?

325
00:12:08,519 --> 00:12:10,146
- So, we're gonna take a little break.

326
00:12:10,146 --> 00:12:12,690
I want you all to get to
know each other a bit better,

327
00:12:12,690 --> 00:12:14,900
and also explain what you do.

328
00:12:14,900 --> 00:12:17,027
People in the tech
industry sometimes forget

329
00:12:17,027 --> 00:12:20,740
that the average person has
no idea what the hell they do.

330
00:12:20,740 --> 00:12:22,616
But I think even an IT expert

331
00:12:22,616 --> 00:12:23,993
should be able to describe their work

332
00:12:23,993 --> 00:12:26,287
in simple lay person's terms.

333
00:12:26,287 --> 00:12:28,539
That's why we created this next segment.

334
00:12:28,539 --> 00:12:30,583
You're gonna explain
your jobs to each other

335
00:12:30,583 --> 00:12:32,710
as if you were a first date.

336
00:12:32,710 --> 00:12:34,879
You'll each have 20 seconds
to make a good impression,

337
00:12:34,879 --> 00:12:37,840
and hopefully lock down date number two.

338
00:12:37,840 --> 00:12:39,550
Get ready to spit some 'A' game,

339
00:12:39,550 --> 00:12:42,595
because it's time for Date Night IT.

340
00:12:42,595 --> 00:12:45,431
(energetic music)

341
00:12:46,932 --> 00:12:49,685
So you both heard the
basic outlines of the game.

342
00:12:49,685 --> 00:12:51,520
Matt, I'm gonna have you go first.

343
00:12:51,520 --> 00:12:53,856
You are at date number one,

344
00:12:53,856 --> 00:12:57,109
put your best foot forward,
give Tien what ya' got.

345
00:12:57,109 --> 00:12:57,943
- You got it.

346
00:12:57,943 --> 00:13:02,031
So as an industry analyst, a tech analyst,

347
00:13:02,031 --> 00:13:06,911
I look at, I try and
marry the knowledge gap

348
00:13:06,911 --> 00:13:10,998
that exists between solutions
providers and IT consumers.

349
00:13:10,998 --> 00:13:14,585
- Okay, Matt, I'm gonna
give you some pointers here.

350
00:13:14,585 --> 00:13:17,546
You opened with industry analyst,

351
00:13:17,546 --> 00:13:19,298
which you know, if I'm on a first date,

352
00:13:19,298 --> 00:13:21,467
that's not really gonna
kind of loosen me up a bit.

353
00:13:21,467 --> 00:13:24,220
So you might wanna have a softer opening.

354
00:13:24,220 --> 00:13:26,388
Do you wanna give it another shot?

355
00:13:26,388 --> 00:13:27,765
- I don't know that I wanna go on a date

356
00:13:27,765 --> 00:13:28,641
with you at this point.

357
00:13:28,641 --> 00:13:29,475
(Baratunde laughing)

358
00:13:29,475 --> 00:13:30,935
- Tien, what were you about to say?

359
00:13:30,935 --> 00:13:33,687
- Oh, I was looking at
the dessert menu yo.

360
00:13:33,687 --> 00:13:34,522
(Baratunde laughing)

361
00:13:34,522 --> 00:13:35,356
Sorry man.

362
00:13:35,356 --> 00:13:36,190
- All right, let me try it again.

363
00:13:36,190 --> 00:13:37,525
- Do it again, yeah.

364
00:13:37,525 --> 00:13:38,692
- What I try and do is,

365
00:13:38,692 --> 00:13:43,239
I try and bridge the gap
between technology companies

366
00:13:43,239 --> 00:13:45,741
and IT organizations,
to help IT organizations

367
00:13:45,741 --> 00:13:47,409
make more informed decisions

368
00:13:47,409 --> 00:13:49,370
around what they're gonna deploy

369
00:13:49,370 --> 00:13:52,081
and use inside their data centers.

370
00:13:53,040 --> 00:13:54,041
Better?

371
00:13:54,041 --> 00:13:55,876
- [Baratunde] Tien, was that better?

372
00:13:55,876 --> 00:13:59,964
- Ahhhh, maybe I'm gonna
skip the appetizer,

373
00:13:59,964 --> 00:14:01,549
but I'll stick around for dessert.

374
00:14:01,549 --> 00:14:03,008
- Stickin' around for dessert.

375
00:14:03,008 --> 00:14:03,843
All right, well, that's good.

376
00:14:03,843 --> 00:14:07,930
Now you go from the judger
or to the judged, perhaps.

377
00:14:07,930 --> 00:14:08,764
- To judged.

378
00:14:08,764 --> 00:14:11,183
- To judged. Tien, shoot your shot.

379
00:14:11,183 --> 00:14:15,437
- So Matt, you know, all
the services that you love,

380
00:14:15,437 --> 00:14:17,648
you use all these subscription services.

381
00:14:17,648 --> 00:14:22,194
I run a company, they really
create some incredible software

382
00:14:22,194 --> 00:14:24,446
to make those things possible.

383
00:14:26,490 --> 00:14:27,700
- Whoo.

384
00:14:27,700 --> 00:14:29,618
- All right, so you're too nerdy for me.

385
00:14:29,618 --> 00:14:30,536
- Oh, oh, oh!

386
00:14:30,536 --> 00:14:32,162
- I was so nerdy.

387
00:14:32,162 --> 00:14:34,790
- Wow, I don't think, the
way you said software,

388
00:14:34,790 --> 00:14:36,000
that got to me, Tien.

389
00:14:36,000 --> 00:14:38,294
- Hey, you did, Tien you did a great job.

390
00:14:38,294 --> 00:14:40,504
It's just a, I'm looking
for a little bit more

391
00:14:40,504 --> 00:14:42,631
in my second date.

392
00:14:42,631 --> 00:14:44,925
- All right, swipe left.

393
00:14:44,925 --> 00:14:47,595
- I appreciate the
honesty and the openness

394
00:14:47,595 --> 00:14:48,762
to play the game.

395
00:14:48,762 --> 00:14:50,931
I'll take you both out, separately.

396
00:14:52,433 --> 00:14:55,311
Tien, you are on the record

397
00:14:55,311 --> 00:14:58,105
as being extraordinarily pro subscription.

398
00:14:59,273 --> 00:15:02,192
What do you wanna own?

399
00:15:03,444 --> 00:15:07,615
- I think we're actually
witnessing the end of ownership.

400
00:15:07,615 --> 00:15:10,451
I'll tell you, like a couple
of years ago I saw this trend,

401
00:15:10,451 --> 00:15:12,786
this Marie Kondo trend, right?

402
00:15:12,786 --> 00:15:14,538
Where, hey just go into your closet,

403
00:15:14,538 --> 00:15:15,956
and just throw everything away,

404
00:15:15,956 --> 00:15:17,249
throw everything away.

405
00:15:17,249 --> 00:15:18,250
And at first I was like, well,

406
00:15:18,250 --> 00:15:20,544
that's just gotta be a strange fad.

407
00:15:20,544 --> 00:15:23,589
And then you look at your own
house, your own apartment,

408
00:15:23,589 --> 00:15:24,798
your own closet, and
you realize, you know,

409
00:15:24,798 --> 00:15:26,508
why do I have all this stuff?

410
00:15:26,508 --> 00:15:28,218
It just weighs you down.

411
00:15:28,218 --> 00:15:30,054
And so I just started
throwing things away,

412
00:15:30,054 --> 00:15:31,055
just like everybody else.

413
00:15:31,055 --> 00:15:32,765
- Do you own that jacket, Tien?

414
00:15:32,765 --> 00:15:34,058
- If I could rent it, I would.

415
00:15:34,058 --> 00:15:35,976
- (laughing) I'll take that as a yes,

416
00:15:35,976 --> 00:15:37,269
you own that jacket.

417
00:15:37,269 --> 00:15:39,229
My wife loves books.

418
00:15:39,229 --> 00:15:41,190
I'm a digital books person myself,

419
00:15:41,190 --> 00:15:42,816
but she wants the physical book.

420
00:15:42,816 --> 00:15:44,318
Where do you stand on books, Tien?

421
00:15:44,318 --> 00:15:45,402
You're an author.

422
00:15:45,402 --> 00:15:46,570
- I do like physical books.

423
00:15:46,570 --> 00:15:47,863
- Aha, we got him!

424
00:15:47,863 --> 00:15:49,406
- I'll tell you, I'll tell you,

425
00:15:49,406 --> 00:15:51,492
like number one question I get is,

426
00:15:51,492 --> 00:15:53,369
well can I subscribe to your book, ha ha?

427
00:15:53,369 --> 00:15:55,537
So we now have a weekly newsletter.

428
00:15:55,537 --> 00:15:57,581
We just continue to dialogue the book,

429
00:15:57,581 --> 00:15:59,416
and we're actually
collecting a bunch of things

430
00:15:59,416 --> 00:16:01,710
that might actually become
a second book or something.

431
00:16:01,710 --> 00:16:04,546
- Okay, okay, so you're
getting high on supply.

432
00:16:04,546 --> 00:16:06,048
You're committed to the movement.

433
00:16:06,048 --> 00:16:06,882
- We're committed.

434
00:16:06,882 --> 00:16:08,550
- And I respect the commitment.

435
00:16:08,550 --> 00:16:12,513
Matt, when you think about
the death of ownership,

436
00:16:12,513 --> 00:16:14,598
are there parts of the business world

437
00:16:14,598 --> 00:16:16,100
where you think ownership

438
00:16:16,100 --> 00:16:18,102
still, is something worth preserving?

439
00:16:18,102 --> 00:16:21,480
- I do believe that the
days of owning your assets

440
00:16:21,480 --> 00:16:23,315
are long behind.

441
00:16:23,315 --> 00:16:25,901
And you know, that's kind
of what made the cloud

442
00:16:25,901 --> 00:16:28,946
so interesting in concept to start,

443
00:16:28,946 --> 00:16:31,281
and a so broadly adopted.

444
00:16:31,281 --> 00:16:34,493
And it's what's gonna drive
consumption-based computing

445
00:16:34,493 --> 00:16:37,162
from solutions providers

446
00:16:37,162 --> 00:16:39,498
across the spectrum, moving forward.

447
00:16:39,498 --> 00:16:41,875
- Matt mentioned enterprise organizations,

448
00:16:41,875 --> 00:16:43,627
which makes me think of the big ones,

449
00:16:43,627 --> 00:16:45,170
the Fortune 500 companies.

450
00:16:46,338 --> 00:16:48,257
What happens to the Fortune 500 companies

451
00:16:48,257 --> 00:16:50,050
in this transition to
a subscription economy?

452
00:16:50,050 --> 00:16:52,219
- The majority of the
Fortune 500 companies,

453
00:16:52,219 --> 00:16:55,431
their business model
is based on ownership.

454
00:16:55,431 --> 00:16:56,807
So you think about a car company,

455
00:16:56,807 --> 00:16:59,351
and you think about, so
the last five or six years,

456
00:16:59,351 --> 00:17:01,186
the number of cars sold around the world

457
00:17:01,186 --> 00:17:02,896
is actually declining every single year,

458
00:17:02,896 --> 00:17:06,150
including in emerging
markets, like China and India.

459
00:17:06,150 --> 00:17:07,943
'Cause we just don't need it you know,

460
00:17:07,943 --> 00:17:09,528
there's all these services out there.

461
00:17:09,528 --> 00:17:13,490
So if your business model is
based on number of cars sold,

462
00:17:13,490 --> 00:17:14,658
then 10 years from now,

463
00:17:14,658 --> 00:17:16,410
you're going to be a smaller company,

464
00:17:16,410 --> 00:17:18,620
unless you just keep on increasing prices.

465
00:17:18,620 --> 00:17:21,498
But if your business model
is based on miles driven,

466
00:17:21,498 --> 00:17:24,043
well it turns out that
miles driven is going up.

467
00:17:24,043 --> 00:17:25,085
And so the same time

468
00:17:25,085 --> 00:17:26,628
that we sort of see the end of ownership,

469
00:17:26,628 --> 00:17:28,213
we're actually using things more and more.

470
00:17:28,213 --> 00:17:29,965
We call this because usership, right.

471
00:17:29,965 --> 00:17:32,593
Usership is going up, and
ownership is going down.

472
00:17:32,593 --> 00:17:35,137
And so I've got a friend
Ray Wang, that wrote a book,

473
00:17:35,137 --> 00:17:37,097
you know, "Everybody
Wants to Rule the World"

474
00:17:37,097 --> 00:17:42,019
and he estimates that 95% of
today's Fortune 500 companies

475
00:17:42,019 --> 00:17:45,606
will not exist in 2050,
because of this change.

476
00:17:45,606 --> 00:17:46,899
And so that is the big question

477
00:17:46,899 --> 00:17:48,484
that Fortune 500 companies have.

478
00:17:48,484 --> 00:17:50,402
How do I make the shift?

479
00:17:50,402 --> 00:17:53,405
And if you're running IT in
one of these organizations,

480
00:17:53,405 --> 00:17:54,323
you should be asking yourself,

481
00:17:54,323 --> 00:17:56,950
how can I help my
organization make that shift?

482
00:17:56,950 --> 00:17:58,410
How can I make sure that my organization

483
00:17:58,410 --> 00:18:01,330
is still one of the
survivors in the year 2050?

484
00:18:01,330 --> 00:18:03,832
- Matt, in terms of making the shift,

485
00:18:04,666 --> 00:18:07,294
what are the hardest
parts that you've seen?

486
00:18:07,294 --> 00:18:09,713
What's working well in the organizations

487
00:18:09,713 --> 00:18:11,715
that have been successful
in making the transition?

488
00:18:11,715 --> 00:18:14,551
- The biggest challenges
that IT organizations find

489
00:18:14,551 --> 00:18:16,845
in transforming operations,

490
00:18:16,845 --> 00:18:19,264
transforming the way
they consume technology,

491
00:18:19,264 --> 00:18:20,599
is all cultural.

492
00:18:20,599 --> 00:18:25,437
It's behavioral, it's we have
done things a certain way

493
00:18:25,437 --> 00:18:27,648
for a certain amount of time.

494
00:18:27,648 --> 00:18:29,483
And there's a lot of discomfort,

495
00:18:29,483 --> 00:18:30,526
and a lot of unknown

496
00:18:30,526 --> 00:18:32,736
on the other side of that transformation,

497
00:18:32,736 --> 00:18:36,240
which is what causes
IT organizations to be,

498
00:18:36,240 --> 00:18:37,741
you know, I don't wanna say they're loath

499
00:18:37,741 --> 00:18:39,576
to go through that transformation process.

500
00:18:39,576 --> 00:18:44,248
But you know, not embrace it
as quickly as they would like.

501
00:18:44,248 --> 00:18:45,707
Tien had mentioned 2050,

502
00:18:45,707 --> 00:18:48,627
the Fortune 500 looking vastly different.

503
00:18:48,627 --> 00:18:50,879
I think it could be
much earlier than that,

504
00:18:50,879 --> 00:18:53,006
depending on the adoption of technology.

505
00:18:53,006 --> 00:18:54,258
- How do you start thinking

506
00:18:54,258 --> 00:18:57,928
about ownership of the
underlying behavioral

507
00:18:57,928 --> 00:19:00,889
and usage data, that's
part of the intelligence,

508
00:19:00,889 --> 00:19:03,433
which drives the subscription
product to the first place.

509
00:19:03,433 --> 00:19:04,393
Tien.

510
00:19:04,393 --> 00:19:06,311
- I think it should be black and white.

511
00:19:06,311 --> 00:19:10,190
I think anything that's about you,

512
00:19:10,190 --> 00:19:13,068
as a business or a consumer
should be your data.

513
00:19:13,068 --> 00:19:14,611
We need to create regulations.

514
00:19:14,611 --> 00:19:16,113
- So that's at a consumer level.

515
00:19:16,113 --> 00:19:17,614
Think about it as a business level, right?

516
00:19:17,614 --> 00:19:19,992
I have a whole lot of proprietary data

517
00:19:19,992 --> 00:19:21,618
that I'm generating on these servers.

518
00:19:21,618 --> 00:19:23,871
I have trade secrets,

519
00:19:23,871 --> 00:19:25,956
you know, that I don't want my competition

520
00:19:25,956 --> 00:19:28,292
to gain access to.

521
00:19:28,292 --> 00:19:30,669
So if I'm getting
consumption-based services

522
00:19:30,669 --> 00:19:35,424
from a large server vendor,
or from a cloud provider,

523
00:19:35,424 --> 00:19:39,011
that is on-prem, and they're
using advanced telemetry

524
00:19:39,011 --> 00:19:40,679
to find a performance data

525
00:19:40,679 --> 00:19:45,601
and all kinds of monitoring
of my operations.

526
00:19:45,601 --> 00:19:48,812
You know, there's also a fear
that as that data goes back

527
00:19:48,812 --> 00:19:51,565
and feeds a large, you know, ML farm,

528
00:19:51,565 --> 00:19:54,318
or you're inferencing farm cluster

529
00:19:54,318 --> 00:19:57,112
to provide better services
out to all of their customers.

530
00:19:57,112 --> 00:19:58,906
Is some proprietary data being shared,

531
00:19:58,906 --> 00:20:02,117
just around operations that
I don't want to be shared?

532
00:20:02,117 --> 00:20:06,121
I mean, there are so many,
so many different issues,

533
00:20:06,121 --> 00:20:09,041
I think that really have
to be kind of pulled back

534
00:20:09,041 --> 00:20:10,792
and I hate to use the term unpacked,

535
00:20:10,792 --> 00:20:12,753
but unpacked, and really explored

536
00:20:13,837 --> 00:20:16,465
as we start to move forward

537
00:20:16,465 --> 00:20:18,717
toward what really is inevitable end,

538
00:20:18,717 --> 00:20:21,261
which is, you know,
everything as a subscription.

539
00:20:21,261 --> 00:20:23,722
- Tien, it feels like it keeps
coming back to trust.

540
00:20:23,722 --> 00:20:25,015
- I think buyers are getting smarter.

541
00:20:25,015 --> 00:20:26,433
I think buyers are spending smarter

542
00:20:26,433 --> 00:20:28,518
and they're certainly
asking the right questions.

543
00:20:28,518 --> 00:20:29,645
They're doing their homework.

544
00:20:29,645 --> 00:20:31,104
And ultimately the marketplace

545
00:20:31,104 --> 00:20:32,606
will decide the winners and losers.

546
00:20:32,606 --> 00:20:34,066
And the winners are gonna be the ones

547
00:20:34,066 --> 00:20:37,569
that can establish that
trust, and over time,

548
00:20:37,569 --> 00:20:39,780
and understand that their
reputation is always at risk,

549
00:20:39,780 --> 00:20:42,032
and live up to that reputation.

550
00:20:42,032 --> 00:20:44,243
And so if you're a modern day CIO,

551
00:20:44,243 --> 00:20:46,370
and you're sort of clinging on

552
00:20:46,370 --> 00:20:47,871
to these systems that you've put in place

553
00:20:47,871 --> 00:20:49,414
for the last 20, 30 years,

554
00:20:49,414 --> 00:20:51,291
and saying, look, I need
to standardize, right,

555
00:20:51,291 --> 00:20:52,918
'cause it's about scale.

556
00:20:52,918 --> 00:20:53,961
And you're not really being able

557
00:20:53,961 --> 00:20:55,212
to meet the needs of the business,

558
00:20:55,212 --> 00:20:58,966
then you're going to hurt the business.

559
00:20:58,966 --> 00:21:00,842
There's no reason why the CIOs of today

560
00:21:00,842 --> 00:21:02,052
can't be the CTOs,

561
00:21:02,052 --> 00:21:04,972
and absorb some of that, all
those cloud digital services

562
00:21:04,972 --> 00:21:07,266
that are not, you know,
to run a sales forecast,

563
00:21:07,266 --> 00:21:09,685
but to actually the service
that the company is providing.

564
00:21:09,685 --> 00:21:12,354
The automobile service, or
the transportation service,

565
00:21:12,354 --> 00:21:14,398
the entertainment service,
whatever it happens to be.

566
00:21:14,398 --> 00:21:16,483
There's no reason IT can't take that role.

567
00:21:16,483 --> 00:21:19,152
- And this is where, you
know, IT as-a-service

568
00:21:19,152 --> 00:21:22,864
and consumption-based
computing can be so important.

569
00:21:22,864 --> 00:21:24,574
There's also a skills gap that exists

570
00:21:24,574 --> 00:21:25,742
in these IT organizations.

571
00:21:25,742 --> 00:21:28,120
It's not just about,
you need to transform,

572
00:21:28,120 --> 00:21:29,454
you need to be able to transform.

573
00:21:29,454 --> 00:21:32,124
And if you can't do that,
you're falling behind.

574
00:21:32,124 --> 00:21:34,835
And there are different
levels to as-a-service,

575
00:21:34,835 --> 00:21:37,212
but if you can take these
ready-made solutions

576
00:21:37,212 --> 00:21:40,173
that come down from IT
solutions providers,

577
00:21:40,173 --> 00:21:43,218
and stand them up as a service
within your environment,

578
00:21:43,218 --> 00:21:45,345
you don’t have to worry about 
all of that.

579
00:21:45,345 --> 00:21:47,347
That all goes to somebody else.

580
00:21:47,347 --> 00:21:48,974
And that's where the trust comes in.

581
00:21:48,974 --> 00:21:50,767
And that's how you allow your business

582
00:21:50,767 --> 00:21:52,686
to leapfrog the competition.

583
00:21:52,686 --> 00:21:55,439
- That's what I love to have
the listeners realize, right?

584
00:21:55,439 --> 00:21:57,899
You can look at IT,

585
00:21:57,899 --> 00:21:59,359
you can look at a subscription economy

586
00:21:59,359 --> 00:22:02,362
and say, okay, the implication
is, as an IT leader,

587
00:22:02,362 --> 00:22:04,698
how do I take advantage of
these subscription services?

588
00:22:04,698 --> 00:22:06,491
Well, I think the next level is to say,

589
00:22:06,491 --> 00:22:09,661
how do I, as an IT organization,
help my entire company

590
00:22:09,661 --> 00:22:11,371
transform into the subscription economy?

591
00:22:11,371 --> 00:22:13,165
And I think that's where the real gold is.

592
00:22:13,165 --> 00:22:15,292
- I've been hearing from both of you,

593
00:22:15,292 --> 00:22:17,336
mostly the positive benefits

594
00:22:17,336 --> 00:22:19,880
of shifting to a subscription-based model.

595
00:22:19,880 --> 00:22:21,757
But one thing we haven't talked much about

596
00:22:21,757 --> 00:22:23,884
is the energy consumption of it.

597
00:22:23,884 --> 00:22:26,928
How do you think about the ongoing costs

598
00:22:26,928 --> 00:22:29,473
of replacing physical
goods on a regular basis,

599
00:22:29,473 --> 00:22:32,768
or keeping digital services
alive so persistently,

600
00:22:32,768 --> 00:22:33,935
given the climate crisis.

601
00:22:33,935 --> 00:22:34,853
Tien.

602
00:22:34,853 --> 00:22:38,190
- We do believe that it is
a more sustainable world.

603
00:22:38,190 --> 00:22:39,649
- What you talkin' about, Tien?

604
00:22:39,649 --> 00:22:41,485
- I'll share a quick story with you.

605
00:22:41,485 --> 00:22:45,113
It turns out there's a firehouse,
somewhere in California,

606
00:22:45,113 --> 00:22:46,615
and there's a light bulb

607
00:22:46,615 --> 00:22:48,575
that's been on for a hundred plus years.

608
00:22:48,575 --> 00:22:49,409
- Wait, one light bulb?

609
00:22:49,409 --> 00:22:50,243
- One light bulb.

610
00:22:50,243 --> 00:22:51,244
- We can do that?

611
00:22:51,244 --> 00:22:52,662
- So, it turns out we can do that.

612
00:22:52,662 --> 00:22:55,707
And it turns out that it used
to be, the electric companies,

613
00:22:55,707 --> 00:22:57,084
would sell you light.

614
00:22:57,584 --> 00:22:59,002
And so if a light bulb went out,

615
00:22:59,002 --> 00:23:02,381
they would have to come,
take it off and replace it.

616
00:23:02,381 --> 00:23:03,215
And eventually they said,

617
00:23:03,215 --> 00:23:04,841
oh, we wanna sell you electricity instead.

618
00:23:04,841 --> 00:23:06,510
And you buy your own light bulbs.

619
00:23:06,510 --> 00:23:08,095
And all of a sudden,

620
00:23:08,095 --> 00:23:11,640
the lifetime of a light
bulb started to shrink

621
00:23:11,640 --> 00:23:13,225
because these companies had an incentive

622
00:23:13,225 --> 00:23:14,851
for you to go back and buy more-

623
00:23:14,851 --> 00:23:15,894
- More and more light bulbs.

624
00:23:15,894 --> 00:23:19,231
- And so when you leave
all the use of resources

625
00:23:19,231 --> 00:23:21,441
to the vendor, the service provider,

626
00:23:21,441 --> 00:23:24,611
you actually wind up having
a much, much better model.

627
00:23:24,611 --> 00:23:26,363
- Tien Tzuo, Matt Kimball,

628
00:23:26,363 --> 00:23:28,865
thank you both for helping me transform

629
00:23:28,865 --> 00:23:31,118
a bit in my understanding of this topic.

630
00:23:31,118 --> 00:23:33,495
I still want a dumb table,
but I'll smarten up-

631
00:23:33,495 --> 00:23:34,913
- We're gonna get you a smart table.

632
00:23:34,913 --> 00:23:36,164
- If you pay for it.

633
00:23:36,164 --> 00:23:38,083
Then yeah, put it on your
credit card, I'll try it out.

634
00:23:38,083 --> 00:23:39,835
- I'll cover the first year.

635
00:23:39,835 --> 00:23:42,379
- And you guys can use that
smart table on your second date.

636
00:23:42,379 --> 00:23:44,423
- Ah, see, he remembers.

637
00:23:44,423 --> 00:23:45,465
- That's right, yeah.

638
00:23:46,633 --> 00:23:49,719
- There are a lot of
subscription services out there.

639
00:23:49,719 --> 00:23:52,556
Some are so random, they
sound made up to me.

640
00:23:52,556 --> 00:23:54,850
To prove my point, we're gonna play a game

641
00:23:54,850 --> 00:23:56,643
called Dumb Subscribe.

642
00:23:56,643 --> 00:23:59,104
I'll describe three subscription services,

643
00:23:59,104 --> 00:24:01,523
two are real, one is fake.

644
00:24:01,523 --> 00:24:04,109
Your mission, should you
choose to subscribe to it,

645
00:24:04,109 --> 00:24:06,695
and the only answer is click, yes,

646
00:24:06,695 --> 00:24:08,238
is the sniff out the fake one.

647
00:24:08,238 --> 00:24:11,658
(snappy music)

648
00:24:11,658 --> 00:24:13,034
Do you understand the game?

649
00:24:13,034 --> 00:24:14,202
- I think so.

650
00:24:14,202 --> 00:24:16,830
- All right, so here
are our three services.

651
00:24:16,830 --> 00:24:21,209
Number one, Bacon of the
Month Club, from Bacon Freak.

652
00:24:21,209 --> 00:24:22,252
- Oh, it's definitely true.

653
00:24:22,252 --> 00:24:23,879
- Bacon Freak's, Bacon of the Month Club

654
00:24:23,879 --> 00:24:26,131
sends its customers boxes full of bacon,

655
00:24:26,131 --> 00:24:28,800
and bacon related
products like bacon jerky,

656
00:24:28,800 --> 00:24:31,928
chocolate covered bacon, and
bacon flavored seasoning.

657
00:24:31,928 --> 00:24:32,846
It's bacon!

658
00:24:32,846 --> 00:24:33,930
All right.

659
00:24:33,930 --> 00:24:38,268
Subscription two, Ship Snow, Yo.

660
00:24:38,268 --> 00:24:41,730
Starting at $49.99 a month, 'Ship Snow, Yo!'

661
00:24:41,730 --> 00:24:43,982
will deliver a patch of fresh snow to you,

662
00:24:43,982 --> 00:24:46,067
wherever you are in the U. S.

663
00:24:46,067 --> 00:24:48,487
The snow is sealed in
a styrofoam container

664
00:24:48,487 --> 00:24:51,323
to prevent melting and leakage.

665
00:24:51,323 --> 00:24:55,035
And number three, "Bless Me Father".

666
00:24:55,035 --> 00:24:57,287
"Bless Me Father" is a
monthly subscription service

667
00:24:57,287 --> 00:24:59,164
for Catholics who want to celebrate

668
00:24:59,164 --> 00:25:02,292
the ritual of confession, but remotely.

669
00:25:02,292 --> 00:25:04,461
Once a month, penitents confess their sins

670
00:25:04,461 --> 00:25:07,005
to an ordained priest who assigns penance

671
00:25:07,005 --> 00:25:09,799
over a secure video feed.

672
00:25:09,799 --> 00:25:13,094
To review, "Bacon of the
Month Club", from Bacon Freak.

673
00:25:13,094 --> 00:25:16,181
"Ship Snow, Yo!", or "Bless Me Father".

674
00:25:16,181 --> 00:25:17,015
Matt?

675
00:25:17,015 --> 00:25:20,143
- The "Ship Snow, Yo!", makes
no sense on its surface.

676
00:25:20,143 --> 00:25:21,686
I don't care if you put it in styrofoam.

677
00:25:21,686 --> 00:25:23,104
It just doesn't make sense to me.

678
00:25:23,104 --> 00:25:25,649
So I'm gonna have to go with "Ship Snow, Yo!"

679
00:25:25,649 --> 00:25:27,817
as the fake service.

680
00:25:27,817 --> 00:25:28,652
- [Baratunde] Tien.

681
00:25:28,652 --> 00:25:30,654
- The snow thing sounds so ridiculous

682
00:25:30,654 --> 00:25:32,155
that it has to be true.

683
00:25:32,155 --> 00:25:33,406
So I'm going to go

684
00:25:33,406 --> 00:25:37,118
with the Catholic priest
over video conferencing.

685
00:25:37,118 --> 00:25:39,120
- Okay, well, this is interesting.

686
00:25:40,539 --> 00:25:41,289
- It's not bacon.

687
00:25:41,289 --> 00:25:42,249
Don't tell me the bacon.

688
00:25:42,249 --> 00:25:43,959
(laughing)

689
00:25:43,959 --> 00:25:45,418
- I like the suspense, you're like,

690
00:25:45,418 --> 00:25:46,920
please don't take my bacon away from me.

691
00:25:46,920 --> 00:25:49,464
I'm already signing up in
the background over here.

692
00:25:51,591 --> 00:25:53,009
Bless Me Father is not real,

693
00:25:53,009 --> 00:25:54,636
And I'm sorry, but the snow thing

694
00:25:54,636 --> 00:25:56,054
is actually happening.

695
00:25:56,054 --> 00:25:57,347
- That's so stupid.

696
00:25:58,932 --> 00:25:59,891
Can I say that?

697
00:25:59,891 --> 00:26:01,184
- You just did!

698
00:26:01,184 --> 00:26:03,311
- Okay, all right.

699
00:26:03,311 --> 00:26:06,314
- It's been a pleasure
playing, hanging and learning

700
00:26:06,314 --> 00:26:07,816
from all of you.

701
00:26:07,816 --> 00:26:10,777
Tien, Matt, thank you so
much for playing with me,

702
00:26:10,777 --> 00:26:13,321
for helping me transform,
if not digitally,

703
00:26:13,321 --> 00:26:15,782
at least mildly, in an analog
way, it's been a pleasure.

704
00:26:15,782 --> 00:26:17,158
- It was fun, thank you.

705
00:26:17,158 --> 00:26:19,035
- We've got to lock up this garage now,

706
00:26:19,035 --> 00:26:20,370
but thank you for joining us.

707
00:26:20,370 --> 00:26:21,997
And thanks to our great guests,

708
00:26:21,997 --> 00:26:24,291
Tien Tzuo, and Matt Kimball.

709
00:26:24,291 --> 00:26:25,750
I'm Baratunde Thurston,

710
00:26:25,750 --> 00:26:28,420
and I'll see you on
the next "Lenovo Late Night I.T."

711
00:26:29,045 --> 00:26:31,798
(snappy music)