Zuora CEO Tien Tzuo Talks Subscriptions with Jim Cramer of "Mad Money"

Watch now or read below for a full transcript of Zuora CEO Tien Tzuo in conversation with Jim Kramer on “Mad Money:”

Jim:                 Increasingly we live in a Subscription Economy where both consumers, and businesses, get what they need via continuous subscriptions to services like Netflix, or the Dollar Shave Club, not to mention all the Cloud based providers of enterprise software on a subscription basis.

This segment of the economy has grown to the point where many companies actually need help managing their subscription programs. That’s why I wanted to go off the tape to dig a little deeper here, which brings me to Zuora, and that is a privately held software as a service company that provides businesses with automated billing, finance, and analytics applications to help them run the subscription based businesses.

In a world where every customer is now also becoming a subscriber, I think Zuora can give us some unique insight into how this is all playing out. Not that long ago I got a chance to talk to Tien Tzuo, he’s the CEO of Zuora, to find out more about his company, and the new way of looking at the economy.

Tien, I’ve got to tell you, I didn’t know until I did the research on your company, there is a Subscription Economy that’s growing a lot faster in a lot of other places, and you’re at the heart of it. How did you come up with this, and was it maybe some of your time at Salesforce?

Tien Tzuo:      Yeah, absolutely. Customers today, they don’t want to products. Why buy a DVD if you can get any movie you want from a Netflix or a Hulu. Why buy a car even, if you can get from point A to point B with services like Uber or Zip Car or Citi Bikes here in New York City, and software. What we experienced at Salesforce.com was companies don’t have to buy software anymore, if they can get everything they need for their businesses from services like a Salesforce.com or a Google. Companies are realizing this today, they’re going beyond the product to deliver what we call a subscription experience. The broader trend here is a shift from product based economies to a subscription based economy.

Jim:                 Do we want as subscribers, what you do, or is it really the person who we subscribe to that has the information, and you push us stuff that we may not necessarily want?

Tien Tzuo:      The best subscription companies in the world are not trying to push you something you don’t want. They’re not trying to sell you stuff at late night infomercials. They give you a service that actually changes your lives, right, that’s better than just receiving the product, that gives you the outcome without having to deal with hassles of asset management. These are the services that are changing your life. You think about it, in our personal life, you’re probably buying less and less stuff, because you’re getting all the things that you need from the services that you can access from your phone. That’s really where the world is going.

Jim:                 That’s absolutely true. I find that there’s a transparency too. Maybe a lot of that is what you bring to the party.

Tien Tzuo:      What we find is, what we do is we help companies deliver that subscription experience by wrapping what they do around a subscriber identity record, to help turn their customers who are somebody that maybe will buy something, to subscribers, somebody you have an ongoing relationship with. Most importantly, from the financial perspective, we help companies build a strong, recurring revenue business model, because that’s the type of business model that really Wall Street prefers.

Jim:                 I have to tell you, after this quarter when I saw how well Netflix has done, and the companies that have really done well are companies with sustainable subscription models. My first thing out of the box was thinking, why don’t you, you got to be scaling, why not come public right now?

Tien Tzuo:      We’re in a real fast space, we’re in a fast moving space.

Jim:                 You’re the dominant player in a fast moving space that has recurring revenue. That’s what I want as a shareholder.

Tien Tzuo:      We want to focus on building the company, building an even better product, scaling the organization. When we’re ready, we will go public at that time.

Jim:                 Where are the one that we may not know that you are powering?

Tien Tzuo:      If you look at it, our customers are from a diverse number of industries. We have technology companies, so Dell and Box are examples. Media companies, we power a lot of the payrolls behind some of the newspaper and magazine sites, so the Times of London, the Straight Times, the City Morning Herald down in Australia, the Financial Times. We power a lot of manufacturing companies, they’re all being driven by this trend called the Internet of Things where they’re putting sensors on their products, and the first step is you want to make these products better. The second step is saying, you know we could wrap a whole set of services around our products, we can actually start to know what our customers are doing with their products, and this is really transformational for our businesses today.

Jim:                 We had Aaron Levy on recently from Box, and I know he’s got that great subscription model. What would you be able to tell him that would make it so he would be a better provider to his customers?

Tien Tzuo:      We provided a whole wealth of information, we tell him what are the right prices, plans that are working. You’ve got this ten dollar plan, this fifty dollar plan, the silver plan, which ones are really, really working. We are just launching a product later this year through an acquisition that we made, a subscriber analytics product that will allow us to say, “Look, if you give us all your subscriber behavior, we’ll tell you which behavior signals the higher value customers, which behavior tells you which customers you should go target.”

Jim:                 That’s the killer app!

Tien Tzuo:      It will help sell more products.

Jim:                 That’s the killer app. When I work sales at Goldman, that’s what I’m looking for.

Tien Tzuo:      What are you customers? Which customers are more valuable? Which customers have unlocked potential where you can actually generate more revenue for the business.

Jim:                 You’ve got a great, great business, I’d want a share of it if I were out there watching the show. Can’t yet, because it’s still private. That’s Tien Tzuo, and he’s the founder and CEO of Zuora. I really appreciate you being on the show, and I think our viewers are going to say, “Please come public.” But that’s up to you.

Tien Tzuo:      One day. Thanks a lot.

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