>>from around the globe. It's the Cube presenting Cuban cloud brought to you by Silicon angle. Hello. We wanna welcome back to the Cuban cloud where we're talking to CEOs, C. E. O s, chief technology officers and investors. On the future of Cloud with me is Dave Humphrey, who is the managing director and co head of Private Equity North America at Bain Capital. They've welcome to the Cube. First time, I think. >>First time. Yeah, David, thanks very much for having so >>let's get right into it. As an investor, how are you thinking about the evolution of cloud? When you look back at the last decade, you know it's not gonna be the same, uh, in this coming decade, you know, Thio ironic 2020 is has thrown us into, you know, the accelerated digital transformation and cloud. But how do you look at the evolution of cloud from an investment perspective? What's your thesis? >>That's a great question, David. You know, for us, we're focused on investing in technology and really across the economy. And I'd say the cloud is the overarching trends and dynamic in the technology markets. And really, for two reasons, one is a major shift. Of course, that's going on. But the second and frankly, even more interesting one to us is all the growth that the cloud is creating in the technology marketplace. You know the ship. It has been well covered. But five years ago in 2015, by our analysis, two thirds of all computing workloads were done on premises and Onley. Five years later, that's that's flipped. So two thirds of all computing workloads now done done in the cloud. And, of course, that shift. There's a lot of ramifications as an investor. But even more interesting dust is the growth in technology and the usage of technology that the cloud is creating. So over that same period of time, the total number of computing workloads run has increased by 2.6 times just a five year period time, which is really a a dramatic thing. And it makes sense when you think about all the new software applications that could be created, all the data that could be used by new users and new segments, and the real time inside that could be gleaned from that is that growth that really were focused on investing behind a Z. Investors in technology. You >>know, it's interesting you just took share those numbers and you hear a lot of numbers. I I actually think you you know, you your even being conservative. You know, Ginny Rometty used to talk about 80% of workloads or are still on Prem. Andy Jassy it reinvent said that 96% of spending is still on premises. So that was kind of an interesting stat. And I guess the other thing that I would, I would note is it's not just a share shift. It is. It's not just, you know, the cloud eating away it on Prem. We've clearly seen that, but there's also incremental opportunity as well. If you look at snowflake, for example, and adding value on top of, you know across multiple clouds and creating new markets, so there's there's that, you know, double that 12 punch of stealing share from on Prem but also incremental growth, which is probably accelerated as a result of this, you know, compressed digital transformation. So when you look at the Big Three cloud players, I mean roughly speaking, they probably account for $80 billion in total revenue which I guess is a small portion of the overall I t. Market. So it has a a long way to go. But But what's the best way to get good returns from an investment standpoint without getting clobbered by their tendency to sometimes coop some of the best ideas and put them on their primary services? >>Yeah, absolutely. Well, you know, for us, uh, it really comes back to the same fundamental principles we look for in any investment, which is finding a business that solves a really important problem for its customers and does so in a way that's really advantaged vs competition can and do something that other competitors just can't do, whether those be the hyper scale is that you're describing or, you know, other specialized and focused competitors, and then finding a way that we can partner with those companies to help them to accelerate their growth. So surely the growth of the likes of AWS and Microsoft and Google, as you're describing, has been a profound competitive shift, along with the cloud shift that we've all talked about. And those companies, of course, can offer and do things that you past purveyors of computing couldn't. But fundamentally, they're selling and infrastructure layer, and there is room for all sorts of new competitors and new applications that can do something better than anybody else can. So any company that we're looking at, we're asking ourselves the question. Why are they the best ones to do what they're doing? How could they solve the most problem for their customers and do that in a way that's that's Brazilian and we see lots of those opportunities, >>and I wanna I wanna pick your brain about the Nutanix investment. But before we get there, I wonder if you could just talk about Bain Capital in their their history of investment in both cloud and infrastructure software and and how do those investments? How would they performed? And how do they inform your current thesis? >>Yeah, absolutely. So being Capital was started in in the mid eighties, 1984 actually has a spin out of being a company consulting, and the basic premise was that if we're good at advising and supporting businesses, we should partner with them and invest behind them, and if they do well, we'll do well. And, as I said, focusing on these businesses but do something really valuable for their customers in a riel advantaged way, with some discontinuous growth opportunity that's led us to grow a lot. You know, we started out actually in the venture business and grew into the private equity business. But now we invest across all life stages of companies and all over the world. So we're $105 billion in assets that we managed across 10 lines of business on were truly global. So I think we have about 470 investment professionals and 210 of those at this point are located outside the U. S. One of the really interesting things for us in investing in technology broadly and in infrastructure in the cloud more specifically is that we're able to do that all over the world. And we're able to do that across all the different life stages of companies. We have a thriving venture capital business that really we've been in since the origins of being capital has invested across countless cloud and security and infrastructure businesses taken successful companies public like like solar wind sold companies to strategic and grown businesses. You know, in really thriving ways we have a, um, growth mid market growth technology business that we launched last year. Called their Technology Opportunities Fund. They've made a really interesting cloud based investment in a company called the Cloud Gurus Cloud Guru Excuse me? That trains the next generation of I t professionals to be successful in the club on then, of course, in our private equity business, you know where I spend my time. We are highly focused on technology sector and the the impacts of the cloud in that sector. Broadly, we've invested in many infrastructure businesses, scale businesses like BMC software and Rockets software security businesses like blue coat systems and semantic. And of course, for those big businesses they've got both on premises solutions. They've got cloud solutions, and often we're focused on helping them continue to grow and innovate and take their solutions to the cloud. And then, uh, that's taking us to our most recent investment in Nutanix that we're very excited about it. We think it's truly a growth business in a large market that has an opportunity to capitalize on these trends we're talking about. >>I wonder if you could comment on some of the changes that have occurred. You guys have been in the private equity business for a long time. And if you look at what you know, kind of the early days of private equity, it was all you know, even, uh, suck as much cash out of the company is possible. You know, whatever's left over will figure out what to do with it. It it seems like you know, investors have realized Wow, we can actually, if we put a little investment in and do some engineering and some go to market, we can actually get better multiples. And so you've got the kind of rule of 30 35 40 where he made a plus. Growth is kind of the metric. How do you think about that? And look at that evolution. >>Yeah, you know, it's interesting because in many ways, being capital was started as the antithesis to what to what you're describing. So we started again, as as with a strategic lens and a focus on growth and a focus on if we got the long term and the lasting impact of our business is right, that the returns would would follow. And you're right that the market has evolved in that way. I mean, I think some of the some of the dynamics that we've seen has been certainly growth of the private equity business. It's It's become a much larger piece of the, you know, the capital markets than it was certainly 10 years ago in 20 years ago. Also, with that growth comes the globalization, that business all over the world and the specialization. So you certainly see technology focused firms and technology focused funds in a way that you didn't see, uh, 10 years ago, or certainly 20 years ago actually being capital. Interestingly enough, we had a technology focused fund in 1989 called called Being Information Partners. So we've been focused on the sector for a very long time. But you certainly see ah, lot more technology investors, uh, than than you did you know 10 or 20 years ago? >>How are you thinking about valuations? Thes days? I mean, that is good. It's good to be in tech. It's even better to be in the cloud. You know, Service officer, software Cloud. You know if if if you're looking at, you know some of the companies, especially the work from home pivot. But a lot of that appears to be. You know, many people believe it's going to be permanent. How are you feeling about the both public market and private market valuations in that dynamic? >>Yeah, well, you know, it's it's amazing, right? I don't think any of us in March, when the covert crisis was just emerging, would have anticipated that that come November, the markets, and certainly the technology markets would be even more robust and stronger than than they were say in January February. But I think it's a testament to the resilience of the technology on that just how intricate and intertwined technology has become with our daily lives and and how much companies depend on its use. And frankly, it's been the cove environments that an accelerant for many of the ways in which we depend on technology. So witnessed this interview, of course, through through the through the cloud, and you're seeing the way that we operate our business day to day the way cos they're accessing their data and information. It's only further accelerated the need for technology and the importance of that technology to how how businesses operate. So I think you're seeing that reflected in the market values out there. But, you know, frost work. We're focused on businesses that still have that catalytic opportunity ahead that can more than compensate for for the price of entry. >>So let's talk about this massive investment. You guys made a Nutanix 750 million, I guess, is a small piece of your 105 billion, but still a massive investment. How did that opportunity come to you? What was your thinking? You know, behind that that investment and what are you looking for in terms of the go forward plan and growth plan for 2021 really importantly, beyond. >>Yeah, absolutely. Well, we're thrilled to be partnered with and invested in Nutanix. We think is a terrific company. And, you know, our most recent technology investment and private equity business. It really came about through a proactive efforts that we had in in the spring. Um, you know, we've got a team focused on the technology sector, focused across infrastructure and applications, and, uh, internet and digital media businesses and financial technology. And, uh, you know, through those efforts, we were looking for businesses. Um, that we felt had faced some dislocation and their market values associated with the Koven environment that we're facing but that we thought were really attractive. Business is well positioned, had leading solutions and had substantial and discontinuous growth opportunities. And as we looked through that effort, we really felt that Nutanix stood out just as a core leader and in fact, really the innovator and the inventor of the market in which it competes with a substantial market share in position solving a really important problem for its customers with a big growth opportunity ahead. But, um, the stock price had had come down because the business has been undergoing ah transition, and we didn't think that that was fully understood by by the market. And so way saw an opportunity Thio partner with Nutanix to invest money into the business to help to fund its transition and its growth. Yeah, and Thio to be partners along for all the value the business will will continue to create. We think it's a terrific company, and we're excited to be to be invested >>Well, you and I have talked about this that transition, you know, from a traditional, you know, license model to one That's Anania recurring revenue model, which many companies have gone through. You know, Adobe certainly has done it. Tableau successfully did it. Splunk is kind of in the middle of that transition right now and maybe not well understood. You've got companies like like Data Dog that and snowflake again to doing consumption based pricing. So there's a lot of confusion in the marketplace, and I wonder if you could talk about that transition and why it It was attractive to you to actually, you know, place that bet now? >>Yeah, absolutely. And as you say, a number of companies at this point have been through various forms of this shift, from from selling their technology upfront to selling it over time on, we find that the model of selling the technology over time eyes one that could be powerful. It could be aligning for customers as well as for, uh, vendor of the software solutions. And in Nutanix in particular again, we saw all the ingredients that we think make this an opportunity for for the business again, market leading technology that customers love. That is solving really important problem. The technology, because Nutanix had been grown and bootstrapped under the leadership of, uh, you know of zeros when it was built and founded, had been selling its software together with an appliance, you know, often in a, um, upfront sale Andi has been undergoing under their own initiative transition from selling that software with an appliance to a software based model to one that s'more rattle over time. And, you know, we thought that there was the opportunity to continue that to continue that transition and by doing that, to be able to offer mawr growth and mawr innovation that we could bring to our customers Thio continue to fund the shift. So something that frankly was well underway before we invested. Um, you know, as a za business makes this transition from collecting upfront Thio, you know, thio more evenly. Over time, you know, we saw a potentially use for our capital to help to fund that growth. And we're just focused on being a good partner toe help the company keep investing in abating, as as it contains to do that. >>I was talking to somebody other day, David. I told him I was interviewing you, and I was mentioning the Nutanix investment. I said, I'm definitely gonna cover that as part of this. You know, Cuban Cloud program. And they said Hit Nutanix. That's not cloud. I'm like, Wait a minute, What's cloud? So we heard Andy Jassy reinvent talking a lot about hybrid Antonio Neary, right after HP made its earnings last earnings announcement he came on on, said that well, we heard the big Cloud player talk about hybrid, and so the definition is changing. But so how are you looking at the market? Uh, certainly. There's this hyper converged infrastructure, but there's also this software play. There's this cloud play. Help us squint through how you see that >>absolutely so Nutanix, as you alluded to, pioneered the market for hyper converged infrastructure for bringing computing storage networking together. Uh, you know, often in private cloud environments in a way that was really powerful for for customers. Make, of course, continue to be the leaders in that marketplace. But they've continued to innovate and invest in ways that can solve problems for customers and related problems across the hybrid cloud. So combining both the public cloud with, you know, with that private cloud and across multiple public clouds with things like clusters and lots of innovation that business is doing in partnership with the likes of, um, Amazon and Microsoft and others. And so, yeah, we think that New Chance has a powerful role to play in that hyper cloud world in a multi cloud world. And we're excited toe back on them. >>Well, I think to what maybe people don't understand is that not only is Nutanix, you know, compatible with AWS and compatible with azure and G C. P. But it's actually kind of create a nabs traction layer across those those clouds. Now there's two sides of that debate. Some some will say, Well, that that that has Leighton see issues or yes, it reduces complexity. But at the same time, it doesn't give you that fine grained access. That's kind of the A W s narrative customers, you know, want simplicity. And we're seeing, you know, the uptake across clouds. I have a multipart question for you, Dave. So obviously being very strong and strategy I'm curious is toe how how much you get involved in the operational details. I mean, obviously 750 million u got a state there, but what are the 2 to 2 or three major strategic considerations for not just even just Nutanix but cloud and software infrastructure companies. And and how much focus do you put on the operational and one of the priorities There? >>Absolutely. Well, you know, we pride ourselves in being good partners to our businesses and in helping them to grow, not just with our capital, which I think is, of course, important, but also, you know, with our sweat equity and our and our human capital in our partnership that we could do that in lots of ways is fundamentally about, um, you know, supporting our businesses, however, is needed to help them thio grow. We've been investing in the technology sector, as I described for over over 30 years. And so we've built up a set of capabilities around things like helping toe partner with the sales force of our company is helping them toe, you know, think about the you know, the ways in which they they allocate their, uh their research and development and their in their innovation raised in which they, you know, continue Thio do acquisitions toe. You know, further that pipeline, we support our businesses in lots of ways, but you know we're not engineers were not. Developers, of course, were looking for businesses that are fundamentally great. They've got great technology. They solve problems for customers in a way, you know, that we could never replicate. That's what's the amazing but a business like Nutanix and just over a 10 year period of time, it literally has customer satisfaction levels that we haven't seen from any other. Infrastructures offer company that we've had the, you know, the pleasure of diligence ing over the last several years. So what we're focused on is how can we take those great products and offerings that Nutanix has and continue to support them through the further growth and expansion in areas like, um, you know, the further salesforce investment Thio expand into these new areas like clusters that we were talking about and thinking about, you know, things that they could do toe further expand the strategic hold. Um, And so, you know, we have, ah, large team of being capital. A zai mentioned 260 investment professionals in a private equity business alone. About a third of those are just available to our companies to help support them. Uh, you know, with various initiatives and efforts after after we invest. And we'll certainly, of course, make all of those available to new taxes. Well, somebody >>was asking me the other day, You know, what's hyper converged infrastructure? How did that come about? I was explaining what, Back in the day you had. You buy some servers and some storage and you have a network and you sort of have different teams and you put applicant, You figure out all out and put the applications on top, you know, test it, make sure it all works. And then and then the guys at V. C and VM Ware and Cisco and the M. C. They got together and said, Okay, we're gonna bolt together a bunch of different components and, you know, pre tested. Here you go. Here's a Here's a skew. And then what Nutanix did was actually really transformational and saying, Okay, look, we do this through software on DSO. And now that was what, Late, late two thousands. Now we're sort of entering this new era, this next generation of cloud cross clouds. So I wonder how you think about, you know, based on what you were just talking about the whole notion of M and A versus organic. There's a lot of organic development that needs to be done. But perhaps you could you could buy in or in organically through emanate toe, actually get there faster. How do you think about that balance? >>Look, I I think that that was an articulate, by the way explanation of I think that the origins of hyper converged infrastructure. So I enjoyed that very much. But, you know, I think that with any of our businesses and with Nutanix, we're of course, looking at where we trying to get to in several years and one of the best ways to support the business to get there, you know? Of course, they'll, um you know, primarily that will be through or continued organic investment in the company and all the innovation in the product. Um, that they've been doing will the company contemplate acquisitions toe further achieve the development goals and the objectives for solving pain points for customers to get, you know, to the strategic places they're trying to get to, of course. But you know, it all is a part of the package of of What's it a good fit company and its growth object. >>I mean, with the size of your portfolio, I mean your full stack investor, I would say, Is there any part of the so called tech stack that you won't touch that you would actually, you know, not not walk, but run away from, >>uh well, you know, I wouldn't say that we're running away from, you know, anything but the questions that we're asking ourselves. Our is the technology that we're investing in durable, ISAT advantaged and does have a growing role in the world. And, you know, if if we think that those things are true are absolutely, um, thrilled toe invest behind those things. You know, if if there are things that we feel like you, that's that's not the case, um, you know, then then we would tend toe to shy away from those investments. We've certainly found opportunities and businesses that people perceived as one. But you know, we believe to be another >>Well, so let me ask you specifically about about Nutanix. I mean, clearly, they achieved escape velocity. One of the few companies actually from last decade. It was Nutanix pure, not a whole lot of others. That actually, you know, were ableto maintain independence as a as a public company. What do you see is their durability. Uh, they're they're they're in their moat. If you if you will. >>Yeah, absolutely. Well, clearly, we think that it's a very durable and very advantage business. You know, that's that's the investment. Look, we think that Nutanix has been able to offer the best hyper converged infrastructure product on the market bar None. Um, one that has got the best ease of use Eyes is the most nimble and flexible for for customers. And you just see that, you know, recently and customer feedback And also that plays across very heterogeneous architectures in a way that, you know, it's really, really powerful because of that. You know, we think that their best position to be able to leverage that technology as they have been, uh, to continue to play across both public and private hybrid cloud environments. And so we're excited toe to back them and and that journey it really starts from solving and acute customer pain point, you know, better than anybody else can. And, you know, we're looking to to back them toe continue to expand that vision. >>Yeah, well, I've talked to a lot of Nutanix customers over the years, and that is the fundamental value. Proposition is it's really simple, very high, you know, customer satisfaction. So that makes a lot of sense. Well, Dave, thanks very much for coming on the Cube and participating in the Cuban cloud. Really? Appreciate your perspectives. Wish you best of luck. And hopefully we could do this again in the future. Maybe face to face >>now, face to face, maybe something even know. Dave, I really appreciate it's been a pleasure and good luck with with the rest of your interviews. >>All right. Thank you. We keep it right. Everybody from or Cuban Cloud, this is Dave Volonte. We'll be right back.

(soft music) >> Hello everyone and welcome back to theCUBE on Cloud, where we're talking to CEOs, CIOs, Chief Technology Officers, and investors on the future of Cloud, with me is Dave Humphrey. Who's the Managing Director, and co-head of private equity in North America at Bain Capital. Dave, welcome to theCUBE first time, I think. >> First time, yeah, Dave, thanks very much for having me. >> So, let's get right into it, as an investor, how are you thinking about the evolution of cloud, when you look back at the last decade? It's not going to be the same, in this coming decade it's ironic 2020 is thrown us into, the accelerated digital transformation and cloud. How do you look at the evolution of cloud, from an investment perspective? What's your thesis? >> That's a great question, David for us we're focused on investing, in technology and really across the economy. And I'd say ,the cloud is the overarching trend, and dynamic in the technology markets. It really affect two reasons. One is a major shift ,of course that's going on. But the second and frankly even more interesting one, just as all the growth, that the cloud is creating, in the technology marketplace. The shift, think is been well covered, but five years ago in 2015, by our analysis, 2/3 of all computing workloads were done on premises. And only five years later, that's that's split. So, 2/3 of all computing workloads now done in the cloud and of course that shift, there's a lot of ramifications, as an investor. But even more interesting to us, is the growth in technology and the usage of technology, that the cloud is creating. So, over that same period of time, the total number of computing workloads run has increased, by 2.6 times, in just a five-year period of time which is really a dramatic thing and it makes sense when you think about, all the new software applications that could be created, all the data that can be used by new users and new segments, and the real-time insight that can be gleaned from there cause that growth, that really were focused on investing behind, as investors in technology. >> It's interesting you share those numbers, and you hear a lot of numbers. I actually think you're even being conservative. Ginni Rometty, used to talk about 80% of workloads, are still on-prem. Andy Jassy at re:Invent said that, 96% of the spending is still on premises. So, that was kind of an interesting stat. And I guess the other thing that I would note is it's not just a share shift, it is, it's not just, the cloud eating away on-prem. We've clearly seen that. But there's also incremental opportunity as well. If you look at Snowflake, for example adding value across multiple clouds and creating new markets. So there's that one-two punch, of stealing share from on-prem (clears throat). Also incremental growth, which is probably accelerated as a result, of this compressed digital transformation. So when you look at the big three Cloud players. I mean, roughly speaking, there probably account for $80 billion in total revenue. Which I guess, is a small portion of the overall IT market. So, it has a long way to go, but what's the best way to get good returns, from an investment standpoint, without getting clobbered, by their tendency to sometimes co-opt some of the best ideas and put them on their primary services. >> Yeah, absolutely, well, for us, it really comes back to the same fundamental principles, we look for in any investment. Which is finding, a business that solves, a really important problem for its customers, and does so in a way that's really advantage, versus competition and can do something, that other competitors just can't do. Whether those be the hyperscalers that you're describing, or other specialized and focused competitors. And then finding a way ,that we can partner with those companies to help them to accelerate their growth. So, surely the growth of the likes of AWS and Microsoft and Google, as you were describing has been a profound, competitive shift, along with the cloud shift, that we've all talked about. And those companies of course can offer, and do things that you asked, purveyors of computing couldn't. But, fundamentally they're selling an infrastructure layer, and there is room for all sorts of new competitors, and new applications that can do something better than anybody else can. So, any company that we're looking at, we're asking ourselves the question, why are they the best ones, to do what they're doing? How can they solve the most problems, for their customers and do that, in a way that's resilient? And we see lots of those opportunities. >> And I want to pick your brain, about the Nutanix investment, but before we get there. I wonder if you could just talk, about Bain Capital their history of investment in both cloud and infrastructure software and how do those investments, how would they perform and how do they inform your current thesis? >> Yeah, absolutely. So, Bain Capital was started in the mid 80s, 1984. Actually, as a spin out Bain Company Consulting. And the basic premise was that, if we're good at advising and supporting businesses. We should partner with them and invest behind them and if they do well, we'll do well. And as I said, focusing on these businesses but do something really valuable for their customers in a real advantage way with some discontinuous growth opportunity. That's led us to grow a lot. We started out actually in the venture business, and grew into the private equity business, but now we invest across all life stages of company all over the world. So we're $105 billion in assets that we manage, across 10 lines of business and we're truly global. So I think we have about 470 investment professionals and 210 of those, at this point are located outside the US. One of the really interesting things for us in investing in technology broadly and in infrastructure and the Cloud more specifically is that we're able to do that all over the world and we're able to do that across all the different life stages of a company. So we have a thrive in venture capital business, that really we've been in, since the origins of Bain Capital has invested across countless cloud and security and infrastructure businesses, taken successful companies public like SolarWinds sold companies to strategic and grown businesses in really thriving ways. We have a growth mid-market growth technology business, that we launched last year, called our Technology Opportunities Fund. They've made a really interesting, cloud-based investment in a company called the Cloud Gurus, Cloud Guru, excuse me. That trains, the next generation of IT professionals to be successful in the cloud. And then of course in our private equity business where I spend my time. We are highly focused on technologist sector. And the impacts of the cloud in that sector broadly, we have invested in many infrastructure businesses, scale businesses like, BMC Software and Rocket Software, security businesses like, Blue Coat Systems and Symantec. And of course, for those big businesses they've got both on premises solutions. They've got cloud solutions and often we're focused on helping them continue to grow and innovate and take their solutions to the cloud. And then, this taken us to our most recent investment in Nutanix that we're very excited about it. We think it's truly a growth business in a large market that has an opportunity to capitalize, on these trends we're talking about. >> I wonder if you could comment on some of the changes that have occurred, you guys have been in the private equity business, for a long time. And if you look at kind of the early days of private equity, it was all, EBITDA suck as much cash out of the company as possible and whatever's left over we'll figure out what to do with it. And it's, it seems like investors have realized, wow, we can actually, if we put a little investment in and do some engineering, and some go to market we can actually, get better multiples. And so you've got the kind of rule of 30, 35 and 40 where EBITDA plus growth is kind of the metric. How do you think about that and look at that evolution? >> Yeah, it's interesting because in many ways Bain Capital was started as the antithesis to what you're describing. >> Great. >> So we started again as, with a strategic lens and a focus on growth and a focus on, if we got the longterm and the lasting impact of our businesses right, that the returns would follow and you're right that the market has evolved in that way. I mean, I think some of the dynamics that we've seen, has been certainly growth of the private equity business. It's become a much larger piece of the capital markets than it was certainly 10 years ago and 20 years ago. Also with that growth comes the globalization of that business all over the world and the specialization. So you certainly see technology focused firms and technology focused funds in a way that you didn't see 10 years ago or certainly 20 years ago. Actually Bain Capital interestingly enough, we had a technology focused fund in 1989 called Bain Information Partners. So we've been focused on the sector for a very long time. But you certainly see a lot more technology investors, than you did in your 10 to 20 years ago. >> How are you thinking about valuations these days? I mean, it's good to be in tech, it's even better to be in the cloud, software, cloud, if you're looking at, some of the companies, especially the work from home pivot. But a lot of that appears to be, many people believe it's going to be permanent. How are you feeling about the both public market and private market valuations in that dynamic? >> Yeah, well, it's amazing, right? I don't think any of us in March when the COVID crisis was just emerging, would've anticipated that come November, the markets and certainly the technology markets, would be even more robust and stronger than they were say in January, February. But I think it's a testament to the resilience of the technology and just how intricate and intertwined technology has become with our daily lives. And how much companies depend on its use. And frankly, it's been, the COVID environment has been an accelerant, for many of the ways in which we depend on technology. So witness this interview, of course, through the cloud, and you're seeing the way that we operate our business day-to-day, the way companies are accessing their data and information it has only further, accelerated the need for technology, and the importance of that technology to how businesses operate. So I think you're seeing that, you're reflected in the market values out there, but for us we're focused on businesses, that still have that catalytic opportunity ahead that can, do more to compensate for the price of entry. >> Let's talk about ,this massive investment you guys made in Nutanix, $750 million. I guess it's a small piece of your 105 billion, but still massive investment. How did that opportunity come to you? What was your thinking behind that investment and what are you looking for in terms of the go-forward plan and growth plan for 2021 and really important beyond? >> Yeah, absolutely, we're thrilled to be partnered with and invested in Nutanix. We think is a terrific company and our most recent technology investment are private equity business. It really came about through a proactive efforts that we had in the spring. We've got a team focused on the technology sector, focused across infrastructure and applications and internet and digital media businesses and financial technology. And through those efforts, we were looking for businesses, that we felt had faced some dislocation in their market values, associated with the COVID environment that we're facing. But that we thought were really attractive businesses, well positioned have leading solutions, and had substantial and discontinuous growth opportunities. And as we look through that effort, we really felt that Nutanix stood out just as a core leader and in fact, really the innovator and the inventor of the market, in which it competes with a substantial market share and position, solving a really important problem for its customers, with a big growth opportunity ahead. But, the stock price had come down, because the business has been undergoing a transition. And we didn't think that was fully understood, by the market. And so, we saw an opportunity to partner with Nutanix, to invest money into the business, to help to fund its transition and its growth, and to be partners along for all the value of the business we'll continue to create, we think it's a terrific company and we're excited to be invested. >> Well, you and I have talked about this, that transition from a traditional license model, to one that's an annual recurring revenue model which many companies have gone through. Adobe certainly has done it, Tableau successfully did it. Splunk is kind of in the middle of that transition right now, and maybe not well understood. You've got companies like, Datadog and Snowflake again to doing consumption-based pricing. So there's a lot of confusion in the marketplace. And I wonder if you could talk about, that transition and why it was attractive to you, to actually place that bet now. >> Yeah, absolutely and as you say, number of companies at this point have been through, various forms of of this shift from selling their technology upfront to selling it over time. And we find that the model of selling the technology over time, is one that can be powerful. It can be aligning for customers, as well as for the vendor of the software solutions. And in Nutanix in particular, again, we saw all the ingredients that we think, make this an opportunity for the business. Again, market-leading technology that customers love that is solving a really important problem that technology because Nutanix had been grown, and bootstrapped under the leadership Dheeraj when it was built and founded. Had been selling its software together within appliance. Often in a upfront sale. And has been undergoing under their own initiative, transitioned from selling that software with an appliance to a software based model to one that's more rattle over time. And we thought that there was the opportunity to continue that transition and by doing that. To be able to offer more growth, and more innovation that we can bring to our customers to continue to fund their shifts. So, something that frankly was well underway before we invested. As the business makes this transition, from collecting upfront to more evenly over time. We saw a potential use for our capital, to help to fund that growth. And we're just focused on being a good partner, to help the company keep investing and innovating, as it continues to do that. >> As I was talking to somebody other day, Dave and I told him, I was interviewing you. And I was mentioning the Nutanix investment. And I said, I'm definitely going to cover that. As part of this Cube on Cloud program and they said, well, then Nutanix, that's not cloud. I'm like, well, wait a minute, what's cloud? So, we heard Andy Jassy at re:Invent, talking all lot about hybrid. Antonio Neri ,right after HPE, made its earning last earnings announcement. He came on and said that, well we heard the big cloud player talk about hybrid. And so the definition is changing. But so how are you looking at the market? Certainly, there's this hyper converged infrastructure, but there's also this software play, there's this cloud play. Help us squint through, how you see that. >> Absolutely, so, Nutanix as you alluded to pioneer the market for hyper converged infrastructure, for bringing compute and storage and networking together. Often in private Cloud environments, in a way that was really powerful for your customers and they can of course continue to be the leaders in that marketplace. But they've continued to innovate and invest in ways that can, solve problems for customers and related problems across the hybrid cloud. So, combining both the public cloud with that private cloud and across multiple public clouds, with things like clusters and lots of innovation, that the business is doing, in partnership with the likes of Amazon and Microsoft and others. And so we think that Nutanix has a powerful role to play, in that hybrid cloud world, in a multi-cloud world. And we're excited to back them in. >> Well, I think too, what maybe people don't understand, is that not only is Nutanix, compatible with AWS and compatible with Azure and GCP, but it's actually trying, to create an abstraction layer across those, those clouds. Now, there's two sides of that debate. Some will say, well, that has latency issues or yes it reduces complexity, but at the same time it doesn't give you, that fine-grained access that's kind of the AWS narrative customers, want simplicity and we're seeing the uptake across clouds. I have a multi-part question for you, Dave. So, obviously Bain very strong in strategy. I'm curious ,as to how much you get involved, in the operational details. I mean, obviously $750 million you've got a stake there. But what are the two or three major strategic considerations for not just even just Nutanix, but Cloud and software infrastructure companies? And how much focus do you put on the operational and what are the priorities there? >> Absolutely, well, we pride ourselves in being good partners to our businesses and in helping them to grow, not just with our capital, which I think is of course important, but also with our sweat equity and our human capital, and our partnership and we can do that in lots of ways. It's fundamentally about supporting our businesses, however, is needed to help them to grow. We've been investing in the technology sector, as I described over, over 30 years. And so, we've built up a set of capabilities around things like, helping to a partner with the Salesforce of a company is helping them to think about the ways in which they allocate their research and development and their innovation ways in which they, continue to do acquisitions, to further that pipeline. We support our businesses in lots of ways. But we're not engineers, we're not developers. Of course, we're looking for businesses that are fundamentally great. They've got great technology. They solve problems for customers in a way, we could never replicate. That's, what's all amazing about a business like Nutanix and just over a 10 year period of time, it literally has customer satisfaction levels, that we haven't seen from any other infrastructure software company that we've had the pleasure of diligencing over the last several years. So, what we're focused on, is how can we take those great products and offerings that Nutanix has, and continue to support them, through the further growth and expansion of areas like, the further Salesforce investment, to expand into these new areas like clusters, that we were talking about and thinking about, things that they can do, to further expand the strategic hold. And so, we have a large team of Bain Capital as I mentioned, 260 investment professionals, in our private equity business alone. About a third of those are just available to our companies to help support them, with various initiatives and efforts after we invest. And we'll certainly, of course make all of those available to Nutanix as well. >> Somebody was asking me the other day, what's hyper-converged infrastructure? How did that come about? And I was explaining, back in the day you had, you'd buy some servers and some storage, and you'd have a network. And you sort of have different teams. And you'd put applicant, you figure it out all out and put the applications on top, test it and make sure it all works and then the guys at VCE and VMware and Cisco and EMC, they got together and said, okay, we're going to bolt together a bunch of different components and pretest it here you go, here's a, here's a skew. And then, what Nutanix did was actually, really transformational and said, okay. Look, we can do this through software. And now that was what late 2000? Now, we're sort of entering this new era, this next generation of cloud, cross clouds. So, I wonder how you think about, based on what you were just talking about the whole notion of MA versus organic. There's a lot of organic development that needs to be done but perhaps you could buy in or inorganically through MA to actually get there faster. How do you think about that balance? >> Look I think that was an articulate by the way explanation of I think that the origins of a hyperconverged infrastructure, so I enjoyed that very much. But I think that with any of our businesses and with Nutanix we're of course looking at where are we trying to get to in several years and what are the best ways to support the business to get there? Of course, they'll primarily that will be through continuing organic investment in the company and all the innovation in the product, that they've been doing. Will the company contemplate acquisitions, to further achieve the development goals and the objectives for solving paying points for customers, to get to the strategic places they're trying to get to of course, but it all, is a part of the package of what's a good fit for the company and its growth objective. >> I mean, with the size of your portfolio, I mean, you're a full stack investor, I would say. Is there any part of the so-called tech stack that you won't touch that you would actually not walk, but run away from? (laughs) >> Well, I wouldn't say that we're running away from anything, but the questions that we're asking ourselves are, is the technology that we're investing endurable? Is it advantaged and does have a growing role in the world? And if we think that those things are true, we're absolutely, thrilled to invest behind those things. If there are things that we feel like, that's not the case. then we would tend to shy away from those investments. We've certainly found opportunities in businesses that people perceived as one, but we believe to be another. >> Well, so, let me ask you specifically about Nutanix. I mean, clearly they achieved escape velocity. One of the few companies actually, from last decade, it was Nutanix pure, not a whole lot of others that actually were able to maintain independence as a public company. What do you see as their durability? They're, moat if you will. >> Yeah, absolutely, well clearly we think that it's a very durable and very advantaged business. Yeah, thus the investment. Look, we think that Nutanix has been able to offer the best hyperconverged infrastructure product in the market bar none. One that is got the best ease of use is the most nimble and flexible for customers. And you just see that resulting customer feedback. And also that plays across very heterogeneous architectures in a way that it's really powerful. Because of that we think that they're best positioned to be able to leverage that technology as they have been, to continue to play across both public and private hybrid cloud environments. And so we're excited to back them in that journey. It really starts from solving an acute customer paying point, better than anybody else can. And we're looking to back them to continue to expand that vision. >> Yeah, well, I've talked to a lot of Nutanix customers, over the years and that is the fundamental value proposition it's really simple, very high, customer satisfaction. So, that makes a lot of sense. Well, Dave, thanks very much for coming on theCUBE and participating in theCUBE on Cloud. Really appreciate your perspectives, wish you best of luck. And hopefully we can do this again in the future. Maybe face to face >> Yeah, face to face maybe someday. Dave, I really appreciate it. It's been a pleasure and good luck with the rest of your interviews. >> All right, thank you. Well keep it right there, everybody for more Cube on Cloud. This is Dave Vellante, we'll be right back. (soft music)

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante cios in the most recent september etr spending survey tell us that they expect a slight sequential improvement in q4 spending relative to q3 but still down four percent from q4 2019 so this picture is still not pretty but it's not bleak either to whit firms are adjusting to the new abnormal and are taking positive actions that can be described as a slow thawing of the deep freeze hello everyone this is dave vellante and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we're going to review fresh survey data from etr and provide our outlook for both q4 of 2020 and into 2021. now we're still holding at our four to five percent decline in tech spending for 2020 but we do see light at the end of the tunnel with some cautions specifically more than a thousand cios and it buyers have we've surveyed expect tech spending to show a slight upward trend of roughly two percent in 2021. this is off of a q4 decline of 4 relative to q4 2019 but i would put it this way a slightly less worse decline sequentially from q3 last quarter we saw a 5 decline in spending okay so generally more of the same but things seem to be improving again with caveats now in particular we'll show data that suggests technology project freezes are slowly coming back and we see remote workers returning at a fairly significant rate however executives expect nearly double the percentage of employees working remotely in the midterm and even long term than they did pre-covert that suggests that the work from home trend is not cyclical but showing signs of permanence and why not cios report that on balance productivity has been maintained or even improved during covit now of course this all has to be framed in the context of the unknowns like the fall and even winter surge what about fiscal policy there's uncertainty in the election social unrest all right so let's dig into some of the specifics of the etr data now i mentioned uh the number of respondents at over a thousand i have to say this was predominantly a us-based survey so it's it's 80 sort of bias to the u.s and but it's also weighted to the big spenders in larger organizations with a nice representation across industries so it's good data here now you can see here the slow progression of improvement relative to q3 which as i said was down five percent year-on-year with the four percent decline expected in q4 now etr is calling for a roughly four percent decline for the year you know i've been consistently in the four to five percent decline range and agree with that outlook and you can see cios are planning for a two percent uptick in 2021 as we said at the open now in our view this represents some prudent caution and i think there's probably some upside but it's a good planning assumption for the market overall in my view now let's look at some of the actions that organizations are taking and how that's changed over time you can see here that organizations they're slowly releasing that grip on tech spending overall you know still no material change in employees working from home or traveling we can see that hiring freezes are down that's that's positive in the green as our new i.t deployment freezes and a slight uptick in acceleration of new deployments now as well you see fewer companies are planning layoffs and while small the percent of companies adding head count has doubled from last quarter's you know minimal number all right so this is based on survey data at the end of the summer so it reflects that end of summer sentiment so we got to be a little bit cautious here and i think cios are you know by nature cautious on their projections of two percent up in 2021. now importantly remember this does not get us back to 20 20 19 spending levels so we may be seeing a kind of a long slow climb out of this you know tepid market maybe 2022 gets back over 2019 before we start to see sustained growth again and remember these recoveries are rarely smooth they're not straight lines so you got to expect some choppiness with you know some pockets of opportunity which we'll discuss here in this slide we're showing the top areas that respondents cited as spending priorities for q4 and into 2021 so the chart shows the ratings based on a seven-point scale and these are the top spending initiatives heading into the year end now as we've been saying for the better part of a decade cyber security is a do-over and i've joked you know if it ain't broke don't fix it well coven broke everything and cyber is an area that's seeing long-term change in my opinion endpoint security identity access management cloud security security as a service these are all trends that we're seeing as really major waves as a result of covid now it's coming at the expense of large install bases of things like traditional hardware-based firewalls and we've talked about this a lot in previous segments cloud migration is interesting and i really think it needs some interpretation i mean nobody likes to do migrations so i would suggest this includes things like i have a bunch of people answering phones and offices or i had and then overnight boom the offices are closed so i needed a cloud-based solution i didn't just lift and ship my shift my entire phone routing system you know from the office into the cloud but i probably pivoted to a cloud solution to support those work from home employees now my guess is i think that would be included in these responses i mean i do know an example of an insurance company that did migrate its claims application to the cloud during coven but this was something that they were you know planning to do pre-covered and i guess the point here is twofold again like i said migrations are hairy nobody wants to do them and i think this category really means i'm increasing my use of the cloud so i'm kind of migrating my my operations over time to the cloud all right look at collaboration no shocker here we've pounded you know zoom and webex to death analytics is really interesting we have talked extensively uh and have been covering snowflake and we pointed out that there's a new workload that has emerged in the cloud it's not just snowflake you know there are others aws redshift google with bigquery and and others but snowflake is the off the charts you know hot ipo and so we we talk a lot about it but it relates to this easy setup and access to a data layer with having you know requisite security and governance and this market is exploding adding ai on top and really doing this in the cloud so you can scale it up or down and really only pay for what you need that's a real benefit to people compare that to the traditional edw snake swallowing a basketball i got to get every new intel chip you're not dialing up down down you're over provisioning and half the time you're not using you know half most of the time you're not utilizing what you've paid for all right look at networking you know traffic patterns changed overnight with covet ddos attacks are up 25 to 40 percent uh since coven cyber attacks overall are up 400 percent this year so these all have impacts on the network machine learning and ai i talked about a little bit earlier about that but organizations are realizing that infusing ai into the application portfolio it's becoming really an imperative much more important as the automation mandate that we've talked about becomes more acute people you can't scale humans at this at the pace of technology so automation becomes much more important that of course leads us to rpa now you might think rpa should be a higher priority but i think what's happening here is i t organizations they were scrambling to plug holes in the dike rpa is somewhat more strategic and planful our data suggests that rpa remains one of the most elevated spending categories in terms of net score etr's measure of spending momentum so this means way more people are spending more than spending less in the rpa category so it really has a lot of legs in fact with the exception of container orchestration i think rpa is a sector that has the highest net score i think you'll see that in the upcoming surveys it's as high or even higher than ai i think it's higher than cloud it's just that it remember this is an it survey and a lot of the rpa stuff is going on at the business level but it had to keep the ship afloat when coveted hit which somewhat shifted priorities but but rpa remains strong now let's go back uh to the work from home trend for a moment i know it's been been played out and kind of beat on really heavily covered but i got to tell you etr was the very first on this trend it was way back in march and the data here is instructive it shows that the percentage of employees working from home prior to cor covid currently working from home the percent expected in six months and then those expected essentially permanently and this is primarily work from home versus yeah i don't work a day or two per week it's really the the five day a week i i work remotely as you can see only 16 percent of employees were working from home pre pandemic whereas more than 70 percent are at home today and cios they actually see a meaningful decline in that number over the next six months you know we'll see based on how covid comes back and you know this fall and winter surge and how will that will affect these plans but look what it does long term it settles in at like 34 percent that's double pre-covet so really a meaningful and permanent impact is expected from the isolation economy that we're in today and again why not look at this data it shows the distribution of productivity improvements so that while 23 of respondents said work from home productivity impacts were neutral nearly half i think it was 48 if you add up those bars on the right nearly half are seeing productivity improvements well less than 30 percent see a decline in productivity and you can see the etr quants they peg the average gain at between three and five percent that's pretty significant now of course not everyone can work from home if you're working at a restaurant you really you know unless you're in finance you really can't work from home but we're seeing in this digital economy with cloud and other technologies that we actually can work from pretty much anywhere in the world and many employees are going to look at work from home options as a benefit you know it was just a couple years ago remember that we were talking about companies like ibm and yahoo who mandated coming into the office i mean that was like 2017 2018 time frame well that trend is over now let me give you a quick preview of some of the other things that we're seeing and what the etr data shows now let me also say i'm just scratching the surface here etr has deep deep data cuts they have the sas platform allows you to look at the data all different ways and if you're not working with them you should be because the data gets updated so frequently every quarter there's new data there's drill down surveys and it's forward-looking so you know a lot of the survey data or a lot of the data that we use market share data and other data are sort of looking back you know you use your sales data your sales forecast that's obviously forward-looking but but the etr survey data can actually give an observation space outside of your sales force and no i'm not getting paid by etr but but it's been such a valuable resource i want to make it available and make the community aware of it all right so let's do a little speed round on on some of the the vendors of interest that we've talked about in the last several segments last couple years actually many years decade anyway start with aws aws continues to be strong but they they have less momentum than microsoft this is sort of a recurring pattern here but aws churn is low low low not a lot of people leaving the aws platform despite what we hear about this repatriation trend data warehousing is a little bit soft whereas we see snowflake very very strong but aws share is really strong inside of large companies so cloud and teams and security are strong from microsoft whereas data warehouse and ai aren't as robust as we've seen before but but microsoft azure cloud continues to see a little bit more momentum than aws so we'll watch that next quarter for aws earnings call now google has good momentum and they're steady especially in cloud database ai and analytics we've talked a lot about how google's behind the big two but nonetheless they're showing good good momentum servicenow very low churn but they're kind of hitting the law of large numbers still super strong in large accounts but not the same red hot hat red hot momentum as we've seen in the past octa is showing continued momentum they're holding you know close to number one or that top spot in security that we talked about last time no surprise given the increased importance of identity access management that we've been talking about so much crowdstrike last survey in july they showed some softness despite a good quarter and and we we're seeing continued to sell it to deceleration in the survey now that's from extremely elevated levels but it's significantly down from where crowdstrike was at the height of the lockdown i mean we like the sector of endpoint security and crowdstrike is definitely a leader there and you know well-managed company company but you know maybe they got hit with uh with you know a quick covet injection with with a step up function that's maybe moderating somewhat you know maybe there's some competition you know vmware freezing the market with carbon black i i really don't see that i think it's it's it's you know maybe there's some survey data isn't reflective of of what what crowdstrike is seeing we're going to see in the upcoming earnings release but it's something that we're watching very closely you know two survey snapshots with crowdstrike being a little bit softer it doesn't make a sustained trend but we would have liked to seen you know a little bit stronger this this quarter the data's still coming in so we'll see sale point is one we focused on recently and we see very little negative in their numbers so they're holding solid z scalar showing pretty strong momentum and while there was some concern last survey within large organizations it seemed that might have been a survey anomaly because z scalar they had a strong quarter a good outlook and we're seeing a strong recovery in the most recent data so it also looks like z z scaler is pressuring some of palo alto network's dominance and momentum heading into the quarter so we'll pay close attention to that we've said we like palo alto networks but they're so big uh they've got some exposures but they can offset those you know and they're doing a better job in cloud with their pricing models and sort of leaning into some of the the market waves uh sale point appears to be holding serve you know heading into the fourth quarter snowflake i mean what can we say it continues to show some of the strongest spending momentum going into q4 and into 2021 no signs of slowing down they're going to have their first earnings reports coming up you know in a few months so i i got to believe they got it together and and they're going to be strong reports uipath and momentum is is slowing down a bit but existing customers keep spending with ui path and there's very few defections so it looks like their land and expand is working pretty well automation anywhere continues to be strong despite comments about the sector earlier which showed you know maybe it wasn't as high a priority some other sectors but as i said you know it's still really really strong strong in terms of momentum and automation anywhere in uipath they continue to battle it out for the the top spot within the data set within the automation data set well i should say within rpa i mean companies like pega systems have a broader automation agenda and we really like their strategy and their execution databricks you know hot company once a hot company and still hot but we're seeing a little bit of a deceleration in the survey even though new customer acquisition is quite strong put it this way databricks is strong but not the off the chart outperformer that it used to be this is how etr frame that their analysis so i want to obviously credit that to them datadog showing the most strength in the application performance management or monitoring sector whichever you prefer but generally the the net scores in that sector as we talked about last week they're not great as a sector when you compare it to other leading sectors like cloud or automation rpa as an example container orchestration you know apm is kind of you know significantly lower it's not it's not as low as some of the on-prem on-prem infrastructure or some of the on-prem software but you know given datadog's high valuation it's somewhat of a concern so keep an eye on that mongodb you know they got virtually no customer churn but they're losing some momentum in terms of net score in the survey which is something we're keeping an eye on and a big downtick in in large organization acquisitions within the data so in other words they had a lot of new acquisitions within large companies but that's down now again that could be anomalies in the data i don't want to you know go to the bank on that necessarily but that's something to watch zoom they keep growing but etr data cites a churn of actually up to seven percent due to some security concerns so that was widely reported in the press and somewhere slower velocity for zoom overall due to possible competition from microsoft teams but i tell you it has an amazing stat that etr threw out pre-cove at zoom penetration in the education vertical was 15 today it's over 80 percent wowza cisco cisco's core is weak as we've said you've seen that in their earnings numbers it's it's there's softness there but security meraki those are two areas that remain strong same kind of similar story to last quarter survey pure storage you know they're the the high flyer they're like the one-eyed man in the land of the the storage blind so storage you know not a great market we've talked about that we've seen some softness in the the data set from uh in pure storage and really often sympathy with the generally back burner storage market you know again they they still outperforming their peers but we've seen slower growth rates there in the in in the survey and that's been reflected in their earnings uh so we've been talking about that for a while really keeping an eye on on on pure they made some acquisitions trying to expand their market enough said about that rubric rubric's interesting they kind of were off the charts in a couple surveys ago and they really come off of those highs you know anecdotally we're hearing some concerns in in the market it's hard to tell the private company cohesity has overtaken rubric and spending momentum now for the second quarter in a row you know they're still not as prevalent in the data set we'd like to see more ends from cohesity remember this is sort of a random sample across multiple industries we let the or etr lets the the respondents tell them what they're buying and what they're spending on you know but because cohesity has the highest net score relative to to compares like rubric like veeam you know i even threw in when i looked at nutanix pure dell emcs vxrail those are not direct competitors but they're you know kind of quasi compares if you will new relic they're showing some concerning trends on churn and the company is way off its 2018 momentum highs in the survey and we talked about this last week some of the challenges new relic is facing but we like their tech the nrdb is purpose-built for monitoring and performance management and we feel like you know they can retain their leadership if they can can pull it together we talked about elliott management being in there so that's something that we're watching red hat is showing strength in open shift really really strong ibm you know services exposure uh it's it's not the greatest business in the world right now at the same time there's there's crosswinds there at the same time people you know need some services and they need some help there but the certainly the outsourcing business so there's you know countervailing you know crosswinds uh within ibm but openshift bright spot i i think you know when i look at at the the red hat acquisition yeah 34 billion but but it's it's pretty obvious why ibm made that move um but anyway ibm's core business continues to be under under pressure that's why red hat is such an important component which brings me to vmware vmware has been an execution machine they had vmworld this past week uh we talked last month about the strength of vmware cloud on aws and it's still strong and and vmware cloud portfolio with vmware cloud foundation and other offerings but other than tanzu vmware is in this october survey of the first first look shows some deceleration really across the board you know one potential saving grace etr shared with me is that the fortune 500 spending for vmware is stronger so maybe on a spend basis when i say stronger stronger stronger than the mean so maybe on a spend basis vmware is okay but there seems to be some potential exposure there you know we won't know for sure until late next year uh how the dell reshuffle is going to affect them but it's going to be interesting to see how dell restructures vmware's balance sheet to get its own house in order and remember dell wants to get to investment grade for its own balance sheet yet at the same time it wants to keep vmware at investment grade but the interesting thing to watch is what impact that's going to have on vmware's ability to fund its future and we're not going to know that for a long long time but you know we'll keep an eye on on those developments now dell for its part showing strength and work from home and also strengthen giant public and privates which is a bellwether in the etr data set uh you know these are huge private companies for example uh koch industries would be one you know massive private companies mars would be another example not necessarily that they're the ones responding although my guess is they are it's it's anonymous but actually etr actually knows and they can identify who those bell weathers are and it's been a it's been a predictor of performance for the last you know better part of a decade so we'll see vxrail is strong um you know servers and storage they're they're still muted relative to last year but not really down from july so you know holding on dell holding on to it to to a tepid spending outlook they got such huge exposure on-prem you know so on balance i wouldn't expect you know a barn burner out of dell you know but they got a big portfolio and they've got a lot of a lot of options there and remember they still have the the still have they have a pc uh business unlike hpe which i'll talk about in in in a moment talk about now aruba is the bright spot for hpe but servers and storage those seem to be off you know similar to dell uh but but but maybe even down further i think you know dell is kind of holding relative to last quarter survey you know down from earlier this year and certainly down from from last year uh but hpe seems to be on a steeper downward trajectory uh in storage and service from the survey you know we'll see again you know one one snapshot quarter this is not a trend to make uh but again storage looks particularly soft which is a bit of a concern and we saw that you know in hpe's numbers you know last quarter um customer acquisition is strong for nutanix but overall spending is decelerating versus a year ago levels uh we know about the 750 million dollar injection uh from from bain capital basically you know in talking to bain what essentially they're doing is they they're betting on upside in the hyper-converged marketplace it's true that from a penetration standpoint there's a long long way to go and it's also true that nutanix is shifting from a you know perpetual model you know boom by the the capex to a in an annual occurring revenue model and they kind of need a bridge of cash to sort of soften that blow we've seen companies like tableau make that transition adobe successfully made that transition splunk is in that transition now and it's you know kind of funky for them but at any rate you know within that infrastructure software and virtualization sectors you know nutanix is showing some softness but in things like storage actually nutanix looking pretty strong very strong actually so again this theme of of these crosswinds uh supporting some companies whereas they're exposed in other areas you certainly see that with large companies and and nutanix looks like it's got some momentum in some areas and you know challenges in in others okay so that's just a quick speed dating round with some of the vendor previews for the upcoming survey so i just want to summarize now and we'll wrap so we see overall tech spending off four to five percent in 2020 with a slightly less bad slightly less bad q4 sequentially relative to q3 all this is relative to last year so we see continued headwinds coming into 2021 expect low single-digit spending growth next year let's call it two percent and there are some clear pockets of growth taking advantage of what we see is a more secular work from home trend particularly in security although we're watching some of the leaders shift positions cloud despite the commentary earlier remains very very strong aws azure google red hat open shift serverless kubernetes analytic cloud databases all very very strong automation also stands out as as a a priority in what we think is the coming decade with an automation mandate and some of the themes we've talked about for a long time particularly the impact of cloud relative to on-prem you know we don't see this so-called repatriation as much of a trend as it is a bunch of fun from on-prem vendors that don't own a public cloud so just you just don't see it i mean i'm sure there are examples of oh we did something in the cloud we lifted and shifted it didn't work out we didn't change our operating model okay but the the number of successes in cloud is like many orders of magnitude you know greater than the numbers of failures on the plus side however the for the on-prem guys the hybrid and multi-cloud spaces are increasingly becoming strategic for customers so that's something that i've said for a long time particularly with multi-cloud we've kind of been waiting it's been a lot of vendor power points but that really we talked to customers now they're hedging their bets in cloud they're they're putting horses for courses in terms of workloads they're they're they're not betting their business necessarily on a single cloud and as a result they need security and governance and performance and management across clouds that's consistent so that's actually a a really reasonable and significant opportunity for a lot of the on-prem vendors and as we've said before they're probably not necessarily going to trust the cloud players the public cloud players to deliver that they're going to want somebody that's cloud agnostic okay that's it for this week remember all these episodes are available as podcasts wherever you listen so please subscribe i publish weekly on wikibon.com and siliconangle.com and don't forget to check out etr.plus for all the survey action and the analytics these guys are amazing i always appreciate the comments on my linkedin posts thank you very much you can dm me at d vallante or email me at david.volante at siliconangle.com and this is dave vellante thanks for watching this episode of cube insights powered by etr be well and we'll see you next time you

>> Narrator: From around the globe, it's theCUBE with coverage of the Global .NEXT Digital Experience brought to you by Nutanix. >> Welcome back, I'm Stu Miniman and this is theCUBE's coverage of the Nutanix .NEXT Digital Experience. We've got two of the c-suite here to really dig into some of the strategy and partnerships talked at their annual user conference. Happy to welcome back to the program two of our CUBE alumni first of all, we have Tarkan Maner. He is the Chief Customer Officer at Nutanix and joining us also Rajiv Mirani, he is the Chief Technology Officer, CTO. Rajiv, Tarkan, great to see you both. Thanks so much for joining us on theCUBE. >> Great to be back. >> Good to see you. >> All right. So Tarkan talk about a number of announcements. You had some big partner executives up on stage. As I just talked with Monica about, Scott Guthrie wearing the signature red polo, you had Kirk Skaugen from Lenovo of course, a real growing partnership with Nutanix, a bunch of others and even my understanding the partner program for how you go to market has gone through a lot. So a whole lot of stuff to go into, partnerships, don't need to tackle it all here upfront, but give us some of the highlights from your standpoint. >> I'll tell this to my dear friend Rajiv and I've been really busy, last few months and last 12 months have been super, super busy for us. And as you know, the latest announcements we made the new $750 million investment from Bain capital, amazing if by 20 results, Q4, big results. And obviously in the last few months big announcements with AWS as part of our hybrid multicloud vision and obviously Rajiv and I, we're making sale announcements, product announcements, partner announcements at .NEXT. So at a high level, I know Rajiv is going to cover this a little bit more in detail, but we covered everything under these three premises. Run better, run faster and run anywhere. Without stealing the thunder from Rajiv, but I just want to give you at a high level a little bit. What excites us a lot is obviously the customer partner intimacy and all this new IP innovation and announcement also very strong, very tight operational results and operational execution makes the company really special as a independent software vendor in this multicloud era. Obviously, we are the only true independent software vendor to do not run a business in a sense with fast growth. Timed to that announcement chain we make this big announcement with Azure partnership, our Nutanix portfolio under the Nutanix cluster ran now available as Bare-Metal Service on Azure after AWS. The partnership is new with Azure. We just announced the first angle of it. Limited access customers are taking it to look at the service. We're going to have a public preview in a few months, and more to come. And obviously we're not going to stop there. We have tons of work going on with other cloud providers, as well. Tying that, obviously, big focus with our Citrix partnership globally around our end user computing business as Rajiv will outline further, our portfolio on top of our digital infrastructure, tying the data center services, DevOps services, and you user computing services, Citrix partnership becomes a big one, and obviously you're tying the Lenovo and HP partnership to these things as the core platforms to run that business. It's creating tons of opportunity and I'll cover a little bit more further in a bit more detail, but one other partnership we are also focusing on, our Google partnership and on desktop as a service. So these are all coming to get around data center, DevOps, and user competent services on top of that amazing infrastructure Rajiv and team built over the past 10 years. I see Rajiv as one of our co-founders and one side with the right another. So the business is obviously booming in multiple fronts. This, if by 2020 was a great starting point with all this investment, that bank capital $750 million, big execution, ACD transition, software transition. And obviously these cloud partnerships are going to make big differences moving forward. >> Yeah, so Rajiv, want to build off what Tarkan was just saying there, that really coming together, when I heard the strategy run better, run faster, run anywhere, it really pulled together some of the threads I've been watching at Nutanix the last couple of years. There's been some SaaS solutions where it was like, wait, I don't understand how that ties back to really the core of what Nutanix does. And of course, Nutanix is more than just an HCI company, it's software and that simplicity and the experience as your team has always said, trying to make things invisible, but help if you would kind of lay out, there's a lot of announcements, but architecturally, there were some significant changes from the core, as well as, if I'm reading it right, it feels like the portfolio has a little bit more cohesion than I was seeing a year or so ago. >> Yeah, actually the theme around all these announcements is the same really, it's this ability to run any application, whether it's the most demanding traditional applications, the SAP HANA, the Epics and so on, but also the more modern cloud native application, any kind of application, we want the best platform. We want a platform that's simple, seamless, and secure, but we want to be able to run every application, we want to run it with great performance. So if you look at the announcements that are being made around strengthening the core with the Block Store, adding things like virtual networking, as well as announcements we made around building Karbon platform services, essentially making it easier for developers to build applications in a new cloud native way, but still have the choice of running them on premises or in the cloud. We believe we have the best platform for all of that. And then of course you want to give customers the optionality to run these applications anywhere they want, whether that's a private cloud, their own private data centers and service providers, or in the public cloud and the hyperscalers. So we give them that whole range of choices, and you can see that all the announcements fit into that one theme: any application, anywhere, that's basically it. >> Well, I'd like you to build just a little bit more on the application piece. The developer conversation is something we've been hearing from Nutanix the last couple of years. We've seen you in the cloud native space. Of course, Karbon is your Kubernetes offering. So the line I used a couple of years ago at .NEXT was modernize the platform, then you can modernize all of your applications on top of it, so where does Nutanix touch the developer? You know, how does that, building new apps, modernizing my apps tie into the Nutanix discussion? >> Yeah great question, Stu. So last year we introduced Karbon for the first time. And if you look at Karbon, the initial offering was really targeted at an IT audience, right? So it's basically the goal was to make Kubernetes management itself very easy for the IT professional. So essentially, whether you were creating a Nutanix, sorry, a Karbon cluster, or scaling it out or upgrading Kubernetes itself. We wanted to make that part of the life cycle very, very simple for IT. For the developer we offered the Vanilla Kubernetes system. And this was something that developers asked us for again and again, don't go around mucking around with Kubernetes itself, we want Vanilla Kubernetes, we want to use our Kube Cuddle or the tools that we're used to. So don't go fork off and build the economic Kubernetes distribution. That's the last thing we want. So we had a good platform already, but then we wanted to take the next step because very few applications today are self contained in the sense that they run entirely within themselves without dependence on external services, especially when you're building in the cloud, you have access, suppose you're building an Amazon, you have access to RDS to manage your databases. Don't have to manage it yourself. Your object stores, data pipelines, all kinds of platform services available, which really can accelerate development of your own applications, right? So we took the stand said, look, this is good. This is important. We want to give developers the same kind of services, but we want to make it much more democratic in the sense that we want them to be able to run these applications anywhere, not just on AWS or not just on GCP. And that's really the genesis of Kubernetes platform services. We've taken the most common services people use in the cloud and made them available to run anywhere. Public cloud, private cloud, anywhere. So we think it's very exciting. >> Tarkan, we had, you and I had a discussion with one of your partners on how this hybrid cloud scenario is playing out at HP discover, of course, with the GreenLake solution. I'm curious from your standpoint, all the things that Rajiv was just talking about, that's a real change, if you think about kind of the traditional infrastructure people they're needing to move up the stack. You've got partnerships with the hyperscalers. So help explain a little bit the ripple effect as Nutanix helps customers simplify and modernize, how your partners and your channel can still participate. >> So perfect, look, as you heard from Rajiv, this is like all coming super nicely together. As Rajiv outlined, with the data center, operations and services, DevOps services, to enable that faster time to market capable, that Kubernetes offering and user services, our desktop services on top of that classical industry-leading, record-breaking digital infrastructure. That hybrid cloud infrastructure we call today. You play this game with devoting a little bit, as you remember, we used to call hyper-converged infrastructure. Now we call it of the hybrid cloud infrastructure, in a sense. All those pieces coming together nicely end-to-end, unlike any other vendor, and from a software only perspective, we're not owned by a hardware company which is making a huge difference. Gives us tremendous level of flexibility, democratization, and freedom of choice. Cloud to us is basically is not a destination. It's an operating model. You heard me say this before, as Rajiv also said. So in our strategy, when you look at it, Stu, we have a three pronged approach on top of our on-prem, marketplace on-prem capable. There's been 17,000+ customers, 7,000+ channel and strategic partners. Also as part of this big announcement, this new partner program we called Elevate, on the Elevate brand, bringing all the channel partners, ISEs, platform partners, hyperscalers, Telco XPSs, and our global market partners all in one bucket where we manage them, simply the incentives. It's a very simple way to execute that opposite Chris Kaddaras, our Chief Revenue Officer, as well as Christian Alvarez, our Chief Partner Officer sort of speaking on global goal, the channels, working together tightly with our organization on the product front to deliver this. So one key point I want to share with you, tying to what Rajiv said earlier on the multicloud area, obviously we realize customers are looking for freedom of choice. So we have our own cloud, Nutanix cloud, under the XI brand. X-I, XI brand, which is basically our own logistics, our own basically, serviceability, payment capability and our software, running off our portal partnerships like Equinix delivering that software as a service. We started with disaster recovery as a service, very fast growing business. Now we announced our GreenLake partnership with HPE in the backend that data center as a service might be actually HP GreenLake if the customer wants it. So that partnership creates huge opportunities for us. Obviously, on top of that, we have these Telco XSP partnerships. As we're announcing partnerships with some amazing source providers like OBH. You heard today from college Sudani in society general, they are not only using AWS and Azure and Nutanix on-prem and Nutanix clusters on Azure and AWS for their internal departments, but they also use a local service provider in France for data gravity and data security reasons. A French company dealing with French business and data centers, with that kind of data governance requirements within the country, within the borders of France. So in that context we are also the service provider partnerships coming in. We're going to announce a partnership with OVHS vault, which is a big deal for us. And tying to this, as Rajiv talked about, our clusters portfolio, our portfolio basically running on-prem on AWS and Azure. And we're not going to stop there obviously. So give choice to the customers. So as Rajiv said, basically, Nutanix can run anywhere. On top of that we announced just today with Capgemini, a new dev test environment is a service. Where Rajiv's portfolio, end-to-end, data center, DevOps, and some of the UC capabilities for dev test reasons can run as a service on Capgemini cloud. We have similar partnerships with HCL, similar partnerships with (indistinct) and we're super excited for this .NEXT in FI21 because of those reasons. >> Rajiv, one of the real challenges we've had for a long time is, I want to be able to have that optionality. I want to be able to live in any environment. I don't want to be stuck in an environment, but I want to be able to take advantage of the innovation and the functionality that's there. Can you give us a little bit of insight? How do you make sure that Nutanix can live these environments like the new Azure partnership and it has the Nutanix experience, yet I can take advantage of, whether it be AI or some other capabilities that a Google, an Amazon or a Microsoft has. How do you balance that? You have to integrate with all of these partners yet, not lock out the features that they keep adding. >> Right, absolutely, that's a great point, Stu. And that's something we pride ourselves on, that we're not taking shortcuts. We're not trying to create our own bubble in these hyperscalers, where we run in an isolated environment and can't interact with the rest of the services they offer. And that's primarily why we have spent the time and the effort to integrate closely with their virtual networking, with the services that they provide and essentially offer the best of both worlds. We take the Nutanix stack, the entire software stack, everything we build from top to bottom, make it available. So the same experience is there with upgrades and prism, the same experience is available on-prem and in the cloud. But at the same time, as you said, we want people to have full speed access to cloud services. There's things the cloud is doing that will be very difficult for anybody to do. I mean, the kind of thing that, say Google does with AI, or Azure does with databases. It's remarkable what these guys are doing, and you want to take advantage of those services. So for us, it's very, very important, that access is not constrained in any way, but also that customers have the time to make this journey, right? If they want to move to cloud today, they can do that. And then they can refactor and redevelop their applications over time and start consuming these sales. So it's not an all or nothing proposition. It's not that you have to refactor it, rewrite before you can move forward. That's been extremely important for us and it's really topical right now, especially with this pandemic. I think one thing all of IT has realized is that you have to be agile. You have to be able to react to things and timeframes you never thought you needed to, right. So it's not just disaster recovery, but the amount of effort that's gone in the last few months in enabling a distributed workforce, who thought it would happen so quickly? But it's a kind of agility that, an optionality that we are giving to customers that really makes it possible. >> Yeah, absolutely. Right now, things are moving pretty fast. So let me let both of you have the final word. Give us a little bit viewpoint, as things are moving fast, what's on the plate? What should we be expecting to see from Nutanix and your ecosystem through the rest of 2020, Tarkan? >> So look, heard from us, Stu, I know you're talking to multiple folks and you had this discussions with us, end-to-end, and look for the company to be successful, customer partner intimacy, IP innovation, and execution, and operational excellence. Obviously, all three things need to come together. So in a sense, Stu, we just need to keep moving. I give this analogy a lot, as Benjamin Franklin says, the human beings are divided in three categories, you know? The first one is those who are immovable. They never move. Second category, those who, you know, are movable, you can move them if you try hard. And obviously third category, those who just move. Not only themselves, but they move others, like in a sense, in a nice way to refer to Benjamin Franklin, with one of our key founders in the US, in a sense as the founders of this company, with folks like Rajiv and other executives, and some of the newcomers, we a culture, which just keeps moving and the last 12 months, you've seen some of these. And obviously going back to the announcement day, AWS, now Azure, the Capgemini announcement then test as a service around some of the portfolio that Rajiv talked about or a Google partnership on desktop as a service, deep focus on Citrix globally with Azure, Google, and ourselves on-prem, off-prem. And obviously some of the big moves were making with some of the customers, it's going to continue. This is just the beginning. I mean, literally Rajiv and I are doing these .NEXT conferences, announcements, and so on. We're actually doing calls right now to basically execute for the next 12 months. We're planning the next 12 months' execution. So we're super excited now with this new Bain Capital investment, and also the partnership, the product, we're ready to rock and roll. So look forward to seeing you soon, Stu, and we're going to have more news to cover with you. >> Yeah, exactly right, Tarkan. I think as Tarkan said we are at the beginning of a journey right now. I think the way hybrid cloud is now becoming seamless opens up so many possibilities for customers, things that were never possible before. Most people when they talk hybrid cloud, they're talking about fairly separate environments, some applications running in the public cloud, some running on premises. Applications that are themselves hybrid that run across, or that can burst from one to the other, or can move around with both app and data mobility. I think the possibilities are huge. And it's going to be many years before we see the full potential of this platform. >> Well Rajiv and Tarkan, thank you so much for sharing all of the updates, congratulations on the progress, and absolutely look forward to catching up in the near future and watching the journey. >> Thanks, Stu. >> Thank you, Stu. >> And stay with us for more coverage here from the Nutanix .NEXT digital experience. I'm Stu Miniman, and as always, thank you for watching theCUBE. (bright music)