(orchestral music) >> Hello everyone. Welcome to the special CUBE conversation here in theCUBE's Palo Alto studio. I'm John Furrier. Where conversation around venture capital, entrepreneurship, crypto currencies, block chain, and more, Jonathan Ebinger our friend with BRV, formerly Blue Run Ventures, but BRV for short, sounds better, welcome to theCUBE. >> Thanks John, looking forward to it. >> Great to see you, we've known each other for a long time and you've been a great investor, your firm has done a lot of great stuff, deals are really famous deals, but also you dig into the companies and you really stand by your portfolio companies, but you've also done a lot of work in China. >> Yes. >> So you have a good landscape of what's going on. What's the, what's going on in China? >> Well China is really expanding in ways which we had not foreseen when we first started investing there almost 15 years ago. We were really active for five to 10 years, investing in companies that initially were considered copycat companies, you can't really use that term anymore. In fact what's happening more and more, you're seeing Chinese ideas coming to the United States. Businesses like We Chat are being copied as fast as they can, you're seeing Snapchat, Messenger and so forth, they're quickly trying to amalgamate as many assets as they can within their viewership much like we're seeing in a lot of the other Chinese analogs over there. It's exciting to see, it's very much an arms race. >> It's been interesting to watch. We were at the Ali Baba Cloud Conference last year, at the end of last year, it's interesting the innovation and entrepreneurial thirst has really changed. If you go back just 10 years ago when you guys were first getting in there, I remember the conversations were what's going on in China, it's very developmental but what's going on 10 years ago, they are dominating the mobile space, they're mobile usage is really much different makeup in how they do startups, the apps. How much of that has influenced some of their success just the demand? >> Always on, location always available, it opens up a whole new level of communication services. The idea of the larger screen format, people used to think in the United States, these large devices coming out of Korea first and then China, we thought these would never play in the United States, now Apple 10, larger screen size, it makes sense, it's mobile first right from the get go for a now billion plus users. >> So BRV, how many active portfolio companies do you guys have and what's the profile that you're looking for for entrepreneurs, what are some of the kind of companies? >> We're about 45 active companies right now. We're putting about, we're putting money in about 10 new companies a year at this point. We have a very disciplined approach of investing in Series A style companies, Series A of course means a lot of different things to people, but generally, we like to put $3 to $5 million to work early on and then follow on. >> How much do take for that, just a third? >> Typical in the 20%-25% range. There's a lot of companies out there that still fit that profile. Of course you're seeing some super sized Series A's that happen, we don't play in those but for the traditional software companies, evaluations are really right in our sweet spot. >> How big is the fund now, just what's the number in terms of capital? >> We're in fund six, we're just over $150 million. >> And you got to save some for follow on rounds. >> Exactly. >> Talk about the changes in venture capital because what's interesting, I had a conversation with Greg Sands with Costanoa Ventures, another great investor, formerly I think the first employee of Netscape I think or the business plan. Great guy, he talked about the dynamics of, you don't need that much cash anymore because if you can get unit economic visibility into what the business is working, you can do so much more with that and I'm calling it the hourglass effect, you get through that visibility, you're in control, you own your own destiny, versus the old Silicon Valley model which seems to be fading away, which is hey, what do you need? $40 million, or here's $100 million. That really limits your exit options and sometimes you can drown in your own capital. Talk about that dynamic. >> You're seeing the $40 million rounds with businesses that are much more capital intensive and that's coming back in vogue now but for the most part, I agree with what Greg's saying and this whole advent of seed funds and super seed funds and angel funds and so forth has been really great for the traditional series A investor. A lot of that early fundamental and foundational work is being done and then when the series A comes, it's more about expansion so we're effectively getting what was a Series B type stage company now we're investing in Series A. We're saying hey, this product works, there's product market fit, let's put dollars to work to really grow the market. >> So you're saying Series B was a kind of prove the business model, shifted down to the A because the cost to get there is lower and hence that's opened up a seed round lower in numbers, so it just shifts down a little bit. >> It really has, it really has and that plays into our sweet spot. We really like working on business models, distribution strategies, things like that. >> And what kind of startups do you want to invest in? What are some of the categories? >> Love financial services, we like health tech, we're doing education, we're really pretty omnivorous when it comes to the sector. What we're looking for is really businesses that are using data, real time data to disrupt the numbers. >> So you're not sector driven, you're disruption oriented. >> That's right. >> Okay let's talk about disruption, my favorite trend. Obviously I love the China dynamic because you're not sure what it is, but it's really doing well so you can't ignore it and they're innovative and they're hustling hard and they've got massive numbers. Block chain, we're super excited about, we love crypto, we think it's the biggest wave coming out there, so a lot of my smart, entrepreneurial friends are jumping on their surfboards literally and jumping out into those waves and there's a lot of action there. At the same time, people are saying, stay away from that crypto thing, it's a scam. Kind of a different perspective, what's your thoughts on that? >> If you look at, you separate the cryptocurrencies from block chain, I think it becomes a lot more clear. Block chain is for real. Tracking provenance on transactions, real estate transactions, multinational transactions, makes a lot of sense, dovetails nicely with security, so there's a real business there. You saw the announcement with IBM and Mersk the other day, what they are taking enterprise level block chain into their whole supply chain. I think that's really important. We have a company in the category called pay stand which is doing the same sort of thing with smaller size businesses, just accelerating the whole process on accounts receivable, taking working capital. >> And they're doing block chain for that? >> Yes block chain is an option, we're not forcing people onto block chain, but the idea of hey, let's give people more cost effective ways to transact, get rid of the paper checks, get rid of the invoicing and just join the modern world, much like you use Venmo if you and I are going to exchange money. >> That's pay stand, that's one of your hot companies. >> Yeah it is, absolutely. >> So are they using block chain or not? >> They are, yes. >> Okay, because it's a physical asset, it's kind of a supply chain thing? >> They use it to track the funds themselves, unlike a credit card where you have to pay a big fee or ACH which you can't really get proof of funds, with their block chain technology, you can be sure that you have the funds available and you get it instantly. >> Let's talk about use cases that you think out there, I'd like you to just weigh in on use cases for block chain that a mainstream person that's not in the tech business would understand, because they say, is it real or not? I agree block chain is legit, what are some use cases that would highlight that? >> I think if you've ever been involved in real estate, bought a home, things like that, just tracking title insurance, you're going all the way back if you live in California, you're going all the way back to pre-statehood days, you have to track the provenance of that land all the way through. You're paying title insurance, title insurance is a business you don't really need if you have accurate provenance tracking through block chain. I think that's one most of us can understand. Obviously bills of weighting with things coming over on ships. That's natural and right now things get held up in port because people are trying to find a clipboard before you can sign off on who, is this bill of weighting actually clean, that stuff can be done automatically with 2D barcodes, block chain usage. >> Certainly with perishable goods too, we learned that with IBM's example. >> Sure. >> Okay let's get into the hot companies you got going on. Name some of the hot investments that you've done. >> Sure, well I talked about pay stand a minute ago, really excited about them, another one we really like is a company called aerobotics. I know you're a fan of autonomous flying. If you think about drones and everyone knows DJI and they're a great company, that's one to one, one person flying one drone, that's not scalable obviously, it scales at one to one. With autonomous flying, you can have a whole army of drones out doing your business, whether they're doing site exploration, checking for chemical spills, looking at traffic and so forth. The company is now operating in three continents, it's just, if you think about what a drone is, effectively it's a flying cell phone. It's a cell phone that goes around, takes pictures, transmits data back, we know something about cell phones at BRV, we've been investing in this category for a long time so when we say aerobotics come along, we said this is just a natural extension of real time data, cellular technology, and location based services. >> You guys don't get a lot of credit as much as you should, in my opinion on that, you guys were very early on the mobile, mobile connectivity side and mobile footprint and device and software. That's playing well into the hottest trend that we see, that's not the sexiest trend, that's IOT. >> Absolutely. >> Because drones are certainly, industrial IOT is a big one. Instrumenting physical plants, equipment, and IOT in general the edge of the network. What's your thoughts on IOT and how would you, how do you see that evolving? It's more than just the edge of the network issue, it's bigger. >> It is, well of course the devices and sensors are important. I think a lot of that's been commoditized. The business that we've been seeing develop and there's a lot of folks, they've moved from analytics of the web to analytics of IOT, so there's a lot of interesting companies coming in the analytic space. We're not playing in that as much, we tend to like to invest in companies that are big enough that you need to have analytics for them. We like companies that have proprietary control of analytics versus necessarily running analytics for company X. >> So you're not poopooing IOT per se, just that from an investment thesis standpoint, it's not on your radar yet. >> That's right, they're either too capital intensive for us as a firm or you're basically managing someone else's data. I want to be in companies that we're managing our own data for a proprietary advantage. >> That's really what I was going to get to next, the role of data driven, so we've lived in dupe world, theCUBE started in 2010 in the offices of Cloud Air actually and people don't know the history and it's been interesting, Hadoop was supposed to save the world, the data, but it really started the data trend, the data driven trend, Mike Olsen, Amar Omadala and the team over there really nailed it but it didn't turn into be just Hadoop, it's everything so we're seeing that now become a bumper sticker, data driven marketer, I'm a data driven executive, I'm a data driven interviewer, all that stuff, what does it actually mean? What does data driven mean to you? >> Data is, there's big data and then there's actionable data obviously people talk about exhaust, the data coming off, we really got started with, as you know, we were investors in Waze, awful lot of data coming out of your cell phone, extracting just the important pieces of it are really what's important. We're investors in a company called Cabbage which looks at every transaction a small business makes to determine their credit worthiness. It's really the science. People talk about data scientists, what do they actually do? What they're actually doing is separating out the wheat from the chaff because it's just a crush of data. I saw your interview with Andy Jazzy to other day from AWS, the amount of data that's being stored, it's almost unfathomable but the important people. >> They have a lot of data. You'd like to invest in them now. >> Exactly, but that's really the thing, it's being able to separate the good data from the bad. >> You look at Amazon, I was talking to Jesse and he didn't really go there because he was kind of on message but when I talked with Swami who runs the AI group over there, we were talking about, I said to him straight up, I'm like, you're running a lot of workloads on your cloud, I'm sure you have data on those workloads. Just the impact of what they could do with that data. This is the virtuous cycle that their business model is made up of, but it's changing the game for what they can become. The thing that we're seeing in the data world is, sometimes the outcome might not be what you think because if you can use the data effectively, it's a competitive advantage, not a department. >> Right and you have to really stay true to your commitment to data. What we've seen happen is when companies, if you've been around for 10 years or so, you start to trust your gut, that's important, but it can also not lead you to see obvious conclusions because the world changes. >> And also committing to data also means from a practitioner's standpoint, investing in the tech, investing in things to be data driven, not just to say it. >> Exactly. >> Okay so what's the future for you guys? What are you looking at next year, what are some of the things you'd like to accomplish for investment opportunities, besides getting all the hot deals, you did Waze, that was an amazing deal, one of my favorite products, how did that go down? How many people passed on Waze? >> I don't know how many people passed, but we were lucky, they wanted to bring us in to the initial syndicate, they wanted to have some folks who understood. >> But it wasn't that obvious though at the beginning. What was the original pitch? >> The initial pitch was that they were going to have folks have the dash devices, the product would sit on your dashboard and they were going to be using it to map Eastern Europe because Eastern Europe was just coming into the Western world and they didn't really have good roads and good maps. We thought, that's interesting but they probably also don't have smartphones, so why don't we come across the Atlantic and let's make this thing work in the US and then from there, the rest took off country by country we were the number one navigation app in I think 150 countries at one point. >> What's the biggest thing that you've learned over the past few years in the industry that's different now I mean obviously there's some context that I'll share which is obviously the big cloud players are becoming bigger, scale's a big thing, you got Google, you got Microsoft and Amazon, you've got Facebook's out there as well. Then you get the political climate. You go to Washington D.C. and New York, Silicon Valley is not really talked highly about these days on the hill in Washington, yet GovCloud is completely changing the game of how the government is going to work with massive innovations and efficiencies, literally overnight, it's almost weird. >> It is and it isn't. If you look at it through a longer term horizon, Silicon Valley is again at the forefront, we're really the first ones with more transparency in the industry, all the different movements which are really important and all the conversations that are happening are important and they're happening here first. I think you're starting to see a ripple effect, you're seeing it going through entertainment, you're going to see it in the government, industry after industry I think is going to start to have to be more open as Silicon Valley has led the way on that. >> That's a great point. Take a minute to describe the folks out there watching that aren't from here, what is Silicon Valley about in your opinion? >> Silicon Valley is, of course it's more than a mindset, but folks who are here are here on purpose. They come here intentionally. There are very few people that I know who were born and raised here, so they're coming here because they want to be part of a shared ethos around success, around success, around shared values and competition so it's a very healthy environment, I came, I used to live in Washington D.C. and I couldn't be happier to be 3000 miles away. >> If you're a technology entrepreneur, this is where all the sports and action is, as I always say, we always love sports analogies. Okay, I got to ask you about the VC situation around ICOs, initial coin offerings are being talked about as an alternative to fundraising, there's some security options on token sales as a utility, the SEC has started to put some guidelines down on what that looks like, but the general sentiment is, it's a new way to raise money and some people are doing private rounds with venture capital and doing token sales through ICOs. You see some hybrids, but for the most part, the hard core I don't want to say right or left wing, is there a wing of the political spectrum, but the hard core ICO guys are like, this is all about disrupting the VC community and you're a VC, so you got to take that a little bit personal but the point is, what do you think about that? Is that talked about? >> I think that's good salesmanship. The VC industry such as it is, you can fit every VC into one section of Stanford stadium. There just aren't that many VCs to really go after. We're a small group of folks. I think that going after maybe disrupting the way folks are raising money through Kickstarter and things like that, that's all great. We're not going to stop it, we're going to embrace it. I think that there's plenty of different ways to raise capital, I have no compunction about those things. >> Do you think it's more of a democratization trend or a new asset class, so you don't see it disrupting the VCs per se, but if it's only a handful of VCs that could fit into Stanford Stadium, for instance, then certainly there's more options, it's a dilution. >> I think you look at it as it's just an alternative financing method, do I take debt, do I take equity, do I take venture, do I take friends and family? It's just one more arrow in the quiver of the entrepreneur, I think you have to be smart about it because thinking that you're going to get the same level of attention from an investor in your ICO that you are going to get from a series A investor who owns 20% of your company, those are two very different value propositions. >> So you see a lot of pitches and sometimes, you have to say no a lot and that's the way the game is, but a lot of times, you want the best deals. But the founders' side of the table, they're looking at the VC, I need money. So that's one of the options, what they really want is a value added partner, so what's your current take on what that means these days? Sometimes it means a firm, sometimes it means a partner, sometimes it means the community. How are you guys looking at BRV as value add versus the worst case scenario which is value subtract, you just want to have that be positive. >> I see that written about venture too. >> I know, some people experienced it. >> I think it helps that we've been around now for almost 20 years, we got started in '98 so you have to look at our body of work and the continuum of investments and founders and CEOs and CTOs that we've invested in. There's hundreds and hundreds of people who have taken money from BRV, and so that's one of the real positives about this current state we're in is that there's so much transparency. The fact that we are, I like to think we're good actors and have been for a long time, that comes out, now through our words but through the words of. >> What would they say about you guys? What would your entrepreneurs say about BRV? >> Aside from using buzzwords like value add, they say, they know their industry, they're not afraid to ask for help, they try to call problems when they see it, things like that. >> You stand by your companies. >> Absolutely. >> Awesome, well what's your favorite trend that you're personally interested in? >> I think you have to go after health care right now. It is just such a big market right now. People have been nibbling all different sides of it right now, there's been folks who are trying to expedite processing, there's actual innovations happening on the medical side, I think there is just, technology is just now starting to get into that, technology has gotten into education. >> How about the startup you guys funded that's related to the health care field. >> Yes, we're in a company called Hello Heart which is really at the confluence of a number of trends. It starts off, what Hello Heart is, it's a personal blood pressure cuff for you as an employee of a big company, more and more companies are starting to self insure. If you're a big enough company, 10,000 plus employees or even fewer, you're going to want to self insure to save money but also, your employees get very much more comfortable with you as an employer, you care about my well being, so it's a very virtuous cycle for the employees. >> So companies themselves insuring their own employees. >> Absolutely. >> They have to be super big, this company. >> This is just one component of a self insured business. You also, of course you still have access to doctors and stuff, I'm not making the pitch for being self insured as a company, I'm just saying that. >> But that's a trend. >> It's absolutely a trend and you're seeing a lot of what I would call point solutions stepping in, whether it's psychiatric, whether it's opioid help, whether it's working on heart conditions, these are all different point solutions which are being amalgamated together to help companies which are self insuring. >> So is Hello Heart for consumers or for business? >> It's sold to businesses but individual employees have it so they can keep track of their blood pressure. >> But I can't buy one if I wanted one? >> Not today, but I'll make sure I can get one to you. >> I need one, get all of our employees instrumented. >> Exactly. >> Drug tested all that stuff going on. People worry about the privacy, that's something I would be concerned with, putting. >> That's taken a really fast pendulum swing. A few years ago, Generation X was privacy, there is no privacy, the default was, location is always on, that's just flipped 180 degrees in the last few years. >> Well Jonathan, thanks for coming into this CUBE conversation, I want to ask you one final question, one thing we're passionate about is women in tech and underserved minorities, obviously Silicon Valley has to do a better job, it's out on the table, and it's working but we're still seeing a lot more work to be done, we're seeing titles not being at the right level, but pay's getting there in some places but titles aren't, some paying still below for women, still a lot more to do, what are you guys doing for the women in tech trend, how are you guys looking at that? Certainly it's a sensitive topic these days, but more importantly, it's one that's super important to society. >> It is, I think like a lot of things that have long term value, it's really about your actions versus your words, so our firm has two out of the five investment professionals are female, one of the last three CEO's we've founded is a female CEO, we have technologists, we have marketing people, we have CEO's that are females it's very much of a cross the board, sex, race and so forth. >> You guys are indiscriminate, a good deal's a good deal. >> Exactly right. >> It's about making money, VC's are in the business of making money, a lot of people don't understand, you guys have a job to do but you do a good job. >> We're in the business of making money but our investors for the most part are not for profits. Large universities, our biggest investor is the Red Cross, so when we do well, the Red Cross does well and the country does well. >> You're mission driven at this point. >> Exactly. >> Is that by design or is that just, your selection? >> We're delighted with our LP's, it's important that we have synergies aside from just finances with our investors. >> That's super well, I appreciate you coming on, I think it's super great that you're tying society benefits into money making and entrepreneurship, great stuff Jonathan Ebinger here on theCUBE, BRV check them out, great VC firm here in Silicon Valley. It's a CUBE conversation, we're talking about startups and entrepreneurship I'm John Furrier, thanks for watching. (dramatic music)

>> Narrator: Live from Boston, Massachusetts, it's theCUBE. Covering Red Hat Summit 2017. Brought to you by Red Hat. >> Welcome back to theCUBE's coverage of the Red Hat Summit here in Boston, Massachusetts. I'm your host, Rebecca Knight, along with my cohost, Stu Miniman. We are joined by Jay Jamison, he is the Vice President for Strategy Software Defined and Cloud Division at HPE. Thanks so much for joining us Jay. >> Oh thanks for having me. >> So I was just in your keynote session and you talked about making hybrid IT simpler. You talked about the imperative that you heard from customers to bring solutions not silos. Can you tell our viewers a little bit about the specific feedback you were hearing from customers that really made you want to tighten your focus? >> Yeah, I think that, so, first off thanks for having me, and I would say that, absolutely, customers have been very clear at the excitement and the opportunity that they see ahead of them in terms of digital transformation and moving to cloud and taking advantage of all these new capabilities and technologies that seem to be showing up all the time. Whether it's containers, whether it's Kubernetes, whether it's internet of things, all that stuff's super exciting, but at the same time customers are saying, "You know, look, I've got thousands of applications "in a traditional estate, or a virtualized estate "that aren't going to be moving to anything "like a cloud any time soon. "And what I need is a way to start thinking about "how do I manage that whole estate "so that I can get my existing footprint optimized, "I can keep that running smoothly, "make sure it's secure, make sure it's reliable, "make sure it's low cost? "While I want to continue to reduce budget "where possible there and I want to start spinning up "more of my new efforts and more of my new investment "onto these new things so that I can be more responsive "to the business that I'm trying to run. "I can get new products and services out to my customers, "I can engage partners and my existing customer base "in ways that they want to be engaged. "I can enter new businesses." And so that challenge of how do I manage that hybrid estate, whether it's a mix of on-prem or off-prem, whether it's a mix of traditional and virtualized applications and workloads with new cloud native or containerized, or even server-less now, those kinds of things, that is really what I see as the problem of hybrid IT today. And our customers tell us that, "Geez, it's complicated "and getting more so each and every day." And that presents a tremendous opportunity for HPE, and partners like Red Hat, to be able to come forward and say, "Look, we can start helping you with solutions "that start bringing together a comprehensive approach "to trying to solve for making that entire estate simpler, "make it more solution oriented, "and less a set of different silos and people "that are all kind of sort of stuck "in whatever technology stack they might be running with." >> Jay, very interesting point. One of the messages we heard from Red Hat is that application spectrum you talked about. I've got most enterprises hundreds if not thousands of applications. They have the new ones that they're modernizing and building but even the old ones we need to at least re-platform them. The term, we used to call it lift and shift, re-platform seems to be the cool new way to kind of talk about it. But, you know, really modernizing the platform that I'm on, being more software driven, being ready to take that, if I'm breaking it down, and componentizing, containerizing it, starting to build micro services, but how are you working with Red Hat? How does HPE cloud offerings and infrastructure pieces playing in that re-platforming and then moving up the spectrum? >> Yeah, so I think really across the board, I think there are a couple of pieces. I think first of all you're absolutely right that customers will say, "Look, I have "an existing estate of applications and workloads "that I absolutely have to use." So for example I often think about if you think about a mobile application that you might use a lot from a mainstream customer. Like think of your, like getting your flight reservation on your mobile phone. Of course there are parts of that mobile application that are going to be very modern. Like I can order an Uber from the mobile app that I use on my airline often, and that's, of course, very modern, I'm using APIs, I'm using all this nice stuff to plug in what Uber offers that airline vendor to be able to say, "You can have that transaction "flow through a partner flow." But things like what time's the flight taking off, whether it's delayed, those are existing systems that aren't newfangled if you will. And so what customers are telling me is, "Look, I've got a corpus of data, "a corpus of application logic "that I absolutely need to be able to access "and use and deliver in new ways." And so in many senses I think that resonates very strongly, this notion of, re-platforming it's going on and it's a reality of, again, how do I make this mix of data application tools that may exist, and the desires I have to do new stuff. How do I bring it together in a way that lands effectively for a customer so that they have a delightful experience? Now what we're doing with Red Hat I think is really exciting in terms of providing opportunities for, in manners, where together we're sort of taking the best of both worlds. So a great example that I talked about in my keynote is saying, "Look, we're trying to take", we're working very closely with Red Hat, and specifically their Ansible team, to say, "Look, what customers, what users of Ansible love "is building playbooks that enable them "to automate infrastructure using Ansible playbooks", that's what's it all about. And what Ansible has been great with those playbooks is setting up and running and automating virtual machines, well what we're doing, because HPE tends to have infrastructure and great infrastructure management tools that say, "Look, down at the hardware level "we want to make it easier and more fungible "for IT shops to be able "to manage that physical infrastructure." And so what we've done is we've partnered up with Ansible to say, "Look, we want your users of Ansible "to just have their playbooks and we will "connect our OneView APIs", which is our infrastructure management software that sits on top of hardware. Say, "It connects, and so when your users "build an Ansible playbook that wants "to change how the infrastructure works "we'll take care of it all in OneView. "It's not something that your users have "to change or learn anything new "it's just all of a sudden Ansible gets more powerful "because it's connecting to HPE hardware and providing "a richer more flexible infrastructure experience." And so that's some of the stuff that we're doing now to make our hardware more flexible and more modern in the context of an Ansible developer, or Ansible user, but over time that's going to get even better. So the stuff, the things that we're doing with Synergy, which is our new brand that is focused on building hardware infrastructure that has composability, which basically says, "Look". It looks like hardware device but from an operators point of view it's very fungible, you can refactor and make your blend of compute, or storage, or networking, kind of shift on the fly. So a very cloud-like experience with on-premises infrastructure. And what we're doing is we want to work with great technologies that are very cloud-centric such as OpenShift from Red Hat to say, "Look, we want to be able to enable customers "to using APIs spin up bear metal instances of OpenShift." Very powerful in terms of time to value message for a cloud native customer that says, "Look, I need to run cloud native applications, "I want to have containers but I want to do it on-premise" This solution will be something that we think is a really powerful message for, particularly our Red Hat OpenShift style customer looking to build applications. >> Jay, and I'm familiar with the Synergy platform and composable infrastructure, like the ideas, you can break that down into smaller components. What we hear all the time is, "I need to build distributed architectures", and, as they talked in the keynote, predicting and forecasting where that's going to go is tough. So big challenge customers always have is like, "I buy these boxes and three years "into it I'm only using 40% of it." The utilization inside of data centers is horrible. Even with server virtualization it helped a little bit but not as much as what you see server founders in clouds and the like. So where are we with the rollout with Synergy? Do you have any proof points of customers that are saying, "Oh, I'm getting better utilization, "my OP-X is much better"? >> Yeah, what I would say is, so first of all I would strongly agree with you in the sense that if you talk to most mainstream enterprise customers today about their data center utilization rates it's often very poor. And I think one of the big draws that customers have when they look at public cloud opportunities is they'll say, "Well a nice thing about a public cloud is "I feel as though I'm getting much higher utilization rates "because of the way the payment structures work and so on." Now that may not always be true, you'll have, at times people will say, "Well these things are sitting dormant." But that's the instinct, right? >> We had server sprawl, we have VM sprawl, and now we have cloud sprawl. >> Now you have cloud sprawl, exactly right. >> And server less will fix it all too right? >> Exactly right, but you absolutely have the challenge of under-utilized data centers. And so it's imperative for HPE, and I think really the industry, to say, "Look, the solutions that we're putting forward, "whenever we talk about hybrid cloud solutions, "or hybrid IT solutions, or private cloud solutions or whatever to me it comes down to look, am I able to show you in concrete terms how am I increasing the utilization of your data center and how am I helping you lower your costs? And Synergy will, over time, become a great solution and platform in that manner because, for a couple of reasons. One, you've described, the fungibility and the composability of resources makes that something that is very much simpler from a technology standpoint. But then at the same time when you couple it with pay as you go style business models, that HPE makes available to its customers through our financial services, you start to then say, "Look, you're not "just sort of writing us a big check in CAPEX "and waiting three years and then being disappointed." "What you're doing is you're going to start getting the notion "that says, "Look this is going to show up, "you'll have a small amount of POD, "you're paying as you use." And we're able to then work together to forecast when will capacity requirements get to a place where you absolutely need to add more capability and refresh that hardware, or extend that hardware, excuse me. On the customer adoption, it's a new platform, and it's just coming out and we're getting great early adoption, and I think particularly from users that were in the beta. We had very satisfied beta users and we're starting to see, I think, really strong early adoption of the product. We actually had someone at our most recent Discover talk where I was talking with them later and they were, I think it was Hudson Alpha, which is a biotech researching style institute that often tries many of our things. And what they were saying that I thought was really interesting point which I'd not heard of in the context of, "Hey, what does composability do and how does "this drive up utilization rates and many of these things?" One of the things that he was saying that I thought was really interesting is he was starting to use Synergy to deliver what he called spot instant style on-premise infrastructure where someone could run a workload for a period of time and then if someone else needed the infrastructure more badly and he had a way to sort of basically just blast away the old thing and put in the new thing there. And he said, "This is great because during the day "there's a certain set of workloads we have to do. "At night there are a different set of workloads "I want to do and Synergy gives me the capability "to do all of that very simply." And so I think that those kinds of capabilities, while still early, will be very powerful value propositions for customers that are looking to solve the problem you're describing of, "How do I get out of a data center "that's under 20% utilized? "I need to get more efficiency here in order "to lower the cost and be responsive "to what my customers need." >> Jay before you were at HPE you worked as a venture capitalist at Blue Run Ventures, in particular looking at opportunities in mobile and consumer internet enterprise software. If you could put on your investor hat here and talk a little bit about the cloud market and the cloud industry, what excites you and what gives you pause in terms of where you see the market heading and where companies are putting their money? >> Oh that's a really good question. I think that, well I would say that putting an investor hat on, I think that particularly in the enterprise space, I think it's a really exciting time, particularly for, and not to be super self serving for what HPE is doing, but I think there is a set of problems that are out there that are big and broad where there will be large companies that get created. One area that we're very interested in at HPE that I think is an area of investor interest, whether it's HPE making the investment or whether it's venture capitalists or what have you. It's really in the notion of what I describe as hybrid management. And what that basically means is, "Look, I'm a user that's going to have some VMware. "I'm going to have some cloud stuff running on AWS, "I'm going to have a desire to use Kubernetes, "and containers and so on." "Help me get one pane of glass that gives "me a way to think about seeing "those different applications, understanding how they're running. "I want one way to do things like firmware updates "for the stuff that needs firmware updates. "I want one way to do application firewalls, "I want one way to do this." And I think that's going to be a very interesting and sticky market to go off an win. So if I were in the investment space that would be an area that I would be looking at very deeply. Another area that I think is going to be really interesting and important, we talk a lot about AI and machine learning in the context of everything in the world of enterprise, seems to have this label of, "Hey, we're using AI and machine learning." But I think what you really have to get back to is what about artificial intelligence and machine learning is actually going to help you solve a problem? How is it going to make your business actually better? And I think that often we're, I think right now at a place where we're a little bit too over our skis in terms of saying, "Look, these are really interesting technologies, "AI's going to do everything and drive out cars "and basically make us little house pets in the corners "'cause they're doing so much in our lives." But I think that there tends to be, one customer was saying to me, "You know what's really interesting is "dozens of startups will come and tell me "about how AI's going to solve "a hundred problems I didn't know I have. "What I'd really like someone to come "and talk to me about is about, "I want them to talk to me about "one of the problems I know I have. "'Cause I've got a hundred problems "I know I've got that I want solutions to." And so I think a big opportunity is really to try and figure out how do these new technologies particularly in that space and around big data and so on, how do those become things that are really truly impactful to making a mainstream business that may have a hybrid estate, how does it make them more effective? And that can have an impact in terms of how to make their IT ops more efficient, how to predict outages, how to be more secure, all that sort of stuff, all the way to "How do I do a better job delighting my customers "and predicting where the next new markets are going to be?" So those are some of the areas that I'd be most interested in as an investor and really as an operator and a strategist at HPE. >> And yet you remain a little skeptical of what you're hearing about the AI and machine learning in terms of where it really truly is at right now and the opportunities that? >> Yeah, what I would says is, I think it's if it's, the technology's really exciting and developing very very quickly. That I have no question about. What I often have questions about and I hear customers questioning is is this a technology in search of a solution or is it just kind of, we're saying, "Hey this is a really cool new thing "that it can go solve everything "but I haven't thought specifically about how "to actually solve this specific problem "that exists at hand." And that's the challenge. It's ultimately, I think of it, to dig in a little deeper, it's really a product management question or problem of "Hey, do I really understand what problem "my customer's trying to solve "and am I using this tactic to do a great job?" As a quick example machine learning, those kinds of things are great for what computers do well. One thing a computer does really well is the same repetitive task thousands and thousands of times. So things like email marketing automation, or thinking about how you use a business development manager to reach, do outbound selling. That you can have a computer do a lot that imitates a human being to say, "Hey I'm going to send you an email "and try and sell you something "and get you interested in a call." I don't need to have a human being do a lot of that stuff. That to me is really straight down the fairway, really clear business problem that AI and machine learning can do a great job, bots, all that sort of stuff, can do a great job starting to have an impact on. But to think it's just going to do everything out of the box is something that you have to think about. Okay where does this tool and technology really provide the value that customers are going to see. >> Jay. We've had HPE on theCUBE lots of time. You were at Discover in London, so I think we're pretty close to where you cloud strategy is but I look at next week's Open Stack Summit, some in the industry was like, "Oh, HPE pulled out completely of Open Stack." You've got HPE Discover coming up in Vegas, soon after that, and we'll have theCUBE there also. I know John and Dave are really looking forward to it. Give our audience a little bit of an update as to where HPE is and isn't when it comes to Open Stack, specifically and just kind of cloud positioning in general. >> Yeah, right, so what I would say is I think that it's a really good question because I think there's been a lot of transition and I think that customers are still, and the market, are still trying to figure out, "Okay, what and where does, is HPE playing?" And I think that what I was talking about today in the keynote and what I think represents where we're going and what we are doing is we're really focused in on this notion of saying, "Look we want to build a set of solutions that make a customer's hybrid estate simpler" and that hybrid estate, as I describe it, cuts across proprietary virtualization technologies like VMware of like Hyper view with Microsoft, it's going to cut across openstack, it's going to cut across doctor, it's going to cut across public clouds, et cetera. And I would say that where HPE is most focused, short of, when we look at how do we help customers get better leverage and value across that whole mix of estate, what we would talk about is, we think we're moving a little bit more up stack into this sort of notion of saying we want to invest and be really great at managing across that estate, so when I was talking about areas that I'd be interested in as an adventure investor, you know, it wouldn't surprise you that HPE were really, we talked a little bit about this concept of new stack and it really is this notion of saying, we want to be great at managing a hybrid estate across public and private, across proprietary and open source. So what that generally means, what that means then, as it pertains to, okay, what are we doing with openstack what are we doing with respect to cloud founder in this case or redhat, open ship, it means we're a lot more partner centric, because our assertion is that we believe the customers love a mix of, it's not going to be an all openstack world within a data center, we think it's going to be a mix openstack's going to be part of the estate, we also think doctor is going to be part of the estate, we think VMware is going to be part of the estate, we think that's where things are going, and so if you've seen us do in terms of the work we're doing with, whether it's red hat, at some levels, whether it's SUSA, whether it's even VMware, whether it's Microsoft, whether it's doctor, we've done, worked in partnership with all of them, and I think you'll see that partner centric approach continue. We certainly are interested in helping support customers that are existing and we'll move forward with respect to openstack with cloud founder in terms of what we're doing there, but I think that, increasingly over time, there's going to be a deep alliance on partners as we look at those infrastructures, service paz layers, because we look at that and say, there's a tremendous amount of world class talent, that's off building off those distributions in the openstack communities and other big opensource communities and those areas where we can most likely partner and have those take advantage of things like our infrastructure management layer of one view, can be very well leveraged within our new stack product and project that we're working on and so on, so that's really where we're heading and how we're approaching it. >> Jay Jameson, thank you so much for joining us, it's been great. >> It's been a pleasure thank you so much. >> I'm Rebecca Knight for Stu Miniman and we will return with more of theCUBE after this.