>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante. >> A decade of big data investments combined with cloud scale, the rise of much more cost effective processing power. And the introduction of advanced tooling has catapulted machine intelligence to the forefront of technology investments. No matter what job you have, your operation will be AI powered within five years and machines may actually even be doing your job. Artificial intelligence is being infused into applications, infrastructure, equipment, and virtually every aspect of our lives. AI is proving to be extremely helpful at things like controlling vehicles, speeding up medical diagnoses, processing language, advancing science, and generally raising the stakes on what it means to apply technology for business advantage. But business value realization has been a challenge for most organizations due to lack of skills, complexity of programming models, immature technology integration, sizable upfront investments, ethical concerns, and lack of business alignment. Mastering AI technology will not be a requirement for success in our view. However, figuring out how and where to apply AI to your business will be crucial. That means understanding the business case, picking the right technology partner, experimenting in bite-sized chunks, and quickly identifying winners to double down on from an investment standpoint. Hello and welcome to this week's Wiki-bond CUBE Insights powered by ETR. In this breaking analysis, we update you on the state of AI and what it means for the competition. And to do so, we invite into our studios Andy Thurai of Constellation Research. Andy covers AI deeply. He knows the players, he knows the pitfalls of AI investment, and he's a collaborator. Andy, great to have you on the program. Thanks for coming into our CUBE studios. >> Thanks for having me on. >> You're very welcome. Okay, let's set the table with a premise and a series of assertions we want to test with Andy. I'm going to lay 'em out. And then Andy, I'd love for you to comment. So, first of all, according to McKinsey, AI adoption has more than doubled since 2017, but only 10% of organizations report seeing significant ROI. That's a BCG and MIT study. And part of that challenge of AI is it requires data, is requires good data, data proficiency, which is not trivial, as you know. Firms that can master both data and AI, we believe are going to have a competitive advantage this decade. Hyperscalers, as we show you dominate AI and ML. We'll show you some data on that. And having said that, there's plenty of room for specialists. They need to partner with the cloud vendors for go to market productivity. And finally, organizations increasingly have to put data and AI at the center of their enterprises. And to do that, most are going to rely on vendor R&D to leverage AI and ML. In other words, Andy, they're going to buy it and apply it as opposed to build it. What are your thoughts on that setup and that premise? >> Yeah, I see that a lot happening in the field, right? So first of all, the only 10% of realizing a return on investment. That's so true because we talked about this earlier, the most companies are still in the innovation cycle. So they're trying to innovate and see what they can do to apply. A lot of these times when you look at the solutions, what they come up with or the models they create, the experimentation they do, most times they don't even have a good business case to solve, right? So they just experiment and then they figure it out, "Oh my God, this model is working. Can we do something to solve it?" So it's like you found a hammer and then you're trying to find the needle kind of thing, right? That never works. >> 'Cause it's cool or whatever it is. >> It is, right? So that's why, I always advise, when they come to me and ask me things like, "Hey, what's the right way to do it? What is the secret sauce?" And, we talked about this. The first thing I tell them is, "Find out what is the business case that's having the most amount of problems, that that can be solved using some of the AI use cases," right? Not all of them can be solved. Even after you experiment, do the whole nine yards, spend millions of dollars on that, right? And later on you make it efficient only by saving maybe $50,000 for the company or a $100,000 for the company, is it really even worth the experiment, right? So you got to start with the saying that, you know, where's the base for this happening? Where's the need? What's a business use case? It doesn't have to be about cost efficient and saving money in the existing processes. It could be a new thing. You want to bring in a new revenue stream, but figure out what is a business use case, how much money potentially I can make off of that. The same way that start-ups go after. Right? >> Yeah. Pretty straightforward. All right, let's take a look at where ML and AI fit relative to the other hot sectors of the ETR dataset. This XY graph shows net score spending velocity in the vertical axis and presence in the survey, they call it sector perversion for the October survey, the January survey's in the field. Then that squiggly line on ML/AI represents the progression. Since the January 21 survey, you can see the downward trajectory. And we position ML and AI relative to the other big four hot sectors or big three, including, ML/AI is four. Containers, cloud and RPA. These have consistently performed above that magic 40% red dotted line for most of the past two years. Anything above 40%, we think is highly elevated. And we've just included analytics and big data for context and relevant adjacentness, if you will. Now note that green arrow moving toward, you know, the 40% mark on ML/AI. I got a glimpse of the January survey, which is in the field. It's got more than a thousand responses already, and it's trending up for the current survey. So Andy, what do you make of this downward trajectory over the past seven quarters and the presumed uptick in the coming months? >> So one of the things you have to keep in mind is when the pandemic happened, it's about survival mode, right? So when somebody's in a survival mode, what happens, the luxury and the innovations get cut. That's what happens. And this is exactly what happened in the situation. So as you can see in the last seven quarters, which is almost dating back close to pandemic, everybody was trying to keep their operations alive, especially digital operations. How do I keep the lights on? That's the most important thing for them. So while the numbers spent on AI, ML is less overall, I still think the AI ML to spend to sort of like a employee experience or the IT ops, AI ops, ML ops, as we talked about, some of those areas actually went up. There are companies, we talked about it, Atlassian had a lot of platform issues till the amount of money people are spending on that is exorbitant and simply because they are offering the solution that was not available other way. So there are companies out there, you can take AoPS or incident management for that matter, right? A lot of companies have a digital insurance, they don't know how to properly manage it. How do you find an intern solve it immediately? That's all using AI ML and some of those areas actually growing unbelievable, the companies in that area. >> So this is a really good point. If you can you bring up that chart again, what Andy's saying is a lot of the companies in the ETR taxonomy that are doing things with AI might not necessarily show up in a granular fashion. And I think the other point I would make is, these are still highly elevated numbers. If you put on like storage and servers, they would read way, way down the list. And, look in the pandemic, we had to deal with work from home, we had to re-architect the network, we had to worry about security. So those are really good points that you made there. Let's, unpack this a little bit and look at the ML AI sector and the ETR data and specifically at the players and get Andy to comment on this. This chart here shows the same x y dimensions, and it just notes some of the players that are specifically have services and products that people spend money on, that CIOs and IT buyers can comment on. So the table insert shows how the companies are plotted, it's net score, and then the ends in the survey. And Andy, the hyperscalers are dominant, as you can see. You see Databricks there showing strong as a specialist, and then you got to pack a six or seven in there. And then Oracle and IBM, kind of the big whales of yester year are in the mix. And to your point, companies like Salesforce that you mentioned to me offline aren't in that mix, but they do a lot in AI. But what are your takeaways from that data? >> If you could put the slide back on please. I want to make quick comments on a couple of those. So the first one is, it's surprising other hyperscalers, right? As you and I talked about this earlier, AWS is more about logo blocks. We discussed that, right? >> Like what? Like a SageMaker as an example. >> We'll give you all the components what do you need. Whether it's MLOps component or whether it's, CodeWhisperer that we talked about, or a oral platform or data or data, whatever you want. They'll give you the blocks and then you'll build things on top of it, right? But Google took a different way. Matter of fact, if we did those numbers a few years ago, Google would've been number one because they did a lot of work with their acquisition of DeepMind and other things. They're way ahead of the pack when it comes to AI for longest time. Now, I think Microsoft's move of partnering and taking a huge competitor out would open the eyes is unbelievable. You saw that everybody is talking about chat GPI, right? And the open AI tool and ChatGPT rather. Remember as Warren Buffet is saying that, when my laundry lady comes and talk to me about stock market, it's heated up. So that's how it's heated up. Everybody's using ChatGPT. What that means is at the end of the day is they're creating, it's still in beta, keep in mind. It's not fully... >> Can you play with it a little bit? >> I have a little bit. >> I have, but it's good and it's not good. You know what I mean? >> Look, so at the end of the day, you take the massive text of all the available text in the world today, mass them all together. And then you ask a question, it's going to basically search through that and figure it out and answer that back. Yes, it's good. But again, as we discussed, if there's no business use case of what problem you're going to solve. This is building hype. But then eventually they'll figure out, for example, all your chats, online chats, could be aided by your AI chat bots, which is already there, which is not there at that level. This could build help that, right? Or the other thing we talked about is one of the areas where I'm more concerned about is that it is able to produce equal enough original text at the level that humans can produce, for example, ChatGPT or the equal enough, the large language transformer can help you write stories as of Shakespeare wrote it. Pretty close to it. It'll learn from that. So when it comes down to it, talk about creating messages, articles, blogs, especially during political seasons, not necessarily just in US, but anywhere for that matter. If people are able to produce at the emission speed and throw it at the consumers and confuse them, the elections can be won, the governments can be toppled. >> Because to your point about chatbots is chatbots have obviously, reduced the number of bodies that you need to support chat. But they haven't solved the problem of serving consumers. Most of the chat bots are conditioned response, which of the following best describes your problem? >> The current chatbot. >> Yeah. Hey, did we solve your problem? No. Is the answer. So that has some real potential. But if you could bring up that slide again, Ken, I mean you've got the hyperscalers that are dominant. You talked about Google and Microsoft is ubiquitous, they seem to be dominant in every ETR category. But then you have these other specialists. How do those guys compete? And maybe you could even, cite some of the guys that you know, how do they compete with the hyperscalers? What's the key there for like a C3 ai or some of the others that are on there? >> So I've spoken with at least two of the CEOs of the smaller companies that you have on the list. One of the things they're worried about is that if they continue to operate independently without being part of hyperscaler, either the hyperscalers will develop something to compete against them full scale, or they'll become irrelevant. Because at the end of the day, look, cloud is dominant. Not many companies are going to do like AI modeling and training and deployment the whole nine yards by independent by themselves. They're going to depend on one of the clouds, right? So if they're already going to be in the cloud, by taking them out to come to you, it's going to be extremely difficult issue to solve. So all these companies are going and saying, "You know what? We need to be in hyperscalers." For example, you could have looked at DataRobot recently, they made announcements, Google and AWS, and they are all over the place. So you need to go where the customers are. Right? >> All right, before we go on, I want to share some other data from ETR and why people adopt AI and get your feedback. So the data historically shows that feature breadth and technical capabilities were the main decision points for AI adoption, historically. What says to me that it's too much focus on technology. In your view, is that changing? Does it have to change? Will it change? >> Yes. Simple answer is yes. So here's the thing. The data you're speaking from is from previous years. >> Yes >> I can guarantee you, if you look at the latest data that's coming in now, those two will be a secondary and tertiary points. The number one would be about ROI. And how do I achieve? I've spent ton of money on all of my experiments. This is the same thing theme I'm seeing across when talking to everybody who's spending money on AI. I've spent so much money on it. When can I get it live in production? How much, how can I quickly get it? Because you know, the board is breathing down their neck. You already spend this much money. Show me something that's valuable. So the ROI is going to become, take it from me, I'm predicting this for 2023, that's going to become number one. >> Yeah, and if people focus on it, they'll figure it out. Okay. Let's take a look at some of the top players that won, some of the names we just looked at and double click on that and break down their spending profile. So the chart here shows the net score, how net score is calculated. So pay attention to the second set of bars that Databricks, who was pretty prominent on the previous chart. And we've annotated the colors. The lime green is, we're bringing the platform in new. The forest green is, we're going to spend 6% or more relative to last year. And the gray is flat spending. The pinkish is our spending's going to be down on AI and ML, 6% or worse. And the red is churn. So you don't want big red. You subtract the reds from the greens and you get net score, which is shown by those blue dots that you see there. So AWS has the highest net score and very little churn. I mean, single low single digit churn. But notably, you see Databricks and DataRobot are next in line within Microsoft and Google also, they've got very low churn. Andy, what are your thoughts on this data? >> So a couple of things that stands out to me. Most of them are in line with my conversation with customers. Couple of them stood out to me on how bad IBM Watson is doing. >> Yeah, bring that back up if you would. Let's take a look at that. IBM Watson is the far right and the red, that bright red is churning and again, you want low red here. Why do you think that is? >> Well, so look, IBM has been in the forefront of innovating things for many, many years now, right? And over the course of years we talked about this, they moved from a product innovation centric company into more of a services company. And over the years they were making, as at one point, you know that they were making about majority of that money from services. Now things have changed Arvind has taken over, he came from research. So he's doing a great job of trying to reinvent themselves as a company. But it's going to have a long way to catch up. IBM Watson, if you think about it, that played what, jeopardy and chess years ago, like 15 years ago? >> It was jaw dropping when you first saw it. And then they weren't able to commercialize that. >> Yeah. >> And you're making a good point. When Gerstner took over IBM at the time, John Akers wanted to split the company up. He wanted to have a database company, he wanted to have a storage company. Because that's where the industry trend was, Gerstner said no, he came from AMEX, right? He came from American Express. He said, "No, we're going to have a single throat to choke for the customer." They bought PWC for relatively short money. I think it was $15 billion, completely transformed and I would argue saved IBM. But the trade off was, it sort of took them out of product leadership. And so from Gerstner to Palmisano to Remedi, it was really a services led company. And I think Arvind is really bringing it back to a product company with strong consulting. I mean, that's one of the pillars. And so I think that's, they've got a strong story in data and AI. They just got to sort of bring it together and better. Bring that chart up one more time. I want to, the other point is Oracle, Oracle sort of has the dominant lock-in for mission critical database and they're sort of applying AI there. But to your point, they're really not an AI company in the sense that they're taking unstructured data and doing sort of new things. It's really about how to make Oracle better, right? >> Well, you got to remember, Oracle is about database for the structure data. So in yesterday's world, they were dominant database. But you know, if you are to start storing like videos and texts and audio and other things, and then start doing search of vector search and all that, Oracle is not necessarily the database company of choice. And they're strongest thing being apps and building AI into the apps? They are kind of surviving in that area. But again, I wouldn't name them as an AI company, right? But the other thing that that surprised me in that list, what you showed me is yes, AWS is number one. >> Bring that back up if you would, Ken. >> AWS is number one as you, it should be. But what what actually caught me by surprise is how DataRobot is holding, you know? I mean, look at that. The either net new addition and or expansion, DataRobot seem to be doing equally well, even better than Microsoft and Google. That surprises me. >> DataRobot's, and again, this is a function of spending momentum. So remember from the previous chart that Microsoft and Google, much, much larger than DataRobot. DataRobot more niche. But with spending velocity and has always had strong spending velocity, despite some of the recent challenges, organizational challenges. And then you see these other specialists, H2O.ai, Anaconda, dataiku, little bit of red showing there C3.ai. But these again, to stress are the sort of specialists other than obviously the hyperscalers. These are the specialists in AI. All right, so we hit the bigger names in the sector. Now let's take a look at the emerging technology companies. And one of the gems of the ETR dataset is the emerging technology survey. It's called ETS. They used to just do it like twice a year. It's now run four times a year. I just discovered it kind of mid-2022. And it's exclusively focused on private companies that are potential disruptors, they might be M&A candidates and if they've raised enough money, they could be acquirers of companies as well. So Databricks would be an example. They've made a number of investments in companies. SNEAK would be another good example. Companies that are private, but they're buyers, they hope to go IPO at some point in time. So this chart here, shows the emerging companies in the ML AI sector of the ETR dataset. So the dimensions of this are similar, they're net sentiment on the Y axis and mind share on the X axis. Basically, the ETS study measures awareness on the x axis and intent to do something with, evaluate or implement or not, on that vertical axis. So it's like net score on the vertical where negatives are subtracted from the positives. And again, mind share is vendor awareness. That's the horizontal axis. Now that inserted table shows net sentiment and the ends in the survey, which informs the position of the dots. And you'll notice we're plotting TensorFlow as well. We know that's not a company, but it's there for reference as open source tooling is an option for customers. And ETR sometimes like to show that as a reference point. Now we've also drawn a line for Databricks to show how relatively dominant they've become in the past 10 ETS surveys and sort of mind share going back to late 2018. And you can see a dozen or so other emerging tech vendors. So Andy, I want you to share your thoughts on these players, who were the ones to watch, name some names. We'll bring that data back up as you as you comment. >> So Databricks, as you said, remember we talked about how Oracle is not necessarily the database of the choice, you know? So Databricks is kind of trying to solve some of the issue for AI/ML workloads, right? And the problem is also there is no one company that could solve all of the problems. For example, if you look at the names in here, some of them are database names, some of them are platform names, some of them are like MLOps companies like, DataRobot (indistinct) and others. And some of them are like future based companies like, you know, the Techton and stuff. >> So it's a mix of those sub sectors? >> It's a mix of those companies. >> We'll talk to ETR about that. They'd be interested in your input on how to make this more granular and these sub-sectors. You got Hugging Face in here, >> Which is NLP, yeah. >> Okay. So your take, are these companies going to get acquired? Are they going to go IPO? Are they going to merge? >> Well, most of them going to get acquired. My prediction would be most of them will get acquired because look, at the end of the day, hyperscalers need these capabilities, right? So they're going to either create their own, AWS is very good at doing that. They have done a lot of those things. But the other ones, like for particularly Azure, they're going to look at it and saying that, "You know what, it's going to take time for me to build this. Why don't I just go and buy you?" Right? Or or even the smaller players like Oracle or IBM Cloud, this will exist. They might even take a look at them, right? So at the end of the day, a lot of these companies are going to get acquired or merged with others. >> Yeah. All right, let's wrap with some final thoughts. I'm going to make some comments Andy, and then ask you to dig in here. Look, despite the challenge of leveraging AI, you know, Ken, if you could bring up the next chart. We're not repeating, we're not predicting the AI winter of the 1990s. Machine intelligence. It's a superpower that's going to permeate every aspect of the technology industry. AI and data strategies have to be connected. Leveraging first party data is going to increase AI competitiveness and shorten time to value. Andy, I'd love your thoughts on that. I know you've got some thoughts on governance and AI ethics. You know, we talked about ChatGBT, Deepfakes, help us unpack all these trends. >> So there's so much information packed up there, right? The AI and data strategy, that's very, very, very important. If you don't have a proper data, people don't realize that AI is, your AI is the morals that you built on, it's predominantly based on the data what you have. It's not, AI cannot predict something that's going to happen without knowing what it is. It need to be trained, it need to understand what is it you're talking about. So 99% of the time you got to have a good data for you to train. So this where I mentioned to you, the problem is a lot of these companies can't afford to collect the real world data because it takes too long, it's too expensive. So a lot of these companies are trying to do the synthetic data way. It has its own set of issues because you can't use all... >> What's that synthetic data? Explain that. >> Synthetic data is basically not a real world data, but it's a created or simulated data equal and based on real data. It looks, feels, smells, taste like a real data, but it's not exactly real data, right? This is particularly useful in the financial and healthcare industry for world. So you don't have to, at the end of the day, if you have real data about your and my medical history data, if you redact it, you can still reverse this. It's fairly easy, right? >> Yeah, yeah. >> So by creating a synthetic data, there is no correlation between the real data and the synthetic data. >> So that's part of AI ethics and privacy and, okay. >> So the synthetic data, the issue with that is that when you're trying to commingle that with that, you can't create models based on just on synthetic data because synthetic data, as I said is artificial data. So basically you're creating artificial models, so you got to blend in properly that that blend is the problem. And you know how much of real data, how much of synthetic data you could use. You got to use judgment between efficiency cost and the time duration stuff. So that's one-- >> And risk >> And the risk involved with that. And the secondary issues which we talked about is that when you're creating, okay, you take a business use case, okay, you think about investing things, you build the whole thing out and you're trying to put it out into the market. Most companies that I talk to don't have a proper governance in place. They don't have ethics standards in place. They don't worry about the biases in data, they just go on trying to solve a business case >> It's wild west. >> 'Cause that's what they start. It's a wild west! And then at the end of the day when they are close to some legal litigation action or something or something else happens and that's when the Oh Shit! moments happens, right? And then they come in and say, "You know what, how do I fix this?" The governance, security and all of those things, ethics bias, data bias, de-biasing, none of them can be an afterthought. It got to start with the, from the get-go. So you got to start at the beginning saying that, "You know what, I'm going to do all of those AI programs, but before we get into this, we got to set some framework for doing all these things properly." Right? And then the-- >> Yeah. So let's go back to the key points. I want to bring up the cloud again. Because you got to get cloud right. Getting that right matters in AI to the points that you were making earlier. You can't just be out on an island and hyperscalers, they're going to obviously continue to do well. They get more and more data's going into the cloud and they have the native tools. To your point, in the case of AWS, Microsoft's obviously ubiquitous. Google's got great capabilities here. They've got integrated ecosystems partners that are going to continue to strengthen through the decade. What are your thoughts here? >> So a couple of things. One is the last mile ML or last mile AI that nobody's talking about. So that need to be attended to. There are lot of players in the market that coming up, when I talk about last mile, I'm talking about after you're done with the experimentation of the model, how fast and quickly and efficiently can you get it to production? So that's production being-- >> Compressing that time is going to put dollars in your pocket. >> Exactly. Right. >> So once, >> If you got it right. >> If you get it right, of course. So there are, there are a couple of issues with that. Once you figure out that model is working, that's perfect. People don't realize, the moment you decide that moment when the decision is made, it's like a new car. After you purchase the value decreases on a minute basis. Same thing with the models. Once the model is created, you need to be in production right away because it starts losing it value on a seconds minute basis. So issue number one, how fast can I get it over there? So your deployment, you are inferencing efficiently at the edge locations, your optimization, your security, all of this is at issue. But you know what is more important than that in the last mile? You keep the model up, you continue to work on, again, going back to the car analogy, at one point you got to figure out your car is costing more than to operate. So you got to get a new car, right? And that's the same thing with the models as well. If your model has reached a stage, it is actually a potential risk for your operation. To give you an idea, if Uber has a model, the first time when you get a car from going from point A to B cost you $60. If the model decayed the next time I might give you a $40 rate, I would take it definitely. But it's lost for the company. The business risk associated with operating on a bad model, you should realize it immediately, pull the model out, retrain it, redeploy it. That's is key. >> And that's got to be huge in security model recency and security to the extent that you can get real time is big. I mean you, you see Palo Alto, CrowdStrike, a lot of other security companies are injecting AI. Again, they won't show up in the ETR ML/AI taxonomy per se as a pure play. But ServiceNow is another company that you have have mentioned to me, offline. AI is just getting embedded everywhere. >> Yep. >> And then I'm glad you brought up, kind of real-time inferencing 'cause a lot of the modeling, if we can go back to the last point that we're going to make, a lot of the AI today is modeling done in the cloud. The last point we wanted to make here, I'd love to get your thoughts on this, is real-time AI inferencing for instance at the edge is going to become increasingly important for us. It's going to usher in new economics, new types of silicon, particularly arm-based. We've covered that a lot on "Breaking Analysis", new tooling, new companies and that could disrupt the sort of cloud model if new economics emerge. 'Cause cloud obviously very centralized, they're trying to decentralize it. But over the course of this decade we could see some real disruption there. Andy, give us your final thoughts on that. >> Yes and no. I mean at the end of the day, cloud is kind of centralized now, but a lot of this companies including, AWS is kind of trying to decentralize that by putting their own sub-centers and edge locations. >> Local zones, outposts. >> Yeah, exactly. Particularly the outpost concept. And if it can even become like a micro center and stuff, it won't go to the localized level of, I go to a single IOT level. But again, the cloud extends itself to that level. So if there is an opportunity need for it, the hyperscalers will figure out a way to fit that model. So I wouldn't too much worry about that, about deployment and where to have it and what to do with that. But you know, figure out the right business use case, get the right data, get the ethics and governance place and make sure they get it to production and make sure you pull the model out when it's not operating well. >> Excellent advice. Andy, I got to thank you for coming into the studio today, helping us with this "Breaking Analysis" segment. Outstanding collaboration and insights and input in today's episode. Hope we can do more. >> Thank you. Thanks for having me. I appreciate it. >> You're very welcome. All right. I want to thank Alex Marson who's on production and manages the podcast. Ken Schiffman as well. Kristen Martin and Cheryl Knight helped get the word out on social media and our newsletters. And Rob Hoof is our editor-in-chief over at Silicon Angle. He does some great editing for us. Thank you all. Remember all these episodes are available as podcast. Wherever you listen, all you got to do is search "Breaking Analysis" podcast. I publish each week on wikibon.com and silicon angle.com or you can email me at david.vellante@siliconangle.com to get in touch, or DM me at dvellante or comment on our LinkedIn posts. Please check out ETR.AI for the best survey data and the enterprise tech business, Constellation Research. Andy publishes there some awesome information on AI and data. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching everybody and we'll see you next time on "Breaking Analysis". (gentle closing tune plays)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCube and ETR, this is Breaking Analysis with Dave Vellante. >> When a piece of digital art sells for $69.3 million, more than has ever been paid for works, by Gauguin or Salvador Dali, making it created the third most expensive living artists in the world. One can't help but take notice and ask, what is going on? The latest craze around NFTs may feel a bit bubblicious, but it's yet another sign, that the digital age is now fully upon us. Hello and welcome to this week's Wikibon's CUBE insights, powered by ETR. In this Breaking Analysis, we want to take a look at some of the trends, that may be difficult for observers and investors to understand, but we think offer significant insights to the future and possibly some opportunities for young investors many of whom are fans of this program. And how the trends may relate to enterprise tech. Okay, so this guy Beeple is now the hottest artist on the planet. That's his Twitter profile. That picture on the inset. His name is Mike Winkelmann. He is actually a normal looking dude, but that's the picture he chose for his Twitter. This collage reminds me of the Million Dollar Homepage. You may already know the story, but many of you may not. Back in 2005 a college kid from England named Alex Tew, T-E-W created The Million Dollar Homepage to fund his education. And his idea was to create a website with a million pixels, and sell ads at a dollar for each pixel. Guess how much money he raised. A million bucks, right? No, wrong. He raised $1,037,100. How so you ask? Well, he auctioned off the last 1000 pixels on eBay, which fetched an additional $38,000. Crazy, right? Well, maybe not. Pretty creative in a way, way early sign of things to come. Now, I'm not going to go deep into NFTs, and explain the justification behind them. There's a lot of material that's been published that can do justice to the topic better than I can. But here are the basics, NFTs stands for Non-Fungible Tokens. They are digital representations of assets that exist in a blockchain. Now, each token as a unique and immutable identifier, and it uses cryptography to ensure its authenticity. NFTs by the name, they're not fungible. So, unlike Bitcoin, Ethereum or other cryptocurrencies, which can be traded on a like-for-like basis, in other words, if you and I each own one bitcoin we know exactly how much each of our bitcoins is worth at any point of time. Non-Fungible Tokens each have their own unique values. So, they're not comparable on a like-to-like basis. But what's the point of this? Well, NFTs can be applied to any property, identities tweets, videos, we're seeing collectables, digital art, pretty much anything. And it's really. The use cases are unlimited. And NFTs can streamline transactions, and they can be bought and sold very efficiently without the need for a trusted third party involved. Now, the other benefit is the probability of fraud, is greatly reduced. So where do NFTs fit as an asset class? Well, they're definitely a new type of asset. And again, I'm not going to try to justify their existence, but I want to talk about the choices, that investors have in the market today. The other day, I was on a call with Jay Po. He is a VC and a Principal at a company called Stage 2 Capital. He's a former Bessemer VC and one of the sharper investors around. And he was talking about the choices that investors have and he gave a nice example that I want to share with you and try to apply here. Now, as an investor, you have alternatives, of course we're showing here a few with their year to date charts. Now, as an example, you can buy Amazon stock. Now, if you bought just about exactly a year ago you did really well, you probably saw around an 80% return or more. But if you want to jump in today, your mindset might be, hmm, well, okay. Amazon, they're going to be around for a long time, so it's kind of low risk and I like the stock, but you're probably going to get, well let's say, maybe a 10% annual return over the longterm, 15% or maybe less maybe single digits, but, maybe more than that but it's unlikely that any kind of reasonable timeframe within any reasonable timeframe you're going to get a 10X return. In order to get that type of return on invested capital, Amazon would have to become a $16 trillion valued company. So, you sit there, you asked yourself, what's the probability that Amazon goes out of business? Well, that's pretty low, right? And what are the chances it becomes a $16 trillion company over the next several years? Well, it's probably more likely that it continues to grow at that more stable rate that I talked about. Okay, now let's talk about Snowflake. Now, as you know, we've covered the company quite extensively. We watched this company grow from an early stage startup and then saw its valuation increase steadily as a private company, but you know, even early last year it was valued around $12 billion, I think in February, and as late as mid September right before the IPO news hit that Marc Benioff and Warren Buffett were going to put in $250 million each at the IPO or just after the IPO and it was projected that Snowflake's valuation could go over $20 billion at that point. And on day one after the IPO Snowflake, closed worth more than $50 billion, the stock opened at 120, but unless you knew a guy, you had to hold your nose and buy on day one. And you know, maybe got it at 240, maybe you got it at 250, you might have got it at higher and at the time you might recall, I said, You're likely going to get a better price than on day one, which is usually the case with most IPOs, stock today's around 230. But you look at Snowflake today and if you want to buy in, you look at it and say, Okay, well I like the company, it's probably still overvalued, but I can see the company's value growing substantially over the next several years, maybe doubling in the near to midterm [mumbles] hit more than a hundred billion dollar valuation back as recently as December, so that's certainly feasible. The company is not likely to flame out because it's highly valued, I have to probably be patient for a couple of years. But you know, let's say I liked the management, I liked the company, maybe the company gets into the $200 billion range over time and I can make a decent return, but to get a 10X return on Snowflake you have to get to a valuation of over a half a trillion. Now, to get there, if it gets there it's going to become one of the next great software companies of our time. And you know, frankly if it gets there I think it's going to go to a trillion. So, if that's what your bet is then you know, you would be happy with that of course. But what's the likelihood? As an investor you have to evaluate that, what's the probability? So, it's a lower risk investment in Snowflake but maybe more likely that Snowflake, you know, they run into competition or the market shifts, maybe they get into the $200 billion range, but it really has to transform the industry execute for you to get in to that 10 bagger territory. Okay, now let's look at a different asset that is cryptocurrency called Compound, way more risky. But Compound is a decentralized protocol that allows you to lend and borrow cryptocurrencies. Now, I'm not saying go out and buy compound but just as a thought exercise is it's got an asset here with a lower valuation, probably much higher upside, but much higher risk. But so for Compound to get to 10X return it's got to get to $20 billion valuation. Now, maybe compound isn't the right asset for your cup of tea, but there are many cryptos that have made it that far and if you do your research and your homework you could find a project that's much, much earlier stage that yes, is higher risk but has a much higher upside that you can participate in. So, this is how investors, all investors really look at their choices and make decisions. And the more sophisticated investors, they're going to use detailed metrics and analyze things like MOIC, Multiple on Invested Capital and IRR, which is Internal Rate of Return, do TAM analysis, Total Available Market. They're going to look at competition. They're going to look at detailed company models in ARR and Churn rates and so forth. But one of the things we really want to talk about today and we brought this up at the snowflake IPO is if you were Buffet or Benioff and you had to, you know, quarter of a dollars to put in you could get an almost guaranteed return with your late in the game, but pre IPO money or a look if you were Mike Speiser or one of the earlier VCs or even someone like Jeremy Burton who was part of the inside network you could get stock or options, much cheaper. You get a 5X, 10X, 50X or even North of a hundred X return like the early VCs who took a big risk. But chances are, you're not one of these in one of these categories. So how can you as a little guy participate in something big and you might remember at the time of the snowflake IPO we showed you this picture, who are these people, Olaf Carlson-Wee, Chris Dixon, this girl Sono. And of course Tim Berners-Lee, you know, that these are some of the folks that inspired me personally to pay attention to crypto. And I want to share the premise that caught my attention. It was this. Think about the early days of the internet. If you saw what Berners-Lee was working on or Linus Torvalds, in one to invest in the internet, you really couldn't. I mean, you couldn't invest in Linux or TCP/IP or HTTP. Suppose you could have invested in Cisco after its IPO that would have paid off pretty big time, for sure. You know, he could have waited for the Netscape IPO but the core infrastructure of the internet was fundamentally not directly a candidate for investment by you or really, you know, by anybody. And Satya Nadella said the other day we have reached maximum centralization. The main protocols of the internet were largely funded by the government and they've been co-opted by the giants. But with crypto, you actually can invest in core infrastructure technologies that are building out a decentralized internet, a new internet, you know call it web three Datto. It's a big part of the investment thesis behind what Carlson-wee is doing. And Andreessen Horowitz they have two crypto funds. They've raised more than $800 million to invest and you should read the firm's crypto investment thesis and maybe even take their crypto startup classes and some great content there. Now, one of the people that I haven't mentioned in this picture is Camila Russo. She's a journalist she's turned into hardcore crypto author is doing great job explaining the white hot defining space or decentralized finance. If you're just at read her work and educate yourself and learn more about the future and be happy perhaps you'll find some 10X or even hundred X opportunities. So look, there's so much innovation going around going on around blockchain and crypto. I mean, you could listen to Warren Buffet and Janet Yellen who implied this is all going to end badly. But while look, these individuals they're smart people. I don't think they would be my go-to source on understanding the potential of the technology and the future of what it could bring. Now, we've talked earlier at the, at the start here about NFTs. DeFi is one of the most interesting and disruptive trends to FinTech, names like Celsius, Nexo, BlockFi. BlockFi let's actually the average person participate in liquidity pools is actually quite interesting. Crypto is going mainstream Tesla, micro strategy putting Bitcoin on their balance sheets. We have a 2017 Jamie diamond. He called Bitcoin a tulip bulb like fraud, yet just the other day JPM announced a structured investment vehicle to give its clients a basket of stocks that have exposure to crypto, PayPal allowing customers to buy, sell, and Hodl crypto. You can trade crypto on Robin Hood. Central banks are talking about launching digital currencies. I talked about the Fedcoin for a number of years and why not? Coinbase is doing an IPO will give it a value of over a hundred billion. Wow, that sounds frothy, but still big names like Mark Cuban and Jamaat palliate Patiala have been active in crypto for a while. Gronk is getting into NFTs. So it goes to have a little bit of that bubble feel to it. But look often when tech bubbles burst they shake out the pretenders but if there's real tech involved, some contenders emerge. So, and they often do so as dominant players. And I really believe that the innovation around crypto is going to be sustained. Now, there is a new web being built out. So if you want to participate, you got to do some research figure out things like how PolkaWorks, make a call on whether you think avalanche is an Ethereum killer dig in and find out about new projects and form a thesis. And you may, as a small player be able to find some big winners, but look you do have to be careful. There was a lot of fraud during the ICO. Craze is your risk. So understand the Tokenomics and maybe as importantly the Pump-a-nomics, because they certainly loom as dangers. This is not for the faint of heart but because I believe it involves real tech. I like it way better than Reddit stocks like GameStop for example, now not to diss Reddit. There's some good information on Reddit. If you're patient, you can find it. And there's lots of good information flowing on Discord. There's people flocking to Telegram as a hedge against big tech. Maybe there's all sounds crazy. And you know what, if you've grown up in a privileged household and you have a US Education you know, maybe it is nuts and a bit too risky for you. But if you're one of the many people who haven't been able to participate in these elite circles there are things going on, especially outside of the US that are democratizing investment opportunities. And I think that's pretty cool. You just got to be careful. So, this is a bit off topic from our typical focus and ETR survey analysis. So let's bring this back to the enterprise because there's a lot going on there as well with blockchain. Now let me first share some quotes on blockchain from a few ETR Venn Roundtables. First comment is from a CIO to diversified holdings company who says correctly, blockchain will hit the finance industry first but there are use cases in healthcare given the privacy and security concerns and logistics to ensure provenance and reduce fraud. And to that individual's point about finance. This is from the CTO of a major financial platform. We're really taking a look at payments. Yeah. Do you think traditional banks are going to lose control of the payment systems? Well, not without a fight, I guess, but look there's some real disruption possibilities here. And just last comment from a government CIO says, we're going to wait until the big platform players they get into their software. And so that is happening Oracle, IBM, VMware, Microsoft, AWS Cisco, they all have blockchain initiatives going on, now by the way, none of these tech companies wants to talk about crypto. They try to distance themselves from that topic which is understandable, I guess, but I'll tell you there's far more innovation going on in crypto than there is in enterprise tech companies at this point. But I predict that the crypto innovations will absolutely be seeping into enterprise tech players over time. But for now the cloud players, they want to support developers who are building out this new internet. The database is certainly a logical place to support a mutable transactions which allow people to do business one-on-one and have total confidence that the source hasn't been hacked or changed and infrastructure to support smart contracts. We've seen that. The use cases in the enterprise are endless asset tracking data access, food, tracking, maintenance, KYC or know your customer, there's applications in different industries, telecoms, oil and gas on and on and on. So look, think of NFTs as a signal crypto craziness is a signal. It's a signal as to how IT in other parts of companies and their data might be organized, managed and tracked and protected, and very importantly, valued. Look today. There's a lot of memes. Crypto kitties, art, of course money as well. Money is the killer app for blockchain, but in the future the underlying technology of blockchain and the many percolating innovations around it could become I think will become a fundamental component of a new digital economy. So get on board, do some research and learn for yourself. Okay, that's it for today. Remember all of these episodes they're available as podcasts, wherever you listen. I publish weekly on wikibon.com and siliconangle.com. Please feel free to comment on my LinkedIn post or tweet me @dvellante or email me at david.vellante@siliconangle.com. Don't forget to check out etr.plus for all the survey action and data science. This is Dave Vellante for theCUBE Insights powered by ETR. Be well, be careful out there in crypto land. Thanks for watching. We'll see you next time. (soft music)

>> Of Silicon Valley. It's the Cube, covering Comcast innovation day brought to you by Comcast. >> Hey, welcome back everybody, Jeff Frick here with the cube. We're at the Comcast Silicon Valley Innovation Center. It's a really cool space right off of Buffet. And they're doing a lot of new technologies here. It's not the only Innovation Center in the country but it's one here in our backyard. And we're excited to be here. Comcast is having a special event talking about really CX, customer experience. They brought together a bunch of super smart people invited us to stop by and we're going to share some of that with you. And we're excited for our very first guest he's Preston Smalley, the VP of product management of Comcast, Preston great to meet you. >> Good to meet you too, Jeff. >> So really cool event today. We talked about a lot of different things about customer experience and really all the applications that are on the front edge that define that customer experience. And you guys are doing a ton of innovation there. >> No, we are I mean I think it's, we were talking just this morning about all the different ways that we're trying to meet customers, where they're at and building products really around those needs, right? >> Yes, so I think the one of the ones that doesn't get enough credit not enough conversation is the voice. And I've got the voice remote at home. And it's really fascinating, especially in the context of there's so many places that what I'm looking for might be and I don't really know what the licensing and arrangements are that you guys have set up with Hulu or with Netflix or with HBO or if it's on HBO on demand or HBO live. So to be able to have kind of a single point of reference to just push that button and say, "Stanford football," and have it show up, it's amazing. >> No, it really is and I think you know, the voice remote has been one of those big hits where you know, people always love their TV remote but, you know, a number years back we started exploring, could we put a voice you know, search capability directly into that remote. And I think what's great is people they're really leaning into it. So we're seeing a billion voice commands happening a month, >> Billion? >> A billion, one b. Through the remote and I think it's just become a part of their life. Right? And I think it's everything from the simple to saying NBC into the remote to the more complicated things like Notre Dame football or what's my WiFi password? or whatever the things they might be asking out of their device. >> So curious on the development side was like about features, but what were some of the real hurdles that you guys knew you had to overcome? And what were some of the surprise hurdles that you didn't necessarily anticipate? >> Sure. I mean, I think the ones you knew about were we've got to be able to translate speech to text and you know, there's there's existing infrastructure that allows for that and doing that with high accuracy. But the good news is we actually had a head start in organizing the content. And so we already had dealt with text based searching of all the different TV shows and movies and such. And so we had all that base of knowledge that we could then tap into. We're now at a stage where that kind of covers the basics but we're trying to understand how do you both increase the breadth and depth of the kinds of commands that you will do through the voice remote. And so you mentioned some at the beginning things like being able to search, not just the content that we bring but things like Netflix or Amazon Prime or soon Hulu. And so partnering with those companies, you get all that information in a way that works very well with the voice remote. >> Right and then you even have it bilingual, right? You even have Spanish and English. >> That's right. >> And it can flip it can switch back and forth on the fly. >> That's right, yeah, so we support both those languages, including a combo a mixed mode where in households where you're seeing both Spanish and English be interwoven, it'll actually even work in those contexts. And then recently, we've also introduced Canadian French and so we license our technology to Rogers and video Tron up in Canada. And so we've now introduced that capability as well. >> That's great, So a long time ago we interviewed Domino's and it's when they first introduced app ordering. And at first you think well app ordering but there was all this like second order benefits that Domino's replied in terms of accuracy of the orders and supply chain impact. So I'm curious if there's some, you know, kind of second order benefits that you guys are realizing with voice that maybe you didn't think, you know, what are some of the surprises that have come out of that? >> Well, that's a good, good question. I think in terms of surprises, it's the types of things that people are looking for you now have, you now have the ability to figure out what kinds of things people are interested in which you wouldn't have been able to know in a typical browse setting. So for example, we support now over 150 apps on X1 as far as third party streaming apps but we know the ones that we don't support because people are saying and into the remote, whereas we wouldn't have got that information prior. >> Right. >> And so now we can actually go and try and meet those needs. >> Now ,it's interesting. You talk about meeting people where they are and you know, one of the things that's happening today is people have all these options, right? They can get it through their Comcast service if they're doing that but you know they may want to have a direct relationship with Hulu is one that you picked out or with Netflix or this historical ones, you guys now are enabling an option for those people that choose to directly engage with those content providers and just use Comcast, as an internet provider. Tell us a little bit about what you guys are doing there. >> Yeah, sure. So obviously, we've had strength in the, in the TV space, and being able to organize and aggregate all that streaming content with your traditional television content. What we've done now is take that investment in X1 and pivot it into a new product this year, we call Xfinity flex. And what that product does is it's a streaming device that should be comfortable for an internet only subscriber that they hook up to their TV. It's 4K, HDR, wireless. And through that device, they're able to aggregate all of that streaming content in one place. So whether it's app content that they may already have an existing subscription from or it's ad supported internet content or maybe they want to buy some more content from us right? And so we'll bundle and sell those subscriptions directly and include that as well. And we've actually been pretty surprised, you know, you take something like Netflix which is highly penetrated in the United States we're pretty surprised how many people are still signing up new as a Netflix subscriber in our service and so by just making it easy and just one click away we found that people are they're opting to do that. >> Right, I'm sure they're happy to hear that in Los Gatos just down the road >> Exactly. No, they're a great partner and either way we're helping them >> Right, right >> They're trying to reach what they call kind of the Netflix nevers people that maybe just hadn't gotten Netflix prior, right? And so we're helping them with that. >> Well, it's really interesting, you know, kind of the you know, kind of TV versus computer you speeding the TV's kind of your passive experience, you're sitting on the couch and you just kind of watching where the computer was more two way and then there was dual screen kind of activity, but you guys are bringing a lot of the stuff that was only available on your pc or your phone now directly into the Comcast experience, you know whether it's YouTube or whatever. So it really it's kind of blurring those lines. But I want to shift gears a little bit about, you know, kind of the role of the internet in homes today, has now expanded beyond entertainment. It's expanded beyond information and IoT now is entering the home probably the biggest one is nested, connected thermostats and connected door bells and ring and you know, we're seeing videos from people's rings all over the place. You guys are sitting again, right in the middle of that ecosystem. So how does IoT and connected devices and thermostats and refrigerators and doorbells impacted the way you guys think about delivering internet into the home? >> Well, I think it's really been a watershed moment for the company, moving from, if you go years back to bringing internet to the wall and making it available in the home to saying look, we've got to actually really control the coverage of that WiFi in the home and make sure that it reaches all the corners of the home but then also providing the control that people want of the devices in there we know that for power users we're seeing today, 20 connected devices on the home network. And I know my house, I'm up to 50, right? And I think what customers don't have and don't want is an IT person directly in their home. They want it to just work naturally and easily. >> Right. >> And so one measurement of success that I know is how often my mother in law gives me a call saying, "Hey, Preston, yeah, this thing's not working in my house." It's got to be really easy and straightforward. >> Right and then just in terms of just being a backhauler and the internet traffic that you guys are hearing because all those connected device or your kids devices, they all want 4k streaming, they're watching movies, you know, come down and watch TV on the big screen, no, no, no, you know, I'm watching it in the room. How does that kind of change the way you guys think about delivering bandwidth cause 4K is a lot more, go to NAB, you're just going to soon be 8K's and 12K's and all kinds of crazy stuff. So your role in actually just delivering bandwidth has changed significantly over the last over a year. >> Absolutely, I mean, there was a stat on bandwidth that surprised me even just to look at it, which is in, in the last 18 years, Comcast has increased bandwidth 17 times. And it's just every, you know, we just keep increasing that because the demand is there, you know, 4K takes, you know, more than your 1080p then did your SD and the more streaming that's happening, it's just, it's requiring more bandwidth, so we're happy to provide that. You know, we now offer one gig internet across all of our homes, we reached 56 million homes, I think it's the most in the United States as far as one gig availability. And so regardless of how much bandwidth you want to take, we're going to bring that to you. And I think recognizing that we also need that coverage in the home and out of the home through Xfinity WiFi hotspots, just trying to bring that there. But you mentioned kids too, I wanted to build on that which is, you know, I'm a parent and being able to control how and where my kids go in the internet is important. And so, you know, being able to put limits, whether it's bed time limits on their devices or we've recently introduced in our testing app base limits. So you could say they can't use Instagram or they can only use it 30 minutes a day. And so being able to have that kind of control puts you in the driver's seat as the parent of kids in the home. >> Preston, I think you're going to be busy for a little while here at the innovations center. >> We are for sure. >> All right, well, thanks for spending a few minutes we could talk all day but we'll have to leave it there. >> All right, thanks Jeff. >> Thanks a lot. He's Preston, I'm Jeff. You're watching the cube. We're at the Comcast Silicon Valley Innovation Center in Sunnyvale. Thanks for watching, we'll see you next time. (distinct music)

(electronic music) >> Live from Toronto, Canada. It's the Cube. Covering Blockchain Futurist Conference 2018. Brought to you by the Cube. >> Hello, everyone. Welcome back to the Cube coverage here in Toronto, Canada. We're in Ontario to the Untraceable Blockchain Futurist Conference. This is day two of two days of coverage. I'm John Furrier, your host. Our next guest is serial entrepreneur, Chris Harper, the CEO of Jereki and Mapogo Ventures. Welcome. >> And ZippedScript. >> And ZippedScript. >> Yeah, yeah. >> Hey, lot of balls in the air, a lot of irons in the fire. Welcome to the Cube. >> Hey, good to have me, man. I'm excited to be here. This is awesome. >> So before we get into, you're a serial entrepreneur, what are you working on now? Take a quick minute, explain. >> Yeah. >> Where the names came from, what do they mean, what are you doing? >> So, first things first, we'll start with Jereki. Jereki is a Japanese proverb which means to achieve enlightenment through one's own efforts. So Jereki is a shell company and we currently run this company, it's called Chase your Drink. It basically is replacing pop and juice as a mix for any hard liquor. No sugar, no calories, nothing artificial and the kicker, we got 90 vitamins in these to combat your hangover the next day. So if you're not drinking with Chase, you're drinking wrong. (laughs) >> It's a chaser. >> Chaser, exactly. >> Yeah. >> And these are in stores like, it'll be in Sobeys, Farm Boy in Canada, GNC soon. And it's going really well. >> Okay, how 'about the venture firm? >> Yes, so the next company is Mapogo Ventures. Mapogo is actually, it comes from a group of lions in the African Savanna that were only six lions, but they dominated the savanna for their whole life span, which is super rare, and they took down animals like giraffes, rhinos, and became legend. It was a folk legend about these Mapogo lions. So Mapogo is a venture firm. We specialize in food and beverage companies. If you're doing something epic, we want to talk to you. And then we also specialize in blockchain cryptocurrency and anything that's on the forefront of what's going on in the tech space. So if anybody's interested, they think they have a great idea, you can reach out to us wherever you guys put contact information, I don't know. >> We'll put it up there. >> Yeah, yeah, definitely. >> What's the website? >> Mapogoventures.com >> Okay, got it. >> Yeah, Mapogoventures.com. >> And how much are you guys investing? What's the kind of round size you guys do? >> So it totally depends. We almost don't have a limit or a minimum. It's all about the team, the idea, where you're going, and what you need. We'll get you what you need. >> Is it a new firm, are you making business? >> It's a new firm, it's a new firm. So we have two companies that we're looking at right now, but we don't have any companies in the portfolio, we're looking to add. >> Great, awesome. >> Yeah, yeah. >> Well any great ideas, check it out. How about crypto? What's your seeing, what's your thing, what are you seeing on crypto? What kind of deals? Obviously the flight to quality right now is starting to see the ICOs kind of burning out here and there, but the ones that are solid are standing and growing in a build-out mode. >> I mean, the whole space right now, everybody's worried about it, right? If you're an outsider, you're looking at it like it's all down. But one thing I did want to say during this interview was this is a great event. Untraceable, they sent up an incredible event and even if you're not into cryptocurrency, if you're a business person, crypto's only been around for, you know, six, seven years. So everybody in this room did something before crypto. Right? So they're all multi-faceted individuals and if you're not in crypto, if you're scared of crypto, if you're hesitant about crypto, if you don't understand it, you should be here. You should be at these events because it's priceless networking and who knows where you can go. >> Plus, starting companies on a down, on down the bottom of the market-- >> Yeah. >> Is when the best companies get built. >> 1000%, you know. What did Warren Buffet say? Be fearful when others are greedy, be greedy when others are fearful. Looks to me that the market-- >> Yeah. >> Is incredibly fearful. So maybe you should consider being greedy right now. >> For the people that aren't here, what's the vibe of the show? What's your take, what's the hallway conversations like? >> Yeah, I mean, the vibe of the show. This is actually one of the best conferences I've been to. I've been to a few in New York. This one is incredible. Everyone's so friendly. You can come here, don't know anyone. >> Yeah. >> People will say hi to you. They'll introduce themselves to you. Next thing you know, you had an idea, now you have funding. But it's up to you to make this situation a great situation. >> What's interesting is this sector, blockchain and crypto. >> Yeah. >> Attracts alpha entrepreneurs, alpha engineers. >> Okay. >> You mentioned-- >> Mapogo. >> Smart people are in this world. They've done things before, so this is really interesting. >> Yeah, like people always forget that. They see crypto and they get nervous 'cause like I don't know anything about it. Remember guys, this is a new industry. And we're only in, you know, the first couple innings. This is going to be huge. So come, learn, and surround yourself with killers. >> Alright, what's the coolest thing you've seen so far here? >> The coolest thing I've seen so far. You know, I'm going to be completely honest with you. Larry King. I was so happy to see Larry King and it's awesome that a guy like that is supporting the community, you know. >> Yeah. >> Because this is really a revolutionary technology, the blockchain technology. >> You've done a lot entrepreneurial things since you were 10, you were talking before we came on. >> Yeah. >> How does that help you right now navigate this scene and looking at deals and your own deals and you're building out, you're investing. Other entrepreneurs are coming in, sometimes first time entrepreneurs, how does that help you and what advice would you give other entrepreneurs? >> So I started really young, not knowing where I was going to go. It was kind of just like in my blood. But, you know, you got to get out, you got to talk to people, you know. I always say no deal happens on your couch. You got to jump off the porch. You got to go out, you got to network, you got to meet people. And I started doing that at a young age which got my conversation skills a lot more advanced, so now I can go in and close a deal in 10 minutes where, you know, back in the day, it might take me two hours and I probably wouldn't even close it. So what I would say. >> 10 minutes is a good metric. >> It is. >> That's hey. >> Hey, I don't need to say more or less. If it's an interesting idea, let's go. You should be able to tell me what it is. >> Yeah. >> We should be able to hammer something out. Yeah, yeah, that's pretty much what's going on. >> Awesome. And what's some of the plans that you have for your ventures? Let's go back, the zip line, what's that one? >> Oh, yeah, ZippedScript. >> ZippedScript, I'm sorry. >> So I can't talk too much about ZippedScript. It's launching in fall of 2018. ZippedScript is basically going, it is revolutionizing the higher education industry and the transcript section in that industry. And all I can say is we may or may not be using blockchain technology to do it. >> Got it, okay. >> Yeah. >> And how about the chaser, that sounds very cool. >> Yeah, it is really cool. And, I mean, you guys can go to chase your drink.com, check it out. You can head over to our Instagram, Chase Your Drink. It's taken over. You know, this cola flavor I've got here and tropical thunder is pineapple mango, but cola tastes just like Coca-Cola. >> Yeah. >> Without any of the bad ingredients. And it's really taken over. You know, our biggest problem is supply. >> Yeah. >> We just can't produce enough, but we're fixing that problem. >> That's a good problem to have. >> It's a very good problem to have, right. >> How did you get into the venture side? Just you're scratching an itch, you wanted to put some of your money to work, did you raise unlimited partners, how's that, how'd that develop? >> Totally. >> And what's the current situation? >> Yeah, so it was a group of fellow entrepreneurs and we're all working on our own companies, but we're all ADD, right? And we're like I'm doing this, I'm doing that, but we have all these contacts, all these different skill sets, and we're all great friends. So that's another very important thing that most people talk about. Surround yourself with like minded people, but you want them to have different skill sets. >> Awesome. >> I don't want a clone. I have a clone, we're not going to work well together. >> You want added value, you don't want to subtract value. >> Yeah, exactly. So we came together and we're like we have so much value in so many different spaces, we can walk companies through, you know, a proven concept in any industry, food and beverage, cryptocurrency, and basically you won't make mistakes that we made. That's the bottom line. So you'll accelerate your success by working with us. >> Well, Chris, great to have you on. >> Yeah. >> Congratulations on your success. >> It was amazing, man. >> Check out Chase, check out the fund if you've got a great idea, contact Chris, go the cube.net, you can find his information there. I'm John Furrier here in Toronto with all the action here at the Blockchain Futurist Conference where the future's being created, robust industry, people looking at the long term, this is where the action is. Thanks for watching. Stay with us for day two coverage after this short break. (electronic music)

>> Narrator: Live from Las Vegas, it's The Cube, covering IBM Think 2018. Brought to you by IBM. >> Hello everyone, welcome to the third day of live coverage here at IBM Think in Las Vegas. This is The Cube, our flagship program, we go out to the events, and extract a civil noise of the leader in live technology coverage. I'm John Furrier, with my co-host Dave Vellante. Our seventh, eighth year covering a bunch of IBM shows. With all now six of them rolled into one IBM Think, this is their big tent event, day three, keynotes just finished, it's blockchain day here at IBM, and as we said, on the opening, on Tuesday, this is like, the innovation sandwich. In the middle is the meat, is data, and then the bread is blockchain and AI. And really that is the architecture of IBM's future strategy, foundationally set up by cloud computing and a variety of other applications and whatnot, but really the future is about data, with blockchain and AI surrounding it. Today's blockchain day, your thoughts on the keynote? Keynote speeches? >> Mm-hm. >> IBM, blockchain, certainly we've seen a lot of advertising on TV. Your thoughts and reaction to the keynote. >> Yeah, and I like your innovation sandwich, I just want to add, that the substrate of all this is cloud. It's critical, if you're going to get network effects, you've got to have the cloud. Today, yeah, was blockchain day, we heard from Marie Wieck, who's the general manager of IBM blockchain. IBM has a tendency, as you know, John, to identify a hot trend, especially some in Open Source, they did this with Linux, they did this with Spark, and they kind of, elbow their way in, you know, maybe that's a pejorative, but they do that, and they say, "Here's some code, here's some resources." They spend money on it, and they give credibility to that Open Source effort. The Hyperledger project is the one they targeted here. It's the fastest growing project in the history of the Linux Foundation. IBM contributed lines of code, people, they've got 15 hundred blockchain experts on this, and they're going all in on blockchain. Which I think, John, is really positive for the blockchain, and even the crypto community, because it brings the credibility of a, you know, a Fortune 100 company to that world. They've announced the blockchain starter kit. All this stuff is available on the IBM cloud. They announced today PWC as an audit partner, which again, brings credibility to the table. Although, I think as you and I know, and we're going to have some guests on later today, there's some other tech emerging, that is going to maybe complement that. >> Yeah. >> And we heard from David Katz, who is the CEO of Plastic Bank, this is the company that's essentially creating currency out of plastic. Allowing disadvantaged people to turn collecting plastic into money. And, at the same time, help save the planet. >> I mean, this is a great example of blockchain as an enabling technology. New ways to do business. As you know, we've been hot on blockchain for the audience watching, you know, we've been covering big data, and AI, that's in our wheelhouse, do all those shows and events, cover that territory with our journalism, and TV and research. But blockchain is an adjacency to storage and infrastructure, and also decentralized applications. The fundamental thing that we're seeing, and we talked to Brian-- Brian Behlendorf, who's with the Hyperledger project, at the Open Source Summit, the Apache Foundation, which IBM is a big sponsor of, IBM needs to do well here. Because they're, again, innovations is essentially betting on blockchain. But it's not just the developers at Open Source, the business users are the ones that are going to create the value, and what I mean by that is, if you look at the blockchain world, and crypto currency and decentralized applications, that's essentially the three components to this market. The blockchain is the infrastructure, ledger, storage of data, et cetera, you know over simplified, but the cryptocurrency runs protocols and infrastructure that power that, and then the application's going to sit on top. We've reported and observed that the secret of success in this new world, is nailing the business logic, and the business model, efficiencies that take advantage of the underlying technology. And that the risk factors in making that success happen, is that business model, not the technology. Although the technology is super important, the technology can be switched out a reduced risk. So the real risk in blockchain and cryptocurrency, and decentralized applications is nailing the business model disruption. This is different than the old way of tech, which was the risk was technology selection. This is a big deal, IBM needs to up their game on that piece of it. I've heard a lot of tech, I've got some nice use cases, but on the outreach basis, they got to go to the business users, and say, "This is an opportunity to leverage the data, "leverage the software and AI with watts and other things." And then leverage the underlying technology, software defined storage, software systems that move to the blockchain, in a decentralized and distributed way. Distributed and decentralized is the future of infrastructure, this is the secret of success, this is where the winners are establishing the clear line of sight. >> Well, one of the things that you're hearing at this conference, Ginny set this up yesterday, was incumbent disrupters, and we were just, kind of, having fun at the open yesterday, but I think it's really smart for IBM. You know me, John, I'm a big fan of saying most of your business is going to come from your existing customers, and if you're chasing all this new business, and start ups, and developers, you're not going to be as productive as if you go to your core. And I think that you're seeing this. IBM back to the core, and they're bringing blockchain to that core as a way to disrupt existing business models, defend against disrupters. So you're absolutely right, companies need to look for inefficiencies where there's a third party taking a toll, and then attack it hard with blockchain. I actually think-- well no, so IBM is really talking business. How do we bring blockchain to the business? They're not really talking about what we talk about a lot, this crypto economy and this whole other mission driven initiative. >> Well, but I mean, if they want to talk business, they got to talk token economics. That's where the business model efficiencies will be rendered on the app side, and the money side. The killer wrap in blockchain and crypto is money. Okay, and marketplaces. IBM got to great marketplace, but it's not just about the developers, that's an organic one stakeholder. The stakeholders that matter is the business guys and the developers coming together. That is absolutely fundamental. If they don't understand that, that's going to be hard to be successful. You can't just throw money at developer programs and say, "Oh, when we win the developers, we win the day." Cloud was, kind of, that playbook, but this world is so fast, and accelerating in it's value creation, that the business users are fundamental in actually grokking what the capabilities are, and putting that into motion quickly, and the proof points is pilots converting to production. That's going to come from the business units. That's where the intellectual property is, is looking at the technology innovations that are possible on the business logic. Business logic is the new IP, this is where the action is, and I haven't heard IBM talk at all about token economics, they kind of talk about it, but that really is the business impact. >> Well, I mean, you sort of heard that today from Plastic Bank, although they didn't talk about a token, they didn't talk about coins, they did talk about monetizing plastic, but in using blockchain to do that, I assume there's tokens behind that, but maybe not. Maybe it's just Fiat currency. It's unclear to me, but I think you're right, the killer app is money. >> Look at it, this is simple. The equation in crypto, and not blockchain, is value creators create value, and they can capture the value. Capturing the value is where the money is, the creating the value is where the technology can happen. So you got to nail both of those as areas. And money is the killer app, so that's going to come from the business side, so the real benefit of decentralization is offering the value capture equation to look different and be different. That's token economics. That's where the action's going to be. So, it really is, it's not mutually exclusive, they're both things. >> Well I think that what you're hearing, so value comes from two places in the simplest form, increased revenue, cut costs. I'm hearing a lot from IBM of cut costs, now again, the Plastic Bank this morning was a really interesting example, I'm glad IBM uses it, but the vast majority of things you're hearing from IBM, like the IBM Maersk relationship, et cetera, are about cutting costs, taking out inefficiencies. >> Well, I mean, the bank thing is easy to look at in your mind, but it's any supply chain. The ICO market that's at a massive bubble right now, is because the supply chain of funding start ups and growth, used to come from private equity and venture capital, that is being disrupted because it certainly hyped up, but that's a supply chain. Any supply chain activities, set of activities, that make up a supply chain, can and will be disrupted by blockchain, crypto, and token economics. >> Yeah, so let's talk about that. Because again, you're not hearing a lot of that from IBM. But I think we have a perspective there. You know, the 1.0 was the wild west, a bunch of developers, blockchain developers, theory developers, doing stuff, building up protocols, making a lot of money. And disintermediating the VCs, right? The new form of raising capital. The VCs are now all in, right? We saw this in Bahamas, you saw this in Puerto Rico, at the two conferences, at four conferences that we covered. So explain that? >> Well, that's just one application, the VCs and these guys are inefficient in some way, but what's happening with crypto currency about access to capital. Now there's a lot of capital being thrown out there. That's mainly because of the hype and the bubble aspect of it, but the real disruption is access to capital, that value chain, value activities are being disrupted and being more efficient. That's a global phenomenon, and that's happening in financing of start ups. Anything with a supply chain, whether it's moving food from point A to point B, is what IBM also highlights as well, anything that's structural incumbent is at risk. And so, this is where, I mean IBM has a ton of supply chain business. They've been doing this for generations in the computer industry. They connect systems together, and create value with using technology. So this is not going to be-- this is a great opportunity for IBM. Again, if they can convert that business value into the blockchain with the value capture, the create capture model, they can run the table. >> But I want to come back to innovation equation. And part of that innovation equation is being able to raise capital. And last I checked, which was last month, about 6.5 billion had been raised in crypto investments. >> And 60% of the projects failed. >> For sure, okay. But failure-- Silicon Valley, fail fest, it's probably up to 10 billion now, much more is being raised through crypto in startups in blockchain than there is in VC. The VCs realized this, and they want a piece of the action, but we're seeing private equity, we're seeing hedge funds, we're seeing crypto billionaires. >> The path of least resistance for the entrepreneur is where the action is. They go right to the new money opportunity. Because they can raise more money. >> So, here's the question. You take Fiocoin, for example, smart guys, trying to go after S3 with peer to peer storage, they raised 250 million dollars in 30 minutes, okay? Is it too much too fast? >> Yes, I think so, but it's what the market's giving. I mean, Fiocoin doesn't even have a product. They're on a roadmap. That's essentially a series A financing. >> Dave: That's a series C. >> Well, no, in terms of the evolution of the startup, it's a seed financing as a series C or D or F financing. >> Yeah, 250 million. >> I mean, it's insane. >> David Scott told us that he needed 85 to start Three Par. I mean that's a storage company 10 years ago, 20 years ago. >> Yeah. >> What a change. At 250 million. >> Look, it's a bubble. But the reality is that it's a bubble that's not going to pop and destroy the sector, it's just a proof point that the efficiency of funding is going to be disrupted. It is being disrupted. >> No, we'll see if it's going to destroy this sector or not. This could, you know-- Warren Buffet says it's going to end badly, others are believers. >> I'm long on blockchain, obviously you know that. I'm pretty biased, but anywhere there's inefficiencies, there's an opportunity for entrepreneurs and business leaders to put new business logic in place to capture that value. That's where the action will be. That's the innovation. And if IBM's innovation sandwich could work, you got a blockchain AI, data in the middle, everyone's going to be full and hungry and eat up everyone's lunch. So, Dave, that's the blockchain day. I'm John Furrier, with Dave Vellante, day three wall to wall coverage here at IBM Think in Las Vegas. More live coverage after this short break. (futuristic music)

>> Narrator: Live from San Jose, it's theCUBE. Presenting Big Data Silicon Valley. Brought to you by SiliconANGLE Media, and its ecosystem partners. (electronica flourish) >> We're back at Big Data SV. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante. Praveen Kankariya is here. He's the CEO of a company called Impetus. Company's been around the Big Data space before Hadoop, even. Praveen, thanks for back in theCUBE, good to see you. >> Thank you, Dave. >> So, as I said in the open, you've seen a lot. You kind of really got into the Big Data space in 2007, seen it blow through the Hadoop, you know, sort of batch world into the real time world, seen the data management headwinds. From your perspective, you know, what kind of problems are you solving today in the Big Data world? >> So I can go into the details of what we are doing, but at a high level, we are helping companies converge to a singular, enterprise-wide data model. 'Cause I think that is a crisis in the Fortune 500 today, and there'll be have and have-nots. >> Dave: What do you mean a crisis? >> I routinely run into companies who do not have their data model stitched. So they know the same customer, they know me by five different handles, and they don't have it figured out, that I'm the same guy. So, that I think is a major problem. So I think the C-suite is, they would not like to hear this, but they are flying partially blind. >> I have a theory on this, but I want to hear yours-- >> Sure. >> Why is that such a big problem? >> So, the most efficient business in the world is a one-man business, because everything is flowing in the same brain. The moment you hire your first employee, you start having communication breakdowns. And now these companies have hundreds and thousands of employees. Hundreds of thousands of employees. There's a lot of breakdown. There are airlines that, when I'm upgraded to first class, are offering me an economy-plus seat when I go to check in. That's ... they're turning me off, and they're losing an opportunity to, real opportunity to upsell something else to me. So. >> Okay, well, so let's bring this into the world of digital transformation. Everybody talks about those buzzwords, so let's try to put some sort of meat on that bone. If you look at the top five companies by market cap, Amazon, Apple, Facebook, Google. I'm missing somebody. Anyway, they're big. 500 billion, 700 billion dollars. They're all sort of what we would call data-driven. What does that mean? Data is at the core of their enterprise. A lot of the companies you're talking about, human expertise is the core of their enterprise, and they've got data that's sort of in silos, surrounding it. >> Praveen: Yes, yes. >> Is that an accurate description? >> That's-- And how can you help close that gap? >> So they have data in silos, and even that data in silos is not being used at velocity, with velocity. That data is, you know, it's taking much longer for them to even clean up that data, get access to that data, derive insights from that data. >> Dave: Right. >> So there's a lot of sluggishness, overall. >> Dave: So how do you help? >> How do we help? Great question. We help in many different ways. So we actually, so my company provides solutions. So we have some, a few products of our own, and then we work with all kinds of product companies. But we're about solving a problem, so when the customers we engage with, we actually solve a problem, so that there's a business outcome before we walk out. That's the big difference. We're not here to just sell the next sexy platform, or this or that, you know. We're not just here to excite the developers. >> So, maybe you could give me some of your favorite examples of where you've helped some of your clients. >> So there's one fairly large company, it's a household name around the world. And we have helped them create a single source of truth using a Big Data infrastructure. This has about six and a half thousand feeds of data coming in, continuously. Some continuously, some every few minutes, every few hours, whatnot. But then all their data is stitched together, and it's got guardrails, there's full governance. So, and now this platform is available to every business unit, to run their own applications. There's a set of APIs who go in and develop their own applications. So shadow idea is being promoted in this environment. It's not being looked down upon. >> So it's not sitting in one box, presumably, it's distributed throughout the organization? >> It is distributed. And you know, there're are some, you know, as long as you stay within the governance structure, you can derive, you know, somebody wants a graph database, they can derive a graph database from this massive, fully-connected data set, which is an enterprise-wide data set. >> Don't you see as some of the challenges, as well as cultural, there are some industries that might say, or some executives that say, "Well, you know my industry, "healthcare is an example, really hasn't been disrupted. "We're maybe insulated from that." I feel as though that's somewhat risky thinking, and it's easy to maybe sit back say, "Well, I'm going to wait, see what happens." What are your thoughts on that? >> Look at the data. The week Jeff Bezos announced that he is tying up with JPMC and Warren Buffet, some of the largest healthcare companies, and I'm talking of Fortune 10 companies, they lost about 20% of their market cap that week. So, you don't have to listen to me. Listen to the markets. >> Well, that's true. We see what happens in grocery, see what happens in... We haven't really seen, as I say, the disruption in healthcare, financial services, but it's all data, and that changes the equation. So why, let's see, not why. How when, if you get to this, so it sounds like step one is to get that sort of single data model across the organization, but there's other steps. You got to figure out how to monetize the data, not necessarily by selling it, but how data contributes to the monetization of the company. You got to it accessible, you got to make it of high quality, you've got to get the right skill sets. So there's a lot to it, and more than just the technology. Maybe you could talk about that. >> So the way, I would like to preach, if I'm allowed to-- >> Dave: Please, it's theCUBE... (laughs) >> No, no, I mean, I don't mean here, but if any CEO was listening to me, what I would like to tell them is, just create a vision of your ultimate connected data model. And then start looking at how do you converge out of that vision. It may not happen in one day, one week, one year. It's going to take time, and you know, every business is in flight, so they have to operate continuously, but they have to keep gravitating. And the biggest casualty is going to be their customer relationship if they don't do this. Because most companies don't know their customers fully. I mean, that little example of the airline which was showing me, flashing an ad for economy seats, premium economy seats when I'm already in first class, they don't know me. Some part of that company doesn't know me. So they're not able to service me well. Here now they lost an opportunity to monetize, but I think from another perspective, they lost an opportunity to really offer me something which would've made my flight way more comfortable. >> Well. >> So. >> Then you wonder if that's the dynamic that you encountered, what's the speed to market, the agility of that organization? They're hampered by their ability to, whether it's roll out new apps, identify new data sources, create new products for the customers. Have you seen, what kind of impacts have you seen within your customers? You gave the example before, of that sort of single data model, the single version of the truth. What business impacts have been able to affect for your customers? >> So, there, I mean I can go on giving you anecdotes from my observations, my front row observations into these companies. >> Yeah, it'd be good to have some kind of proof points, right? Our audience would love to hear that. >> So, you know there's a company not too far from here. They've stitched every click stream, right to product usage data. To support data, to every marketing email opened. And they can tell who's buying, what happened, what is their support experience, who's upgrading, who's upgrading faster because they had a positive support experience, or not. So everything is tied. Any direction you want to look into your customer space, you can go and get visibility from every perspective you can think of. That's customer 360. We worked with a credit card company where they had a massive rules engine, which had been developed over generations to report fraud, to catch fraud, while a transaction's being processed. We actually, once they got all their data together, we could apply a massive machine learning engine. And we started learning from customers' own behavior, so we completely discarded the rules engine, and now we have a learning system which is flagging fraudulent transactions. So they managed to cut down their false positives tremendously, and in turn reduced inconvenience. It used to be embarrassing for me to give out a card and get it declined in front of a customer. >> So, as I said at the top, you've seen sort of the evolution of this whole Big Data meme before it was called Big Data. What are the things that may be exciting you? We seem to be entering a new era we call digital. There's a cognitive era, AI, machine intelligence. What do you see that's exciting, and real? >> So number one, so I like to divide this space into two parts, the whole space of data analytics. There's the data plumbing, which we call data management, and whatnot. I have to plumb all my data together. Only then I can feed this data into my AI models. Now I can do in my silos today, but for me to do at a global level for my entire corporation, I need it all stitched together. And then, of course, these models are very real. My son, my 22-year old son is using TensorFlow for some little startup that he's cooking. And it took him just a month to pick it up and start applying it. So why can't our large companies do so? And in turn, bring down the cost of services, cost of products, the velocity of delivering those things to us, and make life better. >> So, the barriers to technology deployment are getting lower. >> And this is all feasible, Dave, right now. >> Yeah. >> You know, I mean, this is all, this is a dream 10 years ago. If somebody had said, you know, for an old corporation to stitch all its data, "What're you talking about? "It's not going to happen." But now, this is possible, and it's feasible. It's not going to require, make a massive hole in their budgets. >> But don't you think it's also table stakes to compete in over, the next 10 years? >> It is, there is table stakes. It's actually kind of late, from my perspective. If I had to go invest in the market, I mean, I would invest in companies who have their data act together. >> Yeah, yeah. So, what's the, how do you tell, when a company has its data act together? When you walk into a prospect, how do you know, what do you see, what're the characteristics of somebody who has that act together? >> It's hard for me to give you a few characteristics, but you know, you can tell what is the mandate they're operating under, if there are clear mandates. Because, for most companies, this is lost because of turf battle. This whole battle is lost due to turf issues. And the moment you see senior executives working together, with a massive willingness to bring everything together. You know, they'll have different turfs, and they're willing to contribute data, and bring it together. That's a phenomenally positive sign, because once that happens, then every large company has the wherewithal to go hire 50 data scientists, or work with all kinds of companies, including mine, to get data science help. >> Yeah, it comes back to the culture, doesn't it? >> Yes, absolutely. >> All right, Praveen, we have to leave it right there. Thanks very much for coming back in theCUBE. >> Thank you Dave, thank you. Thank you for the opportunity. >> You're very welcome. All right, keep it right there, everybody. This is theCUBE. We're live from the Forager in San Jose, Big Data SV. We'll be right back. (electronica flourish)

>> Announcer: Live from Nassau in the Bahamas, it's the Cube. Covering Polycon '18. Brought to you by Polymath. >> Welcome back, everyone. This is the Cube's exclusive coverage. We're live in the Bahamas, here for day two of our wall to wall coverage of Polycon '18. It's a security token conference, securitizing, you know, token economics, cryptography, cryptocurrency. All this is in play. Token economics powering the world. New investors are here. I'm John Furrier, Dave Vellante. Our next guest is Nithin Eapen Who's the Chief Investment Officer for Arcadia Crypto Ventures. Welcome to the Cube. >> Thank you very much gentlemen. >> Thanks for joining us. >> Thanks for coming out. >> Excited to have you on for a couple reasons. One, we've been talking since day one, lot of hallway conversations. Small, intimate conference, so we've had a chance to talk. Folks haven't heard that yet, so let's kind of get some of the key things we discussed. You are very bullish and long on cryptocurrency and Blockchain. You guys are doing a variety of deals. You're also advising companies and you guys are rolling your sleeves up. So kind of interesting dynamics. So take a minute to explain what you guys are doing, your model. >> Okay. >> And we're going to try to get some of your partners on later. You have a great team. >> Yep. >> Experienced pros in investing. And you got wales, you got pros. So you got a nice balance. >> Yes we do. >> So take a minute to explain Arcadia, your approach and philosophy. >> Okay. Okay. So Arcadia Crypto Ventures primarily we are a private fund. We invest other money. We believe in the whole crypto space. We believe this market is expanding and it is growing and it's going to be the biggest thing that ever happened. It's going to be this fusion of internet and PC and mobile. And everything is going to go batshit, okay. We believe in the whole tokenization world. Everything is going to be tokenized. So as a whole, we believe this space is going to go very big. Okay, so that's one piece and because of that, we invest in the space, the whole space. Not one bitcoin or Ethereum, but everything in the space that makes sense. People who have a use case. Now the second piece of it is we advised great founders. We want to get founders to come out and build these new things because this is the new internet of the new era and people have to come out and build these things. And so many of them are traditional businesses and we have to explain to them why this matters, why you should come to this space and be decentralized and reach the whole world. Because initially, the internet came. The idea of the internet was everybody gets information. Now information did get everywhere. You don't have to worry that the mailman is there to deliver your email anymore. Even if it's a Sunday, your mail will get delivered. So that part was good. But now you have these few companies that's holding all your data. It's okay for most people, but they do censor a lot of people. So that is one point. That censorship. We want a censorship-resistant world where everybody's ideas get out. So that way, we believe that's how this whole internet space itself is going to change because of that. See this is if I explained in one word, this is the greatest sociopolitical economic experimental revolution ever that has happened in humankind. >> In the history of the world. I mean this is important. I'd said that on my opening today. >> Uh-huh. >> Dave and I were riffing and Dave and I have always been studying. We've been entre-- We are entrepreneurs. We live in Silken Valleys in Boston and so you seeing structural change going on. So it's not just make money. >> Nope. >> There's mission-based, younger demographics. So you starting to see really great stuff. So I want to ask you specifically, 'cause you guys are unique in the sense that you're investing in a lot of things. But startups, pure-playing startups? >> Which had only one path before, or two paths. >> Right, yeah. >> Cashflow financing and venture capital. >> Okay. >> So that's a startup model. The growing companies that are transform their growth business with token economics, those would have long odds. Those are the best deals. >> Okay. Then there's like the third deal. Well we're out of business, throw the Hail Mary, repivot. (laughs) Right, so categorically, you're starting to see the shape of the kinds of swim lanes of deals. >> Okay. >> Okay, pivoting, that Hail Mary. Okay, you can evaluate that pretty much straight up on that. Startups need nurturing, right? >> Yeah. >> So the VC1 al-oc-chew works really well for startups because of the product market fits going to be developed. You got cloud computing so you can go faster. So you guys are nurturing startups. At the same time, you're also doing growth deals. >> We do. >> Explain the dynamic between those kinds of deals, how you guys approach them. What's the dynamic? What are the key things that you're bringing? Is it just packaging? Is it tech? So on, so forth. >> So with a lot of people, when they are on the advisory side. Primarily we look at the founder and the tech. What are they trying to solve? That is key. If it's a turd, you can't package it. No matter how you package it, that's not going to work. >> You can't package dog you-know-what. >> Yeah, exactly, okay. >> So that's one thing that we look at. The founders and their idea. Now their idea, can it be decentralized? Some models are meant to be centralized maybe so it doesn't work, okay. Like, see it all boils down to-- Let me break it down. We look at it. Okay, do you have an asset? Behind the scenes, is there an asset? Is that asset being transferred among parties? If you have an asset and it's being transferred, is there some central mechanism in between? Because if there is a central mechanism in between, that means you're going to be paying rent to that. Okay, all right. You have these things. Okay, great. Now you have your asset. Do you have that in between party? But in some of them, let's say you have money in your pocket. You walk, it falls down. Somebody else pick ups the money. It's his. It's a bearer asset, okay? So that's where bitcoin solved a very big problem. It was bearer asset. >> Unless they hack your wallet, then they take your money. >> Right. That happens in real life too, right? Somebody can take money from your wallet. So it can happen in bitcoin. They can hack your wallet. All right. So bitcoin was solving that problem. Now the second piece is a registered asset. And I mean by registered asset is take your car. You buy your car, you go to the DMV, stand in line, register. There's a record of data at the DMV in their central database. If somebody steals your car, the car is still not his. It's only if they can change the record over there in DMV. Then it becomes his. Now there maybe you do want the DMV to be there. Or maybe we can-- But the DMV being there, now you have a problem. They're going to charge you rent and they can decide, oh you know what? John, I'm not going to give him a license or a car in the state of California. They can decide, right? So that is where now you decide do you want to go the centralized route or the decentralized route? So we break it down to the asset. >> So there could be a fit for decentralized. I get that. >> Yeah. >> Let me ask you a tactical question, because I know a lot of entrepreneurs out there. They're watching and they'll hear this. A big strategic decision up front is, obviously, token selection. >> So it's pretty clear that security token works really well for funding and whatnot. Then there's a role for security tokens. I mean utility tokens. >> Yes. >> So do people, should they start from a risk management standpoint, a new company. So let's just say we had an existing business. Entrepreneur says, "Hey, you know what? We're doing well. We're doing 10 million dollars in revenue and I want to do tokenize 'cause we're a decentralized business. That's a perfect fit." Do they start a new company or do they just use the security token with their existing stable company? >> I would suggest, usually at that time, that's more of a legal question at that time. I don't know if I'm a lawyer to answer that. I tell them, you have a business. The business model is going well. If you're happy with it, let that be there. Make a new company. If your business model was not doing good, you might as well start from there because you figure out it's not working. But again, at that time, we tried to come up with this question. Are you trying to put the old wine in a new bottle kind of thing? If the wine is old, it ain't going to work. You have to get to that realization. So, here. >> People are being sued. So mainly the legal question is do I want to risk being. >> All right, let me hop in here. I wanted to ask, go back to something you said about censorship. I had this conversation with my kid the other day. I was explaining Google essentially censors your search results based on what they think you're going to click on. >> They do that. >> He's like no and then he thought about it and he's like okay, yeah they kind of do that. Okay, so that's an underpinning of we're going to take back the internet, right? >> Yeah. >> Okay, I just wanted to sort of clarify that. From an investment philosophy standpoint, you're technical, yet you don't exclusively vet or invest in infrastructure protocols and dig deep into what-- You read the white papers, but there are some folks out there hedge funds, et cetera. All they do is just invest in utility tokens. They're trying to invest in stuff that's going to be infrastructure for the next internet. Your philosophy is different. You're saying, we talked about this, we don't really know what's going to win, but we make prudent investments in areas that we think will win. We like to spread it around a little bit. Why that philosophy? May reduce your return, but it also reduces your risk. Maybe you could describe that a little bit. >> Sure. See, in general, picking winners in the long run has been-- It's a proved fact that nobody could pick winners. Like if you take active hedge fund managers. Active hedge fund managers, in the long run, if you take 10 to 20 years, they lag the S and P. So if you had money, if you give it to an active hedge fund manager, and so that you just had to buy the S and P, you will have beaten 93%. >> That's Buffet's advice. Buy an S and P 500. >> Buffet made a bet for a billion dollars or something where, you know. So take Warren Buffet for that matter, his fund is lagging too. In reality, all his stock investments are down. He put it in IBM at $200 after eight years, it's at the 143 or something, right? So realistically,-- There's a lot of luck element, okay. You can do all of the analysis and you could still end up buying Enron, Lehman, and Bear Stearns, right? >> Right, yeah. >> And at that time, see they were using some models that they knew 'til then. Most people, investment comes from, you have this background that you know, okay this is what I look at. Cash flow, discounted cash flow. Great. If that is there, price to earnings, I'm going to buy. But then an Amazon came, most of the traditional investors never invested in Amazon. They were like, it's a loss- making company. They never going to survive. But they forgot the fact that companies like that there's this network effect and once the people are there, at any point, Jeff Bezos can just turn off the switch and take off the discount. You're not going to change your shopping from Amazon at that point because this month I lost my 15%. We're so used to it so people missed that. Nowadays they see that, but when it came to Blockchain they're like, oh, no, no, this is a fad. That's what most people said. >> So we talked about discounted cashflow as a classic valuation method. I see guys trying to do DCF on these investments. I mean, we were joking about that. (laughs) How do you-- What's your reaction to that? >> If anybody's saying that if they come to me and I'm like you-- I don't know what Kool-Aid do you drink at that point because what cashflow are they discounting? There's no cashflow. It's not like you're going to get dividends from these tokens. There's no dividends. It's like can you find out how many people are going to use it. What is the network effect? And again, for that, a lot of people are coming with a lot of these matrices or matrix right now. But I think even that, they're trying to retrofit into it. They're like, oh I can use this matrix. But, really we don't know. >> So people tend to want metrics. Dave and I talk about this all the time. When people part with their money, they need to know what they're betting on. So the question is when you look at investments, when you spend cash, when you write checks, what is your valuation technique? Do you look for the l-- How do you play that long game? What's the criteria? Besides like the normal stuff like founders, disruptive, like you got to write the check, let's say. Okay, buying a token. It's got to be worth something in the future, obviously. >> So we look at that space, where invariably they are trying to disrupt. Is there a big market? And even if it's a niche market, okay? So we're doing an error chain token. It's a very niche market. It's just the pilot, the maintenance folks, and the charter people, or the plain charter guys. It's a very small market, but that's good enough. It's very niche. They can have an ecosystem between themselves rather than being incentivized to long game miles and stuff like that, right? It doesn't have to be a very big market. We just look at it, okay. Founder is good, he has an idea, it is a space that can be decentralized and people can come in and they feel that they're part of the ecosystem. See the whole thing with the token economy and a traditional economy like let's say I'm spending money to buy a stock. So I buy stock. As an investor, what do I want? I want maximum returns. The employee, he wants to get maximum pay. And the consumer who's buying the product, he wants to get it at the cheapest price. So there's a-- It start aligned, okay? The moment you give 'em the cheapest price, my profits go down. If I increase the employees' salary, my profits go down. So we are all three of us are totally misaligned. >> If I for an important point, do you favor certain asset classes, you know, token, security tokens, or utility tokens, or you looking for equity? I mean, maybe just ... >> Right now, we've moved away from the whole equity bonds, or any of those things. We are totally concentrated on the utility or security tokens. We don't mind if it's a security token or utility token. >> And if it's a security token, are you looking for dividends, are you looking for >> At that point it's some kind of dividend. >> So you're not expecting equity as part of that security token? >> No, I like to expect equity, but if they are saying okay my token, if people buy and if they pay me $10, and out of that you're going to get $1 back, okay that's fine. We don't mind that as long as it's legal and all those things we're fine because it just makes the process easier. Earlier you invest and you didn't know when you could get out of your investment. At this point, it's become so liquid, at any point of time within two or three months, the token is less to people are either buying and selling. We know, otherwise, earlier when we used to do Ren Chain investments, we would get into our product, have it it's time seven to 10 years to get out. And in the meanwhile, they say great stories. Oh we're doing great. Who do I check with that we are doing great? I'm not getting any dividends. Nobody's buying this from me. How do I know? Where am I? I really don't know. I can make these values up and on my Excel sheet and say okay we valuing this company at a billion. >> So your technique is to say okay look at the equity plays the long game. You need an exit on liquidity, either M and A or IPO. >> Yes. >> Now you have a new liquidity market, so you play the game differently. I won't say spray and pray, but you have multiple bets going on so you can monitor liquidity opportunity. So that's a new calculation. >> And it's a great calculation, also. Because see we're in the market and now we know at any point of time, we don't have things on our books that are like we don't know what the value is. We know what that price is because the market is there, the exchange is there. What other people are willing to pay for us doesn't surprise. It's like saying my house is worth a million dollars. Actually it might be worth to me. It depends on what people are willing to pay me. >> Right exactly. >> If I have to synthesize this, you're taking high frequency trading techniques with classic venture investing, handling token from those two perspectives. >> Yes. >> High frequency trading meaning I'm looking at volatility and then option to abandon and get rid of whatever or whatever. >> The only thing is, we're not exiting our positions. We are in the long game. We believe the score market is supposed to at least reach eight trillion. When we started this whole investing, at that time, the whole market was at six billion and we said okay this market, based on our thesis, is supposed to reach eight trillion. Until then, we keep buying, okay? >> But to your HFT, you're not really arbitraging. >> No, no, we're not doing any of those. Because see >> They're applying real time techniques to token evaluations so they're game is try to get into a winner. >> Yes. >> With some tokens. >> A lot of the funds, they're doing this arbitrage more. They're trying to do arbitrage. But the problem is they're missing the big picture that way. So, arbitrage works in a very tight market. So S and P, let's say, somebody's doing 5% return on S and P. The guy with a arbitrage is coming and saying I made five point three, 5.5% or 6%. That's great in the equity world. Now, I want returns last year are 10 x or 30 x or 50 x. And somebody comes and tells me I made an extra 0.2%, doesn't really matter to me. I'm like instead of wasting that time doing arbitrage and paying taxes, I might just hold it. >> You believe in the fundamentals. >> You guys are in New York. Obviously, Arcadia Crypto Ventures, that's how they get ahold of you guys. Final question for you to end the segment. As new real pros come in, and let's take New York as a since you're in New York. The New York crowd comes in or the Silken Valley comes crowd existing market players other markets come in here. How important is optics packaging and compatibility with the sector, meaning I just can't throw my weight around on the hedge fund scene. We do it this way, I got money. Because people here have money. So what's the dynamic of pros coming in, we're seeing institutional folks come in, we're seeing real pros come in. They've never been to Burning Man. So, you know, they get that Burning Man culture exists, but this is not a Burning Man industry. >> Right, right. >> Business doesn't run like Burning Man. Maybe it should, that's a debate we'll have. Your take. >> So the new funds that are coming in, so they have a fear that they have missed out. They are missing the picture that this is just the beginning. So they've seen that this industry has gone from six billion to 500 billion in a year or year and a half. They're like, oh my god, I missed it. >> It's got to be over. >> So I have to write these big checks to get this. We don't write big checks. We write much smaller checks because we believe that if a founder is raising money, he has to raise it through small checks from everybody. That means all those people are really interested in this. And they're all of them really want the token to go up. Whether it's the investor, the user, and the employee who is working there because all of them they're interests are aligned. The moment you give a big check, so let's say you could raise 10 million from 10,000 people or you could raise it from one person. So when the big check is there, let's say I go to raise my money. There's this fund who's missed it and he says here's 10 million dollars. Okay, now I've got me and the fund and my tokens. Nobody else knows about my tokens. My tokens are as good as valueless. Now the funders looking okay, I need to exit. Nobody knows about my tokens. The fund is the only guy who has my tokens, he's trying to exit. Obviously the market is going to crash. There's no market. And he's like why did I get into this. So he missed that point that you need people around you. It's not just you alone. See, earlier days when ... >> This is your point about understanding how token economics works. >> Yes. >> So having more people in actually creates a game mechanic for trading. >> Because then you know that you're not the only guy interested in this. And earlier venture capital space there were these bunch of few venture capitals who wanted to capture that whole thing and tried to sell it to the next guy. Here, I'm what I'm saying is, we all have to come in together. We all can be together at the same price, which is good because the small person has, the common man has a chance to be a VC right now. Earlier you could never be a VC. I could only see Google, after IPO. I could never get it at what KPCB or Sequoia got it at. I had to wait 'til they got through CDA, CDB, which they bought at five cents. I would get at about $40 maybe. In this case, the big fund has a lot more money than me, but I can have my small 5,000 or 10,000. I can invest in the ICO. >> If you picked the right spot and you were there at the right place, the right time. 'Cause you are seeing guys come in and try to buy up all the tokens early on. >> They're trying to do that. They don't get it, but they will understand. So it is a learning (mumbles). Even they will evolve. They're like okay this is not how it works. And you have to make mistakes. >> Sorry, got to ask you one final, final since you brought it up. More people the better. So we're hearing rumors inside the hallways here that big wales are buying full allocations and then sharing them with all their friends. >> Possible, it is possible. >> We see some of that behavior. Dave calls it steel on steel, you know. Groups, you know. I'm going to take this whole deal down. We see that in venture capital. Used to be syndicates. Now you seeing Andreessen Horowitz doing the whole deals. That kind of creates some alienation, my opinion, but what's your take on that? I'm a big wale. I'm taking down the whole allocation. >> It's okay. Some of those things are going to happen, okay. It is fine. The only problem is usually when that happens the big wale who takes it he will realize very quickly. >> He's got to get more people. >> He needs more people otherwise he might be able to exit to his five buddies who were always taking it from him. Now those guys, they also have to exit at some point. Nobody knows about the product. Might as well just take a small piece, even the founders in this case typically in a token model. Founders who've taken 20% or 10% have done better than founders who took 60% of the whole tokens. >> Right. Nithin, great to have you on. Love your business model. Arcadia Crypto Ventures. They got real pros, they got a wale, they got people who know what they're doing, and they're active. They understand the ethos. I think you guys are well-aligned and you're not trying to come in and saying this is how we did it in New York before. You get the culture. You're aligned and you're making investments. Great perspective. Thanks for sharing. >> Thank you so much. >> This is the Cube, bringing the investor perspective live here in the Bahamas. More exclusive Cube coverage. Token economics, huge opportunity for entrepreneurs and investors to create value and capture it. That's Blockchain, that's crypto, that's token economics. I'm John with Dave Vallante. We'll be back with more coverage after this short break. (futuristic digital music)

>> Announcer: Live from Nassau in the Bahamas, it's theCUBE, covering Polygon 18, brought to you by Polyman. >> Welcome back everyone, we're here live with theCUBE's exclusive coverage of Polycon '18. We're in the Bahamas, I'm John Furrier with Dave Vellante, co-founders and co-hosts of theCUBE. We're here with special guest Halsey Minor, entrepreneur, serious serial entrepreneur here on theCUBE. Halsey, great to have you. You're the founder and CEO of VideoCoin, a successful ICO. You had an event last night, kind of an investor thank you event out in the Bahamas Country Club, there, you're here. Man, you're a pro, you're back in the game with this crypto. This is the wave, I mean, I want to get your perspective 'cause you see waves. You've seen CNET, you started that from scratch before online news was anything, you were the pioneer in that. First investor, first operator in salesforce.com, a variety of other successful entrepreneurial adventures. You've got a nose for the waves. So just put it in perspective, what is this wave? >> Yeah, so I actually have an interesting story because I've actually started around 2012, and I launched my first business in 2013. So, the first problem that I saw was, how do you get your money from your bank account and buy Bitcoin? Still a problem, hasn't been fixed, right? So I tried to fix that. Oh well, I did to a certain extent, I did fix the problem. So what I did was created effectively a coin-based converter, and I started out and was going to make it very easy for you to take your bank account, connect it up, seemed logical, and then buy, you know, the currency. The company was called Bit Reserve at the time. So, no bank would touch anybody named Bit in their name. And it was even worse than that, all of us who put our company name into our bank account, we had our bank accounts basically shut down, right? So, I started getting an idea how difficult this was going to be, you know, Coinbase getting a Silicon Valley bank account early on to become a conduit, was very fortuitous. It ultimately took two and a half years and buying a big chunk of New Jersey Bank before we were able to allow you to connect your US bank and your European bank into Uphold to buy currency. So it's really Uphold, Coinbase, maybe like Gitbit, very, very few who've been able to crack that problem. We literally had to buy part of a bank to do it. So that's where I started. So I really looked at it very much as money, as a new monetary system. And I still see unlimited opportunities in that area. It wasn't until really a couple years later that I saw the block chain as the new architecture for the computer, and what I mean by that, is what Bitcoin proved was that if you gave people software and they ran it on their computer and they got paid in some funny kind of digital money, they would convert that money back into fee hock, you know, dollars, and they go buy more computers. And nobody asks anybody to be a Bitcoin miner, they just come and showed up the more, the bigger it got, the bigger the opportunity. And what's most interesting is when you make money or lose money, depends on your cost of power. So for most of these Bitcoin miners, they're near hydroelectric dams. So what I realized, and VideoCoin is in the area of video. It's a direct competitor with Amazon web services, everything they do in video. So there's, it's called encoding which is compress it, there's storage and there's streaming, three basic pieces. So what I realized was, two things: first of all, 20% of servers and data centers are not used at all. They're called zombies, right? So all of these people, the Airbnb, Uber model, they can all of a sudden start earning on assets that are doing nothing. But even if you look out into the future, if video mining, which is what we call it, ends up being like bitcoin mining, then what happens is that the whole thing works on the cost of power. It's not good for Amazon, if they have to be competitive solely based on the cost of power. >> Dave, so he's got an ICO going on, we looked Filecoin, right? So Filecoin was storage and that's infrastructure. You go to VideoCoin, we're streaming right now, we've got video. This is kind of like an interesting digital media infrastructure ... >> Well ... >> What's your take compared to Filecoin? >> What's interesting to me is that I'd love to get Halsey's input on, because you've got the full spectrum here. You started in publishing and now-- >> With five TV shows. >> Dave: Okay. >> Yeah, CNET had five TV shows. >> So right, and so very digital from the beginning and relatively ripe for disruption and then now into banking, which really hasn't been disrupted, but we all think it's coming. So that's an interesting spectrum. It's not Negroponte, I don't think, bits versus atoms, because you've seen, you know tax season get disrupted. That's atoms. So what are the factors that make an industry ripe for disruption? >> Well, I mean the obvious thing is really disruptive technologies, right? And so for the Internet, for me, it was, I started the company in '93 to be on commercial online services like AOL and I saw, I guess, the first browser in '93 and, actually at Sun, and it made me believe the Internet was going to be this incredible thing. And it was really seeing information coming in, and, you know, the Internet wasn't that big back then but I watched a gif of a storm, you know, from one of the weather centers, and so I realized that this information thing was incredibly interesting. And so what all of us did, the way I thought about it and seen it, is we're cracking open databases and we're just letting people have the information. And it was silly things like the ability for me to live in San Francisco but know what the weather was in New York and pack appropriately. This was the magic, I mean, we take all of this for granted. This was magic, right, at the time. You had to go out and buy a USA Today-- >> Check the stock price. >> Yeah, exactly. >> Call your friends in New York. >> Yeah, that was magic. So at a very high level, it was just access to information. At a very high level, what this is is combining information and money into a packet. Right? So now what we can do is, I can gather information from servers about what they're really doing and I can also be paying them at the same time. So you know, it would have actually solved a lot of problems around the Internet, because on the Internet getting paid was hard. And there were so many times we'd go into a meeting and we'd agree on the partnership but we didn't know who was paying who. You know? (laughing) Am I paying you for traffic or are you paying me for content or you know, how is that going? So this kind of comes with a built-in payment system, which I think is what makes it so incredible as a system. >> So we're-- >> And more stable, I am inferring, long-term anyway. Because that whole system that you just described on the Internet all blew up when the funding dried up. >> It blew up and I think, you know, I think there are certainly a lot of risks. The number one thing I would tell everybody in this area is, you know, be very cautious about what in you invest in. There were a lot of companies that, uh-- so my whole description was sort of the Internet bubble was that people say that, well, you know, nine trillion dollars was lost in investing. >> With everything that happened though. >> And when I-- >> The plus.com happened, everything happened. >> And what I said to the people is that it would be great if people had just invested in the survivors, but who knew what they were? The only reason the United States emerged, with, you know, with Salesforce and Ebay and Amazon, etc., the only reason that we emerged dominating the world was 'cause we invested in them all. Right? And so-- >> Even all those things that were called silly ideas actually happened. >> And they ended up happening. It was all a matter of timing, yeah. So you know, what's happening now is very much the same thing. You know, a lot of people are going to invest in a lot of bad ideas, right? But this is all necessary for the good ideas to get funding and for something big to come out of this. >> So I want to get your take on with the VideoCoin and in comparison, you mentioned Amazon, right? So our observation, obviously we're recording all these shows, Amazon web service, among others, the big guys are sucking all the oxygen out of the room. Look at the big whales, Google, Facebook, Amazon, I mean, we can't even run any ads on our site. We actually prefer to just push the content all over the world because it's hard to build a destination site. I mean, people going out of business in the media business. Video, your choices are Ustream now owned by IBM, Twitch TV became Amazon which was Ustream before that. Build your own custom player, set up a CDN, which is actually hard and expensive. Okay, so do I do Facebook live, again controlled by Facebook? So there's an opportunity that you're pursuing. Did you have that in mind? I mean, we see it every day and we know this, but luckily we have a good deal with Ustream, but the point is that is going to be up too. What's the alternative producers, content producers who have streaming, whether it's a pro set like this or someone who's going to have unlimited access to video streaming? >> So the real issues are cost and innovation, okay? And so Hanno Basse, who's the CTO of 20th Century Fox and one of our advisors, right? And all these media companies have the same problem. Nobody is watching broadcast anymore that'll cost them nothing and everybody's now streaming in, which is one-to-one and has a cost associated with it. So that's why, and even worse, videos going to 4k, 8k, VR, data that's going up like this-- >> Data isn't growing as fast either. >> So all these companies are confronted with all these costs and they can't monetize them. Google can monetize it, Amazon can monetize it. >> Tel cos ... >> Netflix, yeah. >> Ouch. >> But they can't monetize it, so it's all cost effectively and no revenue. So the one thing that we offered to VideoCoin by using all this research is we cut the cost 60 to 80%, so that's huge. The other thing is, in the early days, everybody bought Salesforce because it was cheaper. It was 1/10th of the cost. And I used to say to people, in the long run, it's going to be way more innovation, right? Because they're constantly, every quarter, rolling out a new version, right? And they're going to have the ability to connect, an API effectively, and the ability to connect, and the whole ecosystem can arise around that. And that's why their conference has 140,000 people, Dreamforce, because there's a whole ecosystem. >> It's sticky as hell too. >> That's right. >> Hard to get out. >> That's right. So while we are 60 to 80% lower cost, we're also effectively open source at the same time. So the ability to have a community arise and develop software. And so right now, you've seen this huge consolidation because it's actually kind of hard to build new kinds of apps on top of Amazon web services, right? But if you have this open system, and you have all these people are contributing code to it, all of a sudden, there are apps, video apps, that they'll be literally a whole new-- >> So you're going to have an open source contribution piece to your ... ? >> Yeah, I mean basically, everything we build is open source, right, so you know, all the way through to the network. So it creates a palate for people to start innovating in video. Because really what's happening is a lot of innovation is getting hurt by the fact these big guys totally dominate it, right? They don't want to see any innovation outside of the funds they bring you, right? >> Right, so you've heard my rap on this. I'd love to get Halsey's thoughts. So the big guys, you're right, have won. It's like centralization and victory. People here are saying, "No, we want to take it back." The premise that I hear a lot is there's been no innovation in protocols in, you know ... Google built gmail on SMPT, HTTP, DNS, it's all government-funded or academia. >> Yeah. >> And it's just a lack of innovation. >> That's right. >> And now, this is why I counter Warren Buffet and Charlie Monger, is no, we're building out a new set of infrastructure. >> That's right. >> Okay, so where do you guys fit into that? What are your thoughts, first of all, on that premise? And where do you guys fit? >> Yeah, I mean, look, you've got these huge companies that are totally dominant and even though they are, in fact, you know, innovative Silicon Valley companies by label, okay, they have all the same issues-- like I say to people, nobody today believes that anybody can put Amazon web services at risk. If I went to somebody and said, "You know Amazon web services which are worth 3/4 "of the value of the company, or 5/6, "depending on who you talk to, "there's going to be something after that." It would literally be a new concept because everybody's convinced this is Amazon's-- >> John: The winner. >> Yeah, this is their big, this is the way they make all their money-- >> Alright it's over-- >> Right, and if you say to somebody there is going to be a next thing, they would look at you like, you know, like you're foolish. But the reality is when you start changing some basic, underlying infrastructure in the Internet and you start doing things, decentralization, this is the word we're going to be using, you know, we're going to see it in solar power. And solar power is, you know, on a cost to benefit like this so, you know, it isn't going to be long before we're going to have power in our house legitimately, not like, you know, some science-fiction thing, we'll be legitimately powering most of our needs with solar that we connect because the cost is coming down so much. So we're going to see all of this decentralization happening. And in the world of computing, decentralization means that this is going to be the most efficient that computing can ever be. Because just compare using the Uber and Airbnb model of saying anything that's excess, let's turn into value. And I've heard that for every Uber driver, 15 cars go away, right? So the decentralization is going to have a profound effect on the economy and it's going to have a profound effect on these big guys. >> Oh, even those guys are going to get disrupted. >> They're going to get disrupted. And they're 20 years old, it's time for them to get disrupted, I mean, you know ... >> E-commerce is a 20, 30-year-old stack, some say 20, 20-year-old stack on e-commerce, all these things are ready, even what we would consider modern, you know, the miracle of saying oh the weather in New York. I mean that magic is here now in a new way. So I got to ask you the question-- >> Taken for granted. >> I got to ask you a question because you brought up that point. In your history of your career as an entrepreneur because you're doing stuff that's always new and cool, and probably before anyone else sees it, can you talk about some of the ideas that you've seen, not necessarily your ideas, as well others, where the investor said, "That's the dumbest idea "I ever heard"? What billion dollar opportunities have you seen emerge that investors have said, "That's the dumbest idea "I've ever heard"? >> Well, actually, the one that is Salesforce. No VC would put money in. It was really kind of backed by Larry Ellison and me early on. And what's so-- >> John: Google was a dumb idea. We want portals, not search. >> Yeah, so the bet that nobody would take in 2000 was that companies would take their sales information and they would put it in the cloud. Nobody would believe that. Not anyone. And so I used to joke, I used to say the only way it's going to happen is if the sales guy's been waiting two years to get his sales management system in place actually runs over the head of security in the parking lot. That's what it's going to take because it's outsourcing and, you know, the security guys say, "Oh, no, no, no, "we're going to lose all of our data", right? It didn't matter that Salesforce had way more security guys, you know, than these guys had and better, you know, working internally. Nobody believed in it. Literally nobody believed in it. >> This is your point about the decentralization, no one's going to believe, "Wait a minute, "that could never happen." So, in a way, the investor thesis should be, "I want to invest in the dumbest ideas," because that might be the best idea. >> It is. I mean the big, obvious ones that attract billions and billions of dollars, I mean, how many of those end up actually not turning into anything? Right? A lot of them, right? So CDAT was profitable on nine million dollars. I believe that Yahoo was profitable on three million dollars. I think Google was somewhere around 12 to 15 million dollars, right? So there are a lot of these business-- Amazon's obviously the outlier. >> John: It's still not profitable. >> Yeah, it's the outlier. But you know, a lot of these businesses were started by people who used a relatively small amount of money and were very creative. You know, you're going to hear this over and over again. Microsoft never needed any money. They accepted five million dollars from-- >> John: (mumbles) >> Yeah, so this happens a lot. And in fact, I think it's very dangerous when in year five, you're losing three hundred million dollars, right? I mean, five hundred, or whatever it is. There are a lot of things that can go wrong. >> What's the role of community? Because we heard the guy from Locktower Capital say something I thought was really profound, "I don't need VC because, if you're a startup, "you don't have to waste your energy on board meetings "and other things, you can build your business "and use the community as your benchmark." So this plays to your whole picking up the slack kind of thing in efficiency. So entrepreneurs can be more efficient in these communities. This is where the cryptocurrency Blockchain is thriving. What's your thoughts to that and how do you see that community interaction progressing? >> In my career, there's been a sea change in sort of the culture of technology and really everything, right? You know, when I started out, everything was very hierarchical. You know, it's like how far up the chain you got that measured how successful you were. Now it's how big is your network, right? And you know, I was talking to somebody the other day who said VCs are going in and they're measuring these companies' success by how many Instagram and Twitter accounts they have and there's massive fraud going on because people are buying these accounts to pump up their numbers, right? So people are starting to value by the breadth of your network. >> John: Reputable network. >> Reputable, yeah. >> John: Not fake network. >> Yeah, but what I heard is there's actually a Twitter application which I haven't seen that'll go in and tell how many of 'em are real and how many of 'em are not now. So really the community becomes almost the measuring stick for your value. You know, before I'd seen it, I had users. Today, everybody has community members. And so, it becomes sort of, kind of like everything I guess. >> And our media model is all community-based which is, we just naturally go there because that's where the data is. >> That's right. >> That's where the feedback is. >> That's right. >> I mean, I can't get feedback from Facebook and Google, they own the data, right? There's no letters to the editor on Facebook. There's only hate comments. >> But you know before Microsoft and all these came, you know, IBM dominated the world. Nobody ever thought they would go away. AT&T dominated the world and nobody ever thought that they would go away, you know. >> Alright, personal question for you, I got to wrap because I know you got to go. Appreciate your time, by the way. Great story, we could go on for another hour. Personal note, what is the most compelling thing that's moved you, as an entrepreneur, in the crypto market? Like, something that, it could be an anecdote, it could be a situation. When you look at this opportunity, as the world's going to eventually be re-instrumented with data, with new open source and community, what's something that's surprised you or moves you as an entrepreneur saying, "This is freakin' awesome"? >> So this hasn't been done yet but it will be done. So this is what actually motivated me to start Uphold was the ability to turn your phone into your bank and to be able to exchange money and primarily really solving the ability for the poor to be able to move money around without having 10 to 20 to 30% of it taken away. Everybody's talked about this, remittance, and so far, nobody has actually solved that problem. That problem is going to get solved. I mean it's inevitable that the phone becomes the bank. There are so many regulations that are designed to stop that and it's extraordinary. Once you get into it and you see all the ways that have been set up-- >> Byzantine system. >> this problem should have been solved long ago, right? And every phone should be a bank. I mean, it can be connected to a bank, but every phone should have my money in it. I should be able to send it to you instantaneously. >> It shouldn't be like getting into Fort Knox. >> Yeah. I mean, computers, banks have computers, they could make this happen today. They just don't want to. So I think the most profound thing for me is the problem is still not solved, that the problem I set out to solve, which is really creating a more equitable financial system. And we live in a country where the banks make about 37 billion dollars a year in bounced check fees. Think about that. Thirty-seven billion dollars in bounced check fees. So if you just take that out, you just take out, 'cause it all affects people in the lower socioeconomic scale, you create a revolution. Just getting rid of the bank fees that you'll pay for bouncing checks. >> Well, I mean the narratives, like the narrative of taking down gatekeepers or central authorities, is the premise of this ecosystem and you could take that example and apply it to thousands of use cases. >> And banks are rapacious, flat out. American banks are the most rapacious 'cause no other country would allow 37 billion dollars to be taken away in bounced check fees. >> Halsey, congratulations on your success again and great to see you on theCUBE. You're now a Cube alumni, so ... >> Congratulations. >> We hope you'll come back again. >> Yeah, thank you guys. >> We're going to get you in our telegram group, now you'll be 42 members, we just turned on last night. (everyone laughs) We appreciate it and congratulations. >> Thank you very much. >> Thanks for your insight and experience and commentary. Halsey Minor, experienced entrepreneur, pro, here in the trenches, establishing a great new venture. We'll be back with more live coverage after this short break. (electronic music)

>> Announcer: Live from Nassau in the Bahamas it's The Cube covering Polycon 18 brought to you Polymath. >> Hello, welcome to The Cube for a special Cube event, our first kick off for our cryptocurrency, Blockchain, decentralized computing world that we know as Bitcoin, Ethereum, Blockchain and all the rest. I'm John Furrier, Dave Vellante. We're here previewing the conference/\. We'll be live tomorrow and Friday but were here down getting ready for the big festivities which is tonight's opening keynotes. We had the co-founder of Ethereum, Anthony Diiorio, and then Brock Pierce coming on. He also is a chairman of the Bitcoin Foundation. Luminaries as well as a bunch of other great guests, Bill Tai from California, a friend of The Cube's. This is a game changing event, Dave. You and I have talked about this on The Cube many times. The waves of innovation come, you know, this big once in a generation, maybe centuries. We're seeing one that I think is not as even big as the other ones, bigger. You combine the PC Revolution. I was just texting Michael Dell earlier today and said, "This feels like the PC Revolution." A bunch of pioneers coming together but it's got a different vibe. It's bigger. It's like the combination of the internet and PC Revolution all rolled into one with a community vibe on it. So, and we're going to have tons of coverage on this. What I want to ask you, Dave, directly is you've seen many waves and we work with and we cover some of the old guard, older companies like Dell EMC, HPE, Oracle, IBM, Microsoft and they're doing really good work pivoting and trying to be ready for this new wave. It's just on Blockchain, it's just how the world works, Cloud, you know, IoT but decentralized cannot be ignored. So, some think this is a blind spot to these legacy and emerging vendors changing vendors like Oracle and IBM and HPE and Dell Technologies. Are they ready? Do you think they're ready? Do you think they even understand what's coming? And people squabble over Cloud market share and it's just funny, right? It's like there's a bigger thing coming over the top. >> Well, first thing I got to say is I got to give you props as my partner because you've been covering, you know, Blockchain, Bitcoin on SiliconANGLE since I don't know -- >> John: 2010. >> 2010, when I first met you, right. And so once again you are sort of ahead of the curve. I feel like we're at our first Hadoop World, you know, back in 2010. And so, props to you and the SiliconeANGLE team. To answer your question, no. No, they're not ready and to me it's not even about just Blockchain. I mean, Blockchain technology they can adopt. The bigger issue is digital disruption. And digital disruption is all about the data at the core of the organization and business models that are built around data. And if you think about the history of companies, it's human expertise and data's bolted on. We've seen this time and time again but if you look at the top five market cap companies, Facebook, Amazon, Google, et cetera, they're data companies. Data is at the center and they take human expertise and wrap it around there. So, the future is going to be about innovation with data, with artificial intelligence and Cloud economics and the old guard doesn't have those things. Blockchain fits in there. To me Blockchain is about building out a new distributed web and on top of the old web and rewarding those who were building it. So, it's a new form open-source where the builders get paid. >> But it's also decentralized and you have a value store, value creation capture model that has all the wrappings of what we traditionally see in a centralized database or even Cloud. You need networks, you need storage, you need databases, you need tokens, which is a form of data. So token economics, I mean, it's a new value economy, Dave. I mean, I just don't, I feel like the, I just, from my perspective, I just don't think those guys are seeing it. >> No and so it's not only those guys. It's the most of the world. I mean, you turn on CNBC and Buffet's on there saying this is going to end badly and there's negative, you know, trade press about, you know, Bitcoin and Silk Road and all that stuff. What most of the world is missing, and that makes people run away, but this is happening, it's real. It's going be the foundation for a next generation internet. It's happening, you see it all the time. Developers built the internet. Developers are going to rebuild the internet on top of this. So, I would suggest that people just try to squint through or squint passed the negative press and try to really understand what this trend is all about and how it's going to fundamentally change the internet and change the world. >> Well, there's negative press that's worthy. There's a lot of scams out there. There's security issues >> Sure >> but these are evolutionary problem spaces that can be solved. One, the scammers are going to be vetted out, the bubble bursting but the real value, creation is going to come from developers and that, to me, is what I hear you saying as your main point. >> No question about it. And I think that that, you know, there's lots of challenges. This stuff is not easy. First of all, who would've ever thought that something like Ethereum could even have been built, this kind of distributed infrastructure? I mean, it's very, very challenging. Of course we know about the scaling problems, the latency issues, all that stuff but these are problems that smart people are going to go attack and solve. And again I emphasize, it's the new form of, remember the old open systems, right? Unix and open systems. Well fast forward passed open-source, which the internet was built on open-source. Think about Linnux, everything's built on Linnux. But today developers who are building these new protocols are actually going to get paid to that. Guys like Anthony, you know, who made hundreds of millions -- >> Anthony Diiorio, co-founder of Ethereum, doing Jaxx wallet as part of Decentral. Great use case. He's paying it forward and I think the community here is a real dynamic and I think what we learned at The Cube, Dave, is the communities matter and now, more than ever they're actually having an input. Look what open-source has done to the software business over the past three decades, okay? Completely revolutionized the world we live in. So if you take the open-source apply those principals to, whether it's content media or decentralized infrastructure and applications, it's going to be a haven of innovation. >> Well and if you think about this, too, folks. Is that, you know, the centralized model has essentially co-opted all this innovation in the last 15 years, right? They've won. Closed won, Facebook won, they killed RSS. >> Well, Facebook's not winning now. They're under a lot of pressure because they screwed the election over and the data that they're using, some will argue, that, when I use Facebook, okay? Facebook's great, I get a free app, I let them have my data 'cause I want to connect with my friends but they're throwing elections off. I didn't bargain for that. The context has changed. So, to me, the shift of user data is going to move into the hands of the users. Do you agree with that statement? >> Yes, no question. And the other thing, just to finish my thought -- >> That's not good for Facebook. >> And we've talked about this, John. Protocol and development has stagnated, you know? Gmail is built on SMTP, you know, HTTP, DNS, these are all protocols that were developed by governments, and academia and the big guys just co-opted them and so, protocol development stagnated. What you need to understand about Blockchain is it bring back innovation -- >> Well, Anthony Diiorio said on my interview with him, one-on-one, that protocol developers are the most in demand role because those big guys take in co-oping those protocols, Dave, as you pointed out, is causing a revolution. It's almost like the 60s for tech. It's like there is a ground swell. I see it, I feel it. Not just a wave of innovation but the actors and the people involved look at this as a liberating opportunity to free the centralized forces that are quite frankly holding the world back. >> And I want to, this is very important and it was really epiphany when it hit me, is if you wanted to invest in TCP/IP, back in the day, how would you do that? You couldn't invest in TCP/IP. You could maybe invest in companies -- >> John: Cisco. (laughs) >> Yeah, can invest in companies. Okay, but you and I couldn't have gotten in early on Cisco, right? It was all the insiders. Today, developers who are building out these protocols, they can own the protocol. That's a form of investment and they got, essentially, equity in that token. >> Dave, we're going to be doing a lot of crypto shows and Blockchain shows because we're talking about the decentralization of the world. This is the future of our globe and work and play. What are you looking for, as we go down and knock down these shows, as The Cube goes out on this new mission? >> Well, I think Anthony kind of hinted at this. Is he's looking at infrastructure. It's like the early days of the internet with, you know, the pickaxe guys, you know, made all the money. It's the infrastructure that's getting built out. So, I want to see how that develops and how that sets the foundation, the platform for distributed applications, number one. Number two is I want to understand some of these challenges and how they're going to be addressed. The scaling issues, the latency problems, some of the, you know, nitty gritty technical challenges, who's working on those? And the third is, what's the right investment profile? How are the investors at this conference and other conferences going about deciding what to invest in? Right? How do they squint through quality and garbage? >> Well, I'm going to be heading to a special investor event. Dave, I'm going to put my ear to the ground and of course The Cube will go wherever it takes to get the story, whether it's the Bahamas. Not a bad gig here but important. We're going to get the most important stories and share that with you. And continue our mission of getting this content out in the open, shining the light on relevance and the right reputable people. Dave, always great. >> Thanks, John. >> And looking forward to a great week. (techno music)

(upbeat electronic music) >> Welcome back, everyone, to this special Cube conversation. I'm John Furrier in the Cube's Palo Alto Studios. My next guest is Dr. Tom Bradicich, he's a friend of the Cube, works at Hewlett Packard Enterprise, heads up the IOT. He's general manager and vice president of servers, converged edge, IOT systems. But we're here to talk about, not so much HPE but really that work that Tom's done in a topic called First Mover, a book that he's writing. It hasn't come out yet, so we'll get an early preview of what it's like to create a category innovation and how to use process to your advantage, not make it your enemy. (chuckles) How to use creativity and how to motivate people and how to sell it through organizations, whether it's venture capitalists or managers. Tom, you've got great experience, thanks for spending time to come into the studio. >> Great to be here, thanks for having me and I'm happy to have this discussion. >> If you go back to the Cube videos, folks watching that know you, seen all the videos at HPE Discover or HP Discover, back in the day, you had a great career. You were an engineer, built the first notebook computer with IBM, you've done a lot of groundbreaking things and I like the topic of your book, First Mover, 'cause it speaks to your mindset. Entrepreneurial, innovative, breaking through walls, you probably got a lot of scar tissue. So, I want to talk about that. Because this is what the opportunity many entrepreneurs have as you know, in the Cube, we really believe that a renaissance in software development is coming. It's so obvious, open source is growing at a extraordinary pace, reuse of code. >> Right. >> You got IOT. >> You're involved in, you got crypto currency, block chain, all these new waves are coming all at once. >> Yes. >> I wish I was 22 again. >> Because this is a great opportunity to innovate. But this improving things, what are some of those things? Let's jump in, what do you see as the playbook? What have you learned and what can you share? >> Well, sure, I've been blessed, I've had a career where I've been able to do a lot of innovation but also, I like to separate the notion of innovation from differentiation. Now see, it's possible to be innovated and not different. Like it's possible for you and I to have the same new suit. It's new, it's innovative, but it's not different. And differentiation is really where one can have a first mover advantage because differentiation by definition is new, is innovation. But it's not always the other way around. So, I always tell my teams and I always focus on, how can we be two things, both different and better. It's possible also to be different and not as good. You can have the highest failure rate in the industry, you're different but that's not good. >> Right? >> Yeah. >> So, the concept here is how do you be different, not just new and innovative but how to be different and how do you be good. And I've actually faced three risks in mostly the big corporate culture that we've had to innovation. And the first risk is, of course, the obvious one, will customers buy it, that's called market risk. Is it something that's good enough to be purchased at a profit? The second risk is, can it be manufactured at quality and at a rate of consumption. The third risk is your own company, does the company have what it takes, actually, to take on the risk of a brand new product category, not just a new product. But a new category of products that, by definition, have never been done before. And when one can do that, when one can figure that out, and I've had some significant experience with this, you can catapult your careers, you can catapult your company and your customers to new levels because you enjoy the benefits of the first mover. That's the name of the book, The First Mover. >> Well, I'm looking forward to seeing it. But I want to ask, this is super important because a lot of people are really good at something and they run hard, they break through a wall but might have missed something. So, you kind of bring up this holistic picture. What are some of the things that folks should focus in on? Say I have a breakthrough idea, I have a prototype I've been running, it's in market, I think it's the best thing since sliced bread, I'm pushing it hard, people are just going to lap this up, this is going to be great, I know it's innovative but no one else knows it. >> Right, right, yeah. >> What do I do? >> What's the process, what do you recommend? >> Well, what I like to do is portion the benefits into two categories. There's supply side benefits that's to your company. Why is this good for your company to do this? And then there are demand side benefits. Meaning, why is it good for the customer? Most people tend to focus mostly on the demand side. Oh, it's solves this problem and the customers will love it and that's important and I would call that a necessary but not a sufficient condition. The other condition is why is this good for your company? And many times, when it's a brand new product category, those inside a company aren't quite in tune with why it's good for the customer. Because, again, it's a new thing, it's a new product category. Why is an automobile better than a horse and buggy, right? Why is a laptop computer better than a desktop computer? These are the ideas where it may be intuitive, it may be instructive to talk about that but when you can get a business model first and start with that, well, the reason is, we can enjoy this margin. The reason is, we can enjoy this particular first mover advantage, the halo effect, the reputation of being the leader. The reason is because we can penetrate a new market. The reason is we can now overcome a falling revenue in a shrinking tam. Now we can accelerate in another tam, perhaps, as well. So, by coming up with both the demand side and the supply side, you have a better case to go forward for support and funding inside a big corporation. >> There's always product market fit, I hear the buzzwords, I got to get the cashflow positive, break even. There's always a motivating force to get something done. How should someone organize the order of their operations to get something done, to the market, if it's an innovative, groundbreaking, differentiating? Because a lot of the big challenge is, some people call it landing span, I heard that buzzword too but you get a champion inside a company and that champion embraces it and most people think, oh man, I got a customer. But then that person has to sell it through and then it has to be operationalized, meaning, people got to get used to it. These are really challenges. >> They are, yes. >> What is your view of how an entrepreneur or a business executive or practitioner to get through that? >> Well, you have to get people on your side and it's really important. Somebody's got to believe in, either, you not even understanding what you're proposing but they'd say, well, you have a track record. For some reason, I believe what you're saying. And then, secondly, getting customers. So, I have personally never done anything major without a customer that I call an inspiration customer. That's a name I just made up. So, a customer, by definition, is an end user that will buy something from you, that's the definition of a customer. And an inspiration customer is one that will help you that is okay with seeing your dirty laundry, okay with mistakes you might make because they see the value in it and they also see the value in them being a first mover. And I like to tell my team, we want to be a first mover and a trendsetter, so our customers can also be trendsetters in their business as well. So therefore, by getting that customer support, and that's in the form of POCs or in trials or in just customer testimony, combine that now with a second dimension called the analyst community, which you're team resides in as well, also saying well, I think this is good as well, brings a lot credibility because there's a saying, a verse in the bible that a prophet is not without honor except in his own home town. Now, if you think about that, a lot of times, you're own company that you reside in has a lower point of view because it's very consumed with, indeed, what is next and doing the right thing, by the way. I have to make this quarter, right. We have to protect the brand. We have to keep the cashflow coming in. These are all important things, so how do you get someone to focus on that? Many times, it's not you anymore, it's outside. And I call that the second C. The first C is internal, the company. The second C is your customers and the community. That also could include, by the way, analysts, the media, other experts, consultants, those type of Cs around there. Now the third C is the competition. This is a little bit controversial. What happens when the idea is now exploited by the competition first; sometimes that is a motivator for a company to jump on it as well and make the market. But, again, if you follow the competition, you're not the first mover, you don't enjoy the benefits of first mover advantage. Higher margin, the halo effect of being the innovators and also, learning, that's an important one. When you're a first mover, you're out there learning so that you can respond to the second generation in a better way. >> I like the notion of differentiation and innovation as two different variables. >> Yes. >> Because it's super important. You can be different and not innovative. You can be innovative and not different. Again, it's all contextual but I want to get back to the pioneering of the first movers. So, statistically speaking, a lot of the best entrepreneurs are first movers and they're often "misunderstood", you hear that all the time. >> Yes. >> Or being a visionary is the difference being 10 years in the future versus an hour, can make the difference between success. (chuckles) We are crazy on one end and you're brilliant on the other because the time to value catches up with that profit, if you will. So the question is that, how does first movers continue to win 'cause I've seen situations where first movers come in, get a position and win and stay, keep the lead. Other times, first movers come in, set the market up, create all the attention and then have arrows on their back. >> And a second mover enjoys the benefit. >> Yeah, so the second mover comes in, bigger scale, so this competition, competitive strategy overlaid on this. Which even complicates it even further. >> Indeed, yes. >> So, your thoughts on that. >> Yes, indeed. Well, one way to look at this is the way to move forward is again, when you can get some momentum that's not you. That's the number one as a... >> John: Market growth, number of subscribers, doing the internet as a trend. >> Yes. >> Mobile users. >> Yes. >> And a third party consultant who's highly respected, a greaser, an analyst. I ran into an analyst recently in a coffee shop who agreed with some of this first mover work we're doing and converged edge systems, which is a new class of products as well. But it's really important that you can't be discouraged, let me point this out. What I tell my team, and I tell students, I lecture at universities and I've been edge professor, those younger in their career, is if you cast and vision and you have an idea and nobody gets it, don't be discouraged, that's a good sign. That's sounds a little funny. Why is it a good sign? Because if everybody gets it right away, it's likely not that novel, it's likely rather ordinary, it's likely been thought of before as well. So, by the very nature and definition that the average person might think it's discouraging. Oh, nobody understands me, nobody gets this idea, should be an encouragement, and a motivation. Now the risk here, is people not getting it is also a sign of a stupid idea. So, usually, when people don't get it, it's either, really not good. >> Or really good. >> Or really amazing that, eventually, they'll come around to it. I had a boss in one of my career opportunities told me to stop working on a product. I don't want to give too much detail, but he literally told me that. And I said, I didn't want to be insubordinate to a boss, we have them and I said, can I please just keep working on it, okay, don't let it interfere with the other stuff. Dah, dah, dah. Today that market is a nine billion dollar market as well. >> Of that product that you-- >> Of that very product that I was told by a very astute person, one of my colleagues, my bosses, that I don't see the future in this, let's not do this, you know, as well. But, being able to have a second thing. So, number one is don't be discouraged by people not getting it. By definition, that's supposed to happen. >> Yeah. >> When you have new-- >> Good point, you want to finish that? >> I just want to get-- >> Get one more thing. >> If I may add a second one. And as you're moving forward with this as well is seek out and find those who do agree with you and stick with them very, very closely. And I have, I can say a couple of names. There's one, we've created this new product class called Converge Edge Systems. Alan Andriole is senior vice president at HP. >> Cube alumni. >> And he's a Cube alumni. >> Super smart. And I'm pointing him out because he has publicly taken on this idea that this product category can really, really work and he's worked-- >> John: Cloud Nine? >> Oh, the converge edge system called Edgeline. >> Okay, got it. >> The Edgeline product brand. >> You know it as well. So therefore, when you find someone who had authority-- >> Eagles fly together, you want to get a good peer group. >> Absolutely. >> Here's a question for you. >> One of my experiences, and I want to just get your reaction and add on to it, your thoughts is, most entrepreneurs or pioneers are misunderstood, so I agree, don't be discouraged, but also, keep validating and be a data seeker, get the data. But a lot of the times, just getting something in the market or getting it going creates movement and inertia to get rolling and sometimes the original idea is actually the big idea turns into it as you get more data. An example is like Air B&B wasn't... What it is, it was basically air mattresses and selling cereal. >> Yes, yes. >> That was the original story, right. And then it turned into, but conceptually, it was the same thing, so you don't have to be 100% right on the semantics. >> It's well known that most startups don't end up being successful with the product they start with. That's well known fact but that's true also in large companies with a product idea as well. So, you have to have this interesting balance. It's very interesting as I've thought about this in study. You have to have deep philosophical and conviction of principles. And here's why: If you don't, you will be swayed by everybody's opinion and you'll never get anything done because oh, well, that's a good idea, maybe I should do this well, that's a good idea, maybe I should do this. Now, I'm not saying that's bad to listen to others but if you don't have a grounding of principles. Example, we established the seven principles of the IOT over two years ago, and we've held on to them and created the success we have based on those principles. Now that's not to say we didn't modify them a little bit but the point is, we were convicted with something and when somebody would come up with a counter to it, we had a way to defend our convictions, if you will, in internal debates and external debates as well. And then, secondly, you got to be also okay with being the sole inhabitant of that field of discourse. Being a visionary can be a very lonely job because of that, right. And, again, it's because you are and your team is, it's not always a lone person right, the team is actually creating something that literally nobody's ever seen before. Nobody understand before. >> What process do you wrap around this? Because Dave Alonzo and I always talk about this on the Cube and after the Cube is that the process has to be your friend, not your enemy. It has to work for you. >> I always say that, yeah. >> Also says that as well on Amazon. But also Charlie Munger, Warren Buffet's partner always says I'm not a big fan of master plans, meaning, because become a slave to the plan rather than the opportunity. >> Yep, yep. >> So these are process kind of things, right. So how does an innovator that's a first mover that wants to create a category, 'cause categories killers or category creators are huge opportunities financially. So they create a lot of value wealth and opportunity. What process is best? Is there a view, is it conditional on certain things? What's your thoughts on... >> Well, let me say, I'm going to give you a big company or a medium size company context, not a startup, I think they're distinctly different. I have limited experience with a startup but I've had significant experience with bigger, medium and large, now, companies as well. You can't try to change the system because now you have two variables. You got this new product that nobody's ever heard of and now you're trying to change the whole system. Now, again, this is just advice for bigger companies. So be careful how many things you want to change, how many things you want to stop. So you want to take this new thing and align it with existing processes and existing core competencies as much as you can, even though it's new, it has to have some alignment; I'll give you an example. When we built the converged edge systems, the Edgeline brand, we aligned it with compute. It's not only compute, but we aligned it with compute, why? Because HPE or HP, at the time, was and is and now, number one in compute when it comes to data center. Compute systems when it comes to high performance computing and mission critical, right. So therefore, that was easy to understand so you're okay, you're familiar with this, but now, let me tell you this new twist on it. And I would assume, and I don't know this for sure, but I would assume Steve Jobs and the Apple team that was thinking of this smartphone concept, the iPhone as well, they had to align it with some level of compute capabilities, right. And if you notice, as it emerged, it also included something that already exists called the iPod which was already aligned with their laptop computers and their desktops, right. Your music would be downloaded as an app to connectivity, but now you can take it with you and by the way, now I'll add a phone to it and so this incrementally built and by the way, you ain't seen nothing yet, I'm going to add a GPS system, I'm going to add a camera, your flashlight, your wallet, I'm going to add all that in. So, I think, by incrementally moving but not upsetting the system, like you said, in a large company really, really helps because you can't change everything too quickly. You got to be okay being alone-- >> Well, I want to interrupt you there for a second. Peter Buress and I talk all the time; I love his quote, Peter Buress, head Cube on research says, the iPhone was a computer that happened to make phone calls. Okay, and that's the smartphone, it's category creator and we know what happened, the rest is history. However, you mentioned talking to customers, having an inspiration customer, I love that concept. Because you need a muse as an innovator. You got to have someone you can trust that knows what you're trying to do that understands the mission. If Steve Jobs went into the marketplace and did market research, he would have probably had the customer feedback to build the best Blackberry. A better Blackberry or another device. Instead, he used is gut, was on his mission and then he understood the inspirational customer, whether it was real or not, he was going down a different road. It takes guts but also some discipline. >> I hear you and I agree with this 100%. When I had the great fortune of leading a team that created the first enterprise blade server or converge system, and today that is pushing about a 10 billion dollar market opportunity, and not one customer asked me for it. Now, that doesn't mean I didn't listen, okay. But I had to bring it to them. So here's the difference, we're not responding to trends, this is a key point, we're creating a trend. And what I tell my team is, you must create trends, not follow them. Many of competitors, are by the way making good money and doing good business, I'm not knocking that, but I'm saying they're not creating a trend, they're actually following one. They're in an exploding tam. >> Pretty lucrative trend. >> It can be. >> Very mature, big market. >> Dave Thomas with Wendy's followed a trend called hamburgers and he did pretty well. He didn't create the hamburger market but he followed one. Now, this is really rather interesting. So when you come in, and then you're saying I want to actually set a trend and create one, it really gives you this opportunity to redefine what is happening. So now, quick story, you may have heard this, maybe your viewers have heard this. A manager of a shoe company sends two guys to an island. He says, I want you to sell shoes on this island. They get to the island, the first guy calls back and says, boss, this is terrible, everybody is barefoot. There's no opportunity to sell shoes. This is terrible, I'm coming home. The second guy calls and says, boss, you're not going to believe this, there's not a shoe on this island and I have a tam that's 100% of the market to sell shoes. I believe, as you pointed out, Steve Jobs didn't go and say well, what apps do you own on your Blackberry. What he did is reversed it and this is what we're doing, we're reversing, we're saying, if you could watch a full length high definition movie in your hand, would you? Well, I can but I can't do it on this device. But if you could, right. So now, in the IOT, I hear this all the time from my competitors and even some colleagues out in the industry, well, we ask them what apps they run at the Edge. We ask them what they do at the Edge. That's good, that's necessary but not sufficient. You have to say, but if you had this product, wouldn't you, for example, run an entire database? Would you compile your machine learning models at the Edge, do it in the cloud now, wouldn't you do that, if you had it? Well, I never thought of that because I don't have that capability, just like, well, I never thought of being able to take pictures and watch full length high definition movies 'cause I never had it. But what if you did, would you do it? So you always got to be setting that trend, not responding to it only. >> That's awesome. >> Dr. Tom Bradicich, writing a book called First Mover really about being innovative. Give you the final word, thanks for coming in, appreciate you sharing the advice. What's going on with HPE and your IOT work? Take a minute to talk about what's happening at HPE. >> Well, thanks, pretty exciting, we've been able to move forward with some really great customer wins. I'm hoping to go public with them. We're in many ways, I know this is an abused term, but we're revolutionizing the industrial IOT in particular and manufacturing floors. We have the large auto-manufacturer that has chosen Edgeline as the standard to produce more and more vehicles per day. That's their goal, how many more vehicles can I get into my customer's hands per day. We have snack company making potato chips. Looking at what we're doing with sulfur, defining operations. We have even, we've talked about this before, space travel, engage with what the space edge is all about. In many ways, we're potato chips to space ships. >> Data centers on Mars. >> Data centers everywhere. >> And then, also, converging OT, just like the smartphone converged the camera and the GPS system, we're converging control systems, data acquisition systems. It's pretty exciting, I've been fortunate to have a company and our new CEO, Antonia Neery, has been very supportive, I was with him this morning and we talked about that new, first-of-a-kind product that we have at this auto-- >> So, is Antonio going to let us come in and do an exclusive interview since he's been a Cube alumni multiple times? >> Yes, I think he should. >> Tell him we said hello. >> I will, I will. >> Tom, great to see you. >> Thanks for having me. >> Tom Bradicich, great thought leader, really around category killers, category creators, being innovative and different, that's the key to success. Thanks for sharing. This is the Cube Conversation here in Palo Alto, I'm John Furrier, thanks for watching. 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>> Live from Boston, Massachusetts, it's The Cube! Covering IBM Chief Data Officer Summit, brought to you by IBM. >> Welcome back to The Cube's live coverage of IBM's Chief Data Strategy Summit, I'm your host Rebecca Knight, along with my cohost Dave Vellante. We have a big panel today, these are our social influencers. Starting at the top, we have Christopher Penn, VP Marketing of Shift Communications, then Tripp Braden, Executive Coach and Growth Strategist at Strategic Performance Partners, Mike Tamir, Chief Data Science Officer at TACT, Bob Hayes, President of Business Over Broadway. Thanks so much for joining us. >> Thank you. >> So we're talking about data as a way to engage customers, a way to engage employees. What business functions would you say stand to benefit the most from using data? >> I'll take a whack at that. I don't know if it's the biggest function, but I think the customer experience and customer success. How do you use data to help predict what customers will do, and how do you then use that information to kind of personalize that experience for them and drive up recommendations, retention, upselling, things like that. >> So it's really the customer experience that you're focusing on? >> Yes, and I just released a study. I found that analytical-leading companies tend to use analytics to understand their customers more than say analytical laggards. So those kind of companies who can actually get value from data, they focus their efforts around improving customer loyalty by just gaining a deeper understanding about their customers. >> Chris, you want to jump in here with- >> I was just going to say, as many of us said, we have three things we really care about as business people, right? We want to save money, save time, or make money. So any function that meets those qualifications, is a functional benefit from data. >> I think there's also another interesting dimension to this, when you start to look at the leadership team in the company, now having the ability to anticipate the future. I mean now, we are no longer just looking at static data. We are now looking at anticipatory capability and seeing around corners, so that the person comes to the team, they're bringing something completely different than the team has had in the past. This whole competency of being able to anticipate the future and then take from that, where you take your organization in the future. >> So follow up on that, Tripp, does data now finally trump gut feel? Remember the HBR article of 10, 15 years ago, can't beat gut feel? Is that, we hit a new era now? >> Well, I think we're moving into an era where we have both. I think it's no longer an either or, we have intuition or we have data. Now we have both. The organizations who can leverage both at the same time and develop that capability and earn the trust of the other members by doing that. I see the Chief Data Officer really being a catalyst for organizational change. >> So Dr. Tamir I wonder if I could ask you a question? Maybe the whole panel, but so we've all followed the big data trend and the meme, AI, deep learning, machine learning, same wine, new bottle, or is there something substantive behind it? >> So certainly our capabilities are growing, our capabilities in machine learning, and I think that's part of why now there's this new branding of AI. AI is not what your mother might have thought AI is. It's not robots and cylons and that sort of thing that are going to be able to think intelligently. They just did intelligence tests on the different, like Siri and Alexa, quote AIs from different companies, and they scored horribly. They scored much worse than my, much worse than my very intelligent seven-year old. And that's not a comment on the deficiencies in Alexa or in Siri. It's a comment on these are not actually artificial intelligences. These are just tools that apply machine learning strategically. >> So you are all thinking about data and how it is going to change the future and one of the things you said, Tripp, is that we can now see the future. Talk to me about some of the most exciting things that you're seeing that companies do that are anticipating what customers want. >> Okay, so for example, in the customer success space, a lot of Sass businesses have a monthly subscription, so they're very worried about customer churn. So companies are now leveraging all the user behavior to understand which customers are likely to leave next month, and if they know that, they can reach out to them with maybe some retention campaigns, or even use that data to find out who's most likely to buy more from you in the next month, and then market to those in effective ways. So don't just do a blast for everybody, focus on particular customers, their needs, and try to service them or market to them in a way that resonates with them that increases retention, upselling, and recommendations. >> So they've already seen certain behaviors that show a customer is maybe not going to re-up? >> Exactly, so you just, you throw this data in a machine learning, right. You find the predictors of your outcome that interest you, and then using that information, you say oh, maybe predictors A, B, and C, are the ones that actually drive loyalty behaviors, then you can use that information to segment your customers and market to them appropriately. It's pretty cool stuff. >> February 18th, 2018. >> Okay. >> So we did a study recently just for fun of when people search for the term "Outlook, out of office." Yeah, and you really only search for that term for one reason, you're going on vacation, and you want to figure out how to turn the feature on. So we did a five-year data poll of people, of the search times for that and then inverted it, so when do people search least for that term. That's when they're in the office, and it's the week of February 18th, 2018, will be that time when people like, yep, I'm at the office, I got to work. And knowing that, prediction and data give us specificity, like yeah, we know the first quarter is busy, we know between memorial Day and Labor Day is not as busy in the B to B world. But as a marketer, we need to put specificity, data and predictive analytics gives us specificity. We know what week to send our email campaigns, what week to turn our ad budgets all the way to full, and so on and so forth. If someone's looking for The Cube, when will they be doing that, you know, going forward? That's the power of this stuff, is that specificity. >> They know what we're going to search for before we search for it. (laughter) >> I'd like to know where I'm going to be next week. Why that date? >> That's the date that people least search for the term, "Outlook, out of office." >> Okay. >> So, they're not looking for that feature, which logically means they're in the office. >> Or they're on vacation. (laughter) Right, I'm just saying. >> That brings up a good point on not just, what you're predicting for interactions right now, but also anticipating the trends. So Bob brought up a good point about figuring out when people are churning. There's a flip side to that, which is how do you get your customers to be more engaged? And now we have really an explosion in reinforcement learning in particular, which is a tool for figuring out, not just how to interact with you right now as a one off, statically. But how do I interact with you over time, this week, next week, the week after that? And using reinforcement learning, you can actually do that. This is the the sort-of technique that they used to beat Alpha-Go or to beat humans with Alpha-Go. Machine-learning algorithms, supervised learning, works well when you get that immediate feedback, but if you're playing a game, you don't get that feedback that you're going to win 300 turns from now, right now. You have to create more advanced value functions and ways of anticipating where things are going, this move, so that you see things are on track for winning in 20, 30, 40 moves, down the road. And it's the same thing when you're dealing with customer engagement. You want to, you can make a decision, I'm going to give this customer a coupon that's going to make them spend 50 cents more today, or you can make decisions algorithmically that are going to give them a 50 cent discount this week, next week, and the week after that, that are going to make them become a coffee drinker for life, or customer for life. >> It's about finding those customers for life. >> IBM uses the term cognitive business. We go to these conferences, everybody talks about digital transformation. At the end of the day it's all about how you use data. So my question is, if you think about the bell curve of organizations that you work with, how do they, what's the shape of that curve, part one. And then part two is, where do you see IBM on that curve? >> Well I think a lot of my clients make a living predicting the future, they're insurance companies and financial services. That's where the CDO currently resides and they get a lot of benefit. But one of things we're all talking about, but talking around, is that human element. So now, how do we take the human element and incorporate this into the structure of how we make our decisions? And how do we take this information, and how do we learn to trust that? The one thing I hear from most of the executives I talk to, when they talk about how data is being used in their organizations is the lack of trust. Now, when you have that, and you start to look at the trends that we're dealing with, and we call them data points verses calling them people, now you have a problem, because people become very, almost analytically challenged, right? So how do we get people to start saying, okay, let's look at this from the point of view of, it's not an either or solution in the world we live in today. Cognitive organizations are not going to happen tomorrow morning, even the most progressive organizations are probably five years away from really deploying them completely. But the organizations who take a little bit of an edge, so five, ten percent edge out of there, they now have a really, a different advantage in their markets. And that's what we're talking about, hyper-critical thinking skills. I mean, when you start to say, how do I think like Warren Buffet, how do I start to look and make these kinds of decisions analytically? How do I recreate an artificial intelligence when machine-learning practice, and program that's going to provide that solution for people. And that's where I think organizations that are forward-leaning now are looking and saying, how do I get my people to use these capabilities and ultimately trust the data that they're told. >> So I forget who said it, but it was early on in the big data movement, somebody said that we're further away from a single version of the truth than ever, and it's just going to get worse. So as a data scientist, what say you? >> I'm not familiar with the truth quote, but I think it's very relevant, well very relevant to where we are today. There's almost an arms race of, you hear all the time about automating, putting out fake news, putting out misinformation, and how that can be done using all the technology that we have at our disposal for disbursing that information. The only way that that's going to get solved is also with algorithmic solutions with creating algorithms that are going to be able to detect, is this news, is this something that is trying to attack my emotions and convince me just based on fear, or is this an article that's trying to present actual facts to me and you can do that with machine-learning algorithms. Now we have the technology to do that, algorithmically. >> Better algos than like and share. >> From a technological perspective, to your question about where IBM is, IBM has a ton of stuff that I call AI as a service, essentially where if you're a developer on Bluemix, for example, you can plug in to the different components of Watson at literally pennies per usage, to say I want to do sentiment analysis, I want to do tone analysis, I want personality insights, about this piece, who wrote this piece of content. And to Dr. Tamir's point, this is stuff that, we need these tools to do things like, fingerprint this piece of text. Did the supposed author actually write this? You can tell that, so of all the four magi, we call it, the Microsoft, Amazon, Google, IBM, getting on board, and adding that five or ten percent edge that Tripp was talking about, is easiest with IBM Bluemix. >> Great. >> Well, one of the other parts of this is you start to talk about what we're doing and you start to look at the players that are doing this. They are all organizations that I would not call classical technology organizations. They were 10 years ago, look at a Microsoft. But you look at the leadership of Microsoft today, and they're much more about figuring out what the formula is for success for business, and that's the other place I think we're seeing a transformation occurring, and the early adopters, is they have gone through the first generation, and the pain, you know, of having to have these kinds of things, and now they're moving to that second generation, where they're looking for the gain. And they're looking for people who can bring them capability and have the conversation, and discuss them in ways that they can see the landscape. I mean part of this is if you get caught in the bits and bites, you miss the landscape that you should be seeing in the market, and that's why I think there's a tremendous opportunity for us to really look at multiple markets of the same data. I mean, imagine looking and here's what I see, everyone in this group would have a different opinion in what they're seeing, but now we have the ability to see it five different ways and share that with our executive team and what we're seeing, so we can make better decisions. >> I wonder if we could have a frank conversation, an honest conversation about the data and the data ownership. You heard IBM this morning, saying hey we're going to protect your data, but I'd love you guys, as independents to weigh in. You got this data, you guys are involved with your clients, building models, the data trains the model. I got to believe that that model gets used at a lot of different places, within an industry, like insurance or across retail, whatever it is. So I'm afraid that my data is, my IP is going to seep across the industry. Should I not be worried about that? I wonder if you guys could weigh in. >> Well if you work with a particular vendor, sometimes vendors have a stipulation that we will not share your models with other clients, so you just got to stick to that. But in terms of science, I mean you build a model, right? You want to generalize that to other businesses. >> Right! >> (drowned out by others talking) So maybe if you could work somehow with your existing clients, say here, this is what we want to do, we just want to elevate the waters for everybody, right? So everybody wins when all boats rise, right? So if you can kind of convince your clients that we just want to help the world be better, and function better, make employees happier, customers happier, let's take that approach and just use models in a, that may be generalized to other situations and use them. If if you don't, then you just don't. >> Right, that's your choice. >> It's a choice, it's a choice you have to make. >> As long as you're transparent about it. >> I'm not super worried, I mean, you, Dave, Tripp, and I are all dressed similarly, right? We have the model of shirt and tie so, if I put on your clothes, we wouldn't, but if I were to put on your clothes, it would not be, even though it's the same model, it's just not going to be the same outcome. It's going to look really bad, right, so. Yes, companies can share the models and the general flows and stuff, but there's so much, if a company's doing machine learning well, there's so much feature engineering that's unique to that company that trying to apply that somewhere else, is just going to blow up. >> Yeah, but we could switch ties, like Tripp has got a really cool tie, I'd be using that tie on July 4th. >> This is turning into a different kind of panel (laughter) Chris, Tripp, Mike, and Bob, thanks so much for joining us. This has been a really fun and interesting panel. >> Thank you very much. Thank you. >> Thanks you guys. >> We will have more from the IBM Summit in Boston just after this. (techno music)

>> Announcer: Live from Washington, DC it's theCUBE. Covering .conf2017. Brought to you by Splunk. >> Welcome back here on theCUBE continuing our coverage of .conf2017 sponsored by Get Together in your nations capitol, we are live here at the Walter Washington Convention Center in Washington, DC. Along with Dave Vellante I'm John Walls Joined now by a couple CUBE alums, actually, you guys were here about a year ago. Yeah, Robert Herjavec, with the Herjavec Group of course you all know him from Shark Tank fame answer Atif Ghauri who is the VP of Customer Service Success at the Herjavec Group. I love that title, Atif we're going to get into that in just a little bit. Welcome. >> Thank you. >> Good to see you all. >> We're more like CUBE groupies We're more like CUBE groupies. >> Alums. >> Alums, okay, yeah. >> If we had a promo reel. >> Yeah, we love it here. We get free mugs with the beautiful Splunk. >> That doesn't happen all the time does it. >> Where did you get those? >> They're everywhere. >> Dave, I'll share. >> So again for folks who don't, what brings you here what, what's the focus here for the Herjavec Group in in terms of what you're seeing in the Splunk community and I assume it's very security driven. >> Yeah, well we've been part of the Splunk community for many years going on gosh, eight, nine years. We're Splunkers and we use Splunk as our core technology to provide our managed service and we manage a lot of customer environments with Splunk and we've been really forefront of Splunk as a SIM technology for a long time. >> Atif, excuse me, David, just the title, VP of Customer Service Success, what's under that umbrella? >> Yeah, it's actually pretty simple and straightforward given especially that Splunk's aligned the same way. Christmas success is King, right. If our customers aren't successful then how are we successful? So what we're trying to do there is putting the customer first and help in growing accounts and growing our services starting with our customers that we have today. >> It was actually Doug Maris, I have to give him full credit him and I were on a flight, and I said to him what's really critical to you growing revenue, efficiency, innovation and he said, number one for us is customer success. So we're very happy to steal other people's ideas if they're better. >> So security's changing so fast. You mentioned SIM, Splunk's narrative is that things are shifting from a traditional SIM world to one of an analytic driven remediation world. I wonder if you could talk about what you're seeing in the customer base, are people actually shifting their spending and how fast and where do you see it all going? >> Yeah, so the days of chasing IOC's is a dead end. Because that's just a nonstop effort. What's really happening now is technique detection. Defining, looking at how hackers are doing their trade craft and then parroting that. So Splunk has ideas and other vendors have ideas on how to go about trying to detect pattern recognition of attacker trade craft. And so what definitely was driving what's next when it comes to security automation, security detection, for our customers today. >> You know, we always tell people and it's just dead on but the challenge is people want to buy the, sexy, exciting thing and why I always try to say to customers is you're a dad and you have three kids, and you have a minivan. You don't really want to own a minivan, you want a really nice Ferrari or Corvette but at the end of the day, you have three kids and you got to get to the store. And in the security world it's a little bit like that. People talk about artificial intelligence and better threat metrics and analytics but the core, foundational basis still is logs. You have to manage your log infrastructure. And the beauty of Splunk is, it does it better than anyone and gives you an upstream in fact to be able to do the analytics and all those other things. But you still got to do the foundation. You still got to get three kids into the minivan and bring back groceries. >> So there's been a lot of focus, obviously security's become a Board level topic. You hear that all the time, you used to not hear it all the time, used to be IT problem. >> Absolutely, the only way I could get a meeting with the CEO or CIO was because I was on Shark Tank. But as a security guy, I would never meet any executives. Oh yeah I spend 80% of my time meeting with CEO, not just CIO's, but CEO's and Boards and that kind of stuff, absolutely. >> How should the CIO be communicating the Board about security, how often, what should be the narrative you know, transparency, I wonder if you could give us your thoughts. >> It's a great question. There's a new financial regulation that's coming out where CISO's and CIO's actually have to sign off on financial statements related to cyber security. And there's a clause in there that says if they knowingly are negligent, it carries criminal charges. So the regulations coming into cyber security are very similar to what we're seeing and Sarbanes Oxley like if a CEO signs an audit statement that he suspects might have some level of negligence to it I'm not talking about outright criminal fraud but just some level of negligence, it carries a criminal offense. If you look at the latest Equifax breach, a lot of the media around it was that there should be criminal charges around it. And so as soon as as you use words like criminal, compliance, audit, CEO's, executives really care. So the message from the CIO has to be we're doing everything in our power, based on industry standards, to be as secure as we can number one. And number two we have the systems in place that if we are breached, we can detect it as quickly as possible. >> So I was watching CNBC the other day and what you don't want to see as a Board member, every Board members picture from Equifax up there, with the term breach. >> Is that true? >> Yeah, yeah. >> See, but, isn't that different. Like you never, like if we think back on all the big breaches, Target and Sony they were all seminal in their own way. Target was seminal because the CEO got fired. And that was the first time it happened. I think we're going to remember Equifax, I didn't know that about the Board. >> For 50 seconds it was up there. I the sound off. >> You don't want to be a Board member. >> I mean, I hate to say it, but it's got to be great for your business, first of all it's another reason not to be a public company is one more hurdle. But if you are they need help. >> They absolutely need help. And on point I don't want to lose is that what we're seeing with CISO's, Chief Information Security Officers, Is that that role's transcending, that role is actually reporting directly to in to CEO's now. Directly into CFO's now, away from the CIO, because there's some organizational dynamics that keep the CISO from telling, what's really going on. >> Fox in henhouse. >> Exactly. >> You want to separate those roles. You're you're seeing that more often. What percent of the CISO's and CIO's are separate in your experience? >> Organizations that have a mature security program. That have evolved to where it's really a risk-based decision, and then the security function becomes more like risk management, right. Just what you they've been doing for decades. But now you have a choice security person leading that charge. >> So what we really always saying theCUBE, it's not a matter of if, it's when you're going to get infiltrated. Do you feel as though that the Boards and CIO's are transparent about that? Do Boards understand that that it's really the remediation and the response that's most important now, or there's still some education that has to go on there? >> You know, Robert speaks to Boards are the time he can comment on that, but they really want to know two things, how bad is it and how much money do you need. And those are the key questions that's driving from a Board perspective what's going to happen next. >> What's worse that Equifax got breached or that Equifax was breached for months and didn't know about it. I mean, as a Board member the latter is much worse. There's an acceptance like I have a beautiful house and I have big windows a lots of alarms and a dog, not a big dog, but still, I have a dog. >> A yipper. >> Yeah, I have a yipper. It's worse to me if somebody broke into my house, was there for a while and my wife came home at night and the person was still there. That to me is fundamentally worse than getting an alarm and saying, somebody broke the window, went in, stole a picture frame. You're going to get breached, it's how quickly you respond and what the assets are. >> And is it all shapes and sizes, too I mean, we talk about big companies here you've mentioned three but is it the mid-level guys and do smaller companies have the same concerns or same threats and risks right now? >> See these are the you heard about. What about all the breaches you don't know. >> That's the point, how big of a problem are we talking about? >> It's a wide scaling problem right and to the previous question, the value now in 2017, is what is the quality of your intelligence? Like what actions can I take, with the software that you're giving me, or with the service that you're giving me because you could detect all day but what are you going to do about it? And you're going to be held accountable for that. >> I'm watching the service now screen over here and I've seen them flash the stat 191 days to detect an infiltration. >> That sounds optimistic to me. I think most people would be happy with that if they could guarantee that. >> I would think the number's 250 to 300 so that now maybe they're claiming they can squeeze that down but, are you seeing any compression in that number? I mean it's early days I know. >> I think that the industry continues to be extremely complicated. There's a lot of vendors, there's a lot of products. The average Fortune 500 company has 72 security products. There's a stat that RSA this year that there's 1500 new security start ups every year. Every single year. How are they going to survive? And which ones do you have to buy because they're critical and provide valuable insights. And which ones are going to be around for a year or two and you're never going to hear about again. So it's a extremely challenging complex environment. >> From the bad guys are so much more sophisticated going from hacktivists to whatever State sponsored or criminal. >> That's the bottom line, I mean the bad guys are better, the bad guys are winning. The white hats fought their way out to the black hats, right. The white hats are trying, trying hard, we're trying to get organized, we're trying to win battles but the war is clearly won by the by the black hats. And that's something that as an industry we're getting better at working towards. >> Robert, as an investor what's your sentiment around valuations right now and do you feel as though. >> Not high enough. >> Oh boy. >> Managed security companies should be trading way higher value. >> Do you feel like they're somewhat insulated? >> Its a really good question, we're in that space you know we're we're about a $200 million private company. We're the largest privately held, managed security company in the world actually. And so I always think every time we're worth more I think wow, we couldn't be worth more, the market can't get bigger. Because your values always based for potential size. Nobody values you for what you're worth today. Because an investor doesn't buy history an investor doesn't buy present state, an investor buys future state. So if the valuations are increasing, it's a direct correlation because the macro factors are getting bigger. And so the answer to your question is values are going to go up because the market is just going to be fundamentally bigger. Is everybody going to survive? No, but I think you're going to see valuations continue to increase. >> Well in digital business everybody talks about digital business. We look at digital business as how well you leverage data. We think the value of data is going through the roof but I'm not sure customers understand the intrinsic value of the data or have a method to actually value their data. If they did, we feel like they would find it's way more valuable and they need to protect it better. What are you seeing in that regard with customers? >> There's an explosion of data in that with IoT, internet of things, and the amount of additional data that's come now. But, to your point, how do you sequence and label data? That's been a multi-decade old question more organizations struggle with. Many have gone to say that, it's all important so let's protect it all, right. And verses having layers of approach. So, it's a challenging problem, I don't think across all our customer base. That's something that each wrestling with to try to solve individually for their companies. >> Well, I think you also have the reality though of money. So, it's easy to say all the data is important, Structured unstructured, but you look at a lot of the software and tools that you need around this floor are sold to you on a per user or per ingestion model. So, even though all your data is critical. You can't protect all your data. It's like your house, you can't protect every single component of it, you try, and every year gets better maybe get a better alarm maybe I'll get rid the yappy dog and get a Doberman you know you're constantly upgrading. But you can't protect everything, because reality is you still live in an unstructured, unsafe world. >> So is that the complexity then, because the a simple question is why does it take so long to find out if there's something wrong with your house? >> I think it's highly complex because we're dealing with people who are manipulating what we know to their benefit in ways we've never done it. The Wannacry breach was done in a way that had not been done before. If it had done before we could have created some analytics around it, we could created some, you know, metrics around it but these are attacks that are happening in a way we've never seen before and so it's this element of risk and data and then you always have human nature. Gary Moore was that the Council this morning. The writer of Crossing the Chasm, legendary book, and he said something very interesting which was Why do people always get on a flight and say, good luck with the flight, hope you fly safe. But they don't think twice about hopping in their car and driving to the grocery store. Whereas statistically, your odds of dying in that car are fundamentally greater, and it's human nature, it's how we perceive risk. So it's the same with security and data in cyber security. >> As security experts I'm curious and we're here in DC, how much time you think about and what your thoughts might be in the geopolitical implications of security, cyber war, you know it's Stuxnet, fast forward, whatever, ten years. What are you thoughts as security practitioners in that regard? >> The longest and most heated battles in the next World War, will not be on Earth, they'll be in cyberspace. It's accepted as a given. That's the way this Country is moving. That's the way our financial systems are tied together and that's the way we're moving forward. >> It's interesting we had Robert Gates on last year and he was saying you know we have to be really careful because while we have the United States has the best security technologies, we also have the most to lose with our infrastructure and it's a whole new you know gamification or game theory balance we have to play. >> I would agree with him that we have some of the best security technology in the world but I would say that our barometer and our limiter is the freedom of our society. By nature what we love about our country and Canada is that we love freedom. And we love giving people access to information and data and free speech. By nature we have countries that may not have as good a security, but have the ability to limit access to outsiders, and I'm not saying that's good by any means but it does make security a little bit easier from that perspective. Whereas in our system, we're never going to go to that, we shouldn't go to that. So now we have to have better security just to stay even. >> To Dave's point talking about the geopolitical pressures, the regulatory environment being what it is, you know legislators, if they smell blood right, it in terms of compliance and what have you, what are you seeing in terms of that shift focus from the Hill. >> Great question. I did a speech to about two thousand CIO's, CISO's not long ago and I said, how many people in this room buy security to be more secure and how many people buy because you have to be compliant. 50/50, even the security ones admitted that how they got budget was leveraging the compliance guys. It was easier to walk into CEO's office and say look, we have to buy this to meet some kind of a political, compliance, Board issue. Than it was to say this will make us better. Better is a hard sell. So that, has to go to the head to pull the trigger to do some of that. >> You know, I think in this geopolitical environment it's look at the elections, look at all the rhetoric. It's just there is going to be more of that stuff. >> A lot's changed in crypto and its potential applications in security. More money poured into ICO's in the first half than venture backed crypto opportunities. >> There are practical applications of blockchain technology all across the board, right, but as you mentioned is fundamentally built on pathology. On core gut security work and making a community of people decide whether something's authentic or not. It's a game changer, as far what what we could do from a platform standpoint to secure our financial systems and short answer it's volatile. As you saw with the fluctuation of Bitcoin and then the currency of Bitcoin, how it's gone up and down. It's quite volatile right now because there's a lot of risk So I say what's the next Bitcoin in six months or eighteen months and what's going to happen to the old Bitcoin and then all the money that into there, where is that going to go? So that's a discuss the pivot point I think for the financial services industry and more and more their larger institutions are just trying to get involved with that whole network of blockchain. >> Crypto currencies really interesting. In some ways it's the fuel that's funding the cyber security ransomeware. I mean it's one of the easiest ways to send money and be completely anonymous. If you didn't have crypto currency, how would you pay for ransomware? You give them your checking account? You deposit into their checking account? So, I think that you're seeing a big surge of it but if you look at the history of money or even checks, checks were developed by company called Deluxe here in the United States 104 years ago. They're a customer of ours, that's why I know this, but the basis of it is that somebody, a real institution with bricks and mortar and people in suits is backing that check, or that currency. Who's backing crypto currency today? So you have, by nature, you have this element of volatility and I don't know if it's going to make it or it's not going to make it. But inevitably has to cross from a purely electronic crypto form to some element of a note or a tender that I can take from that world and get backing on it. >> That's kind of what Warren Buffet has said about it. I mean I would respond that it's the community, whatever that means, that's backing it. I mean, what backs the greenback, it's the US Government and the US military. It's an interesting. >> Right like, at the end of the day I would still rather take a US dollar than even a Canadian dollar or a UK dollar. >> Gentlemen thanks for being with us. >> Great to see you. >> Thank you for the coffee mug. >> This is incredible. >> There's actually stuff in it too so be careful. >> I drank it is that okay? >> Can I go to the hospital. >> Atif, thanks for the time and Robert good luck with that new dog. (all laughing) >> Don't tell my wife I got rid of her dog. >> In time. >> In time. All things a time, theCUBE continues live here Washington DC at .conf2017 right after this.

(instrumental electronic music) >> Announcer: Live from Palo Alto, it's The Cube, covering Women Transforming Technology 2017, brought to you by VMware. (crowd) >> Welcome back to the Cube's coverage of Women Transforming Technology. I'm your host, Rebecca Knight. And I'm here at VMware, with Sindy Braun. She is the Vice President of Social Impact here at VMware. >> Hey Rebecca! >> Welcome! Thank you so much for taking the time-- >> Thank you. It's great to be here. >> To talk to us. >> So, I first of all want to commend you because this conference is fantastic. And you've really taken a Lot You've put it together. >> We did. Of course, it's a consortium, so we could not do this without the partners that we have, and, of course, the great team that is working on this. So, certainly, can't take credit for it, but it is the team has been tremendous in putting this together. >> Well, some of the feedback that I'm hearing is that this conference has a great mix of technical sessions, but then also professional career-based sessions-- >> Sindy: Um-hmm. Yeah. >> What's the balance that you're try to strike when you're putting it together. >> Sure, so this is actually part of what we were aiming at, is there are other conferences that focus on technical women, that focus on women in a certain industry. And this is where we wanted it to have that conversation, to build a community for women in tech. And I think it's the bit of a uniqueness around that, being able to create the network, the support system, the conversation that is happening and becoming even more important in today's world. And that's what we're trying to do here, is how do you create the conversation, and how do you continue the conversation. And this is our second year of doing it. Obviously, last year was such a success that coming back this year was almost a no-brainer in something that we really wanted to invest in. >> And the theme, breaking barriers-- >> Sindy: Um-hmm. >> Where did you... What was the thought behind that? >> I think it's where we're at from a diversity perspective where most companies, particularly, in Silicon Valley and in tech careers, how do we break those barriers? How do we break through? How do we take other people's stories and tell the story of breaking through, of building momentum? And we've got a lot of work to do, but this is where VMware is focused, is how are we going to pull together and make change? And for us, its always been driving it into the business, of making it a business-led initiative, as opposed to an HR-led initiative, which is where a lot of companies do this. And really making it both top down and bottom up because it's about changing consciousness. It's about changing the conversation, and it's about seeing the movement in both the diversity side, which is the numbers associated with it. And the inclusiveness side, which is how do you bring your whole self to work? How do you feel comfortable? And that's also you can see from where we're... The kind of people that are here. That's what it's about, is how do we change the face of women in technology. >> Gloria Steinem is giving the closing address. What a bold choice to choose a feminist. This is the Women Transforming Technology is the conference, and choosing a feminist icon-- >> Sindy: Um-hmm. >> To close it out-- >> Right. Talk today. We were obviously having discussions who would be the right choice and her name came up. And really it was, Wow, could we get her? (laughing) And she was available, and I think we're going to all be in for a treat this afternoon. We just got to spend some time with her, one-on-one Q and A. And it is... Runs so deep with her. She's actually pretty soft-spoken-- >> Rebecca: Um-hmm. >> But you can see that this is how she lives and breathes her life. And I'm just so excited! I can't wait to get in there and hear the keynote. >> One of your responsibilities here at VMware is being in charge of the foundation. >> Sindy: Um-hmm. >> And VMware has a very unique approach to giving. >> Sindy: Um-hmm. Yeah. >> Tell us more about that? >> So, that the approach that we've had is, again, most of what Vmware's and our culture is about is about choice, and about engaging our people, as opposed to many other sort of giving philosophies, which is really a top down approach. So, what we do is really give our employees the say in where did they want to give? How did they want to engage? And we call this Citizen Philanthropy, and we talk about it that every individual can make a difference and that's the Citizen Philanthropy. But at the end of the day, that's how we get to having a collective impact, right? And it has been phenomenal. We have done some work internally around employee engagement, what does this mean? And we're seeing phenomenal results from just how embedded this is in our culture. How proud people are of being able to give in this way. How much they value this as a culture. And we're seeing more and more of this within all of our employees. Most people talking about millennials really wanting to have their sense of purpose, but I'm seeing it across the spectrum. It's not just millennials, it's people at my age, which is much more than a millennial (laughing), all the way across, which is how do we get that sense of purpose? How do we give back? And that's essentially what the foundation approach is, how do we awaken the philanthropist in everyone? >> So, where are employees giving back? Give me some examples of how Citizen Philanthropy plays out. >> Across the board, so we invite our employees to engage, we invite our employees to... And we very generously offer 40 hours of service learning, right? I think just even that phrase, we don't call it volunteerism because really we're focusing on the being of service, and what do you learn from that, right? And I think that has a profound impact on people, and it's not just about, Oh, I'm going to do two hours here or there. It's seeing the impact this has, and then being able to apply it back to their own selves, and see how this grows them and changes their perspective of the world. When we first launched the foundation, it was under the then CEO, Paul Maritz, and he's made this comment up, Anybody who works here has won the lottery of life, alright. And it's part of who we are. And being able to give back is such a tremendous, just privilege. And people feel that and we see it. We just did a survey and we're working on our employee NPS score, which is would they recommend the company. And we found that those employees that have engaged in our foundation programs are 25% more likely to recommend the company. So, you can see how this is really embedded-- >> So, it has an effect on retention. >> And retention, be the culture, and that, in turn, has an impact on hiring because they'll recommend it to their friends, and who, again, are looking for more in a company than just-- >> Um-hmm. >> How am I going to earn my paycheck? And I think that's part of what the foundation allows us to accomplish for people. >> I think that quote from your former CEO has stayed with me, You've won the lottery of life. Do you think that is part of the culture in Silicon Valley, too? I mean, there's a humility there? Because I got to be honest-- >> I think there is-- >> It doesn't appear that way (laughing). >> There's a lot of privilege out there. And I think that's the opportunity that we have, and I think we're seeing some of this changing, with the Warren Buffet's giving away his money. >> Rebecca: Um-hmm. >> What the Gates' Foundation is doing out there. But I think there's a constant reminder of that sense of privilege that where we are in the world, and how we almost have a responsibility to give back and make a difference for others. >> Rebecca: That's great. >> So. >> Well, Sindy Braun, thank you so much for joining us! >> Thank you, this has been a pleasure. >> I'm Rebecca Knight, your host at The Cube. This is Women Transforming Technology at VMware. We'll be right back. (instrumental electronic music)