(bright upbeat music) >> Hey, good morning from Las Vegas. It's Lisa Martin and Paul Gillin here. We are on day three of AWS re:Invent. We started Monday night, we went all day yesterday, we are going all day today and all day tomorrow. The amount of content coming at you from theCUBE, great, interesting, fascinating conversations with AWS, its customers, its ecosystem partners is incredible. Paul, what's your take so far on re:Invent? We've been here two and a half days. >> Well, it's just a fire hose. Like I've said before, this morning's keynote was about was about ML, machine learning and AI, and I stopped counting at 15 new announcements during about a 90 minute keynote, it's just one thing after another. And that's the nature of re:Invent, you know? It's always a showcase for new stuff. And they talk about customers, you talk about customers, I love it when we have a chance to talk to customers on theCUBE as we are about to do. >> We are about to talk to one of the nation's leading digital banks, you know them well, Capital One. Please welcome, Lo Li, Managing Vice President of Customer Digital Experience and Payments. Thank you so much, Lo, for joining us. >> Why, thank you, I'm glad to be here. >> Talk a little bit about your role where it fits within the organization, what it encompasses? >> Sure, yeah. So, I lead the retail bank technology organization which is a form of, you know, we have teams that lead digital experiences for our consumers. We look after agent in-person experiences with their cafes in branches, our call centers and as well as of our MarTech and payments ecosystem. >> So you're new to Capital One, in the last less than a year, you know, we all know it, we love it, we know the tagline, what's in your wallet? I think we can all recite that. It's as I said in the opening, it's one of the nation's leading digital banks and technology is really core to its business strategy and delivering value to customers. What attracted you to Capital One and talk about it really as a digital bank that delivers all that value. >> Of course. Yeah, so, you know, I spent 20 years of my career in a digital space in retail, and fashion and hospitality. And that is what I love about IT and the industry that I'm in and what I do, which is bringing really great solutions and products to consumers and getting them excited about an experience and a brand. So I knew early on in my career I was attracted to really great brands and brands that wanted to innovate and disrupt the consumer space. So when Capital One gave me an opportunity, I couldn't be happier, right? This is an incredible bank, we have an incredible story, we're a young bank and yet we are very much on the leading edge of a digital bank experience. >> And you were in an interesting place because as we know retail banking is declining or at least bank branches are in decline. More and more people want to do their banking on their mobile apps or through their computers, particularly younger customers. And so you're having to manage all this, what are you doing? How are you tracking to these demographic changes accelerated by the pandemic and recreating the customer experience through multiple channels? >> Yeah, great question. We want to give our consumers an omnichannel experience irrespective of, you know, the few that still want to go into branches or perhaps they want to experience a cafe, and while there meet with one of our branch ambassadors to talk about their banking, we have consumers that want to go digital. So what we do is that we make sure that we're looking after the consumer holistically, irrespective of the channel. So whether they call into the call center because they need servicing or if they're physically present or they want to carry that on digitally, we make sure that we create super personalized custom experiences. We also work with a bunch of designers that are thinking through, you know, the life of a consumer now and their relationship to a bank. It is, to your point, it is no longer a branch, you know? That is a ubiquitous experience that we're by large knowing that we have to figure out and rethink. So, we're very lucky to have great designers that work with us and work on what is that experience that we want our consumers to have, from the pastries and the coffee, and the experience of being with an ambassador and how we can lead them through our iPads and digital experiences to continue to stay with us and for us to service them. >> You know, if we think about how much banking has changed especially in the last couple of years, when suddenly you couldn't get into a branch, even if you wanted to, it's amazing how we have this expectation that on my phone I can do any transaction I want in real time, I'm going to be able to see my balance, I can transfer money, I can make a payment. And we don't think about the technology on the back end but it's absolutely critical to powering that experience. >> Yeah. >> Talk about how you're doing that and is there customer feedback in that process? >> There is, but that's music to my ears by the way. The fact that you don't think about it tells me we're doing something really right, right? So first and foremost, we are super hypervigilant about security, that is top of mind, we are well managed. The cloud has enabled us to create these infrastructures that are highly secure, that are scalable and that allows us to really focus on innovation. So we use our mobile platform and our apps in that way, right? We know that this is a scalable, secure platform. We create really great products, we create very custom experiences for you that are relevant to you and your family and we create these digital products that are supposed to meet you where you are. >> But we certainly have, you know, this expectation that I'm going to get what I want, it's going to be relevant, it's going to be timely. If not, I'm going to pick up, not the phone, I'm going to go on social media and make a complaint. So from a brand reputation perspective, you guys, what you're doing is clearly going in the right direction. >> Yeah, yeah. Look, we take our bank voice and the voice of the customer extremely seriously. So, we have a really large infrastructure from a bank operations perspective. We have our bank voice agents that work with us that give us kind of really real-time feedback from our customers. You know, by the time you pick up the phone and call usually something has gone really wrong, right? So, we make sure that we stay lockstep with what our first level agents are hearing. Then we also look into our feedbacks, we have obviously ways to look into our mobile app. We look at all the reviews that we have and incorporate that into how we think about our product and how we invest and innovate on them. >> Before we turned on the cameras, you said an amazing thing. Capital One doesn't have any data centers anymore, doesn't have any mainframes anymore, it is fully in the cloud. Understanding that you weren't there in those old days but how does that change the way you think about new features, about technology, new technology developments for the customer when you don't have that legacy to drag along with you? >> It's incredible, right? Our cost efficiency, our production efficiency, how we think about going to the market now is really getting us to focus on the right parts of that product. We don't have to carry a lot of the technical debt, we don't carry that old infrastructure. So the way we develop, the way we design, the way we go to market is a lot faster than it ever was. >> Well, and the culture is there, the cultural mindset is there to be able to do that. I mean, if you think about who you compete with some of these institutions that have been around for a hundred years that also have to transform and digitize 'cause the customers expect it. That has to be a seamless process but their culture also has to be there because changing from being On-prem data centers to being completely in the cloud, it's a big change. >> Yeah, actually, you hit it, right? The cloud transformation is big, and hard and sticky. You got to move these workloads, you got to make 'em native, you got to deploy. But to your point, the harder part really is the culture, right? Because the cloud will then unleash productivity, it will unleash continuous improvement. It will bring product partners along the ride because they have to think differently about what they want to go to the market with, how they think about the cost of those units, how they think about cloud. So, you know, in my opinion, Capital One has done an incredible job bringing that entire, the entire organization along this cloud transformation including our culture, our processes, and our people. >> I know Capital One is proud of the work it's been doing in AI and machine learning. Can you talk about from the retail banking perspective, how is machine learning being applied to improve the customer experience? >> Yeah, well, you know, as you know, AI and machine learning is the heart of the bank, is the heart of Capital One. When we started in the early 90s, we were the only bank that was really trying to challenge how we use data to provide better products for our consumers, and that is ingrained in our DNA and everything that we do. So if you were to look at bank, we would start with, you know, from the time you are authenticating yourself, how we think about fraud and how do we capture bad actors, all the way to if you were to call into a call center, we use a lot of natural language processing models to make sure that we assess your sentiment, we give you the support that you need, and then of course, use that to learn more about how we service you. >> Interesting, I'm just wondering, do you think about Capital One as a technology company that does banking or a bank that is powered by technology? >> We are a technology company, and we happen to also have a bank. >> Lisa: I love that. What are some of the things that you've heard and seen at the show? Obviously, we're hearing numbers between 55 and 70,000 people here. It's crazy. And we're only getting a snapshot of that because here we are at Venetian Expo and the conference is going on all over the strip. But what are some of the things that you've heard from AWS that excite you about the partnership going forward? >> You know, I'll be honest, one of my happiest, proud moments, when we're talking about Lambda SnapStart yesterday, we actually, our team that is here today was part of the first beta of bringing in Lambda SnapStart. And we're super excited because it helps propel our serverless agenda. You know, we're continued to transform into the cloud. So, we have a lot of these partnership opportunities that, you know, make me super proud. >> Well follow up on serverless because to a lot of people, it's a concept that they don't really understand how to put it to practice. How is serverless a step forward? What has it enabled you to do that you couldn't otherwise do? >> Wow, a bunch. I think first and foremost, it helps us stay, you know, very well managed, security wise, right? It allows us to create automation and it takes away a lot of the heavy lifting that our engineers would have to do otherwise. And the byproduct of that is that we get to go focus on really fun, innovative ideas, and we get to go work on product development. We're taking a lot of the grit work of the management of the servers out of the engineer's hand and automating them. >> Banking, of course, one of the most regulated industries on the planet, has Cloud been able to help you in that respect? >> Yes. Yes it has. Look, we are in a regulated space which means everything we do has a ton of scrutiny, for the right reasons. So we actually built it into our design, so our design, our products, we design our platforms with security in mind, with the regulations in mind and make it where it's less of a thought, right? So, we obviously spend a lot of time from a risk posture helping our associates understand, really respecting the responsibility that we have to look after everybody's assets, right? Like it's, what a more incredible job than that? So, we spend a lot of time thinking about what is our risk posture, where is it, you know, from what you would imagine the regular scan vulnerabilities all the way to data protection. And now that we protect that data in Fly, like they're all things that is our number one job and we spend a ton of time focused on it. >> That's good, it's very complex but security is a topic we discuss regularly. We've seen the threat landscape change so dramatically in the last couple of years. Bad actors are getting far more sophisticated. They're leveraging the technology but when it comes to banking as Paul was talking about, from a regulations perspective, from an end customer perspective, we have this expectation that you're going to keep my data secure because nobody wants to be the next headline. >> Lo: Yes, that's right. That's right, and look, we are getting, we're getting smarter as well, right? So we are able to detect and monitor and go after the bad actors faster. We're doing it in a way that allows us configurability, it gives us time, it gives us speed, but at the same time we also work as a network, right? So a lot of our banks, we, you know, in some ways share a lot of this information to make sure that we're all going after a common enemy. >> Capital One recently launched a software company, Capital One Software, which is a relatively unusual move by a financial services organization. How has that affected the thinking at the company about what the company is and what other opportunities there might be outside of pure banking? >> Yeah, absolutely. So, Capital One Software is a very exciting new line of business. I think the team that is there is doing some really incredible, innovative work. But you know what's really interesting is they were talking about our new product SlingShot, it was born out of our needs, right? We knew that we needed to have better governance around our data. We created really great tools and it was very obvious that there was a commercial applicability there. And that is how we will continue to operate, right? As a bank, we're all in the cloud, we're all in in the cloud. It will give us the ability to start sharing some of these best practices. And I think the best is yet to come, I think we got some really good stuff in the pipeline. >> Lisa: Anything you can share in the-- >> No. >> Lisa: No? Tight lips. >> Tight lips. >> Excellent, well, last couple of questions. What's the main theme here? When people walk into the Venetian Expo and they see Capital One next to all these tech companies, what's the main theme that Capital One wants to get across to the greater community? >> Yeah, look, our mission is to change banking for good, it always has been our mission. We're very fortunate to be in a position to be tech innovators, and we're fortunate to disrupt, and that's what I want people to get out of it. >> Excellent, my last question for you, kind of continuing on this theme. If you had, you were going to have the opportunity to create new branding and it's going to go in the cafes and it's going to be like a little billboard inside about Capital One being a technology company that does banking. What do you think that that billboard, that sign would say? >> I think I'm going to stick with the change banking for good. I mean, that really is at the heart of our mission. >> Paul: It's a nice double message too, yeah. >> Yeah, with technology, with disruption, ultimately that's where our hearts and minds are at. >> Awesome. Lo, it's been great to have you on the program. Thank you for sharing what you're doing at Capital One, how you're working with AWS and also emerging technologies like AI and ML to really create a seamless digital customer experience. We really appreciate your time and your insights. >> Thank you. >> All right, for our guest and for Paul Gillin I'm Lisa Martin. You're watching theCUBE, the leader in live emerging and enterprise tech coverage. (upbeat music)

>>Good morning, everyone. Welcome back to the Cube's coverage of snowflake summit live from Caesar's forum in Las Vegas, Lisa Martin, with Dave Valante. Dave, we have had an action packed two days here, talking with loads of folks. There's been about 10,000 attendees here, the momentum, the excitement for snowflake, what they're building, what they're, what they've announced is huge. >>I'll tell you like this is a getaway day and there's still decent amount of buzz going on in the ecosystem here and the exhibit hall. And I was just saying, when you walk around Las Vegas, you'd never know the economy's about the tank with, you know, inflation is on the rise. I mean, Vegas is packed. >>It is packed it a lot of shows going on here. We are excited to welcome Patrick Barch, the senior director of product management at capital one software to the program. Patrick, it's great to have you. >>Thank you. It's great to be here. >>So we all know capital one. I love the commercials. I'm sure you have a, a large say in how fun and creative they are. Talk to us about capital one software. This is a new business software business. It >>Is. And so, you know, from our founding days in 1994, capital one has always recognized the power of data and technology to create differentiated experiences for our customers. But about 10 years ago, we declared that we were gonna reinvent the way that we build and use technology. One of the key steps in that journey was migrating from our owned and operated data centers to the public cloud. But in order to do that, we needed to build a number of products and platforms to help us operate at scale because the market just wasn't quite there yet. And so capital one software, which we announced last week, Woohoo is our first foray into bringing some of those cloud and data management products to market. >>Talk to us about you. Capital one is one of Snowflake's longest running and largest customers. How does snowflake help facilitate that >>A couple different ways? So first snowflake is a, it's a super powerful platform. They've changed the game when it comes to leveraging data. At scale in the cloud, we were an early investor. We were, we were one of their biggest customers. They've been a great partner along the way, helping us adopt the platform. But for us, when we adopted back in 2018 ish, we realized that with all of this power comes a lot of responsibility. And so we needed to make sure that we were putting good governance and good controls around our usage of snowflake from the start. And so, you know, we, we, we needed to build some, some tools to help us optimize our, our usage of snowflake. >>Okay. So you basically said we're going all in the cloud. You guys have made huge investments in, in AWS and obviously snowflake. And then now you're, you're sort of taking what you did internally and exposing it almost like, like Amazon did Amazon retail and then that's how AWS was born. Okay, awesome. What kind of results did you see internally in terms of the primary benefit? If I understand it is cost savings, but also better data management, right? Is that fair? >>So the, the totality of what we've built internally covers both cost savings, data management, data security, adherence to data privacy legislation. The product that we announced here at summit is really focused on cost optimization for snowflake, right? And so with these tools, we've been able to save about 27% on our projected snowflake costs. We've been able to save our teams about 50,000 hours of manual effort by reducing the number of change orders that they have to execute manually through automated infrastructure management. We've reduced our cost per query by about 43%. And so really what these enabled us to do is just get really efficient with how we use the system. You know, one, one of the challenges you might run into with snowflake is, is unexpected costs. And so by leveraging these tools, we've been able to make sure that our costs are predictable and consistent from month to month, which enables us to budget appropriately. >>And, and that's 50,000 hours person hours over what period of time >>Have to get back to you on the exact amounts? I mean, >>Years, months, several years. Weeks. Yeah. Yeah. Okay. So, but we're talking about tens and tens of millions of dollars, right? If you, I mean, just assume a hundred bucks an hour for, for a person just fully loaded. I mean, I'll just do that math. Okay. And 20% percent on snowflake cost. So here's, here's the question? Well, well, first of all, what's the vision, what's the like gimme a five year vision for, for the software group at capital one, >>We wanna bring capital one's data and cloud management expertise to the masses. Okay. We've spoken to a number of companies that are trying to follow in our footsteps. We've, we've heard again and again, that our challenges are their challenges. Our, the path that we walked is the path that they're trying to walk in. So we are super excited about bringing all of our expertise to the market. >>So start with cost savings, but the vision transcends cost savings, absolutely going into security, privacy, data management, >>Absolutely absolutely workflow. And the, the, you know, the industry's in a super interesting place now where it's very fragmented. There is a galaxy of tools out there. You, you look around here, there's hundreds and hundreds of different solutions, but they're point solutions. They're all going after an individual piece of the management puzzle. And what we found was that we needed to create these integrated experiences that were aligned to our team's jobs to be done, not necessarily in terms of, you know, a capability like cataloging or quality or entitlements, you know, in order to efficiently operate at scale, you need to string those things together in a way that lets your team get their job done. >>So my last question on this flow is, I dunno if you're familiar with you guys, maybe familiar with Sarah Wong and Martin CASAA published a piece that got, you know, pretty wide viewing and discussion. They are out out of Andreesen, a 16 Z that the cost of good sold for SaaS companies who are born in the cloud are gonna become so overwhelming that they're gonna repatriate and start managing themselves. And they use Dropbox as an example. Now Dropbox is storage. So it's very specific niche, you know, and I've talked to many, many companies like snowflake about this, and they're like, eh, that ain't happening anytime soon. How do you feel about that? Because if you look at SAS companies that are born in the cloud, their gross margins are, you know, they don't get to 90%, but they're healthy, you know, 75, you know, sometimes 78% even snowflakes, you know, end of decade forecast Scarelli has it. I think it's 78%. And the reason it's not higher is because of the cloud cost. You gotta pay the cloud bills, my belief and I've argued, this is that's okay. I can negotiate cloud bills. I can work with tools like yours over time to keep those down. And the cloud guys are gonna be competing with each other, but, but what do you make of that Patrick >>Cloud costs? Aren't gonna go down. Data is expanding at an exponential rate. The scale of data today is orders of magnitude versus what it was in on-prem systems. And so, you know, I don't think the cloud providers are too worried because data is exploding at such a, a crazy pace. And so it really becomes about using all of those resources as efficiently as possible. And, and in the cloud where compute is fully elastic, it scales infinitely instantly on demand. You know, it's all about getting it's, it's, it's all about making sure that if you're spending more, you're getting more business value. There's not wastage in the system. >>Same question, but different. Do you feel like strategically organizations generally in capital one specifically will, will, will optimize their time on optimizing or spend their, their effort optimizing the cloud costs? Or do you feel like long term you can actually be cheaper to manage yourself? In other words, our, our cloud benefits of not doing all that heavy lifting offset that potential, you know, cost equation. >>I mean, you saved just so much time and effort and headache, not having to manage physical infrastructure. And so like, you know, snowflake, you can write a sequel command to create a database. You can write a sequel command to create a data warehouse. Like the market will not give up that level of simplicity for managing infrastructure. And so I think at the end of the day, you're gonna, you're gonna see a focus on efficiency because what you really want your teams to be focused on your old, your old DBA and data engineering teams is focused on driving customer value, not in the weeds of infrastructure management. >>And that's why I think you guys, this is a great business that you're starting. And I think you, I, frankly, I think you're gonna get a lot of competition, which is a good thing that says you're in a great business and you guys are first >>Talk about the customer experience. You know, we are also as consumers demanding, we wanna be able to transact ASAP. We wanna make sure that, you know, on the swipe fraud detection happens, how does the Slingshot help facilitate and improve the customer experience if I'm transacting or I'm gonna sign up or I'm getting a mortgage. >>So with Slingshot, we enable your company, regardless of what you do at, at capital one, we're, we're a bank to build more personalized experiences for customers in a more cost effective way. And so Enno is our, our intelligent, personal banking assistant with snowflake. We're enable Enno to do way more than we were previously for less than we would've without some of these tools. >>And that's a huge competitive differentiator because we expect as consumers and of whatever it is. We want a personalized experience, right? That's relevant. That's gonna offer us products and services that might build upon what we've already done. >>It's it's kind of table stakes these days. Yes. And so with these tools and with snowflake, we were able to onboard our business teams were able to onboard over 400 new use cases over, over that same time period. And so really what it's enabled us to do is unlock the innovative power of our company and create more of these customer experiences. >>How does the customer visualize those, those cost savings? And, and, and do, do, do you have some tooling, maybe it's in the works to help them predict what kind of cost savings they have based on some modeling that >>You do. And absolutely. So we enable teams to enforce good governance around infrastructure management, up front by building rules and enabling their teams to create warehouses, create databases. And then once that infrastructure is up and running, we give them a whole bunch of dashboards that show transparency and to spend, we enable chargebacks to lines of business in today's consumption, driven business models. It's hard to reconcile at the end of the month, if you spent what you thought you spent and, and data costs have gone from CapEx to OPEX and, but not everybody is an expert. And so we look at usage data, we look at usage history and we come up with recommendations for how you can save money by, you know, tweaking this or tweaking that or better optimizing your, your compute. >>Should we expect you as you expand your opportunity to take your expertise and aim it at AWS more broadly, maybe Redshift more specifically, Google GCP, big query Azure, what, what should we expect there? >>You know, there's, there's a lot of opportunity to help companies optimize costs across other cloud providers as well. This, this concept of elastic compute, isn't just specific to snowflake. That's certainly one path that we could go down. You know, we have a lot of expertise in, in data management as well, and data privacy, data security. And so that's that, that's another path as well that, that we have expertise in. And so, you know, I think it's, it's an exciting time we're in, we're in an exciting place, but it's early days, >>Did you do a working backwards document? Can you share that with us? >>Fortunately >>Not five, five or 10 years down the road, you may decide to do that, right? >>Yeah. Let me, let me check with my PR person to see if I'm allowed to share here. That's >>I mean, I think this is gonna be a huge success and, and I think it it's, it's, it follows a lot of the things that we've learned from AWS. Yeah. And you guys have been all in there and, and, you know, it's funny, right? We laugh about working backwards, customer obsession, two pizza teams. I mean, it really has changed the sort of way that we think about developing software and, and managing infrastructures. I, I think you're gonna have a, a huge business and I, I wish you the best. >>I, I appreciate that. And the, the thing, a lot of that statement is, you know, internal teams are now starting to demand consumer great experiences for the tools that they use. Yeah, for sure. And so one of the things that we did was treat our internal associates. Like they were external customers, we applied design thinking, we applied product management, we built our experience in terms of what are you trying to accomplish? And what's getting in your way, because that's what people have come to expect with all of these consumer experiences, >>Collaboration. That's right. What last question for you? What would you say to peers in your, whatever, same industry, other industries that are really trying to figure out how to get their hands on data to become a data company, what would you advise them? Why should they choose >>Snowflake gives you so many building blocks out of the box to help you create a, a well-managed data ecosystem? You know, the simplicity with which you can create new infrastructure, define policies for that infrastructure onboard new users. I mean, it, it's one of the platforms in internally capital one that has the highest NPS score. And so, you know, if you're looking to adopt a, a data cloud platform, I mean, snowflake is certainly high up on the list of what you should be looking at. >>That's >>Awesome. How do you, do you consider this a SA, is it a consumption or how do you price for this? >>So we, we don't have published pricing at the moment, but it is, it is a SAS product. You know, what we can share is it'll, it'll be a, you know, small fraction of, of your, of your total credit spend with snowflake and, and >>You're thinking a subscription or, or haven't figured that out yet, >>It it'll likely be a, a consumption model based on, you know. Okay. >>So the, so, so say, you know, it's funny SAS, I get it. Software's a service, but it, but because it's consumption, I think it's like modern SAS. If I can say that, you know, it's cloud >>SAS and it, it, you know, it's more important to make sure right now, because we're so early that we're actually providing the right value to customers. We have a pretty generous trial program going on right now where you can try the, the, the software out for free to make sure it, it fits your needs. So, >>Okay. So you're in trial, right. I should have clarified that you're in trial now. And, and so, yeah, of course you haven't figured out exactly how you're gonna price it yet. But >>The, the, the official posture that we're taking is public preview. We've, we've been in private preview for the last six months. We've onboarded a, a couple of customers who are starting to use the product. And so the, the big announcement this week is we're officially in public preview, come on in. >>So you gotta get product market fit. That's right. Before you figure out your pricing and before you, then you, then you're gonna scale. Great. >>What's been the feedback so far >>Overwhelmingly positive. Somebody stopped by the booth and said, oh my God, that's so cool. We've heard a lot of, wow, we need this right now. You know, it's, I had pretty, pretty high expectations coming in, just based on the value that this is created for capital one, but I've, I've been blown away by, by what I've heard from the people who've stopped by our booth. >>Awesome. Patrick, thank you for joining Dave and me on the program, talking about what you're doing with capital one software seems like you're just in early innings, but so much potential to come. We wish you the best of luck with that. And you have to come back and tell us how it's going. Thanks so much. Thanks for having me, our pleasure for Dave ante. I'm Lisa Martin. You're watching the cube our day three coverage of snowflake summit 22 live from Las Vegas continues after a short break.

(gentle upbeat music) >> People hate to be sold, but they love to buy. We become what we think about, think, and grow rich. If you want to gather honey, don't kick over the beehive. The world is replete with time-tested advice and motivational ideas for aspiring salespeople, Dale Carnegie, Napoleon Hill, Norman Vincent Peale, Earl Nightingale, and many others have all published classics with guidance that when followed closely, almost always leads to success. More modern personalities have emerged in the internet era, like Tony Robbins, and Gary Vaynerchuk, and Angela Duckworth. But for the most part, they've continued to rely on book publishing, seminars, and high value consulting to peddle their insights and inspire action. Welcome to this video exclusive on theCUBE. This is Dave Vellante, and I'm pleased to welcome back Professor Mark Roberge, who is one of the Managing Directors at Stage 2 Capital, and Paul Fifield, who's the CEO and Co-Founder of Sales Impact Academy. Gentlemen, welcome. Great to see you. >> You too Dave and thanks. >> All right, let's get right into it. Paul, you guys are announcing today a $4 million financing round. It comprises $3 million in a seed round led by Stage 2 and a million dollar in debt financing. So, first of all, congratulations. Paul, why did you start Sales Impact Academy? >> Cool, well, I think my background is sort of two times CRO, so I've built two reasonably successful companies. Built a hundred plus person teams. And so I've got kind of this firsthand experience of having to learn literally everything on the job whilst delivering these very kind of rapid, like achieving these very rapid growth targets. And so when I came out of those two journeys, I literally just started doing some voluntary teaching in and around London where I now live. I spend a bunch of time over in New York, and literally started this because I wanted to sort of kind of give back, but just really wanted to start helping people who were just really, really struggling in high pressure environments. And that's both leadership from sense of revenue leadership people, right down to sort of frontline SDRs. And I think as I started just doing this voluntary teaching, I kind of realized that actually the sort of global education system has done is a massive, massive disservice, right? I actually call it the greatest educational travesty of the last 50 years, where higher education has entirely overlooked sales as a profession. And the knock-on consequences of that have been absolutely disastrous for our profession. Partly that the profession is seen as a bit sort of embarrassing to be a part of. You kind of like go get a sales job if you can't get a degree. But more than that, the core fundamental within revenue teams and within sales people is now completely lacking 'cause there's no structured formal kind of like learning out there. So that's really the problem we're trying to solve on the kind of like the skill side. >> Great. Okay. And mark, always good to have you on, and I got to ask you. So even though, I know this is the wheelhouse for you and your partners, and of course, you've got a deep bench of LPs, but lay out the investment thesis here. What's the core problem that you saw and how are you looking at the market? >> Yeah, sure, Dave. So this one was a special one for me. We've spoken in the past. I mean, just personally I've always had a similar passion to Paul that it's amazing how important sales execution is to all companies, nevermind just the startup ecosystem. And I've always personally been motivated by anything that can help the startup ecosystem increase their success. Part of why I teach at Harvard and try to change some of the stuff that Paul's talking about, which is like, it's amazing how little education is done around sales. But in this particular one, not only personally was I excited about, but from a fun perspective, we've got to look at the economic outcomes. And we've been thinking a lot about the sales tech stack. It's evolved a ton in the last couple of decades. We've gone from the late '90s where every sales VP was just, they had a thing called the CRM that none of their reps even used, right? And we've come so far in 20 years, we've got all these amazing tools that help us cold call, that help us send emails efficiently and automatically and track everything, but nothing's really happened on the education side. And that's really the enormous gap that we've seen is, these organizations being much more proactive around adopting technology that can prove sales execution, but nothing on the education side. And the other piece that we saw is, it's almost like all these companies are reinventing the wheel of looking in the upcoming year, having a dozen sales people to hire, and trying to put together a sales enablement program within their organization to teach salespeople sales 101. Like how to find a champion, how to develop a budget, how to develop sense of urgency. And what Paul and team can do in the first phase of essay, is can sort of centralize that, so that all of these organizations can benefit from the best content and the best instructors for their team. >> So Paul, exactly, thank you, mark. Exactly what do you guys do? What do you sell? I'm curious, is this sort of, I'm thinking in my head, is this E-learning, is it really part of the sales stack? Maybe you could help us understand that better. >> Well, I think this problem of having to upscale teams has been around like forever. And kind of going back to the kind of education problem, it's what's wild is that we would never accept this of our lawyers, our accountants, or HR professionals. Imagine like someone in your finance team arriving on day one and they're searching YouTube to try and work out how to like put a balance sheet together. So it's a chronic, chronic problem. And so the way that we're addressing this, and I think the problem is well understood, but there's always been a terrible market, sort of product market fit for how the problem gets solved. So as mark was saying, typically it's in-house revenue leaders who themselves have got massive gaps in their knowledge, hack together some internal learning that is just pretty poor, 'cause it's not really their skillset. The other alternative is bringing in really expensive consultants, but they're consultants with a very single worldview and the complexity of a modern revenue organization is very, very high these days. And so one consultant is not going to really kind of like cover every topic you need. And then there's the kind of like fairly old fashioned sales training companies that just come in, one big hit, super expensive and then sort of leave again. So the sort of product market fit to solve, has always been a bit pretty bad. So what we've done is we've created a subscription model. We've essentially productized skills development. The way that we've done that is we teach live instruction. So one of the big challenges Andreessen Horowitz put a post out around this so quite recently, one of the big problems of online learning is that this kind of huge repository of online learning, which puts all the onus on the learner to have the discipline to go through these courses and consume them in an on-demand way is actually they're pretty ineffective. We see sort of completion rates of like 7 to 8%. So we've always gone from a live instruction model. So the sort of ingredients are the absolute very best people in the world in their very specific skill teaching live classes just two hours per week. So we're not overwhelming the learners who are already in work, and they have targets, and they've got a lot of pressure. And we have courses that last maybe four to like 12 hours over two to sort of six to seven weeks. So highly practical live instruction. We have 70, 80, sometimes even 90% completion rates of the sort of live class experience, and then teams then rapidly put that best practice into practice and see amazing results in things like top of funnel, or conversion, or retention. >> So live is compulsory and I presume on-demand? If you want to refresh you have an on demand option? >> Yeah, everything's recorded, so you can kind of catch up on a class if you've missed it, But that live instruction is powerful because it's kind of in your calendar, right? So you show up. But the really powerful thing, actually, is that entire teams within companies can actually learn at exactly the same pace. So we teach it eight o'clock Pacific, 11 o'clock Eastern, >> 4: 00 PM in the UK, and 5:00 PM Europe. So your entire European and North American teams can literally learn in the same class with a world-class expert, like a Mark, or like a Kevin Dorsey, or like Greg Holmes from Zoom. And you're learning from these incredible people. Class finishes, teams can come back together, talk about this incredible best practice they've just learned, and then immediately put it into practice. And that's where we're seeing these incredible, kind of almost instant impact on performance at real scale. >> So, Mark, in thinking about your investment, you must've been thinking about, okay, how do we scale this thing? You've got an instructor component, you've got this live piece. How are you thinking about that at scale? >> Yeah, there's a lot of different business model options there. And I actually think multiple of them are achievable in the longer term. That's something we've been working with Paul quite a bit, is like, they're all quite compelling. So just trying to think about which two to start with. But I think you've seen a lot of this in education models today. Is a mixture of on-demand with prerecorded. And so I think that will be the starting point. And I think from a scalability standpoint, we were also, we don't always try to do this with our investments, but clearly our LP base or limited partner base was going to be a key ingredient to at least the first cycle of this business. You know, our VC firm's backed by over 250 CRO CMOs heads of customer success, all of which are prospective instructors, prospective content developers, and prospective customers. So that was a little nicety around the scale and investment thesis for this one. >> And what's in it for them? I mean, they get paid. Obviously, you have a stake in the game, but what's in it for the instructors. They get paid on a sort of a per course basis? How does that model work? >> Yeah, we have a development fee for each kind of hour of teaching that gets created So we've mapped out a pretty significant curriculum. And we have about 250 hours of life teaching now already written. We actually think it's going to be about 3000 hours of learning before you get even close to a complete curriculum for every aspect of a revenue organization from revenue operations, to customer success, to marketing, to sales, to leadership, and management. But we have a development fee per class, and we have a teaching fee as well. >> Yeah, so, I mean, I think you guys, it's really an underserved market, and then when you think about it, most organizations, they just don't invest in training. And so, I mean, I would think you'd want to take it, I don't know what the right number is, 5, 10% of your sales budget and actually put it on this and the return would be enormous. How do you guys think about the market size? Like I said before, is it E-learning, is it part of the CRM stack? How do you size this market? >> Well, I think for us it's service to people. A highly skilled sales rep with an email address, a phone and a spreadsheet would do really well, okay? You don't need this world-class tech stack to do well in sales. You need the skills to be able to do the job. But the reverse, that's not true, right? An unskilled person with a world-class tech stack won't do well. And so fundamentally, the skill level of your team is the number one most important thing to get right to be successful in revenue. But as I said before, the product market for it to solve that problem, has been pretty terrible. So we see ourselves 100%. And so if you're looking at like a com, you look at Gong, who we've just signed as a customer, which is fantastic. Gong has a technology that helps salespeople do better through call recording. You have Outreach, who is also a customer. They have technologies that help SDRs be more efficient in outreach. And now you have Sales Impact Academy, and we help with skills development of your team, of the entirety of your revenue function. So we absolutely see ourselves as a key part of that stack. In terms of the TAM, 60 million people in sales are on, according to LinkedIn. You're probably talking 150 million people in go to market to include all of the different roles. 50% of the world's companies are B2B. The TAM is huge. But what blows my mind, and this kind of goes back to this why the global education system has overlooked this because essentially if half the world's companies are B2B, that's probably a proxy for the half of the world's GDP, Half of the world's economic growth is relying on the revenue function of half the world's companies, and they don't really know what they're doing, (laughs) which is absolutely staggering. And if we can solve that in a meaningfully meaningful way at massive scale, then the impact should be absolutely enormous. >> So, Mark, no lack of TAM. I know that you guys at Stage 2, you're also very much focused on the metrics. You have a fundamental philosophy that your product market fit and retention should come before hyper growth. So what were the metrics that enticed you to make this investment? >> Yeah, it's a good question, Dave, 'cause that's where we always look first, which I think is a little different than most early stage investors. There's a big, I guess, meme, triple, triple, double, double that's popular in Silicon Valley these days, which refers to triple your revenue in year one, triple your revenue in year two, double in year three, and four, and five. And that type of a hyper growth is critical, but it's often jumped too quickly in our opinion. That there's a premature victory called on product market fit, which kills a larger percentage of businesses than is necessary. And so with all our investments, we look very heavily first at user engagement, any early indicators of user retention. And the numbers were just off the charts for SIA in terms of the customers, in terms of the NPS scores that they were getting on their sessions, in terms of the completion rate on their courses, in terms of the customers that started with a couple of seats and expanded to more seats once they got a taste of the program. So that's where we look first as a strong foundation to build a scalable business, and it was off the charts positive for SIA. >> So how about the competition? If I Google sales training software, I'll get like dozens of companies. Lessonly, and MindTickle, or Brainshark will come up, that's not really a fit. So how do you think about the competition? How are you different? >> Yeah, well, one thing we try and avoid is any reference to sales training, 'cause that really sort of speaks to this very old kind of fashioned way of doing this. And I actually think that from a pure pedagogy perspective, so from a pure learning design perspective, the old fashioned way of doing sales training was pull a whole team off site, usually in a really terrible hotel with no windows for a day or two. And that's it, that's your learning experience. And that's not how human beings learn, right? So just even if the content was fantastic, the learning experience was so terrible, it was just very kind of ineffective. So we sort of avoid kind of like sales training, The likes of MindTickle, we're actually talking to them at the moment about a partnership there. They're a platform play, and we're certainly building a platform, but we're very much about the live instruction and creating the biggest curriculum and the broadest curriculum on the internet, in the world, basically, for revenue teams. So the competition is kind of interesting 'cause there is not really a direct subscription-based live like learning offering out there. There's some similar ish companies. I honestly think at the moment it's kind of status quo. We're genuinely creating a new category of in-work learning for revenue teams. And so we're in this kind of semi and sort of evangelical sort of phase. So really, status quo is one of the biggest sort of competitors. But if you think about some of those old, old fashioned sort of Miller Heimans, and then perhaps even like Sandlers, there's an analogy perhaps here, which is kind of interesting, which is a little bit like Siebel and Salesforce in the sort of late '90s, where in Siebel you have this kind of old way of doing things. It was a little bit ineffective. It was really expensive. Not accessible to a huge space of the market. And Salesforce came along and said, "Hey, we're going to create this cool thing. It's going to be through the browser, it's going to be accessible to everyone, and it's going to be really, really effective." And so there's some really kind of interesting parallels almost between like Siebel and Salesforce and what we're doing to completely kind of upend the sort of the old fashioned way of delivering sort of sales training, if you like. >> And your target customer profile is, you're selling to teams, right? B2B teams, right? It's not for individuals. Is that correct, Paul? >> Currently. Yeah, yeah. So currently we've got a big foothold in series A to series B. So broadly speaking out, our target market currently is really fast growth technology companies. That's the sector that we're really focusing on. We've got a very good strong foothold in series A series B companies. We've now won some much larger later stage companies. We've actually even won a couple of corporates, I can't say names yet, but names that are very, very, very familiar and we're incredibly excited by them, which could end up being thousand plus seat deals 'cause we do this on a per seat basis. But yeah, very much at the moment it's fast growth tech companies, and we're sort of moving up the chain towards enterprise. >> And how do you deal with the sort of maturity curve, if you will, of your students? You've got some that are brand new, just fresh out of school. You've got others that are more seasoned. What do you do, pop them into different points of the curriculum? How do you handle it? >> Yeah we have, I'll say we have about 30 courses right now. We have about another 15 in development where post this fundraise, we want to be able to get to around about 20 courses that we're developing every quarter and getting out to market. So we're literally, we've sort of identified about 20 to 25 key roles across everything within revenue. That's, let's say revenue ops, customer success, account management, sales, engineering, all these different kinds of roles. And we are literally plotting the sort of skills development for these individuals over multiple, multiple years. And I think what we've never ceases to amaze me is actually the breadth of learning in revenue is absolutely enormous. And what kind of just makes you laugh is, this is all of this knowledge that we're now creating it's what companies just hope that their teams somehow acquire through osmosis, through blogs, through events. And it's just kind of crazy that there is... It's absolutely insane that we don't already exist, basically. >> And if I understand it correctly, just from looking at your website, you've got the entry level package. I think it's up to 15 seats, and then you scale up from there, correct? Is it sort of as a seat-based license model? >> Yeah, it's a seat-based model, as Mark mentioned. In some cases we sell, let's say 20 or $30,000 deal out the gate and that's most of the team. That will be maybe a series A, series B deal, but then we've got these land and expand models that are working tremendously well. We have seven, eight customers in Q1 that have doubled their spend Q2. That's the impact that they're seeing. And our net revenue retention number for Q2 is looking like it's going to be 177% to think exceeds companies like Snowflakes. Well, our underlying retention metrics, because people are seeing this incredible impact on teams and performance, is really, really strong. >> That's a nice metric compare with Snowflake (Paul laughs) It's all right. (Dave and Paul laugh) >> So, Mark, this is a larger investment for Stage 2 You guys have been growing and sort of upping your game. And maybe talk about that a little bit. >> Yeah, we're in the middle of Fund II right now. So, Fund I was in 2018. We were doing smaller checks. It was our first time out of the gate. The mission has really taken of, our LP base has really taken off. And so this deal looks a lot like more like our second fund. We'll actually make an announcement in a few weeks now that we've closed that out. But it's a much larger fund and our first investments should be in that 2 to $3 million range. >> Hey, Paul, what are you going to do with the money? What are the use of funds? >> Put it on black, (chuckles) we're going to like- (Dave laughs) >> Saratoga is open. (laughs) (Mark laughs) >> We're going to, look, the curriculum development for us is absolutely everything, but we're also going to be investing in building our own technology platform as well. And there are some other really important aspects to the kind of overall offering. We're looking at building an assessment tool so we can actually kind of like start to assess skills across teams. We certify every course has an exam, so we want to get more robust around the certification as well, because we're hoping that our certification becomes the global standard in understanding for the first time in the industry what individual competencies and skills people have, which will be huge. So we have a broad range of things that we want to start initiating now. But I just wanted to quickly say Stage 2 has been nothing short of incredible in every kind of which way. Of course, this investment, the fit is kind of insane, but the LPs have been extraordinary in helping. We've got a huge number of them are now customers very quickly. Mark and the team are helping enormously on our own kind of like go to market and metrics. I've been doing this for 20 years. I've raised over 100 million myself in venture capital. I've never known a venture capital firm with such value add like ever, or even heard of other people getting the kind of value add that we're getting. So I just wanted to a quick shout out for Stage 2. >> Quite a testimony of you guys. Definitely Stage 2 punches above its weight. Guys, we'll leave it there. Thanks so much for coming on. Good luck and we'll be watching. Appreciate your time. >> Thanks, Dave. >> Thank you very much. >> All right, thank you everybody for watching this Cube conversation. This is Dave Vellante, and we'll see you next time.

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

>>from around the globe. It's the Cube presenting innovation for good, brought to you by on shape. >>Hello, everyone, and welcome to Innovation for Good Program, hosted by the Cuban. Brought to You by on Shape, which is a PTC company. My name is Dave Valentin. I'm coming to you from our studios outside of Boston. I'll be directing the conversations today. It's a very exciting, all live program. We're gonna look at how product innovation has evolved, where it's going and how engineers, entrepreneurs and educators are applying cutting edge, cutting edge product development techniques and technology to change our world. You know, the pandemic is, of course, profoundly impacted society and altered how individuals and organizations they're gonna be thinking about and approaching the coming decade. Leading technologists, engineers, product developers and educators have responded to the new challenges that we're facing from creating lifesaving products to helping students learn from home toe how to apply the latest product development techniques and solve the world's hardest problems. And in this program, you'll hear from some of the world's leading experts and practitioners on how product development and continuous innovation has evolved, how it's being applied toe positive, positively affect society and importantly where it's going in the coming decades. So let's get started with our first session fueling Tech for good. And with me is John Herstek, who is the president of the Suffers, a service division of PTC, which required on shape just over a year ago, where John was the CEO and co founder. And Dana Grayson is here. She is the co founder and general partner at Construct Capital, a new venture capital firm. Folks, welcome to the program. Thanks so much for coming on. Great >>to be here, Dave. >>All right, John. You're very welcome. Dana. Look, John, let's get into it for first. A belated congratulations on the acquisition of Von Shape. That was an awesome seven year journey for your company. Tell our audience a little bit about the story of on shape, but take us back to Day zero. Why did you and your co founders start on shape? Well, >>actually, start before on shaping the You know, David, I've been in this business for almost 40 years. The business of building software tools for product developers and I had been part of some previous products in the industry and companies that had been in their era. Big changes in this market and about, you know, a little Before founding on shape, we started to see the problems product development teams were having with the traditional tools of that era years ago, and we saw the opportunity presented by Cloud Web and Mobile Technology. And we said, Hey, we could use Cloud Web and Mobile to solve the problems of product developers make their Their business is run better. But we have to build an entirely new system, an entirely new company, to do it. And that's what on shapes about. >>Well, so notwithstanding the challenges of co vid and difficulties this year, how is the first year been as, Ah, division of PTC for you guys? How's business? Anything you can share with us? >>Yeah, our first year of PTC has been awesome. It's been, you know, when you get acquired, Dave, you never You know, you have great optimism, but you never know what life will really be like. It's sort of like getting married or something, you know, until you're really doing it, you don't know. And so I'm happy to say that one year into our acquisition, a TPI TC on shape is thriving. It's worked out better than I could have imagined a year ago. Along always, I mean sales are up. In Q four, our new sales rate grew 80% vs Excuse me, our fiscal Q four Q three. In the calendar year, it grew 80% compared to the year before. Our educational uses skyrocketing with around 400% growth, most recently year to year of students and teachers and co vid. And we've launched a major cloud platform using the core of on shape technology called Atlas. So, um, just tons of exciting things going on a TTC. >>That's awesome. But thank you for sharing some of those metrics. And of course, you're very humble individual. You know, people should know a little bit more about you mentioned, you know, we founded solid works, go founded solid, where I actually found it solid works. You had a great exit in the late nineties. But what I really appreciate is, you know, you're an entrepreneur. You've got a passion for the babies that you helped birth. You stayed with the salt systems for a number of years. The company that quiet, solid works well over a decade. And and, of course, you and I have talked about how you participated in the M I t blackjack team. You know, back in the day a Z I say you're very understated, for somebody was so accomplished. So well, >>that's kind of you. But I tend to I tend Thio always keep my eye more on what's ahead. You know what's next then? And you know, I look back Sure to enjoy it and learn from it about what I can put toe work, making new memories, making new successes. >>I love it. Okay, let's bring Dana into the conversation. Hello, Dana. And you Look, you were fairly early investor in on shape when you were with any A. And I think it was like it was a Siri's B. But it was very right close after the A raise. And and you were and still are a big believer in industrial transformation. So take us back. What did you see about on shape back then? That that excited you? >>Thanks. Thanks for that. Yeah. I was lucky to be a early investment in shape. You know, the things that actually attracted me. Don shape were largely around John and, uh, the team. They're really setting out to do something, as John says humbly, something totally new, but really building off of their background was a large part of it. Um, but, you know, I was really intrigued by the design collaboration side of the product. Um, I would say that's frankly what originally attracted me to it. What kept me in the room, you know, in terms of the industrial world was seeing just if you start with collaboration around design what that does to the overall industrial product lifecycle accelerating manufacturing just, you know, modernizing, manufacturing, just starting with design. So I'm really thankful to the on shape guys, because it was one of the first investments I've made that turned me on to the whole sector. And, wow, just such a great pleasure to work with with John and the whole team there. Now see what they're doing inside PTC, >>and you just launched construct capital this year, right in the middle of a pandemic and which is awesome. I love it. And you're focused on early stage investing. Maybe tell us a little bit about construct capital. What? Your investment thesis is and you know, one of the big waves that you're hoping to ride. >>Sure, it construct it is literally lifting out of any what I was doing there, um uh, you're on shape. I went on to invest in companies such as desktop metal and Tulip, to name a couple of them form labs, another one in and around the manufacturing space. But our thesis it construct is broader than just, you know, manufacturing and industrial. It really incorporates all of what we'd call foundational industries that have let yet to be fully tech enabled or digitized. Manufacturing is a big piece of it. Supply chain, logistics, transportation and mobility or not, or other big pieces of it. And together they really drive, you know, half of the GDP in the US and have been very under invested. And frankly, they haven't attracted really great founders like Iran in droves. And I think that's going to change. We're seeing, um, entrepreneurs coming out of the tech world or staggolee into these industries and then bringing them back into the tech world, which is which is something that needs to happen. So John and team were certainly early pioneers and I think, you know, frankly, obviously, that voting with my feet that the next set, a really strong companies are going to come out of this space over the next decade. >>I think there's a huge opportunity to digitize the sort of traditionally non digital organizations. But Dana, you focused. I think it's it's accurate to say you're focused on even Mawr early stage investing now. And I want to understand why you feel it's important to be early. I mean, it's obviously riskier and reward e er, but what do you look for in companies and and founders like John >>Mhm, Um, you know, I think they're different styles of investing all the way up to public market investing. I've always been early stage investors, so I like to work with founders and teams when they're, you know, just starting out. Um, I happened to also think that we were just really early in the whole digital transformation of this world. You know, John and team have been, you know, back from solid works, etcetera around the space for a long time. But again, the downstream impact of what they're doing really changes the whole industry and and so we're pretty early and in digitally transforming that market. Um, so that's another reason why I wanna invest early now, because I do really firmly believe that the next set of strong companies and strong returns for my own investors will be in the spaces. Um, you know, what I look for in Founders are people that really see the world in a different way. And, you know, sometimes some people think of founders or entrepreneurs is being very risk seeking. You know, if you asked John probably and another successful entrepreneurs, they would call themselves sort of risk averse, because by the time they start the company, they really have isolated all the risk out of it and think that they have given their expertise or what they're seeing their just so compelled to go change something, eh? So I look for that type of attitude experience a Z. You can also tell from John. He's fairly humble. So humility and just focus is also really important. Um, that there's a that's a lot of it. Frankly, >>excellent. Thank you. And John, you got such a rich history in the space in one of you could sort of connect the dots over time. I mean, when you look back, what were the major forces that you saw in the market in in the early days? Uh, particularly days of on shape on how is that evolved? And what are you seeing today? Well, I >>think I touched on it earlier. Actually, could I just reflect on what Dana said about risk taking for just a quick one and say, throughout my life, from blackjack to starting solid works on shape, it's about taking calculated risks. Yes, you try to eliminate the risk sa's much as you can, but I always say, I don't mind taking a risk that I'm aware of, and I've calculated through as best I can. I don't like taking risks that I don't know I'm taking. >>That's right. You like to bet on >>sure things as much sure things, or at least where you feel you. You've done the research and you see them and you know they're there and you know, you, you you keep that in mind in the room, and I think that's great. And Dana did so much for us. Dana, I want to thank you again for all that you did it every step of the way from where we started. Thio, Thio You know your journey with us ended formally but continues informally. Now back to you. Um, Dave, I think question about the opportunity and how it's shaped up. Well, I think I touched on it earlier when I said It's about helping product developers. You know, our customers of the people build the future of manufactured goods. Anything you think of that would be manufacturing factory. You know, the chair you're sitting in machine that made your coffee. You know, the computer you're using that trucks that drive by on the street, all the covert product research, the equipment being used to make vaccines. All that stuff is designed by someone, and our job is given the tools to do it better. And I could see the problems that those product developers had that we're slowing them down with using the computing systems of the time. When we built solid works, that was almost 30 years ago. People don't realize that it was in the early >>nineties, and, you know, we did the >>best we could for the early nineties, but what we did, we didn't anticipate the world of today. And so people were having problems with just installing the systems. Dave, you wouldn't believe how hard it is to install these systems. You need a spec up a special windows computer, you know, and make sure you've got all the memory and graphics you need and getting to get that set up. You need to make sure the device drivers air, right, install a big piece of software. Ah, license key. I'm not making this up. They're still around. You may not even know what those are. You know, Dennis laughing because, you know, zero cool people do things like this anymore on but only runs some windows. You want a second user to use it? They need a copy. They need a code. Are they on the same version? It's a nightmare. The teams change. You know? You just say, Well, get everyone on the software. Well, who's everyone? You know? You got a new vendor today? A new customer tomorrow, a new employee. People come on and off the team. The other problem is the data stored in files, thousands of files. This isn't like a spreadsheet or word processor where there's one file to pass around these air thousands of files to make one, even a simple product. People were tearing their hair out. John, what do we do? I've got copies everywhere. I don't know where the latest version is. We tried like, you know, locking people out so that only one person can change it at the time that works against speed. It works against innovation. We saw what was happening with Cloud Web and mobile. So what's happened in the years since is every one of the forces that product developers experience the need for speed, the need for innovation, the need to be more efficient with their people in their capital. Resource is every one of those trends have been amplified since we started on shape by a lot of forces in the world. And covert is amplified all those the need for agility and remote work cove it is amplified all that the same time, The acceptance of cloud. You know, a few years ago, people were like cloud, you know, how is that gonna work now They're saying to me, you know, increasingly, how would you ever even have done this without the cloud? How do you make solid works Work without the cloud? How would that even happen? You know, And once people understand what on shapes about >>and we're the >>Onley full SAS solution software as a service, full SAS solution in our industry. So what's happened in those years? Same problems we saw earlier, but turn up the gain, their bigger problems. And with cloud, we've seen skepticism of years ago turn into acceptance. And now even embracement in the cova driven new normal. >>Yeah. So a lot of friction in the previous environments cloud obviously a huge factor on, I guess. I guess Dana John could see it coming, you know, in the early days of solid works with Salesforce, which is kind of the first major independent SAS player. Well, I guess that was late nineties. So it was post solid works, but pre in shape and their work day was, you know, pre on shape in the mid two thousands. And and but But, you know, the bet was on the SAS model was right for Crick had and and product development, you know, which Maybe the time wasn't a no brainer. Or maybe it was I don't know, but Dana is there. Is there anything that you would invest in today that's not Cloud based? >>Um, that's a great question. I mean, I think we still see things all the time in the manufacturing world that are not cloud based. I think you know, the closer you get to the shop floor in the production environment. Um, e think John and the PTC folks would agree with this, too, but that it's, you know, there's reliability requirements. There's performance requirements. There's still this attitude of, you know, don't touch the printing press. So the cloud is still a little bit scary sometimes. And I think hybrid cloud is a real thing for those or on premise. Solutions, in some cases is still a real thing. What, what were more focused on. And, um, despite whether it's on premise or hybrid or or SAS and Cloud is a frictionless go to market model, um, in the companies we invest in so sass and cloud, or really make that easy to adopt for new users, you know, you sign up, start using a product, um, but whether it's hosted in the cloud, whether it's as you can still distribute buying power. And, um, I would I'm just encouraging customers in the customer world and the more industrial environment to entrust some of their lower level engineers with more budget discretionary spending so they can try more products and unlock innovation. >>Right? The unit economics are so compelling. So let's bring it, you know, toe today's you know, situation. John, you decided to exit about a year ago. You know? What did you see in PTC? Other than the obvious money? What was the strategic fit? >>Yeah, Well, David, I wanna be clear. I didn't exit anything. Really? You >>know, I love you and I don't like that term exit. I >>mean, Dana had exit is a shareholder on and so it's not It's not exit for me. It's just a step in the journey. Um, what we saw in PTC was a partner. First of all, that shared our vision from the top down at PTC. Jim Hempleman, the CEO. He had a great vision for for the impact that SAS can make based on cloud technology. And really is Dana of highlighted so much. It's not just the technology is how you go to market and the whole business being run and how you support and make the customers successful. So Jim shared a vision for the potential. And really, really, um said Hey, come join us and we can do this bigger, Better, faster. We expanded the vision really to include this Atlas platform for hosting other SAS applications. That P D. C. I mean, David Day arrived at PTC. I met the head of the academic program. He came over to me and I said, You know, and and how many people on your team? I thought he'd say 5 40 people on the PTC academic team. It was amazing to me because, you know, we were we were just near about 100 people were required are total company. We didn't even have a dedicated academic team and we had ah, lot of students signing up, you know, thousands and thousands. Well, now we have hundreds of thousands of students were approaching a million users, and that shows you the power of this team that PTC had combined with our product and technology whom you get a big success for us and for the teachers and students to the world. We're giving them great tools. So so many good things were also putting some PTC technology from other parts of PTC back into on shape. One area, a little spoiler, little sneak peek. Working on taking generative design. Dana knows all about generative design. We couldn't acquire that technology were start up, you know, just to too much to do. But PTC owns one of the best in the business. This frustrated technology we're working on putting that into on shaping our customers. Um, will be happy to see it, hopefully in the coming year sometime. >>It's great to see that two way exchange. Now, you both know very well when you start a company, of course, a very exciting time. You know, a lot of baggage, you know, our customers pulling you in a lot of different directions and asking you for specials. You have this kind of clean slate, so to speak in it. I would think in many ways, John, despite you know, your install base, you have a bit of that dynamic occurring today especially, you know, driven by the forced march to digital transformation that cove it caused. So when you sit down with the team PTC and talk strategy, you now have more global resource is you got cohorts selling opportunities. What's the conversation like in terms of where you want to take the division? >>Well, Dave, you actually you sounds like we should have you coming in and talking about strategy because you've got the strategy down. I mean, we're doing everything said global expansion were able to reach across selling. We've got some excellent PTC customers that we can reach reach now and they're finding uses for on shape. I think the plan is to, you know, just go, go, go and grow, grow, grow where we're looking for this year, priorities are expand the product. I mentioned the breath of the product with new things PTC did recently. Another technology that they acquired for on shape. We did an acquisition. It was it was small, wasn't widely announced. It, um, in an area related to interfacing with electrical cad systems. So? So we're doing We're expanding the breath of on shape. We're going Maura. Depth in the areas were already in. We have enormous opportunity. Add more features and functions that's in the product. Go to market. You mentioned it global global presence. That's something we were a little light on a year ago. Now we have a team. Dana may not even know what we have a non shape, dedicated team in Barcelona, based in Barcelona but throughout Europe were doing multiple languages. Um, the academic program just introduced a new product into that space. That's that's even fueling more success and growth there, Um, and of course, continuing to to invest in customer success. And this Atlas platform story I keep mentioning, we're going to soon have We're gonna soon have four other major PTC brands shipping products on our Atlas Saas platform. And so we're really excited about that. That's good for the other PTC products. It's also good for on shape because now there's there's. There's other interesting products that are on shape customers can use take advantage of very easily using, say, a common log in conventions about user experience there used to invest of all their SAS based, so they that makes it easier to begin with. So that's some of the exciting things going on. I think you'll see P. D. C. Um expanding our lead in saas based applications for this sector for our target sectors, not just in in cat and data management. But another area, PTC's Big and his augmented reality with of euphoria, product line leader and industrial uses of a R. That's a whole other story we should do. A whole nother show augmented reality. But these products are amazing. You can You can help factory workers people on, uh, people who are left out of the digital transformation. Sometimes we're standing from machine >>all day. >>They can't be sitting like we are doing Zoom. They could wear a R headset in our tools. Let them create great content. This is an area Dana is invested in in other companies, but what I wanted to note is the new releases of our authoring software. For this, our content getting released this month, used through the Atlas platform, the SAS components of on shape for things like revision management and collaboration on duh workflow activity. All that those are tools that we're able to share leverage. We get a lot of synergy. It's just really good. It's really fun to We'll have a good time, >>that's awesome. And then we're gonna be talking to John MacLean later about Atlas and do a little deeper dive on that. And, Dana, what is your involvement today with with on shape? But you're looking for you know, which of their customers air actually adopting, and they're gonna disrupt their industries. You get good pipeline from that. How do you collaborate today? >>That sounds like a great idea. Um, a Z John will tell you I'm constantly just ask him for advice and impressions of other entrepreneurs and picking his brain on ideas. No formal relationship clearly, but continue to count John and and John and other people in on shaping in the circle of experts that I rely on for their opinions. >>All right, so we have some questions from the crowd here. Uh, one of the questions is for the dream team. You know, John and Dana. What's your next next collective venture? I don't think we're there yet, are we? No. I >>just say, as Dana said, we love talking to her about. You know, Dana, you just returned the compliment. We would try and give you advice and the deals you're looking at, and I'm sort of casually mentoring at least one of your portfolio entrepreneurs, and that's been a lot of fun for May on hopefully a value to them. But also Dana, We uran important pipeline to us in the world of some new things that are happening that we wouldn't see if you know you've shown us some things that you've said. What do you think of this business? And for us, it's like, Wow, it's cool to see that's going on And that's what's supposed to work in an ecosystem like this. So we we deeply value the ongoing relationship. And no, we're not starting something new. I got a lot of work left to do with what I'm doing and really happy. But we can We can collaborate in this way on other ventures. >>I like this question to somebody asking with the cloud options like on shape, Wilmore students have stem opportunities s Oh, that's a great question. Are you because of sass and cloud? Are you able to reach? You know, more students? Much more cost effectively. >>Yeah, Dave, I'm so glad that that that I was asked about this because Yes, and it's extremely gratifying us. Yes, we are because of cloud, because on shape is the only full cloud full SAS system. Our industry were able to reach stem education brings able to be part of bringing step education to students who couldn't get it otherwise. And one of most gratifying gratifying things to me is the emails were getting from teachers, um, that that really, um, on the phone calls that were they really pour their heart out and say We're able to get to students in areas that have very limited compute resource is that don't have an I T staff where they don't know what computer that the students can have at home, and they probably don't even have a computer. We're talking about being able to teach them on a phone to have an android phone a low end android phone. You could do three D modeling on there with on shape. Now you can't do it any other system, but with on shape, you could do it. And so the teacher can say to the students, They have to have Internet access, and I know there's a huge community that doesn't even have Internet access, and we're not able, unfortunately to help that. But if you have Internet and you have even an android phone, we can enable the educator to teach them. And so we have case after case of saving a stem program or expanding it into the students that need it most is the ones we're helping here. So really excited about that. And we're also able to let in addition to the run on run on whatever computing devices they have, we also offer them the tools they need for remote teaching with a much richer experience. You know, could you teach solid works remotely? Well, maybe if the student ran it had a windows workstation, you know, big, big, high and workstation. Maybe it could, but it would be like the difference between collaborating with on shape and collaborate with solid works. Like the difference between a zoom video call and talking on the landline phone. You know, it's a much richer experience, and that's what you need in stem teaching. Stem is hard. So, yeah, we're super super excited about bringing stem to more students because of clouds. >>Yeah, we're talking about innovation for good, and then the discussion, John, you just had it. Really? There could be a whole another vector here. We could discuss on diversity, and I wanna end with just pointing out So, Dana, your new firm. It's a woman led firm, too. Two women leaders, you know, going forward. So that's awesome to see, so really? Yeah, thumbs up on that. Congratulations on getting that off the ground. Yeah. Thank you. Okay. So thank you guys. Really appreciate It was a great discussion. I learned a lot, and I'm sure the audience did a swell in a moment. We're gonna talk with on shape customers to see how they're applying tech for good and some of the products that they're building. So keep it right there. I'm Dave Volonte. You're watching innovation for good on the Cube, the global leader in digital tech event coverage. Stay right there. Yeah.

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

>> Announcer: From around the globe. It's theCUBE. With digital coverage of AWS re-invent 2020 sponsored by Intel, AWS, and our community partners. >> Hi, welcome to theCUBE virtual and our coverage of AWS reinvent 2020. We are theCUBE virtual and I'm your host Keith Townsend. Today I'm joined with Melanie Frank who is managing VP of technology at Capital One. Welcome to theCUBE Melanie >> Thanks for having me glad to be here. >> So first time on theCUBE, but you guys have done something big at Capital One. So we're not going to take it easy on you. This is, this has been hitting the news cycles. You guys have closed down your last data center. What spurred the, the initiative for Capital One to exit to private data center. >> Oh, there's so many cool technology, you think that we'll talk about, but you know, if you want to talk about why that is not tech for the sake of tech in this case, this is about working back from, from what our customer needs are. So I think of how the digital world has transformed our expectations as consumers, right. I, I actually was, I use a digital assistant a lot in the kitchen. And so the other day I was cooking and, you know, I update a shopping list to set a timer. I'm just used to doing those things. And the other day I actually asked my digital assistant to set my stove to 350 degrees, which I do not have a smart stove. It's not integrated with my digital assistant, nothing in my home has that capability right now, but it really kind of struck me as a wow, this whole, like this, this interaction has changed my expectations now for my entire kitchen. And I think that those types of experiences now are what we've come to expect as consumers. And that really was the center of it for us, our shift to cloud and exit of the data centers was all about our ability to provide our customers with experiences that are real-time and intelligent that you just can't do, if you're running on outdated technology in a data center. >> So I absolutely understand the benefits of when you're there. The other day, I was bringing up another circuit in our data center and I'm thinking our virtual data center and I'm thinking, wow, man, this is so easy. I can just issue a command software defined. And now the data centers has redundant connectivity, but getting there is a process can you talk to us about the process and how long it took for Capital One to actually reach that goal. >> Yeah, you know, you're so right. Like it is so nice once you're there, but it is not to be underestimated the, the transformational aspect of this, so this was a part of a massive eight year technology transformation, really. That was about modernizing the way in which we worked as well as the tech infrastructure itself. So our goal was to get to this destination where we were faster and more nimble, like you described with those new capabilities for those customers. But we're talking about this eight year transformation where we transformed our talent. We had to hire product managers, data scientists, designers. We shifted our developer skill sets. We're now sitting at an 11,000 person tech organization with 85% of that being, you know, engineers, we shifted the way we work to agile, is it is just much more conducive to that rapid delivery of value. And then of course, on the tech side, really since about 2014, we've closed eight data centers and rebuilt thousands of applications to take full advantage of the cloud technology and capabilities. >> Cool. So it goes without saying, you guys won the world's biggest financial organizations and you've highlighted the non-technical part of the journey. Can you provide a little bit of insight for us on the, kind of the, your partners within the bank, not just technologists in the technology organization, how was this not necessarily disruptive, but changing, you know, groups like audit your financial services. You're constantly worried about audit. How did audit embraced this change? >> Well, I think there was a huge learning for the entire organization to think about what, what parts of what we do need to be done differently. In some ways there were a lot of benefits if I think about our business partners in the finance team where, you know, you had a data center running with massive amounts of technology infrastructure, perhaps you had to size that technology infrastructure for your peak loads, for us during, you know, holiday shopping periods and things like that. And now we're at a position where we can much more nimbly control the tech. We can audit scale up, we can audit scale down that is much more cost-effective for us, for our business. And then from a financial perspective, you just take that use case for the finance department it's, you know, adjusting so that we can directly show that cost to the line of business and allow them to make the changes that they need, which makes sense for their business and their customers. >> So let's talk about more of that process and the journey from a technology perspective, as we look at something as mature as a bank's infrastructure, not all of those applications can be migrated easily and re-platformed easily. How did you guys deal with those tough last to move application, you know, that last 20%? >> Yeah. I think, you know, it early with that, for us with a declaration that, you know, kind of I'll say the easier part, anything new gets built into the cloud. And as you point out that is way easier than tackling some of those things that you you've probably been dealing with and tackling for a very, very long time, from an application standpoint. We knew early on that it would be better if we could modernize the applications themselves as we moved them to the cloud to really kind of unlock the advantages because there's one part of the advantages of the cloud infrastructure. There is a second part of what it forced was a application modernization and a tech modernization for us. And so those two things together were super powerful. We had a few stubborn ones that we said, okay, can we containerize this? Can we lift and shift this over it's, to me, it was likening to, you know, moving from one house to another and you've, you're kind of cleaning out your attic and you're trying to figure out, ideally, you don't take anything to the new house that you don't need and you do all this cleanup. And at some point you say, well, this I'm going to put in this box and I will deal with it kind of at the new house. And ideally you do that before you put it right back in the attic. So we had a few of those, but in large part, you know, 85%, I think that's, that's part of why it took us so long was let's, let's do this right. And let's get, get this so that these applications can run effectively and take full advantage of the cloud. >> So let's talk about some of the potential benefits and the past eight to nine months. My relationship with my commercial banker, with my private banker have really changed due to the pandemic. Talk to me about some of the advantages or capabilities the bank has gained as a result of moving all almost all. Well now totally to the public cloud. >> Yeah. Yeah. It's a good question. I think I'll start with one that is a little bit more technically oriented then talk about the capabilities. So, you mentioned the pandemic and we had, you know massive amounts of planning as we were kind of taking in the full impact of what was about to happen for our associates and our customers, you know and trying to think through how will customer behavior change during a pandemic? We didn't have a whole lot of indicators as to what that might look like. You know, how is their activity going to change from a transactions, for example, or, you know, are they going to change the frequency with which they're logging in online or paying the cloud gave us the flexibility. As you mentioned earlier to scale rapidly in case the projections that we were making were wrong about consumer behavior. And so we could keep the platforms up and running and recover them much quicker, more resilient infrastructure to make sure that it's up because we really we're in unprecedented times, trying to think through how, how behaviors and needs of customers would change. Secondly, you know, from a capability standpoint, we talked about the need for those real time intelligent experiences that only cloud can give you only modern applications can give you things like, you know Eno, our digital assistant, which is built on a streaming architecture, it can identify unusual charges, 40% tip and alert me in real time. You know, these days 40% tip, I'm trying to help local businesses, that's, that's exactly true. But the fact that Eno is out there kind of looking out and watching my back and saying, this is unusual is, is this you you're transacting a lot online who knows what the fraudsters are looking for. It's those types of experiences that, that you can't build. If you are posting transactions to a mainframe that, you know, runs a batch process overnight, it doesn't help me if you tell me the next day. >> So let's talk about this talent transformation a little bit too, because one of the most difficult things I've witnessed with any type of, of massive transformation like this is recruitment and retention of talent, not the industry hasn't quite built up the talent pool to support such massive transformations. How is this impacting your talent and recruitment processes? >> Yeah. So, massively. And the good news is, you know, given the amount of time we've been on this transformation, we had some time to allow that to adjust, you know, when we started and knowing that, that we were focused largely on AWS, we said, we'd be great if we could go find it, you know thousands of engineers who are, you know, deep experts in AWS, and they didn't necessarily exist at the time given that there, there aren't a whole lot of companies doing what we were doing at the time besides perhaps, you know, AWS themselves and Netflix and they're good partners to us. So we don't need to, to steal everybody's talent. And so we started early on with training and re-skilling our engineers, generally speaking, I find that engineers love using new things. And they in particular love learning newer technologies. I haven't found one yet who's kind of resistant and, you know, wanting to go back and learn COBOL or Fortran like I had to. And I was in college. So, you know, the fact that, that they could, could learn some of these modern tech help evolve and develop them, you know, really kind of push on, on some of the capabilities and, and partner with partners like AWS to enhance the capabilities that are out there. And that's, that's an engineer's dream. The fact that they had, we had plenty of time. We made the declaration that we were going to go all in on cloud. Well, before we targeted getting it done probably before we even knew how in the world we were going to get there, it gave folks plenty of time to think through the training. We provided massive amounts of, of access to learning and training certifications of, for, for everyone to develop the skills that they needed. And I think it's just been great and super fun from a talent perspective. >> I love that you mentioned Netflix, they've been another company that's been extremely public with their journey to the cloud. We kind of think of Netflix is just born in the cloud company and they weren't, and they had a journey to the cloud you share your journey to the cloud. What are some of the pieces of advice, the best practices you can give other companies looking to take that similar journey? >> I will say to, you know, not underestimate the transformative part, for us I think I've said it before. I'll I will say it again. This was not just a tech transformation, you know, this started with our customer needs. It started with a business strategy. It was transformative to our culture for how we, how we think about building and delivering capabilities, as well as the software, then that underlies and supports them. And so I think, you know, starting from a place of where are you trying to go and why? And giving yourself really the fortitude and commitment to achieve it, because you mentioned it, it is not necessarily easy. If you run on a yearly budget cycle, you if, unless you are, you know, running on very few applications at this point, you know, you will not get this done in kind of one year budget cycle, this is a multi-year journey. And ideally you're changing the technology itself, but also how software gets delivered. And therefore then as we just talked about the talent required to do so. >> So Melanie, we've been watching your journey for the past couple of years and we so appreciate you sharing your journey with theCUBE. More importantly, you're now a CUBE alum, and you get all the benefits of the CUBE alum, which has a great headshot that the team has shared, but we really appreciate you sharing a builder's journey at this builder's show. Stay tuned for more coverage of AWS re-invent 2020 via that you.. virtual. Thanks for joining us. (gentle upbeat music)

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is a Cube conversation. >> Hi everybody, this is Dave Vellante. And as you know, I've been running a CxO series in this COVID economy. And as we go into the post-isolation world, really want to focus and expand our scope and really look at startups. And of course, we're going to look at startups, let's follow the money. And I want to start with the investor. Mark Roberge is here. He's the managing director at Stage 2 capital. He's a professor at the Harvard Business School, former CRO over at HubSpot. Mark, great to see you. Thanks for coming on. >> Yeah, you bet, Dave. Thanks for having me. >> So I love that, you know... looking at your career a little bit, on your LinkedIn and following some of your videos, I love the fact that you did, and now you teach and you're also applying it with Stage 2 Capital. Tell us a little bit more about both of your career and Stage 2. >> Yeah, I mean, a lot of it's a bit serendipitous, especially last 10 years, but I've always had this learn, do, teach framework in my, in mind as I go through the decades of my career, you know, like you're probably like 80% learning in your twenties, early thirties and you know, 20% doing. Then, you know, I think my thirties was like leading the HubSpot sales team, a lot of doing, a little bit of teaching, you know, kind of hopping into different schools, et cetera, and also doing a lot of, some writing. And now like, I'm teaching it. I think investing kind of falls into that too, you know, where you've got this amazing opportunity to meet, the next generation of, of extraordinary entrepreneurs and engage with them. So yeah, that, that has been my career. You know, Dave, I've been a, passionate entrepreneur since 22 and then, the last one I did was HubSpot and that led to just an opportunity to build out one of the first sales teams in a complete inside environment, which opened up the doors for a data driven mindset and all this innovation that led to a book that led to recruitment on HBS's standpoint, to like come and teach that stuff, which was such a humbling honor to pursue. And that led to me a meeting my co-founder, Jay Po, of Stage 2 Capital, who was a customer to essentially start the first VC fund, running back by sales and marketing leaders, which was his vision. But when he proposed it to me, addressed a pretty sizeable void, that I saw, in the entrepreneur ecosystem that I thought could make a substantial impact to the success rate of startups. >> Great, I want to talk a little bit about how you guys compete and what's different there, but you know, I've read some of your work, looked at some of your videos, and we can bring that into the conversation. But I think you've got some real forward-thinking for example, on the, you know, the best path to the upper right. The upper right, being that, that xy-axis on growth and adoption, you know, do you go for hyper-growth or do you go for adoption? How you align sales and marketing, how you compensate salespeople. I think you've got some, some leading-edge thinking on that, that I'd love for you to bring into the conversation, but let's start with Stage 2. I mean, how do you compete with the big guys? What's different about Stage 2 Capital? >> Yeah, I mean, first and foremost, we're a bunch of sales and marketing and execs. I mean, our backing is, a hundred plus CROs, VPs of marketing, CMOs from, from the public companies. I mean, Dropbox, LinkedIn, Oracle, Salesforce, SurveyMonkey, Lyft, Asana, I mean, just pick a unicorn, we probably have some representation from it. So that's, a big part of how we compete, is most of the time, when a rocket ship startup is about to build a sales team, one of our LPs gets a call. And because of that, we get a call, right. And, and so there's, we're just deep in, in helping... So first off, assess the potential and risks of a startup in their current, go to market design, and then really, you know, stepping in, not just with capital, but a lot of know-how in terms of, you know, how to best develop this go-to-market for their particular context. So that's a big part of our differentiation. I don't think we've ever lost a deal that we tried to get into, you know, for that reason, just because we come in at the right stage, that's right for our value prop. I'd say Dave, the biggest, sort of difference, in our investing theme. And this really comes out of like, post HubSpot. In addition to teaching the HBS, I did parachute into a different startup every quarter, for one day, where you can kind of like assess their go-to-market, looking for, like, what is the underlying consistency of those series A businesses that become unicorns versus those that flatline. And if I, you know, I've now written like 50 pages on it, which I, you know, we can, we can highlight to the crew, but the underlying cliffnotes is really, the avoidance of a premature focus on top line revenue growth, and an acute focus early on, on customer attention. And, I think like, for those of you, who run in that early stage venture community these days, and especially in Silicon Valley, there's this like, triple, triple, double, double notion of, like year one, triple revenue, year two, triple revenue, year three, double revenue, year four, double revenue, it's kind of evolved to be like the holy grail of what your objectives should be. And I do think like there is a fraction of companies that are ready for that and a large amount of them that, should they pursue that path, will lead to failure. And, and so, we take a heavy lens toward world-class customer retention as a prerequisite, to any sort of triple, triple, double, double blitzscaling type model. >> So, let me ask you a couple of questions there. So it sounds like your LPs are heavily, not only heavily and financially invested, but also are very active. I mean, is that a, is that a fears thing? How active are the LPs in reality? I mean, they're busy people. They're they're software operators. >> Yeah. >> Do they really get involved in businesses? >> Absolutely. I mean, half of our deals that we did in fund one came from the LPs. So we get half of our funnel, comes from LPs. Okay. So it's always like source-pick-win-support. That's like, what basically a VC does. And our LPs are involved in every piece of that. Any deal that we do, we'll bring in four or five of our LPs to help us with diligence, where they have particular expertise in. So we did an insuretech company in Q4, one of our LPs runs insurance practice at Workday. And this particular play he's selling it to big insurance companies. He was extremely helpful, to understand that domain. Post investment, we always bring in four or five LPs to go deeper than I can on a particular topic. So one of our plays is about to stand up in account based marketing, you know, capability. So we brought in the CMO, a former CMO at Rapid7 and the CMO at Unisys, both of which have, stood in, stood up like, account based marketing practices, much more deeply, than I could. You know of course, we take the time to get to know our LPs and understand both their skills, and experiences as well as their willingness to help, We have Jay Simons, who's the President of Atlassian. He doesn't have like hours every quarter, he's running a $50 billion company, right? So we have Brian Halligan, the CEO of HubSpot, right? He's running a $10 billion company now. So, we just get deal flow from them and maybe like an event once or twice a year, versus I would say like 10 to 20% of our LPs are like that. I would say 60% of them are active operators who are like, "You know what? I just miss the early days, and if I could be active with one or two companies a quarter, I would love that." And I would say like a quarter of them are like semi-retired and they're like, they're choosing between helping our company and being on the boat or the golf course. >> Is this just kind of a new model? Do you see having a different philosophy where you want to have a higher success rate? I mean, of course everybody wants to have a, you know, bat a thousand. >> Yeah. >> But I wonder if you could address that. >> Yeah. I don't think it, I'm not advocating slower growth, but just healthier growth. And it's just like an extra, it's really not different than sort of the blitzscaling oriented San Francisco VC, okay? So, you know, I would say when we were doing startups in the nineties, early 2000s before The Lean Startup, we would have this idea and build it in a room for a year and then sell it in parallel, basically sell it everywhere and Eric Ries and The Lean Startup changed all that. Like he introduced MVPs and pivots and agile development and we quickly moved to, a model of like, yeah, when you have this idea, it's not like... You're really learning, keep the team small, keep the burn low, pivot, pivot, pivot, stay agile and find product-market fit. And once you do that, scale. I would say even like, West Coast blitzscaling oriented VCs, I agree with that. My only take is... We're not being scientifically rigorous, on that transition point. Go ask like 10 VCs or 10 entrepreneurs, what's product-market fit, and you'll get 10 different answers. And you'll get answers like when you have lots of sales, I just, profoundly disagree with that. I think, revenue in sales has very little to do with product-market fit. That's like, that's like message-market fit. Like selling ice to Eskimos. If I can sell ice to Eskimos, it doesn't mean that product-market fit. The Eskimos didn't need the ice. It just means I was good at like pitching, right? You know, other folks talk about like, having a workable product in a big market. It's just too qualitative. Right? So, that's all I'm advocating is, that, I think almost all entrepreneurs and investors agree, there's this incubation, rapid learning stage. And then there's this thing called product-market fit, where we switch to rapid scale. And all I'm advocating is like more scientist science and rigor, to understanding some sequences that need to be checked off. And a little bit more science and rigor on what is the optimal pace of scale. Because when it comes to scale, like pretty much 50 out of 50 times, when I talk to a series A company, they have like 15 employees, two sales reps, they got to like 2 million in revenue. They raise an 8 million-dollar round in series A, and they hired 12 salespeople the next month. You know, and Dave, you and your brother, who runs a large sales team, can really understand how that's going to failure almost all the time. (Dave mumbles) >> Like it's just... >> Yeah it's a killer. >> To be able to like absorb 10 reps in a month, being a 50, it's just like... Who even does all those interviews? Who onboards them? Who manages them? How do we feed them with demand? Like these are some of the things I just think, warrant more data and science to drive the decisions on when and how fast to scale. >> Mark, what is the key indicator then, of product-market fit? Is it adoption? Is it renewal rates? >> Yeah. It's retention in my opinion. Right? So, so the, the very simple framework that I require is you're ready to scale when you have product-market and go to market-fit. And let's be, extremely precise, and rigorous on the definitions. So, product-market fit for me, the best metric is retention. You know, that essentially means someone not only purchased your offering, but experienced your offering. And, after that experience decided to repurchase. Whether they buy more from you or they renew or whatever it is. Now, the problem with it is, in many, like in the world we live inside's, it's like, the retention rate of the customers we acquire this quarter is not evident for a year. Right, and we don't have a year to learn. We don't have a year to wait and see. So what we have to do is come up with a leading indicator to customer retention. And that's something that I just hope we see more entrepreneurs talking about, in their product market fit journey. And more investors asking about, is what is your lead indicator to customer retention? Cause when that gets checked off, then I believe you have product-market fit, okay? So, there's some documentation on some unicorns that have flirted with this. I think Silicon Valley calls it the aha moment. That's great. Just like what. So like Slack, an example, like, the format I like to use for the lead indicator of customer retention is P percent of customers, do E event, in T time, okay? So, it basically boils it down to those three variables, P E T. So if we bring that to life and humanize it, 70% of the customers, we sign up, this is Slack, 70% of the customers who sign up, send 2000 team messages in 30 days, if that happens, we have product-market fit. I like that a lot more, than getting to a million in revenue or like having a workable product in a big market. Dropbox, 85% of customers, share one file in one hour. HubSpot, I know this was the case, 75% of customers, use five or more of the 25 features in the platform, within 60 days. Okay? P percent, do E event, in T time. So, if we can just format that, and look at that through customer cohorts, we often get visibility into, into true product market-fit within weeks, if not like a month or two. And it's scientifically, data-driven in terms of his foundation. >> Love it. And then of course, you can align sales compensation, you know, with that retention. You've talked a lot about that, in some of your work. I want to get into some of the things that stage two is doing. You invest in SaaS companies. If I understand it correctly, it's not necessarily early stage. You're looking for companies that have sort of achieved some degree of revenue and now need help. It needs some operational help and scaling. Is that correct? >> Yeah. Yeah. So it's a little bit broader in size, as any sort of like B2B software, any software company that's scaling through a sales team. I mean, look at our backers and look at my background. That's, that's what we have experience in. So not really any consumer plays. And yeah, I mean, we're not, we have a couple product LPs. We have a couple of CFO type LPs. We have a couple like talent HR LPs, but most of us are go-to-market. So we don't, you know, there's awesome seed funds out there that help people set up their product and engineering team and go from zero to one in terms of the MVP and find product-market fit. Right? We like to come in right after that. So it's usually like between the seed and the A, usually the revenue is between half a million and 1.5 million. And of course we put an extraordinary premium on customer retention, okay? Whereas I think most of our peers put an extraordinary premium on top line revenue growth. We put an extraordinary premium on retention. So if I find a $700,000 business that, you know, has whatever 50, 70 customers, you know, depending on their ticket size, it has like North of 90% local retention. That's super exciting. Even if they're only growing like 60%, it's super exciting. >> What's a typical size of investments. Do you typically take board seats or not? >> Yeah. We typically put in like between like seven hundred K, one and a half million, in the first check and then have, larger amounts for follow on. So on the A and the B. We try not to take board's seats to be honest with you, but instead the board observers. It's a little bit selfish in terms of our funds scale. Like the general counsel from other venture capitalists is of course, like, the board seat is there for proper governance in terms of like, having some control over expenditures and acquisition conversations, et cetera, or decisions. But a lot of people who have had experience with boards know that they're very like easy and time efficient when the company is going well. And there are a ton of work when the company is not going well. And it really hurts the scale, especially on a smaller fund like us. So we do like to have board observers seats, and we go to most of the board meetings so that our voice is heard. But as long as there's another fund in there that, has, world-class track record in terms of, holding proper governance at the board level, we prefer to defer to them on that. >> All right, so the COVID lock down, hit really in earnest in March, of course, we all saw the Sequoia memo, The Black Swan memo. You were, I think it HubSpot, when, you remember the Rest In Peace Good Times memo, came out very sort of negative, put up all over the industry, you know, stop spending. But there was some other good advice in there. I don't mean to sort of, go too hard on that, but, it was generally a negative sentiment. What was your advice to your portfolio companies, when COVID hit, what were you telling them? >> Yeah, I summarized this in our lead a blog article. We kicked off our blog, which is partially related to COVID in April, which has kind of summarize these tips. So yes, you are correct, Dave. I was running sales at HubSpot in '08 when we had last sort of major economic, destabilization. And I was freaking out, you know (laughs briefly) at the time we were still young, like 20, 30 reps and numbers to chase. And... I was, actually, after that year, looking back, we are very fortunate that we had a value prop that was very recession-proof. We were selling to the small business community, who at the time was cutting everything except new ways to generate sales. And we happen to have the answer to that and it happened to work, right? So it showed me that, there's different levels of being recession proof. And we accelerated the raise of our second fund for stage two with the anticipation that there would be a recession, which, you know, in the venture world, some of the best things you could do is close a fund and then go into a recession, because, there's more deals out there. The valuations are lower and it's much easier to understand, nice to have versus must have value props. So, the common theme I saw in talking to my peers who looked back in the '01 crisis, as well as the '08 crisis, a year later was not making a bolder decision to reorient their company in the current times. And usually on the go-to-market, that's two factors, the ICP who you're selling to, ideal customer profile and the CVP, what your message is, what's your customer value prop. And that was really, in addition to just stabilizing cash positions and putting some plans in there. That was the biggest thing we pushed our portfolio on was, almost like going through the exercise, like it's so hard as a human, to have put like nine months into a significant investment leading up to COVID and now the outcome of that investment is no longer relevant. And it's so hard to let that go. You know what I mean? >> Yeah. >> But you have to, you have to. And now it's everything from like, you spent two years learning how to sell to this one persona. And now that persona is like, gyms, retail and travel companies. Like you've got to let that go. (chuckle simultaneously) You know what I mean? Like, and, you know, it's just like... So that's really what we had to push folks on was just, you know, talking to founders and basically saying this weekend, get into a great headspace and like, pretend like you were parachuted into your company as a fresh CEO today. And look around and appreciate the world and what it is. What is this world? What are the buyers talking about? Which markets are hot, which markets are not, look at the assets that you have, look at your product, look at your staff, look at your partners, look at your customer base, and come up with a strategy from the ground up based on that. And forget about everything you've done in the last year. Right? And so, that's really what we pushed hard on. And in some cases, people just like jumped right on it. It was awesome. We had a residential real estate company that within two weeks, stood up a virtual open house module that sold like hotcakes. >> Yeah. >> That was fantastic execution. And we had other folks that we had to have like three meetings with to push them deep enough, to go more boldly. But that, was really the underlying pattern that I saw in past, recessions and something I pushed the portfolio on, is just being very bold on your pivots. >> Right? So I wanted to ask you how your portfolio companies are doing. I'm imagining you saw some looked at this opportunity as a tailwind. >> Yeah. >> You mentioned the virtual, open house, a saw that maybe were exposed, had, revenue exposure to hard-hit industries and others kind of in the middle. How are your portfolio companies doing? >> Yes, strong. I'm trying to figure out, like, of course I'm going to say that, but I'm trying to figure out like how to provide quant, to just demonstrate that. We were fortunate that we had no one, and this was just dumb luck. I mean, we had no one exclusively selling to like travel, or, restaurants or something. That's just bad luck if you were, and we're fortunate that we got a little lucky there, We put a big premium, obviously we had put a big premium on customer retention. And that, we always looked at that through our recession proof lens at all our investments. So I think that helped, but yeah, I mean, we've had, first off, we made one investment post COVID. That was the last investment on our first fund and that particular company, March, April, May, their results were 20% higher than any month in history. Those are the types of deals we're seeing now is like, you literally find some deals that are accelerating since COVID and you really just have to assess if it's permanent or temporary, but that one was exciting. We have a telemedicine company that's just like, really accelerating post COVID, again, luck, you know, in terms of just their alignment with the new world we're living in. And then, jeez! I mean, we've had, I think four term sheets, for markups in our portfolio since March. So I think that's a good sign. You know, we only made 11 investments and four of them, either have verbal or submitted term sheets on markups. So again, I feel like the portfolio is doing quite well, and I'm just trying to provide some quantitative measures. So it doesn't feel like a political answer. (Mark chuckles) >> Well, thank you for that, but now, how have you, or have you changed your sort of your thesis post COVID? Do you feel like your... >> Sure. >> Your approach was sort of geared towards, you know, this... >> Yeah. >> Post COVID environment? But what changes have you made. >> A little bit, like, I think in any bull market, generally speaking, there's just going to be a lot of like triple, triple, double, double blitzscaling, huge focus on top-line revenue growth. And in any down market, there's going to be a lot of focus on customer retention unit economics. Now we've always invested in the latter, so that doesn't change much. There's a couple of things that have changed. Number one, we do look for acceleration post COVID. Now, that obviously we were not, we weren't... That lens didn't exist pre-COVID, So in addition to like great retention, selling through a sales team, around the half million to a million revenue, we want to see acceleration since COVID and we'll do diligence to understand if that's a permanent, or a temporary advantage. I would say like... Markets like San Francisco, I think become more attractive in post COVID. There's just like, San Francisco has some magic happening there's some VC funds that avoid it, cause it's too expensive. There's some VC funds that only invest in San Francisco, because there's magic happening. We've always just been, you know... we have two portfolio companies there that have done well. Like we look at it and if it's too expensive, we have to avoid it. But we do agree that there's magic happening. I did look at a company last week. (chuckles inaudibly) So Dave, there are 300K in revenue, and their last valuation is 300 million. (both chuckle) >> Okay, so why is San Francisco more attractive, Mark? >> Well, I mean and those happened in Boston too. >> We looked at... (Mark speaks inaudibly) >> I thought you were going to tell me the valuations were down. (Dave speaks inaudibly) >> Here's the deal all right, sometimes they do, sometimes they don't and this is one, but in general, I think like they have come down. And honestly, the other thing that's happened is good entrepreneurs that weren't raising are now raising. Okay? So, a market like that I think becomes more attractive. The other thing that I think that happens is your sort of following strategies different. Okay so, there is some statistical evidence that, you know, obviously we're coming out of a bear market, a bullish market in, in both the public and the private equities. And there's been a lot of talk about valuations in the private sector is just outrageous. And so, you know, we're fortunate that we come in at this like post seed, pre-A, where it's not as impacted. It is, but not as or hasn't been, but because there's so many more multibillion-dollar funds that have to deploy 30 to 50 million per investment, there's a lot of heating up that's happened at that stage. Okay? And so pre COVID, we would have taken advantage of that by taking either all or some of our money off the table, in these following growth rounds. You know, as an example, we had a company that we made an investment with around 30 million evaluation and 18 months later, they had a term sheet for 500. So that's a pretty good return in 18 months. And you know, that's an expensive, you know, so that that's like, wow, you know, we probably, even though we're super bullish on the company, we may want to take off a 2X exposition... >> Yeah. >> And take advantage of the secondaries. And the other thing that happens here, as you pointed out, Dave is like, risk is not, it doesn't become de-risk with later rounds. Like these big billion dollar funds come in, they put pressure on very aggressive strategic moves that sometimes kills companies and completely outside of our control. So it's not that we're not bullish on the company, it's just that there's new sets of risks that are outside of the scope of our work. And so, so that that's probably like a less, a lesser opportunity post COVID and we have to think longer term and have more patient capital, as we navigate the next year or so of the economy. >> Yeah, so we've got to wrap, but I want to better understand the relationship between the public markets and you've seen the NASDAQ up, which is just unbelievable when you look at what's happening in main street, and the relationship between the public markets and the private markets, are you saying, they're sort of tracking, but not really identical. I mean, what's the relationship. >> Okay, there's a hundred, there's thousands of people that are better at that than me. Like the kind of like anecdotal thoughts that I, or the anecdotal narrative that I've heard in past recessions and actually saw too, was the private market, when the public market dropped, it took nine months roughly for the private market to correct. Okay, so there was a lag. And so there's, some arguments that, that would happen here, but this is just a weird situation, right? Of like the market, even though we're going through societal crazy uncertainty, turmoil and, and tremendous tragedy, the markets did drop, but they're pretty hot right now, specifically in tech. And so there's a number of schools of thoughts there that like some people claim that tech is like the utilities companies of the eighties, where it's just a necessity and it's always going to be there regardless of the economy. Some people argue that what's happened with COVID and the remote workplace have made, you know, accelerated the adoption of tech, the inevitable adoption, and others could argue that like, you know, the worst is still the come. >> Yeah. And of course, you've got The Fed injecting so much liquidity into the system, low interest rates, Mark, last question. Give me a pro tip for entrepreneurs. (Mark Sighs) >> I would say, like, we've talked a lot about, this methodology with, you know, customer retention, really focusing there, align everything there as opposed to top line revenue growth initially. I think that the extension I do at this point is, do your diligence on your investors, and what their thoughts are on your future growth plans to see if they're aligned. Cause that, that becomes like, I think a lot of entrepreneurs, when they dig into this work, they do want to operate around it. But that becomes that much harder when you have investors that think a different way. So I would just, you know, just always keep in mind that, you know, I know it's so hard to raise money, but you know, do the diligence on your investors to understand, what they'd like to see in the next two years and how it's aligned with your own vision. >> Mark is really great having you on. I'd love to have you back and as this thing progresses, and see how it all shakes out. It really a pleasure. Thanks for coming on. >> No, thanks, Dave. I appreciate you having me on. >> And thank you everybody for watching. This is Dave Vellante for The Cube. We'll see you next time. (music plays)

(upbeat music) >> Hi, and welcome to theCUBE, the leading source for insights into the world of technology and innovation. I'm your host Donald Klein, and today's topic is the market for autonomous vehicles and the ecosystem suppliers looking to tap into this brave new world of autonomous capabilities in our daily commute. To have this conversation I'm joined by Rudy Burger, managing partner at Woodside Capital. Rudy, welcome to the show. >> Thanks Don, it's great to be here. >> Great, so look, why don't we start off Rudy, why don't you tell us a little bit about Woodside Capital and your role there? >> Great, so I founded Woodside Capital about 20 years ago having started five different companies of my own, one of which I took public. We are a specialist M&A advisor. We work with so-called growth stage often venture-backed companies and help them find buyers that are usually much larger public companies. Our clients are usually US or European companies and we find buyers in the US, Europe, or Asia. >> Excellent, excellent, okay. And why don't you talk a little bit about your kind of specialty areas? >> So I focused my career, and certainly the work at Woodside Capital, on imaging technologies and as an enabling technology, and the products and markets that are enabled by imaging and increasingly computer vision. So nowadays that is autonomous vehicles, consumer technology, security surveillance, and digital health. So enabling technologies, the computer vision is the theme that binds those together. >> Okay, well, the thing that's on everybody's mind these days is autonomous vehicles, when are we going to get them? Very high profile for sure. Before the show we talking about the kind of two key ingredients to making this happen, the AI software which is kind of the brains of the operation and then also the sensors which enable all of the AI. So why don't we talk about the sensor world first, okay? Lot of discussion about there, so sort of does the brave new world of vehicles need lidar? Does it not need lidar? Are there other types of sensors coming along? What's your sense of that market and how it's looking for all of the different players in it? >> So, Don, I look at it from a sort of fairly basic standpoint. Humans have two very capable image sensors and a very powerful processor, and the degree to which the automotive manufacturers and so-called Robo-Taxi developers have decided it's necessary to sprinkle every sensor known to man, and I'm talking lidar, radar, ultrasound, thermal, and of course cameras, is to some extent a degree to which, you know, image sensors are not as good as our eyes today. Now, there are some areas in which we will probably always have technology as a help. For example, humans are not very good at seeing in the dark whereas a thermal technology can do that very well. But my overall belief is that it's never a good idea to bet against an incumbent technology, and in this case I'm talking about so-called CMOS image sensors which are the sensor that goes into pretty much every camera in the world now. It's never a good idea to bet against the incumbent technology being able to scale into a new market. Every time people have done that, they've been wrong. Back in the early days the debate was whether CMOS image sensors would ever be good enough to replace CCDs as the sensor technology, and of course now, you know, everything uses CMOS image sensors. In other markets there was a long period of time in which people were thinking that LCD panels would never be large enough to replace, you know, for television, for example, 50 inch and so forth. It was never going to happen, so we needed plasma TVs, we needed rear-projection TVs. But slowly but surely the incumbent technology, LCDs, expanded to that market. So my belief is that CMOS image sensors will evolve to a point at which they will replace the need for lidar in most applications. >> Interesting, so that's a very controversial statement, right? Because you've certainly seen a lot of emphasis on the development of new generation lidar capability. >> Over 100 lidar companies started over the last three, four years, and of course many of them will not be happy to hear me say that. There are two distinct markets and one is the so-called Robo-Taxi market, and the other is more of the consumer vehicle ADAS market, and I think we need to think about those separately because the economics behind both are very different. If you look at the Robo-Taxi market, those vehicles tend to be much more expensive and are relatively price-insensitive. So if they can improve safety a little bit by putting a lidar on there, you know, great, let's do it, multiple lidars because these vehicles will be in operation 24 by seven, and if each vehicle costs 200,000, $250,000, fine. When we talk about the mass market for automobiles, type of car that you and I might go down and buy, very different thing. And, you know, auto makers sweat the pennies, and so putting a one or $200 lidar in a vehicle, big decision. And to the extent that they can replace the need for that lidar with a much less expensive camera system, that's what they'll do. Bear in mind that Mobileye, which has been the biggest success story, acquired by Intel for $13.5 billion, second largest acquisition Intel ever made, they for the most part still run on one camera, forward-looking camera. That's it, no radar, no lidar, no thermal, one camera. So the clever use of image processing, computer vision, and one image sensor can do a great deal. >> Interesting, okay. Well, so I want to talk about the software in just a second, but just to kind of finish this point, so if you were advising a sensor company that's developing some next gen capabilities, whether lidar or other related technologies, is the point you're making here that there are certain segments of this industry which are going to be more attractive to your technology than others? >> Absolutely, yes. I mean, the first thing to recognize is that the automotive industry has never really been a particularly comfortable fit with the economics and timeline of venture capital. VCs need to invest and recoup and redeploy back to their LPs on an eight-year cycle. But the automotive industry moves quite slowly, perhaps Tesla are excepted, and what the first piece of advice I would give these companies is it's probably going to be three, four, five years before, even if you have the right technology, before that technology really starts generating any significant volume and revenue. So for many venture-backed companies, that's too long. So the first piece of advice is find pockets of revenue, right, beachheads if you will, where you can land your technology and start generating revenue before you get to the automotive market. And many of these lidar companies we just talked about are not going to last long enough to get to the automotive market because not only does the automotive market move slowly but the autonomous vehicle market keeps on getting pushed out to the right as the industry realizes that this is a big, hairy problem. And so I would say, what is it that your technology can do an order of magnitude better than any other technology? Focus on that and find some opportunities for revenue outside the automotive industry that will sustain the company on its way to the holy grail. >> Interesting, yeah, so find that alternative revenue source to get you to base camp, and then when the market's ready, climb that Everest to-- >> I've seen so many companies basically go out of business because they've set their sights on either the automotive market, and it's go for broke. We're not interested in, all these other things are distractions. You know, entrepreneurs don't have a plan B. Or this. We're going to get our technology into a smartphone, that's it. And there are possibly some other opportunities but it takes so long and it's so difficult to get your technology into a smartphone that they go out of business before they ever get to that point. >> Interesting, okay. So good advice for people looking to kind of apply their technology in this kind of a very difficult market, right, very complicated market. All right, well, then let's switch to the other side of it. So we were kind of talking about the key ingredients, right? Sensors but also AI and the software around that, okay, and there are some very big players developing the software. Tesla's had their Autonomy Day where they've showcased their technology. You've obviously got Google with their capabilities developing software. How do you make sense of this overall landscape because we do see a lot of smaller providers also trying to develop software here. >> So the first thing that I find fascinating about the automotive industry is that for the most part there is no software market. There's perhaps one exception of any scale, that's BlackBerry that sells the QNX software. They found a point within the entertainment console where they can license their software. But for all of the development and capital invested into automotive software, nobody is actually generating revenue, making a living, by licensing software. And one of the main reasons for that is that, you know, the automotive market, really since inception, has been a hardware business. This is a business of bending sheet metal, internal combustion engines, and software has really not played that big a role up until relatively recently. So even those companies that do have software technology have ended up selling it into the automotive supply chain as a piece of silicon, embedded on a piece of silicon, not as, you know, here's my software on a USB stick, right? I think that the whole software licensing model hasn't so far fit well, fit comfortably, with the automotive industry. And the other reason is that there's no standard platform. If I were to develop a piece of software, I can, in the PC industry, I can develop for Windows, I can develop for Mac, I can develop for an iPhone. There's no such thing in the automotive industry, and particularly in this new world of autonomous vehicles there is no standard platform. There are many different processors, Nvidia has staked an early claim there. And the reason that most of the companies developing autonomous vehicle technology have developed the so-called full-stack solution, everything from code running on the processor, integrated through the sensors and so forth, is for that reason, there is no standard platform. So each company has developed the whole solution for themselves, and there are many of them around here that have raised hundreds of millions of dollars, some cases billions of dollars, for that purpose. So there is, today, no software market for automotive in the same way that we think about it in other industries. >> Understood, understood. But in terms of the companies that are actually pushing the envelope on these kind of capabilities, right, so we're taking the best of AI, we're applying it to big data sets, and then hopefully being able to extract that to create capabilities for these vehicles, right? What's your sense of how far that's come along in-- >> Well, it's come a long way but, here I'm going to push the boat out a little bit. I don't believe that the so-called deep learning technology, which is the current state of the art for AI, it's the technology that has allowed computers to beat humans at chess, at Go, I don't think that that flavor of AI, that approach to AI, is ever going to get us to safe enough autonomous vehicles. And that's because it works extremely well in fairly well-bounded rules, rule-bounded games or any scenario like that, but can you imagine trying to teach your 16-year-old how to drive by showing them images of every situation that they might encounter, right? Impossible. It's an infinite, it's not a well-bounded set. And that's so difficult because we really haven't developed the technology to allow computers to learn, to have things like common sense, to infer, you know, well, this happened, so this is likely to happen. So I think we are going to need a whole new breakthrough in AI before we get to what is generally considered safe enough vehicles. >> Interesting, well then, maybe if we kind of apply your previous thought about sort of Robo-Taxis as maybe being the segment where you're going to see the most use of these newer sensor technologies. >> Rudy: Near term, yes. >> Exactly, what about maybe, is that sort of the same rules apply there for maybe the AI providers, that they're-- >> I think so and that's why they're all focused on that. I mean, from Uber to Waymo, they've all made the same calculation which is if you're running a fleet of vehicles, and so for example in Uber's case, the driver takes 80% of the fare and only 20% goes back to Uber, but if you can replace the driver with a computer, you can keep that vehicle on the road 24 by seven and you can keep 100% of the revenue. You don't need to pay the computer. So that's the calculus that they're all going through. But I think that many of them are making a fundamental mistake and I predicted recently that I think Uber, my prediction for 2020 is that Uber is going to divest its autonomous vehicle business and get back to the business that it should be focused on. Uber generates about $14 billion a year in gross revenue, so 20% of that, which is the piece that Uber keeps after the drivers take their 80, is what, 2.8 billion. Uber should be able to be an extremely profitable business on 2.8 billion of net revenue, but they're spending a huge chunk of money every year on R&D. Now, I would argue that Hertz and Avis have successful businesses. They're in the service, they're in the transportation business, but they didn't decide that they had to build their own cars in order to be in that business. My view, personal view, is that what Uber should be doing is saying, that's not our business, right? We are the world's best at managing this sort of peer-to-peer network crowdsourced transportation, if you will. And when some company, some Silicon Valley startup, comes out with safe enough technology, great, we'll use it, but we don't have to develop that ourselves. >> Well then, maybe just to play devil's advocate here for a second, what about it's a Robo-Taxi-type technologies being applied in bounded areas within metropolitan areas where the rules-- >> That's where it will start. >> Could be more-- >> I think that's where it will start, but I think part of the problem is that we have, perhaps in part due to all of the media hype around autonomous vehicles, we've been misdirected to thinking about autonomous vehicles as a replacement for the car we drive to work every day and I think that's the wrong way to think about it. I think that autonomous vehicles are going to show up in the market as an extension of public transportation. Right, you know, I get off the train and there's an autonomous vehicle waiting to take me for the last couple of miles to my office. >> And those last couple of miles would be sort of a regulated space. >> Rudy: May well be. >> Where the AI is more than capable of functioning. >> Right, and that, you know, yes. And so it's better to think about autonomous vehicles as not being a revolutionary technology but much more of an evolutionary technology. And in fact, most of these technologies are showing up in so-called ADAS technologies which are designed to make driving your regular car safer, lane assist, keeping you a safe distance. >> Donald: Maybe just explain that word, ADAS, and what that means. >> So ADAS stands for automated driver-assistance systems. So one of the first was cruise control, right, everybody's familiar with cruise control. And so to some extent ADAS is just building on cruise control. In addition to maintaining a constant speed, you can now stay in the lane. In addition to maintaining a constant speed, it will now automatically slow down if you get too close to the car in front. And so you can see ADAS as, you know, collision avoidance and so forth, not full autonomy, still have to have a driver in the driver's seat, but evolving year by year until one year we wake up and, yep, my car will actually drive me all the way from home to work without me intervening. Right, it's going to happen in that way. >> So incremental improvements. >> Incremental improvement. >> To ADAS as opposed to kind of revolution of autonomy. >> An overnight sensation. >> Yeah, right, coming from nowhere. Okay, understood. Well then, let's pivot from that then, okay. So let's talk about the automotive industry as a whole and sort of your thoughts on how this is all going to play out. >> Yeah, so there are some very interesting dynamics playing out in the automotive industry. Firstly, as good news, as a result of all of this money and innovation in the automotive industry, Detroit's actually coming back. I go there once or twice a year and you can feel the economy coming back in Detroit, but it's not going to come back around, you know, bending sheet metal. And the challenge that the automotive companies have is so much of their infrastructure and expertise has been built on construction, building a car, production lines to bend the metal, install the engine, and the internal combustion engine itself. And by complete coincidence, to some extent, we've got this confluence of all of these autonomous technologies and electric vehicles happening at the same time. Electric vehicles are much easier to make than internal combustion engines. Far fewer parts. It's one of the reasons that China has spun up about 20 different electric vehicle companies recently. So I think that long term, my prediction is that the automobile industry will go the same way that the personal computer industry went. When the PC first, you know, it was born by IBM, or Apple in some sense before that. There were dozens of companies producing different PCs and it was very much, they were expensive products, and, you know, relatively unusual. As the industry matured, the supply chains matured, and it became apparent there were really only two companies that were making a lot of money out of the PC industry. The companies that developed the software, operating system, and the companies that developed the processor, and all of the manufacturing went over to, in the PC's case, in Taiwan, right? And I think that exactly the same thing is going to happen with the automotive industry. Tesla today still actually makes cars, but I don't see them long term being in the car business because they're really a technology company. It's the reason I don't think Apple is ever going to get into the car industry. They make fantastic margins selling computer products. The gross margin selling a car, it's miserable. It can be single digits or teens. That would completely tank Apple's blended gross margin. So my prediction for the industry is there will be a few small pockets of very profitable businesses, particularly around the operating system, by which I mean the intelligence or the AI intelligence, and then the processor, whether it's a Qualcomm processor or a Nvidia processor or an Intel processor. And as with the PC industry, most of the profit will go there and most of the manufacturing will end up getting outsourced because that's not the value-add, you know, bending metal and so forth. >> Interesting, well, so in the kind of compute market today, right, we have this notion of sort of cloud-native, right, okay, and that many of the companies that are developing apps as relying on cloud-native infrastructure have a kind of technology lead that's going to be hard for some of the legacy providers to actually catch up on. Now, other people say that that's not necessarily the case and et cetera, right? Can you make the same argument for the electric car market, that some of the electric-natives might have a kind of sustainable advantage here? >> I should've added, today the cloud infrastructure companies, cloud services, SaaS companies, in the PC world, you know, very profitable, and I can see a similar cloud services model developing for the automotive industry. However, other than Tesla, it's very difficult to change the automotive channel to support that. I'll give you one example. Everyone that owns a Tesla is very used to the idea that, sometimes on a daily basis, a new bunch of software, operating system software, is downloaded overnight to your vehicle. You wake up in the morning and some new feature's been turned on, right? Tesla can do that because they bypass the entire dealership channel that has a complete lock on the rest of the industry. So for example, if GM wants to do the same thing as Tesla and do sort of what's called over-the-air, OTA, updates, software updates, they can't do that because their contract with the dealership network states that if there is service to be done on the vehicle, the vehicle has to be brought back to the dealership, and the dealerships consider updating the software on the vehicle as service. So their contract with the dealers actually prevent them from doing something that basic. So it's not just a technology issue. The whole channel and way vehicles get sold is going to have to change. >> Interesting, so that's the advantage that some of the new generation of vehicle manufacturers-- >> I would say that Tesla has a five year lead, technology lead, because they, like Apple, are vertically integrated. They're doing everything from user interface, fit and function, all the way down to the semiconductor. They're developing their own semiconductors now. So they have become a fearsome competitor in the electronic vehicle space because they've been doing it for longer than the other major auto companies. They've figured out a lot of the, you know, tricks and techniques of how to extend mileage and so forth. And so they have a substantial lead in the industry at this point, despite the fact that over the next 12, 18 months, every automotive company is going to be coming out with their own flavor of electronic vehicle. >> So then it's more than just about having electric drivetrains, et cetera, right? It's about the whole suite of capabilities. >> It's a systems engineering challenge. >> Interesting, okay. All right, well Rudy, we're going to have to leave it there, okay, but I think everything you've told us is, it sounds like some good news for some of the Tesla stock holders at the moment. >> I think so. >> Okay, well. (laughs) We'll pass on making an opinion about that, but great conversation, thank you for your insights. Okay, this is Donald Klein, host of theCUBE, here with Rudy Burger, managing partner at Woodside Capital. >> Rudy: Great, thank you, Don. (upbeat music)

(upbeat music) >> Hi, and welcome to theCUBE, the leading source for insights into the world of technology and innovation. I'm your host Donald Klein, and today's topic is the market for autonomous vehicles and the ecosystem suppliers looking to tap into this brave new world of autonomous capabilities in our daily commute. To have this conversation I'm joined by Rudy Burger, managing partner at Woodside Capital. Rudy, welcome to the show. >> Thanks Don, it's great to be here. >> Great, so look, why don't we start off Rudy, why don't you tell us a little bit about Woodside Capital and your role there? >> Great, so I founded Woodside Capital about 20 years ago having started five different companies of my own, one of which I took public. We are a specialist M&A advisor. We work with so-called growth stage often venture-backed companies and help them find buyers that are usually much larger public companies. Our clients are usually US or European companies and we find buyers in the US, Europe, or Asia. >> Excellent, excellent, okay. And why don't you talk a little bit about your kind of specialty areas? >> So I focused my career, and certainly the work at Woodside Capital, on imaging technologies and as an enabling technology, and the products and markets that are enabled by imaging and increasingly computer vision. So nowadays that is autonomous vehicles, consumer technology, security surveillance, and digital health. So enabling technologies, the computer vision is the theme that binds those together. >> Okay, well, the thing that's on everybody's mind these days is autonomous vehicles, when are we going to get them? Very high profile for sure. Before the show we talking about the kind of two key ingredients to making this happen, the AI software which is kind of the brains of the operation and then also the sensors which enable all of the AI. So why don't we talk about the sensor world first, okay? Lot of discussion about there, so sort of does the brave new world of vehicles need lidar? Does it not need lidar? Are there other types of sensors coming along? What's your sense of that market and how it's looking for all of the different players in it? >> So, Don, I look at it from a sort of fairly basic standpoint. Humans have two very capable image sensors and a very powerful processor, and the degree to which the automotive manufacturers and so-called Robo-Taxi developers have decided it's necessary to sprinkle every sensor known to man, and I'm talking lidar, radar, ultrasound, thermal, and of course cameras, is to some extent a degree to which, you know, image sensors are not as good as our eyes today. Now, there are some areas in which we will probably always have technology as a help. For example, humans are not very good at seeing in the dark whereas a thermal technology can do that very well. But my overall belief is that it's never a good idea to bet against an incumbent technology, and in this case I'm talking about so-called CMOS image sensors which are the sensor that goes into pretty much every camera in the world now. It's never a good idea to bet against the incumbent technology being able to scale into a new market. Every time people have done that, they've been wrong. Back in the early days the debate was whether CMOS image sensors would ever be good enough to replace CCDs as the sensor technology, and of course now, you know, everything uses CMOS image sensors. In other markets there was a long period of time in which people were thinking that LCD panels would never be large enough to replace, you know, for television, for example, 50 inch and so forth. It was never going to happen, so we needed plasma TVs, we needed rear-projection TVs. But slowly but surely the incumbent technology, LCDs, expanded to that market. So my belief is that CMOS image sensors will evolve to a point at which they will replace the need for lidar in most applications. >> Interesting, so that's a very controversial statement, right? Because you've certainly seen a lot of emphasis on the development of new generation lidar capability. >> Over 100 lidar companies started over the last three, four years, and of course many of them will not be happy to hear me say that. There are two distinct markets and one is the so-called Robo-Taxi market, and the other is more of the consumer vehicle ADAS market, and I think we need to think about those separately because the economics behind both are very different. If you look at the Robo-Taxi market, those vehicles tend to be much more expensive and are relatively price-insensitive. So if they can improve safety a little bit by putting a lidar on there, you know, great, let's do it, multiple lidars because these vehicles will be in operation 24 by seven, and if each vehicle costs 200,000, $250,000, fine. When we talk about the mass market for automobiles, type of car that you and I might go down and buy, very different thing. And, you know, auto makers sweat the pennies, and so putting a one or $200 lidar in a vehicle, big decision. And to the extent that they can replace the need for that lidar with a much less expensive camera system, that's what they'll do. Bear in mind that Mobileye, which has been the biggest success story, acquired by Intel for $13.5 billion, second largest acquisition Intel ever made, they for the most part still run on one camera, forward-looking camera. That's it, no radar, no lidar, no thermal, one camera. So the clever use of image processing, computer vision, and one image sensor can do a great deal. >> Interesting, okay. Well, so I want to talk about the software in just a second, but just to kind of finish this point, so if you were advising a sensor company that's developing some next gen capabilities, whether lidar or other related technologies, is the point you're making here that there are certain segments of this industry which are going to be more attractive to your technology than others? >> Absolutely, yes. I mean, the first thing to recognize is that the automotive industry has never really been a particularly comfortable fit with the economics and timeline of venture capital. VCs need to invest and recoup and redeploy back to their LPs on an eight-year cycle. But the automotive industry moves quite slowly, perhaps Tesla are excepted, and what the first piece of advice I would give these companies is it's probably going to be three, four, five years before, even if you have the right technology, before that technology really starts generating any significant volume and revenue. So for many venture-backed companies, that's too long. So the first piece of advice is find pockets of revenue, right, beachheads if you will, where you can land your technology and start generating revenue before you get to the automotive market. And many of these lidar companies we just talked about are not going to last long enough to get to the automotive market because not only does the automotive market move slowly but the autonomous vehicle market keeps on getting pushed out to the right as the industry realizes that this is a big, hairy problem. And so I would say, what is it that your technology can do an order of magnitude better than any other technology? Focus on that and find some opportunities for revenue outside the automotive industry that will sustain the company on its way to the holy grail. >> Interesting, yeah, so find that alternative revenue source to get you to base camp, and then when the market's ready, climb that Everest to-- >> I've seen so many companies basically go out of business because they've set their sights on either the automotive market, and it's go for broke. We're not interested in, all these other things are distractions. You know, entrepreneurs don't have a plan B. Or this. We're going to get our technology into a smartphone, that's it. And there are possibly some other opportunities but it takes so long and it's so difficult to get your technology into a smartphone that they go out of business before they ever get to that point. >> Interesting, okay. So good advice for people looking to kind of apply their technology in this kind of a very difficult market, right, very complicated market. All right, well, then let's switch to the other side of it. So we were kind of talking about the key ingredients, right? Sensors but also AI and the software around that, okay, and there are some very big players developing the software. Tesla's had their Autonomy Day where they've showcased their technology. You've obviously got Google with their capabilities developing software. How do you make sense of this overall landscape because we do see a lot of smaller providers also trying to develop software here. >> So the first thing that I find fascinating about the automotive industry is that for the most part there is no software market. There's perhaps one exception of any scale, that's BlackBerry that sells the QNX software. They found a point within the entertainment console where they can license their software. But for all of the development and capital invested into automotive software, nobody is actually generating revenue, making a living, by licensing software. And one of the main reasons for that is that, you know, the automotive market, really since inception, has been a hardware business. This is a business of bending sheet metal, internal combustion engines, and software has really not played that big a role up until relatively recently. So even those companies that do have software technology have ended up selling it into the automotive supply chain as a piece of silicon, embedded on a piece of silicon, not as, you know, here's my software on a USB stick, right? I think that the whole software licensing model hasn't so far fit well, fit comfortably, with the automotive industry. And the other reason is that there's no standard platform. If I were to develop a piece of software, I can, in the PC industry, I can develop for Windows, I can develop for Mac, I can develop for an iPhone. There's no such thing in the automotive industry, and particularly in this new world of autonomous vehicles there is no standard platform. There are many different processors, Nvidia has staked an early claim there. And the reason that most of the companies developing autonomous vehicle technology have developed the so-called full-stack solution, everything from code running on the processor, integrated through the sensors and so forth, is for that reason, there is no standard platform. So each company has developed the whole solution for themselves, and there are many of them around here that have raised hundreds of millions of dollars, some cases billions of dollars, for that purpose. So there is, today, no software market for automotive in the same way that we think about it in other industries. >> Understood, understood. But in terms of the companies that are actually pushing the envelope on these kind of capabilities, right, so we're taking the best of AI, we're applying it to big data sets, and then hopefully being able to extract that to create capabilities for these vehicles, right? What's your sense of how far that's come along in-- >> Well, it's come a long way but, here I'm going to push the boat out a little bit. I don't believe that the so-called deep learning technology, which is the current state of the art for AI, it's the technology that has allowed computers to beat humans at chess, at Go, I don't think that that flavor of AI, that approach to AI, is ever going to get us to safe enough autonomous vehicles. And that's because it works extremely well in fairly well-bounded rules, rule-bounded games or any scenario like that, but can you imagine trying to teach your 16-year-old how to drive by showing them images of every situation that they might encounter, right? Impossible. It's an infinite, it's not a well-bounded set. And that's so difficult because we really haven't developed the technology to allow computers to learn, to have things like common sense, to infer, you know, well, this happened, so this is likely to happen. So I think we are going to need a whole new breakthrough in AI before we get to what is generally considered safe enough vehicles. >> Interesting, well then, maybe if we kind of apply your previous thought about sort of Robo-Taxis as maybe being the segment where you're going to see the most use of these newer sensor technologies. >> Rudy: Near term, yes. >> Exactly, what about maybe, is that sort of the same rules apply there for maybe the AI providers, that they're-- >> I think so and that's why they're all focused on that. I mean, from Uber to Waymo, they've all made the same calculation which is if you're running a fleet of vehicles, and so for example in Uber's case, the driver takes 80% of the fare and only 20% goes back to Uber, but if you can replace the driver with a computer, you can keep that vehicle on the road 24 by seven and you can keep 100% of the revenue. You don't need to pay the computer. So that's the calculus that they're all going through. But I think that many of them are making a fundamental mistake and I predicted recently that I think Uber, my prediction for 2020 is that Uber is going to divest its autonomous vehicle business and get back to the business that it should be focused on. Uber generates about $14 billion a year in gross revenue, so 20% of that, which is the piece that Uber keeps after the drivers take their 80, is what, 2.8 billion. Uber should be able to be an extremely profitable business on 2.8 billion of net revenue, but they're spending a huge chunk of money every year on R&D. Now, I would argue that Hertz and Avis have successful businesses. They're in the service, they're in the transportation business, but they didn't decide that they had to build their own cars in order to be in that business. My view, personal view, is that what Uber should be doing is saying, that's not our business, right? We are the world's best at managing this sort of peer-to-peer network crowdsourced transportation, if you will. And when some company, some Silicon Valley startup, comes out with safe enough technology, great, we'll use it, but we don't have to develop that ourselves. >> Well then, maybe just to play devil's advocate here for a second, what about it's a Robo-Taxi-type technologies being applied in bounded areas within metropolitan areas where the rules-- >> That's where it will start. >> Could be more-- >> I think that's where it will start, but I think part of the problem is that we have, perhaps in part due to all of the media hype around autonomous vehicles, we've been misdirected to thinking about autonomous vehicles as a replacement for the car we drive to work every day and I think that's the wrong way to think about it. I think that autonomous vehicles are going to show up in the market as an extension of public transportation. Right, you know, I get off the train and there's an autonomous vehicle waiting to take me for the last couple of miles to my office. >> And those last couple of miles would be sort of a regulated space. >> Rudy: May well be. >> Where the AI is more than capable of functioning. >> Right, and that, you know, yes. And so it's better to think about autonomous vehicles as not being a revolutionary technology but much more of an evolutionary technology. And in fact, most of these technologies are showing up in so-called ADAS technologies which are designed to make driving your regular car safer, lane assist, keeping you a safe distance. >> Donald: Maybe just explain that word, ADAS, and what that means. >> So ADAS stands for automated driver-assistance systems. So one of the first was cruise control, right, everybody's familiar with cruise control. And so to some extent ADAS is just building on cruise control. In addition to maintaining a constant speed, you can now stay in the lane. In addition to maintaining a constant speed, it will now automatically slow down if you get too close to the car in front. And so you can see ADAS as, you know, collision avoidance and so forth, not full autonomy, still have to have a driver in the driver's seat, but evolving year by year until one year we wake up and, yep, my car will actually drive me all the way from home to work without me intervening. Right, it's going to happen in that way. >> So incremental improvements. >> Incremental improvement. >> To ADAS as opposed to kind of revolution of autonomy. >> An overnight sensation. >> Yeah, right, coming from nowhere. Okay, understood. Well then, let's pivot from that then, okay. So let's talk about the automotive industry as a whole and sort of your thoughts on how this is all going to play out. >> Yeah, so there are some very interesting dynamics playing out in the automotive industry. Firstly, as good news, as a result of all of this money and innovation in the automotive industry, Detroit's actually coming back. I go there once or twice a year and you can feel the economy coming back in Detroit, but it's not going to come back around, you know, bending sheet metal. And the challenge that the automotive companies have is so much of their infrastructure and expertise has been built on construction, building a car, production lines to bend the metal, install the engine, and the internal combustion engine itself. And by complete coincidence, to some extent, we've got this confluence of all of these autonomous technologies and electric vehicles happening at the same time. Electric vehicles are much easier to make than internal combustion engines. Far fewer parts. It's one of the reasons that China has spun up about 20 different electric vehicle companies recently. So I think that long term, my prediction is that the automobile industry will go the same way that the personal computer industry went. When the PC first, you know, it was born by IBM, or Apple in some sense before that. There were dozens of companies producing different PCs and it was very much, they were expensive products, and, you know, relatively unusual. As the industry matured, the supply chains matured, and it became apparent there were really only two companies that were making a lot of money out of the PC industry. The companies that developed the software, operating system, and the companies that developed the processor, and all of the manufacturing went over to, in the PC's case, in Taiwan, right? And I think that exactly the same thing is going to happen with the automotive industry. Tesla today still actually makes cars, but I don't see them long term being in the car business because they're really a technology company. It's the reason I don't think Apple is ever going to get into the car industry. They make fantastic margins selling computer products. The gross margin selling a car, it's miserable. It can be single digits or teens. That would completely tank Apple's blended gross margin. So my prediction for the industry is there will be a few small pockets of very profitable businesses, particularly around the operating system, by which I mean the intelligence or the AI intelligence, and then the processor, whether it's a Qualcomm processor or a Nvidia processor or an Intel processor. And as with the PC industry, most of the profit will go there and most of the manufacturing will end up getting outsourced because that's not the value-add, you know, bending metal and so forth. >> Interesting, well, so in the kind of compute market today, right, we have this notion of sort of cloud-native, right, okay, and that many of the companies that are developing apps as relying on cloud-native infrastructure have a kind of technology lead that's going to be hard for some of the legacy providers to actually catch up on. Now, other people say that that's not necessarily the case and et cetera, right? Can you make the same argument for the electric car market, that some of the electric-natives might have a kind of sustainable advantage here? >> I should've added, today the cloud infrastructure companies, cloud services, SaaS companies, in the PC world, you know, very profitable, and I can see a similar cloud services model developing for the automotive industry. However, other than Tesla, it's very difficult to change the automotive channel to support that. I'll give you one example. Everyone that owns a Tesla is very used to the idea that, sometimes on a daily basis, a new bunch of software, operating system software, is downloaded overnight to your vehicle. You wake up in the morning and some new feature's been turned on, right? Tesla can do that because they bypass the entire dealership channel that has a complete lock on the rest of the industry. So for example, if GM wants to do the same thing as Tesla and do sort of what's called over-the-air, OTA, updates, software updates, they can't do that because their contract with the dealership network states that if there is service to be done on the vehicle, the vehicle has to be brought back to the dealership, and the dealerships consider updating the software on the vehicle as service. So their contract with the dealers actually prevent them from doing something that basic. So it's not just a technology issue. The whole channel and way vehicles get sold is going to have to change. >> Interesting, so that's the advantage that some of the new generation of vehicle manufacturers-- >> I would say that Tesla has a five year lead, technology lead, because they, like Apple, are vertically integrated. They're doing everything from user interface, fit and function, all the way down to the semiconductor. They're developing their own semiconductors now. So they have become a fearsome competitor in the electronic vehicle space because they've been doing it for longer than the other major auto companies. They've figured out a lot of the, you know, tricks and techniques of how to extend mileage and so forth. And so they have a substantial lead in the industry at this point, despite the fact that over the next 12, 18 months, every automotive company is going to be coming out with their own flavor of electronic vehicle. >> So then it's more than just about having electric drivetrains, et cetera, right? It's about the whole suite of capabilities. >> It's a systems engineering challenge. >> Interesting, okay. All right, well Rudy, we're going to have to leave it there, okay, but I think everything you've told us is, it sounds like some good news for some of the Tesla stock holders at the moment. >> I think so. >> Okay, well. (laughs) We'll pass on making an opinion about that, but great conversation, thank you for your insights. Okay, this is Donald Klein, host of theCUBE, here with Rudy Burger, managing partner at Woodside Capital. >> Rudy: Great, thank you, Don. (upbeat music)

(rhythmic techno music) >> Hey welcome back everybody, Jeff Frick here with theCube. We're at Oracle Park on the shores of McCovey Cove. We're excited to be here, it's a pretty interesting event. Sports Tech Tokyo World Demo Day. It's kind of like an accelerator but not really, it's kind of like Y Combinator but not really, it's a little bit different. But it's a community of tech start-ups focusing on sports with a real angle on getting beyond sports. We're excited to have our next guest, who's an investor and also a mentor, really part of the program to learn more about it and she is Gayatri Sarkar, the managing partner from Hype Capital. Welcome. >> Thank you. Thank you for inviting me here. >> Pretty nice, huh? (laughs) >> Oh, I just love the view. >> So you said before we turned on the cameras, well first off Hype Capital, what do you guys invest in? What's kind of your focus? >> So Hype Capital is part of one of the biggest ecosystems in sports which is Hype Sports Innovation. We have 13 accelerators all around the world. We are just launching the world's first E-sports accelerator with Epsilon and SK Gaming, one of the biggest gaming company. So we are part of the ecosystem for a pretty long time. And now, we have Hype Capital, VC Fund investing in Europe, Israel, and now in U.S. >> So you mentioned that being a mentor is part of this organization. It's something special. I think you're the first person we've had on who's been a mentor. What does that mean, what does that mean for you? But also what does it mean for all the portfolio companies? >> Sure, I'm a mentor at multiple accelerators. But being a part of Sports Tech Tokyo I saw the very inclusive community that is created by them and the opportunity to look at various portfolio companies and also including our portfolio companies as part of it. One of our portfolio company where we had the lead investors, 'Fun with Balls' they're part of this. >> What's it called, Fun with Balls? >> Fun with Balls, very interesting name. >> Good name. (laughs) >> Yeah, they're from Germany and they came all the way from Germany to here. So, yeah, I'm very excited, because as I said it's an inclusive community, and sports is big. So we are looking at opportunities where deep-techs, where it can be translated into various other verticals, but sports can also be one of the use cases, and that's our focus as investors. >> Right, you said your focus was really on AI, machine learning, you have a big data background a tech background. So when you look at the application of AI in sports what are some of the things that you get excited about. >> Yeah, so for me when I'm looking at investments definitely the diversification of sports portfolio. How can I build my portfolio from esports, gaming, behavioral science in sports to AI, ML, AR, opportunities in material science and various other cases. Coming back to your question it's like how can I look into the market and see the opportunities that, okay can I invest in this sector? Like what's the next big trend? And that's where I want to invest. Obviously, product/market fit, promise/market fit because there's a fan engagement experience that you get in sports, not in any other market the network effect is huge, and I think that's what VVC's are very excited in sports and I think this is right now the best time to invest in sports. >> So promise/market fit, I've never heard that before what does that mean when you say promise/market fit? >> Interesting question so promise/market fit was coined by Union Square Venture VC fund. And they think that where there's the network effect or your engagement with your consumers, with your clients, and with your partners can create a very loyal fan base and I think that is very important. You may see that in other technology sector but, not, it is completely unparalelled when it comes to sports. So, I request all the technologies that are actually trying to build they are use cases, they should focus on sports because the fan engagement, the loyal experience the opportunities, you will not get anywhere else. >> Right >> And I think this is the market that I, and other investors are looking for that, if deep-tech investors and deep-tech technologies are coming into this market we see the sports ecosystem not to be a trillion dollar but a multi-trillion dollar market. >> Right, but it's such a unique experience though, right? I mean some people will joke that fans don't necessarily root for the team, they root for the jersey, right? The players come and go, we're here at Oracle Park which was AT&T park, which was SBC Park, which was I can't even remember, Pac bell I think as well. So you know, is it reasonable for a regular company that doesn't have this innate connection to a fanbase that a lot of sports organizations do that's historical, and family-based, and has such deep roots that can survive maybe down years, can survive a crappy product, can survive kind of the dark days and generally they'll be there when things turn back around. Is that reasonable for a regular company to get that relationship with the customer? >> So, you asked me one of the most important questions in the investors relationship, or investors life which is the cyclicality of the industry and I feel like sports is one industry that has survived the cyclicality of that industry. Because, as you say, a crappy product will not survive you have to focus on customer service so you have to focus, that, okay even if you have the best product in the world how can I make my product sticky? These are the qualities that we are looking into when we are investing in entrepreneurs. But the idea is that if we are targeting startups and opportunities, our focus is that okay, you may have the worlds best product but the founder's should have the ability to understand the market. Okay, there are opportunities, if you look at Facebook if you look at various other companies they started with a product that was maybe like okay, friend site, dating site and they pivoted, so you need to understand the economy you need to understand the market and I think that's what we are looking into the entrepreneurs. And, to answer your question, the family offices they are actually part of this whole startup ecosystem they are saying if there is an opportunity because they are big, they are giant and they are working with legacy techs like Microsoft, Amazon. It's very difficult for the legacy techs to be agile and move fast, so it's very important for them if they can place themselves at a 45 degree angle with the startup ecosystem, and they can move faster. So that's the opportunity for them in the sport's startup ecosystem. >> All right, well Gayatri thanks for taking a few minutes and hopefully you can find some new investments here. >> No, thank you so much thank you so much for your time. >> Absolutely, she's Gayatri, I'm Jeff you're watching The Cube, we are at Oracle Park On the shores of historic McCovey Cove I got to get together with Big John and practice this line thanks for watching, and we'll see you next time. (rhythmic techno music)

>> Hey, welcome back. You're ready, Jeff? Rick! Here with the Cube were Oracle Park recently, A T and T Park just renamed. It's a beautiful day home in San Francisco Giants. They're on the road. We're here at a pretty interesting event is called Sports Tech. Tokyo World Demo Day brought together a coalition of about 100 startups. 25 of them are given demos today on technology as it relates to sports. But even more importantly, that can then be used in other in others. Beyond sports. We're excited to have an athlete on not just another tech crazy guy. He's Brendan Harris. He's an athlete in residence at 76 Capital. Brendan. Thanks for stopping by. >> Thanks for having me. >> So what is the effort, Principles and entrepreneur in residence? Where is the athlete residents do? It is >> essentially a play on the entrepreneur in residence. I was introduced to 76 Capital finished playing in 15 and I was doing my MBA at Warden and in Philly and got introduced Thio Wayne and the guys at 76. And they are kind of putting together an athlete venture group. Whether they're bringing in a lot of athletes don't wannabe investors and kind of providing them access to deal >> flow and >> um, >> and then also leveraging their social capital. So, uh, he was He was kind of tickled when he came when he coined the term athlete residents and he threw it on my business card. And and that's where we're at, >> right? So I'm just curious your perspective as an athlete as you look around at all the technology that's going into sports, right? Kind of the big categories are, you know that which helps the players play better. There's that which helps the people run, the team's better. And then there's that, which is really kind of part of the fan experience. I mean, you actually to go down and try to put wood on a ball coming at you in 90 plus miles an hour. All this other stuff. Do you see it as is it interesting is distraction. Is it entertaining? I mean, how do you look at it from an athlete's perspective? >> So yeah, so a lot to impact. So first of all, I have this ah, equally the equal view of fascination and frustration where a lot of this wasn't he wasn't around when I when I was playing it, certainly from the field. Now we're taking in things like recovery and rest and sleep. Ah, but I think players and me personally are fascinated with How can we improve on field performance? And I think baseball. It's such a perfect game and you fail so often, being able to turn to turn things that were previously subjective and applied data and in tech to make them objective and give you answers. I think it's fascinating and the ways that we can use data to to kind of promote performance and health and and all those things air Very fascinating. So from players, point of view, we're all about it. But at the same time, I think it certainly says why I've loved to get into sports. Tech is there's a lot of data that's just noise that's coming in and things. And so the tough part is, um, kind of weeding through and what is actionable info on what can actually help improve the on field performance? And then along with that, you know, we want to feel the product on the field, but also what the service is for the consumer and the fans are. And how can we improve that and then engage them? Because certainly sports are part of the culture and part of life now, and it's fascinating. These fans want to know more and more and more, certainly what's going >> on. And it's been It's been a >> great journey, >> right? So on the fan experience specifically, and we've been we've been here a number of years. Bill Styles, a good friend of mine off another word and other work. Brad and and, you know, talking about high density WiFi and you know the app on your phone and delivered, you know, food delivered to your seats. I mean, >> as a as an >> athlete on the field. Do you look at kind of all these things is as a distraction. Do you appreciate? It's kind of a more competitive environment these days in terms of people's attention and kind of that entertainment dollar. But I would imagine from between the lines it looks like Hey, you know, the game's down here people. It's been >> interesting because, um, you know, one of the problems of a major league baseball's been trying to address his pace of games right. And if you really look at the data, they're not that much longer. What's different? We're wired differently, right? So our attention spans are short and we're constantly so our technology. So these, you know, guys like Bill, you are trying to leverage that and try to have your food delivered and try to increase the social component. Increased the value in the in venue experience so that you're not only watching the game, but you're socially enjoying at the same time and kind of fill in those gaps. Ah, lot of it is yes on. And I think there's been balls flying into the stands since baseball's been playing, but they need to put the netting up. Has come a lot of times because nobody's watching. Some people aren't not nobody, but a lot of people aren't watching. The games are getting hit with a lot of these foul balls. So there is that component where you know there's there's some unbelievable things are going off on the sides. But um, you know it's baseball is still gonna be kind of very somewhat within within the confines. >> The other piece that I find really interesting on the data side, right? Is there so much data? Right? There's data data data. Obviously, baseball is built on data and arguments about data and conversations about data, but now it's kind of gone to this next Gen with, you know, wins over replacement and all these other things. But sometimes it's funny to me. It feels like they're forgetting the object of the game is to win the game. And it feels like sometimes the metadata has now become more important than the data. Did you win or lose and is not necessarily being used as a predictor for future performance? But it's almost like a standalone game in and of itself. Like we forget. The object is to win the game and win a championship, not to have the highest war number views since that frustration is that sound? Yeah, I think what you're getting >> into a lot of times is our know how are we making decisions right? And in the game? A lot of times people forget that human beings are out there performing and so I think that's how we've gotten into Moneyball 2.0, looking at development and certainly mental health in focus and game preparation have come into play more and you're seeing some managers. I mean, Mickey Callaway just came out and said 80% my, you know, Susan's go against the data, which which I thought was a little bit interesting, but, ah, so there is that fine line right where you have to filter in what's noise and what's actionable. And at the same time, um, you know, allow you know, your managers and your decision makers some flexibility to go with, You know, they're they're in the heat of the battle and they kind of know their guys. And they know the human element that's involved. So it's it's an interesting, you know, trying to balancing act, >> right? So from your from your new job in your new role, what are some of the things you hope to see today? What are some things that you're excited about? Um, you know, from kind of an investor. And having played the game as well. As you know, I'm looking forward to the evolution of sports. Two >> things specifically how the, uh certainly bias the performs on the field in the human element. And certainly everybody wants workout secrets, and I don't feel like it's whether it's athletes or the kind of weekend warrior or people that are, you know, kind of your senior citizens. And I don't think it's a simple as this has worked, and you should do this. It's a very personalized experience now. And I think some of this personalized digital fitness is fascinating to me on and then how it relates to and how your body relates to, you know, your diet and nutrition, your sleep, your recovery. I think all those air fascinating that, uh, advances that I want to look into more. And the second is a CZ, I kind of mentioned is the fan engagement aspect. How do we drive those those fans that digital, >> um, and >> make it actionable and monetize, right? So that you know, you have your fans that are following you know, your Facebook, twitter and all those things. And so how do you not only gauge them, but collect that data and then kind of personalized that experience? Engage your fan in a way that can kind of grow your brand. Yeah, it's interesting to me, >> really interesting to have to have your perspective, and I'm sure will be a great day and you see all kinds of crazy stuff. So thanks for taking a few minutes. >> Yeah, Any time. >> All right. He's Brendan. I'm Jeff. You're watching The Cube were at Oracle Park in San Francisco. Thanks for watching. We'll see you next time.

(upbeat music) >> Hey, welcome back everybody. Jeff Frick here with theCUBE. We're at Oracle Park on the shores of McCovey Cove. We're excited to be here. It's a pretty interesting event. Sports Tech Tokyo World Demo Day. It's kind of like an accelerator, but not really. It's kind of like YCombinator, but not really. It's a little bit different, but it's a community of tech start-ups focusing on sports with a real angle on getting beyond sports. We're excited to have our next guest who's an investor and also a mentor, really part of the program to learn more about it, and she is Gayatri Sarkar, the managing partner from HYPE Capital. Welcome. >> Thank you. Thank you for inviting me here. >> Pretty nice, huh? >> Oh, I just love the view. >> So you said before we turned on the cameras... Well, first off, HYPE Capital, what do you guys invest in? What's kind of your focus? >> So HYPE Capital is one of the biggest ecosystem in sports, which is HYPE Sports Innovation. We have 13 accelerators all around the world. We are just launching the world's first Esports accelerator with FC Koeln and SK gaming, one of the biggest gaming company. So we are part of the ecosystem for a pretty long time. And now we have HYPE Capital or VC Fund investing in Europe, Israel, and now in US. >> So you mentioned that being a mentor, as part of this organization, as something special. Think you're the first person we've had on who's been a mentor. What does that mean? What does it mean for you, but also what does it mean for all the portfolio companies? >> Sure. I'm a mentor at multiple accelerators, but being a part of Sports Tech Tokyo, I saw the very inclusive community that is created by them. And the opportunity to look at various portfolio companies and also including our portfolio companies as part of it. One of our portfolio company where we are the lead investors, Fund with Balls, they are part of this. So-- >> What's it called? Fun with Balls? >> Fun with Balls, very interesting name. >> Good name. >> Yeah. (laughing) They're from Germany and they came all the way from Germany to here. So, yeah, I'm very excited because as I said, it's an inclusive community and sports is big. So we are looking at opportunities where deep techs, where it can be translated into various other verticals, but sports can also be one of the use cases. And that's our focus as investors. >> Right. You said your focus is really on AI, machine learning. You have a big data background, a tech background. So when you look at the application of AI in sports, what are some of the things that you get excited about? >> Yeah, so for me, when I'm looking at investments, definitely the diversification of sports portfolio, how can I build my portfolio from Esports gaming, behavioral science in sports to AI, ML, AR opportunities in material science, and various other cases? Coming back to your question, it's like how can I look into the market and see the opportunities that, okay, can I invest in this sector? As I said, what's the next big trend? And that's where I want to invest. Obviously, founder market fit, product market fit, promise market fit because there's the fan engagement experience that you get in sports, not in any other market. The network effect is huge and I think that's what we VCs are very excited in sports. And I think this is, right now, the best time to invest in sports. >> So promise market fit, I've never heard that before. What does that mean when you say promise market fit? >> Interesting question. So promise market fit was coined by Union Square Venture VC Fund. And they think that where there's the network effect, or your engagement with your consumers, with your clients, with your partners, can create a very loyal fan base and I think that's very important. You may see that in other technology sector, but it is completely unparallel when it comes to sports. So I request all the technologies that are actually trying to build their use cases. They should focus on sports because the fan engagement, the loyal experience, they opportunities, you'll not get anywhere else. >> And I think this is the market that I and other investors are looking forward. If deep tech investors and deep tech technologies are coming into this market, we see the sports ecosystem, not to be a trillion-dollar, but a multi-trillion dollar market. >> Right. But it's such a unique experience, though, right? I mean, some people will joke their fans don't necessarily root for the team, they root for the jersey, right? The players come and go. We're here at Oracle Park, which was AT&T Park, which was SBC Park, which was I can't even remember. Pac Bell, I think, as well. So is it reasonable for a regular company that doesn't have this innate, kind of, a connection to a fan base that a lot of sports organizations do that's historical and family-based, and has such deep roots that can survive, maybe, down years, can survive a crappy product, can survive, kind of, the dark days and generally they'll be there when things turn back around. Is that reasonable for a regular company to try to get that relationship with a customer? >> So you asked me one of the most important question in the investor's relationship or investor's life, which is the cyclicality of the industry. And I feel like sports is one industry that has survived the cyclicality of that industry. Because, as you said, a crappy product will not survive. You have to focus on customer service. You have to focus that, okay, even if you have the best product in the world. How can I make my product sticky? I think these are the qualities that we're looking into when we are investing in entrepreneurs. But the idea is that if we are targeting start-ups and opportunities, our focus is that, okay, you may have the world's best product, but the founders should have the ability to understand the market. Okay, there are opportunities. If you look at Facebook, if you look at various other companies, they started with a product, which maybe, okay, friends saw a dating site and they pivoted. So you need to understand the economy. You need to understand the market. And I think that's what we are looking into the entrepreneurs. And as to answering your question, the family offices, they're actually part of this world start-up ecosystems. They're seeing if there's an opportunity, because they're big, they're giant, and they're working with legacy techs like Microsoft, Amazon. It's very difficult for the legacy techs to be agile and move fast. So it's very important for them if they can place themselves at a 45 degree angle with the start-up ecosystem and they can move faster. So that's the opportunity for them in the sports start-up ecosystem. >> All right. Well, Gayatri, thanks for taking a few minutes and hopefully you can find some new investments here-- >> No, thank you so much. >> over the course of the day. >> Thank you so much for your time. >> Absolutely, she's Gayatri, I'm Jeff. You're watching theCUBE. We are at Oracle Park on the shores of historic McCovey Cove. I got to get together with big John and practice this line. (laughing) Thanks for watching. We'll see you next time. (upbeat music) >> Camera Crew: Clear. >> Jeff: John Miller. >> Gayatri: Oh, yeah.

(upbeat music) >> Hey welcome back everybody, Jeff Rick here with theCUBE. We're at Oracle Park, recently AT&T Park just renamed, it's a beautiful day. Home of San Francisco Giants, they're on the road, we're here at a pretty interesting event, it's called Sports Tech Tokyo World Demo Day, brought together coalition of about 100 startups. 25 of them are giving demos today on technology as it relates to sports but even more importantly, that can then be used in others beyond sports. We're excited to have an athlete on, not just another tech, crazy guy. He's Brendan Harris, he's an athlete and resident at SeventySix Capital. Brendan, thanks for stopping by. >> Thanks for having me. >> So what is that, I've heard principles and entrepreneur residence\\\, what does a athlete residence do? >> It is essentially a play on the entrepreneuring residence. I was introduced to SeventySix Capital, I finished playing at 15 and I was doing my MBA at Wharton and in Philly, and got introduced to Wayne and the guys at SeventySix and they are kind of putting together an athlete venture group where they're bringing in a lot of athletes that want to be investors and kind of providing them access to deal flow. And then also leveraging their social capitals, so, he was kind of tickled when he coined the term athlete in residence and threw it on my business card and that's where we're at. >> Right so I'm just curious, your perspective as an athlete as you look around at all the technology that's going into sports, right. Kind of the big categories are that which helps the players play better, there's that which helps the people run the teams better, and then there's that which is really kind of part of the fan experience, I mean, you actually had to go down and try to put wood on a ball coming at you 90 plus miles an hour, all this other stuff, do you see it as interesting, is it a distraction, is it entertaining? How do you look at from an athlete's perspective? >> So, yeah, so a lot to impact, so, first of all, I have this equal view of fascination and frustration where a lot of this wasn't around when I was playing, certainly from the field, now we're taking in things like recovery and rest and sleep, but I think players and me personally, are fascinated with how can we improve on field performance and I think baseball's such an imperfect game and you fail so often. Being able to turn things that were previously subjective and apply data and tech to make them objective and give you answers, I think it's fascinating. The ways that we can use data to kind of promote performance and health and all those things are very fascinating. So from a player's point of view, we are all about it but at the same time, I think this is why I've loved to get into sports tech is there's a lot of data that's just noise that's coming in and things and so the tough part is kind of weeding through and what is actionable info and what can actually help improve beyond field performance and then, along with that, we want to feel the product on the field, but also what what the services for the consumer and the fans are and how can we improve that and then engage them because certainly sports are a part of the culture and part of life now and it's fascinating, these fans want to know more and more and more, certainly what's going on and it's been a great journey. >> Right so on the fan experience specifically, we've been here a number of years, Bill Styles' a good friend of mine, and another Wharton grad. And talking about high density WiFi and the app on your phone and food delivered to your seat, I mean as an athlete on the field, do you look at kind of of all these things as a distraction, do you appreciate it's more competitive environment these days in terms of people's attention and kind of that entertainment dollar but I would imagine from the between the lines it looks like, hey, the game's down here people. >> Yeah. (laughing) It's been interesting because one of the problems major league baseball's been trying to address is pace of games right? And if you really look at the data, they're not that much longer. What's different, we're wired differently, right? So our attention spans are shorter and we're constantly addicted to our technology. So these guys like Bill, are trying to leverage that and try to have your food delivered and try to increase the social component, increase the value in the in-venue experience so that you're not only watching the game but you're social enjoying it at the same time and kind of filling those gaps. A lot of it is, yes, and I think, there has been balls flying into the stands since baseball's been playing but the need to put the netting up has come a lot of times because nobody's watching. Some people aren't, not nobody, but a lot of people aren't watching the games are getting hit with a lot of these foul balls. So there's that component, where there's some unbelievable things are going off on the sides but it's baseball still going to be kind of very similar within the confines of lines. >> The other piece that I find really interesting on the data side right, is there's so much data, right? There's data, data, data. Obviously baseball's built on data and arguments about data and conversations about data. But now it's kind of gone to this next gen with wins over replacement and all these other things, but sometimes it's funny to me. It feels like they're forgetting the object of the game is to win the game and it feels like sometimes the metadata has now become more important than the data. Did you win or lose and it's not necessarily being used as a predictor for future performance but it's almost like a stand alone game in and of itself. We forget the object is to win the game and win a championship, not to have the highest award number. Do you sense that frustration, does that sound like something you see-- >> Yeah, I think what you're getting into a lot of times is how are we making decisions, right and in the game a lot of times people forget that human beings are out there performing and so I think that's how we've gotten into Moneyball 2.0 when looking at development. Certainly mental health in focus and game preparation have come into play more and you're seeing some managers, Mickey Callaway just came out said 80% of my distances go against the data which I thought was a little bit interesting but so there is that fine line where you have to filter in what's noise and what's actionable and at the same time, allow your managers and your decision makers some flexibility to go with they're there in the heat of the battle and they kind of of know their guys and they know the human element that's involved. It's an interesting balancing act. >> Right so from your new job and your new role, what are some of the things you hope to see today, what are somethings that you're excited about from an investor and in having played the game as well as looking forward to the evolution of sports? >> Two things, specifically how the, I'm certainly biased to the performance on the field, and the human element and certainly, everybody wants workout secrets and I don't feel like it's, whether it's athletes or the kind of weekend warrior or people that are senior citizens. I don't think it's as simple as, this is work and you should do this, it's a very personalized experience now and I think some of this personalized digital fitness is fascinating to me and then how it relates to and how your body relates to your diet, your nutrition, your sleep, your recovery, I think all those are fascinating that advances that I want to look into more. And then second is, as I kind of mentioned, is the fan engagement aspect and how do we drive those fans, that digital, and make it actionable and monetized, right. So that you have your fans that are following your Facebook, your Twitter, and all those things and so how do you, not only engage them but collect that data and then kind of personalize that experience, engage your fan in a way that can kind of grow your brand. It will be interesting to me. >> Really interesting to have your perspective and I'm sure it will be a great day and you'll see all kind of crazy stuff. So thanks for taking a few minutes. >> Yeah, anytime, thanks for having me. >> All right, he's Brendan, I'm Jeff, you're watching theCUBE. We are at Oracle Park in San Francisco, thanks for watching, we'll see you next time. (upbeat music)

(upbeat music) >> From our studios in the heart of Silicon Valley, Palo Alto, California. This is a CUBE Conversation. >> Hi, everyone. Welcome to this CUBE Conversation here in Palo Alto, theCUBE Studios. I'm John Furrier, host of theCUBE. We're here with two great guests, Carl Eschenbach, partner at Sequoia Capital on the board of Cohesity as well with the CMO Lynn Lucas. Lynn, great to see you. Carl, thanks for coming back on. >> Great to be here. >> Appreciate it. So Lynn, you know we've been following you guys for many many years, watching the rapid growth of Cohesity. Funding round after funding round, Unicorn. From a start up, to going through the atmosphere heading into orbit, nice growth. >> Mid-size company I would say now. >> Yeah >> Yeah >> No longer a startup. >> Growing like crazy. >> No longer a startup, yeah. >> Good round, good financing track. Thanks to Sequoia. >> Well, we're proud and happy investors and partners with them, that's for sure. >> Yeah, one of the things we're super excited about right now, Lynn I want to get your thoughts on this is that, how do you maintain the growth because cloud is an ever changing landscape, data management's really hot and changing. What's been the success formula for you guys, staying ahead? Both in terms of continuing to push the brand, push the message and success. What's been the formula? >> Well, I think it starts with our founder, Mohit Aron, and his vision and strategy which, if you go back, he's been extraordinarily consistent on and he saw this massive opportunity to take hyper-convergence, which of course he's really the father of from Nutanix and bring it to this whole other area of data, the vast majority of data that enterprises have. That is in all of these different silos and so really I think that Cohesity has this opportunity to be a once in a generation platform company much like VMware and really change the way enterprises, protect, manage, store and ultimately do more with their data. So, I'm going to say it's less about the brand. I'm proud about the brand. But, it's really about... >> You did a great job the brand, but I think the execution is. I think one thing I love about this market cloud in the next ten years ahead of us is that you can come into the market with a feature or a specific thing, like backup and turn it into a broad ranging high-growth, billions dollars of value. I think that's what you guys are on. But I, while we have Carl here, I want to put him on the spot because, you know, of his experience at VMware and now at Sequoia. What's he bringing to the table for Cohesity? What's his operational knowledge? What is some of the things Carl's brought to Cohesity? >> Oh, my gosh. >> What hasn't he brought. >> Well, Carl is obviously incredibly experienced and brings a wealth of go to market knowledge and connections and advice for us. I think instrumental in helping us see how to scale. As well as, change and shift the business model over to software and subscription. Which is what Cohesity did last year and is right in line with the move towards the cloud. >> Carl, your thoughts? >> I have to say one of the things just to echo, so thank you for those kind words. But quite frankly its all about execution and these folks at Cohesity know how to execute. If you just look at their scale over the last three years and their ability to execute. It's pretty impressive, not on the technology side only. But, if you think about their go to market motion and what they've not both here in the U.S., internationally, over into, you know, Asia and in Japan with the joint venture they have with SoftBank and some of the others. It's been amazing to watch them scale and to go market and also the ecosystem that they started to build around them and leveraging partners like HPE and Cisco as Cohesity has transitioned from being an appliance solution to being a software and data management platform and moving the hardware to other partners. It's been amazing to watch that transformation happen. So, it's technology, yes. But, it's also every other component and piece of the business that's been able to scale through good execution. >> Let's talk about the ecosystem, cause I think it's a super important, ever changing conversation. Especially as the bigger players get bigger and then the mid-size folks like you guys get bigger as well. The relationships change. You've certainly seen your share, Carl, at VMware. At VMworld every year, the ecosystem has its growth. It changes over, new value propositions are coming in. You have a constant rotation through the ecosystem dynamic. >> Yeah, no. >> What are some of the going on now that Cohesity's taken advantage of? >> What are they... >> Yeah, so because Cohesity is actually building a true platform as Lynn was articulating. If you're a platform in a data center it means two things. You have to partner with people on the south-bound side of that platform and the north-bound side of the platform because everything's going to go through a platform and because of that you form a very rich ecosystem but you also form sometimes competitors. In this world everyone I think describes it as friends and enemies. They're frenemies and they've done a very good job at that but at the same time they've really focused on key partners like an HPE or a Cisco or many others that can really differentiate themselves and allow them to focus on what they truly are and that's a data management software company. So, I think they've done a really good job navigating the ecosystem and building off of it and aligning with the right people. For example you sit here at VMWworld today. Look at the partnership they have with VMware they have V-ready, you know, certification across vsan, their infrastructure platform. Vcloud Director, AWS, you name it. So, I think they've done a great job and that's thanks to people like Lynn and the team. >> Lynn, talk about the ecosystem dynamic. Because you guys are actively market a big booth every year at VMworld as well as Amazon re:invent and other shows. You have to be out there. What are you hearing? What are some of the dynamics that your working through? >> Well speaking of VMworld and VMware they really were the original ecosystem partner and I think we believe that north of 70 percent of our customers are VMware customers and they're getting better value out of that. But, we haven't talked a lot about the cloud and that's obviously a massive ecosystem that's continuing to develop and bringing those two things together is something that Cohesity specializes in. With our native capabilities, with Amazon, Azure, Google but the other third piece of the ecosystem that we're now developing is the applications and that's unique to Cohesisty really redefining data management. Just announced Cohesity CyberScan based on Tenable running on the Cohesity platform. Prior to the, Splunk, running on the platform. So we're developing these ecosystem partnerships in new ways with application providers. >> So when are we going to see Cohesity world. (laughing) >> I am just so happy to be at Vmworld it's a great place for us to meet a lot of customers and partners. So we'll stay with that. >> Carl you were talking about, before we came on camera, about your first VMworld. You know, oh my god, it's huge, now it's even bigger. This is the opportunity for firms like Cohesity, if they continue the momentum. Building out applications which if you think about it that's an enabling technology. You can enable developers to be successful. That truly is a testament to what a true platform is. >> Yeah, again, I think, she said they don't have a big user conference yet. I don't think it will be long before we such momentum in the market that we will have a user conference at some point. Where you will see a large turnout of people using the technology. People from the ecosystem there and then developers as well and lastly you'll start to see application vendors like a Splunk or a Tenable who are actually now running their applications on top of this. This isn't just data management but it's also supporting applications and when you pull those three different you know constituents together you have a pretty big opportunity to pull off some type of platform show. >> Lynn, I got to put you on the spot here for a minute you got Carl, he's also a partner with Sequoia Venture Capital. What are the pros and cons with working with a big time tier one renowned VC like Sequoia is? Sequoia's Don Valentine is a well documented story. Moritz goes on, the young guns in there now. Get the operating experience from like the Carl's. Pretty established, they got a great business model, you know that. What's the pros and cons of working for the big time Sequoia. >> I've not seen any cons. Pros are as you said the operating experience and I think also the experience in guiding a company through this hyper growth. Cohesity is now well over 1200 employees. Last year, when you and I sat here much less than that, right? And they've seen it and done it before with other partners or with other portfolio companies that I think is one of the best pieces of advice that Carl has given us coming into our company is how to maintain that culture and that focus on the mission as we move through this tremendous growth phase. >> That's interesting, Sequoia loves you when your growing but then, but they've seen success. The cons haven't come yet. But, if you continue to grow there will be no cons. Everyone's happy and growing. But, I want to get your thoughts because Sequoia also builds world-class companies and they also, Apple the names are legendary. Your founder on theCUBE told me that he doesn't just want to get an exit. He wants to build world class company. >> That's right >> Well, exit is not as important as like EMEA. But in like public that happens. He's not in it for the cash. He wants build a durable world class company. >> That's exactly right, right Mohit has had a number of successes, Google, Nutanix. So he's not in this for the short return and we really are focused on building a culture and a set of values and a long term sustainable business and he really means what he says about. He's here to change the world and data is the foundation of what most businesses are going to compete on and he believes he can really empower organizations to do that and we can build a great culture and a great company while were helping. >> Carl when you hear that.. >> I want to piggyback off what Lynn just said and its exactly what Lynn articulated about Mohit to want to build a big enduring company that stands the test of time. If you look at our ethos at Sequoia we want to partner with founders from idea to IPO and beyond. We're not looking for a quit hit, a quick win. We want to be with them through IPO and beyond and build big legendary companies that stand the test of time and in the form of Cohesity we have that opportunity and we're well on that path to build a legendary platform company that will service both the enterprise in the cloud companies into the future. That's our mission, so I think our missions are aligned. >> Well you just answered the question I was going to ask you. That is music to your ears this is the kind of model you guys want and certainly you guys do a good job of exiting out on EMEA and doing, making your LPs a lot of money. You got to make money. >> Right, but, you know a lot of people think when our companies go public this is an exit for us. It's just an event. If we believe in the companies were going to hold long into the public market from that idea and that seed investment, like we did here at Cohesity, well beyond the IPO. >> There's a renaissance going on , I love it because two things are happening in this next 10 years. You seen a systems platform mindset come back versus the quick hits and also people want to build big companies they don't want to do the quick flips anymore. So at lot of young entrepreneurs are, they are in it for a mission. This is a new vibe. What kind of advice do you give entrepreneurs that are looking to bring that Cohesity model and get the attention of Sequoia? What are some of the things that you see as success for the young entrepreneurs out there? >> Yeah, so it is around the word mission. Like we want to partner with people that are mission driven that are going to have a huge impact on business and society as a whole and even you know the social efforts in our world. So were looking for people that want to change the trajectory of whatever it is they are addressing and we think for example with Cohesity there's a radical transformation taking place in the infrastructure and someone's got to innovate because a lot of innovators today are not coming from the incumbent it's coming from the next generation of founders like Mohit and he's very mission driven. Build a big company, service a community of people change the way people store and think about data and manage it and that mission-centric founder is one we love to partner with. >> Final question I'd love to get both your take on this question, Lynn and Carl is. When you meet someone that may not be inside the ropes of technology like the enterprise tech like we are the few and others and they ask you the question "Why is Cohesity so successful?" How do you describe the dynamics of the marketplace and Cohesity's role in it on it's success? What is the answer to that question? >> I think it's really two things. So one is I think that there is this generational shift in the architecture that underpins data and we've got a perfect storm with data doing exponential growth and as Carl's been saying there really hasn't been a lot of innovation in the infrastructure in more than a decade. Mohit saw that, but then that's combined with a mission, a passion for customers and sticking to that execution of serving the customer and that's making us successful. >> Carl your thoughts after that. >> Listen, it starts with technology and to have great technology you have to have a great technical founder and we have that in Mohit, time and time again. I can go, we've all talked about Mohit and how special he is. At the same time you need to build a company that has a special culture, that can stand the test of time, that is resilient, that has grit and has passion and perseverance for the work their doing around their mission and I think we have all of that in Cohesity and that's a lot of it's because of Mohit and people like Lynn that he's brought in around his executive team. You can just see that permeate through the entire organization. >> That's awesome. Thanks for sharing the insight. Carl, great to have you comment here with Lynn on Cohesity, I know your on the board. Lot of great things happening, looking to see what's happening at the VMware parties. Thanks for hosting some awesome events for the community. >> Can't wait to be back. Bring some of our customers on. >> Thanks for spending the time. This is theCUBE Conversation here at Palo Alto. I'm John Furrier, thanks for watching. (upbeat music)

(bright music) >> From our studios, in the heart of Silicon Valley, Palo Alto, California, this a "Cube" conversation. >> Hello everyone, and welcome to this special "Cube" conversation here, in the Palo Alto "Cube Studios". I'm John Furrier, the host of "theCube", where a special guest, "Cube" alumni Carl Eschenbach was a partner at "Sequoia Capital", former head of "VMWare", running all the fields, COO, many tiles of "VMWare", great to see you Cube alumni. Thanks for coming in. >> It's great to be here, it's always fun to join you on "theCube". We've done a number of these and it's always good to do 'em in different settings and talking about different topics and companies. >> Love the studio love to talk about "VMWare", what they're doing "VMWorld's" right around the corner, it's here, >> Yep. On our doorstep. The market's changing, you're now doing a lot of investments at "Sequoia Capital", you're on a lot of big company boards. Cohesively you eye-path, you're on the front end of all the new trends, on the new waves. So, dated management has become super hot again, we were just talking some editorial around big data, early days had duped, how that kind of went its way but "Cloud" brought in a whole 'nother level of focus on data management. Really, it's still just as important, I've been seeing a lot of investments in this space. What's your view of the current landscape of the data management space right now? >> It's a great question, clearly, you know, there's a tremendous amount of data being created each and every day and the more data there is there's more opportunity to manage it and analyze it and actually use it to help drive your business into the future and drive revenue growth. So there has been a lot of investments, from the likes of "Sequoia", now there's around data and data management specifically like we did with "Cohesity." But I think data, just because there's so much more being created at such a rapid pace it's just become so valuable and every company is becoming a data and data management company because it's one thing to centralize your data. It's another thing to get it into one repository, but really what you want to do is to be able to manage it, analyze it to future predict where you're going to take your business going forward. >> You know, and one of the things that we're hearing all the time is that you don't want to bring data and dump it into a whole new system. It's got to not be non-destructive, that's been a very key thing. "Cohesity" has been one of those companies that just has risen really fast from start up to a rapidly growing company to a really strong high valuation, customer success has been phenomenal. You guys are in that, you're on the board of "Cohesity", was that obvious with those guys when you saw them, when the investment was there, what was the-- what interests you about "Cohesity"? What's the big focus? >> Yes, so there was a couple of things, let's start with-- always when you're doing an investment you want to look at the founder. What is the founder and what is his or her experience and what have they done in the past? And when you look at Mohit, there a very few founders of his caliber when it comes to infrastructure, data, data management. If you just look back, he was a rockstar at "Google", and in fact, you could-- many people can say he wrote the distributed file system for "Google" that it still runs on today. He left there after doing an amazing job and became an entrepreneur and co-founded "Nutanix", and wrote the, you know, file system for hyper converged infrastructure and then he said, "you know what? I've done that, I'm going to go do my third thing and I'm going to go and now build a company. And build a company that's going to disrupt a very fragmented market, starting with data storage and backup, but really build a platform for data management." And I think "Sequoia", I wasn't there when they led the initial investment and Bill Coughran, my partner, led the investment said, "you know, this guy is a rockstar, technically, there's not many better than him, and if he can achieve what his vision looks like today, he's going to build a big valuable company." And that's when we leaned in. So it started with the founder, it started with his experience, and then it started with what was he disrupting, and he was disrupting a legacy market in the infrastructure space that hasn't had a lot of innovation. So if you think it's the competitors of "Cohesity", its fun to compete in this market because a lot of them are legacy and they're trying to protect their legacy and they're not innovating and this is something that Mohit has done time and time again. In fact, it's probably the third time he's done it. >> He's a unicorn builder as we say here in "theCube" team, we loved him, he's been on "theCube" many times. But you're the new guy at "Sequoia", so they say, "Okay, Carl, you know the enterprise, you take it." >> Yeah. So you get on the board, it's interesting because his-- he's been on "theCube" and he's told me here, in studio that, you know, executing the entry strategy of the market with data backup and the normal-- the team was huge. But he had the vision, he saw that it wasn't going to be about data management backup and recovery, all that kind of categorical venture. He saw it as a bigger cloud place, sort of as a platform as you said. >> Yeah. What is the success formula for that because a lot of people try to compare, you know, this company that company and "Cohesity" has a unique differentiation. What's your take on that? >> The thing that's really unique about what Mohit and the team at Cohesity have created here is the fact that they've truly built the platform. A lot of people talk about building platforms and platform is like the holy grail in the enterprise because it's very sticky they've done it. Yes, they can do backup, but the fact that they have a distributed file system is scales, like, at web scale that can be used on premise, in the cloud in hybrid environments, the duplication, can do replication can do snapshot and cloning all that but most importantly what he's built is this platform that takes a very fragmented set of data, centralizes it, manages it, but then more importantly a lot of people say where's your data and where are you applications, he's built this platform to centralize data, and now what he's doing completely different than anyone else can do here, John, is he's bringing the actual application to the data. So you can now start to run applications on top of his platform, not just centralize your data, no one else can do that in the industry. >> I think that's one of the key things you see in these successful companies, and then Mohit again talked about-- you enter the market on a known beach head, good tan, but that's just the backup plan of it. >> Yeah. >> But they've been successful. And this has been a formula only a few companies have pulled off, "VMWare" was one of them where you were involved in from the beginning and "VMWare" virtualization has changed the game. And so I got to ask you being to having that "VMWare" history and legacy pedigree, as former CEO of "VMWare", where you've seen it from, you know, few employees to where it is today or when you left. What does "Cohesity" do for those customers 'cause remember "VMWare" was a very ecosystem friendly company. >> Yeah. But that ecosystem has been evolving, what does "Cohesity" bring to "VMWare" customers? >> It's really interesting because if you look at the workloads that are being backed up, supported, or the data that's being centralized on their platform, probably I'm guessing maybe greater than seventy percent of the workloads are VMWare workloads. So there's a tight relationship with VMWare technologically speaking because the amount of workloads and VMs that are being backed up on the "Cohesity" platform. But it goes further than that, there's a lot of commonality around how they go to market. They have a common set of channel partners that resell their technologies that do integration for customers, we have a lot of certifications. With "VMWare" we're VMware ready and certified on "vSAN" same with their hyper converged infrastructures stack. We're even supported are with the "VMWare" on "AWS" platform, we're "VMWare" ready certified for that too, to backup both on premise and off premise. So there are so many different areas we're integrated with VMWare both on go-to-market side and technically speaking, and then like I said, look at the amount of workloads that we're supporting, probably seventy percent plus are "VMWare" environments so, I think it's a really strong partnership and I'd say it's one of the stronger ones that "VMWare" has when it comes to building a data management back-up storage solution. >> The "Amazon" relationship with "VMWare" is certainly critical and "Cohesity" plays what, on both fronts there? >> Yes. So, actually there's three different solutions here. We are supporting "AWS", so "Cohesity" runs on "AWS". We support and we're certified with "VMWare", and then the three of us have come together and we're supported on the VMWare platform running on AWS to do backup and storage recovery for that as well. So there's three different ways those partners are in for. >> So Cohesity is not a public company yet so, and you're on the board so I'm going to ask you the board question. You're sitting in the board meetings, you know, CEO comes in, we're going to take that hill, this is where the future growth it. What is that conversation like? Where is the future growth for "Cohesity"? What does the future look like for them? What do they need to do? >> Yeah so, I do think it is around data management. We're still on the early innings, John, around data management. Backup clearly, I think they can crush the market and I think they're doing a good job competing against the more traditional players and even the emerging ones. We can differentiate ourself, but I think the real opportunity is to really go in with a point solution and then very quickly from that vertical entry go to a horizontal play and do data backup data recovery and data management and the more data we can take from this fragmented world and centralize it and then start to think about, wow we can bring things like "Splunk", bring applications to the data. Now try to move the data around to meet the applications, I think that is a rich opportunity and if you look at the go-to-market strategy of "Cohesity" one thing that's been very impressive to me having grown up for thirty years in the enterprise world, they started out selling to the enterprise, they're landing fortune five, fortune ten companies at scale with multimillion dollar deals as an entry point just to completely redo their backup architecture and how they're going to do data management. You don't see that too often. In three years, the revenue ramp this company's experienced is quite impressive, and I think they have a long way to go, and it's going to be on the back of data management going forward. >> You know, one of the things also they've done real well is they align with the community, they have great events. Their parties at "VMWorld" are legendary, reinventing. So, you know, they always-- they align, they work hard, they play hard but they get the job done. >> Yeah, no, they're known from what I understand, you know, they have a great CMO who you've met many a times, Lynn, she is not only a great CMO and a marketeer, but she knows how to throw a good party and there's always lines waiting outside the doors. A board member, I'm like, "Oh my god, how much did that cost?" But the amount of leads we get out of it, it's a no-brainer. >> Final question, how's it been as a VC? What's it like there? How's life been for you? >> Oh, I feel very fortunate, John. To be a partner at "Sequoia." It's one of the greatest, if not, greatest venture capital firm of all time, forty six years of rich history and to be part of it has been a blessing for me, and I get to bring all of my many years of operating skills to many younger companies. I get to see a lot, get to learn a lot, get to invest in some of the most exciting up and coming companies like "Cohesity" or "Snowflake" or "UiPath" or "Zoom" that's now gone public. I couldn't be happier and be more excited with what I'm doing and the ability to learn everyday from some great partners at "Sequoia." >> You surely got the mightiest touch and great experience in the enterprise; the company's lucky to have you like "Cohesity," congratulations . >> Thank you. >> Thanks for bringing the insight here on "theCube," I'm John Furrier, you're watching a special "Cube" conversation here in the Palo Alto studios, thanks for watching. (lively music)