from the cube 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 thecube and we have some news for you pure storage has acquired portworx the kubernetes specialist for 370 million dollars in an all-cash transaction charlie giancarlo is here he's the ceo of pure storage and he's joined by merlin theorem alley who is the ceo of portworx gentlemen good to see you thanks for coming on thank you dave thanks for having us so charlie uh the transaction all cash transaction north of 300 million your biggest transaction uh ever your biggest acquisition uh give us give us the hard news yeah well the the hard news is uh easy news for our customers we're bringing together uh two great companies uh pure as you know the the leader in technology and uh data storage and management and we're bringing together in uh to our team uh the port works team that is the has been the leader uh in container orchestrated uh storage systems and uh it really is gonna match uh you know the existing and and uh legacy uh hardware and application environment to the new environment of containers and we couldn't be more excited so to so tell us you know what was the rationale the sort of thesis behind the acquisition what are you hoping to accomplish charlie yeah you know uh containers is the way that uh applications are going to be developed in the future uh with with no doubt and uh containers utilize storage differently than traditional application environments whether those are rvms or even bare metal application environments and uh because of that it's a very new way of of handling data management the other thing we saw was a philosophy within um portworx very similar to pure of building cloud everywhere and make it look the same whether it's in a private data center or in the uh public uh cloud environment and so by bringing these two things together we create a very consistent environment for uh for customers whether they're utilizing and going with their existing application environment or with the new container environment for their new applications so merlin let me go to you first of all congratulations you know this isn't your your your first uh nice exit we we've known each other for a long time so so that's fantastic for you and the team uh so so bring us up to date on kind of where the company you know started and and where it's gone and and why you feel like this is such a good fit and a good exit for portworx well let's start with the company you know we've been uh at this for uh five and a half years almost six now and we started with these the very premise that that as containers were beginning to be deployed and apps started to kind of be seen everywhere containerized that data agility needed to match the app agility that people were getting from containers and that was something that was missing and so one of the things we did was really kind of take an entirely different approach to storage we turned kind of storage on its head and and designed it from the app down and effectively what we did was leverage kubernetes which was being used really until then to orchestrate really just the container part of the of this system to start orchestrating data and storage as well so northbound you know we containers are being orchestrated or orchestrated by kubernetes to manage the apps and southbound portworx now added the ability to manage data with kubernetes and what that's resulted in dave is that you know uh in in the last several years we've gained 160 customers uh household names right comcast t-mobile lufthansa ge roblox uh rbc who have all sort of deployed us in production and and really kind of built a leadership position in the ability to aid digital transformation uh of you know which customers are going through with containers hey guys i wonder if you could bring up that the chart uh i want to just introduce some etr data here so so this is one of our favorite views x y view the vertical axis is spending momentum when what we call net score higher the better and the vert and the horizontal axis is is market share and you can see i've outlined with that little pink area container orchestration and container platforms and you can see it's very elevated right there with machine learning and ai a little bit above cloud computing right there with robotic process automation this is the april survey of 1200 uh respondents uh the july survey you know robotic process automation bumps up a little bit which changes the shape but i wanted to show this picture to really explain to our audience the you know the popularity and this is where people are investing and charlie you can see storage kind of you know right there in the in the middle and you it seems to me you're now connecting the dots to containers which are gonna disperse everywhere we often think of containers sometimes as a separate thing but it's not i mean it's embedded into the entire stack i wonder if you can talk containers are just the next generation way of of building applications right and one of the great things about uh containers when you build an app on containers it becomes what's known as portable you know it can operate in the cloud it can operate on your own hardware inside your own data center and of course pure is known for making data portable as well between both private data centers and hyperscalers such as aws and uh and azure so by bringing this together making it possible not just for as we talked about container based applications but also for existing uh application environments whether those are vm or bare metal you know we create a very flexible portable environment i wonder if we could talk merely about you know just sort of the evolution of i mean vms and then and obviously containers the you know the virtual machines when we were spinning them up in the early days storage was like the second class citizen and then through a series of integrations and you know hard work you had you know storage much more native but every vm is is is kind of fat right it's sharing the same uh or has its own operating system my understanding is containers they could share a single operating system uh and and so but talk a little bit more first of all is that right and where does storage fit in in containers i mean we think of them at least at least in the early days as ephemeral uh but you're solving a different problem of persistence maybe talk about that that problem that you're solving sure dave i think you know you characterize this as uh the right way right there's kind of vms uh that have dominated sort of in in the world of infrastructure for for for the last 10 15 years now but what what is really happening here is a little bit more profound right really is if you think about it this is the transformation of a data center from being very very machine centric which is sort of the look back view of the world to being much more application centered going forward and this is being accomplished not just by you know what charlie talked about which is applications being deployed in containers but by the evolution of using kubernetes now as the new control plane for the data center so in in the last couple of years something amazing has happened right people have adopted containers and in doing so they've realized they need to orchestrate these containers and lo and behold they've kind of deployed kubernetes as they've done that they've begun to recognize that kubernetes now gives them a an amazing capability they can now let everything be application driven so kubernetes is now the new app defined control plane for the for the data center just like vms and vmware was the you know the kind of compute centered machine defined data center of the past so we're one of those modern day companies for the modern you know digital transformation stack and it doesn't just mean it's just not just products like portworx but other products in there right whether it's a rancher an open shift or or security solutions that are extensions of kubernetes so to your point what we've done is we've taken kubernetes and extended it to managing storage and data and we're doing that in a way that allows it to be fully distributed completely automated and in fact what happens is now the management of of the app and the data go hand in hand at the same time you don't have these separation of sort of responsibilities so the person who is really our buyer and buying set is a very different buyer than traditional storage and you know you know traditional storage i've talked to you about that part of the business a long time many times in the in the past our buyers are actually devops buyers so we land in devops and we expand in it ops our budgets are coming from uh a digital transformation budget like move to cloud or or even just kind of business transformation and our users are really not the classic storage user but really the the person who's driving kubernetes the person who's making automation decisions cloud architects automation architects they can now operate storage without having to know storage through products like portworx that extend kubernetes uh and and and allow it to be all application driven okay so it's much more happen so it's much more than just bringing i'd say jess much more than bringing state uh to what was originally a stateless environment it's bringing more data management uh correct so charlie connect the dots for us in terms of where pure fits in that in that value chain well as you know i mean we've developed a large number of products and capabilities that uh go well beyond storage into data management so whether it's snapshotting or replication or data motion you know into uh you know from uh from on-prem into the cloud and as we've been doing that we've been building up a control plane to do this with you know traditional uh block and file storage now this is extending that set of same set of capabilities uh to the container side uh you know whether it'll be block because contain there are a lot of container systems that are looking at block but even into the object space overall so think of this as the integration of data manage of a data management control plane for both existing and new apps and and that data control plane existing not just in one location such as uh the the private data center or the private cloud but also into the public uh cloud as well so that a company can orchestrate their both their uh their container-based apps but also the data that goes along with them and the data that goes to their traditional apps with one orchestration tool so you know you mentioned you know i think when you said motion i think of vmotion uh and and if i want to move a workload from one vm to another i can preserve at state is that kind of where you're headed with with control you're thinking of it very much in a push you know i t push sense rather than just the application calling for data access and being given given it through a set of apis so again very much more dynamic environment rather than rather than it be a human uh instigated you know think of it being as as a policy and and pro and programmer initiated set of activities uh i'm glad you brought that up because i think about we think about you know we also often think in monolithic terms and and containers are not right it's really like you said we can have applications even though they run inside of vms it sort of breaks they can but they don't have to right they can run on bare metal uh but of course you know with the with vmware they they've designed it to be able to run inside of vms as well if that's what customers are most comfortable with sure ultimately you were going to add some color to that yeah i think i think you know what what what charlie is describing is really kind of a new paradigm that's a self-service paradigm where application owners and application drivers people who are creating apps deploying apps now can can self-service themselves through a kubernetes-based interface and and it's all automated right so in in a in a funny way one way to think about this is a somebody who who's you know deploying apps they are doing that with the help of kubernetes their hands never leave the kubernetes wheel and now all of a sudden they're deploying you know data and storage and doing all of that without an intimate knowledge of the storage infrastructure so that kind of idea of automation driving and it's and this app-driven self-service model really enables that agility for data in addition to the agility for uh for the app layer and and i think dave the key thing here is you know why why it why has that container bubble floated to the top of of your of your of the graph that you just showed it's because i think modern day enterprises are doing two things that are imperative for their success right one of them is the fast enterprises are gonna eat the slow so they need to move fast and the way for that fast to be translated from an app agility to the agility throughout the whole stack is enabled by this the other thing that they are doing is data is the new oil and and folks really need to be able to leverage their data whether it's their own data external data but bring it all together in real time mine it and they can't do that without automating the heck out of it right and that's what kubernetes enables also so the combination of data agility and being able to kind of create that ability to mine in real time the data through an app-oriented interface is is completely revolutionary if you think about it and in my view going forward what you're going to start seeing is that kubernetes is going to start revolutionizing not just the app world but the world of infrastructure the world of infrastructure is going to change significantly with the advent of kubernetes being used to manage infrastructure yeah we often say in the cube the data is the new development kit and and you're talking about you know infrastructure as code is the perfect instantiation here so charlie i i wonder if are developers sort of a new distribution channel for you do you see that involving yeah you know we did a lot of studying uh before bringing the two companies together and about 40 percent of the buyers of uh of uh this uh environment of of port works our customers that we do talk to regularly in the it group and about 60 in the devops environment so you know one of the beautiful things about this is we have a good head start with the people we're selling to today but also it opens up a whole new uh buying area for us with devops and one that we plan on uh investing in as we go forward so charlie i would imagine this is a pretty fast close right uh what's the yeah these are two california companies and and luckily we've we we scoot under the uh uh the uh uh legal radar of hsr so we think we'll be able to close this within 30 days great and and how will you organize it you're going to where it's going to be it's going to be a a new business unit uh reporting directly to me uh as especially as we go through the you know the early days of of integrating but really we want to learn from the way that poor works has built a successful business make sure that we combine the best of both organizations together uh and uh really understand uh you know how to best uh tie together our go-to markets uh in the uh you know with uh the combination of of legacy and container and so so emerald are you gonna hang out for a while absolutely i you know uh i was i was talking to my team earlier and i said look the journey of business success is like a thousand steps and the part of a startup is only the first 250 steps i'll tell you i think we've kind of run up those first 250 steps pretty fast but we're going to sprint through the next 750 steps with with uh you know in the company of of pure because look pure is has always been well known as a disrupter in the business uh for a long time and we are a relatively new disruptor in the kubernetes space i think this is this this level of our joint ability to disrupt that market end to end is gonna be just just uh astounding astonishing i i'm just really looking forward to kind of taking this to a greater level of accelerating our our business well charlie i mean you see in the data i mean if you pick a analyst firm the vast majority of new applications are being you know developed in using kubernetes and containers but uh give us the last word uh give us the the summary from you in your final thoughts you know i think you know for uh both pure and port work customers what they're going to see is just a great marriage of two great companies i think it's a marriage of two great technologies and they're going to see the ability to be able to orchestrate all of their data across you know their existing as well as their new application environments and across both their development of their private cloud and the public cloud environment so this is uh you know a great addition to uh the advancement that customers are seeing through orchestration orchestration both of their application environment but just as importantly the orchestration of their data storage and management excellent well gentlemen thanks so much for your time really appreciate you coming on thecube thank you david thank you all right and best of luck to you both and thank you for watching everybody this is dave vellante for the cube and we'll see you next time you

>> Narrator: Live, from the Bill Graham Auditorium in San Francisco, it's theCUBE! Covering, Pure Storage Accelerate, 2018! Brought to you by: Pure Storage. (upbeat electronic music) >> Welcome back to theCUBE, we are live at Pure Storage Accelerate 2018. I am Lisa Martin, supporting the Prince look today. We're at the Bill Graham Civic Auditorium, this is a super cool building, 1915 it was built, and is the home of so many cool artists, so got to represent today. Dave Vellante's my co-host for the day. >> Well, I got to tell you, Charlie, thank you for wearing a tie. >> Yeah, well-- >> My tie's coming off. >> Okay, well, hey, look, you and me both. >> You have to wear yours-- >> Well, I do, I still have investors later. >> I'm not the only one who's representing musicians today. >> I got my tee shirt underneath here, all right. >> Oh, oh oh! >> Ladies and gentlemen, you will not want to miss this. >> Bill Graham, right, I'm on a Who, Lisa. >> "I'm on a Who", oh he said The Who! >> The Who! >> We got Roger Daltrey-- >> Charlie: Oh, that's fantastic. >> (laughing) >> Pete Townshend-- >> The Who! >> That's my deal. >> He's being so careful not to ruin his shirt with the buttons. >> The Who. >> I got to say-- >> Well done. >> Tower of Power was really my band. >> Oh, wow. >> They didn't play here, but Bill Graham was the first to sign him. >> Wow, representing. >> Well, I was an East Coast boy, so it was all the New York concerts and venues for me, but it was fantastic, I used to watch, you remember, Bill Graham presents? That was-- >> Yes! >> Yeah! >> I always thought if I found myself on stage, there'd be a couple of security guys dragging me off. >> Love that line! >> Nobody today, and you got a lot of applause, a lot of confetti. So Charlie, kick things off this morning at the Third Annual Accelerate, packed house, orange as far as the eye can see, but just a couple days ago-- >> Sea of orange. >> Exactly, sea of orange, a proud sea of orange. >> Right. >> Just two days ago, on the 21st of May, you guys announced your fiscal 19 first quarter results. Revenue up 40%, year over year, you added 300 new customers, including the U.S. Department of Energy, Paige.ai, and the really amazing transformational things they're doing for cancer research. You also shared today your NPS score: over 83! >> Correct. >> Big numbers shared today. >> These are big numbers. >> You've been the CEO for about nine months or so now, tell us what's going on, how are you sustaining this? Stocks going up? >> Right, right, stock's up about 80% year over year right now, so that's very good, but really I think it's a recognition that Pure is playing a very important role in the data processing, in the high-tech landscape, right? I think, you know, storage was really, I think up until now, really viewed as maybe an aging technology, something that was becoming commoditized, something where innovation wasn't really important, and Pure was the one company that actually thought that storage was important. As I mention in my keynote talk, you know, I really view technology as being a three-legged stool. That is, it's comprised as three elements: compute, networking, and storage. If any of one of them falls behind, you know, it becomes unbalanced, and frankly, you know, computers has advanced 10X over the last 10 years, networking has advanced more than 10X over the last 10 years, and storage didn't keep up at the same time that data was exploding, right? Pure is the one company that actually believes that there's real innovation to be had in storage. Paige.ai is a great example of that, I know it tugs on all of our heartstrings, but Paige.ai took lots of analog data, what was it, we're talking about cancer samples that were on slides, okay, they took literally millions of samples, digitized it, and fed it into an AI machine learning engine. Now, if you understand the way machine learning operates, it has to practice on thousands, or actually tens of thousands, millions, of samples. It could take all year, or it can take hours. What you want it to do is take minutes or hours, and if the data can't be fed fast enough into that engine, you know, it's going to take all year. You want your cancer pathology to be analyzed, you know, really quickly. >> Immediately. >> Immediately, right? That's what this engine can do, and it can do it because we can feed the data at it fast, at the rate it needs to be able to analyze that cancer. Data is just becoming the core of every company's business, it's becoming, if you will, the currency, it's becoming the gold mine, where companies now want to analyze their data. Right now, only about a half of 1% of the data that companies have can even be analyzed, because it's being kept in cold storage, and at Pure, we believe in no cold storage, you know, it's all got to be hot, it's all got to be available, able to be analyzed, able to be mined. >> Do you think, I got to ask you this, do you think that percentage will rise faster than the amount of data that's going to be created? Especially when you're thinking things at the edge. >> It's a great question, and I think absolutely! The reason is because it's not only the data that's being generated, or saved now, that's important. If you really want to analyze trends and get to know your customers, you know, the last five years, the last 10 years of data, is just as important. Increasingly, I think you may know this just from online banking, right, it used to be that maybe you'd have last month's checks available to you, but now you want to go back a year, you want to go back five years, and see, you know, you get audited by the IRS, they say: "Well, prove to us you did this," you need to find those checks and banks are being expected to have that information available to you. >> I got to ask you, you're what we call a tech-athlete, you were showing your tech-chops on stage, former CTO, but you've been a CEO, a board member of many prominent companies, why, Charlie, did you choose to come back in an operating role? You know, why at Pure, and why in an operating role? >> You know, I love being part of a team, it's really that. You know, I've had great fun throughout my career, but being part of a team that is focused on innovation, and is enabling, you know, not just our industry but frankly, allowing the world's business to do a better job. I mean, that's what gets me thrilled. I like working with customers every day, with our sales people, with our engineers. It's just a thrilling life! >> You did say in your keynote this morning that you leave the office, at the end of the day, with a smile, and you get to the office in the morning with a smile, that's pretty cool. >> I do, and if you asked my wife she'd tell you the same thing right, so I really enjoy being part of the team. >> Dave: So, oh, go ahead, please >> Oh, thank you sir. One of the things that Pure has done well is: partners, partnerships. We're going to be talking with NVIDIA later today, so this is going to be on, you guys just announced the new AIRI mini, and I was just telling Dave: I need to see that box, cause it looks pretty blinged out on the website. Talk to us about, though, what you guys are doing with your partnerships and how you've seen that really be represented in the successes of your customers. >> Right, well there are several different types of partnerships that we could talk about. First of all, we're 100% channel lead in our organization. We believe in the channel. You know, this is ancient history now, but when I arrived at Cisco, they were 100% direct at that time, no partners whatsoever. >> Belly to belly. >> Belly to belly, and I was very much apart of driving Cisco to be 100% partner over that period of time. So, you know, my history and belief in utilizing a channel to go to market is very well known, and my view is: the more we make our partners successful, the more we make our customers successful, the more successful we will be. But then, there are other types of partnerships as well. There are technology partnerships, like what we have with Cisco and NVIDIA, and again, we need to do more with other companies to make the solutions that we jointly provide, easier for our customers to be able to use. Then, there are system integration partners, because, let's face it, with as much technology as we build, customers often need help from experts of system integrators, to be able to pull that all together, to solve their business problems. Again, the more we can work with these system integrators, have them understand our products, train them to use them better, the better off our customers will be. >> Charlie, Pure has redefined, in my opinion, escape velocity in the storage business, it used to be getting to public, you saw that with 3PAR, Compel, Isilon, Data Domain, you guys are the first storage to hit one billion dollars since NetApp-- >> Right, 20 years ago. >> Awesome milestone, I didn't think it was possible eight years ago, to be honest, so now, okay, what's next? Can you remain an independent company? In order to remain independent, you got to grow, NetApp got to five billion in a faster growing market, you guys got to gain-share, how do you continue to do that? >> Well, you're right, each and every day we have to compete. We have to, you know, kill for what we eat. Our European sales lead calls it, our competition, on an account basis, a: knife fight in a phone booth. So the competition is tough out there, but we are bringing innovations to market, and more importantly, we're investing in the technology at a rate that I think our competitors are not going to be able to keep up with. We invest close to 20% of our revenue every year in R&D. Our competitors are in single-digits, okay, and this is a technology business, you know, eventually, if you don't keep up with the technology, you're going to lose, and so, that I think is going to allow us to continue growing and scaling. You're right, growth is important for us to be able to stay independent, but I looked very deeply at the entire industry before joining, and you know, I was in private equity for awhile, so we know how to analyze an industry, right? My view was that all of the other competitors are either no longer investing, and that's either internally, or in terms of large acquisitions, or they've already made their beds, and so I didn't really see a likely acquirer for Pure, and that was going to give us, if you will, the breathing room to be able to grow to a scale where we can continue to be independent. >> Almost by necessity! >> Almost by necessity, yeah. >> It's good to put the pressure on yourselves. >> So, in terms of where you are now, how is Pure positioned to lead storage growth in infrastructure for AI-based apps? There's this explosion of AI, right, fueled by deep-learning, and GPUs, and big data. How are you positioned to lead this charge is storage growth there? >> That's such a great question, you know, to get to the part of, you know, I started hearing about AI when I graduated college, which is a really long time ago now, and yet why is it exploding now? Well, computing has done its job, right, we're here today with NVIDIA, with GPUs that are just, you know, we're talking about, you know, giga-flops, you know, just incredible speeds of compute. Networking has done its job, we're now at 100 gigabits, and we're starting to talk about 400 gigabit per second networks, and storage hadn't kept up, right, even though data is exploding. So, we announced today, as you know, our data-centric architecture, and we believe this is an architecture that really sets our customers' data free. It sets it free in many ways. One of which, it allows it to always be hot, at a price that customers can afford, not only can afford, it's cheaper than what they're doing today, because we're collapsing tiers. No longer a hot tier, warm tier, cold tier, it's all one tier that can serve many, many needs at the same time, and so all of your applications can get access to real-time data, and access it simultaneously with the other applications, and we make sure that they get the quality of service they need, and we protect the data from being, you know, either corrupted or changed when other applications want it to be the same. So, we do what is necessary now, to allow the data to be analyzed for whether it's analytics, or AI, or machine learning, or simply to allow DEV-ops to be able to operate on real-time data, on live data, you know, without upsetting the operation's environment. >> I want to make sure I understand this, so you're democratizing tiering, essentially-- >> Charlie: Democratizing tiering. >> So how do you deal with, you know, different densities, QLC, et cetera, is that through software, is that? >> Well, so we hide that from the customer, right, so we're able to take advantage of the latest storage because we speak directly to the storage chips themselves. All of our competitors use what are called SSDs, solid state drives. Now, think about that for a moment. There's no drive in a solid state drive, these things are designed to allow Flash to mimic hard disk, but hard disk has all these disadvantages, why do you want Flash to mimic hard disk? We also set Flash free. We're able to use Flash in parallel, okay, we're able to take low quality Flash and make it look like high quality Flash, because our software adapts to whatever the specific characteristics of the flash are. So we have this whole layer of software that does nothing other than allow Flash to provide the best possible performance characteristics that Flash can provide. It allows us to mix and match, and completely hide that from the customer. >> With MVME, you're taking steps to eliminate what I call: the horrible storage stack. >> Charlie: That's exactly right. >> So, you talked earlier about the disparity between storage and the other two legs of the stool, so as you attack that bottle neck, what's the new bottle neck? Is it networking, and do you see that shaking out? >> It's a great question, I think the new bottle neck, I would actually put it at a higher layer, it's the orchestration layer that allows all this stuff to work together, in a way that requires less human interaction. There are great new technologies on the horizon, you know, Kubernetes, and Spark, and Kafka, a variety of others that will allow us to create a cloud environment, if you will, both for the applications and for the data, within private enterprises, similar to what they can get in the cloud, in many cases. >> You also talked about, innovation, and I want to ask you about the innovation equation, as both a technologist and a CEO who talks to a lot of other CEOS. We see innovation as coming from data, and the application of machine intelligence on that data, and cloud economics at scale, do you buy that? And where do you guys fit in that? >> We do buy that, although cloud economics, we believe, that we can create an environment where customers and their private data centers can also get cloud economics, and in fact, if you look at cloud economics, they're very good for some workloads, not necessarily good for other workloads. They're good at low scale, but not initially good at high scale. So, how do we allow customers to be able to easily move workloads between these different environments, depending on what their specific needs are, and that's what we view as our job, but also point something else out as well. About 30% of our sales are in the cloud providers themselves. They're in softwares that service, infrastructures that service, platforms as a service. These vendors are using our systems, so as you can see, we are already designed for cloud economics. We also already get to see how these leading-edge, very high scale customers construct their environments, and then we're able to bring that into the enterprise environment as well. >> I mean, I think we buy that. You're an arm's dealer to the cloud, you know, maybe not the tier zero to use that term, which is, but also, you're helping your On-Prem customers bring the cloud operating model to their data, cause they can't just stuff it into the cloud. >> It won't always be the right solution for everyone, now, it'll be the right solution for many, and we're doing more and more to allow the customers to bridge that, but we think that it's a multi-cloud environment, including private data centers, and we want to create as much flexibility as we can. >> Would you say Pure is going to be an enabler of companies being able to analyze way more than a half a percent of their data? >> If we don't do that, then there's no good reason for us to be in business. That is exactly what we're focused on. >> Last question for you Charlie, you've been the CEO about nine months now; cultural observations of Pure Storage? >> Oh, you know, you've seen the sea of orange that's here, and by the way, the orange is being sported not just by Puritans, not just by our employees, but by our partners and our customers as well. It's a bit infections, I have to be honest, I had one piece of orange clothing when I started this job, and you know, my mother's into it, she's sending me orange, you know, all sorts of orange clothing, some of which I'll wear, some of which I won't. My wife, everyone, there's a lot of enthusiasm about this business, it has a bit of a cult-like following, and Puritans are really very, very dedicated, not just to the customer, I mean, people become dedicated, you know, not to an entity, they become dedicated to a cause, and the cause for Pure is really to make our customers successful, and our employees feel that it's what drives them every day, it's what brings them to work, and hopefully it's what puts a smile on their face when they go home at night. >> Charlie Giancarlo, CEO of Pure Storage, thanks so much for joining us on theCUBE today! >> Thank you, thank you. >> For The Who Vallante, I'm Prince Martin, and we are live at Pure Accelerate 2018, in San Francisco, stick around, Who and I will be right back. (upbeat electronic music)

>> Advertiser: From theCUBE Studios in Palo Alto, in Boston, connecting with thought leaders all around the world, this is theCUBE Conversation. >> Hi, everybody, this is Dave Vellante and welcome to our ongoing CXO series, Charlie Giancarlo season, chief executive officer of Pure Storage. Charlie, always a pleasure. Thanks so much for taking the time. >> Thanks, Dave. And like you said, always a pleasure, thank you. >> Well, I got to start asking you, the last time we talked, you were recovering from COVID. How are you doing? >> Yeah, I'm doing great actually. I seem to have fully recovered. I've been on 17 mile hikes at 10,000 feet. I've been doing a lot of biking, so it looks like other than my wife telling me that maybe I'm not all there, but she did that before COVID. So I'm used to it. >> Well, that's awesome to hear. Well, of course, just yesterday, you guys announced your quarter. I want to start there. You beat expectations, although revenue growth was a little less robust than we're used to from Pure, but you clearly had some activity regarding COVID in the US. International, very strong, but again, we'll talk about this US customers kind of reevaluating was your other key point. I got a lot of takeaways from the call that I want to ask you about. But the big thing was you had set a very confident tone on the Earnings Call. So I kind of want to start there. Well, give us your summary. >> Yeah, no, thank you for that. So first of all, we feel like we're operating really with all of our cylinders going. We have operational discipline. We've been adding to our R&D capabilities. We've hired people this year. and we showed a profit this quarter. So we're operating, I think very well. We've introduced a boatload of new products continuously over the last couple of quarters, including, FlashArray//C, the first and only all-flash product that competes at second Tier disc levels. We introduced our file services on FlashArray//C, which really allows us to go into the general purpose of file market. And we picked up a huge amount of share as you well know in Q1. We believe we're going to pick up significant share in Q2 as well, well above our competitors. So we feel like given everything we can control, we're doing very well. As you said, in Q2, what we saw was Europe, which came out of the crisis for the most part recover very, very nicely. The US, that's still in the crisis. Of course, we're seeing some slowness and especially among what we call the mid tier or the commercial market. They've been hurt very badly by the lockdown in the economy. And they have our sympathies, but we definitely saw some slow down there. >> Yeah, so I want to talk about the market share and maybe unpack some of that data. I mean, you guys gave a cautious outlook. It kind of gave no formal guidance, but you did informally guide flat, so you kind of gave some visibility there. So actually I appreciated it. I think some of the analysts were a little bit concerned there, but I think that's prudent. And they're really the expectations are a function of your expectations around the COVID recovery. I think you mentioned your account almost state by state and very clearly the international where you've seen comebacks have been very, very strong. >> Right, so I think our customers' data continues to grow if anything, growing faster under a lockdown environment and the move to more digital engagement with everyone, their customers, their employees, et cetera. So digital continues to grow, which generally creates more demand. However, of course, as you know, in storage customers generally always have a buffer. And what we saw on Q2 was customers starting to reconsider how they're going to spend their IT budget. And whenever you have a reconsideration, you have a slowdown. And that's what we experienced. And especially in the US where the effects of the pandemic, of the economy have been much more severe than in other parts of the world. >> Yeah, so I want to talk about some data. I often, as you know, like to share some data from our partner ETR every quarter we do the survey. So guys bring up that chart. And what it shows here, let's just set it up for the audience and Charlie for you as well. That this is essentially net score, which is a measure of spending velocity for the major primary guys. So we show Pure at the top in orange, that's just a coincidence guys. And then HPE, NetApp, Dell, and IBM. And you can see the net score, and then I've super imposed there in that table, in the upper left. And you can see Pure Storage is really the only one of these majors in the green. Everybody else is in the red, which is either the lower or high teens. And you can see a little bit of a COVID impact, last quarter, but holding strong at about a 40% net score where everybody else is, as I say, in the mid teens. And so that's a real positive. I point out, this is a forward looking survey. So we're asking people, what are you planning on spending in the second half relative to what you spent in the first half. And again, we see Pure with consistent momentum. I'll add, just if you looked at the past quarter, you guys announced plus 2% growth. IBM was plus 3% growth and we know why, they have the mainframe tailwind. HPE played a little hide, the growth ball. I don't know Charlie, how closely you looked at it, but they said 4% growth sequentially. Now, the last quarter they were down 16%. The same quarter last year, they were flat. So it looks to me like they were down this quarter. So we appreciate when you have clear guidance. >> Their storage, by the way, was down 10% year over year. >> Yeah, okay, great, thank you. I didn't pick up on that. And so, yeah, that seemed like that to me. And then NetApp happens tonight and we get Dell tomorrow. But so you were saying that you gained share, what gives you that confidence? >> Well, several, you mean for Q2? We know we gained Q1, right? We were 15 points above the industry average and maybe about 20 points ahead of our competitors. We saw a similar momentum from our partner. Remember, we're 100% partner fulfilled, right? And so in conversations with our partners, we have a general sense of how we're doing vis-a-vis competitive environments. We also know that our win rates have held very nicely and in quarters, almost every quarter, we're used to about a 20% per annum higher growth rate than our competitors. So when all of our metrics, that is our relative metrics. Things like win rates and so forth continue unabated, we generally expect to have the same outcome. >> Great, and then so let me go through some of the takeaways that I have from the quarter. I'll just run through them and we can go wherever you like. But the COVID snapback obviously is a key indicator. We saw that in international versus the US. >> Charlie: Right. >> New opportunities for growth. I want to talk about that, at some length the FlashArray//C object, the Cohesity pieces and other TAM expansion. The pipeline is very encouraging, but there's some uncertainty leading to your tepid guidance. Very strong, gross margins as usual. The subscription model is growing nicely. I want to hit on that. And the RPO, the remaining performance obligations grew to almost a billion dollars. That's a big number. New logo, solid at 20%. No real change in the competitive, but you called out, you'll see more PowerMax than PowerStore. That was really interesting. You're still hiring pretty aggressively, last quarter. And your technology investments continue. And I'll throw in the seven nines, which I think is another industry first, but where do you want to go there? >> Yeah, well, seven nines is a reliability figure for those of your audience that doesn't know. It relates to how much uptime or availability a product has or in our case, fleet of products. We have tens of thousands of arrays in the field. And last quarter we achieved what's called seven nines, which is the equivalent across the fleet of only three seconds of downtime per array per year. Which is, most other vendors had struggled to stay to five nines. And that's typically without even counting what they call scheduled downtime for upgrades. We don't even count that. We count all downtime of any type. So we're clearly, I think with no doubt, we're the most reliable product on the these days. >> So I want to come back to the TAM discussion because you, I inferred many opportunities for you guys to continue to grow. I mean, it's Flash, it's still about flash. flash is gaining share relative to spinning disk and relative to hybrid, you guys made that point a lot. FlashArray//C, you sound pretty happy with that, again, going after hybrid. And then this notion of bringing file services and object that unify play. kind of the man made great strides years ago with that capability. And then the data protection piece, the recovery with Cohesity, the faster recovery. That's another TAM expansion. So really, I identified four points of potential growth area for you over the next several years. I wonder if you could talk about that? >> Absolutely, we do feel very positive about all these areas. These areas open up a huge amount of the TAM that we didn't play in before. So FlashArray//C for example, as you say, flash was always a primary workload environment for flash 'cause it was very expensive compared to disc. Higher performance, better ecological footprint, denser, faster, cheaper, are more expensive though. So it only went after primary workload, but the vast majority of data storage is secondary workload. Things that don't require the high performance and therefore customers want it less expensive. And of course there were even more bits there. But FlashArray//C now competes very well with low cost disc, which is amazing. And of course it's 10 times lower footprint and 10 times more reliable. So this is the first and literally today only product that has all-flash in that secondary workload market. So just opens up a huge amount for us. And then, yes, I love talking about data protection for the following reason, customers actually don't want to do a backup, right? If you think about it, what they really want is recovery. Backup is what you have to do in order to get recovery. And these backup systems have been very good at backup, but usually can take 24 or 48 or even more hours to be able to recover from a failure. And now with ransomware, you don't want your website to be down for days before it comes back up. You don't want your traders not trading for days. It costs a lot of money. And with what we call rapid recovery and now flash recover, we can have companies come back within an hour or two at most, with a rapid recovery solution. And so the integrated solution that we've put together with Cohesity, allows customers to very quickly get up and running with an anti ransomware solution that allows them to get back up and operating in no time at all. >> Well, was interesting to see you choosing the partner route. I mean, you could have, if you remember EMC in the day. They bought in, data protection and it had actually worked out pretty well for them. You look at a company like NetApp, they've chosen not to vertically integrate with backup. You're choosing the same path. What's the thinking there? Stick to your knitting and partner up and add value where you can? >> Yeah, we have strong partnerships actually with all of the data backup players, Veritas Veeam, with Rubrik and others. In many cases, customers have already made their decision who their backup player is. Also, backup is actually a very relatively fragmented market. There's backup for different types of applications and different vendors have strengths and weaknesses in each one of those. And so our partnership across the backup board is very important to us. We did see however customers wanting an integrated solution, which we have, let's say initiated with Cohesity. But we believe it's the first of what will be multiple pure validated designs. Not all of which will be OEM, but all of which will be available as integrated systems in the market, through our channel partners. And so you can expect to see more of these as we go forward. >> So kind of the PVDs okay. I want to ask you about your subscription model. I mean, it's growing very nicely. Are there nuances there just in terms of understanding the income statement ie, product revenue was down, subscriptions growing. Are you going through that transition and having to sort of educate people on the impact on the income statement? You didn't make a big deal out of that on the Earnings Call and I thought, well, maybe I'm overstating that, but I wonder if you could talk about that dynamic? >> No, no, you're absolutely correct. And there is some of that going on on the earning statement. The bigger part, though, of let's say the lower growth this quarter was due, and the forecast was due to the pandemic. No doubt and especially in the US, especially hard hit in the US. But simultaneously we are going through the transition that many companies have had to go through in the past where a larger proportion over time of our sales are going to be what we call Pure as-a-Service and our unified subscription. So moving to subscription from CapEx. And whenever you do that, it takes a while, even though your sales, as in bookings, can stay in the growth path. The revenue takes a while to catch up as your subscription bookings grow. So there is some of that going on on our P and L as well. >> Yeah, well, it's the nirvana to the extent you can get that model. And of course your RPO is a good indication of you got a nice backlog that's yielding, that's certainty in revenue. >> That's correct. And the RPO is very nice and it reflects the fact that we have multi-year contracts going in with customers who are choosing Pure as-a-Service in Evergreen. And of course, the billing only reflects what we've actually built them for. >> I was struck by your comments regarding your main competitor, which is Dell, Dell EMC. Now, of course, in the early days of Pure, I've always said you guys drove a truck through the old VNX and symmetrics base. You said you're seeing PowerMax more than you're seeing PowerStore. That was interesting and somewhat surprising to me. >> Yeah, well, a standard play of Dell is to offer VMAX because it's less expensive versus our FlashArray. And then when the customer clearly says, well, it's just not performance enough or it just can't do the work that we need, then they'll offer PowerMax at a supposedly a deep discount to be able to compete with a FlashArray. So that's been a favorite tactic of theirs for quite some time. We maintain our win rates against that. PowerStore on the other hand, remember, it's a forklift upgrade with a new product on four different Dell existing products, right? And two things. One, is customers are just reluctant right now to try new things, right? They don't have the time to be able to test them properly. But I also think there's some reluctance even on Dell's part to put those properties up for grabs right now, when customers are more risk adverse. So, we continue, as I said, we are not seeing it as much as we had thought we might going into this. >> Yeah, we'll definitely find out more tomorrow. And I would expect that, to the extent that you're having more and more success in file, you're going to obviously run into NetApp more. >> Yeah, and that's what we're expecting. The file services on FlashArray//C really allow us to start to penetrate the general purpose file market. Clearly not on the very small, and we're not going after the very small market. We're going after the data center file share market on this and the Tier 2 workloads. >> Well, what's the early returns there? I mean, you saw the NetApp did the SolidFire acquisition to shore up NetApp kind of missed flash, and then bought SolidFire but that is obviously a good play. Do you feel like it's a tougher road than perhaps the old EMC install base or what are you seeing early on? >> Well, there's a lot of maturity obviously in files. And it will take us a while to be able to get up to full levels of maturity in files. But what customers love about us is our simplicity. And our file services on FlashArray is just as simple as our block services on FlashArray. And I think what customers are going to find is a very performant product that requires very little maintenance, very little tuning to meet their needs. And I think they're just going to appreciate the fact that it's a true fully capable block product with a fully capable set of file services. And that they'll be able to consolidate more and more of their use cases onto smaller and smaller footprint. So I think that's what they're going to appreciate about what we do. >> That's ironic, outsimplifying NetApp, which of course made its name, taken on guys like ASPEX for those of you remember that or even even the early day. So that's good. And I'd be remiss if I didn't ask you about cloud. Thinking on cloud, I know it's early days and I know most of your subscriptions of course are still with on-prem, but you made an interesting announcement last year to accelerate with Cloud Block Store running on AWS. How's the uptake been there? What can you tell us about that? >> Yeah, we're seeing a good uptake there. I'd say more of it is in the DevOps environment than in the actual NDR, disaster recovery, more than it is in transition of primary workloads into the cloud. And we're just seeing a bit less of that than one would expect given all the press around it. I don't think it's us. I think customers are just taking a while. They're focusing their new activities in the cloud and much less about transitioning existing environments. But we are seeing work done there. What we are seeing is a huge uptake in what we call our unified subscription, which is a Pure as-a-Service on-prem where we deliver to our customers, basically cloud, the equivalent from their point of view of cloud storage on-prem, where we manage the entire environment plus the unified subscription is that plus Cloud Block Store. So regardless of where our customers want to place their data, either on-prem or in the cloud, it's the same price and the same contract, same interface, same management to them. So we've seen a huge, I mean, literally an incredible spike in uptake in that. >> Great, thank you for that. And then I got to end with, I asked you last time about networking. You have a, a very wide observation space and a lot of expertise in a lot of different areas. So I want to ask you about, we've seen the spate of IPOs this week. Snowflake came , Palantir, UniFi, JFrog, number of others. Very interesting to see that in the Valley, you're in the Valley. Of course you shot in the Valley like everybody else these days, but what do you make of that? Is it kind of everybody trying to get in before the election? Or is it just a really good time? What's your take on that? >> I think a lot of it is getting in before the election, but a lot of stock market movements as you well know, has to do with cash flows more than it has to do with the prospects of individual companies and just given the amount of stimulus that's taking place, not just in US but worldwide. There's a lot of money floating around, which is boiling stock market prices. And so it's a great, an old colleague of mine had a saying, "When Monday's on sale, take it." And that seems to be the case right now, at least as far as the stock market is concerned. And I've stood there for a good time for IPOs. >> Well, the Palantir IPO took a swipe at Silicon Valley broadly, really targeting, I think Facebook and Google. It really doesn't have anything to do with your business, but I mean, I think as an executive in Silicon Valley, you see the innovation and the software development that's going into so many good things. I was struck by that though. I thought it was a little bit of a cheap shot at Silicon Valley. It really was aimed at Google and Facebook because there's so many companies from you guys, Cisco, Palo Alto Networks, it'll work on and on and on. They are just doing some great software work. And we're seeing that with COVID, where would we be without Big Tech? >> Well, thank you, Dave. I think the press tends to focus on the consumer companies. And we all have maybe our own individual opinions about the way they operate, but you're correct. I mean, I think the good foundational work that many companies in Silicon Valley are doing to make our lives easier every day, just continues to really impress. >> Well, Charles Giancarlo it's always a pleasure. Thanks so much. You're generous with your time. I really appreciate you coming on theCUBE. >> Thank you, Dave. Again, as you said, always a pleasure to speak with you and look forward to doing it next quarter. >> All right, us as well. And thank you for watching everybody. This is Dave Vellante for theCUBE. We'll see you next time, we're out. (bright upbeat music)