(funky jazz music) >> From our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBE conversation. >> Hello, and welcome to theCUBE studios in Palo Alto, CA for another CUBE Conversation, where we go in-depth with thought leaders driving innovation across tech industry. I'm your host, Peter Burris. Everybody talks about the unbelievable explosion in the amount of data that digital business is going to generate. That's true. But there's an analogue to that, and that is the unbelievable explosion in software that's going to be created over the next decade. The difference, though, is that if you create data, sometimes it's good, sometimes it's bad, different quality levels, but it's really easy to create really bad software, and bad software can take down a business. So as a consequence, every business, from the CIO down to the most lowly person in the organization, has to participate in the process of creating great software, either in the design or conceptualization standpoint, to a use standpoint. It's a very important topic and it's one I'm really excited about, and to have that conversation, we're joined by two great thought leaders in this space. Dominik Tornow is the principal engineer at the office of CTO at Cisco, and Sara Lynn Hua is a UX designer at Chegg, Inc. Thanks for joining us on theCUBE. >> Thanks for having us. >> So, Sara. Let's talk to you first. Tell us a little bit about Chegg. >> Yeah, so Chegg is an education technology company that provides both physical and fiscal services to students. >> Okay, great. So with that in mind, I want to come to this issue of the marriage of UX and the marriage of cloud native. Let's start here, what is UX? >> So UX stands for user experience design and user experience design is the process of creating a meaningful and intuitive experience in a product, like a software application for a user. >> So, cloud native. >> Well, cloud native applications, as we talked about, are applications that are scalable and reliable by construction. So in order to have a cloud native system, you need a system that is capable of detecting and mitigating load in failure, and you can basically say cloud and cloud native applications have as much in common as Java and JavaScript, or, if you want to avoid the bar fight, have as much in common as car and carpet. So cloud native application or cloud native systems have effects on your entire organization. >> So, Sara, as a UX person, a person who's really worried about having a, building software that is intuitive and useful for human beings, how do you think about the impact of cloud native? Is that something that is good, bad, indifferent? Where's cloud native at Chegg? >> So, Chegg is in the process of adopting cloud native principles. Chegg has three million subscribers and is actively growing especially in the international space, so obviously reliability and scalability are one of our highest priorities. We have a lot of different applications and we have a lot of different teams, so, due to a lot of different acquisitions, we're at different stages of adopting cloud native principles. >> So it's something that has immediate implications, not only as you talk to students and people who you are trying to inculturate to great UX design, but also in your business as well. >> Exactly. >> Alright, so let's get into this. Because there is a lot of excitement about cloud native and building applications faster, but as I said up front, it's not uncommon for people to build really bad applications fast. So, how does UX and cloud native come together? From your perspective, Sara, what do you think that marriage needs to look like? >> So I think a lot of what ends up happening with cloud native, adopting cloud native principles, is that user experience designers are sometimes left outside of that decision. We learn about it later on and there are lot of far-reaching implications of adopting cloud native principles that we normally don't think about from a design perspective, and one of them would be, we don't know to design for partial failure. If certain components depend on a service, and that part of the system then fails, then from a user experience perspective, a user using that component may have an awful experience, but we're not necessarily thinking about that in terms of reliability. >> So it's a reliability question, so some of the precepts of cloud native aren't recognized as potential constraints as you imagine the nature of the application, but still, you're still focused on translating user insights and user practices and user realities into design elements that can be built. But it starts with at least into design elements. You're trying to build the right application. Have I got that right? >> Mm-hmm. I think when we talk about how cloud native relates to design we also have to talk a bit about how designers and developers collaborate. >> So you've got UX folks that are really focused on building the right application. How does that impact the way cloud native developers have to start thinking? >> Well, if Sara is responsible for building the right application, I am responsible for building the application right, and there is, of course, there is a collaboration. There is a peer relationship between design and development, and design happens to be the first step in the process. So while designers uncover the requirements of the application, right, it is my job to implement these requirements. And in this case I am a service provider to the UX and UI designers, and I get to veto only on three counts. That is, if a certain design negatively impacts scalability, negatively impacts reliability, or, of course, negatively impacts security. Other than that, I only communicate the consequences. For example, consequences in terms of costs. So if designers lay out a few alternatives, design alternatives for an application, I can, of course, communicate, how long is it going to take to implement it? Or how costly is this solution going to be? However, it is, at the end of the day, the business and the design makes the decision. >> So if I think about it, if I can, just let me throw out kind of how I think about some of this stuff. I imagine you really focusing on the social dynamics that have to be reflected in the software, given, you know, human constraints and human experiences, and quite frankly whether or not people are going to find the system useful and meaningful and enjoyable to use, otherwise they don't adopt it, and I think of you in terms of the technology dynamics. So both of you are thinking about the underlying dynamics of how it's going to work. You facing the system and you facing the user. Have I got that right? >> Yes, you absolutely got that right. So if you make people happy, I make systems happy, and you see this is also a core conflict, right? So even though we are working on the same application, right, there is, of course, a lot of tension because we are pulling in two different directions. >> Mm-hmm. >> Well, you mentioned earlier what cloud native is and the idea, you know, all the things by design at the system level, but there are a number of techniques that cloud native developers are starting to apply. We talked a little bit about one of them up front, partial failure, that has to be accommodated because we're talking about a greater distribution of systems. One of them is eventual consistency. Historically we like to say, "Oh, when I tell the computer to do something, "it's going to do it "irrefutably and absolutely." But that doesn't work in cloud native. Talk a little bit about eventual consistency and what that's going to mean from a design standpoint. >> So for some applications, scalability and reliability may benefit, as you said, for applying eventual consistency. So eventual consistency, meaning that the effects of the last write converge in the different parts of the system at different times, right, and yes, while that benefits the scalability and reliability of the system, that may absolutely negatively impact the user experience. >> How? >> Well, for example if you have, let's say a sports app, right? So two users are using ESPN to get their sports updates on how the game is going, and these two users are getting information. If they're getting information from the same node then we don't have a problem, but if these two users are getting information from different nodes, there's a delay in when they get the game score. This doesn't matter unless the two users are actually sitting in the same room. So someone might get an update about this game way earlier that someone else might, and then they'll be like, "Oh, look at this, the Warriors just scored!" And the other person is like, "What are you talking about?" So once you have the use case of them being in the same room then that actually creates this negative user experience of someone assuming their app is slower. Something like that. >> I'm going to take that example and I'm going to add another one, because I think that this has significant importance when we talk about the implications. Let's talk about financial transactions. So we're, you know, stock trading. That, it shouldn't necessarily be that the fact that I'm a few thousand kilometers away necessarily puts me at a disadvantage, but metaphorically if my node is processing slower than your node and you get that information about what's happening with stocks faster than I do, then I'm at a disadvantage. That has a pretty significant impact, social as well as technical, on subsequent behaviors. So there's this notion of blast radius, of how those impacts affect not just a particular transaction at a particular terminal, you're going to have impacts in much broader social settings. Tell us a little bit about that. >> Yeah, so for blast radius, the way I like to look at it, is the parts of the system that are directly or indirectly affected by the failure of another part of the system. Would you say you agree with that? >> Perfect definition. So the blast radius being the parts of the system that are transitively affected by one part of the system failing. And even so we share the same definition of blast radius, our experience is actually very different. >> Mm-hmm. >> So let's talk a little bit about, for example, a recommendation service like in an e-commerce application or a video streaming service that takes my past behavior into account and recommends additional items to consume in the future. So, I would say in typical systems the recommendation service is a standalone service. Not many services depend on the recommendation service. Right. So if the recommendation service fails, for me the blast radius is very small. I may not necessarily want to get up at a Saturday night in order to fix the recommendation system. >> You, being the cloud native person. >> Correct, but the UX designer may have a complete different view of that. >> Yeah, so at Chegg, for example, we use recommendations to give our users certain parts of content, so users really rely on our recommendations to really master a subject that they are studying, and we have all these pages dedicated to just having recommendations for the user. You're studying math, great. Here's a list of practice problems that you probably should go through before your quiz. So imagine they're studying for a math exam tomorrow and they're up at two a.m. and going through these practice problems and bam! That recommendations module suddenly fails. That is something that keeps me up at night because the parts of this system that, or what I think about as parts of the system, are user flows and user interactions, and if we do not provide that service to that user at that time, it could result in them leaving us as a subscriber because of that negative user experience. >> So it's very clear today that we need to factor the practical constraints of the system as we do UX, but more importantly, we need to really accommodate the real human experience, those user interactions, user flows, in how we design the systems. It's not really what's happening today the way we want it to. Give us one simple step, Sara, we'll start with you. One simple step that you think would improve these two groups working together. >> Well, like I mentioned before, having those conversations with designers because when a company is moving towards cloud native principals, and towards adopting cloud native principals, and they leave designers out of the conversation, designers aren't aware that they need to design for partial failure. >> So get designers into those sprints early on in the system design and not just later on as you get close to thinking about what the user is going to experience. >> Right, exactly. >> That is, I 100% agree with that. It is first and foremost a conversation to be had, and you have to have this conversation on the very first step of the journey. You cannot bring in, whether UX or UI, designers at a late stage in time. You have to bring them in at the very first moment. And you have to establish the peer relationship, and you do have to understand that as a developer you are a service provider to the designers. >> And you know, I'll make a quick observation, and my quick observation is having been in this world a little bit. It's actually a lot more fun to think about the human element early on in the process. It just makes the constraints on the technical side a little bit more interesting and a little bit more meaningful. >> That is very true, I agree. I very much like the examples that Sara brought up because if you think about a cold-hearted technology, you would think about nodes that scale up, for example, in the example of the eventual consistency. You think of nodes to scale up but you do not think of the consequences. Yet, if you have this conversation early on with the designers, right, you see the consequence of what it does if your system scales, and you can actually apply simple remedies that have great effect on the user experience. In that case if there is geographical proximity to users you route them to the same node and you make the user experience so much better. It is very fulfilling. >> Sara Lynn Hua, Chegg. Dominik Tornow, Cisco. Thank you very much for being on theCUBE. Great conversation. >> Thanks for having us. >> And once again, I want to thank you for participating in another CUBE conversation. Until next time. (funky jazz music)

>> Announcer: Live from Las Vegas, it's theCUBE. Covering AWS Reinvent 2017, presented by AWS, intel, and our ecosystem of partners. >> Welcome back to theCUBE's continuing coverage of AWS Reinvent 2017. This is day two for us. Incredible day one. We had great buzz on day two. Great announcements coming out from AWS today. I'm Lisa Martin with my cohost Keith Townsend, and we're excited to be joined by CUBE alumni, Aaron Kalb, the head of product and a founder of Alation. Welcome back to the show. >> Thanks so much for having me. I'm excited to be here. >> So speaking of excitement, you can hear the buzz behind us. Interesting about Alation, the first data catalog designed for human collaboration. What gap did Alation see in the market five years ago when you started? >> That's a great question, Lisa. So, yeah, we're the first data catalog, period, and we're excited to see a lot of other people kind of using that label, I believe it validates this as a space, and I think that everybody needs, and I think our approach, as you said, was to really to approach it from the human side, to say the data might be generated by machines or stored on machines, but it's not meant to ultimately be consumed by machines. Even if there's algorithms that's pulling it in, it's to ultimately serve human interests. So the goal was to design from the human back and really think, what does this data mean? Can I trust it? Is it gonna drive the processes correctly? >> So Aaron, I have seen that term quite a bit, and data catalog, for me, means one specific thing. Can you kind of wrap that up for us? >> What is a data catalog? >> That's a really great question, Keith, and I think what's interesting is we took a lot of inspiration in the early days actually from Amazon.com, right? So Amazon is an amazing modern product catalog. You can go in, type in English and see a variety of products that match that keyword. And for each one you can see whose bought it before, how many stars did they give it? Is it good? So it helps you find, understand, and trust, and get the right product for your need. We want to do that same thing for data. How do you found a trustworthy data asset, understand what it is, and put it to use? So that's exactly the goal. >> So, a simple problem is I've worked with a ton of researchers in the Big Pharma industry, data across the world basically. And a lot of data sets, repetitive. A team in Germany is working with one set of data, team in New Jersey working with another one, how does your solution help those researchers find the data that they're looking for? >> Exactly right. So the problem is many different data sets, many different things claiming to be true. Some of them are just plain wrong. Sometimes the answer might be one thing in Germany but something else elsewhere, and they're both valid. And so you've hit the nail on the head. The way people use data contains a lot of hints about the way you should use data. So just like Amazon, again, because we're here. And it'll say, oh, customers who bought what you're about to buy also bought this, and that can help you discover something useful. We try to expose we call behavior IO. Let the past behavior of the most knowledgeable people in the organization drive the future behavior. That's a big part of what we do. So one of the things I was reading about you guys on your website and some editorials is, a lot of data lakes fail. Why is that? How is Alation different? >> That's a great question. So I think what's interesting about a data lake is it's kind of like having a huge basement, right? And it can make you adopt a hoarder mentality, you say, oh it's so cheap to store everything, we'll just store it, and then when we need it we'll figure it out then. Well, the truth is, it's not always how it goes. Often you store so many things, it's cheap to store it, but when that actual human who has an actual analytical question they want to answer or an actual business process they want to improve, goes looking for the data, all they see are all these unlabeled boxes. Right? So I think the key is to think about how do you make information searchable, discoverable, understandable, trustworthy? And what's great is a lot of people are migrating from their on-premise data lakes to the Clouds, and obviously (mumbles) a big leader in where that's going. It gives you an opportunity to ask, just like when you move houses to say, let me look at what I've got, and can I adopt an approach? You know, what do I actually need? You might keep it all, but what's gonna be in the top shelf? What's gonna be in the basement? And how do you make everything accessible? >> So Aaron, can you talk a little bit about today's announcements? A lot of machine learning, analytics announcements from AWS. However, I don't know what I already have. So how can I make use of that data? Can you help talk about how Alation helps to leverage some of these new tools from AWS? >> Absolutely. So, we've had a bunch of customers on AWS Stack already, and increasingly so. Fundamentally our customers are people who do analysis. A lot of them are using S3, Redshift, the like. And people are hosting on the Cloud increasingly. And it's exactly the problem you described. It's I know I have it somewhere, but I can't get my head around what I already have. What region is it in? >> Aaron: Exactly. >> Is it in a region, is it in my data center, where is it? >> Exactly. so whether that data is in Redshift, in S3, or somewhere else. Maybe it's, you know, in a Postgres or SQL Server or Oracle Server. (mumbles) hosted one. Whatever it is, we crawl and index everything you have, just the way Google crawls and indexes everything out on the web, and we make it searchable, and we put information about who's used it and how good it is front and center, just the way you can say, oh this is a five-star clock on Amazon, I'm gonna go click buy it now. >> So one challenge with data lakes is security around that data. So data catalog, I get meta data around the data that I have, but some of that data is sensitive. How do you guys handle security around the data catalog itself? >> Absolutely. So we respect all the security and privacy settings that exist that are on the data itself, and we just sort of surface those in the catalog. Some of our customers say, look, we want to let people know what exists so they can ask for permission. Others say, even having awareness of this data is too much for us. And you mentioned, Pharma, that'll vary by industry. >> Where do you guys get involved in the customer conversation? You said many customers of yours are already using AWS for different things, but where does Alation come into the conversation? Are you brought in by AWS? Are you brought in by customers? Where are they on this journey towards leveraging the Cloud for the things that they need, agility, the speed, and the cost reduction? >> Absolutely. So our promise is we help you find, understand, and trust your data wherever it lives and whoever you are, democratizing it. So customers choose the right infrastructure for their needs, given cost, given performance. Obviously Amazon is increasingly a part of that. But that's a choice they make, and we resolve to handle that wherever it is. And as of customers, our customers are so smart, we learn so much from them. We're meeting a bunch of CIOs, both the prospects and also talking some current customers like Expedia today here at AWS lunch with our investor Costanoa and another at dinner tonight. And folks like Chegg and Invoice2go who've been longstanding AWS customers using S3, using Redshift, and actually in Chegg's case, they have a lot of homegrown tooling that they developed on the backend, but they said Alation is the best place to surface that and have it be the central portal for business users and analysts who might not be able to otherwise access things that are just available via (mumbles) >> So how are you, Alation, and AWS helping a customer like Chegg extract ROI quickly? >> Yeah, it's a great question, so, AWS is really great for cost containment. You have all this data and all this processing, but you have peaks and you have troughs, and how do you make sure you're not overpaying (mumbles) so it's great for helping with storage and computation. And Alation helps with the human side, how do you get that upside by saying you have this data, that could effect the way you stock your shelves, the way you price your products or who you hire, what markets you go into. And that requires that last step. If you have the data but it isn't in the right hands at the right time or it's interpreted incorrectly, it has no value. So the two of them together (mumbles) end-to-end solution. >> So Aaron, with GDPR coming up quick, the enforcement of that coming up May 2018, customers have to be concerned about having data they shouldn't have. Does Alation help identify some of that data? >> Absolutely. So data catalog is fundamentally an inventory of everything you have, plus information about how it has been and could be consumed. We very much focus on the upside, potential of using that to drive better business choices and better analysis. But we have customers actually saying, oh, we can use that same information about what we have, who's using it, what's in it, to instead make sure that it's used compliantly with a regulation like GDPR to make sure that you aren't holding onto health records longer than you should or PII. And it's absolutely a very big use case for many of our customers. >> So data is touched by a lot of people in an organization. AWS has done a great job of really developing a lot of synergy with the developer community for a long time now. But we're also seeing some trends suggesting they're going up the stack. They want to get more enterprises, enterprises are at the precipice, as Andy Jassey said, of this mass migration to the Cloud. You mentioned, all of your work with AWS and the CIO events that you're having here. Where are you guys in a conversation with customers? Are you more now having to get to that C-suite as now their business are absolutely predicated upon the best use of data to identify ways to monetize new revenue streams. How influential is that C-level in this conversation. >> It's a great question. So I think what is interesting is, all companies, we sort of commoditized a basic business school, consultant, best practice knowledge. Everyone is kind of already doing that. To get to the next level our customers are recently telling us it is only by finding key insights in data that they're gonna beat out the competition and stay relevant. I mean, look what Amazon and Netflix have done to the industries that, they weren't as data driven, and have that kind of agility around data. So everybody wants to do the same thing. So CIOs, CDOs, chief data officers, we're seeing them crop up more and more and being more and more empowered in the organization. Because it's seen as central to hitting revenue targets and making an impact, which is what customers want to do. And I mentioned CISOs as well with the question that you asked, Keith, about security. >> The CISOs, the chief information security officers. >> Aaron: Yeah, absolutely. Yeah, absolutely, so I think usually often a CISO will report into a CIO, often you see it as adjacent to them, there's somebody who needs to have the confidence, as they do, in Alation's process of mirroring what's in the data source, not introducing security holes. Potentially even taking a step forward and saying, as I implement GDPR and other policies, how do I use a comprehensive automated inventory like Alations to make sure that process isn't just started but actually finished and avoid the fines and the adverse events. We absolutely see across the C-suite a lot of interest. >> So let's go one step below the CIO, and I think the CIO understands this. This data is the new oil. Very, very straightforward. But now you're getting into the enterprise architect, the VP of infrastructure, and they have to implement these technologies. What have been some of the rewards and challenges with those conversations? >> That's a great question. Right, so here at AWS Reinvent we have a very technical audience, very infrastructure minded. Those are folks that we love to engage with, but our primary audience is the business. >> Keith: Right. >> Right. And so I think what's interesting is, the problem we solve for the more infrastructure-minded executives is how do I deal with these business users? How do I turn this relationship that feels adversarial, where they're putting strain on my system, they're upset about cost overruns, we don't speak the same language with the same values. Alation can be a great bridge. Because we do all of this automated extraction and tying to the sources where they are, and kind of meet the industry people where they live, but then can communicate the value in a clean interface that demonstrates real business ROI to the business. So we can kid of be an ambassador between those sides of the customer. >> I love that, being an ambassador. Aaron, your passion for Alation, what you do, your engagement with customers is palpable. So we thank you for joining us on theCUBE, and wish you guys the best of luck with what you're doing here at AWS Reinvent. >> Lisa, thank you so much for having me. >> Lisa: Awesome. >> Keith: Great job, Aaron. >> Thank you for watching. We are live at AWS Reinvent 2017 with 42,000 other people. I'm Lisa Martin, for my cohost Keith Townsend and Aaron Kalb, stick around. We'll be right back.

prepare for the extraction point we've been briefed on all the important stories and events in the world of emerging information now it's time to extract the data and turn it into action live from the silicon angle studios in the heart of Silicon Valley this is extraction point with John furrier okay we're live back in the palo alto studios i'm john furrier for the extraction point we extract the signal from the noise and my special guest today i'm excited to have here is Paul Martino who is the founder of aggregate knowledge and also storied entrepreneur in Silicon Valley who now lives in Philly with his family comes out here Paul is known for among other things being a great entrepreneur tech geek loves tech loves to build build startups started one of the first social networks with Mark Pincus called tribe started his own company funded by Kleiner Perkins with his partner Chris law called aggregate knowledge which is booming and doing great and now more famous for being the first round investor in zynga company that is exploding with revenue as Kleiner Perkins said is the of all their portfolio comes in the history more than Google's made more money faster than anybody Paul Martino welcome to the extraction point great to see you John as always awesome to see you first I got to start with your now I forgot to mention that you're actually running a venture firm so in addition to being famous with Zynga you're running bullpen capital so first give the folks out there an update and first confirm or deny you were in the first round of Zynga or not yes the the first round of Zynga there were several institutional investors and several individual investors Morocco me Reid Hoffman were individual investors Avalon Union Square accelerator ventures and foundry where the institutional investors in that first round Peter was Peter Thiel yeah Peter was also an individual investor in the first round so that's officially the first round investors of Zynga we have clarified that and that is now hot on the books but now you're you've been successfully founded aggregate knowledge you know have a CEO running that what's the update with aggregate knowledge yeah so great guy runs that company as a guy you need to meet and have on this show Dave jakubowski aggregate knowledge really went in a direction where all of the focus was on providing data and analytics to the major ad agencies and John John Nelson who started organic one of the first agencies is now the CEO of Omnicom digital joined the board and I said look we got to get a guy who's an ad heavy in here and jakubowski was previously the GM of microsoft adcenter and had a senior position at specific media and we brought him in and he's just been kickin butt our greek knowledge has really really made a significant significant contribution in the area of data and analytics for these major agencies and he was very able to bring in a crew of people know exactly how to run that business so you're a big fan of big data then mm-hmm oh yeah we just had a big special yesterday on Big Data mentioned about it so that's cool we're going to get into a lobbyist I was just kind of get the small talk out of the way here your current role is the founder of bullpen capital right so bullpen to me I'm a baseball not I love baseball bullpen means you go the bullpen for relief right yep thank God close the game out hopefully or mid-innings relief so tell us about what bullpen is it's a special fund as I know from reading talk to you to target an expansion of this new seed and explosive new funding environment Bryce plain force right I'll tell you how we got the name at the end too so here's what happened I've been investing with a lot of the so-called super angels and that's kind of a misnomer because they really are actually in some cases actual small venture firms to I've been investing with a lot of them since they got off the ground Josh Kopelman from first round is one of the first investors in aggregate knowledge mike maples was an early advisor to the company I've known Jeff claw be a who run soft tech since he was at Reuters and with the late 90s and so I've worked with these guys done a lot of investing and we were me and my buddies Duncan Davidson rich Melman were sitting around over summer of 09 doing a little bit data analysis right another big data assignment we realized that as more and more these seed funds got created they were creating an inventory of companies that weren't quite ready to go to the traditional venture guy but we're also difficult to bridge from just the seed guys because the see guys at that time didn't have really big funds so wait a minute you've got some really good companies here is to clarify the for the folks out there seed funds don't traditionally have follow-on big funds like a VC firm right that's what you're referring to yeah they tend not to have as bigger reserve so if a big fun writes you a five-million-dollar check and you stub your toe you can probably get some more money to get through the hardships but a lot of the the new super angel funds or smaller funds and you get a five hundred thousand dollar check and if you need another five hundred thousand dollars it can frequently be very difficult because they make so many investments with smaller reserves yeah and so you've got dave McClure clavey a maples first round capital true ventures made the first round truevision more traditional VC then say dave McClure and mike maples and claw VA they're out doing some really good work out their funding really good company spending a lot of time I know I've seen them working their butt off yeah they need some air support right they need some cover the little bullpen is that that's you come in and say hey for your stars they're going to rise up yep and so that's exactly right so what happens is here's what the analysis we did turned out of their portfolio thirty percent of their portfolios in aggregate quickly are really exciting companies you know and they quickly go up to a venture auction and the guys and sandhill rotor excited about it about twenty percent of their deals you know that they don't like too much it's kind of just floating there yeah that you know the entrepreneur wasn't a fit that team didn't execute that left fifty percent of their deals in the middle which they kind of were too early to tell as Mike maple sometimes says they were in an extended learning and discovery phase they hadn't quite figured out what their models yeah and this de pivoting stuff's going on right now the Marcus changes turbulence so these guys are right and so you look you look at some examples and you go well wait a minute for every zynga that goes up into the right immediately go look at the stories of chegg and modcloth and etsy and quite frankly the in-between round on twitter and for everyone Zynga that you find that just hits it out of the park the right way there were four to five companies that went through that hard intermediate round that it was difficult in the environment where you have only a potentially thinly capitalized seed fund in front of you go get through that difficult point I said guys you need a bull pen and way we came up with the name is I'm involved in a deal with Chad Durbin who used to pitch for the Phillies and now as a relief pitcher for the cleveland indians and he was in our office and we were talking about this idea and Chad said yeah it's kind of like you're building a bullpen for the seed guys I'm like that's exactly right that's the name we got to go with and so fortunately I was involved in in this company called showcase you which is actually cool cited suppose for recruiting for college scholarships for a collegiate athletes right you're a high school student you throw 80 miles an hour left hand it and you're in 10th grade how do you figure out where the right scholarships are so Durbin and some of the Phillies where the original investors in this company called showcase you it's actually a cool company as the combine work out online basically fries for the high school kids and because the high school kids sometimes are in tough geographies to get to you're in you're in a small rural area in Nebraska how do they find out that you're the guy who can throw 89 miles an hour great so I mean this VC market so basically you're referring to with bullpen right now is an innie and you've been in our sprayer so you live through classic you know classic financing your last company financed by kleiner perkins and a tribe i forget who financed tribe yet Mayfield was the lead investor may feel again another traditional VC firm all tier 1 VCS although may feel people are you now is slipped a little bit that's some of their key partners who have slipped away but they've all moved on what you're really referring to is there's a new dynamic of entrepreneurship going on now we're now there are some break outcomes that just need a little bit more time to mature in the old model they just be kind of closed down the VC guy would be on the Bora has just a pain in the ass and you know really not growing and do another round it's they get kind of lazy in a way if they got 10 10 boards are on so with the super angels and the fact that does take a lot of cash to start a company you've got more deals getting done so the the Y Combinator the Dave McClure's and chef claw va's in the mike maples and sometimes SiliconANGLE labs which we're doing here is telling you about right we're funding companies the more [ __ ] is funded a better will you come in as you keep them alive longer just wreck the pivot possibly that's right and so what happens is right now the venture industry is being disrupted the same way the venture industry has funded companies that have rupted other industries they are being disrupted in the exact same way and the disruption happened from below as always happens it started in seed stage now in order for the disruption to go all the way through there need to be companies that come after seed stage investors that have the same philosophy and mentality pro entrepreneur easy terms operating people who get their hands dirty to get deals done you need that in the B stage and in the sea stage and here's what our prediction is John our prediction is a few years from now there'll be a company that comes after bullpen that does series c and series d financing or mezzanine financing but the same philosophy is bullpen and then DST s at the end of that chain and you can imagine building companies that go all the way to liquidity that you got money from maples first bullpen second this unnamed company third and you went quasi-public with DST and you've bypassed the entire venture scheme entirely and the entire institutional public markets complete liquidity wealth creation companies creating jobs I mean this is new paradigm I mean this isn't amazing I mean this is a potentially amazing point in the history of us finance the idea that you could go two billion dollar outcomes by passing not only the public markets on the back side but the traditional venture ecosystem on the front side I mean that is a disruption if ever there was one amen I mean hi and with you a hundred percent the other some people who will argue regulation is if market forces first of all I'm a big believer in market forces so I think what you're doing is clearly identifying an opportunity that dynamics are all lying lining up entrepreneurs are validating it and so but the questions are regulations I mean first of all I'm anti-regulation but as you start to get to that liquidity and some are arguing I even wrote a blog post about saying hey you know basically Facebook's public merry go buddy what do you say to those guys this is the change in the history of this financial asustor we want the government regulating this yeah so my co-founder of both i started bullpen with two really good guys Duncan Davison who was the founder covad was advantage point for years asking them to buy government regulation would go bad i mean what happened then because of the I lack warsi like Wars but only that the some extent covet doesn't exist unless the telco 1994 happens through in some ways a creation of the government to good point it's social right but but think about it the arbitrariness of government as opposed to a well-thought-out centralized plan so anyway so Duncan sometimes uses that phrase you know he talks a lot about the way in which the government you know that the worst thing you can ever hear is I'm with the government I'm here to help right i mean that's about the way it goes but his point around the the the new quasi public markets is money we'll find a way yeah and when sarbanes-oxley happens and it's tough to go public and you're a CEO like Pincus who's running one of the great all-time companies in Silicon Valley at Zynga he says you know going public is not an entrance is not an exit it's an entrance that's that's this quote what why would I why do I need that headache I mean I was just talking with Charles beeler who sold for the hell dorado he sold to compel in one of his investments to dell for over a billion dollars and and 3 para nother firm he wasn't on that one that was sold to HP during storage wars he's talking about the lawsuits literally this shakedown of immediately filed lawsuits you know you could have got more money so this is this public markets brutal no doubt no doubt i think what you're doing is a revolution I'm all excited about this new environment again anything with his liquidity wealth creation with the engine of innovation can be powered that's fantastic look back the startups okay get back to where you're playing yeah the history of Silicon Valley was built on the notion of value add some have said over the past 10 years venture capital has not been truly value add and some were arguing value subtract and then just money so what you're talking about here is getting in and helping me stay alive what's the value added side of the equation mean I know that a lot of these folks like like like ourselves here it's looking angle McClure Xavier and maples and true ventures they roll their sleeves up first round capital right before we can only provide so much it kind of expands right you guys are filling in the capital market side right how are you guys helping out on the value add because a lot of those companies may be the next Twitter right you've got a bridge to finance that's right allow them to do the pivot or get the creative energy to grow and they hit that market if they hit that hit it going vertical you got it kind of sometimes nurture it you guys have a strategy for that talk about the so let me let me give you my perspective on that so I think 10 years ago when you're starting a company the name of the venture firm was more important than potentially the partner on your board ten years later the name of the firm matters much less and it's the name of the partner and it's the operating experience that that partner partner brought to bear and you go talk to the 24 year old entrepreneur verse the 34 year old entrepreneur the 24 entrepreneur 24 year old entrepreneur wants a guy like you or a guy like me on his board he wants have been there done that started a company was a CEO exited it got fired hired people fired other people scar tissue scars knowledge experience exactly and if a good friend of mine who's in the traditional business I'll leave his name out of it he sometimes says the following phrase the era of the gentleman VC is over and what he means by the era of the gentleman VC is over is you know if your background is you were a junior associate who came in with a finance degree in an MBA and it never started a company you're not going to get picked by the entrepreneur anymore in 10 years from now almost everyone in the business is going to have a resume that looks more like a Cristal Paul Martino a mark pincus that you name all the people who we've started our companies with if there's a lot more hochberg with track record certainly with with the kind of big companies in the valley just in our generation yet started with netscape google paypal right now i want to see facebook is and then now's inga either the ecosystem is just entered intertwined I mean for every failure that spawns more success right so that's right that's a Silicon Valley way yeah well a tribe was tribe was a perfect example of a successful failure tribe was not a successful outcome but it was in many ways a very successful way to actually pioneer what became social networking you know investments got made into Facebook as a result of that Zynga in aggregate knowledge were both the outcrops of what was learned to some extent the original business case of Zynga was remarkably simple there is a ton of time being spent on social networks and after you get done finding your buddies and looking at photos what do you do and Pincus is original vision to some extent was let's have games to play and that insight doesn't happen that way unless you don't do tribe and go into the trenches and get the scars on your back and your in your your second venture of our adventure right at the tribe was aggregate knowledge was similar concept people are connected I mean you got to be excited though I mean you know you were involved in tribes very early on all the stuff that you dealt with activity streams newsfeed connections the social science you know the one that one of the nicest pieces of validation of this recently was over in q4 of 2010 seven of the patents that me Chris law Elliot low and Brian Waller wrote got issued now they're all owned by Cisco Cisco bought tribe in the end they bought the assets in the and the patent filings but there are patent filings that go back to 2002 on the corner stones and hallmarks of what social networking really is that we wrote back then that have now issued order granted or sitting in the cisco portfolio and well that's kind of like a consolation prize and that there wasn't a big outcome for tribe it is very validating to see that those original claims on really cutting-edge stuff have been had been issued and I'm excited about that you should be proud i'm proud to know your great guy you have great integrity you're going to do well as a venture capitalist i think you people will trust you and you're fair and there's two types of people in this world people who help people people who screw people so you know you really on one side of the other you're you're not in between you're truly on the on the good side I really enjoy you know having chatting with you but let's talk about entrepreneurship from that perspective about patents you know I'm try was an outcome that we all can relate to the peplum with Facebook of what Zuckerberg and and those guys are doing over there that's entrepreneurship so talk to the entrepreneurs out there yeah hey you know what you do some good work it all comes back to you talk about the the Karma of entrepreneurship a failure is not a bad thing it's kind of a punch line these days I'll failures are stepping stone to the next thing but talk about your experience and lets you and i talk about how to deal with faith for those first-time entrepreneurs out there in their 20s what just give them a sense of how to approach their venture and if it fails or succeeds what advice would you give them yeah well like winning and losing is important part of the game I mean certain companies are going to be successful in certain ones art and if you go and start ten unsuccessful companies maybe this isn't exactly the business for you but that said how you the game is important as well and if you're a high integrity guy who gets good investors and you make quality decisions and let's say the market wasn't a fit you're going to get the money the second time because people said you know I work with that guy that guy really did a good job you know they never got it quite right but this is a guy learn the right lessons so when I'm coaching a first-time CEO and i'm the CEO coach of a couple guys now you know i'm looking for someone who's sitting there going hey i not only want to do this to win and be successful but i want to learn i I want to do this better than no one no one walks in and says I learn from my failure I hope I'm successful I mean you let it go and say hey I'm gonna be successful I want to win failure is not an option but failure happens right i mean you know it's bad breaks that mean but but here is the key less I tell this to all of the entrepreneurs I work with you will not be successful if you're making mistakes that were made by those before you if you make novel mistakes you're in good company right and so only ever make a novel mistake I made a good example this is one claw and I started Chris law and I started aggregate knowledge aggregate knowledge was the original business model was around recommendations and there were dead bodies in front of us there was net perceptions there was fire fly and she was in the office this morning with Yazdi one of the founders of [ __ ] cast with it man yeah so predictive analytics residi what did we do we went out and we I flew out and met John riedle University of Minnesota who was the founder of net perceptions I dug up yes d i got these guys on my advisory board and while aggregate knowledge was not successful in the recommendation business and pivoted into the data management thing we made novel mistakes we did not repeat the mistakes of met perceptions and firefly and so i think that's an important important lesson to an entrepreneur if you're going into an area that has dead bodies in front of you you better research them you better know who they are you better know what happened and you better make sure that if you screw it up you at least screw it up in a way which none of us could have predicted yeah that's the only way you're going to get a hall pass on that well let's talk about talk about some of the hot Renisha of activity saw so you're in that sector where you're feeding the seed the super angels in the first rounds early stage guys and it's a good fit what about some of the philosophies on like the firms out there there's of this to this two philosophies I just taught us to an entrepreneur here you met on the way out a street speaker text and there at seven you know under a million dollars in financing hmm series a yeah and then you got in the news yesterday color 41 million dollars building to win magnin flipboard a hundred million dollars i got this is these guys that we know i mean there are yep our generation and a little bit around the same time and certainly they have pedigree so remember the old days the arms race mentality right when the sector at all costs right that's kind of what's going on here i mean some of the command that kind of money there's actually an auction going on what do you make of that I mean bubble is an arms race so so rich Melman inside a bullpen de tu fascinating analysis he looked at the full portfolio of 28 took about 20 of the best super angels by the way the super angles are all different some are micro vc summer buying options etc so so first off super angel is a weird word but it's everybody from Union Square and foundry on one side first round and flooding but any take the top 20 or so of these guys and look at their portfolios what's amazing about their portfolios is the unlike 10 and 20 years ago in prior tech bubbles there are not 20 companies doing the same thing when you categorize them yeah ten percent are in ad tech ten percent our direct-to-consumer consider but like forty percent are one-offs that is this is I think one of the first times in the history of venture that forty percent of the deal flow is a one-off unique business idea that there aren't 30 guys going to do and I think that the importance of that to what happens in this next stage of the tech boom we don't know what that means yet because back in the day well we need to just we're venture firm we need to disk drive company okay so your venture firm you've got your disk drive companies and I'll 20 venture friend knows if drive out and created the herd mentality everyone talks about with venture yep mean I was an opponent on a talk on here in the cube and I don't think I actually put in a blog post but I called the era of entrepreneurship like with open sores and low cost of entry with cloud computing and now mobility the manure of innovation where you know in the manure that's being out in the mark place mushrooms are growing out of it right and these you don't know what's going to be all look the same in a way so how do you tell the good ones from the bad ones so it's hard right so you have a lot of one you have a lot more activity hence angel list hence the super in rice so so the economics and the deal flow are all there the question is how do you get them from being just a one-off looked good on paper flame out the reality yeah well look in my opinion seed stage investing is about investing in people and I think when big firms trying to seed stage investing there's an impedance mismatch a lot of times because they want more evidence they want to know did the market work to the management then this is this is an early stage venture and am I going to want to go in a foxhole with this person and in many ways the good super angels are instinctive investors who are betting on people that they want to be in the foxhole with and yeah did they do it before do they know how to hire people is the market reasonably interesting but guess what they're probably gonna pivot three times so wait a minute at the end of the day you got to invest in people later stage venture is not you can look at discounted cash flows you can look at mezzanine financing you can do traditional measures but if you're going to invest in two people who have a prototype and need five hundred thousand dollars you're investing in people at that point what do you think about the OC angel is I'm a big fan of and recently was added thanks to maybe out there but even though i'm not i don't really co-invest with anyone else other than myself maybe you guys would bullpen but but if that's a phenomenon you don't have angel list which is opening up doors for deal flow companies are getting funded navales getting yeah a ton of activity nivea doing great job with venture hacks i get y combinator which I called the community college of startups they bring in like they open the door and I mean that an actually good way don't mean that negatively I mean they're giving access to entrepreneurs that never had access to the market right and now you have Paul Graham kind of giving the halo effect or thrown the holy water on certain stars and they get magically funded but yesterday at an event and they're they're packed right I've heard from VC saying I'm not invited because I didn't wasn't part of the original investment class so it seems that Y comma day is getting full yeah so do you see that you agree is there will be an over lo y combinator you know kind of like I've TED Conference has you know Ted they'll be you know y combinator Boston little franchises will be like barcamp for sure I mean look and look at techstars they franchise they'd I was over there with Dave Tisch in New York there's TechStars New York after those TechStars older in techstars seattle there is no doubt in my mind that right now there is an over investment in the seed stage meaning that there is a little bit of a seed bubble going on that's not necessarily bad though because in terms of raw dollars there's not a bubble yet Rory who's over at rafi it smells like a bubble it looks like a bubble but when you look at the mechanic when you look at the actual total dollars it's not a bubble rory who has a hinge recent Horowitz been said that that it's a boom not a bubble yeah so don't be confused it looks like bubbles and booms kind of look together the same right I actually I'm not quite sure I had the exact data right but here's the quick summary if you take a look at venture capital investment as a percent of GDP historically it's been something like point one percent of GDP in the bubble back in 99 it went to one percent something like it went 10x higher right now we're still at point one percent but since it's very much centered around the seed stage investing you see this frothiness in the sea but until that number goes from point 1 percent of GDP back up to one percent there's no real bubble because the tonnage of money hasn't come in yet and so so it's starting but this is what a tech boom feels like the early stages are excitement and lots of ideas and lots of flowers blooming and then the big money comes in because John I'll bet you're your brother and your sister and your mom haven't invested in a tech startup back in 99 video there's no public market that supports seven in a way that's a good and bad star basement yeah there's no fraud going on and most of the companies that are out there whether their lifestyle business or seed or bullpen funded are actually generating income the entrepreneur he has any earlier Mike was saying that he could a business deal so people are kind of like saw the old bubble and said shoot I don't want to do that again I gotta have at least revenue right and so companies didn't seem to start out with cash so you know that because you invested it but you know Pincus was getting some cash flow in the door from day one that's right that company was company was profitable the first day it started basically so talk about you know so I'm with Paul Martino by the way with bullpen capital entrepreneur wrote the patents on social networking which he sold the cisco when they sold the company now with bullpen capital huge dynamic you're a company out there this is exactly the positive dynamic you want to see because mainly you know dave mcclure jeff clavier mike maples have been kind of getting their butts handed to them in the press about super angels not having the juice to kind of go anywhere and it's been kind of a negative press there so you know this is the kind of void that's been filled by you guys to show the market that look at this there's a road map here so even though that the McClure's and clubs don't have big funds that there's a path to follow on financing so that the vc's can't shut them down and i've heard some pc say that so a lot of traditional venture guys would like to say that you know this little disruption we nipped it in the butt and it stopped after the seed stage but that's not the history of disruptions the history of disruptions are they start from the bottom then they get ecosystem support and then they grow and they disrupt the incumbents and I think we're halfway there so so the Angel gate thing that Arrington reported on was interesting because you know essentially what happened there it was a lot of him fighting Ron Conway I was not happy you can't be happy about competition I mean this is competition that increases prices right so you know in the short term prices have been inflated on valuations true or false that's true but but but I think I think the whole way angel gate was reported was absurd the most Pro entrepreneurial venture people perhaps in the history of the business are the guys who were supposedly at those tables I mean mike maples Jeff claw VA josh cop and Ron Conway fired his guy that was there I I understand suppose again suppose a key are right these are the most Pro entrepreneurial venture guys in the history of the business so I think that turned into something that it never was yeah well I mean that's the thing you know good for content producers who want page views I got to create some drama and you know as you know SiliconANGLE doesn't have any banner ads on our site quick plug for us we are motivated by content not page views so thanks for coming in today no but seriously I mean there's a there's a black cloud over the super angels has been since Angel gate I've heard privately from VCS that super angels it's been kind of a scuttlebutt they're misaligned just rumors I completely overblown and you know their business model threatens the incumbents and you know someone needed someone needed a piece of fodder to start a you know start a techcrunch discussion right there's no doubt that the market is need in need of a new ecosystem for the early stage because individual angels traditionally were wealthy individuals but now you have people with more experience like yourselves and entrepreneurs from google and facebook etc coming out and doing some things okay so next topic more on a personal kind of professional note k last final question is I know you got to run appreciate your time you're a technologist a lot of folks don't know that you're hardcore computer science guy and our model southern angles computer science meet social science right in your wheelhouse so with that just kind of final parting question what gets you excited technically right now I mean I'll see you have roots in both comps I and social Iran Zynga's early investor roster you got a bullpen capital you're looking at a lot of deals outside of that you as a computer scientist geek mm-hmm what gets you jazz what do you see in the horizon that's not yet on the mega trend roster that kind of you can't put your finger on it truly we might really get a good feeling well so I think you'll be disappointed with this answer because I think it's now cross the chasm to start being one of those mega trends it's called consumerization of enterprise and that's now the buzz word for it but what is it really mean and why do I think it's for real look you've got cool self-service applications for everything you can go do home banking by logging into a portal you can go to an ATM you can go do these things but you know go bring a new laptop into your big stodgy fortune 500 company and you know it's like getting a rectal exam right you know we got to install this we got to give you this private key yet that's TSA it writes like going through TSA exact idea that IT inside of big fortune 500 companies is going to stop being this gatekeeper to new technology I think look how long do you think it'll be until pick your favorite fortune 500 company the IT people know how to deal with the ipad 2 but how many people bought an ipad 2 into the off already everyone and so this to me is going to be the big next deck the next decade are going to be self service offerings for the enterprise getting around a very frustrating gatekeepers inside of you know the IT department etc and that's going to lead to an awesome boom of everything from security to auditing to compliance etc that's the convergence question Paul Martino my friend entrepreneur great guy venture capitals now on the good side helping the seed Super Angel micro VCS great to have you consumerization of IT that hits the cloud mobile social it's everything so that I was buzzword compliant on that great job great to have you know you're busy got to have you in again thanks so much for time that's a wrap thank you very much great thank you John