(upbeat music) >> From our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBEConversation. >> Hello everyone, welcome to Palo Alto's CUBE studios. I'm John Furrier, host of theCUBE. We're here for a special CUBEConversation as part of our new brand of tech leader series as well as Extracting the Signal From the Noise. We're here with Gary Conway, the CMO of Automation Anywhere, a hot startup, heavily funded, attacking a whole new market segment, that's kind of changing the game of value in digital, obviously, RPA, robotic process automation, is the buzz word. It's actually real, it's happening, we're seeing a lot of success in companies there. It's changing the way business is operated, business is structured, and value is created. Gary, thanks for joining me. >> My pleasure. >> So we covered your event, Automation Anywhere. You guys are essentially doing very very well, heavily funded, growing like crazy. RPA is one of the fastest growing segments in this next generation digital culture. You're seeing a lot of companies coming out attacking this. What's your perspective, why is RPA so important, why is it so hot? >> It's a pretty simple reason, actually. You know, the truth of the matter is that companies are now, because of RPA, able to automate parts of their business processes, or entire processes that they were never able to automate before, and they can do it with RPA at a relatively little cost compared to a lot of other technologies out there, especially from the big ERP vendors. We say that, and we really believe this, and we're finding this to be true, that since the onset of automation about 30 years ago, from the big technology companies, only about 20% of the processes that businesses manage now are actually automated. The 80% of them that are not automated are pretty much done by human beings, you know. Millions of human beings employed to manage those back office processes. RPA is enabling companies to actually automate more of those processes than ever before. >> Before we get started, just quickly define, what is RPA for the folks that are learning for the first time, because we're now seeing the concept really penetrating mainstream right now. It's becoming, frankly, a topic that's being discussed across most of the largest enterprises and small business, what is RPA? >> So RPA means robotic process automation. So think of them as robots that are built as predesigned software bots that you can plug into any business process, and it'll automate a part of that process, or the entire process, by just plugging it in. It actually is capable of observing what human beings do, remembering what human beings do, and then repeating that again and again and again, only in a fraction of a second. That's the easiest way to think of it. >> So when I think of robots, I think of like a machine, you know, moving things around, from, like, manufacturing, whatnot. It's beyond that, it's not just robots, it's software as well, and this is the key in all this. >> It is software, I mean. >> It is software, it's not robots. >> RPA is only software. >> It's only software. >> I think most people, when they think of robotics, do think of, you know, mechanical robots used in manufacturing. That's not what RPA is. RPA is robotics that is only constructed with preconfigured software. >> I want to get your take on the impact to business and how leaders are adapting to this, but first I want to get to the mainstream topic that is trying to be figured out, and the classic one is technology's going to automate my jobs away, and the example that I use is retail. Most people go to retail, and they think, you know, whether it's a person out of college, or someone working in retail, that oh my god, a robot's going to show up and move stuff on the shelves, and eliminate those jobs. It's not so much robots, per se, it's Amazon that's going to impact in retail. We know what Amazon and Walmart has done to commerce. So that's already happening, retail's impacted. It's not so much that jobs are going away, they're just changing. That's our opinion. Can you share your opinion on the impact of software automation to jobs? >> We agree that jobs are not going away. They will change, but I always tell people when I'm asked this question that there's not been one technology that's ever been introduced that has actually done anything but create more jobs, and I always use the example of the PC. You know, I'm old enough to remember when the PC was introduced, the headlines were what will people do with all this additional time? You know, people were predicting a three day work week because of all the efficiencies that would be created by the PCs, and in fact the opposite has happened. Technology actually makes people more productive, and when they're more productive they're capable of doing more things. So with the automation of certain things that people happen to be doing now, those people are being upskilled, they are being redeployed to other jobs, as we've seen in the past, and actually, more jobs are being created. >> You know, we cover a lot of the Big Data space going back to 2010 when we first started theCUBE, at Hadoop World, which that kind of had its course, but ultimately Big Data, which became AI, you know the bank teller example, you know the ATM was going to kill the branches, when in reality there's been even more branch offices-- >> That's what we're seeing, yeah. >> than ever before. So again, I think the argument is pretty clear from the data and the trend, technology is actually helping create new jobs, but not the jobs maybe that there were once there. That seems to be the big debate, so we agree with you on that. Now we applied some of our, not RPA, but we had some technology that applied to all of our videos that we did with you at your event, and a couple things came out of the entity extraction. I want to share with you, I want to get your reaction. Business hubs, human versus machines, complex problems, digital colleagues, digital worker, new potential applications, digital native companies, supply chain, system integrators, labor platforms, AI assistance, inefficiencies, and machine learning. These are key words that really kind of point to the next generation. This is essentially the language of your company. What's your reaction to that? >> Well, I'm not sure it's the language of our company as much as it's the language that people are using to determine what role they will play in the future, and what role, how they will impact their businesses going into the future. So these are not our terms, these are terms that exist in the space right now as people try to determine for themselves the role they will play in defining the future and how they will use technology to make their businesses more efficient. >> And companies are using cloud, for instance, to kind of reshape. We had a big conversation yesterday around, you know, do I want to be in the business of managing data centers, or be in the business of managing my business with technology. These concepts are interesting from an industry standpoint. Business hubs. Good concept, I get that. Digital worker. This is the impact that you guys are enabling. What's the managerial leadership role as an executive or a worker in these new cultural shifts? Because, as this is being enabled, new value is being created. Digital is enabling that. How does someone manage all this? What do you guys see, how do you see that playing out? >> Look, I think that whenever things are changing, and things are changing dramatically in business today, the only way to manage it is a day at a time. You can't project yourself so far into the future that you trip over the things that are immediately facing you now. So my suggestion would always be to evaluate options every day, every week, and make decisions when it's the right time to make decisions for your business. But let's go back to one of the terms you described, digital worker. So a digital worker in our view is actually available in what we call our bot store, which is a bot that is actually preconfigured to have skillsets that you would require. So let's just say you need an order-to-cash person, person who understands that, and it's a part of an automated process. The idea is that you would be able to download a digital worker with similar skills, and plug that bot into your process, and it would begin to work with, I would say, the skillsets of somebody who understands the order-to-cash process. That's really what a digital worker is. Now imagine that, in the future, and that future is not that far away, where every human being will be working side by side with a digital worker, so that the human being can offload the repetitive things that a digital something could actually do for them, and that digital worker would take on the task-based stuff, freeing up the individual to use their creativity to create higher order value for the business. That's really what we mean by digital worker and the importance of a digital colleague, for example. >> I think that it's a profound statement, and I think this is one of the cultural shifts that I see that this next generation workforce and leaders have to get their arms around, and in watching folks in Washington, D.C., we've been covering a lot of the procurement changes going on in government and businesses. There's a leveling up going on in the IQ of organizations, because that is a profound statement. Now we saw that with DevOps in cloud. You know, you talk to tech people, if you're doing the repetitive task more than three times, automate it. You're getting at something a little bit different. You're not just automating, you're adding intelligence to it, so what I like about the process automation area, is it's not just an undifferentiated, heavy lifting, mundane task. Yes it is, but there's an era of machine learning, you're seeing intelligence being applied to it, so it's truly becoming an augmentation to a human. That's kind of what I hear you saying. Do you agree with that, and is that something that you guys see happening, and what does that actually mean for the enterprise? >> No, I do agree with it, and we are at various stages of that evolution. But like anything else in business, and in life, you don't just flip a switch and all of a sudden people migrate to that new model, that's not how life really works. We evolve to those things, and I think what we're seeing is a very fast evolution to exactly what you just described. >> I want to get your thoughts on operationalizing new technology. You know, obviously, being an entrepreneur, I've done a bunch of startups, and the startup ethos is come on a narrow entry, get a landing area, and then sequence to the broader market opportunity. There's a lot of entrepreneurial ethos involved in how to operationalize something new like RPA, because you can't just, you know, shut down the old and bring in the new, there's a method there. This is a challenge in any new technology. How do you guys see this playing out? Because you guys are on the front end, bringing real value to the table, but people might want to get more aspirational and then get the reality. How do you get into the point of going into someone and saying I love what you guys do, what's the playbook, what do I do next? This is the challenge, can you share your thoughts on how an executive or a business can operationalize these benefits? >> So we have a lot of customers, 1800 customers, unique customers, and 2800 entities around the world that are using the software now. And I think that each of them had one thing in common. They started in bite-sized chunks. They said we're going to try this, and what's happening with RPA, which is one of the reasons it's growing so fast, is that once you try it, once you implement a few bots to automate the things that you weren't able to automate before, it starts ramping like this, right? It has a very very fast ramp-up. So you realize some successes in the processes that you begin to automate that you've never automated before. And the more you do it, the more you learn from it. The more you learn from it, the more you want to do it, the more processes you identify that could be automated, and should be automated, and what starts happening in most companies is they start adopting much much faster once they understand the benefits of it. And the benefits to business is driving higher levels of efficiencies, and reducing costs dramatically. >> So the tie to value is fast. >> Right, the value is very fast, compared to-- >> And that's driving the ramp-up, to your point. >> And that's driving the map. >> The flywheel kicks in, you start with a process that's known, and you automate it, wow, that's good, do it again, do it again. >> Correct. Well, do it again, and do it with more processes, right? And the other unique thing about this technology is human beings, once they understand the advantages of automating things that other human beings may have to do manually, most of those people who have been doing them manually will say I want more of that. We should be automating this, we should be automating that, and it actually makes them much more productive, and it makes them feel as if they are delivering higher value to the business themselves, and what an amazing human dynamic that is. >> You know, I was talking to Dave Vellante about this, we were talking about the TAM, the total adjustment market, for RPA, we're like, I think it's just in the trillions because with digital, everything is connected, so you can measure everything. Everything is ultimately a supply chain, whether it's network effect for internet, whether it's, you know, some process with cryptocurrency, whether it's blockchain or a process with cybersecurity, digital is pretty much connected, it's pretty much a supply chain. Some of them are more formed than others. This seems to be the entry point that most people would go to. Do they go to the supply chains first, or, better yet, what's the use cases that you see as the low hanging fruit that people come in on and automate? Is it simple supply chain stuff that's known, or are they applying it as they grow to other areas? >> It's very broad, but the fastest adoption, especially beginning about two years ago, were from the companies in industries like banking, other financial services, insurance, healthcare, manufacturing, which is supply chain, as you rightly point out. Those businesses that tend to be earlier adopters of technology have also become earlier adopters of RPA. But what we're finding now is it's now, because of the results that these businesses have demonstrated, and because digital native competitors are actually coming into the space and threatening what are sometimes referred to as legacy businesses, businesses are not delaying the investments they're making so that they can actually become more competitive, and when you think about that, it's not just the efficiencies that these technologies like RPA drive, but it's the ability to make businesses acutely more competitive than they've ever been before. >> That's a great angle, competitive strategy has always been one of those things where, you know, the cloud native world or digital native world was like oh yeah, pick one feature, innovate, and you can go beat an incumbent. The incumbent now has leverage in the marketplace, whether it's physical presence or other assets. Using RPA gives them a way to level up, so to speak. >> Level up, for sure. So let's just take something we're all familiar with, right? You can now go on your phone, and you can have a car at your house to take you somewhere in about four minutes in most cities, right? If you have an issue, you can solve that issue on your phone as well. You don't have to call anybody, you just solve it on your phone. These ride share companies have made it so simple, it's almost as if there's no such thing anymore as a front office or a back office. Digital native companies have brought those things together, and now there's one office. So that immediacy is what legacy companies are actually competing against, and if those companies don't adopt this kind of automation to make more efficient those processes and narrow the gap between customer facing and back office, they won't be able to compete. >> Yeah, they can turn a liability into an advantage, with software. Big big bullish on the software, I think the competitive landscape also is interesting, I'd like your thoughts on. There seems to be a battlefield, at least from my perspective, my opinion is that, okay, RPA software is out there, it's going to grow really fast. The competitive battle will be around intelligence. How do you guys view the competitive levers? How do you guys compete, what's the advantage? Is it intelligence, is it being more intelligent, is it more operational, what's the advantage you guys see vis-a-vis the competition? >> Yeah, so we're actually seeing a sort of a bringing together of technology, what we have considered to be strictly technology, and what's being described broadly now as artificial intelligence. Artificial intelligence is still evolving. Everybody has his own definition of what it really is, but what we're seeing, and I think in other sectors we're seeing the same thing, is now the merging of things that have truly been technology with things that are perceived to be artificial intelligence, and they're beginning to come together. What that will look like five years from now, nobody knows. What it'll look like 10 years from now, no one can even conceive of, but we're seeing that dynamic in place now, and this is the beginning. >> It's a great wave, excited to have you on and share your insights, Gary. It's great stuff you guys are doing over there at Automation Anywhere, love the, we love this wave, I think it's going to be relevant. My final question for you, though, is little bit different. You know, you're at a cocktail party, you're at a friend's house, you're at a confab, and you see people that aren't in the business, and they're like Gary, I need to get, I need to be more competitive. What do I do, what is this RPA thing, how do I change my culture, how do I get my people and my process aligned with software, what's the playbook, what's your advice? >> So what I would say is, get started as quickly as possible, because if you delay too long, you will be left behind. So that's would be my first bit of advice. The other, it would be to start slowly. Learn as quickly as you can. Don't worry about automating things that are hard to automate, go to the things that are easy to automate. Companies find that when they address those things first, they're actually able to drive more success faster, and then they will look for more and more opportunities based on what they've learned and the success that they've derived, and that's what happens to create this ramp effect, where it becomes almost viral-like. Where you have one process that works great, you automate that, you automate another one, you automate five more, 10 more, and before you know it, believe it or not, we have customers that are implementing more than 3000 bots over the last year and a half, and that's how they started. >> Get rid of the mundane work, you've got happy people, HR is happy, you've got more revenue coming in, you're more competitive as a business, this is a good value proposition. It's an easy sale. >> Nothing's easy, but it has a huge appeal. >> Gary, thanks so much for coming on and sharing your insights around RPA, appreciate it and congratulations on your success. >> Thank you. >> This is CUBEConversation, and I'm John Furrier here in Palo Alto, thanks for watching. (upbeat music)

>> Announcer: From downtown San Francisco, it's theCUBE covering RSA North America 2018. >> Hey welcome back everybody, Jeff Frick here with theCUBE. We're in San Francisco at RSA conference 2018, as 40,000 plus professionals talking about security. It's quickly becoming one of the biggest conferences that we have in San Francisco right up there with Oracle OpenWorld and Salesforce.com, pretty amazing show and we're excited to get some of the insight with some of the experts that are here for the event and all the way from the East Coast, from New Hampshire Edna Conway's joining us, she's a chief security officer, global value chain for Cisco, Edna great to see you. >> Oh I'm delighted to be here Jeff, thank you. >> Absolutely so we're glad to get you out of the 21 degree weather that you said was cold and sleety when you departed. >> Cold and sleety, spring in New Hampshire, although it's not much nicer here in San Francisco. >> No, it's a little dodgy today. Well anyway let's jump into it. So you're all about value chain. What exactly when you think about value chain, explain to the people, what are you thinking? >> You know that's a great question because we define the value chain as the end to end life cycle for any solution. So it could be hardware, it could be software, it could be a service, whether it's a service afforded by a person, or a service afforded by the cloud. >> Now it's interesting because the number of components in a solution value chain just continue to grow over time as we have the API economy, and clouds, and all these things are interconnected so I would imagine that the complexity of managing and then by relation securing that value chain must be getting harder and harder over time as we continue to add all these, kind of API components to the solution. Is that what you see in the field? >> I think there's a challenge there without a doubt, but sometimes that interconnection actually gives you a hook in right, and so what we've been thinking about for years now is, is there a way to actually define a simple high level architecture that can be flexible and elastic with some rigidity that allows you to identify what your core goals are, and then allows those third party ecosystem members to join you in the effort to achieve those goals in a way that works for their business. >> Right and then how does open source play in that? Because that's also an increasing component of the value chain, is that integrated into more and more either just overtly, or you're implementing an open source solution or you've got all these people that are kind of open source plus and what they're building and delivering to the market. >> Yeah open source is a great challenge without a doubt. I think the way in which to deal with open source is to understand where you're getting it from, just like all third party ecosystem members. Who are they? What are they doing for you? And more precisely how are you going to utilize them and take a risk based approach to where you're embedding them. >> Right. >> Right. Not all things are created equally. And so your worry needs to be different depending on the utilization. >> Right. The risk based approach is a great comment because cause security in a way to me is kind of like insurance, you can't be ultimately secure unless you just lock the doors and sit in there by yourself. So it's always kind of this risk trade off, benefit versus trade off, and really a financial decision as to how much do you want to invest in that next unit of security relative to the return. So when you're thinking about it from a risk modeling basis versus just, you know, we're putting up the moat and nobody's coming in, which we know doesn't work anymore. What are some of the factors to think about so that you're achieving the right level of success at the right investment? >> I think there are a number of things to think about, and the primary one I would say is, look at what I believe is the currency of the digital economy which is trust. And in order to build trust what you need to do is understand the risks that you're taking. And those risks need to measured in the language of business. So all of a sudden, it becomes really clear when you know what someone is doing for you, and you know how they're doing it, and the invasiveness of your inquiry and partnership with them actually needs to be adjusted, and all of a sudden you develop not only a baseline, but an opportunity to enhance your trust for, let's take an example. So Cisco's working with Intel, we're going to deploy Intel threat detection technology, our first instantiation of that will be tetration. Clearly they're a third party ecosystem member. >> Right, right. >> And they have been for some time. Now what we're thinking about is how does Intel go about deploying that capability? And not only that, but how are we going to utilize it? And our view is if you take CPU telemetry and you combine it with our edge as well as our network telemetry, you have a better solution down the road, better solution for alerts, better solution for quicker decisions for the inevitable. That risk based approach says we're embedding into and partnering at a core solution level. >> Right. >> That's a different area of inquiry then somebody, we were talking earlier and I said, you know, if you're a sheet metal provider on the external part of a chassis, great. >> Don't they love the diligence on that piece? >> Quality due diligence, but security limited, yeah? >> So but it's interesting because on one hand you're opening up kind of new kind of threat surfaces if you will, the more components that are in a solution from the more providers. On the positive side, now you're leveraging their security expertise within the components that they're bringing to the solution. So as most things in life right, it's really kind of two sides of the same coin, opening up more threats, but leveraging another group of resources who have an expertise within that piece of the value chain. >> Absolutely. Look none of us make something from nothing, you know, the reality is we're relying more and more on the digital economy on those third parties. So understanding precisely how they're doing something is important, but we also have to be respectful of one another's intellectual property. And that is a unique wrinkle in a day and age of integration that we haven't seen previously. The other thing I think that's really important is we're seeing a wonderful, I think explosion of IOT, there's a downside obviously, the question is have folks deployed their IOT in a way that included the security community. You should have security at the table, but what IOT does is give you edge visibility that you've never had before. So I see it as a positive, but it needs to be informed by things like AI, it needs to be informed by things like machine learning, and they need to be gates within at the end of the day where the information is managed, which is at the network. >> Right, cause again it's just another entry point in as well, so good thing, bad thing. I want to circle back on kind of the boardroom discussion that we talked about a little bit earlier. Everyone's talking about securities and board conversation, clouds and board conversation, a lot of these big, kind of IT transformational things that are happening are now being elevated to the board cause everybody's a digital company and everybody's a digital business. When you want to talk to the board, and how should people talk to the board about security vis a vis kind of this risk analysis versus just a pure, you know, we're secure, or we're not secure, and I'm sure every CEO and board is worried for that announcement to come out in the paper that they were breached some time ago. And you almost think it's inevitable at some point in time, so what does the board discussion look like? How's the board decision changing as security gets elevated beyond kind of the basics? >> So let me answer that in the context of value chain security. >> Absolutely. >> I think we need to get to the point where security speaks the language of business. We need to walk into the board and say we have an architecture, we are deploying measures to achieve the architecture at a certain level of compliance and goal setting across the ecosystem on a risk based approach. Fabulous words, I'm a board member. What does that mean to me? >> Help me, help me, gimme a number. Exactly, well, and the number comes out of tolerance levels. So if you have this architecture and you have goals set we have 11 domains, we set goals flexibly based on the nature of the third party and what they do for us. Now we have a tolerance level and guess what you can report? I'm at tolerance, I'm above tolerance, I'm below tolerance. And if you start to model through a variety of techniques, there are a number of standards out there and processes some folks have written about them, where you can translate that risk of tolerance into dollars if you're in the US or currency of your choice and the reality is you're walking in and saying at tolerance means this degree of risk, below tolerance means I've reduced my risk to this. It might afford you an opportunity to say hmmm, perhaps you can share some of that benefit with me to take the program to a new level. >> Right, right or in a different area. >> About tolerance, higher degree of risk, what do we do about it? Now you're speaking the language of business. >> So that's pretty old school business right? I want to talk to you about something that's a little bit newer school which is block chain. And you've used the word trust I don't know how many times in this interview, we'll check the transcript, but trust is a really important thing obviously, and some people have said that they view block chain as trust as a service. I'm just curious to get your perspective as we hear more and more about block chain, and big companies like IBM and a lot of companies are putting a bunch of resources behind it, where do you see block chain fitting? What is Cisco's position or I don't know if they have a official position yet as block chain now is introduced into this world of trust. >> So I think we're all looking at it, Cisco included block chain is an incredibly useful tool without a doubt. I'm not sure that block chain's going to solve world hunger or world peace. >> Shoot. >> However, just as we said trust has elements of use artificial intelligence to inform your decisions, achieve a higher degree of trust, what you can have is a set of let's say, hashes, date and time stamps, as something passes through the network because remember, if the currency is trust the integrity of the data is the fuel that allows you to earn trust. And digital, digital ledger technology or block chain is something that I think allows us to develop what I call a passport for the data. So we have a chain of custody, you know I'm an old homicide prosecutor from many, many, years ago chain of custody was important in the trial so too chain of custody of your data and your actions across the full spectrum of a life cycle add a degree of integrity we've never had the ability to do easily before. >> Interesting times. >> Alright Edna well thank you for spending some of your day with us, I'm sure you have a crazy, busy RSA planned out for the next couple days so thanks again. >> My pleasure, thank you so much for having me. >> Alright she's Edna Conway, I'm Jeff Frick. You're watching theCUBE from RSA Conference 2018 thanks for watching. (theme music)

(soft music) >> From theCUBE studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is theCUBE Conversation. >> Hi, I'm Stu Miniman coming to you from our Boston area studio here for a CUBE conversation. Really like when we can dig into help some of the nonprofits in our industry, going to be talking about, training, helping other people lift up their careers. Happy to welcome to the program, first time guests, Jerome Hardaway. He's the founder of vets who code coming down from Nashville, Jerome, I seem to remember a time where I was able to travel. I did some lovely hiking even saw bear last time I was down in Nashville. Thanks so much for joining us. Roger that. Thank you, a funny story. I saw a cow on the loose while driving on the highway yesterday. So not much has changed. (Jerome laughs) Thank you guys for having me. >> Yeah, it is a little bit of strange times here in the Covert area. I live kind of suburban Massachusetts area. One of my neighbors did report a small bear in the area. I'm definitely seeing more than just the usual, what kind of wild turkeys and the like that we get up in New England, but let's talk about Vets Who Code. So, you're the founder, the name doesn't leave much up for us to guess what you do, but tell us a little bit as to the inspiration and the goals of your organization. Roger that, Vets Who Code is the first veteran founded, operated and led, a remote 501 C three that focuses on training veterans regardless where they are and modern age of technologies. Our stack right now, I would say is focused more towards front-end DevOps with a lot of serverless technologies being built-in. And that's pretty much what exactly what we do well. >> Well awesome, I had been loving digging into the serverless ecosystem the last few years. Definitely an exciting area, help us understand a little bit, who comes and joins this? What skill set do they have to have coming in? And explain a little bit the programs that they can offer that they can be part of. >> Yeah, cool. So we run Vets Who Code like a mixture between a tech company or a tech nonprofit, I guess, using those practices while also using military practices as well. And the people that come in are veterans and military spouses. And we try to use what we call a pattern matching practice, showcasing like. Hey, these are the things, he's been in military. This is how it translates to the tech side. Like, our sit reps is what you guys would call stand up. Kanban is what we would call like systems checks and frag orders, Op orders, things like that, or, our SLPs. So we turn around, we just train them, retrain them. So that way they can understand the lingo, understand how things, how you code, move and communicate and make sure that these guys and girls, they know how the work as JavaScript engineers and a serverless community. As of right now, we've helped 252 veterans in 37 States get jobs, our social economic impacts, then I think it's at 17.6 million right now. So it all from the comfort of their homes, that's like the cool and free, and those are like the coolest things that we've been able to do. >> Wow, that's fascinating. Jerome, I heard something that you've talked about, leveraging the military organizational styles. I'm just curious, there's in the coding world a lot of times we talk about Conway's law, which is that the code will end up resembling the look of the organization. And you talk about DevOps, DevOps is all about various organizations collaborating and working together. It seems a little bit different from what I would think of traditional military command and control. So is that anything you've given any thought to? Is there some of the organizational pieces that you need to talk to people about? Moving into these environments compared to what they might've had in the military. >> Negative, I think the biggest misconception that we have is that people, when you're talking about how the military moves, they're thinking of the military of yesteryear of 20, 30, 40 years ago. They're not thinking of global war on terrorism veterans and how we move and things like that. We understand distributed chains. We understand cause we call, that's what we've done at CENTAF and CENTCOM in Iraq and Afghanistan. So we honored, like we are already doing a lot of this stuff, we just naming it different. So that's part of the thing that we have as an advantage as the, cause all the people who are educators, there are veterans who learn how to code and they've been working in industry and they know. And so when they're teaching, they know the entire process that a veteran's going to go through. So that's how now we focus on things. And so the organizational structure for us first term to second term veterans is pretty normal. If you're coming out within the last, heck 10 years. (Jerome laughs) >> Yeah, absolutely. That's wonderful. And I I've had the opportunity to work with plenty of people that had come from the military. Very successful in the tech industry, definitely tend to be hard workers and engaged in what they'r doing. Curious, you talked about being able to do this remotely and then it is free. What's the impact of the current global pandemic? Everything that's happening here in 2020 been on what you're doing in your resources. >> Of the impact, unfortunately, I mean, not unfortunately, fortunately it has been nothing but positive. It's been crazy, we've gotten more applications. We have people are seeing that during, I was the crazy person in the room, when in 2014, when I was saying nonprofits should move to remote first protocols. So that way they could have greater impact for less, with less financial resources. And back then I was the, like what are you talking about? This is the way we've always done. Well now everybody was scrambling to try to figure out how to help people without being in same room with them. We were like, Oh, okay, lt's do today. So we got an influx of people applying, influx of people, sending me, trying to get into our next cohort in August. It's just, the biggest thing that has happened for Vets Who Code is yet, it's been a really positive experience for us, which is really weird to say, but I think it has, my doomsday Murphy's law style of preparing, I assume that anything that can go wrong will go wrong. So I try to prepare for that. So being open source, being serverless, being having everything in a manner to where--in case I was out of the pot, out of the situation, other people operate having this distributed teams, or there are other leaders that can take over and do things. It's all stuff that, I guess I got from the military. So, we were know we were prepared because there was absolutely zero pivot for us. If anything, it has been more resources. We've been able to dive deeper in more subjects because people have had more time, but, we can do, we can dive deeper into AWS. We started a lunch and learn every two weeks. We actually have a lunch and learn next week with Dr. Lee Johnson. And she's going to be talking, we open that to it by all juniors and entry level devs, developers, regardless of whether you're a veteran or not, we just throw it on Twitter and let them get in. And the focus will be on tech ethics. We all know, right now we've been leading the charge on trying to make sure people are supercharging their skills during this time frame. So that's what, it's been very positive. I've been working with magazine, front-end masters. It's been awesome. >> Well, that's wonderful. Wish everyone had the mindset coming into 2020, because it does seem that anything that could go wrong has, (both laugh) I'm curious, once people have skilled up and they've gone through the program, what connections do you have with industry? How do you help with job placement in that sort of activity? >> That is the most asked question, because that is the thing that people expect because of code schools, because of our educational program protocols. We don't really need that issue because our veterans are skilled enough to where to hiring managers know the quality that we produce. I live in Nashville and I've only been able to place one veteran that I've trained locally in the community because of fame companies have snatched up every other veteran I've ever trained in the community, so things like that, it's not a problem because no, a usually 80% of our veterans have jobs before they even graduate. So you're literally picking up, picking people who, they know they have the potential to get a bit companies if they put the work in and it's just as they come, we actually have people. I think a company reached out to me yesterday and I was like, I don't even have people for you. They already have jobs. (jerome laughs) Or I'm in a situation now where all my senior devs are looking for fame companies. Cause that's one of the things we do is that we support our veterans from reentry to retirement. So we're not like other code schools where they only focus on that 30 to 60 to 90 days, so that first job, our veterans, they keep coming back to re-skill, get more skills, come up to the lunch and learns, come to our Slack side chats to become better programmers. And once they're, so we've helped several of our programmers go from entry-level dev to senior dev, from absolutely zero experience. And so, I think that's the most rewarding thing. When you see a person who they came in knowing nothing. And three years later, like after the cohort safe they got their job and then they come back after they got the jobs, they want to get more skills and they get another job and then they come back. And the next thing, my favorite, one of my favorites Schuster, he starts at a local web shop, a web dev shop in Savannah, Georgia. And then next thing, oh, he's on Amazon, he's at Amazon three years later and you're like, Oh wow, we did that, that's awesome. So that's the path that we do is awesome. >> I'm curious, are there certain skill sets that you see in more need than other? And I'm also curious, do you recommend, or do you help people along with certain certifications? Thinking, the cloud certifications definitely have been on the rise, the last couple years. >> I feel like the cloud, the cloud certifications have been on the rise because it's expensive to like test for that stuff. If a person messes up, unless you have a very dedicated environment to where they can't mess up, they can cost you a lot of money, right? So you want that certain, right? But for us, it's been, we just focused on what we like to call front-end DevOps. We focus on Jamstack, which is JavaScript, APIs and markup, also along with a lot of serverless. So we're using AWS, we're using, also they're, they're learning Lambda functions, all this stuff. We're using a query language called GraphQL. We're using Apollo with that query language. We're using some node, React, GET, Speed. And a lot of third party API has to do like a lot of heavy lifting cause we believe that the deeper dive that a person has in a language and being able to manipulate and utilize APIs that they can, the better they will be, Right? So, same way that colleges do it, but a more modern take like colleges, they give you the most painful language to learn, which is usually like C right? Where you had to make everything a very low-level language. And then you're going through this process of building. And because of that, other languages are easier because you felt the pain points. We do the same thing, but with JavaScript, because it's the most accessible, painful language on earth, that's what I called it with Wire magazine last year anyway. (jerome laughs) >> So Jerome, you've laid out how you you're well organized. You're lean and financially, making sure that things are done responsibly. We want to give you the opportunity though. What's the call to action? Vets Who Code, you're looking for more people to participate. Is it sponsorships? Work in the community, look to engage. >> Roger that, we are looking for two things. One, we're always looking for people to help support us. We're open source, we're on GitHub sponsors. Like the people who we we're up, we're open source. But the people that do most of our tickets are the students themselves. So that's one of the best things about us. there is no better move, feeling that having something in production that works, right? It actually does something right? Like, Oh, this actually helps people, right? So we help have our veterans like actually pull tickets and do things like that. But, we also, we build, we're building out teams that they're on all the time as well. We have our new tutorials team or veterans. They literally built front facing tutorials for people on the outside. So that way they can learn little skills as we also have podcasts team and they're always podcasting, always interviewing people that in community, from our mentors to our students, to our alumni. And so just, let's throw our podcasts on Spotify. Let's do some codes, the best Code podcast and sponsor song get up. >> Wonderful, Jerome. We want to give you the final word. you're very passionate. You've got a lot interested, loved hearing about some of the skill sets that you're helping others with. What's exciting you these days? What kind of things are you digging into, beyond Vets Who Code? >> Oh man, everything serverless dude. As a front-end, as a person who was full stack and move to front-end. This has never been a more exciting time to learn how to code because there's so many serverless technologies and is leveling the playing field for front-end engineers, just knowing a little bit of like server-side code and having DevOp skills and being able to work in a CLI, you can do like Jamstack and the people that are using it. You have Nike, you have governments. It's just, it's such an exciting time to be a front-end. So I'm just like, and just seeing also how people are like really turning towards wanting their data more open source. So that's another thing that's really exciting for me. I've never been a person that was very highbrow when it came to talking about code. I felt like that was kind of boring, but seeing how, when it comes to like how code is actually helping normal, average everyday people and how the culture as a whole is starting to get more hip to how, API is like our running the world and how tech is being leveraged for. And it gets them, I'm on fire with these conversations, so I try to contain it cause I don't want to scare anyone on TV, but we could talk like, we could talk hours of that stuff. Love it. >> Well, Jerome, thank you so much for sharing with our community, everything you're doing and wonderful activity Vets Who Code, definitely call out to the community, make sure check it out, support it. If you can and tie so much in Jerome, I've got a regular series I do called Cloud Native Insights that are poking at some of those areas that you were talking about serverless and some of the emerging areas. So Jerome, thanks so much for joining, pleasure having you on the program. >> Roger that, thank you for having me. >> All right. Be sure to check out thecube.net for all of the videos that we have as well as Siliconangle.com for the news an6d the writeups, what we do. I'm Stu Miniman and thank you for watching theCUBE. (soft music)

>>from Boston, Massachusetts. It's the Q covering I. F s World Conference 2019. Brought to you by I F s. Hi, buddy. Welcome to Boston. You're watching the cubes coverage of I s s World in the Heinz Auditorium in Boston. I'm Day Volonte with my co host, Paul Gill and Paul. This is the the largest enterprise resource planning software company that our audience probably has never heard of. This is our second year covering I f s World. Last year was in Atlanta. They moved to Boston. I f s is a Swedish based company. They do about $600 million in annual revenue, about 3700 employees. And interestingly, they have a development center in Sri Lanka, of all places. Which is kind of was war torn for the last 15 years or so, but nonetheless, evidently, a lot of talent and beautiful views, but so welcome. >>Thank you, Dave. I have to admit, before our coverage last year, I had never even heard of this company been around this industry for more than 30 years. Never heard of this company. They've got 10,000 customers. They've got a full house next door in the keynote and very enthusiastic group. This is a focus company. It's a company that has a lot of ah ah, vision about where wants to go some impressive vision documents and really a company that I think it's coming out of the shadows in the U. S. And it will be a force to be reckoned with. >>So I should say they were founded in the in the mid 19 eighties, and then it kind of re architected their whole platform around Client server. You remember the component move? It was a sort of big trends in the in the nineties. In the mid nineties opened up offices in the United States. We're gonna talk to the head of North America later, and that's one of the big growth areas that growing at about three. They claim to be growing at three x the overall market rate, which is a good benchmark. They're really their focus is really three areas e r. P asset management software and field service management, and they talk about deep functionality. So, for instance, they compete with Oracle ASAP. Certainly Microsoft and in four company we've covered in four talks a lot about the last mile functionality. That's not terminology that I f s uses, but they do similar types of things. I'll give you some examples because, okay, what's last mile? Functionality? Things like, um, detailed invoicing integration, contract management. Very narrow search results on things like I just want to search for a refurbished parts so they have functionality to allow you to do that. Chain. A custom e custody chain of custody for handling dangerous toxic chemicals. Certain modules to handle FDA compliance. A real kind of nitty gritty stuff to help companies avoid custom modifications in certain industries. Energy, construction, aerospace and defense is a big area for that. For them, a CZ well as manufacturing, >>there's a segment of the e r P market that often is under uh is under seeing. There's a lot of these companies that started out in niches Peoples off being a famous example, starting out on a niche of the market and then growing into other areas. And this company continues to be very focused even after 35 years, as you mentioned, just energy aerospace, a few construction, a few basic industries that they serve serve them at a very deep level focused on the mid market primarily, but they have a new positioning this year. They're calling the challengers for the challengers, which I like. It's a it's a message that I think resonates. It's easy to understand there position their customers is being the companies that are going to challenge the big guys in their industries and this time of digital transformation and disruption. You know, that's what it's all about. I think it's a great message of bringing out this year. >>Of course I like it because the Cube is a challenger, right? Okay, even though we're number one of the segments that we cover, we started out as a sort of a challenger. Interestingly, I f s and the gardener Magic Corners actually, leader and Field Service Management. They made an acquisition that they announced today of a company called Asked. He asked, U S he is a pink sheet OTC company. I mean, they're very small is a tuck in acquisition that maybe they had a They had a sub $20 million market cap. They probably do 25 $30 million in revenue. Um, Darren rules. The CEO said that this place is them is the leader in field service management, which is interesting. We're gonna ask him about that to your other point. You look around the ecosystem here that they have 400 partners. I was surprised last night. I came early to sort of walk around the hall floor. You see large companies here like Accenture. Um and I'm surprised. I mean, I remember the early days when we did the service. Now conferences 2013 or so you didn't see accent. You're Delloye E Y p W c. Now you see them at the service now event here that you see them? I mean, and I talked to essential last night. They said, Yeah, well, we actually do a lot of business in Europe, particularly in the Scandinavian region, and we want to grow the business in the U. S. >>Europe tends to be kind of a blind spot for us cos they don't see the size of the European market, all the activities where some of the great e. R. P. Innovation has come out of Europe. This company, as you mentioned growing three times the rate of the market, they have a ah focus on your very tight with those customers that they serve and they understand them very well. And this is a you can see why it's centuries is is serving this market because, you know they're simply following the money. There's only so much growth left in the S a P market in the Oracle market. But as the CEO Darren said this morning, Ah, half of their revenues last year were from net new customers. So that's that's a great metric. That indicates that there's a lot of new business for these partners to pursue. >>Well, I think there's there's some fatigue, obviously, for big, long multi year s AP integrations, you're also seeing, you know, at the macro we work with Enterprise Technology Research and we have access to their data set. One of the things that we're seeing is a slowdown in the macro. Clearly, buyers are planning to spend less on I T in the second half of 2019 than they did in the first half of 2019 and they expect to spend less in Q four than they expected to in July. So things are clearly softening at the macro level. They're reverting back to pre 2018 levels but it's not falling off a cliff. One of the things that I've talked to e t. R about the premise we put forth love to get your thoughts is essentially we started digital transformation projects, Let's say in earnest in 2016 2017 doing a lot of pilots started kind of pre production in 2018. And during that time, what people were doing is they were had a lot of redundancy. They would maintain the legacy systems and they were experimenting with disruptive technologies. You saw, obviously a lot of you. I path a lot of snowflake and other sort of disruptive technology. Certainly an infrastructure. Pure storage was the beneficiary of that. So you had this sort of dual strategy. We had redundancy of legacy systems, and then the new stuff. What's happening now is, is the theory is that we're going into production. Would digital transformation projects and where were killing the legacy stuff? Okay, we're ready to cut over >>to a new land on that anymore, >>right? We're not going to spend them anymore. Dial that down. Number one. Number two is we're not just gonna spray and pray on all new tech Blockchain a i rp et cetera. We're gonna now focus on those areas that we think are going to drive business value. So both the incumbents and the disruptors are getting somewhat affected by that. That slowdown in that narrowing of the focused. And so I think that's really what's happening. And we're gonna, I think, have to absorb that for a year or so before we start to see new wave of spending. >>There's been a lot of spending on I t over the last three years. As you say, driven by this need, this transition that's going on now we're being going to see some of those legacy systems turned off. The more important thing I have to look at, I think the overall spending is where is that money being spent is being spent on on servers or is it being spent on cloud service is, and I think you would see a fairly dramatic shift going on. They're so the overall, the macro. I think it's still healthy for I t. There's still a lot of spending going on, but it's shifting to a new area there. They're killing off some of that redundancy. >>Well, the TR data shows couple things. There's no question that server and storage spending is has been declining and attenuating for a number of quarters now. And there's been a shift going on from that. Core infrastructure, obviously, into Cloud Cloud continues its steady march in terms of taking over market share. Other areas of bright spots security is clearly one. You're seeing a lot of spending in an analytics, especially new analytics. I mentioned Snowflake before we're disrupting kind of terror Data's traditional legacy enterprise data warehouse market. The R P. A market is also very hot. You AI path is a company that continues to extend beyond its its peers, although I have to say automation anywhere looks very strong. Blue Prison looks very strong. Cloudera interestingly used to be the darling is hitting sort of all time lows in the E. T R database, which is, by the way, that one of the best data sets I've ever seen on on spending enterprise software is actually still pretty strong. Particularly, uh, you know, workday look strong. Sales force still looks pretty strong. Splunk Because of the security uplift, it still looks pretty strong. I have a lot of data on I f s Like you said, they don't really show up in the e t R survey base. Um, but I would expect, with kind of growth, we're seeing $600 million. Company hopes to be a $1,000,000,000 by 2022 2021. I would think they're going to start showing up in the spending >>service well again in Europe. They may be They may be more dominant player than we see in the US. As I said, I really had not even heard of the company before last year, which was surprising for a company with 10,000 customers. Again, they're focused on the mid market in the mid market tends to fly a bit under the radar. Everyone thinks about what's happening in the enterprise is a huge opportunity out there. Many more mid market companies and there are enterprises. And that's a that's been historically a fertile ground for e. R. P. Companies to launch. You know J. D. Edwards came out of the mid market thes are companies that may end up being acquired by the Giants, but they build up a very healthy base of customers, sort of under the radar. >>Well, the other point I wanted to make I kind of started to about the digital transformation is, as they say, people are getting sort of sick of the big, long, ASAP complicated implementations. As small companies become midsize companies and larger midsize companies, they they look toward an enterprise resource planning, type of, of platform. And they're probably saying, All right, wait. I've got some choices here. I could go with an an I F. S, you know, or maybe another alternative. T s a p. You know, A S A P is maybe maybe the safe bet. Although, you know, it looks like i f s is got when you look around at the customers, they have has some real traction, obviously a lot of references, no question about it. One of things they've been digging for saw this gardener doing them for a P I integrations. Well, they've announced some major AP I integrations. We're gonna talk to them about that and poke it that a little bit and see if that will So to solve that criticism, that what Gardner calls caution, you know, let's see how real that is in talking to some of the customers will be talkinto the executives on members of the ecosystem. And obviously Paul and I will be giving our analysis as well. Final thoughts >>here. Just the challenge, I think, is you note for these midmarket focus Cos. Has been growing with their customers. And that's why you see of Lawson's in the JD Edwards of the World. Many of these these mid market companies eventually are acquired by the big E R P vendors. The customers eventually, if they grow, have to go through this transition. If they're going to go to Enterprise. The R P you know, they're forced into a couple of big choices. The opportunity and the challenge for F s is, can they grow those customers as they move into enterprise grade size? Can they grow them with with E. I. F s product line without having them forcing them to transition to something bigger? >>So a lot of here a lot of action here in Boston, we heard from several outside speakers. There was Linda Hill from Harvard. They had a digital transformation CEO panel, the CEO of soo say who will be on later uh PTC, a Conway, former PeopleSoft CEO was on there. And then, of course, Tony Hawk, which was a lot of fun, obviously a challenger. All right, so keep it right there, buddy. You're watching the Cube live from I F s World Conference at the Heinz in Boston right back, right after this short break.

(loud upbeat music) >> Narrator: Live from Boston, Massachusetts. It's the Cube. Covering Red Hat Summit 2019. Brought to you by Red Hat >> Well good morning and welcome to day two of Red Hat Summit 2019. We're in Boston. Beautiful Boston, Mass. again. Second day of just gorgeous sunshine as I'm looking outside but we're inside the Boston Convention and Exposition Center BCEC. Stu Miniman John Walls here on the Cube. Stu good morning to ya. >> Good good morning John. Yeah lovely spring day here in Boston. >> John: Yeah >> Crowd's all excited. >> John: Yes >> Lots of things to geek out on. >> John: Let's go back uh lets go back to last night for the sake of it if you don't mind. We just got done with keynotes this morning We'll touch on that in a second. Last night though, what an array of of CEO keynote you might as well call it. We have IBM. we have Microsoft. We have Red Hat. We have you know the boss of each. And first lets lets just jump in first with IBM Ginni Rometty on the stage last night. And settling maybe a few concerns with some of her comments. I don't have a death wish. Independent. All that. So that your she said all of the good things >> Look first of all, love the tone. It's we hear what your saying and we're kind of laughing with you. You know when they joked and said You know IBM's been working for a long time on Linux. You know we spent a billion dollars that was you know big dollar uh dollar Jim Whitter was like 34 billion dollars is a really big number too. Everybody laughed >> Right >> You know the the commentary notes and joking is look we want this to succeed. We're spending 34 billion dollars on Red Hat. We don't have a death with for it you know. We're not trying to kill it. And what she said specifically and they've said it before but it bears repeating you know more often is Red Hat will stay separate. They're not going to "blue wash" the company which is the term for when they normally integrate and take over. They're going to stay separate. The brand is going to stay separate. That's why they didn't stop something like the new rebranding you know uh you know new new >> Logo >> Hat same soul >> Right right >> You know same hat but new logo same soul All of those things are in place you know and when I talk to lots of people in Red Hat they expect that you know day after this closes they'll be doing the same job. They understand that you know things like IBM's scale should be able to enable them and there will be more collaberation there but you know they're under the umbrella but you know are managed separately. Uh and that's something what the other thing Ginni pointed out which I thought was important that she say it and that is something we're all be watching is the culture that they have built is super super important. She said Red Hat's built a wonderful company and maybe more importantly culture and Jim goes Oh and our eco system you know don't forget our eco system She's like of course but that culture should actually slowly infuse into IBM not the reverse. We don't want you know IBM look great culture, great innovations, strong history but IBM is not looking to take IBM's culture and put it on Red Hat. They want to learn from you know the younger you know you know company and you know moving and growing fast So help accelerate. Work together and you know absolutely important and as Jim said on stage you know pretty impressive here at the Red Hat show you start out with the CEO of IBM you end with the CEO of microsoft. Those are two pretty impressive tech companies >> John: Sure >> With your CEOs coming to talk to this community. >> Yeah tell me about on the culture standpoint though you you do have some very definite differences right just in terms of history you know IBM been around forever Red Hat new kid on the block relatively speaking. How hard do you think it really will be? I mean you've been around this space for a long time that's there just that I think an institutional resistance that is is almost inevitable >> Stu: Yeah >> You have (groan) it's gonna take a lot of open mindedness and bending on the IBM side. >> Look yes and no because look Red Hat has facilities. If they're not living in the same place as if they're you know the the tower down Raleigh where Red Hat is if that stays Red Hat people and they stay separate sure they might have some calls where they collaberate but its a you know Conway's law I like to go to is the way software is designed matches the organizational structure. If the organizational structure gets mixed between them, >> Mmhmm >> Expect that IBM culture just 'cause the size of it you know will likely overpower and it's really easy for it to leak that way. Going the other way you know Red Hat's got you know about twelve thirteen thousand employees you know IBM's got well over a hundred thousand employees. So can Red Hat inflitrate it? In pieces and places and start doing it, sure. But it would be very easy for IBM just to total have a blue wave wash over and make Red Hat lose you know what makes them so special and they are special in this industry. But one of the things that I actually really loved in the keynote we'll talk to is some of that what they called their innovation labs what they helped teach some of that culture to some pretty impressive companies and help them along that technical journey to you know not just do the technology but the cultural changes so that you know they can live in that multi cloud world. They can live you know work with the open source even more. >> I think we got the impression or at least I did you know listening to Ginni too there's a recognition there that we being IBM you know we need them. We need you know we we have we're at a somewhat of a competitive disadvantage right now. This gets us in the game on a whole new level. So I'm I'm would imagine that message is being communicated throughout the ranks at IBM. You know there's a reason why we're spending this kind of money and making this kind of a commitment because their ways worked. And it's in a space that we have to be more present >> Hey look I'm excited. Our first two guests of the day we've got Jim Whitehearst the CEO of Red Hat and then we've got Arvind Krishna who is you know the SVP of cloud and heavily involved in that decision to move IBM to do the acquisition and talking about that hybrid multi cloud world. We will dig in there because that you know is the product space it's the area where Red Hat and IBM intersect the most. Because you know I don't expect that IBM is going to mess up you know rhel >> John: right >> you know from a core linux standpoint they've been partnered for a decade on this. It's not competitive with what IBM does. They we you know IBM does not have a huge team doing it but some of the other spaces some of the tooling some of the you know orchestration and that multi cloud world is an area that IBM has a lot of bodies and a lot of resources and we'll see. But you know an area they want to have help is you know IBM absolutely needs to partner in the multi cloud world with more of the cloud environments so maybe we can talk a little bit about Microsoft. >> Yeah lets go Microsoft here um you know again um kind of a nice kumbaya moment last night where there's a handshaking backslapping five years ago they they both readily admitted it. We're talking about you know Satya Nadella and uh Jim Whitehearst last night wouldn've been like that! We weren't on the best of terms not too long ago and to think that we'd be sharing a stage and not only talking about working together but being partners and truly partners um many people would have imagined that to be just totally unfathomable but it happened. We saw it last night! >> Yeah so um and there's a lot more not just to Sataya being here but the relationship uh that I've been learning more about-walking the show floor, talking to some of the people, uh reading some of the articles online there so you know you know big announcement they talked about is open shift on Azure and that you know fully managed you know common operating platform, across the clouds, manage it yourself, consume it as a service, um you know deep integration there uh between Azure and Open Shift. So uh as I mentioned yesterday in our open Red Hat's working with all the clouds you know talk to them at Google at this show two years ago they announced the AWS piece uh but more than that even is you know some of the applications you know where is microsoft doing great? They have business productivity applications so sequel on rhel is something that you know fully supported and is something that you know Red Hat's been seeing a lot of growth there. And it's something that you know you think Microsoft usually you think Windows and today in the technology world you know Satya's goal is when you think Microsoft he wants you thinking you know Azure and AI and not that they don't have a strong Windows business or that it's not going uh you know not going away. See things like in the demo this morning their like oh hey you want to you know manage your all your linux environments and logins? Oh they pulled up a windows desktop. I mean you know it's it's I think it's it's interesting to see that Linux. It's like oh my gosh that's blasphemy. How dare you you know pull up you know a windows gooey and you see like minecraft and all these other stuff there. It's like that's that's not what a linux used to using. >> John: Right right >> But I can go to those environments so that blending of worlds uh is is what we see and uh yeah you know Microsoft and Red Hat uh living together uh you know in a lot of these customer environments is uh impressive. And I heard Satya spending a bunch of time with customers here. He didn't just fly in and do the keynote and then you know out on the jet off to his next environment You know working with the customers. Strong commitment uh to the partnership and as Satya said inter operate and commit to open source which if you haven't been watching the last five years has been a big push of Microsoft uh and uh is not the Microsoft that we grew up off of you know in the '90s and like um with proprietary software, proprietary operating systems, um committing to all of these environments. >> Yeah I mean so lets follow up a little bit on on the commitment angle or you know that discussion because I think you raised an interesting point that this was just not a fly by. It wasn't just a dropping kind of thing. This was a apparently from what you're uh sources have been telling you a very much more committed uh direction for the company for Microsoft we're talking about here. That's a strong statement. That this is not just for show. That our commitment is going to be the long term success. >> Yeah Yeah um you know we go to a lot of shows and when I've been at a lot of the open source shows especially uh really in the container and Kuraneti's space so we've got the Cube two weeks from now in uh Barcelona for the Cube con and Cloud native Con. Uh.. Microsoft and Red Hat are both really big players in that environment and it's not you know shooting arrows and throwing stones. It's everybody's committing to the growth of these environments and the reality for customers is going to be multi cloud. Uh you know Paul Cormier this morning said you know hybrid is the direction. I'm like well no no, it is where they are today. I think what he means to say is if you look in the future, it's not going away. It's not what a few years ago it was the public cloud was the enemy to some and it's taking over and beware. It's well no the reality is is customer's using a ton of SAS. Microsoft to their credit pushed a ton of customers into that environment. They moved Office 365. Wasn't a oh hey it'd be nice if you do it, it's like you were being pushed by you know into this environment and if Micrsoft is pushing you that way and you know I was used to you know getting my discs and downloading things and doing that. Well this is the new world. It's you know SAS first, public cloud, absolutely an environment. We have Azure you know strong growth you know really strong growth. Uh you know for for many years. Um and the data centers, so you're going to have all of these environments and to manage them and make multi cloud better than its parts? Uh... The partnerships need to be deeper than they were in the past. We can't have the old world of saying oh yeah we've signed some cooperative support agreement but if something goes wrong, we're all going to be pointing fingers as to who's fault it is. The customer doesn't care. They need to run their business. >> John: Right >> Uh you know it needs to be able to go. My data and my applications are the lifeblood of my business so partnerships like Microsoft and Red Hat just make all the sense in the world today. >> Yeah we saw some uh some demos today of uh well I saw Open Shift 4 on the stage. Uh you talked about what uh Microsoft and opening up in Windows and all. Um but pretty impressive in terms of upgrading capabilities and automation capabilities just in general that's kinda what the the impression that I left with was. It's pretty cool. This is pretty good. You're allowing a lot of jobs to be done simultaneously without interference without concerns where as you know a year or two back you couldn't have these dual operations going on because you're too worried about interfering or disrupting instead. You're giving great confidence to the application side and to the dev side. So like Dev Ops is you know you're uh taking a lot of the worry out of the equation. >> Yeah it's really interesting time 'cause I you know there are many of the solutions that will just really abstract away or manage away anything that I need to worry about. I just wanna consume it as a service. It's really simple um. I might just have something that I'll you know automatically does most of the stuff for me and I don't need get underneath but still a lot of these demos its okay here's my terminal and you know let me run through these environments uh and I want to have visibility. So um we're in a little bit of a transition period here as the you know where we are. You know what my teams, what the skill set they need to have, how much depth they need to be able to do um because you know these sins of IT in the past was you know how much am I reinventing the wheel or doing undifferentiated heavy lifting where the vendors of the platforms could really make this easier so that what I need to do as the IT is respond to the needs of the business. I need to be agile. I need to be flexible and if I need to you know build this you know build the temple every time they need something uh I'm not going to be able to be fast enough >> John: Right >> And so I need to be at cloud speed. Uh I need to you know be able to you know respond when uh the business says I need something or I need to make a change. It is uh no longer acceptable to say months or years. It's it's now usually measured you know days or weeks if not in certain things are like no no instantly >> Like now. >> You need to now (john laughs) >> Exactly. >> Ready for a big day? >> Stu: Yeah absolutely. >> All right Jim Whitehearst coming up in just a little bit, a moment or two, but we'll continue our coverage here live from Boston. We're at Red Hat Summit 2019 and you are watching the Cube (loud upbeat music) (music fades away)

(upbeat orchestral music) >> Welcome back everybody. Jeff Frick here with the CUBE. We're at our Palo Alto studios having a CUBE conversation about digital transformation, industrial internet, AI, ML, all things great, and we're really excited to have a representative of GE, one of our favorite companies to work with because they're at the cutting edge of old industrial stuff and new digital transformation and building a big software organization out in San Ramon. So we're so happy to have here first time Jeff Erhardt. He is the VP Intelligent Systems from GE Digital. Jeff, great to see you. >> Pleasure to be here. Thanks for having me. >> Absolutely, so how did you get into GE? You actually, a creature of the valley, you've been here a little while. How did you end up at GE? >> I have. I'm a new guy, so I've been here about a year and a half, I came in via the acquisition of a company called Wise IO where I was the CEO, so I've spent the last 10 years or so of my life building two different analytic startups. One was based around a very popular and powerful open source language called R and spent a lot of time working with much of the Fortune 500. Think the really data driven companies now that you would think of, the Facebooks, the Goldman Sachs, the Mercks, the Pfeizers helping them go through this data driven journey. Anyway, that company was acquired by Microsoft and is embedded into their products now. But the biggest thing I learned out about that was that even if you have really good data science teams, it's incredibly hard to go from white board into production. How do you take concepts and make them work reliably repeatably, scalably over time? And so, Wise IO was a machine learning company that was a spin out from Berkeley, and we spent time building what I now refer to as intelligent systems for the purposes of customer support automation within things like the sales force and Zendesk ecosystem, and it was really that capability that drew us to GE or drew GE to approach us, to think about how do we build that gap not just from algorithms, but into building true intelligent applications? >> Right, so GE is such a great company. They've been around for a hundred years, original DOW component, Jeff Immelt's not there now, but he was the CEO I think for 16 years. A long period of time. Beth Comstock, fantastic leader. Bill Ruth building this great organization. But it's all built around these industrial assets. But they've started, they did the industrial internet launch. We helped cover it in 2013. They have the Pridix Cloud, their own kind of industrial internet cloud, had a big developer conference. But I'm curious coming from kind of a small Silicon Valley startup situation. When you went into GE, what's kind of the state of their adoption, you know, kind of how had Bill's group penetrated the rest of GE and were they making process? We're people kinda getting it, or were you still doing some evangelical work out in the field? Absolutely both, meaning people understand it are implementing yet I think there was maybe misunderstandings about how to think about software data in particular analytics and AI machine learning. And so a big part of my first year at the company was to spend the time coming in really from the top down, from sort of the CEO and CDO levels across the different business understanding what was the state of data and data driven processes within their businesses. And what I learned really quickly was that the core of this business, and this is all public information been well publicized, is in things like GE Aviation. It's not necessarily the sale of the engine that is incredible profitable, but rather it's maintaining and servicing that over time. >> Right. >> And what organizations like them, like our oil and gas divisions, with things like their inspection capabilities like our power division had really done is they had created as a service businesses where they we're taking data across the customer base, running it through a data driven process, and then driving outcomes for our customers. And all of a sudden the aha moment was wow, wait a minute. This is the business model that every startup in the valley is getting funded to take down the traditional software players for. It's just not yet modern, scalable, repeatable, with AI machine learning built in, but that's the purpose and the value of building these common platforms with these applications on top that you can then make intelligent. >> Right. >> So, once we figure that out it was very easy to know where to focus and start building from that. >> So it's just, it's kinda weird I'm sure for people on the outside looking in to say data driven company. We all want to drive data driven companies. But then you say, well wait a minute, now GE builds jet engines. There's no greater example that's used at conferences as to the number of terabytes of data an engine throws off on a transcontinental flight. Or you think of a power plant or locomotion and you think of the control room with all this information so it probably seems counterintuitive to most that, didn't they have data, weren't they a data driven organization? How has the onset of machine learning and some of the modern architectures actually turned them into a data driven company, where before I think they were but really not to the level that we're specifying here. >> Yah, I-- >> What would be your objective, what are you trying to take on this? >> Absolutely, machine learning, AI, whatever buzz words you want to use is a fascinating topic. It's certainly come into vogue. like many things that are hyped, gets confused, gets misused, and gets overplayed. But, it has the potential to be both an incredibly simple technology as well as an incredibly powerful technology. So, one of the things I've most often seen cause people to go awry in this space is to try to think about what is the new things that I can do with machine learning? What is the green field opportunity? And whenever I'm talking to somebody at whatever level, but particularly at the higher levels of the company is I like to take a step back and I like to say, "What are the value producing, data driven workflows within your business?" And I say define for me the data that you have, how decisions are made upon it, and what outcome that you are driving for. And if you can do that, then what we can do is we can overlay machine learning as a technology to intelligently automate or augment those processes. And in turn what that's gonna do is it's gonna force you to standardize your infrastructure, standardize those workflows, quantify what you're trying to optimize for your customers. And if you do that in a standardized and incremental way, you can look backward having accomplished some very big things. >> Right, and those are such big foundational pieces that most people I think discount again, just the simple question of where is your data. >> That's right. >> What form is it in? So another interesting concept that we cover all the time with all the shows we go to is democratization, right? So it seems to me pretty simple, actually. How do you drive innovation, democratize the data, democratize the tool to manipulate the data, and democratize the ability to actually do something about it. That said, it's not that easy. And this kind of concept that we see evolving from citizen developer to citizen integrator to citizen data scientist is kinda where we all want to go to, but as you've experienced first hand it's not quite as easy as maybe it appears. >> Yah, I think that's a very fair statement and you know, one of the things, again I spend a lot of time talking about, is I like to think about getting the right people in the right roles, using the right tools. And the term data scientist has evolved over the past five plus years going from to give Drew Conway some credit of his Venn diagram of a program or a math kinda domain expert, into meaning anybody that's looking at data. And there's nothing wrong with that, but the concept of taking anybody that has ability to look at data within something like a BI or a Tableau tool, that is something that should absolutely be democratized and you can think about creating citizens for those people. On the flip side, though, how do you structure a true intelligent system that is running reliably, robustly, and particular in our field in mission critical, high risk, high stakes applications? There are bigger challenges than simply are the tools easy enough to use. It's very much more a software engineering problem than it is a data access or algorithmic problem. >> Right. >> And, so we need to build those bridges and think about where do we apply the citizens to for that understanding, and how do we build robust, reliable software over time? >> Right, so many places we can go, and we're gonna go a lot of them. But one of the things you touched on which also is now coming in vogue is kind of ML that you can, somebody else's ML, right? >> Mhmm. >> As you would buy an application at an app store, now there's all kinds of algorithmic equations out there that you can purchase and participate in. And that really begs an interesting question of kinda the classic buy versus build, or as you said before we turned on the cameras buy versus consume because with API economy with all these connected applications, it really opens up an opportunity that you can use a lot more than was produced inside your own four walls. >> Absolutely. >> For those applications. >> Yep. >> And are you seeing that? How's that kinda playing out? >> So we can parse that in a couple of different ways. So the first thing that I would say is there's a Google paper from a few years back that we love and it's required reading for every new employee that we bring on board. And the title of it was machine Learning is the High Interest Credit Card of Technical Debt. And one of the key points within that paper is that the algorithm piece is something like five percent of an overall production machine learning implementation. And so it gets back to the citizen piece. About it's not just making algorithms easier to use, but it's also about where do you consume things from an API economy? So that's the first thing I would think about. The second thing I would think about is there's different ways to use algorithms or APIs or pieces of information within an overall intelligent system. So you might think of speech to text or translation as capabilities. That's something where it probably absolutely makes sense to call an API from an Amazon or a Microsoft or a Google to do that, but then knowing how to integrate that reliably, robustly into the particular application or business problem that you have, is an important next step. >> Right. >> The third thing that I would think about is, it very much matters what your space is. And there's a difference between doing things like image classification on things like Imagenet which is publicly available images which are well documented. Is it a dog versus a cat? Is it a hot dog versus not? Versus some of the things that we face with an industrial context, which aren't really publicly available. So we deal with things like within our oil and gas business we have a very large pipeline inspection integrity business where the purpose of that is to send the equivalent of an MRI machine through the pipes and collect spectral images that collect across 14 different sensors. The ability to think that you're gonna take a pre trained algorithm based on deep learning and publicly available images to something that is noisy, dirty, has 14 different types of sensors on it and get a good answer-- >> Right. >> Is ridiculous. >> And there's not that many, right? >> And there's not that many. >> That's the other thing I think people underestimate the advantage that Google has we're all taking pictures of dogs and blueberries-- >> Correct. >> So that it's got so much more data to work with. >> That's right. >> As opposed to these industrial applications which are much smaller. >> That's right. >> Lets shift gears again, in terms of digital transformation one of the other often often said examples is when will the day come that GE doesn't sell just engines but actually sells propulsion miles? >> Yep. >> To really convert to a service. >> Yah. >> And that's ultimately where it needs to go cause it's kinda the next step beyond maintenance. >> Yep. >> How are you seeing that digital transformation play out? Do people kinda get it? Do the old line guys that run the jet engine see that this is really a better opportunity? >> Mhmm. >> Cause you guys have, and this is the broader theme, very uniques data and very unique expertise that you've aggregated across in the jet engines base all of your customers in all of the flying conditions and all of the types of airplanes where one individual mechanic or one individual airline just doesn't have an expertise. >> Yep. >> Huge opportunity. >> That's exactly right, and you can say the ame thing in our power space, in our power generation space. You can say the same thing in the one we we're just talking about, you know things like our inspection technology spaces. That's what makes the opportunity so powerful at GE and it's exactly the reason why I'm there because we can't get that any place else. It's both that history, it's that knowledge tied to the data, and very importantly it's what you hinted at that bares repeating is the customer relationships and the customer base upon which you can work together to aggregate all that data together. And if you look at what things are being done, they're already doing it. They are selling effectively, efficiency within a power plant. They are selling safety within certain systems, and again, coming back to why create a platform. Why create standardized applications? Why put these on top? Is if you standardize that, it gives you the ability to create derivative and adjacent products very easily, very efficiently, in ways that nobody else can match. >> Right, right. And I love the whole, for people who aren't familiar with the digital twin concept, but really leveraging this concept of a digital twin not to mimic kinda the macro level, but to mimic the micro level of a particular part unit engine in a particular ecosystem where you can now run simulations, you can run tests, you can do all kinds of stuff without actually having that second big piece of capital gear out there. >> That's right, and it's really hard to mimic those if you didn't start from the first phase of how did you design, build, and put it in to the field? >> Right, right. So, I want to shift gears a little bit just on to philosophical things that you've talked about and doing some research. One of them is that tech is the means to an end, and I know people talk about that all the time, but we're in the tech business. We're here in Silicon Valley. People get so enamored with the technology that they forget that it is a means to an end. It is now the end and to stay focused. >> That's right. >> How are you seeing that kind of play out in GE Digital? Obviously Bill built this humongous organization. I'm super impressed he was able to hire that many people within the last like four years in San Ramon. >> Yah. >> Originally I think just to build the internal software workings within the GE business units, but now really to go much further in terms of industrial internet connectivity, etc. So how do you see that really kinda playing out? >> Yah, I think one of my favorite quotes that I forget who it came from but I'll borrow it is, "Customers don't want to buy a one inch drill bit, they want to buy a one inch hole." >> Right. >> And I think there is both an art and a science and a degree of understanding that needs to go into what is the real customer problem that they are trying to solve for, and how do you peel the onion to understanding that versus just giving what they ask for? >> Right. >> And I think there's an organizational design to how do you get that right. So we had a visitor from Europe, the chairman of one of our large customers, who is going through this data driven journey, and they were at the stage of simply just collecting data off of their equipment. In this case it was elevators and escalators. And then understanding how was it being used? What does it mean for field maintenance, etcetera? But his guys wanted to move right to the end stage and they wanted to come in and say, "Hey, we want to build AI machine learning systems." And we spent some time talking through them about how this is a journey, how you step through it. And you could see the light bulb go off. That yes, I shouldn't try to jump right to that end state. There's a process of going through it, number one, and then the second thing we spent some time talking about was how he can think about structuring his company to create that bridge between the new technology people who are building and doing things in a certain way, and the people who have the legacy knowledge of how things are built, run, and operated? >> Right. >> And it's many times those organizational aspects that are as challenging or as big of barriers to getting it right as a specific technology. >> Oh, for sure, I mean people process and tech it's always the people that are the hard part. It's funny you bring up the elevator or escalator story, We did a show at Spunk many moons ago and we had a person on from an elevator company and the amazing insight they connected Spunk to it. They could actually tell the health of a building by the elevator traffic. >> Yah. >> Not the health of it's industrial systems and it's HVAC, but whether some of the tenants were in trouble. >> Yep. >> By watching the patterns that were coming off the elevator. While different kinda data driven value proposition than they had before. >> Yep. So again, if you could share some best practices really from your experiences with R and now kinda what you're doing at GE about how people should start those first couple of steps in being data driven beyond kinda the simple terms of getting your house in order, getting your data in order, where is it. >> Yah. >> Can you connect to it? Is it clean? >> Yah. >> How should they kinda think about prioritizing? Ho do they look for those easy wins cause at the end of the day it's always about the easiest wins to get the support to move to the next level. >> Yah, so I've sorta got a very simple Hilo play book and you know the first step is you have to know your business. And you have to really understand and prioritize. Again, sometimes I think about not the build, buy decision per say, but maybe the build consume decision. And again, where does it take the effort to go through hiring the people, understanding building those solutions, versus where is it just best to say, "I'm best to consume this product or service from somebody else." So that's number one, and you have to understand your business to do that, really well. The second one is, and we touched on this before, which is getting the right people in the right seats of the bus. Understanding who those citizen data scientists are versus who your developers are, who your analytics people are, who your machine learning people are, and making sure you've got the right people doing the right thing. >> Right. >> And then the last thing is to make sure, to understand that it is a journey. And we like to think about the journey that we go through in sort of three phases, right? Or sort of three swim lanes that could happen, both in parallel, but also as a journey. And we think about those as sort of basic BI and exploratory analytics. How do I learn is there any there there? And fundamentally you're saying, I want to ask and answer a question one time. Think about traditional business reporting. But once you've done that, your goal is always to put something into production. You say, "I've asked and answered once, now I want to ask and answer hundreds, millions, billions of times-- >> Right, right. >> In a row." And the goal is to codify that knowledge into a statistic, an analytic, a business role. And then, how do you start running those within a consistent system? And it's gonna do and force exactly what you just said. Do I have my data in one place? Is it scalable? Is it robust? Is it queryable? Where is it being consumed? How do I capture what's good or bad? And once I start to then define those, I can then start to standardize that within an application workflow and then move into, again, these complex, adaptive, intelligent systems powered by AI machine learning. And so, that's the way we think about it. Know your business, get the people right, understand that it's a systematic journey. >> Right, and then really bake it into the application. >> That's right. >> That's the thing, we don't want to make the same mistake that we do with big data, right? >> Yep. >> Just put it into the application. It's not this stand alone-- >> Correct. >> You know, kinda funny thing. >> Exactly. >> Alright, Jeff, I'll give you the last work before we wrap for the day. So you've been with GE now for about a year and a half, about halfway through 2018. What are your priorities for the next 12 months? If we sit down here, you know June one next year, what are you working on, what's kinda top of mind for you going forward? >> Yah, so top of the line for me, so as I mentioned sort of our first year here was really surveying the landscape, understanding how this company does business, where the opportunities are. Again, where those data driven work flows are. And we have an idea of of that with the core industrial. And so what we've been doing is getting that infrastructure right, getting those people right, getting the V ones of some very powerful systems set up. And so, what I'm gonna be doing over the next year or so is really working with them to scale those out within those core parts of the business, understand how we can create derivative and adjacent products over those, and then how we can take them to market more broadly based upon that, exactly as you said earlier, large scale data that we have available, that customer insight, and that knowledge of how we've been building the stuff, so. >> Alright, I look forward to it. >> I look forward to being back in a year. >> All right, Jeff Erhardt. Thanks for watching. I'm Jeff Frick. You're watching the CUBE from our Palo Alto studios. See you next time. (upbeat orchestra music)

>> Announcer: From Copenhagen, Denmark, it's theCUBE. Covering KubeCon and CloudNativeCon Europe 2018. Brought to you by the Cloud Native Computing Foundation and its ecosystem partners. >> Hello and welcome back to the live CUBE coverage here in Copenhagen, Denmark, for KubeCon 2018, Kubernetes European conference. This is theCUBE, I'm John Furrier, my co-host Lauren Cooney here with Adrian Cockcroft who is the Vice President of Cloud Architecture and Strategy for Amazon Web Services, AWS. CUBE alumni, great to see you, a legend in the industry, great to have you on board today. Thanks for coming on. >> Thanks very much. >> Quick update, Amazon, we were at AWS Summit recently, I was at re:Invent last year, it gets bigger and bigger just continue to grow. Congratulations on successful great earnings. You guys posted last week, just continuing to show the scale and leverage that the cloud has. So, again, nothing really new here, cloud is winning and the model of choice. So you guys are doing a great job, so congratulations. Open source, you're handling a lot of that now. This community here, is all about driving cloud standards. >> Adrian: Yeah. >> Your guys position on that is? Standards are great, you do what customers want, as Andy Jassy always says, what's the update? I mean, what's new since Austin last year? >> Yeah, well, it's been great to be back on had a great video of us talking at Austin, it's been very helpful to get the message out of what we're doing in containers and what the open source team that I lead has been up to. It's been very nice. Since then we've done quite a lot. We were talking about doing things then, which we've now actually done and delivered on. We're getting closer to getting our Kubernetes service out, EKS. We hired Bob Wise, he started with us in January, he's the general manager of EKS. Some of you may know Bob has been working with Kubernetes since the early days. He was on the CNCF board before he joined us. He's working very hard, they have a team cranking away on all the things we need to do to get the EKS service out. So that's been major focus, just get it out. We have a lot of people signed up for the preview. Huge interest, we're onboarding a lot of people every week, and we're getting good feedback from people. We have demos of it in the booth here this week. >> So you guys are very customer-centric, following you guys closely as you know. What's the feedback that you're hearing and what are you guys ingesting from an intelligence standpoint from the field. Obviously, a new constituent, not new, but a major constituent is open source communities, as well as paying enterprise customers? What's the feedback? What are you hearing? I would say beyond tire kicking, there's general interest in what Kubernetes has enabled. What's Amazon's view of that? >> Yeah, well, open source in general is always getting a larger slice of what people want to do. Generally, people are trying to get off of their enterprise solutions and evolving into an open source space and then you kind of evolve from that into buying it as a service. So that's kind of the evolution from one trend, custom or enterprise software, to open source to as a service. And we're standing up all of these tools as a service to make them easier to consume for people. Just, everybody's happy to do that. What I'm hearing from customers is that that's what they're looking for. They want it to be easy to use, they want it to scale, they want it to be reliable and work, and that's what we're good at doing. And then they want to track the latest moves in the industry and run with the latest technologies and that's what Kubernetes and the CNCF is doing, gathering together a lot of technologies. Building the community around it, just able to move faster than we'd move on our own. We're leveraging all of those things into what we're doing. >> And the status of EKS right now is in preview? And the estimated timetable for GA? >> In the next few months. >> Next few months. >> You know, get it out then right now it's running in Oregon, in our Oregon data center, so the previews are all happening there. That gets us our initial thing and then everyone go okay, we want to in our other regions, so we have to do that. So another service we have is Fargate, which is basically say just here's a container, I want to run it, you don't have to declare a node or an instance to run it first. We launched that at re:Invent, that's already in production obviously, we just rolled that out to four regions. That's in Virginia, Oregon, Dublin and Ohio right now. A huge interest in Fargate, it lets you simplify your deployments a little bit. We just posted a new blog post that we have an open source blog, you can find if you want to keep up with what's going on with the open source team at AWS. Just another post this morning and it's a first pass at getting Fargate to work with Kubernetes using Virtual Kubelet which is a project that was kicked off by, it's an experimental project, not part of the core Kubernetes system. But it's running on the side. It's something that Microsoft came up with a little while ago. So we now have, we're working with them. We did a pull request, they accepted it, so that team and AWS and a few other customers and other people in the community, working together to provide you a way to start up Fargate as the underlying layer for provisioning containers underneath Kubernetes as the API for doing you know the management of that. >> So who do you work with mostly when you're working in open source? Who do you partner with? What communities are you engaging with in particular? >> It's all over. >> All over? >> Wherever the communities are we're engaging with them. >> Lauren: Okay, any particular ones that stand out? >> Other than CNCF, we have a lot of engagement with Apache Hadoop ecosystem. A lot of work in data science, there's many, many projects in that space. In AI and machine learning, we've sponsored, we've spend a lot of time working with Apache MXNet, we were also working off with TensorFlow by Torch and Caffe and there's a lot, those are all open source frameworks so there's lots of contributions there. In the serverless arena, we have our own SAM service application model. We've been open sourcing more of that recently ourselves and we're working with various other people. Across these different groups there's different conferences you go to, there's different things we do. We just sponsored Rails Conference. My team sponsors and manages most of the open source conference events we go to now. We just did RAILCON, we're doing a Rust conference, soon I think, there's Python conferences. I forget when all these are. There's a massive calendar of conferences that we're supporting. >> Make sure you email us that that list, we're interested actually in looking at what the news and action is. >> So the language ones, AltCon's our flagship one, we'll be top-level sponsor there. When we get to the U.S., CubeCon in Seattle, it's right there, it's two weeks after re:Invent. It's going to be much easier to manage. When we go to re:Invent it's like everyone just wants to take that week off, right. We got a week for everyone to recover and then it's in the hometown. >> You still have that look in your eyes when we interviewed you in Austin you came down, we both were pretty exhausted after re:Invent. >> Yeah, so we announced a bunch of things on Wednesday and Thursday and I had to turn it into a keynote by Tuesday and get everyone to agree. That's what was going on, that was very compressed. We have more time and all of the engineering teams that really want to be at an event like this, were right in the hometown for a lot. >> What's it like workin' at Amazon, I got to ask you it since you brought it up. I mean and you guys run hard at Amazon, you're releasing stuff with a pace that's unbelievable. I mean, I get blown away every year. Almost seems like, inhuman that that you guys can run at that pace. And earnings, obviously, the business results speak for themselves, what's it like there? I mean, you put your running shoes on, you run a marathon every day. >> It's lots of small teams working relatively independently and that scales and that's something other engineering organizations have trouble with. They build hierarchies that slow down. We have a really good engineering culture where every time you start a new team, it runs at its own speed. We've shown that as we add more and more resources, more teams, they are just executing. In fact, their accelerated, they're building on top of other things. We get to build higher and higher level abstractions to layer into. Just getting easier and easier to build things. We're accelerating our pace of innovation there's no slowing down. >> I was telling Jassy they're going to write a Harvard Business School case study on a lot of the management practices, but certainly the impact on the business side with the model that you guys do. But I got to ask you, on the momentum side, super impressed with SageMaker. I predicted on theCUBE at AWS Summit that that will be the fastest growing service. It will overtake Aurora, I think that is currently on stage, presented as the fastest growing service. SageMaker is really popular. Updates there, its role in the community. Obviously, Kubernete's a good fit for orchestrating things. We heard about CubeFlow, is an interesting model. What's going on with SageMaker how is it interplaying with Kubernetes? >> People that want to run, if you're running on-premise, cluster of GPU enabled machines then CubeFlow is a great way of doing that. You're on TensorFlow, that manages your cluster, you run CubeFlow on top. SageMaker is running at very low scale and like a lot of things we do at AWS, what you need to run an individual cluster for any one customer is different from running a multi-tenant service. SageMaker sits on top of ECS and it's now one of the largest generators of traffic to ECS which is Amazon's horizontally scaled, multi-tenant, cluster management system, which is now doing hundreds of millions of container launches a week. That is continuing to grow. We see Kubernetes as it's a more portable abstraction. It has some more, different layers of API's and a big community around it. But for the heavy lifting of running tens of thousands of containers in for a single application, we're still at the level where ECS does that every day and Kubernetes that's kind of the extreme case, where a few people are pushing it. It'll gradually grow scale. >> It's evolution. >> There's an evolution here. But the interesting things are, we're starting to get some convergence on some of the interfaces. Like the interfacing at CNA, CNA is the way you do networking on containers and there is one way of doing that, that is shared by everybody through CNA. EKS uses it, BCS uses it and Kubernetes uses it. >> And the impact of customers is what for that? What's the impact? >> It means the networking structures you want to set up will be the same. And the capabilities and the interfaces. But what happens on AWS is because it has a direct plug-in, you can hook it up to our accelerated networking infrastructure. So, AWS's instances right now, we've offloaded most of the network traffic processing. You're running 25 gigabits of traffic, that's quite a lot of work even for a big CPU, but it's handled by the the Nitro plug-in architecture we have, this in our latest instance type. So if you talked a bit about that at re:Invent but what you're getting is enormous, complete hypervisor offload at the core machine level. You get to use that accelerated networking. You're plugging into that interface. But that, if you want to have a huge number of containers on a machine and you're not really trying to drive very high throughput, then you can use Calico and we support that as well. So, multiple different ways but all through the same thing, the same plug-ins on both. >> System portability. You mentioned some stats, what's the numbers you mentioned? How many containers you're launching a week, hundreds of thousands? On ECS, our container platform that's been out for a few years, so hundreds of millions a week. It's really growing very fast. The containers are taking off everywhere. >> Microservices growth is, again that's the architecture. As architecture is a big part of the conversation what's your dialogue with customers? Because the modern software architecture in cloud, looks a lot different than what it was in the three layered approach that used to be the web stack. >> Yeah, and I think to add to that, you know we were just talking to folks about how in large enterprise organizations, you're still finding groups that do waterfall development. How are you working to kind of bring these customers and these developers into the future, per se? >> Yeah, that's actually, I spend about half my time managing the open source team and recruiting. The other half is talking to customers about this topic. I spend my time traveling around the world, talking at summits and events like this and meeting with customers. There's lots of different problems slowing people down. I think you see three phases of adoption of cloud, in general. One is just speed. I want to get something done quickly, I have a business need, I want to do it. I want machines in minutes instead of months, right, and that speeds everything up so you get something done quickly. The second phase is where you're starting to do stuff at scale and that's where you need cloud native. You really need to have elastic services, you can scale down as well as up, otherwise, you just end up with a lot of idle machines that cost you too much and it's not giving you the flexibility. The third phase we're getting into is complete data center shutdown. If you look at investing in a new data center or data center refresh or just opening an AWS account, it really doesn't make sense nowadays. We're seeing lots of large enterprises either considering it or well into it. Some are a long way into this. When you shut down the data center all of the backend core infrastructure starts coming out. So we're starting to see sort of mainframe replacement and the really critical business systems being replaced. Those are the interesting conversations, that's one of the areas that I'm particularly interested in right now and it's leading into this other buzzword, if you like, called chaos engineering. Which is sort of the, think of it as the availability model for cloud native and microservices. We're just starting a working group at CNCF around chaos engineering, is being started this week. So you can get a bit involved in how we can build some standards. >> That's going to be at Stanford? >> It's here, I mean it's a working group. >> Okay, online. >> The CNCF working group, they are wherever the people are, right. >> So, what is that conversation when you talk about that mainframe kind of conversation or shut down data centers to the cloud. What is the key thing that you promote, up front, that needs to get done by the by the customer? I mean, obviously you have the pillars, the key pillars, but you think about microservices it's a global platform, it's not a lift and shift situation, kind of is, it shut down, but I mean not at that scale. But, security, identity, authentication, there's no perimeter so you know microservices, potentially going to scale. What are the things that you promote upfront, that they have to do up front. What are the up front, table stake decisions? >> For management level, the real problem is people problems. And it's a technology problem somewhere down in the weeds. Really, if you don't get the people structures right then you'll spend forever going through these migrations. So if you sort of bite the bullet and do the reorganization that's needed first and get the right people in the right place, then you move much faster through it. I say a lot of the time, we're way upstream of picking a technology, it's much more about understanding the sort of DevOps, Agile and the organizational structures for these more cellular based organizations, you know, AWS is a great example of that. Netflix are another good example of that. Capital One is becoming a good example of that too. In banking, they're going much faster because they've already gone through that. >> So they're taking the Amazon model, small teams. Is that your general recommendation? What's your general recommendation? >> Well, this is the whole point of microservices, is that they're built by these small teams. It's called Conway's law, which says that the code will end up looking like the team, the org structure that built it. So, if you set up a lots of small teams, you will end up with microservices. That's just the way it works, right. If you try to take your existing siloed architecture with your long waterfall things, it's very hard not to build a monolith. Getting the org structure done first is right. Then we get into kind of the landing zone thing. You could spend years just debating what your architecture should be and some people have and then every year they come back, and it's changing faster than they can decide what to do. That's another kind of like analysis paralysis mode you see some larger enterprises in. I always think just do it. What's the standard best practice, layout my accounts like this, my networks like this, my structures we call it landing zone. We get somebody up to speed incredibly quickly and it's the beaten path. We're starting to build automation around these on boarding things, we're just getting stuff going. >> That's great. >> Yeah, and then going back to the sort of chaos engineering kind of idea, one of the first things I should think you should put into this infrastructure is the disaster recovery automation. Because if that gets there before the apps do, then the apps learn to live with the chaos monkeys and things like that. Really, one of the first apps we installed at Netflix was Chaos Monkey. It wasn't added later, it was there when you arrived. Your app had to survive the chaos that was in the system. So, think of that as, it used to be disaster recovery was incredibly expensive, hard to build, custom and very difficult to test. People very rarely run through their disaster recovery testing data center fail over, but if you build it in on day one, you can build it automated. I think Kubernetes is particularly interesting because the API's to do that automation are there. So we're looking at automating injecting failure at the Kubernetes level and also injecting into the underlying machines that are running Good Maze, like attacking the control plane to make sure that the control plane recovery works. I think there's a lot we can do there to automate it and make it into a low-cost, productized, safe, reliable thing, that you do a lot. Rather than being something that everyone's scared of doing that. >> Or they bolted on after they make decisions and the retrofit, pre-existing conditions into a disaster recovery. Which is chaotic in and of itself. >> So, get the org chart right and then actually get the disaster recovery patterns. If you need something highly available, do that first, before the apps turn up. >> Adrian, thanks for coming on, chaos engineering, congratulations and again, we know you know a little about Netflix, you know that environment, and been big Amazon customer. Congratulations on your success, looking forward to keeping in touch. Thanks for coming on and sharing the AWS perspective on theCUBE. I'm John Furrier, Lauren Cooney live in Denmark for KubeCon 2018 part of the CNC at the Cloud Native Compute Foundation. We'll back with more live coverage, stay with us. We'll be right back. (upbeat music)

>> Narrator: From Hell's Kitchen in New York City, it's The Cube on the ground at Serverlessconf. Brought to you by SilliconANGLE Media. >> Hi, I'm Stu Miniman with The Cube, and we're here are Serverlessconf in Hell's Kitchen New York City, really happy to welcome to the program, another one of the keynote speakers. Ben Kehoe, who's the Cloud Robotics research scientist at iRobot. >> Yeah. >> Ben, great to see you. >> Great to see you too. >> All right, so tell us a little bit about how you got involved with Serverless. >> Yeah, I mean it all started, I was a grad student in robotics, and I started thinking about, you know, we have all these robotics algorithms. And as the cloud can enable robots to do more and better things, how do we help turn those robotics algorithms into web services. And I didn't get very far in that, right towards the end of my PHD, and then that was 2014, LAMBDA was released, and it was like hey, that looks like it does the kind of thing that I was thinking about that we needed. So then I joined iRobot, and we were developing a cloud solution, a cloud application for our connected robots and apps, and to help us scale that to stay lean. Serverless was the right choice, and we've been doing that since 2015. >> Yeah, so Ben, what is it about Serverless that made it a fit for this? You know, I think about, doesn't their responsiveness, performance, latency if I have to go >> Yeah. >> up to the cloud and back like that way. I think some of this needs to kind of live locally. And some that goes there, maybe you can just briefly tease through some of those dynamics for us. >> Yeah, when you're talking about robots, you definitely have to keep things local. You want a robot to be responsive to its environment. You want, that even if its cloud connection disappears, that it can still accomplish all of its tasks. So it's always a mix of keeping it as a timeless robot that is enabled to do better things through the cloud, in terms of additional computational power, or accessing libraries of information to help it understand its world better. And of course, when one robot learns something, all robots can benefit from that experience. >> Excellent, so this is the first step for Skynet is what you're saying, right? >> Could be. >> All right, bring us in a little bit. Your keynote, what were you looking to share? You know, some of the key points. >> Yeah, I think in the talks that I've given at Serverlessconf, they tend to be as much as I am enthusiastic about Serverless, fully bodying, I try and pull us back a little bit to say, "What are we still missing? "What's not here yet? "Where do we need to go?" And so I had some frowny face emoji in my talk about event driven programming, event driven Serverless, and Serverless without event driven programming. Now we're still, you know, we have areas to improve in each one of those. And then that transitioned really into, "How do we start bringing in people who "are just starting into Serverless?" Larger organizations, more traditional architectures, and people who are experienced with that, and understand traditional architectures well. How do we get them on board with Serverless? And so that starts with just the gateway drug, which is infrastructure automation at the edges of their application, taking scripts that they run from developer machines with Cron jobs, and moving those into a function that's triggered by some cloud event. And then from there, starting to bring them over in terms of you can reduce your costs by eliminating idle resources. You can start to simplify and strengthen by refactoring some of that. And then once you really get them thinking about, "Oh, this is really working for the things "that we're doing." New features will start to be developed. Serverless native or event driven native. And then sort of at the end of the talk, the key is that because Serverless architectures look different from traditional architectures, there's something called Conway's law that says, "The design of your application will follow "the communication patterns in your organization." >> Stu: Right. >> And so you have to sort of flip that around to say, "Well if our design is changing, then we have "to make our organization change as well." >> Right, does that mean we're going to have, micro-employees you know? Instead of micro services we have, you know, employees that we hire them, and then we fire them pretty quick when we don't need them, or? >> I hope not. >> Yeah. >> I hope not. >> (crosstalk) that that's the part time, the uber's >> Yes. >> nation of the workforce. >> Yes. That would be, I think an inefficient way of going about it. >> Yeah. >> But I think we do need to reset expectations around what we have control over, and what we don't, because when you're on a traditional architecture with servers, you can reach in and fix problems that you have. And recognizing that when you're running on functions as a service platform, and using managed services, that when the provider has some sort of incident, you're out of control of that. It's a very uncomfortable place to be of not being in control of your own destiny, even though when you look at the big picture, that's going to happen less often, then if you were doing it yourself. >> Stu: Yeah. >> And so that's making sure that the mindset inside the organization, and the way that people communicate, is appropriately tuned to that sort of new paradigm. >> Okay, yeah. Ben, some of those frowny faces, what are things that the community is working on that you're hopeful for? What are some of the areas that we need for the maturation of this space? >> Yeah, I think something that I talked about previously that's coming around, is monitoring. So there's much more tools out there to monitor the infrastructure to know what's going on inside these functions and these managed services. And there's now some security analysis tools that are coming out, that some of these people are present here. And that was a big aspect that I've harped on for a long time of... We have a lot of mature traditional tools, that will do network analysis of your servers. Well it's like, "I don't have any servers." And those vendors then say, "Well, we can't help you." And there's static code analysis vendors who say we look at your whole application, and the flows inside it. And we say, well most of my application exists outside of code that I've written. I just write little bits, that glue it together in the way that my business works. And they say, "Oh, well we can't help you." >> Yeah. It reminds me, I think you know for so many years, people were really excited about how they could build their infrastructure. >> Yeah. >> And now they look to environments, well I can get out of that. So it caught my eye. You know, you put out on twitter, said "Maybe we need to have, you know, my next talk will be, "Work dumber not harder." Maybe explain that a little bit. >> Yeah, so I think, >> Yeah. >> I've been thinking about, you know, with some of the talks here about how it's not building it yourself. That in some ways, there's not invented here syndrome. And we kind of want to go a little bit down the road of invented here syndrome, of if you're building something that is not business logic, you're probably ideally thinking, "Maybe I shouldn't be doing this." So turning it into, I don't want to have to be clever in setting up my architecture, because being clever and like writing, it's always interesting to do, right? When you're developing, you're solving a computer science problem. But often that mean you're not delivering business value. And so, in Paul Johnson's talk, he was talking about the kind of people he looks like. What the kind of people he looks for, look like. >> Yeah. >> And he was saying, you know, "It's people "who want to get stuff out the door. "And who think about good enough." And I think that's really the thing of, how do we, when the people you hire are people who just want to ship features, they're going to say, "I can pull together services to do that "without having to actually solve any hard problems." And that means that you're delivering value, and you're operating more in your business space then in a technology space." >> All right, Ben I want to give you the final word. >> Thank you. >> You know, only 460 people here, which is good growth for the show, but a lot of people out there that are still learning about Serverless, what tips do you give them? You know, first steps to get involved, get involved with the community, (mumbles) some early wins they can have? >> I think there's a couple of things. There is training out there, there's blogs. There's twitter. Ask questions. You know, ping me on twitter if you wonder about something. And there's a Serverless slack that's very active, and if you ask basically anybody, the link is floating around. >> All right, well Ben Kehoe, thanks so much. Great to meet you, and thanks for sharing in this community. >> Yeah, thanks for having me. >> And our community, I'm Stu Miniman and thanks for watching The Cube. (upbeat, exciting music bumper)

>> Announcer: Live from San Francisco, it's theCUBE, covering DevNet Create 2017, brought to you by Cisco. >> Welcome back everyone, we're here live in San Francisco for theCUBE's special exclusive coverage of Cisco's inaugural event, DevNet Create, a foray into the developer opensource world as they extend their classic DevNet core developer program, three years old now, going into the opensource world, this is theCUBE, I'm John Furrier with my cohost, Peter Burris, our next guest is Matt Howard, EVP and CMO of Sonatype, knows something about opensource, Matt, great to have you on theCUBE, thanks for joining us. >> Thanks for having me. >> So first, talk about Sonatype, what do you guys do? Give a quick minute to describe the company, then I got some pointed questions for you. >> Well, we provide tools and intelligence to modern development organizations to basically reinvent how opensource components are flowing through the pipeline, through the value chain, through the development lifecycle. >> You guys are a service, SaaS service, are you guys a subscription? >> It's a subscription service, and we provide two products, there's a product which is a repository manager called Nexus where you store, organize, and distribute software binaries into the development lifecycle, and then there's a second server product called Nexus IQ, which provides intelligence on top of those binary, so think of it as like FDA food labeling database, so if you're looking at a bag of potato chips as a consumer, you can see that there's calories, sugar, salt, it's gluten-free. If you're looking at a software binary, you're able to see metadata that we provide, which allows you as a developer to make intelligent decisions with respect to, this component's good for my application 'cause it's properly licensed, or this component's good for my application because it doesn't have any-- >> So you're a verifying code, basically, in a way. >> Yeah, absolutely. Verifying and qualifying the opensource-- >> John: And the problem you solve for the customer as well. >> The customer basically gets to build applications at scale, at speed, with quality opensource components. >> So you take the worries off, like, with the licensing, does it work well, you're like Yelp for software? There're comments? >> Sort of, more like Amazon reviews for opensource binaries. >> Okay, great, cool, thanks for taking the time. So we was just talking in our intro, opensource, I'm old enough to know when we used to pirate software, and then opensource, woo, this is great, and then it became a tier two in the enterprise player, Red Hat brought it to tier one. It's booming. Communities are changing. You're in the middle of it, what's happening? Give us your take on how opensource is evolving, because it's the classic case of cliche, opensource, I'm standing on the shoulders of giants before me, and now the next generation is standing on the current generations of shoulders, a new generation's happening, what's going on? >> So, just think of supply and demand, simple supply. We live in a world right now where development organizations are facing an infinite supply of opensource, there's a thousand new opensource projects a day, 10,000 new versions and 14 releases per year. The supply is massive. And in a world where supply is incredible, consumption is equally incredible, last year alone, there were 52 billion download requests from Maven Central for Java binaries, 50 billion-plus requests for NPM packages in the JavaScript ecosystem, so we are basically dealing with a world where software is no longer a marginal cost to doing business, it is the business. Developers are king, developers are the lifeblood that's flowing through every great enterprise today, because innovation is ultimately the thing that will allow companies to compete and win on a global playing field! >> I mean, it's almost intoxicating for these guys who are just drinking from the trough of free software, because if you compound the new projects with the fact that Google and these guys are donating awesome libraries, Amazons, machine-learning stuff, it's not something to shake a stick at, it's great software! >> Yeah! >> TensorFlow, Spanner, I mean, all this stuff-- >> It's great software, and just think, in a world of infinite choice, which is the world we're living in, how do you make the best choice? >> So where's the growth coming from? Peter and I were speculating that, in talking to Abby Kearns yesterday from Cloud Foundry, and then with the Cloud Native Foundation, a lot of money's coming in so the business model for players and vendors are coming in, and suppliers now helping out and donating software, but we're speculating that there's a whole growth area that's different than we've seen before. Are we on that? Your comment to that, your thoughts on where this evolution's coming from, the next wave, is it horizontal? >> Our view is that the devops transformation from waterfall-native development to devops-native software development is happening and it's real, and it's arguably in the early days, but it's no stopping that train now. As organizations continue to reconcile demand from board members and shareholders and CEOs, how do you remain relevant, how do you be, put yourself into a position where you're innovating with software fast enough to remain competitive? And that's a tremendous pressure, and it's driving transformational change like devops, and so as that demand for speed continues to grow, we think it only increases the appetite for opensource, and it creates opportunities for organizations like ours to basically automate how that opensource innovation happens. >> We do a lot of crowd chats, to surface the landscape and the common theme that comes up is, oh, your organizational mindset has to change, and were commenting, Peter and I were talking yesterday about, if your org's not set up, you'll have, what's the law? >> Conway's law. >> Conway's law, where the output matches the organization, but the bigger question is, Ford CEO got fired, he's been in the job for less than four years, he didn't have time to transform, so the question is, how does opensource help people transform faster, do you have any observations around that? Because that's the number one question we get is, okay, I need to configure resources to do that, and then the other theme that we're hearing, I'd love to get your reaction on is, "Oh my God, I'm going to lose my job through automation." And certainly Cisco has networking guys who are looking down the barrel of potentially being irrelevant if they don't make the network programmable, so this is, we've lived through cycles, is it the mainframe guys who kind of lose their jobs, kind of thing going on? Or is it a transformative opportunity for the people as well? >> Yeah, it's a great question, there's a lot there, but I think the notion that they say software eats the world, a different way of viewing is automation eats the world, and if you look at, we refer to the 100-10-1 rule, today, in every large IT organization, you got 100 developers for every 10 IT operations professionals for every one security professional. It's impossible for the application security professionals to maintain governance over 100 software developers. If the old way of doing something like application security in this world where we're talking about infinite supply of opensource, needs to be automated with machine intelligence, it needs to be scalable early, everywhere, and throughout the entire development lifecycle, and unless it's not, you're going to basically get some of the benefit of opensource, but not all of the benefit of opensource. >> I want to push you a little bit in this, Matt, because, one might argue, and I'm going to be a little bit apocryphal here for a second, but one might argue that we also have an infinite supply of different types of bubblegum. And at the end of the day, one can say, "Well, do we need another bubblegum?" And we may or may not, and yet we do. So the reason why I'm bringing that up is I want to square the infinite supply, which I don't disagree with, with the idea that, certainly our clients, especially the big data side, are still concerned about the fact that they can't find tooling, or combinations of opensource tooling, that can help them with their use case. And so as you think about, one of the things that intrigued me about what your company does is the idea of to what degree can you start with a business problem, use that business problem to do some design work, and then based on that, start finding the tooling that will be most appropriate for solving the problem. >> Yeah, it's a great question, and I think it goes back to this idea of automation, let's just give a real world use case, this is one of many, but if the demand for speed and innovation is what shareholders, boards, and CEOs are looking for out of their IT organizations and their development teams, then the first thing you do, in the theory of constraints is you look for where is the friction, right? So theory of constraints basically points to something like the process inside of a large financial organization that involves a developer requesting approval for using an opensource component. How long does that take? How many people are involved in that process? How many hours, how many dollars? Does it have to be that hard? Or can you basically create policy, and define policy, and build, effectively, a firewall that then automatically governs the flow of opensource, healthy opensource components, into the development lifecycle? With no human intervention at pace, right? And that's the idea of what we're doing when we talk about scaling opensource innovation early, everywhere, and across the entire development lifecycle, it starts at the perimeter, the moment the development requests the opensource component for use, it has to be automated, you can't afford to take three months to approve it, he needs it now! >> So let me turn that around, and see if this is a service that you are providing, or actually could provide. Given that you probably visibility into a lot of the problems that the developer's trying to solve, and therefore, their ability to check opensource in and out from a variety of different sources, are you also gaining visibility in the types of stuff that people can't find, and making that information available to the world about, here's some of the places where the opensource world could step up and do perhaps a better job of delivering that software? And I'm specifically thinking of the big data universe, because there's so many, for example, I got a client, big financial institution, who is tearing his hair out right now trying to come up with some standard components for complex machine-learning pipelines. Real, real hard job, a lot of different tools, they work together at some level, but they're not solving the problem, 'cause they're more focused on solving each other project's problem. Am I making this? >> You are making a lot of sense, and you should introduce us to your friend, because we would love to have a conversation and talk exactly how it is that you can create prescriptive architectures with opensource components to remove friction back to the theory of constraints concept, I mean, this process of innovation has to flatten out, and we are very narrowly focused on one particular piece of that pipeline, and it is the making sure that the development organization is benefiting from all of the greatness that opensource has to offer, but none of the bad, and you have to do that with automation. >> So just really quick, John, for those of you who don't know, the theory of constraints, to a computer science person, looks like Amdahl's law. Speed up that which you do most frequently, for those of you who've ever done computer design. >> Herbie the Boy Scout. >> Exactly, so it's speed up the thing that is causing the most pain. >> Right, right, right. >> So the question I have for you this, okay, given what you guys do, which is a great service, cutting edge, it's in the devops wheelhouse, so, what is, in your opinion, the most important metric for your customer's success, vis a vis devops, okay, I'm in, I've been hearing about this cloud native thing and devops, we've got to change to Agile, we wrote a manifesto, we changed the organization, what is the important metric that you think they should look for for success? >> You know, there's a lot of metrics, there's no one answer, but I'll give you a really great one, since you mentioned Red Hat earlier. Red Hat is an amazing company that has probably done more for the evolution of opensource than anyone. They have a phenomenal track record of managing RHEL, the Red Hat Enterprise Linux stack, upstream and downstream, to the point where today, they publicly tell that the Red Hat Summit just recently in Boston, I think it's a day or two meantime to repair for a zero-day vulnerability. They understand the supply chain for RHEL extremely well, and from our perspective, we are trying to create the same type of hygiene for custom software development that RHEL has long practiced in support of Red Hat, Red Hat has long practiced in support of RHEL, and so meantime to repair, for example. If a zero-day vulnerability hits, do you have a software bill of materials? Are you wondering where that particular component is? Do you even have the component? How many applications in production are affected? I mean, this is a real-world scenario, just two weeks ago, with Struts 2, how many organizations are still working today to figure out the answer to that question? You'd be surprised, it takes organizations months-- >> Peter: But this is more than a library. >> This is more than a library. >> So explain why it's more than a library. >> Struts 2? >> No, what you're doing. >> What we're basically doing is imagining a software supply chain, so step back and imagine a world where you could build software applications the same way that Toyota builds cars. You have Deming's principles, which says you basically take and source the components or the parts from the fewer suppliers, and you source the absolute best parts, and you track and trace the location of those parts to every step of the supply chain all the way into production, so that Toyota recently had to conduct an orderly and effective recall for four million Takata airbags. Right? In software terms, the next time you're basically sitting on top of a zero day, you need the equivalent of that orderly effective recall so you can in a matter of minutes, not months, patch that vulnerability. >> Hence why you use Goldratt's theory of constraints, so in many respects, this is a digital supply chain tool? >> We believe it's software supply chain automation. >> What about digital? Can I also think about how digital objects can be included in that? Again, going back-- >> Containers? >> Going back to the big data notion? >> Yeah, absolutely, this is, supply chain theory is well understood in a physical goods world, certainly, if you look at how physical goods move through a supply chain, and you come to grips with what's happening in digital transformation today and the evolution of devops and the proliferation of opensource, continuous integration, continuous delivery, speed is king, it's all going in the direction of a supply chain. >> So, when you have so much bubblegum, as Peter said, after it loses its flavor, you get a new piece, right? So, same with software. Final question for you. You guys are doing well, I can imagine that operationally, as coming to operational as opensource, you're a key component there, and that seems like a good opportunity. How early are you on that operational progress? I mean, you just get started, you're making some money, which is good. >> To be frank-- >> You're the customer on the journey, in other words, people realize, "I got a operation on," so they're just doing it, not having a checks and balance. >> Our business is really interesting in the sense that product market fit for any young company can take quite a while, and we're fortunate enough to have a CEO who is remarkably patient and savvy and experienced, his name is Wayne Jackson, for anybody knows, here at the Cisco conference, he was previously the CEO of Sourcefire, so an interesting connection there, but patience is key, and we're being rewarded right now because all of the trends that you guys have already talked about here, and everything we've talked about at Cisco DevNet point to a simple fact, which is that software is key to how companies will compete and win in the future, and as long as that's true, they're going to be looking for ways to improve innovation. Right now, our business is early, we're still creating budget in some situations, but that's increasingly changing, and I would say that you should expect our business to continue to grow-- >> So people are operationalizing opensource, and they're getting serious about some of these things-- >> We're seeing budget now that we didn't see last year, for operationalizing the flow of opensource into a devops-- >> Final, final question, since I want to get your take on the show, Cisco's moves here into this world, obviously, a good move in our opinion, I'm sure you agree, risky for them, a good move, progress, what should they do next? Your thoughts and reaction to DevNet Create, 'cause man, they got DevNet, a growing, robust community of Cisco developers. DevNet Create, a new opportunity, what's your thoughts? >> I've learned a lot, I'm glad to be here, and just saw some things yesterday that make it very, very clear that DevNet Create and what Cisco's doing with it is a great move, I mean, my personal belief is that developers are king, and as you expose core services, network services to developers, an innovation happens, and value gets created, and so they've done so much at the network layer for so many years, and if they're now exposing that network sort of innovation to developers, it'll be exciting to see what kind of innovation happens. >> Matt, thanks for coming on theCUBE, really appreciate it, I'm glad we got you in, great to meet you last night, and congratulations on your startup that you're working with, and growth, and been around the industry a long time, you've seen a lot of waves, and appreciate the insight here on theCUBE, appreciate it. >> Appreciate you having me. >> Alright, we are live in San Francisco for exclusive coverage of Cisco's inaugural event DevNet Create, I'm John Furrier, Peter Burris, stay with us for more day two coverage after this short break. >> Hi, I'm April Mitchell, and I'm the Senior Director of Strategy and Planning for Cisco.

>> Announcer: Live from San Francisco, it's theCube. Covering DevNet Create 2017, brought to you by Cisco. >> Hey welcome back everyone. Live here in San Francisco, exclusive coverage with theCube at Cisco's inaugural DevNet Create event. I'm John Furrier with my co-host Peter Burris. We're breaking down the new foray into the open source world with a big presence. Cisco expanding their DevNet core developer classic program and creating an open source model with collaboration, 90% of that activity is non-Cisco, really a good formula. And to help us this down is Krish Subramanian, Principal Analyst at Rishidot Research, formerly of Red Hat, formerly of a start up that was recently sold. Can't talk about it because it's not released yet. Friend of theCube, Cube alumni, part of the Clouderati, going way back. Krish, we've seen a lot of the waves of how cloud has evolved from the early days. I remember when EngineYard was a startup, Haruku was a couple guys, we were having our meetups. >> And the AWS was still like people who weren't able to make money. >> They were poo-pooing the hell out of it. It was EC2 and S3 with a couple different, I mean RightScale did everything back then, so think about the changes. And now Cisco here with the formula, they have the right formula, I got to give them props for that, doing it right. They're not trying to come in and do a land grab and sort of, "Ahh, we're Cisco", throwing their elbows around. Really doing it right, your thoughts? >> Yeah, definitely, come back to what some other legacy companies tried to do. Cisco didn't try to jump in and say, "Hey, we are going to run public cloud, compete with Amazon", and sort of take them down. They sort of waited for right moment, they initially started with the InterCloud, which will go much further, but when IoT came into picture, they were there right for that and they were there taking advantage of that. And with the increasing focus on developers, they are going right to capture the minds of developers. Especially for IoT, that is critical for Cisco to go-- >> Well, I'm really glad you're on with Peter. We have two analysts here who know the industry up and down, from every dimension. Of course, I'll add my color, but I want to ask both of you guys a couple questions. One, do you think Cisco's making the right moves by coming out and really focusing on their core competency, which is the network? They also bought AppDynamics, so that is a big purchase. So, you got apps meets infrastructure, programmable infrastructure, which means infrastructure as code. You really can't have infrastructure as code unless Cisco gets behind it, they're the leader. So, with IoT looming, this seems like a good move for Cisco. What do you think? >> Yeah, definitely, they are going in the right direction, so it's really like IoT's still in the early stages and we have to wait and see how it is going to evolve, but Cisco is very persistent. Especially I like the AppDynamics acquisition because they are clearly telling the world that we understand that applications are the future and developers need the right tools if they are to develop their apps on Cisco infrastructure. And with the emphasis on programmability, Cisco is taking right steps towards capturing developer attention and I hope with successful events like this, they will be able to get there. >> Peter, I want to go to you for a second because we just found out, in talking to Suzy, I did not know this, but in your previous life, when you ran research at META Group, folks may not know what that was, it was a big research firm at the time, you did some really similar work around the infrastructure developer. >> Yeah >> Okay, and our comment was, "What is old is now new". I got a degree in operating systems and computer science and that seems to be the model. What is this notion of an infrastructure developer? It was mentioned in the keynote today. Does that exist in this new scenario? Do you see it being viable? It seems like the messaging is tight. What is your reaction to this notion? You've done a lot of work on that. >> Well, as a way of answering the question John, and I'll play off of something you just said, when we talk about the degree with which this is relevant to Cisco, here's what I say. Everybody's always looking for what is it that's different from today, relative to yesterday? And there's a lot of things that are different. One of the most important ones is that yesterday's computing industry emphasized a priority set of models about how you do things. So, if you thought about the network, the network had a modeled structure. You sat there and you designed a network to be as relevant to as many things as possible. Same with the database. You sat there and you designed the database to be as relevant to whatever notion of applications. When we start talking about the new world, now what we're discovering is the data is going to force a reconfiguration. That's what big data is. In many respects, it's non-structured, non-modeled data, but we still want to do analytics. Same thing with the network. We want the network to evolve and emerge, have emerging characteristics that allow us to do things that we never really anticipated when we first put this stuff down. And so, the thing that an infrastructure developer, at least as we conceived it, and we were way ahead and probably wrong for that reason, but the way we conceive it is someone has to take some degree of responsibility for starting to characterize, fill that gap, characterize the services in the infrastructure that need to be made available to application developers in a way that makes coherent and consistent sense so that an application written to an infrastructure, in fact, may become a service to another application at some point in time in the future, because they make consistent assumptions about where they operate within that margin between the application and the infrastructure. >> John: Does that environment exist today, in your opinion? >> It does in certain places. It does in certain places. I think the whole notion of containers is making, in Kubernetes for example, is making some very powerful presumptions about how applications are going to interact with each other in the future. Now, we had SOA, but we also talked about Conway's law, it just never happened because the structure of the organizations that were using SOA just guaranteed you end up with monolithic, crap applications anyway. >> Explain Conway's law real quick for people who didn't-- >> Yeah, Conway's law is, it's been mentioned in theCube a couple times, basically, it's a suggestion that the structure of the application is a reflection of the structure of the organization that created it. And so, if you have a silo-based application development organization that's looking at the application for the finance group, or the marketing group, you are going to get a structured, siloed-oriented application, no matter what underlying technology you use. And that's been that way forever. >> And so, Krish, I want to get your thoughts because let's take that to the next level. So, one of the benefits of cloud was horizontally scalable model. That really kind of, to me, was the big ah-ha moment around software. And with DevOps, which is now called cloud native, which is the same thing, infrastructures code was, hey, I'm not not an infrastructure person. I just want it to be available for me and help me configure it out and programmable, as Suzy was saying. Okay, so if you take what Peter's saying about data, you've lived through the infrastructure as a service, platform as a service, SAS wars or evolution, however you want to look at it. And, now you see that kind of coalescing into SAS and infrastructure and PAS kind of folding away and kind of becoming less of a contentious conversation. But, now that same thing's happening with data, we believe. I mean I think, maybe he may disagree, but now data's now the new data layer. What's your thoughts on that? Because now, if you inject data into what was the old cloud stack, new things are really possible. >> Yeah, the thing is, data brings in a new dimensionality to what we are seeing right now. Everything from infrastructure to application, everything requires a mindset change in terms of seeing them as services. So, even if it is a physical hardware you are dealing with, you have to make it more service-like by putting an API in front of it. So, it's changing the way how we consume these services. But, data is the one that is bringing business value to customers. When you make data easily, sort of like, inter operate with the services, let's say call it, for lack of a better term, a services ocean kind of IT model you have in your enterprise. So, when you offer to bring data into it, it offers you a lot of opportunities which didn't exist in the past. It opens up new avenues in which you could manipulate data, make sense out of it and probably get more value than what you were getting in the past. >> What's interesting, if you bring micro services, if you think about Docker and Kubernetes, as you were saying, and you bring data now into the equation and the notion of microservices, you can apply all that microservices knowledge to data. That's what you were saying, from what I hear. Or concepts of-- >> Sort of like you will bring data close to take, earlier as Peter pointed out, data was in silos, representative of the organizational structure. So, by taking a more services approach and spreading the services across these siloed, PAS, siloed organization, you are bringing the entire organization into one single umbrella, sharing the data and thereby benefiting much more than what they were getting in the past. >> So John, in the opening, one of the things we talked about, and I'll repeat it here because he's probably going to see it and I'd love to hear your comments on it, is that we went to hardware-defined networking. And then we went to software-defined networking. And, Wikibon's working on a proposition and I'm sure we'll find reasons why it's not going to play out, but again, I'd like to hear your position, is what I'll call data-defined infrastructure. So, we were on theCube last week at Informatica and we heard a lot about the role that metadata's going to play in discovery of data resources and whatnot. I can imagine adding metadata when we start talking about dependencies and time and location and things that are relevant to how a network or how an infrastructure might configure itself to serve the data, becoming a feature of the programmability of the underlying infrastructure so that we end up, in five years, we do talk about data-defined infrastructure. Just as today, we're talking about software-defined infrastructure, where the infrastructure, literally, responds to the needs of the data because that, ultimately, is the most flexible way of think about this. What do you think? >> Yeah, I fully agree with you. In fact, data brings in a new dimensionality to the equation where applications, it's a morph based on what is there in the data. So, on-the-fly, the infrastructure needs to be modified. So, data sort of brings in a new way of doing infrastructure from what we have done in the past. I fully agree with the role of data in that and how, through the application, that influences how we deal with infrastructure. It does change completely. >> All right, so I got to ask you guys a question. Journeys, is journey to DevOps, journey to digital transformation, certainly has a lot of cloud, has a lot of open source involved with it. We're seeing the Ford CEO get fired, he hasn't been on the job for four years, right? So, you guys both work with end users and advise them, so what's your advise to CXOs where, hey the clock now is, I thought four years was short. It really should be seven to 10 on the transformation scale, but people are getting axed in their third year, so they got to show results. How does an executive make all this stuff happen in such a short time? Or should they just reset expectations? >> When the executive comes in, he, or she, not only should look at their core business, they should also think that they are a technology business and change the mindset completely. That mindset change needs a push from the top that's going to accelerate the change down the lane and I think the executive should think that they are becoming a CEO, or CXO, of a technology company, rather than a manufacturing company or a automobile company kind of thing. >> I think that's true, but look, we haven't studied what happened at Ford in detail because I'm sure there's some subtleties in there that we just don't fully understand, but on the surface, it sounds like he might have gotten a little bit of a raw deal, just from the pure standpoint of-- >> Well the stock was down 39%, so my guess is total Wall Street hatchet job, but -- >> Peter: Exactly. >> We don't know a lot of the politics, but Val Bercovici, who was on earlier, who has a lot of experience in organizations that net app since 97, or late 90s, brought an interesting point, you were saying earlier. Tesla creates a car that's a service. And so, to me, I hate to use the cliche, "Everything as a service", but essentially, that's what software's going to. So, where you make up a day, that's why I'm kind of poking at the data thing because I think you're on to som-- >> But it's the end of the day, Tesla still has to have a shop that bends metal, there's still some car manufacturing things that have to happen. And, in many respects, whether the old CEO is saying, well the value proposition is, someday this autonomous vehicle is going to happen, but right now, we still got to build cars that can compete in the world market. There's a lot of subtleties here. There are-- >> Yeah, but Tesla does upgrade with software over the network. >> For an 80 to $100,000 price point and there's about four billion people that are going to buy cars in the next five years that may, or may not, be able to buy a 80,000 to $100,000 car. So anyway, coming back to your core point, I think what it really means is that if you're in a situation where you don't have visibility in a how, some of these new, digital approaches are going to create value for your business, you're doomed. So, I think the first thing you got to do is you got to be very explicit. This is how digital technology's going to create value for my business, that's number one. And, be able to articulate that to, virtually, anybody that's capable of understanding it, including Wall Street. But, to do that, you have to step back and say, and what is it about that digital technology that's going to create value for my business. And the thing that's going to do it, or not, is the data. >> And the asset configuration around, the work around the assets. >> Especially the asset configuration, as it's defined by the data. And, increasingly, there's an economics terms, what we're going to see happen over the next 10 years is the asset specificities are going to go down dramatically. In other words, the ability to which, or the degree to which an asset can only be configured to a specific purpose. Software's going to change that dynamic dramatically. And that, in many respects, is one of the fundamental, underlying things that's going on here. But, at the end of the day, you have to say, what role is data going to play in my business? How am I going to articulate that role by saying that I'm going to incorporate digital in this way? And then, put in place a plan that demonstrates that you're competent about some of these things. And, if your shareholders don't like it, they're not going to like it from anybody, not just you. >> Krish, I want to get your thoughts on the Cloud Native Compute Foundation. Why it's so successful. Why, in your opinion, do you think, there just booming with vendors, a lot of cash infusion, a lot of activity, projects went from one, three, 10. We had Dan on earlier, a lot of growth in the cloud native. And then, also, Kubernetes as a, kind of as an emerging, really interesting dynamic, vis-a-vis multicloud. So why cloud native is so popular and the impact of Kubernetes. >> Cloud native is popular because of late, developers are understanding that the role we are building applications is not going to work in cloud. When containers came into picture, that really made it easy for developers to develop cloud native apps. It got them to take advantage of the more distributed nature of the underlying infrastructure. So, the containers are the main reason why cloud native has become the household term, even in the enterprises. That could be one of the reason why Cloud Native Foundation is popular. Because they came at the right time to host all these development projects and evangelize with the developers and take steps in that. As far as Kubernetes is concerned, it worked at Google's CE. If it can work at Google's CE and then solve Google's problem, it should be able to help-- >> If it's good for Google, it's good for me. That's their strategy. >> And also, people are slowly realizing that as more and more enterprises go to cloud, they are realizing that going with a single cloud provider may not solve all their problems because different cloud providers have different set of services. So, they want to take advantage of all that. But, they want a single pane of glass to manage everything. Kubernetes is this general to be that at the cloud-- >> Krish, thanks for coming on. Peter, thanks for the comments, I'll just wrap up the analyst segment by saying, in my opinion, I think Cisco's making a good move here because, to your point about Google and Kubernetes is, and that's one of many examples of great software being contributed to open source. And open source, for all the times I've been involved with it since I was in college, is this more great software coming to the table now than ever before and that's creating great innovation. So, combined with the cloud and cloud native and Kubernetes, a perfect storm of innovation is coming. And it's coming, not from vendors, it's coming from open source. And, so the smart vendors are putting their toe in the water and really figuring it out. And again, the-- >> Peter: It is coming from vendor support though. >> Well the vendors are smart by putting their people in open source as a proxy for contribution. That's the open source model. That, to me, is the new R&D. It's a new innovation strategy, coupled with some proprietary R&D. Not saying they should be going all open source. >> I agree with it completely. In fact, I would even go one step further and say open source is completely disrupting the traditional enterprise software in modern business. Think about someone like Capital One putting critical software as open source and disrupting all the vendors in the space, so it's-- >> Well, let's continue the conversation in studio or tomorrow. Again, open source is horizontally scaling as well. Great stuff, great projects. More exclusive coverage from the inaugural event for Cisco's DevNet Create after this short break. (up-tempo music) >> Hi, I'm April Mitchell and I'm the senior director of strategy--

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