(intro music) >> Hi, everybody, we're back. Dave Vellante and Dave Nicholson. We're covering Fal.Con 22. This is CrowdStrike's big user conference. CrowdStrike is a very hot company, as you probably know started on endpoint security, expanding into another, a number of other areas trying to build the next great generational company in cybersecurity. Michael Sherwood is here. He's the chief innovation and technology officer for the city of Las Vegas. >> Got to love that. >> Thanks so much for coming to theCUBE. >> Welcome! >> Yeah, we got to love that. I mean, if it weren't for Las Vegas, I'm not sure where we would have our CUBE events, but so thank you for hosting us. >> Thank you for being here. This is awesome. It's a great day and a lot of people, and it's exciting to see everything that's going on here. >> Yeah, the city is booming. Obviously the convention, the conference business is booming. Tech is a big part of that but there's so many other industries that come to Las Vegas. Talk about your role, really interesting, chief innovation, technology officer, CTO. Tell us about what you do day to day. >> Kind of all over the place. But a lot of it has to do with day to day technology within the organization. So managing all the different technology components. When you start looking at any city, it's a lot of different companies inside of it. Think of fire service as a different company. They all have different missions. And so our technology needs are expansive. So while we have operational IT, we also have our innovation unit. Innovation unit works on next generation technology. So Las Vegas was one of the first cities in the United States to have a autonomous vehicle drive in mix-flow traffic, meaning it was out there with, driving along cars. We're also the first city to have an accident in a autonomous vehicle. That happened on day two. (Vellante laughing) So, there's always a lot of firsts in Las Vegas, but. >> Despite the grid. >> Despite the grid, you know. But even today, so that was in 2017, when we first started working with autonomous vehicles. Up until today, where you have the ability, anybody in Las Vegas, including yourselves right after the show can go ahead and use Lyft, go outside and hail an autonomous taxi to come pick you up and drive you up and down the strip. Those vehicles actually communicate with our infrastructure. So the innovation is, how do cities work with private companies to start building next generation amenities, next generation technologies? And so that happens a lot of times. People don't realize. They come to Las Vegas for entertainment, and now we're known for sports but we do have a lot of technology here that permeates through the entire community. >> So I'm from Boston. We're trying to get the smart traffic lights, we're not quite there yet. But I was at a session, Dave you'll appreciate it, it was John Rose, who was the CTO. He was the CTO of, he's a CTO of Dell Technologies now. And the mayor of Boston, we were talking about the vision for a smart city. But Boston and I mean talk about, a challenge for building a smart city. So when I come out here, it's like amazing to me to see the technology that's there. So as a CTO and innovation officer, you've got a playground where... Now, of course you have legacy infrastructure, you've got technical debt, but you also have, in certain cases, an opportunity and more latitude to get creative. So what are some of the cool things that you're working on that you're really excited about? >> There's a lot of things I'm excited about. It's just great being in this city. But a lot of the things that we're excited about here in the next year to two years, we have an innovation district. So not a lot of cities have this but Downtown around the Fremont Street Experience, there's a corridor there that covers government, covers entertainment, medical. And so this innovation district is where we test out new technologies. So some of the things we're testing out, computer vision. So we're, our smart parks program is how do we provide better security and enjoyment of those amenities without providing physical labor to constantly patrol. And so we're using cameras and vision and different types of AI algorithms to kind of manage the park. And while we're doing that, we're also getting data back on how often is the park used? Are the facilities, are the sprinklers going on during the day? Water's a big deal here. And so those type of projects. Again, autonomy is still huge, vehicle autonomy, still working on driving those next generation changes where you'll actually have a driverless vehicle. Right now, there's a safety driver in a lot of the autonomous vehicles. Even the one I talked about earlier, you have the, while the vehicles driving itself, for safety reasons, there's still a human driver in the seat. But as we go forward in the next year to two, that >> That's soon. >> is getting ready to change. I believe that's soon. You can quote it here, you heard it here first. >> Wow. >> But that would be coming up. You got drones as well. We've already started looking at a few types of drone delivery systems. It may not be too far away. Your pizza or maybe some other item that you want is delivered in the general area. Probably not in the hotel corridor but in the outside areas of the city. I just think there's a lot of, again, we're building amenities for the future. We really want people to understand that Las Vegas is not just a place to come visit, but it's a place to live and have fun and be part of a community. >> So from an academic perspective, what you just described is a highly ambidextrous organization, right? >> Yes. >> Because you're not just worried about keeping the lights on, but you're also looking at innovation. How did your organization get to this place? What you're describing is sort of the gold standard that any organization public or private would seek to implement. How did you get there? >> Baby steps, small steps. It all started back when there was the Smart Cities Challenge. So we were not selected as the finalist. We were in the, I think top 15 at the time but we didn't give up on it. And we continued to move forward. The pandemic helped us do things. When you ask, what do I do? Well, my normal job is running the day to day infrastructure. I also see my role as economic development to help bring companies here and bring new ideas. We have a great community, diverse and ready to do things. But when you take, talk about the innovation and the technology and what we're doing. Like I said, during a pandemic, we came up with the idea of, Hey, we don't want to send our building inspectors or our inspectors in the people's homes, one for the inspector's health and one for the citizen's health. So we used normal tools. We took an iPhone and made it a virtual inspector. So now if you get a new water heater, you can actually do your inspection via like a FaceTime. And you hold your phone up around the water heater. We can view it, we record the video, save it, and boom give you an inspection remotely. And so you build on it. So how do you get, I wouldn't quite say we're the gold. I appreciate, we're moving there, that's the bar. You've laid out the bar for us, but we're moving in that direction. But it's building on one win and not all of our things that we've deployed. We can talk about those as well. Some of the things like trash can sensors, we looked at doing, which would monitor when the trash can was full or empty, just didn't pan out. So a lot of the times I talk about the wins a lot not as much about the things that didn't pan out. >> So what're the big challenges, generally of building out a smart city and then specifically around cyber? >> So there's, community acceptance number one. Las Vegas, I'm very lucky cameras are everywhere. So there's not as much resistance to using video technology. But a lot of times it's just getting the constituents, getting people to understand the value of what we're trying to do. Not everybody is interested in autonomous vehicles or believes they're ready for that. But when you start looking at the increments, more than any other city I know, the community here is so robust and so supportive of bringing on these technologies. Look, what other city do you know that builds new buildings and knocks them down five years later to build something new again? Or, who has a volcano in the middle of their downtown? So different things like that. But when you start looking at all the advancements we're making, you brought up one of the biggest concerns. When people ask me, what keeps you up at night? It's not the autonomous vehicle not performing, its the cyber, it's the cyber issues that go along with becoming more advanced. And as you bring innovation in, you start bleeding the lines of what's government, what's private. And then how do you continue to have the data transmission between these multiple entities? How do you keep the endpoint secure? And that is something that you learn as you go, but it's always out there. And endpoint security and security in general is a huge, huge area. >> And how about the data? You were talking before about you can get actually approval for an inspection. That's data, it's video data. How have you changed the way in which you're using data? What are you doing with that data? How do you leverage it? How do you secure it? >> It's all great questions. One of the things we've undertaken is called an open data initiative. So we have an open data portal. It's opendata.lasvegasnevada.gov, where we publish a lot of the data sets that we collect. If it's air quality, if it's ambulance runs, and we make that data available. A lot of that is, one for the public for transparency, two though, it's, we hope enables the private sector to build apps off of the data that we have. A lot of times, you either you have the data but you don't have the app or you have the app, but no data. So in our way, it's trying to help the community build up new ideas. Our push has been moving to the cloud a lot. So we're pushing a lot more data into the cloud where before I think a lot of governments keep a lot of that internal, but obviously look, the cloud's here to stay and it's not going anywhere. And so now it's more about as we migrate, using our partners, our relationship with CrowdStrike, to start securing not only our endpoints but start looking at the cloud space as well. And then we have this new technology. It's not really new, but edge compute. You've heard a lot of, there's different people talking about it. When you start talking about autonomous vehicles, autonomous delivery, drones. We own a large private wireless network. A lot of data now is computed at the edge and we're only taking the metadata and sending it up to the cloud. So it becomes rather complicated with security being at the forefront. >> Yeah, so that very small portion of the actual amount of data that's created goes back but it's such a massive amount of data. It's not to trivialize it, it's still a lot. And some of it is probably ephemeral. Do you persist at all? Or probably not. >> Not always, I mean. A lot of it, what we're learning is, it's a learning process as you go through this smart city or what we call just basically emerging into, 'cause I believe all cities are smart. Not one city smarter than another necessarily. So I'm not really a fan of the term smart city. It's more in line with me as we're building amenities for the future and building amenities for people. And a lot of that is built upon data and then built upon providing things that citizens want. And we all know, we all live somewhere and we live there because it's safe community, it has good education, good infrastructure whatever it might be. And so we're trying to build out that smart community to be as many things as we can to as many people. >> Yeah, that's fair. And there's automation, there's certainly machine intelligence that's heavily involved. Of course, you talking autonomous. Now I understand your work transcends the city of Las Vegas into the broader state of Nevada helping make Nevada a safer state. What's that all about? >> So we have a great partnership. One of the great things, I come from California, so a rather large state. Here in Nevada, it's a very close knit state. So we have a lot of communications with the state. We get to work with them very closely. One of the initiatives we've been working on is how do we, a lot of organizations spend a lot of time doing cybersecurity for just their organization. So it's focused internal on the employees that might work in that organization. We're kind of now looking outwards and saying, how do we not only do that for our internal government employees but how do we involve the entire community? One of the things is, is Las Vegas over 40,000 conventions per year. You're here a lot. What happens in Vegas stays in Vegas and a lot of people bring malware with them and it stays here. We're trying to educate people. We do a lot in government to help people with police and fire and services. What is local government doing to help the community prepare for the next generation of cyber threats and issues? So our initiative is really working with the community, bringing in CrowdStrike and other partners to help us not only work with small business, but work with those entrepreneurs as well as the midsize businesses. >> So what do you do with Crowd? You got the cool little CrowdStrike, not CrowdStrike, but you got the red splash in your lapel. Very cool cuff links, I noticed that you have there. I love the red. >> Little poker chips there. >> They're Very nice, very nice. >> They're very cool. So what do you do with CrowdStrike? >> So CrowdStrike is one of our major components in our security posture. We use them as endpoint protection. I can tell you a quick story. I know my CISO's listening probably was going to cringe now when I tell this story, but our journey with CrowdStrike has been amazing. We deployed the product and when that first week of deployment, we had a malicious actor and CrowdStrike was able to catch it. I would probably would not be here today with you two gentlemen if it wasn't for CrowdStrike. That's not an endorsement it's just a, that's a fact of how things rolled out. But we depend on CrowdStrike and their capabilities to ensure the safety of our digital assets. >> You wouldn't be here 'cause we, it used to be failure means fire. Is that what you mean? >> That's what I mean. I'm not going to, I don't like to use that word in my terminology, but basically failure is not an option in my job. It's just not there. >> Well, it's funny, we had Kevin Mandy on early, he was like, look I started my company in 2004 with the assumption that breaches will happen, you are going to get breached. >> Yes >> So that's why I say, I think there was a day when, if you got breached, oh, you're fired. Well that, then everybody got breached. So I think that that sentiment changing 'cause CrowdStrike saying that the unstoppable breach is a myth. Well, we're not there yet, but. >> I'd say damage control now. At least we have a little bit more control but, again, look, government is about trust. And so when you have that trust level, from my perspective, I keep a high standard and try to prevent any loss of data or any type of malicious activity from happening. I hope the mayor's listening and she doesn't fire me if anything would happen, but you know. >> You got a fun job. How'd you get into this? >> It was a great opportunity. I worked in law enforcement prior to here. I was a Deputy Police Chief in city of Irvine. I oversaw technology as part of that role. I've always loved Las Vegas, always liked the energy of the city and I had a great opportunity to apply and I applied and was lucky enough to be selected. I have a great team that supports me. >> Deputy Police Chief, it sounds like, what you just described, the technology role. You had an operations role essentially, is that right? >> Correct. And so kind of gave me a lot of insights and really helped me, as you progress in government, having different roles in your portfolio makes you a little bit more adaptive and it's kind of, it helps in, especially now with so much video and cameras prevalent in cities, having that law enforcement role, understanding a little of the legal aspects and understanding some of the, what law enforcement wants kind of makes that bridge from technology to the actual end user. >> A really interesting story, Michael. Thanks so much for sharing on theCUBE, appreciate it. >> Thank you for having me here. >> You're very welcome. All right, keep it right there. Dave Nicholson and Dave Vellante will be back from Las Vegas at the Aria from Fal.Con 22. You're watching theCUBE. (outro music)

>>Okay, We're now going into the technical deep dive. We're gonna geek out here a little bit. Ben Wa Dodgeville is here. He's co founder of Snowflake and president of products. And also joining us is Christian Kleinerman. Who's the senior vice president of products. Gentlemen, welcome. Good to see you. >>Yeah, you that >>get this year, they Thanks for having us. >>Very welcome. So it been well, we've heard a lot this morning about the data cloud, and it's becoming my view anyway, the linchpin of your strategy. I'm interested in what technical decisions you made early on. That that led you to this point and even enabled the data cloud. >>Yes. So? So I would say that that a crowd was built in tow in three phases. Really? The initial phase, as you call it, was it was really about 20 minutes. One regions Teoh, Data Cloud and and that region. What was important is to make that region infinity, infinity scalable, right. And that's our architectural, which we call the beauty cross to share the architectural er so that you can plug in as many were clues in that region as a Z without any limits. The limit is really the underlying prop Provide the, you know, resource is which you know, Cal provide the region as a really no limits. So So that z you know, region architecture, I think, was really the building block of the snowflake. That a cloud. But it really didn't stop there. The second aspect Waas Well, it was really data sharing. How you know munity internets within the region, how to share data between 10 and off that region between different customers on that was also enabled by architectures Because we discover, you know, compute and storage so compute You know clusters can access any storage within the region. Eso that's based off the data cloud and then really faced three Which is critical is the expansion the global expansion how we made you know, our cloud domestic layers so that we could talk You know the snowflake vision on different clouds on DNA Now we are running in three cloud on top of three cloud providers. We started with the ws and US West. We moved to assure and then uh, Google g c p On how this this crowd region way started with one crowd region as I said in the W S U S West, and then we create we created, you know, many you know, different regions. We have 22 regions today, all over the world and all over the different in the cloud providers. And what's more important is that these regions are not isolated. You know, Snowflake is one single, you know, system for the world where we created this global data mesh which connects every region such that not only there's no flex system as a whole can can be aware of for these regions, But customers can replicate data across regions on and, you know, share. There are, you know, across the planet if need be. So So this is one single, you know, really? I call it the World Wide Web. Off data that, that's, you know, is this vision of the data cloud. And it really started with this building block, which is a cloud region. >>Thank you for that. Ben White Christian. You and I have talked about this. I mean, that notion of a stripping away the complexity and that's kind of what the data cloud does. But if you think about data architectures, historically they really had no domain knowledge. They've really been focused on the technology toe ingest and analyze and prepare And then, you know, push data out to the business and you're really flipping that model, allowing the sort of domain leaders to be first class citizens if you will, uh, because they're the ones that creating data value, and they're worrying less about infrastructure. But I wonder, do you feel like customers air ready for that change? >>I I love the observation. They've that, uh, so much energy goes in in in enterprises, in organizations today, just dealing with infrastructure and dealing with pipes and plumbing and things like that and something that was insightful from from Ben Juan and and our founders from from Day one WAAS. This is a managed service. We want our customers to focus on the data, getting the insights, getting the decisions in time, not just managing pipes and plumbing and patches and upgrades, and and the the other piece that it's it's it's an interesting reality is that there is this belief that the cloud is simplifying this, and all of a sudden there's no problem but actually understanding each of the public cloud providers is a large undertaking, right? Each of them have 100 plus services, uh, sending upgrades and updates on a constant basis. And that just distracts from the time that it takes to go and say, Here's my data. Here's my data model. Here's how it make better decisions. So at the heart of everything we do is we wanna abstract the infrastructure. We don't wanna abstract the nuance of each of the cloud providers. And as you said, have companies focus on This is the domain expertise or the knowledge for my industry. Are all companies ready for it? I think it's a It's a mixed bag. We we talk to customers on a regular basis every way, every week, every day, and some of them are full on. They've sort of burned the bridges and, like I'm going to the cloud, I'm going to embrace a new model. Some others. You can see the complete like, uh, shock and all expressions like What do you mean? I don't have all these knobs. 2 to 3 can turn. Uh, but I think the future is very clear on how do we get companies to be more competitive through data? >>Well, Ben Ben. Well, it's interesting that Christian mentioned to manage service and that used to be in a hosting. Guys run around the lab lab coats and plugging things in. And of course, you're looking at this differently. It's high degrees of automation. But, you know, one of those areas is workload management. And I wonder how you think about workload management and how that changes with the data cloud. >>Yeah, this is a great question. Actually, Workload management used to be a nightmare. You know, traditional systems on it was a nightmare for the B s and they had to spend most a lot of their time, you know, just managing workloads. And why is that is because all these workloads are running on the single, you know, system and a single cluster The compete for resources. So managing workload that always explain it as explain Tetris, right? You had the first to know when to run. This work will make sure that too big workers are not overlapping. You know, maybe it really is pushed at night, you know, And And you have this 90 window which is not, you know, efficient. Of course, for you a TL because you have delays because of that. But but you have no choice, right? You have a speaks and more for resource is and you have to get the best out of this speaks resource is. And and for sure you don't want to eat here with her to impact your dash boarding workload or your reports, you know, impact and with data science and and And this became a true nine man because because everyone wants to be that a driven meaning that all the entire company wants to run new workers on on this system. And these systems are completely overwhelmed. So so, well below management was, and I may have before Snowflake and Snowflake made it really >>easy. The >>reason is it's no flag. We leverage the crowds who dedicates, you know, compute resources to each work. It's in the snowflake terminology. It's called a warehouse virtual warehouse, and each workload can run in its own virtual warehouse, and each virtual warehouse has its own dedicated competition resources. It's on, you know, I opened with and you can really control how much resources which workload gas by sizing this warehouses. You know, I just think the compute resources that they can use When the workload, you know, starts to execute automatically. The warehouse, the compute resources are turned off, but turned on by snowflake is for resuming a warehouse and you can dynamically resized this warehouse. It can be done by the system automatically. You know if if the conference see of the workload increases or it can be done manually by the administrator or, you know, just suggesting, you know, uh, compute power. You know, for each workload and and the best off that model is not only it gives you a very fine grain. Control on resource is that this work can get Not only workloads are not competing and not impacting it in any other workload. But because of that model, you can hand as many workload as you want. And that's really critical because, as I said, you know, everyone in the organization wants to use data to make decisions, So you have more and more work roads running. And then the Patriots game, you know, would have been impossible in in a in a centralized one single computer, cross the system On the flip side. Oh, is that you have to have a zone administrator off the system. You have to to justify that. The workload is worth running for your organization, right? It's so easy in literally in seconds, you can stand up a new warehouse and and start to run your your crazy on that new compute cluster. And of course, you have to justify if the cost of that because there is a cost, right, snowflake charges by seconds off compute So that cost, you know, is it's justified and you have toe. You know, it's so easy now to hire new workflow than you do new things with snowflake that that that you have to to see, you know, and and look at the trade off the cost off course and managing costs. >>So, Christian been while I use the term nightmare, I'm thinking about previous days of workload management. I mean, I talked to a lot of customers that are trying to reduce the elapsed time of going from data insights, and their nightmare is they've got this complicated data lifecycle. Andi, I'm wondering how you guys think about that. That notion of compressing elapsed time toe data value from raw data to insights. >>Yeah, so? So we we obsess or we we think a lot about this time to insight from the moment that an event happens toe the point that it shows up in a dashboard or a report or some decision or action happens based on it. There are three parts that we think on. How do we reduce that life cycle? The first one which ties to our previous conversation is related toe. Where is their muscle memory on processes or ways of doing things that don't actually make us much sense? My favorite example is you say you ask any any organization. Do you run pipelines and ingestion and transformation at two and three in the morning? And the answer is, Oh yeah, we do that. And if you go in and say, Why do you do that? The answer is typically, well, that's when the resource is are available Back to Ben Wallace. Tetris, right? That's that's when it was possible. But then you ask, Would you really want to run it two and three in the morning? If if you could do it sooner, we could do it. Mawr in time, riel time with when the event happened. So first part of it is back to removing the constraints of the infrastructures. How about running transformations and their ingestion when the business best needs it? When it's the lowest time to inside the lowest latency, not one of technology lets you do it. So that's the the the easy one out the door. The second one is instead of just fully optimizing a process, where can you remove steps of the process? This is where all of our data sharing and the snowflake data marketplace come into place. How about if you need to go in and just data from a SAS application vendor or maybe from a commercial data provider and imagine the dream off? You wouldn't have to be running constant iterations and FTP s and cracking C S V files and things like that. What if it's always available in your environment, always up to date, And that, in our mind, is a lot more revolutionary, which is not? Let's take away a process of ingesting and copying data and optimize it. How about not copying in the first place? So that's back to number two on, then back to number three is is what we do day in and day out on making sure our platform delivers the best performance. Make it faster. The combination of those three things has led many of our customers, and and And you'll see it through many of the customer testimonials today that they get insights and decisions and actions way faster, in part by removing steps, in part by doing away with all habits and in part because we deliver exceptional performance. >>Thank you, Christian. Now, Ben Wa is you know, we're big proponents of this idea of the main driven design and data architecture. Er, you know, for example, customers building entire applications and what I like all data products or data services on their data platform. I wonder if you could talk about the types of applications and services that you're seeing >>built >>on top of snowflake. >>Yeah, and And I have to say that this is a critical aspect of snowflake is to create this platform and and really help application to be built on top of this platform. And the more application we have, the better the platform will be. It is like, you know, the the analogies with your iPhone. If your iPhone that no applications, you know it would be useless. It's it's an empty platforms. So So we are really encouraging. You know, applications to be belong to the top of snowflake and from there one actually many applications and many off our customers are building applications on snowflake. We estimated that's about 30% are running already applications on top off our platform. And the reason is is off course because it's it's so easy to get compute resources. There is no limit in scale in our viability, their ability. So all these characteristics are critical for for an application on DWI deliver that you know from day One Now we have improved, you know, our increased the scope off the platform by adding, you know, Java in competition and Snow Park, which which was announced today. That's also you know, it is an enabler. Eso in terms off type of application. It's really, you know, all over and and what I like actually needs to be surprised, right? I don't know what well being on top of snowflake and how it will be the world, but with that are sharing. Also, we are opening the door to a new type of applications which are deliver of the other marketplace. Uh, where, You know, one can get this application died inside the platform, right? The platform is distributing this application, and today there was a presentation on a Christian T notes about, >>you >>know, 20 finds, which, you know, is this machine learning, you know, which is providing toe. You know, any users off snowflake off the application and and machine learning, you know, to find, you know, and apply model on on your data and enrich your data. So data enrichment, I think, will be a huge aspect of snowflake and data enrichment with machine learning would be a big, you know, use case for these applications. Also, how to get there are, you know, inside the platform. You know, a lot of applications led him to do that. Eso machine learning. Uh, that engineering enrichments away. These are application that we run on the platform. >>Great. Hey, we just got a minute or so left in. Earlier today, we ran a video. We saw that you guys announced the startup competition, >>which >>is awesome. Ben, while you're a judge in this competition, what can you tell us about this >>Yeah, >>e you know, for me, we are still a startup. I didn't you know yet, you know, realize that we're not anymore. Startup. I really, you know, you really feel about you know, l things, you know, a new startups, you know, on that. That's very important for Snowflake. We have. We were started yesterday, and we want to have new startups. So So the ends, the idea of this program, the other aspect off that program is also toe help, you know, started to build on top of snowflake and to enrich. You know, this this pain, you know, rich ecosystem that snowflake is or the data cloud off that a cloud is And we want to, you know, add and boost. You know that that excitement for the platform, so So the ants, you know, it's a win win. It's a win, you know, for for new startups. And it's a win, ofcourse for us. Because it will make the platform even better. >>Yeah, And startups, or where innovation happens. So registrations open. I've heard, uh, several, uh, startups have have signed up. You goto snowflake dot com slash startup challenge, and you can learn mawr. That's exciting program. An initiative. So thank you for doing that on behalf of of startups out there and thanks. Ben Wa and Christian. Yeah, I really appreciate you guys coming on Great conversation. >>Thanks for David. >>You're welcome. And when we talk, Thio go to market >>pros. They >>always tell us that one of the key tenets is to stay close to the customer. Well, we want to find out how data helps us. To do that in our next segment. Brings in to chief revenue officers to give us their perspective on how data is helping their customers transform. Business is digitally. Let's watch.

>>from the >>Cube Studios in Palo Alto in Boston, connecting with thought leaders around the globe. >>These are cloud native insights. Hi, I'm stupid, man. And welcome to Episode one of Cloud Native Insights. So this is a new program brought to you by Silicon Angle Media's The Cube. I am your host stew minimum, and we're going to be digging in to cloud native and, of course, cloud native like cloud before kind of a generic term. If you look at it online, there's a lot of buzzwords. There's a lot of jargon out there, and so we want to help. Understand what? This is what This isn't on And really happy to welcome back to the program to help me kick it off you piss car. He is an industry analyst. His company is T l A Tech. You. Thanks so much for joining us. >>Thanks, Dave. Glad we're >>all right. And one of the reasons I wanted you to help me kick this off. Not only have you been on the Cube, you know your background. I met you when you were the cto of a service provider over there in Europe, where you're Netherlands based. You were did strategy for a very large ah, supermarket chain also. And you've been on the program that shows like docker con in the past. You work in the cloud native space you've done consulting for. Some of the companies will be talking about today. But you help me kick this off a little bit. When you heard here the term cloud native. Does that mean anything to you? Did that mean anything back in your previous roles? You know, help us tee that up. >>So, you know, it kind of gives off a certain direction and where people are going. Right. Um so to me, Cloud native is more about the way you use cloud, not necessarily about the cloud services themselves. So, you know, for instance, I'll take the example of the supermarket. They had a big e commerce presence. And so we were come getting them to a place where they could, in smaller teams, deploy software in a faster, more often and in a safer way so that teams could work independently of each other, work on, you know, adding business value, whatever that may be for any kind of different company. That's a cloud native to me, Connie means using that to the fullest extent, using those services available to you in a way organizationally and culturally. That makes sense to you, you know, Go wherever you need to go. Be that release every hour or, you know, transform your s AP environment to something that is more nimble, more flexible, literally more agile. So what cloud native means so many things to so many people? Because it's immediately is not directly about the technology, but how you actually use it. >>Um, and u Pua and I are in, you know, strong agreement on this thing. One is you've noticed we haven't said kubernetes yet. We haven't talked about containers because cloud native is not about the tooling. We're, you know, strong participants in you know, the CN CF activities. The Cloud Native Computing Foundation, cube con and cloud native is a huge show. Great momentum one. We're big fans of too often people would conflate and they'd say, Oh, cloud native equals. I'm doing containers and I've, you know, deployed kubernetes one of the challenges out there. You talk about companies, you know? Well, you know, I had a cloud first initiative and I'm using multi cloud and all this stuff. It's like, Well, are you actually leveraging these capabilities, or did I shove things in something I'd railed about for the last couple of years? You talk about repatriation, and repatriation is often I went to go do cloud. I didn't really understand what I was doing. I didn't understand how to leverage that stuff. And I crawled back to what I was doing before because I knew how to do that. Well, so, you know, I think you said it really well. Cloud native means I'm taking advantage of the services. I'm doing things in a much more modern way. The thing I've loved talking to practitioners and one of things I want to do on this program absolutely is talk to practitioners is how have you gone through things organizationally, there are lots of things right now. Talk about like, thin ops. And, of course, all the spin off from Dev Ops and Dev SEC ops. And, like, how are we breaking through silos? How we're modernizing our environments, how we're taking advantage of new ways of doing things and new services. So yeah, I guess you You know, there are some really cool tools out there. Those are awesome things. But, you know, I love your viewpoint. Your perspective on often people in tech are like, Hey, I have this really cool new tool that I can use, you know? Can I take advantage of that? You know, do I do things in a new way, or do I just kind of take my old way and just make things maybe a little incrementally better? Hopefully with some new tooling. >>Oh, yeah. I mean, I totally agree. Um, you know, tooling is cool. Let me let me start by saying that I You know, I'm an engineer by heart, so I love tinkering with new new stuff. So I love communities I love. Um, you know that a new terra form released, for instance, I love seeing competition in the container orchestration space. I love driving into K native server lists. You know, all those technologies I like, But it is a matter of, you know, what can you do with them, right. So, for instance, has she corporate line of mine? I work on their hashtag off. Even they offer kind of Ah, not necessarily an alternative, but kind of adjacent approach to you what the CNC F is doing, and even in those cases, and I'm up specifically calling out Hashi Corp. But I'm kind of giving. The broader overview is, um, it doesn't actually matter what to use, Even though it'll help me. It'll make me happy just to play around with them. But those new tools have to mean something. They have to solve a particular problem. You have either in speed of delivery or consistency of delivery or quality of service, the thing you are building for your customers. So it has to mean something. So back in the day when I started out in engineering 15 years ago, a lot of the engineering loss for the sake of engineering just because, you know you could create a piece of infrastructure a little faster, but there was no actual business value to be out there. That's a lot of the engineering kind of was stuck inside of its own realm, or as what you see now is, if you can use terraform and actually get all of you know the potential out of you, it allow you to release offer more quickly because you're able to stand up infrastructure for that software more quickly. And so you know, we've kind of shifted from back in the in the attic or in the basement doing I t. Stuff that no one really understands. The one kind of perceives the business value of it into the realm of okay, If we can deploy this faster or we don't even need to use a server, we can use server lists. Then we have an advantage in the marketplace. You know, whatever marketplace that is, whatever application we're talking about. And so that's the difference to me. And that was that. You know, that's what CN CF is doing to me. That is what has she Corpus is helping build. That is what you know. A lot of companies that built, for instance, a managed kubernetes service. But from nine spectral crowd, all those kinds of companies, they will help, you know, a given customer to speed up their delivery, to not care about the underlying infrastructure anymore. And that's what this is all about to me. And that is what cloud native means use it in a way that I don't actually have to do the toil off the engineering anymore. There's loads of smart people working for, you know, the Big Three cloud vendors. There's loads of people working for those manage service providers, but he's used them so that you can speed up your delivery, create better software created faster, make customers happy. >>Yeah, it's a lot to unpack there. I want to talk a little bit about that landscape, right When you talk about, you know, cloud native, maybe a little compare contrast I think about, you know, the wave of Dev ops and for often people like, you know, Dev Ops. You know, that's a cultural movement. But there's also tooling that I could buy to help me along that weighs automation, you know, going agile methodology. See, I CD are all things that you're like. Well, is this part of Dev Ops, isn't it? There's lots of companies out there that we saw rows rode that wave of Dev ops. And if you talk about cloud native, you know the first thing you know, you start with the cloud providers. So when I hear you talking about, how do we get rid of things that we don't need to worry about? Well, for years, we heard Amazon Web services talk about getting rid of undifferentiated heavy lifting. And it's something that we're huge fans off you talk about. What is the business outcome? It's not. Hey, I went from, you know, a stand alone server to I did virtualized environments. And now I'm looking container ization or serverless. What can I get rid of? How do I take advantage of native services and all of those cloud platforms? One of the huge values there is, it isn't Hey, I deployed this and maybe it's a little bit cheaper and maybe a little better. But there's that that is really the center of where innovation is happening not only from the platform providers they're setting themselves, but from that ecosystem. And I guess I'll put it out there. One of the things I would like to see from Cloud Native should be that I should be able to take care of take advantage of innovation wherever it is. So Cloud Native does not mean it must live in the public cloud. It does not necessarily mean that I'm going, you know, full bore, multi cloud everywhere. I've had some great debates with Corey Quinn, on the Cube Online and the like, because if you look at customer environments today, you know, yes, they absolutely have their data centers. They're leveraging, typically more than one public cloud. SAS is a big part of the picture and then edge computing and pulls everything away into a much more distributed architecture. So, you know, I'm glad you brought up. You know, Hashi, a company you're working with really interesting. And if you talk about cloud native, it's there. They're not trying to get people to, oh, use multiple clouds because it's good for us. It's they. Hey, the reality is that you're probably using multiple clouds, and whether it's one cloud or many clouds or even in your data center, we have a set of tools that we can offer you. So you know, Hashi, you mentioned, you know, terra form vault. You know, the various tooling is that they have open source, you know, big play in this environment, both under the CN CF umbrella and beyond. Give us a little bit as to, you know, where are the interesting places where you see either vendors and technology today, or opportunity to make these solutions better for users. >>So that's an interesting question, because I literally don't know where to begin. The spectrum is so so broad, it's all start off with a joke on this, right? You cannot buy that helps. But the vendors were sure try and sell it to you. So it's kind of where you know, the battle is is raging on its getting foothold into an organization. Um, and you see that? You know, you see companies like, how is she doing that? Um, they started out with open source tooling that kind of move into the enterprise realm. Um, you solve the issues that enterprises usually have, and that's what the club defenders will trying to you as although you know, the kind of kick start you with a free service and then move you up into their their stack. And that's you know, that's where Cloud native is kind of risky because the landscape is so fragmented, it is really hard to figure out. Okay, this tool, it actually solves my use case versus this one doesn't. But again, it's in the ecosystem in this ecosystem already, so let's let's still use it just because it's easier. Um, but it does boil the disk a lot of the discussion down into. Basically, it's a friction. How much effort does it take to start using something? Because that's where and that's basically the issues enterprises are trying to solve. It's around friction, and it used to be friction around, you know, buying servers and then kind of being stuck with him for 4 to 5 years. But now it is the vendor lock in where people in organizations have to make tough decisions. You know, what ecosystems am I going to buy into it? It's It's also where a lot of the multi cloud marketing comes from on the way down to get you into a specific ecosystem on your end companies kind of filling that gap, helping you manage that complexity and how she corpus is one of those examples in my book that help you manage that multi cloud ah challenge. So but yeah, But it is all part of that discussion around friction. >>Yeah, and I guess I would start if you say, as you said, it is such a broad spectrum out there. If you look in the developer tooling marketplace is, there's lots of people that have, you know, landscapes out there. So CN cf even has a great landscape. And you know, things like Security, you no matter wherever I am and everywhere that I am. And there's a lot of effort to try to make sure that I can have something that spans across the environment. Of course, Security, you know, huge issue in general. And right now, Cohen, 19. The global pandemic coming on has been, you know, putting a spotlight on it even more. We know shared responsibility models where security needs to be. Data is at the center of what we're talking about when we've been talking for years about companies going through their transformation, I hadn't talked about, you know, digital transformation. What that means is, at the end of the day, you need to be data driven. So there's lots of companies, you know, big movement and things like ml ops. How can I actually harness my data? I said one of the things I think we got out of the whole big data wave. It was that bit flip from, Oh my God, their data everywhere. And maybe that's a challenge for me. It now becomes an opportunity and often times somewhere that I can have new value or even new business models that we can create around data. So, you know, data security on and everyone is modernizing. So, you know, worry a bit that there is sometimes, you know, cloud native washing. You know, just like everything else. It's, you know, cloud enabled. You know, ai ready from an infrastructure standpoint, you know, how much are you actually leveraging Cloud native? The bar, we always said, is, you know, if you're putting something in your data center, how does that compare against what I could get if I'm doing aws azure or Google type of environment? So I have seen good progress over the last couple of years in what we used to call it Private Cloud. And now it's more Ah, hybrid environment or multi cloud. And it looks and acts and is managed much more like the public cloud at a lot of that. Is that driver for developers? So you know Palmer, you know, developers, developers, developers, you know, absolutely. He was right as to how important that is. And one of the things I've been a little bit hardened at is it used to be. You talked about the enterprise and while the developers were off in the corner and, you know, we need to think about them and help enable them. But now, like the Dev Ops movement, we're trying to break down those silos. You know, developers are much more in the workflow. When I look at tools out there not only get hub, you know, you talked about Hashi, you know, get lab answerable and others. Often they have ways to have nothing to developers. The product owners and others all get visibility into it. Because if you can get, you know, people in the organization all accessing the same work stream the way that they need to have it there. There's goodness there. So I guess final question I have for you is you know, what advice do we have for practitioners themselves? Often, the question is, how do I get from where I've been? So where I'm going, This whole discussion of Cloud native is you know, we spent more than a decade talking about cloud, and it was often the kind of where in the movement and the like So what? I want to tee up with cloud native is discussion, really for the next decade. And you know, if I'm, you know, a c i o If I'm in, i t how do I make sure that I'm ready for these next opportunities while still managing? You know what I have in my own environment. >>So that kind of circles back to where we started this discussion, right? Cloud native and Dev ops and a couple of those methodologies they're not actually about the tooling. They are about what to do with them. Can you leverage them to achieve a goal? And so my biggest advice is Look for that goal. First, have something toward towards because if you have a problem, the solution will present itself. Um, and I'm not saying go look for a problem. The problems, they're already It's a matter of, um, you know, articulating that problem in a way that your developers will actually understand what to do. And then they will go and find the tools that are needed to solve that particular problem. And so we turn this around in a sense that so finally, we are at a point where we can have business problems. Actually, solved by I t in a way that doesn't require, you know, millions of upfront investment or, you know, consultants from an outside company. Your developers are now able to start solving those problems, and it will maybe take a while. They may need some outside help Teoh to figure some stuff out, But the point is, we can now use you know, these cloud resource is these cloud native services in such a small, practical way that we can actually start solving these business problems in a real way. >>Yeah, you actually, earlier this year I've done a series of interviews getting ready for this type of environment. You know, one of the areas I spent a bunch of time trying to dig in. And to be frank, understand has been server lists. So, you know, people very excited about server lists. You know, one of the dynamics always is, You know, everything we're talking about with containers and kubernetes driving them to think about that. I always looked as container ization was kind of moving up the stack in making infrastructure easier. The work for applications, but something like serverless it comes, top down. It's it's more of not the tooling, but how do I build those applications in those environments and not need to think at least as much about the infrastructure? So server lists Absolutely something we will cover, you know, containers, kubernetes what I'm looking for. Always love practitioners love to somebody. You you've been, you know, in that end, user it before startups. Absolutely. We'll be talking to as well as other people you know, in the ecosystem that you want to help, have discussions, have debates. You know, we don't have, you know, a strong. You know, this is the agenda that we have for cloud native, but I really want to help facilitate the dialogue. So I'll give you a final word here. Anything You know, what's exciting you these days when you talk to your peers out there, you know, in general, you know, it can be some tools, even though we understand tools are only a piece of it or any other final tips that you have in this market >>space. Well, I want to kind of go go forward on on your statement earlier about server lists without calling, You know, any specific serverless technology out there specifically, but you're looking at those technologies you'll see, But we're now able to solve those business problems. Um, without actually even needing I t right. So no code low code platforms are very adjacent to you to do serverless movement. Um, and that's where you know, that's what really excites me of this at this point, simply because, you know, we no longer need actual hardcore engineering as a trait Teoh use i t to move the needle forward. And that's what I love about the cloud native movement that it used to be hard. And it's getting simpler in a way also more complex in a way. What we're paying someone else Teoh to solve those issues. So I'm excited to see where you know, no code low code survivalism those the kinds of technologies will take us in the next decade. >>Absolutely wonderful. When you have technology that makes it more globally accessible There, obviously, you know, large generational shifts happening in the workforce. You Thank you so much for joining us, >>actually, Sue. >>All right. And I guess the final call to action really is We are looking for those guests out there, so, you know, practitioners, startups people that have a strong viewpoint. You can reach out to me. My emails just stew Stu at silicon angle dot com where you can hit me up on the twitters. I'm just at stew on there. Also. Eso thank you so much for joining us. Planning to do these in General Weekly cadence. You'll find the articles that go along with these on silicon angle dot com. Of course. All the video on the cube dot net I'm stew minimum in and love to hear more about your cloud Native insights >>Yeah, yeah, yeah, yeah, yeah

>> Announcer: From the Cosmopolitan Hotel in Las Vegas, Nevada, it's theCUBE. Covering Coupa Inspire 2019. Brought to you by Coupa. >> Welcome to theCUBE. Lisa Martin on the ground at Coupa Inspire '19 from the Vegas. I'm very pleased to welcome not Bono, not Sting, it's Chandar, the CMO of Coupa. Chandar, welcome to theCUBE. >> Lisa, thank you, it's great to be here today. >> This is a really cool event. Procurement is sexy. >> It is sexy. >> It can be so incredibly transformative to any organization. I loved how the last two days, what you guys have done is a great job of articulating Coupa's value in procurement, invoicing, payments, expense, through the voices of your customers and I think there's no better brand value that you can get. >> Sure, absolutely. >> Tell us a little bit about your role as the CMO of Coupa and marketing in a fast-growing company with a product that people might go, "I haven't heard of that, what is that again?" >> Yeah, it's a good question. I think if I look at it, my role is at Coupa, especially, for Coupa, what's interesting about it, as you said, is that every company makes money, every company spends money. So, invariably, Coupa can be used across a set of different companies. One from the Golden State Warriors to Procter & Gamble to the Lukemia & Lymphoma Society. Across the board. And then, from our perspective, holistically, we're looking at business, but managed from different aspects of spend. You said procurement was in expenses. So, my role is to build a marketing engine to get the flywheel effect of first you drive awareness. All marketing starts with awareness and you said people haven't heard of it. And so, to first to drive awareness in a very thoughtful way to the right contextual community we want to go after. And, two, drive acquisition, we'll drive close synergies between sales and marketing to ultimately drive pipeline and win rates and ultimately deals. And then, very importantly in today's world, is to drive the advocacy and get your most passionate customers to evangelize about the brand, so that you create the flywheel effect of awareness, acquisition, and advocacy. And, that's really what my role today is. >> And, I love how I read an article where you call that the stairway to marketing heaven. So, I thought, I wonder if you're a guitar guy, but you're right. It's how to drive awareness, but in a meaningful, thoughtful way. Especially today, with all all the technology, we wake up with it, right? Our phone is our alarm clock. We are bombarded by ads. If we're on Instagram, following our favorite celebrities or whatnot and it's scary when they have the right context, but it has to be thoughtful. We need to know our audience. So, you describe this stairway to marketing heaven, as you just mentioned, it's awareness, it's acquisition, which is key. But, I feel like a lot of companies don't forget the advocacy part, but they don't invest enough in it because that's the best salesperson for your technology, is the people that are using it successfully, right? >> Totally. Yeah, so, in fact, there was a study about a couple of years which looked at how balanced the boat is in terms of spending in presale versus post-sale. And, it's interesting that 87% of B2B marketing spend was presale. In other words, only 13% of people were investing in retention marketing, adoption mastery, customer marketing, and this is what advocacy marketing. And, in today's world, that doesn't work because you got to balance the boat because, to your point, you're getting in a peer-bond world where your existing customers are your best sellers. And, prospects who have all the buying power today are looking to your existing customers to guide them in their purchasing decisions. So, as an organization, if you balance the boat, then you're going to get the flywheel effect going for you in terms of driving the right advocacy across all channels. Just not your own channel if you earn channels to ultimately drive that acquisition going. >> Do you think that's actually more valuable? 'Cause it's one thing to have on your .com site, your social media sites, all these great things about your technologies, etc., coming from customers or from product experts, from influencers. Talk about the value. As technology advances so much and we are influenced by so many other channels, the value of the earned channel and that peer-to-peer relationship. >> Yeah, I think, as I say, that every mom says her baby is good-looking. But, in software, not every baby is really good-looking. Which means, if you take that analogy and extend it, if you're coming to your own channel, invariably, you're going to see some great customer videos about your product, you're going to see some great endorsements and testimonials, you're going to see some great quotes about your product. The reality, there's no bad news about your product on your own website, on your own channel. But, the reality is there are some, some people who might have different opinions. If you go to Glassdoor, no company gets a five on Glassdoor. And, if you take the same thing and extend it to earned channels for advocacy, folks like G2 Crowd, TrustRadius, and B2B, for example, are becoming more relevant today than before because two things. One is 85% of our customers' journey is self-directed. >> Lisa: That much? >> That much and Forrester has anywhere from 60 to 80, but reality is whether you're buying a car or you're buying Coupa. Today, a customer is discovering more journeys. And, in that process, they are looking to more of these earned channels as validation of which ones to go after than just your own channels. So, that's why we got to balance the boat and distribute our advocacy spend dollars across both your own channels and your earned channels. And, that's really important for you and the flywheel will pay off for you over time from that perspective. >> It will and that seems like a lot of the things that Suzy Irwin was talking about to the audience earlier. That's common sense. Why is it that you see these marketing budgets that are so heavily weighted towards just getting awareness, getting customers acquired, and then not thinking about retention marketing account based marketing. >> I'll tell you why. I think any smart CMO will conceptually agree with you. Nobody's going to say, of course, this is not important for me to get advocacy. The challenge comes in in terms of how that marketing department is measured. What gets measured gets funding at the end of the day. >> Lisa: That's a good point. >> And, reality is a lot of these B2B companies are still measuring marketing based on, what's the pipeline you're driving and what's at the top of the funnel metrics that you're driving? In reality, that's a little bit of a skewed thing because then if that's what you're being measured at the board level, at the executive level, then guess what? All your funding is going to go towards that. But, really, the true measurement of marketing, one, is about, yes, you have to get pipeline. You have to influence win rates at the bottom of the funnel and that's where product marketing comes in. But, as importantly, you have to look at the number of brand advocates you create and lifetime value of a customer. >> Yes, CLV, yes. >> And, that's really, really, customer lifetime value is so important because in a SaaS business, ultimately, the Mufasa metric, I'm a Lion King fan. The Mufasa metric is really lifetime value because if a customer stays longer with you, pays you more, and is shouting from the rooftop, then, invariably, that SaaS business is doing well. And, that's why you have to balance the boat in terms of post-advocacies, post-acquisition spend into advocacy, as much as you've done in pre-acquisition. >> When you came into Coupa a couple of years ago, have you been able to shift those budgets because you're able to demonstrate the value that that advocacy piece generates with the flywheel? >> Absolutely and I have a very progressive-thinking CEO who's partners with me on this too. So, we've been absolutely able to do that. In fact, what we're trying to do at the end of the day and most software companies, the real goal should be creating a tribe. In technology, you have to create a tribe to be a titan. And, it's just not about the capability, it's about the community. And, that's really what we're trying to do at Coupa is to create the tribal community feeling. So, if the community is bigger than the brand, it is about the community itself and learning, sharing, and growing with each other and being successful. And, we're just fostering that. So, from that perspective, if you look at this conference and the investment we're making here, some of the programs we're doing in terms of advocacy, what we call spend sellers, etc., is all about that community tribal feeling and go establish that. To use some inspiration from our consumer brands, if you really think about it, people don't buy what they want. People buy what they want to be. So, let me give you what I mean by that. What I want could be a bike. It could be any motorbike, but what I want to be could be part of a very special community and that's why Harley Davidson is successful. What I want could be any stationary bike today, but what I want to be is part of some cool community like Peloton. That's why Peloton is successful. So, similarly for us, what I want could be some spend management software, but what I want to be is part of this community, this cool club, and that's the feeling we're trying to create in the post-acquisition cycle. >> I love that you said that because you talked about that this morning and I loved how you had the word community on the slide and then broke that out into communication unity. And, one of the senses that I got yesterday when-- >> Chandar: Rob was talking about it. >> Yeah, when Rob kicked off everything is this is a very collaborative community. We think about that in terms in terms even like a developer community or something like that. But, Coupa is now managing $1.2 trillion of spend through the platform that every other business that's using Coupa gets to benefit from. It's customer-centric, it's supplier-centric, but it's about applying the right technologies, AI, machine learning, to all this data, so everybody benefits. >> That's right and one of the interesting aspects of community building is one aspect of community building is that Marc Benioff had a great, evangelistic marketing was a way of community building. He would come in and really evangelize and this is where we're going and you all need to come with us. When I was at Marketo, it was interesting. Community building was through more educational marketing and doing it through this, I'm going to educate you through though leadership. Another good way of community building is through product intelligence, which is community intelligence. So, collectively, the sum of all parts are smarter than the parts themselves. And, Rob has a great line, which says, "None of us is as smart as all of us." And, the fundamental community intelligence offering is based on this first principle. So, example, if I'm the community of Coupa customers, the next customer is smarter than the previous customer because the collective intelligence grew, which means I can then go benchmark it myself. I gave an example this morning of USO, the company that provides services to the United States troops. And, when Rick Quaintance at USO benchmarked himself using community intelligence, versus the rest of the community, he realizes that his invoice cycle times are seven times lower. So, that kind of intelligence is extremely beneficial and invaluable to companies. So, that's the value of the community, is providing the collective intelligence. Waze is a great consumer example. Those of us who use Waze for traffic know that it's all community driven and each one of us is smarter because we're collectively using it. It's the same concept in applying that to B2B software. >> So, as we see, you mentioned the over 80% of the buying decision is self-directed whether we're buying a car or Coupa software. Did Coupa foresee that in the last decade to see we're going to have to go to a more community-driven collaboration because the consumer of any thing, any product or service, is going to be so empowered 'cause that's a part of the Coupa foundation. >> It is. >> Lisa: Which, we don't see a lot in companies that are 10 plus years old. >> Yeah, and credit to Rob for his vision for this. It's because I think early part of the company, he wrote into the contracts that the company can benefit. Collectively, every company can benefit by being part of this community. And, the fact is data's aggregated, abstracted, there's no information that is sensitive, etc. But, the fact is we all can collectively benefit through it. That was a great vision of Rob and early people and that's benefited us because the benefit is really over scale and time. Now, your $1.2 trillion, it is really statistically significant in each different industry to get that intelligence. And, that is one of the other reasons we launched our business spend index. It's called spendindex.com. Where we can use the billions of dollars spent in the community to provide a leading indicator of economic growth based on current business spend sentiment. You think of ADP as this payroll, it's called ADP payroll thing that comes out and the gross domestic product report comes out. Those tend to be rear-view mirror lagging indicators. But, as we're using community-based intelligence to provide a windshield, a leading indicator of where the economy is going. So, there's so many different use cases. Benefiting based on spend you're doing as well as where the economy is going and all this is based on the intelligence. >> It's so powerful because, to your point, you're not looking behind. >> Chandar: It's the windshield. >> Exactly, able to be looking forward. So, with all the announcements and the great things that have come out with the AWS expansion, what you guys are doing with Coupa Pay. I was shocked to learn the percentages of businesses that are still writing paper checks. Or, the fact that a lot of companies have 10 plus banks that they're working with. There's still so much manual processes. You must just be, the future is so bright, you got to wear shades with Coupa. But, what excites you about what you guys have announced the last coupe of days and the feedback that you're hearing from your tribe? >> I think there's two kinds of things. One is continue to set the innovation agenda for the industry. And, really, you have to look at every customer on their unique journey of maturity and maturation, so we have a very thoughtful, what we call, maturity index, The business spend management index. Whereas, you are seeing some of these customers, for example, you mentioned, may be in the first stage of this maturity, where, for them, it's just getting automation and going from paper to paperless could be the first step. But, some other customers might say, "I've gotten there, "but I want to get the next level of sophistication "to orchestrate these business spend processes." So, what's exciting for us in the feedback is we're creating product capability across this maturation journey for our customers to make them successful at each of those places. And, Coupa Pay is one example of that. Whereas, some of the other pieces we talked about, we announced about some of the community offerings that we did also is on that. So, that's one exciting piece. The other exciting piece that customers tell us at this conference is, "Foster platforms for us "to engage with each other, learn from each other, "share from each other, and grow with each other." So, even stuff that Rob talked about, which is sourced together. This concept of customers coming together to drive a sourcing process and, again, the collective intelligence in the community, that, we're getting very, very positive feedback from that perspective. And, ultimately, Rob has a really good saying that, "It is not about customer satisfaction. "It is about customer success." That's a delineation there. A customer could be very satisfied with you, but they may not be necessarily successful. And, we say, it's not about satisfaction. It's about success. And, by creating this innovation cycle and then having a post-implementation process that's getting true value, that's truly how we drive customer success. >> And, something that I've heard over and over as I've talked to a number of your customers yesterday and today is how much they're feeling Coupa is listening. Their feedback is being incorporated. They're actually influencing the development of the technology and that was loud and clear the last two days. >> Yeah, I think there is, Rob talked about the number of features that are being influenced by the community and we have these-- >> 300 plus in the last 12 months. >> Yes, 300 plus in the last 12 months. And, there's this concept of two ears, one mouth. And, listen, learn, and innovate and that's the philosophy here. But, it's a right mix of listening to customers, learning from them, and getting the right input from them for driving innovation, as well as having strategic vision on where this market is going and having the right mix of those to provide the capability to customers. >> Wow, you're on a rocket ship. Chandar, it was great to have you on theCUBE. You'll have to come back. >> Yes, Lisa, absolutely, I'll come back and it was a pleasure being here. Awesome. >> Awesome, thank you so much. For Chandar, I'm Lisa Martin and you're watching theCUBE from Coupa Inspire '19. Thanks for watching. (techno music)

>> Live from New York, it's theCUBE, covering AWS Summit New York 2018. Brought to you by Amazon Web Services and its ecosystem partners. >> Hello, welcome back everyone. This is theCUBE live in New York City for AWS Amazon Web Services Summit 2018. I'm John Furrier with Jeff Frick here for wall-to-wall coverage here for the one day event. Our next guest is TK Keanini, distinguished engineer at Cisco. Great to have you on theCUBE. Thanks for joining us today. >> Thanks, great to be here. >> We had some chat on before they came on camera about protocols, deep-packet inspection, networking. I see Cisco now, moving up the stack. I'm sure, back in the day when you were there and recently, that's been the big debate for Sysco of the stack but the cloud has created a whole new stack, right, so a lot of action. Seems like the same movie from a couple generations ago happening out in real time at a much more accelerated rate, welcome to theCube, what's your toughs? >> Thank you so much, yeah, you know, anybody who's been in this business for the last 20-25 years, I always joke and say, you know, same circus, different clowns. You know, it's the same thing again and it's exciting because I mean, you saw the keynote, the people here, everybody's excited about doing develop on this new thing. It's got new economics, new scale, it's definitely got more security, I think, and yeah, we're just really moving aggressively with our customers towards the future. >> You know, TK, I want to get your thoughts 'cause one of the thing we've been saying on theCube, we've been covering Amazon reinvent since 2012, 2013 timeframe and so we've seen the growth but it's always been a developer haven, you know, cloud native, you were born in the cloud, like most startups were back in the day, you had great goodness and then you could become a drop box and be so big you had to do your own data so I get that but for the most part developers check small, medium sized businesses, check now large enterprises, great developers. Now, you're getting clear visibility on operators. So the confluence between operators of networks and infrastructure and IT operations merging together and having some synergy and cohesiveness with developers for applications, new work loads. What's your thoughts on that because this is really becoming the big ah-ha moment where I can now operate now at a level and have a developer haven going on, your thoughts? >> Yeah, no, so I think you heard it in the keynote today, security is everybody's problem, right? And it certainly is the developer's problem, it maybe even starts with the developer. You know, threat actors are clever, you could say that threat actors were the first to go cloud first and they're not ashamed of what they use, they're going to get what they want and so you know, the idea of providing security as a service to those developers is a new thing I will say. Usually I'm building product and service for the security expert. Now, it's this web app developer, right? And their first question to me is "where's the API?", right? "Where's my libraries", right? How can I treat you like I treat storage, like I treat networking? They don't want to grow up and become a networking expert, they just want to have their application scale and so that's the real focus is, understanding the customer and building that service at the highest quality. Much of the expertise, I have to mechanize inside of my algorithms and my machine learning but again, delivering them a service so that they can protect and become incredibly expensive for those threat actors to pursue. >> And the alternative in the old days was provision a lot of hardware, do a lot of configuration management, security audits, meeting, put up a perimeter, now you can create sets of services. >> Yeah, and a lot of automation, right? That's key. Like, you don't have enough people to test. You have to automate your tests. You don't have enough people to read over documents, you have to automate that acquisition. Everything's about augmentation and automation. Security, all aspects of security are following suit. >> Yeah. >> TK, I wonder, you talk a lot about the threat-act revolution, through some other interviews and that's really an recurring theme because it's kind of your way of saying how you have this kind of have this arms race but the other big thing that's happened in the threat act is that it's gone the hacker, maybe trying to cause a disruption to nation states and much more organize. Is that as evolved in the amount of resources that they now have to deploy versus just some stand alone hacker? Have have you seen that evolve, what are some of the responses? >> Yeah, I still get goosebumps thinking about it. 'Cause back when we started it was more like, you know, we were just sharing a craft, you know. It was a lot like amateur radio, you know? You broke into something, you shared that skill, not anymore. I mean these are real, a nation state, threat actors, criminals and they're running a real business, okay? >> Right. And if you do really good security, you're essentially adding to their cost of operation and they don't like that. So it is really a business against a business. And they think like a business. They're well resourced like a business, they're patient and sometimes you know, in certain cases going after the weak, in some cases they're incredibly targeted, they're coming after you because you are a center of excellence for that sector and it doesn't matter, you know, how high you build the wall. They're going to find a way to go under it (laughs) or go around it or find a way to declare no wall but yeah, it's fun because like I said, instead of waiting for something to fail, like a hard drive or you're just building IT systems for resiliency, in my world, these threat actors are talented. >> Right. Right? So everyday if intervene, I force them to intervene. If they intervene, they force me to intervene. That's funny you say they're running a business, so is that part of your defense is just increasing their cost of goods to hold in a major, major way? >> It really is, you know, we've seen a lot of trends shift. For instance, you know, Ransomware a little while ago, that was a big deal because you know, they'd hold your machine hostage, it'd cost you $200 maybe $300 to get out of it, okay? The problem with that is tomorrow their gig's up, okay? Now the shift has been to cryptomining or cryptojacking. If they compromise your machine and can get a quarter out of that machine just by doing Bitcoin mining, they will essentially make 25 cents tomorrow, so they've shifted to a recurring revenue stream, okay? This is important, okay? >> Right, right. >> Because tomorrow and the next day and the next day, they're still undetected, okay? And when I say about raising their cost of operations if you can find that cryptomining on your network, no matter where your network is and shut them down, you've just taken a little bit away from their recurring revenue stream, right? And that's the dynamics we're facing daily. >> Disruption is key. Making it complex and keeping disruption. >> Having more visibility than they do, having more detection than they do and basically knowing yourself better than they do. >> Right. >> Is absolutely critical. >> I want to hear your thoughts, TK, on a couple things. One observation is you know, during the Snowden era, you know, the mainstream population and world whether it's capital markets or IT, didn't talk much about "metadata", but then after Snowden, "metadata" became a big thing and we now know what metadata is and now obviously with the Russian involvement in the election, spearfishing is now, I mean its been out there, but you're seeing specifically what was done there with spearfishing, so easy to pull off. >> Yeah. >> How are we getting better at detecting, preventing, against the humans who just think oh hey, a job offer for you, or a real elegant bait and certainly with mobile, doesn't have that DNS visibility, mobile makes it easier to do some spearfishing. Spearfishing is a big deal. >> Yeah. >> Your thoughts on it? >> Yeah, and that's again, that big trend in shift is a long time ago, you know, we built security systems to watch for people breaking into networks. Today, the threat actors are logging into your network 'cause they've already gotten your credentials through some means, okay? So how do you detect somebody who's actually impersonating you on the network? The same sort of security bells are not going to ring. And this applies for a cloud or on pram, or anything. >> Right, right. >> It's the same game and really, you know, being able to do that detection from the telemetry that comes native from then environment is critical. >> And so really just more analytics, more telemetry, more instrumentation? >> It's not about the data, it really is about the analytics. I mean, yes the telemetry has to be necessary and sufficient but the analytical outcome has to be pointed at exactly that, you are trying to detect fraud, you are trying to detect. You know, it's like in the old days, if I gave you my general ledger, right, and you were an accountant, you would just be looking for errors. Okay, that's fine for operation but say you're trying to cath a crook. I hand you that same general ledger, you're going to come at it with a different pair of eyes. >> Right. >> A different mental model. You're trying to find the crook. >> Right. >> Who is actively hiding from you. That's the type of analytics we're focused on. >> So this is interesting, talk about machine learning, and AI could be assist you mention, automation, Stealthwatch Cloud is something that you've mentioned. What is that, what's going on around there, how do you get that lens to be turned on quickly in context? 'Cause real time is about contextual relevance. >> That's right. >> At any given moment you've got to be ready alert and looking for things. >> So the beauty of AWS is they can deploy in any one way. You can have your virtual servers, you can have the containerized, or you can be serverless. That's the thing, the cool kids are doing serverless, okay? >> Right, right. >> You have to provide the same level of threat analytics for all three, no matter what. The good news is, it's not about not having the data. AWS gives you a rich set of telemetry from many, many sources. What we do is first synthesize all that together, run our analytics on it and point out where you may be exposed or there are threat activities that's either, maybe even from the inside, not necessarily from the outside, you know, in your Snowden account but there's anonymous activity that requires attention. All of those things, all that developer wants to do is make sure that they you know, delivered to their customers. Business continuity. >> Right, right, yeah. >> They're not interested in security. >> TK, I've got to ask you the question around security around you know, can you see the papers, so you know, Pat Gelsinger, Cube alumni, now CEO of VMware, said on theCube, Dave Vellante co-host theCube, asked him years ago "is security a do-over with the cloud?". This was back when the cloud was being poo-pood as a security mod, oh it's not secure in the cloud, now it's looking damn good, right, so. >> And now it's more secure, I think, yeah. >> Now it's more secure, and yeah, that's pretty clear. >> Yeah. >> So there's a chance for people to get a mulligan, get a re-do, to rethink security. How do you engage conversations and how do you advise friends, colleagues, customers around if there's a chance to do security over, with a no-perimeter model, with a API microservices centric view. Whats the strategy, what's the architecture, what's the approach? >> Yeah, you know, I don't know, there's a couple of cases, it's not a one size fits all. We have a lot of successful businesses transitioning and they really can't turn their back on yesterday, you know, they have to bring that transition forward. >> Right. >> So there's that one crowd and they're going to have a different playbook because they have a set of skills and a set of things that are different. On the other end of the extreme, you have businesses that don't know on print, I mean, honestly, they were born in the cloud and their cloud made it. >> Yeah. >> And then you have most of everybody who is in between, you know, hybrid, multi-cloud, they're just doing, but functionally they're all trying to achieve the same thing which is, you're trying to get the elastic economics, you're tying to get parts of their business that elastic to that elastic compute, right? But all-in-all, the treat actor doesn't care whether they come in through your mobile device or through that cloud workload, they're after something very specific, which is, there's something in your organization, in your digital business that they want. >> So a couple of thing I want to follow up with. One is kind of the changing world of identity and security because of firewalls and you know, the walls have got to come down, they've got a lot of holes in them. You know, so much more focus on who are you? But to your point, oftentimes they're coming in as you, so the identity maybe not necessarily is a great way. >> That's right. >> Then you've got this other thing which is basically pattern detection, right, and online detection, right and we hear over and over that the average time to know that you've been breached is months and many, many days. So, how are you kind of factoring in those two things to do a better job? >> Yeah, and it is accretive, meaning there are net new ways of establishing identity. For instance, you know, if this thing is acting like a printer and its acted like a printer for the last ten years and one day that device gets up and starts checking out source code, that's a problem, (laughs) right? Okay, so there's all these sort of things around novelty and around the dimensions of novelty. It may be a volumetric novelty, it might be a protocol novelty, in serverless, I'll give you an example with serverless. We treat serverless as a first-class object, as if it actually was persistent and if it makes a very novel API call that it never did before, I think you should probably know about that. >> Yeah. >> If it starts to exfiltrate 20 gigs of data and never did that before, you probably should take a look at that, right? And these are all things from a DevOps standpoint, they want to know first, certainly. You know, there really is no excuse in cloud for you to be like "oh, I wouldn't have been able to know that", no, you can, 'cause it's all there. >> Right, right. >> And microservices in containers provide great value here. >> Incredible value, incredible value. And just again, that dynamic nature of that orchestration, you know, that orchestration brought us to basically a way where, you know, me as a developer, I used to know exactly where I was going to run and how long I was going to run and everything. I have no idea where my code runs anymore, right? And that's the case here and so security takes a completely different turn there because a lot of things that in your analytics were things that you needed to persist, those things are gone, everything's ephemeral now. So what if I wanted to run a report for ten years? Like what in that ten years stayed the same? Probably nothing, okay? So you actually have to use a lot of algorithms to say that heres a composite type of set of data features and if these things persist over time, it's kind of like the way humans work. >> Right, right. >> TK, great to have you on theCube, thanks for joining us, thanks for sharing your insight. Real quick, you're giving a talk for Cisco here? >> Yep. >> Which you're doing in a, working the hallway, give an update. >> Come join me at five o'clock, I think, it's going to be on self-launched clouds, so it will be a great talk. >> Self-launched cloud, again, thanks for coming out to Cisco Systems. >> Alright, thanks. >> And of course we're covering all the Cisco action at DevNet and Cisco Live just recently and DevNet create the cloud native portions of Cisco, and we're going to dissect TK here on theCube. Breaking it down, I'm John Furrier with Jeff Frick, stay with us, we'll be right back.

(electronic music) >> Host: Live from Midtown Manhattan it's The Cube! Covering Big Data New York City 2017, brought to you by Silicon Angle Media, and its Ecosystem sponsors. >> Okay, welcome back everyone. We are here live, The Cube in New York City for Big Data NYC, this is our fifth year, doing our own event, not with O'Reilly or Cloud Era at Strata Data, which as Hadoop World, Strata Conference, Strata Hadoop, now called Strata Data, probably called Strata AI next year, we're The Cube every year, bringing you all the great data, and what's going on. Entrepreneurs, VCs, thought leaders, we interview them and bring that to you. I'm John Furrier with our next guest, Greg Sands, who's the managing director and founder of Costa Nova ventures in Palo Alto, started out as an entrepreneur himself, then single shingle out there, now he's a big VC firm on a third fund. >> On the third fund. >> Third fund. How much in that fund? >> 175 million dollar fund. >> So now you're a big firm now, congratulations, and really great to see your success. >> Thanks very much. I mean, we're still very much an early stage boutique focused on companies that change the way the world does business, but it is the case that we have a bigger team and a bigger fund, to go do the same thing. >> Well you've been great to work with, I've been following you, we've known each other for a while, watched you left Sir Hill and start Costanova, but what's interesting is that, I can kind of joke and kid you, the VC inside joke about being a big firm, because I know you want to be small, and like to be small, help entrepreneurs, that's your thing. But it's really not a big firm, it's a few partners, but a lot of people helping companies, that's your ethos, that's what you're all about at your firm. Take a minute to just share with the folks the kinds of things you do and how you get involved in companies, you're hands on, you roll up your sleeves. You get out of the way at the right time, you help when you can, share your ethos. >> Yeah, absolutely so the way we think of it is, combining the craft of old school venture capital, with a modern operating team, and so since most founder these days are product-oriented, our job is to think like product people, not think like investors. So we think like product people, we do product level analysis, we do customer discovery, we do, we go ride along on sales calls when we're making investment decisions. And then we do the things that great venture capitalists have done for years, and so for example, at Alatian, who I know has been on the show today, we were able to incubate them in our office for a year, I had many conversations with Sathien after he'd sold the first two or three customers. Okay, who's the next person we hire? Who isn't a founder? Who's going to go out and sell? What does that person look like? Do you go straight to a VP? Or do you hire an individual contributor? Do you hire someone for domain, or do you hire someone for talent? And that's the thing that we love doing. Now we've actually built out an operating team so marketing partner, Martino Alcenco, and Jim Wilson as a sales partner, to really help turn that into a program, so that they can, we can take these founders who find product market fit, and say, how do we help you build the right sales process and marketing process, sales team and marketing team, for your company, your customer, your product? >> Well it's interesting since you mention old school venture capital, I'll get into some of the dynamics that are going on in Silicon valley, but it's important to bring that forward, because now with cloud you can get to critical mass on the fly wheel, on economics, you can see the visibility faster now. >> Greg: Absolutely. >> So the game of the old school venture capitalist is all the same, how do you get to cruising altitude, whatever metaphor you want to use, the key was getting there, and sometimes it took a couple of rounds, but now you can get these companies with five million, maybe $10 million funding, they can have unit economics visibility, scales insight, then the scale game comes in, so that seems to be the secret trick right now in venture is, don't overspend, keep the valuation in range and allows you to look for multiple exits potentially, or growth. Talk about that dynamic, because this is like, I call it the hour glass. You get through the hour glass, everyone's down here, but if you can sneak through and get the visibility on the economics, then you grow quickly. >> Absolutely. I mean, it's exactly right an I haven't heard the hour glass metaphor before but I like it. You want to basically get through the narrows of product market fit and the beginnings of scalable sales and marketing. You don't need to know all the answers, but you can do that in a capital-efficient way, building really solid foundations for future explosive growth, look, everybody loves fast growth and big markets, and being grown into. But the number of people who basically don't build those foundations and then say, go big or go home! And they take a ton of money, and they go spend all the money, doing things that just fundamentally don't work, and they blow themselves up. >> Well this is the hourglass problem. You have, once you get through that unique economics, then you have true scale, and value will increase. Everybody wins there so it's about getting through that, and you can get through it fast with good mentoring, but here's the challenge that entrepreneurs fall into the trap. I call it the, I think I made it trap. And what happens is they think they're on the other side of the hourglass, but they still haven't even gone through the straight and narrow yet, and they don't know it. And what they do is they over fund and implode. That seems to be a major trap I see a lot of entrepreneurs fall into, while I got a 50 million pre on my B round, or some monster valuation, and they get way too much cash, and they're behaving as if they're scaling, and they haven't even nailed it yet. >> Well, I think that's right. So there's certainly, there are stages of product market fit, and so I think people hit that first stage, and they say, oh I've got it. And they try to explode out of the gates. And we, in fact I know one good example of somebody saying, hey, by the way, we're doing great in field sales, and our investors want us to go really fast, so we are going to go inside and we, my job was to hire 50 inside people, without ever having tried it. And so we always preach crawl, walk, run, right? Hire a couple, see how it works. Right, in a new channel. Or a new category, or an adjacent space, and I think that it's helpful to have an investor who has seen the whole picture to say, yeah, I know it looks like light at the end of the tunnel, but see how it's a relatively small dot? You still got to go a little farther, and then the other thing I say is, look, don't build your company to feed your venture capitalist ego. Right? People do these big rounds of big valuations, and the big dog investors say, go, go, go! But, you're the CEO. Your job is analyze the data. >> John: You can find during the day (laughs). >> And say, you know, given what we know, how fast should we go? Which investments should we make? And you've got to own that. And I think sometimes our job is just to be the pulling guard and clear space for the CEO to make good decisions. >> So you know I'm a big fan, so my bias is pretty much out there, love what you guys are doing. Tim Carr is a Pivot North doing the same thing. Really adding value, getting down and dirty, but the question that entrepreneurs always ask me and talk privately, not about you, but in general, I don't want the VC to get in the way. I want them, I don't want them to preach to me, I don't want too many know-it-alls on my board, I want added value, but again, I don't want the preaching, I don't want them to get in the way, 'cause that's the fear. I'm not saying the same about VCs in general, but that's kind of the mentality of an entrepreneur. I want someone who's going to help me, be in the boat with me, but not be in my way. How do you address that concern to the founders who think, not think like that, but might have a fear. >> Well, by the way, I think it's a legitimate fear, and I think it actually is uncorrelated with added value, right? I think the idea that the board has certain responsibilities, and management has certain responsibilities, is incredibly important. And I think, I can speak for myself in saying, I'm quite conscious of not crossing that line, I think you talk. >> John: You got to build a return, that's the thing. >> But ultimately I would say to an entrepreneur, I'd just say, hey look, call references. And by the way, here are 30 names and phone numbers, and call any one of them, because I think that people who are, so a venture capital know-it-all, in the board room, telling CEOs what to do, destroys value. It's sand in the gears, and it's bad for the company. >> Absolutely, I agree 100% >> And some of my, when I talk about being a pulling guard for the CEO, that's what I'm talking about, which is blocking people who are destructive. >> And rolling the block for a touchdown, kind of use the metaphor. Adding value, that's the key, and that's why I wanted to get that out there because most guys don't get that nuance, and entrepreneurs, especially the younger ones. So it's good and important. Okay, let's talk about culture, obviously in Silicon Valley, I get, reading this morning in the Wymo guy, and they're writing it, that's the Silicon Valley, that's not crazy, there's a lot of great people in Silicon Valley, you're one of them. The culture's certainly an innovative culture, there's been some things in the press, inclusion and diversity, obviously is super important. This whole brogrammer thing that's been kind of kicked around. How are you dealing with all that? Because, you know, this is a cultural shift, but I think it's being made out more than it really is, but there's still our core issues, your thoughts on the whole inclusion and diversity, and this whole brogrammer blowback thing. >> Yeah, well so I think, so first of all, really important issues, glad we're talking about them, and we all need to get better. And to me the question for us has been, what role do we play? And because I would say it is a relatively small subset of the tech industry, and the venture capital industry. At the same time the behavior of that has become public is appalling. It's appalling and totally unacceptable, and so the question is, okay, how can we be a part of the stand-up part of the ecosystem, and some of which is calling things out when we see them. Though frankly we work with and hang out with people and we don't see them that often, and then part of which is, how do we find a couple of ways to contribute meaningfully? So for example this summer we ran what we called the Costanova Access Fellowship, intentionally, trying to provide first opportunity and venture capital for people who traditionally haven't had as much access. We created an event in the spring called, Seat at the Table, really, particularly around women in the tech industry, and it went so well that we're running it in New York on October 19th, so if you're a woman in tech in New York, we'd love to see you then. And we're just trying to figure-- >> You're doing it in an authentic way though, you're not really doing it from a promotional standpoint. It's legit. >> Yeah, we're just trying to do, you know, pick off a couple of things that we can do, so that we can be on the side of the good guys. >> So I guess what you're saying is just have high integrity, and be part of the solution not part of the problem. >> That's right, and by the way, both of these initiatives were ones that were kicked off in late 2016, so it's not a reaction to things like binary capital, and the problems at uper, both of which are appalling. >> Self-awareness is critical. Let's get back to the nuts and bolts of the real reason why I wanted you to come on, one was to find out how much money you have to spend for the entrepreneurs that are watching. Give us the update on the last fund, so you got a new fund that you just closed, the new fund, fund three. You have your other funds that are still out there, and some funds reserved, which, what's the number amount, how much are you writing checks for? Give the whole thesis. >> Absoluteley. So we're an early stage investor, so we lead series A and seed financing companies that change the way the world does business, so up and down the stack, a business-facing software, data-driven applications. Machine-learning and AI driven applications. >> John: But the filter is changing the way the world works? >> The way, yes, but in particularly the way the world does business. You can think of it as a business-facing software stack. We're not social media investors, it's not what we know, it's not what we're good at. And it includes security and management, and the data stack and-- >> Joe: Enterprise and emerging tech. >> That's right. And the-- >> And every crazy idea in between. >> That's right. (laughs) Absolutely, and so we're participate in or leave seed financings as most typically are half a million to maybe one and a quarter, and we'll lead series A financing, small ones might be two or two and a half million dollars at the outer edge is probably a six million dollar check. We were just opening up in the next couple of days, a thousand square feet of incubation space at world headquarters at Palo Alto. >> John: Nice. >> So Alation, Acme Ticketing and Zen IQ are companies that we invested in. >> Joe: What location is this going to be at? >> That's, near the Fills in downtown Palo Alto, 164 staff, and those three companies are ones where we effectively invested at formation and incubated it for a year, we love doing that. >> At the hangout at Philsmore and get the data. And so you got some funds, what else do you have going on? 175 million? >> So one was a $100 million fund, and then fund two was $135 million fund, and the last investment of fund two which we announced about three weeks ago was called Roadster, so it's ecommerce enablement for the modern dealerships. So Omnichannel and Mobile First infrastructure for auto-dealers. We have already closed, and had the first board meeting for the first new investment of fund three, which isn't yet announced, but in the land of computer vision and deep learning, so a couple of the subjects that we care deeply about, and spend a lot of time thinking about. >> And the average check size for the A round again, seed and A, what do you know about the? The lowest and highest? >> The average for the seed is half a million to one and a quarter, and probably average for a series A is four or five. >> And you'll lead As. >> And we will lead As. >> Okay great. What's the coolest thing you're working on right now that gets you excited? It doesn't have to be a portfolio company, but the research you're doing, thing, tires you're kicking, in subjects, or domains? >> You know, so honestly, one of the great benefits of the venture capital business is that I get up and my neurons are firing right away every day. And I do think that for example, one of the things that we love is is all of the adulant infrastructure and so we've got our friends at Victor Ops that are in the middle of that space, and the thinking about how the modern programmer works, how everybody-- >> Joe: Is security on your radar? >> Security is very much on our radar, in fact, someone who you should have on your show is Asheesh Guptar, and Casey Ella, so she's just joined Bug Crowd as the CEO and Casey moves over to CTO, and the word Bug Bounty was just entered into the Oxford Dictionary for the first time last week, so that to me is the ultimate in category creation. So security and dev ops tools are among the things that we really like. >> And bounties will become the norm as more and more decentralized apps hit the scene. Are you doing anything on decentralized applications? I'm not saying Blockchain in particular, but Blockchain like apps, distributing computing you're well versed on. >> That's right, well we-- >> Blockchain will have an impact in your area. >> Blockchain will have an impact, we just spent an hour talking about it in the context our off site in Decosona Lodge in Pascadero, it felt like it was important that we go there. And digging into it. I think actually the edge computing is actually more actionable for us right now, given the things that we're, given the things that we're interested in, and we're doing and they, it is just fascinating how compute centralizes and then decentralizes, centralizes and then decentralizes again, and I do think that there are a set of things that are fascinating about what your process at the edge, and what you send back to the core. >> As Pet Gelson here said in the QU, if you're not out in front of that next wave, you're driftwood, a lot of big waves coming in, you've seen a lot of waves, you were part of one that changed the world, Netscape browser, or the business plan for that first project manager, congratulations. Now you're at a whole nother generation. You ready? (laughs) >> Absolutely, I'm totally ready, I'm ready to go. >> Greg Sands here in The Cube in New York City, part of Big Data NYC, more live coverage with The Cube after this short break, thanks for watching. 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>> Narrator: Live from Washington D.C., it's theCUBE covering .conf2017 Brought to you by Splunk. (techno music) >> Well, welcome back to Washington D.C. We're at the Walter Washington Convention Center as we wrap up our coverage here of .conf2017. As Dave Vellante joins me, I'm John Walls here at theCUBE, coming to you live from our nation's capital. Joined by Team AWS here. With us we have rather, Ray Zhu rather, who is a senior product manager at AWS. And Roger Barga, who is the general manager of Amazon Kinesis Services. So gentlemen, thanks for being with us, we appreciate the time. >> Absolutely, thank you for the invitation. >> Dave: Oh, you're welcome. >> You bet. Alright, so let's just jump in. The streaming data thing, right? It's just blowing up. What's inspiring that popularity of the Cloud? What's kind of lit that fire and what's going to keep it burning? >> Yeah, I think over time, I think customers really do realize the value that you can get out of by collecting, analyzing, and reacting to data in real time. Cause that really provides a very differentiated experience to their customers, you know, for example you're able to analyze your user behavior data in real time, provide them with a much more engaging experience, much more relevant content. You're able to diagnosis your service, understand your law of data issues in real time, so that when you have an issue, you can fix that right away. So that really provides a very different customer experience. So I think our customers are realizing the value of real time processing, which is why we think streaming data is gaining more and more popularity. And this is why Cloud is all the good stuff that Cloud can offer and tell the customers. It's highly scalable, so you don't need to worry about if it's going to scale later on when I scale my business. It's a matter of sort of like click of a button. We scale the infrastructure for you and we got all the resource ready for you to go on streaming data. We got super, it's very cost effective, right? So that cause we price at very low. As we keep improving the efficiency of running the service, we reduce our cost structure, we return that back to our customers as a price cut. The third thing which I think is super important is agility, right cause you don't need to set up an infrastructure, install any software, make all the configurations. Starting up a Kinesis Stream is like 15 seconds on the average console, you're done. And it really allows the developers, the customers, to move fast and purely focus their resources and effort on the things that really differentiate their customer experience. >> So very AWS like, we love AWS, we're a customer, it's our favorite Cloud. We'll go on record of saying that, you know? (laughs) We're loyal to you guys. Crowd, our Crowd Chat App runs on it, basically run our whole company on Amazon, where we can. >> Roger: Great. >> In 2013, we got the preview of Kinesis. It was a lot of buzz. It was kind of before the whole streaming meme took over. We were talkin' about real time at the time, but so maybe you can take us through the evolution of Kinesis and where we are today. >> I'd be happy to. You know, when we first built Kinesis Stream, what the company was trying to do, is we had all of the AWS billing and metering records coming from all of our services, our EC2 incidences. This was a lot of data that had to be captured. And the way we were doing it was in batch. We were storing this data in S3 buckets. We were starting large EMR jobs up at the end of day actually to aggregate them by the customer account. So say this was your bill for the end of the day. But we had customers that said actually I'd like to know what I'm spending every hour, every few minutes. And frankly that batch processing wasn't scaling. So we had to innovate and create Kinesis Streams as a real time system that was constantly aggregating all of the billing and metering records that were coming in from our customer's accounts. Totalling them in near real time and we presented our customers with a new experience of billing and insights into their billing and even forecasts of what they were spending at any given time. But we had other teams that immediately looked at Kinesis and said hey, we're dealing with real time streaming data and our customers want it delivered and aggregated and provided, so Cloud watch logs and Cloud watch metrics built on top of us. And this was the start of something which continues to this day. Other services are looking at, and even customers, are looking at a Kinesis Stream and saying, that's a really useful abstraction that we can build a new service, a new experience for our customers. And today we have over a dozen AWS and Amazon retail services that build on top of Kinesis Streams as a fundamental abstraction to offer new experiences and new insights as three events. Cloud watch events, there's a host of services, which underneath Kinesis is running, but they're offering unique value building on top of it. Which is why Kinesis today is considered a foundational service and we can't build an AWS region without Kinesis being there for all these other services to build on top of. So that's been exciting to see that kind of adoption, different uses for this fundamental abstraction called a Kinesis Stream. And you know, it's also, and we can talk later about how it's transforming analytics, which is really exciting as well. >> Well, that's a great topic. I mean, why don't we talk about that. And one of the things that we've noted about AWS, and other Cloud providers, is obviously simplicity and delivering as a service is critical. We all know about the complexity of, for instance, the Hadoop Ecosystem And the challenges that a lot of customers have. Delivering that as a service has dramatically simplified their lives. That's why you see so many people going to the Cloud. We've always predicted that is what happened. Maybe talk about that a little bit. And then we can get into the analytics discussion. >> Yeah, so again, customers are always looking at ways to actually get insights into their data to better support their customers, to better understand what's going on in their business. And of course, Hadoop had managed EMR, had been a great benefit, cause customers could move their developers into the analytics that they want to do and not worry about this undifferentiated heavy lifting of operating these services. And the same is true for Kinesis Streams. But we're seeing customers, and if you stop for a moment and think about this, data never loses it's value. It always has it's historical value for machine learning, for understanding trends over time, but the insights that data has are actually very, very perishable and they can actually turn to zero within an hour if you can't extract those insights. That's the unique area where Kinesis Streams has kept adding value to our customers. Giving 'em the ability to get instant insights into what's going on in their business, their customers, their business processes, so they can take action and improve a customer experience, or capitalize on an opportunity. So what we're seeing and the role, I believe, that streaming data, at large, plays is about giving customers real time insights and then business opportunity to improve how they run their business. >> So. >> Go ahead, please. So who's using it? I mean or what's the if there's a sweet spot or a sweet spot for an industry or vertical to use that, I mean, in terms of whether it's in a minute, an hour, or whatever, what would that be? >> Yeah, so today, I'm really pleased to see, because we have watched this evolution since 2014, but today in virtually every market segment, where data is being continuously generated, we have customers that are actually taking advantage of the real time insights that they can get out of that data virtually every market segment. I'll pick a couple of examples which are kind of fun. One is Amazon Game Studios, near and dear to our heart. Now typically games are written, they're completely developed end to end. They're shipped in a box, made available to customers, and they hope that game and the engagement has the outcome that they want. Amazon Games Studios is actually writing that game in near real time ahead of their customers, so they release a new level of the game. They will actually watch the engagement. They'll look at how customers are dying, surviving, how long they're playing. And is it traveling in the direction they want? They stream all of the multi, all of the game data from their players in real time. And they build dashboards so they can see exactly how game play is going. And if they don't like it or they think they can make an improvement, they'll get right online, change the game itself, and re-deploy the game, so the customer experience is actually, within minutes it's being evolved. Another customer I like to talk about is Hertz Publishing. We all like to read. When Hertz started making the transition of their magazines, Cosmopolitan, Car and Driver, from print to digital form, they instrumented it so they could actually watch how long was a customer reading an article, how were their comments trending in Twitter and in Facebook. So they could actually get a sense of engagement with an article. Whether the article should be rebroadcast to other digital channels, other magazines. Should they change the article? Double down and write a new one. So again, they're engagement and then the business metrics by which they measure engagement and readers, readership have all increased because they have that intimate understanding of what's happening in real time. So again, every market segment, where there's data continuously generated, customers are using this to provide a better experience. >> That phrase undifferentiated heavy lifting we first heard it widely in the tech community in 2012 in Andy Jassy's keynote at Reinvent and it's become sort of a mantra. It probably was one well before that inside of AWS. And often times AWS doesn't talk about TCL but it's not the main reason why people go to the Cloud. You emphasized that a lot. And there's all this debate. Oh a cheaper on prem, oh no, Cloud is cheaper. But this idea of essentially eliminating labor that is doing that non-differentiated heavy lifting is something that you guys have really lived and popularized. We see that labor cost shifting from provisioning luns into other areas, up the stack, if you will. Application, digital business, analytics, et cetera. What are you guys seeing, in terms of how organizations, I mean, there's two types of organizations, right, the Cloud native guys who obviously didn't have the resources, but then enterprises that are bringing their business to the Cloud. Where are they shifting that undifferentiated heavy lifting labor towards? >> To. And they are in fact moving it up stream. We think about it very abstractly. You know, operating servers doesn't really bring any special IP that that company possesses to bear. It is about, you know, just managing servers, managing the software on it, figuring our how to scale. These are problems which we are able to take away. And we've often worked with customers and showed them the value of moving to our managed servers. And the excitement from the leadership, from their customers, is like wonderful. That project we couldn't, we aren't able to fund, if we can just onboard here, onto Kinesis for example, or any one of our managed services, then we can immediately move and get that fund project that we really wanted to fund, it would actually be unique value as move them over to that. So they're actually moving upstream as you said. And they're actually leveraging their unique understanding of their industry, their customer, to go ahead and add value there. So it is a distribution and I think in a very productive way. >> I want to ask about the data pipeline. So one of the values that AWS brings is simplification. When I look, however, at the data pipeline, it's very rich. If I look at the number of data services, Kinesis, Aurora, DYNAMO dv, EBS, S3, Glacier, each of these has a programming interface that is, I use the word primitive not in pejorative way but >> Roger: Yes, yes. >> But a deep level, low level. And so the data pipeline gets increasingly complex. There's probably a benefit of that, because I get access to the primitives, but it increases complexity. First of all, is that a fair assertion on my part? And how are your customers dealing with that? >> Be happy to take that one, yeah? >> Sure. >> Okay. >> Yep, so I think from our perspective all these different capabilities and technologies by customer choice. We build these services because our customers ask for them. And we order a wide variety so that people can choose for the developers who want to have full control over the entire staff, they have access to these lower level services. You know as you mentioned a few, DYNAMO dv, Kinesis Stream, S3, but we also build an abstraction layer on top of these different services. We also have a different set of customers asking for simplicity, just doing a specific type of things. I want you guys to take care of all the complexities, I just want that functionality. The example would be services like Kinesis Files, Kinesis Analytics, which is the abstraction layer we put on top. So for customers who are looking for simplicity, we also have these kind of capability for them. So I think at the end of the day, it's customer choice and demand. That's why we have this rich functionality and capabilities at AWS. >> So you guys have already solved that problem essentially, the one that I was sort of putting forth. >> So I won't say, I like Ray's answer. It's about listening to the customer. Cause in many cases if we would have, if we said, hey, we're going to go build a monolithic service that simplifies this, we would potentially disappoint many other customers. Say actually I really do want to have that low level control. >> Right. >> I'm used to having that. But when we hear customers asking for something which we can then translate to a service, we'll build a new service. And we will actually up level it and actually build a simpler abstraction for a targeted audience. So for us it's all about listening to the customers, build what they want, and if it means that we're going to actually bring two or three of our services together to work in concert for our customer, we'd do that in a heartbeat. >> Yeah that low level control also allows you to be presumably maybe not more agile but more responsive to the market demand. Because if you did build that monolithic service, you would essentially be locking yourselves in to a fossilized set of functions and services that you can't easily respond to market conditions. Is that a fair way to think about it? >> That is a fair statement, because basically our customers can look at these API's and together for these various services, realize how to use these API's in concert to get an end and done. And should we have precise feedback on a specific service, we can add a new API or tailor it over time. So it does give us a great deal of agility in working on these individual services. >> So Ray, you're a product guy and you're talking about listening to customers, right? And coming up with products, it's what you do. What are you hearing now? Where do people want to go now? Because I assume you've been in the market place for four years now with this, evolution is (clears throat), excuse me, perpetual, constant, so where do you want to take it? What's the next level or what's percolating in the back of your mind right now? >> Yeah, I think people always looking for different type of tools that they're familiar with or they want to use to analyze these data in real time and provide a differentiated customer experience. A concrete example I want to give is actually why we're here. At the Splunk Conference is at Kinesis we have a service called Kinesis Firehose. Based on customer demand when we launched Kinesis Streams, customers wanted to make sure they had access to data sooner than they used to do, but they want to use the tools they're familiar with. And apparently there's a diverse set of tools different customers want to use. We started with S3 for data lay, kind of storage, we used Reshift as a data warehouse. And overtime we heard from customers say, hey, we want you to use Splunk analyze the data. But we would like to use Kinesis Firehose and suggest a solution. Can you guys do something about it? So actually the two teams got together. We thought it's a strong customer value proposition, great capability for other customers. So we start this partnership. We're here actually earlier this day, today, we made the announcement actually, Kinesis Firehose is going to support Splunk as data of redestinations. And this integration is not in beta program. It's open for public sign up. Just go to the Kinesis Files website. You can sign up, get early access. So basically from today, you can use Kinesis Firehose in real time streaming (mumbles) service to get real data into your Splunk cluster. We're super excited about it. >> And okay, and I can access those Splunk services through the market place or what's the way in which I bring Splunk to? >> Good question. For this integration actually we're just a different version of Splunk. You can run Splunk on AWS using ECT extensions. You can access through the market place. You can have your, you can use native Splunk Cloud, which manage all the servers for you. You can also use Splunk on print in that regard. >> Okay. What have you guys learned since the orig, the first reinvent? I mean, I think, and again, I don't mean this as a pejorative but AWS is pretty dogmatic in its view of the world as you you are very strict (laughs) about your philosophy. But at the same time, as you learn about the enterprise, you've evolved. What have you learned about enterprise customers in that five, seven year journey of really getting intense with the enterprise? >> Yeah, that's a good question. But again, we're dogmatic about we always listen to our customers. We will never deviate from that. It's part of our culture. And the customers need to tell us where they want to go. And I'll tell you when we first started with Kinesis, just to answer your question, it was about low latency. We want to get that answer really fast, cause our ad tech customers are some of our very early customers, so it really was about that that extremely low latency response. As even our customers have started to look at Kinesis as a fundamental abstraction on which to put all of their business data in and now they're telling their customers well you should, if their IT customers within their company, if you want any business data, attach to the stream and pull it out. So now we're seeing less emphasis on low latency and to end processing, but increase request I want to be able to attach a dozen consumers, because this stream is actually supporting my entire enterprise. I want to have security. So we recently released encryption at rest. Our customers are asking for support for a VPC flow logs, which we hope to be talking with you about very soon. So now it's becoming actually very mainstream to actually, for the enterprise, and they want all the enterprise ready features, all the certifications, Fed Rep, Hippa, et cetera. So now we're actually seeing the Kinesis Stream itself being put into the enterprise as a fundamental building block for how they're going to run their business and how they're going to build their applications within the business. >> So that philosophy, I mean, you are customer driven first and there's a lot a, Andy Jassy says, there's a lot of ways to compete. You can be competitive oriented, but we're customer oriented. And I, it's clear, you guys do that. At the same time, customers sometimes don't know what they want, so you have to be good at decoding. >> Roger: Yes. >> If you listen to all your customers, you know, five years ago, they say, well we're not going to put any data in there. Sensitive data in the Cloud. Now everybody has sort of gotten over that. You said, alright, well we have to make it more secure. We have to get, you know, whatever certified, et cetera, et cetera. There's an art to this, listening to customers, isn't there? >> It gets back to one of our leadership principles of we always work customer backwards. We need to understand what they want, what experience they'd like to have. We have to anchor everything on that. But there is this element of invent and simplify. Because our customers may guess at what a solution is, but let's make sure we really understand what they want, what they need, the constraints under which that solution must offer. Then we go back to our engineering teams and other teams and we invent and simplify on their behalf. And we're not done there. We actually then bring these back to customers and in fact, why we're here today, we've spent two days talking to customers but even before this collaboration with Splunk began, we actually brought customers in and it turned out, their customers were often our customers. So we started talking, what is the problem? And we started with the very clear problem stain. And once both of our teams, we've loved working with Splunk, they work very customer backwards, like we do. And together once we understood this is the problem we are trying to address, and we had no preconception about how we're going to do it, but we worked backwards on what it would take to actually get that experience for our customers. And we're actually here beta testing it. And we're going to have a very aggressive two or three month beta test with customers, did we get it right? And we'll refine as well before we actually release it to the customer. So again, that working with the customer, work customer backwards. But invent and simplify on their behalf. Because many Splunk customers weren't aware of Firehose until we explained it to them as a potential solution. They're like ah, that will do it, thank you. >> So very outcome driven. I mean, I know you guys write press releases before you sometimes launch products. Sort of as you say, that's what you mean by working backwards, right? >> Roger: Yes, yes it is. It really is. >> Ray: You're good listeners. >> So far it's worked. (laughter) >> It's always fun at the company, when somebody says I have a customer, the entire room gets quiet and we all start listening. It's actually fun to see that, because that's the magic word. I have a customer and we all want to listen. What do they want? What are they challenged with? Cause that's where the innovation starts from which is exciting to be part of that. >> It's been a great formula, no doubt about that. >> It has, it has. >> Thank you both for being here. Didn't realize it was a big day. So congratulations >> Thank you. >> on your announcement as well. >> Absolutely. >> Ray, Roger, good to see you. >> It's great talking with you. >> Alright, you're watching theCUBE live here from Washington D.C. .conf2017. (techno music)

>> Announcer: From Palo Alto, California, it's CUBEConversations with John Furrier. >> Welcome back to our special CUBEConversation here in Palo Alto. I'm John Furrier, co-founder of SiliconANGLE Media, and the co-host of theCUBE. We're with Grant Fondo who is an attorney, with Goodwin. Specializes in block chain, Initial Coin Offerings, also known as ICOs. Part two segment we just went over the high-level landscape, but I really want to walk through the playbook of ICO process. Call this the Initial Coin Offering, or ICO-101. Take me through the process, okay? Hypothetically, let's just say we want to do something, we want to have an ICO called "Crowd Coins". Something that we're looking at doing. But let's just walk through that. What's the advice, what's the playbook? Take me through the process. >> Sure. So the first question is, where are you located, and who are you targeting? So what I mean by that is, where is the founding team? Are they in the US? The threshold issue is whether they are in the US or abroad. If they're in the US, and they want to stay in the US, and most don't want to move, so they want to stay in the US, then we talk about, "Okay, you're going to be subject to US regu-- potentially subject to US regulation." And so, the next step on that is, who is your target audience for the token sales? Are you looking to do accredited investors? Are you looking for US people, are you looking for foreign, and who are those target people? So the threshold issue is, as I mentioned before, are you looking for accredited or unaccredited? Most people would rather, they believe in the democratization. >> Accredited over a million dollars of net worth? So it's like a... >> It's essentially a sophisticated-- yes, it's essentially a sophisticated investor. >> And what's the trade-off between the two of those? >> So the trade-off is, if you really want to get a large market, you do the unaccredited route. And that means anybody can participate. Accredited, if it's credited, it's a much more limited, typically from 50 to 100 people, high net worth individuals, there's a paperwork process, it's exemption under their security's rules. Most of the token sales we're seeing are unaccredited, although we're seeing a trend now, too, that people are doing a hybrid of accredited US investors, and unaccredited foreign investors. It's an interesting hybrid that we're seeing. But, so that's the initial threshold. We have many companies that say, "Well, what if we move our operations offshore? What if we open up a company in Switzerland or something like that?" And I think what they don't realize is that if they are trying to seek US money, or they are located in the US, or the money that they raise comes back to the US in some way, that they're going to be subject to US regulations. So simply sticking something offshore doesn't cut it from a regulatory perspective. So that's the first question we ask, is to trying to figure out, "Okay, where are we setting up this entity?" And typically you set up different entities to raise the token sale. >> So what if a company, say, us as an example, already exists, we're a Delaware corporation? Do I have to stand a new company up, or subsidiary? What's the playbook? So there's a clean sheet of paper is a new company, so that's where you start, I get that. But what about a pre-existing companies? >> So if you're a Delaware corporate pre-existing company, sometimes we'll set up a new, like a subsidiary. Sometimes just for typical corporate reasons it's good to set up separate entities. The other issue, threshold issue, is tax issues. We typically advise people to get sophisticated tax advice from CPAs, things like that, Deloitte's one of the players in the space, for example. And that decision then becomes, do you set that entity up in a more tax-friendly venue than the United States? The British Virgin Islands and the Cayman Islands are two of the examples of where these people set these entities up for tax purposes. >> The tax thing seems like it would take time. Does that slow things down, or is it...? It's super important, obviously. >> So, it does. It has a couple components. It slows it down because there's another player involved, you also have the potential transfer of assets and you have to figure out what are the assets that you're going to trade, move from the Delaware corporation, for example, to the Cayman Island corporation? You also have obligations of, you have to go live in the Cayman Islands for a while, which is not a bad thing. >> My wife wants me out of the house, time to go to the Cayman. >> So it's funny, I had a client who said, "Alright, let's set up in the hotel right next to the airport," and I'm like, "If you're in the Cayman Islands, go to the beach. Don't stay at the airport." >> Start scuba-diving. A lot of people would do that. Okay, so, great, so, jurisdiction and corporate structure is the first consideration. >> Yes. >> What's next? >> The next step is related to that, is what type of sale are you doing? Are you doing a token sale or a security sale? And what we mean, and that's a big threshold issue. What we mean by that is, and most of the sales are token sales. But is the token that you're using going to give someone equity in the company? Are they going to get a percentage of the profits from the company? Are they going to be able to control some of the decisions of the company? If so, that looks more like a stock. And so, therefore, it's deemed a security token. That is subject to SEC regulation, and there's a different route. Many people don't go that route, but some do. So, for example, people in real estate transactions where they want to give, use tokens, but they really want to give investors who get a percentage of the real estate profits. They'll go the accredited US investor route. For the other pivot is towards the utility token. Which is the utility token, like an arcade token, it's basically a token that works in the platform, and people use it so that they can transact on your platform, they can play games, they can get content, they can encourage people to find bugs in your software. >> John: So, transactional-type value. >> Transactional, exactly. >> So, smart network, smart contracts assume some sort of marketplace with coins and the currency, right? >> Grant: Exactly. >> Okay, so the next step. The tokens and security and utility, I get that. Okay, make that decision, now what? >> So the next step is, you need to do a white paper. And you need to hire a law firm to help you with the white paper and all the legal, all these different steps. So then we'll take a look at the white paper, and we'll advise them on what their token looks like, if they're trying to do the utility route we'll walk through the different language and things of that nature. We also try to clear it up, make it just a little bit more readable. And then, once they do the white paper, we then, also, help them with the pre-sale documents. Oftentimes they'll do two sales. So it's called a "pre-sale", which is where you give an opportunity for significant purchase, people that you believe will be significant purchases of tokens, and they'll come in and they'll buy a large amount of tokens, let's say $100,000 dollars in tokens, but at a significant discount from the price that will be for a regular token sale. So maybe a 20% discount. >> So once I have my token, security or utility, okay, now I got to go figure out how I'm going to sell this. >> Grant: Yes. >> And that's what we're getting at here. >> Yes. And so, typically you make a decision and do a pre-sale, and you raise a certain amount of money, and then you do the sale, the token sale, about a month later, typically. >> What about allocation of tokens? That comes up a lot. So I'm also thinking, "Okay, is there a structure for X percentage for the development, X percentage to sell, to offer to the community or network, how many stay in the company." we see people keep an allocation for the company, or, between 15 or some higher. So how do you put the pie chart together, or distribution of token? >> One of the things you have to figure out, is this a token that you're going to sell all your tokens right off the gate, except for some of the ones you keep, or do you envision later releasing tokens over time? So some of our token sales, every year, excuse me, token companies, will release tokens over the time to continue to provide tokens to the users. So you have to make that threshold decision. What you typically see, is you see a percentage kept by the company, you see, and it's usually, usually you see 15 to 20%, although I've seen companies up to 90%, and then you'll see a bunch of the tokens issued to the market, and they will tell people through their white paper what they intend to use that money for. Most of the times it's for R&D and development of the platform, and continued maintenance of the platform, but also legal and administrative expenses for that company. One of the big issues that companies face, is where are they in the development of that platform? Ideally, by the time they do the token sale, the platform exists and the tokens can be used immediately. That helps, we talked earlier about, being a security versus a token. That helps in that analysis. If you're building a platform, and you've already got it up and running, that looks more like utility token. If it's going to be a year or two before that platform's available for use, the SEC may say that looks more like a security. >> And a lot of people get flagged in ICOs where it's like, "We're going to see something in late 2018." And so they hope to raise money through the tokens to do development. And it can be like a Kickstarter kind of model there. But it's not legit. I mean, from a product standpoint. I shouldn't say, "not legit". It can be scrutinized. >> I think now, the SEC gave some guidance a couple weeks ago, and I think that in Coin Center, which is a very think tank in this area, they issued a spreadsheet, essentially, that talks about when are you more a token versus security. And I think that's an issue. I think, especially going forward, companies, if they can, are better off having a platform up and running by the time they issue the tokens. >> Okay, so next question is, okay, great, now I'm rockin' and rollin', now I got to do some blocking and tackling. I need a white paper, I got to have a website, what are the minimum viable elements that need to be in market for an ICO? Obviously a website. What are the elements there? >> One is the white paper, which we talked about. You also, as part of that white paper, you want to make sure you are conscious that this is a white paper that has to live and breathe potentially years, and so you want to be honest and forthcoming, and also give yourself some flexibility. But the other thing is, not every company is a super-sophisticated smart contract company. And so they'll often hire vendors to do that. >> John: Do the white paper. >> No, not to do the white paper, sorry, to do the actual smart contracts to set up the token sales. Those companies will also assist with the white paper, just like we do, but their primary platform, or purpose, is to help launch the smart contracts. You'll also have marketing companies that will assist with marketing the token sales, so that more of the community knows about your business, and that there's a platform out there and that hopefully that's a platform that you want to use tokens on, and so that's another component. And then, also, the tax advice that I mentioned before. >> Alright, so in that white paper, is also the consideration for who the service providers will be in the process. >> Sometimes. Not always, though. Sometimes it will identify who's going to get, if the service provider, for example, is going to get tokens, but oftentimes you don't see that in there. >> Alright, so white paper, probably an FAQ of some sort, but, again, thinking about this being an evergreen, living document that'll be on the web. It could bite you in the butt, or help you, so be careful, right? So that's what you're saying. Good advice. Okay. Tax considerations. Okay, now I have my tax hat on. Bring in Deloitte, bring in tax guys. What are they talking about? How does that impact the process? >> So, you mentioned the delay before. I think any time that you bring more players in it obviously delays things. But they're important players. All these are important players. And part of what you want to do, is you want to bring them in early, versus waiting, because the tax implications are significant. It takes time to set up foreign entities, it takes time to go live in the Cayman Islands, not the worst time, but it takes time. >> John: What duration in the Cayman Islands would someone have to live? >> I'm not an expert on that, but you're going to spend a couple weeks there, for sure, if not longer, and you're going to have to stay there through the token sale. >> Does the boat get paid as part of the token sale? >> I'll leave it up to you on how you decide to spend that money. >> Okay, so back on the jurisdictional thing, this is important. People, can they do it in the US? >> Yes. >> Yeah, they can. Okay. But how does that impact the process? Is it a tax issue, or is it just, comfort? What's the consideration between a Cayman Islands, foreign makes sense if you have people there, but Caymans would be the alternative to the US companies, right? >> So if you do it in the US, you can still have your operations here, and essentially you can have some people here, but the primary wallet, essentially, entity receiving the money would be in the Cayman Islands. If you decide, and that's really mostly for tax issues. If you decide to forego that, so some companies decide the tax issues are not significant enough that I want to deal with it, setting up a Cayman operation, there's a delay, there's expense, and we'll deal with the US tax issues. And so that's just a business decision. >> And because the tokens are viewed as income? >> Revenue. >> Revenue. >> Grant: It would be viewed as a revenue for the company. >> Okay, so does that mean, if a corporation wants to buy tokens, that's an expense? >> So, it's funny, we haven't had that question asked, and I'm not a tax expert, but yes, I think it would be an expense. >> We'll have to get a referral, get a tax guy in here to answer these questions. The post-ICO issues. Did we get to the ICO? So the next step is, okay, I got my tax considerations, it's time for the ICO. What happens next? Do I ring a bell? Is it a digital bell? What happens? >> It's kind of fun. Most companies, what they do is they put a countdown to when the ICO is about to start, and they usually give a window. And it's typically a two-component thing. One is, if we raise X, so let's just pick a number, $30 million dollars. It's a $30 million dollar X amount of tokens we sold, the token sale will stop at that point. And/or a time limit, so two weeks. We'll have a two week token sale. And so, you'll have the timeline, and they'll actually register for you on their website how much they've raised, how many tokens have been sold, as well as where they are in that timeline. And then the timeline ends either through one of those two mechanisms, and then the token sale is closed. >> And then I'm sure there's a protection issue around protecting the tokens. Can you add some color there? Because there's been rumors that someone raised $34 million dollars and lost it all. They've basically been robbed, digitally, by hackers. Who do you call, then? Better Coin Bureau? >> So we've dealt with that issue, and we can give advice when that happens, but it's a tough issue. Tracking, the FBI, obviously you notify the FBI... >> John: It's a fatal flaw. >> It's a real problem. Typically there are people abroad. So you have to assume it's gone. So one of the immediate things we talk about is security. And some of it is very basic security. And that is, if you are receiving all these Ethereum or Bitcoin or however you're raising it, set up a bunch of different wallets. If you're going to lose money, it's better to lose one out of 10 wallets, or one out of 20 wallets, versus one wallet with all your money there. So some of that is just prudent, in a sense, but I also think you really need to make sure. That's part of why you bring some experts in, if you don't have that inside expertise it's going to make it extraordinarily insecure. >> How do vet the service providers if I'm going to work with the company if I'm an entrepreneur or an entity to deal with the front-end of the first collection? The wallets make sense. You sprinkle it around, it's like digging a hole, or putting mattresses all over your house, so I get that. Who do I deal with on the inbound? Is there a central authority that takes the cash in before it goes to wallets, or it goes right into different wallets? >> That's where we talked about a smart contract vendor will assist you in setting things up so that it goes directly into a wallet. Part of it is just word of mouth. People get referrals, they look for who's done other ICOs. Part of it's reputational. Some of it, too, is when you talk to people, you can figure out, do they really know what they're talking about? Hopefully you have some IT security people on your team, or that at least you can rely on who can really vet, vet these providers and to say, okay, this is a really strong product, and we feel comfortable with that. And you're betting a lot on it, so it's a really important decision. >> John: So you invest in a security resource. >> I think you have to. >> Okay, now ICO is completed, everyone's high-fiving, the clock is ticking, and there's a post, maybe a trickle, or a one-shot opportunity, assuming that trickles is part of the process. What's the post ICO consideration? >> One of the issues is the money, right? So what do you do with it? So this is a pre and post token sale issue. And that is, do you provide employees, or founders, with tokens? And I think the consensus now is that the more you provide tokens for employees and founders it more looks like securities. So there's a tendency for people like advisors who come onto the company, to provide them tokens. I think there's a risk that if you do that, it looks more like securities. So you have to treat that money and that token, especially the tokens, because the company keeps some tokens, too, right? You have to continue to remember that that's a utility token, not a security token. As far as the money goes and what you want to use it for, you have to keep consistent with your mission. So it's just like crowdfunding. If you ask people to donate money to an idea, you can't change that idea. And if you do change that idea, you need to let them know about it. So you have to be very transparent. So there's no such thing as "free money", and I believe that one of the risks with the post-token sales is, some of these companies are not going to make it. And so you want to be very cognizant of that you're doing the right thing, you're making the right decisions. Pretend, in a sense, that it's truly your money, and every dollar that you spend is your own dollar. You want to use it wisely, and you never want to be embarrassed or ashamed or concerned about how you spent that money. >> As long as it's not buying a boat or having a, like on Silicon Valley, renting out Treasure Island and having a big party. Use it wisely, and to the mission of the firm. Okay, so the question I have for you, this comes up a lot is, okay, I get the utility token. That creates value for the currency, you're not selling the appreciation as an investment, it's a transactional component of a smart network with smart contracts, and values the creation and distribution of that value. I get that. If a company wants to do that, they can still have an equity plan, I assume, because you have to assume that that utility is contributing to the value of the overall enterprise itself, the company. That's where the employees would get the stock options in a normal stock option plan. >> Yeah, it's just like any other company. When you raise money, you still have equity. So I think they are generally Delaware corporations that stick with the standard structure. You can give options in the company. There's no concerns with that. >> So you have a coin vehicle going on, and a standard equity program. >> Grant: Yes. Absolutely. >> Okay, so, post-ICO, what else? Cross your fingers and hope you can use the development cash? >> I think, too, and this goes throughout the process from the beginning through the post, which is, be careful how you talk about the token sales. Don't talk about, "We're going to try to increase the value of the tokens." Remember, the token is a utility token. It's an arcade token. It's not a security. >> It's like playing a video game. Pinball Wizard. You pump it in to thing, play your game, and people get value out of that. >> So that's fine. But what you don't want to say, is you don't want to encourage people to continue to trade and buy the token for the purpose of they hope it's going to go up in value and not use the platform. >> Even though everyone's doing that. >> There's some truth to that. There's a little bit of, that's the elephant in the room, a little bit. But there's different ways to do that. As you build your community, as you talk about it and you're excited about your company, and people are. It's a great, it's a fantastic tool, and what's really been fun about it is you're seeing these companies that hadn't thought about the block chain and utility tokens and say, "Wow, this is such a great mechanism to build this huge community, and have all these people participate through these tokens. Setting aside the fund-raising aspect of it, but just this, it's a great mechanism to do this. The democratization of my platform. And I can reach internationally. So focus on that. Don't focus on the value of the token. There's another issue, which is putting them up on exchanges, particularly pre-token sale, I think you need to think twice about trying to connect with an exchange and sticking your tokens up on an exchange. >> John: Why? >> Because it sounds like security again. It sounds like you're trying to develop this market for more people to buy this token to go up in value. Now, it's okay to provide a platform, just like the arcade owner, it's okay if that arcade owner thinks that other people can sell his token for him, or her token for him, that's fine, but you got to be really careful about how you do it. >> So Brave browser, which is obviously utility, has BAT tokens. They're listed, I believe. >> So you can list, yeah and I think, you can list, I think it's just a risk. And I think what you don't want to do, is you don't want to say, "We're listing our tokens and trying to encourage people to buy the tokens." >> So it's optics. It's how you position it. >> It's important. The optics are important. >> So talking about expectations. Can we talk about this in our first segment, but I just wanted to just end this, ICO-101. Went through the process, overall expectations? Any thoughts on that? What people should expect? Duration? Fees? Costs? Is it order or manual, what solar system are they in? Million dollars is it going to cost, is it going to be $20K, how do you engage on fees, and then process timeframe? >> The process depends in part of the company. How far along are they on the white paper, how far along are they on the platform? But setting aside that issue, and more from the legal technical advisor, generally takes two to three months. We're seeing some that are longer. It takes time to put the white paper together, and we proof it and give advice, and then I'll also have some of the other advisers give advice on it. It does take time to set up the tax structure, so if you're doing the Cayman Islands, that's probably a two to three month process for sure. Depends on how much IP you transfer as well, so that can slow things down. >> John: Licensing and agreements. It's like standard legal stuff. There's no fast-track. There's no shortcuts. >> There's no shortcuts. You're bringing in an initial consultant so it takes time to negotiate. So I think safe, you're going to assume at least three months, if not, definitely more. >> Well, the number one question I think here, today, for you, is, who's going to pay for this hour? Who are we going to bill for this? >> Grant: You'll get my bill. >> I appreciate the candid conversation. Thanks for sharing your knowledge, again. This is an expensive hour here on the CUBE. The community is a freebie. Grant, thanks for sharing. You do some great work. I think I'm going to look back on this time in history and say, "Man, glory days, or hell-of-a time." It's going to crash and burn or go big, in my opinion. Great stuff. Grant Fondo. Attorney at Goodwin. Great firm, check him out. Doing great work. 25+ ICOs in the pipeline. Done a bunch of work. New area. Exploring the future of block chain, a lot of disruption, anything that has to do with supply chain, anything that has to do with technology, decentralize concepts in a distributed manner is really the rage. We see this as a game changer. It's SiliconANGLE. I'm John Furrier, thanks for watching.

(upbeat music) >> Hey, welcome back everybody. Jeff Frick here with the Cube. We're having the Cube conversation in our Palo Alto studio. The conference season is taking a little bit of a break, so now we can do interviews in the studio which is a little bit more comfortable situation, and we're really excited to have first time guest Karen Steele. She's the GVP of corporate marketing at Marketo. Karen, welcome. >> Thank you, very happy to be here Jeff. >> Absolutely. So, you are talking about something that I've seen in the research coming up to this about engagement. And right, everybody talks about engagement. What is engagement? People are trying to measure engagement, >> Karen: Yep. >> But then it seems like so many people are still stuck though on the mass broadcasting kind of numbers. The want big numbers which is a very different number than engagement. So You guys are getting really into this. Obviously Marketo a leader in marketing innovation and marketing platform. Is this new? Is it renewed focus? I mean, how do you guys deal with this whole concept of engagement? >> Yeah, so thanks. It's a great opening question because we are passionate about engagement. And in fact, we believe that today, people, human beings want to be engaged with as opposed >> to marketed to. >> Right. >> So our CEO created a vision of this idea called The Engagement Economy. And the idea is that everybody and everyone is connected. Today with the digital transformation happening around us, you can touch people, touch customers anywhere and everywhere throughout their journey. You know, before they buy from you, during the sales process and post sale. So, it's all about creating experience and we think the way to do that is through engagement. >> But it's kind of interesting 'cuz the dichotomy is we're in this Google world, right? And the Google world is, you know, build great engineering, people will come. It's all about the data. It's cookies and where have you been and you know, recommendation engines. And more of this kind of, feels more machine-y And not necessarily engage-y, Which is more of a person to person than necessarily a machine to person. >> Karen: Correct. >> But yet, even the person to person is still supported by and enabled by a lot of this technology. So it's this inter, intertwining of both kind of a person to machine, or machine to person, >> excuse me. >> Yep. >> Versus really connecting with, whether it be the brand, Whether it be a person that represents >> the brand >> Right. >> So how, how do you see this kind of evolving and how can people not get too wrapped up >> in the machine-y part? >> Right. >> And actually build a relationship, another word instead of engagement, with their customers, or even take it another step, with their constituents, if you will? >> Yes. >> And their community, >> even more passionate. >> Yes. Yeah, so I think it's interesting you brought up the machine aspect, 'cuz there's sort of a positive and negative. So if you think about the space we're in, it's called Marketing Automation. And it does feel sort of process oriented and machine-like. But at the end of the day, marketing has always been about the human being and building that relationship. And technology has just simply helped facilitate that and do it through multiple channels like never before. But it still comes down to the marketer's primary role is to connect with, in a personalized way, in an authentic way and create a relationship. A relationship that's going to generate advocacy for the brand, that's going to ultimately generate revenue for their business. So it's really important that engagement is about the human being and it's about how you can create positive experience throughout the lifecycle of the journey. >> Right, it's interesting you say experiences too, 'cuz we've seen a huge shift in into customers wanting really more of an experience or an engagement that's potentially tied to a brand. But you look at great experience marketers like Red Bull, >> Yep. >> To pull one out. >> That you know, buying and drinking a Red Bull, the way they've positioned that in the marketplace is really being part of this really cool thing. It's visually stimulating, it's you know, a lot of >> adrenaline, >> Yes. >> and a lot of cool stuff. And then the other one I always think of is Harley Davidson. And the passion that that community has around that motorcycle. But it's so much more than driving that motorcycle, >> You know? >> Yep. >> It's the open road and it's all the accessories and stuff that they put. You know people brand it on their arm. >> A lot of people. >> Right. >> So, in terms of you know how, how does that translate with newer brands? How do you try to get that type of connection with your customers, hold it, and I think you've mentioned in some of the things I've looked up for the interview you know, really thinking about the lifetime value of the customer as opposed to a transactional relationship? >> Right. >> That's a one time shot. >> Yeah, I mean a lot of the examples you, you just gave are very experiential in terms of the physical aspects of seeing, and feeling, and touching a brand. But a lot of digital marketing is, is not physical. And so you're communicating with people through a lot of channels that that are bits and bytes, and they're not looking somebody in the eye. And so I think being in touch with your brand and the messages you want to deliver. Making sure they're relevant and they carry your brand promise forward, and they connect with what that person wants to hear at exactly the right times. So for us engagement is, is about being smart in terms of reaching the person. If I use a social, or excuse me, a mobile device and that's my preferred way of communicating with you, I want you to reach me through that device, and not try and get me through direct mail or an email campaign. I might not pay attention to any of those things. So having that intelligence about your customer, or your prospect, or your partner, or even your employee is going to give you a better option to engage with them and create that one to one while you're still marketing one to many. >> Right. >> In terms of >> the actual relationship. >> And the other challenge a marketer obviously has too, is, I don't know who said it, we do too many shows. But you know, when it's done well, when suggestive selling is done well and recommendation engines are working well, it's magical. >> Yep. >> Right? >> It's what I want, when I want and it's presented to me. >> Yep. >> If it's done poorly, >> it's creepy, right? >> Yep. >> I don't necessarily >> know that you want to know that that was, you know what I was looking at. And obviously the target example which now is way far in the rear view mirror. But you know just because you have all the data, doesn't mean you can use all the data. And the challenge and the nuance of knowing what to use, when and where. >> Right. >> Well now you have >> so much more, kind of ammunition in >> your quiver if you will. >> Yep. >> Is a whole different type of a challenge. >> Yeah I think it's, it's a good point, and I think you're right. You don't want it to feel like big brother and somebody's following or stalking you, that's the last thing you want. But I think paying attention to the response, paying attention to a personalized message, testing that message, seeing what comes back, and helping execute the next thing that you do. And so there's sort of a fine line, but I definitely think the marketers are using the analytics today and it's just getting smarter and smarter. And we're going to talk about adaptive coming up here, >> I hope? >> Right, right. >> And you know, the big buzz right now which is AI, you know, what does AI mean for engagement? And we have some ideas around that >> as well. >> Right. >> Okay, so you broke it down to >> the big threes >> Yep. >> of the engagement economy. So the art of story telling. >> Karen: Yep. >> Adaptive engagement, >> as you just mentioned. >> Yep. >> And then advocacy. >> Karen: Yep. >> Which you talked about earlier before. So let's, let's kind of touch base on each one of those >> things. >> Great. >> How do you define 'em? Why are they important? So start out with the story telling. >> Yeah so it comes back to what we've already been talking about, which is the one to one relationship. Understanding who you're talking to. Crafting a message that, that resonates. Having that message be front and central to what your brand value is. You know, we are more prone to buy from somebody if we value their brand. You might make choices and pay a price premium if you care about a brand or how a brand interacts with you. So crafting the art of story telling is the right message, making sure it resonates, understanding your audience, and connecting it to the brand so you can make that >> emotional connection. >> Right, right. >> So how do you >> So, done, done well, >> you can do a very good job. >> Right, and it's always interesting to me, I always think, I watch sports on TV, right? I always think of the poor guy that just got assigned, I got to do a car commercial. Like, how many car commercials have been created up till now? And I got to think of a new one. >> Right. >> But, >> But you know, kind of traditional, kind of high end TV broadcast commercials are really story telling. I mean, some of them are fascinating what they can actually convey in a 30 second >> ad. >> Right. >> Or whether it's a Coke commercial and makes you cry at the end. So that, that, and that format has, has pretty well developed. But how are you seeing it translated into all these various digital formats and really short engagements, or it's a Snapchat, or it's (snaps fingers) you know a quick hit on Instagram, or it's a Facebook post. >> Karen: Yep. >> How are you seeing some of that story telling evolve into these different kind of communication mediums, if you will? >> Yep. >> And, and you >> you have so many that you have >> to >> Right. >> Jeff: to manage, right? A huge challenge. >> Yeah, and again, I think it's the authenticity as I said, but also the personalized nature of it. I want to deliver a message that matters to you. Where you want to receive that message. I might want to deliver something different to somebody else through an entirely different channel. So, but crafting the story, having the story be based on what you stand for as a brand, and the value for that customer, or whoever the message is, you're attempting to land it on >> Right. >> is still foundational and fundamental. And I think that a lot of the marketing, because technology's automated so much, we've lost a little bit of the art of the story. And really making the story connect back to you as a brand so you deliver the best message to your customer. >> Right. So that kind of feeds into your second one which you described as adaptive engagement. Which I presume is situational, contextual. >> Correct. >> That defines the how, the when, the where, the why. >> Yeah. Yeah, and I think in terms of our vision, so yes it is about delivering the right message, at the right time, to the right person to get the response you want. That's sort of the basics of adaptive and being able to do that very flexibly with technology. But when we think about adaptive and the next generation of it, we think about the impact that AI will have on engagement or marketing. So imagine a marketer today could say to their engagement platform, let's say the Marketo engagement platform, "I want to understand an outcome "and the best way to go about it. "I want to know how I can increase sales "in a particular region, in a particular quarter." And the engagement platform, based on that outcome that I want, will help determine what the right campaign is, what creative elements you put in that campaign based on the assets you've created, and importantly, who you target. And what is the audience? And think of almost just creating that outcome, having the platform deliver that whole experience when you push a button. And that entire campaign gets executed. >> Right, right. >> So that, I think is the future of adaptive. >> Because you'll be able to run you know, A/B test is probably not a very accurate description, >> right? >> Right. >> 'Cuz it's a multi, much more multivariate test that you can run and really >> start to optimize >> Right. >> for a much tighter group of attributes of your customer. >> Than >> Right. >> you ever could >> Yeah, and we >> in the past. >> Jeff: Or try to think of every kind of variable. >> And we do that today, but I think, I think now what we're saying is the marketer's going to truly be in the power seat where they can say not just, "Here's two ideas, test one against the other." It's basically, here's the outcome I want. >> Jeff: Right. >> Tell me exactly the best way to put that message out. What channel it should go through, who it should be delivered to, and run it. And so I think that's going to be the future of adaptive. >> Interesting. And then the third A, that you have, of engagement economy is advocacy. >> Heart and soul of any brand strategy. You know customers, loyal customers, are great customers and you want to create advocacy and relationships. I think when companies talk about advocacy, they talk about "I want a customer reference. "I want somebody who's going to approve a customer story "or a quote in a press release." We go far beyond that when we think about advocacy. We want customers that are going to partner with other customers and make the community around us better. >> And so, >> Right. >> they're speaking on behalf of our brand, Marketo, but they're also making our brand stronger and the relationships they're creating around Marketo. So we have a program called Purple Select, which has about 1200 customers, that every single day you know, we're putting challenges forward for them. We're offering them places to go, you know, generate conversations in community. And as a result they give stuff back to us. >> And they >> Right, right. >> make things available to us that otherwise wouldn't be. >> It's really kind of analogous to open source, right? The fact that you know >> all the smartest people >> Yep. >> in the world, don't happen to reside in your four walls. >> And >> Yep. >> you know, if you can use your product service offering platform, store, as a basis point for an engaged community to engage around, through, with. >> Correct. >> You know, >> you get you know, one plus one makes three, or ten for that, so huge. >> Absolutely. >> Huge kind of shift in, in thinking to really kind of open it up and to share and be collaborative and find out what other people >> are doing. >> And let, >> I think that's a great point. And let the advocates be your heroes. Let them advance their careers based on learning your technology, participating in your community and taking you know, their businesses forward in terms of success from a marketing standpoint. >> So I'm just curious in terms of the holy grail of measuring engagement. You know, kind of your thoughts on that. I mean there are obviously engagement measures out there. >> Karen: Right. >> How do you, you know, what are some of the things you look at to measure engagement. Or that you tell people they should look at to measure engagement. And how do you see engagement as a metric, as an actionable metric kind of evolving? Now that we have so many more potential touchpoints, >> datapoints, >> Right. >> other ways to measure. >> Yeah, so I think in the traditional marketing automation world, which we have played a big part in over the years, the true measurement has always been about pipeline. >> 'Cuz you're >> Right. >> you're doing campaigns to generate revenue for your business. I don't think that goes away, but it gets extended to across the entire lifecycle. So it's not just new customer acquisition. It's up-sell, it's cross-sell, it's renewals if you're in a softwares as service business. So it's lifetime value, not just revenue. >> Jeff: Right, right. >> It's advocacy, not just references. It's you know, peer to peer. There's this whole idea of voice of the customer. There're new companies out there like TrustRadius and G2 Crowd which provide platforms now for customers to do reviews on products and rank companies. And making that available to users gives everybody a voice in the process. >> So. >> Right. >> There's a whole bunch of new metrics, many of them are going to be, you know, very, very much around emotional connections back to your brand. And participation in the community. Today we have the marketing nation which is a 60,000 person community. The way I can cultivate content on that and grow people's roles in participating in that dialogue, is certainly an engagement measure for us. And it will lead to stronger sales, it will lead to stronger you know, preference in terms of our brand. It will lead to premium pricing if we want to do that in the future, et cetera. >> And then I wonder too, if you could just speak to the evolving role of marketing. Not only within the company, but specifically within IT spend, and business analytics spend, and really as a driver. >> Because before >> Yep. >> the analytics was really a service provider to the rest of the company >> and we gave you >> Yep. >> your quarterlies and your weekly sales reports and you know, that was kind of the role of IT. Now we're seeing IT as a business partner stepping in to say, "Here's all these cool technologies." But now marketing and the marketing automation which is way ahead of the automation >> Right. >> in a lot of >> the other places, is really driving that, and you've got measure, measurable results, and you can connect to all the different channels that are new that weren't there two years ago when you just had newspaper and >> Yep. >> and billboards and TVs. >> So you know, as that has evolved how have you seen, you know, marketing's role change in terms of kind of, power seat at the table, driving IT, investment decisions and those types of things? >> Obviously Marketo's >> Yep. >> were those decisions for a lot of companies. >> Yeah and it's a great conversation because there's been a lot of talk about the, the hybrid CMO, and what does that look like today? Because the CIO and the CMO now have to be in lockstep. In many cases now, the CMO's technology budget is looking as large as the CIO's technology budget. >> Right, right. >> And so. >> And then there's this other notion of if marketing owns the customer experience, or all things around customer engagement, are they not, in fact, the chief customer officer? And so, there's a whole bunch of things that I think are crossing lines. But I think it's great news for the marketer, because they need to be more customer centric, they need to be more data centric, and ultimately they sit in a really pivotal place in the organization to achieve many of those things. >> Right. And it's still interesting, and for all the soft things, I'll call it a soft thing, of engagement and lifetime value and some of these, some of these things that aren't necessarily tied to the bottom line at the end of the quarter, >> Right. >> every quarter. >> We still have to respond to that. And at the end of the day there has to be some, some ties, some connection, some demonstrated >> value of these efforts. >> Right. >> It can't just be for you know, apple pie and lemonade, I forget the expression. But anyway (laughs). So, 'cuz it still has to tie back to business, right? >> Absolutely. >> Still has to pay the bills, >> still has to get more sales. >> Absolutely. >> But what you're >> saying is, is it does. Engagement does translate into sales. >> Engagement translates to sales. Engagement translates to brand preference. Engagement translates to price premium. Engagement translates to advocacy. I mean, engagement is, it's such an active way to move the market forward that I think there's going to be a whole set of new metrics that combine sales enablement and sales processes as well because as marketing and sales partner, you know, from a sales engagement standpoint to go after named accounts, the ones that are most strategic to the business we're going to see a huge shift in terms of sales, sales engagement metrics as well. >> Just as you're saying that, I'm thinking of brands, right? And always the debate about the power of brand, and does brand still have power? And I think it does, but the market's really kind of bifurcated where either the brand is super powerful, or has zero power, you know, kind of depending on the product or the engagement. It sounds like really, engagement is probably the best way to make sure your brand can't be replaced by the old white label stuff that they used to have at the grocery store. >> Karen: Yeah. >> 'Cuz people got to be connected. >> Karen: Yep. >> Jeff: Not just a label. >> And they need to care about, people need to ultimately care about the relationship. Not the one thing. You know it used to be you dropped a direct mail, it was sort of an episode and you were never having a dialogue. Today, there's so many ways and so many channels to reach people, you have to have a consistent way to engage and a consistent way to look at, did I move the needle forward? Am I ultimately renewing that customer? Or generating more loyalty from that customer? Or you know, referenceability or advocacy. And so, engagement helps you do that through all the channels. >> It's interesting 'cuz the customer can engage with you, whether you, or communicate with you, whether you >> necessarily want it or not. >> That's right. >> And in new ways that were heretofore nonexistent. >> Karen: That's right. >> Fun stuff. >> Yeah. >> Great place to be. >> Well Karen, I loved >> Yeah. >> sitting down and talking about engagement. It's a thing we talk about here all the time. >> Great. >> It's really how we should measure success, it's how we know we're getting through and look forward to a follow up. I know you have some research coming out, and some books coming out, and Marketo's up to all kinds of stuff. So we will look for that in the not so distant future. >> Awesome. >> Alright. >> Thank you. >> We look forward to it. >> Absolutely, she's Karen >> Thanks a lot. >> Steele from Marketo, I'm Jeff Frick, you're watching the Cube. Thanks for watching, we'll see ya next time. (upbeat music)

(upbeat music) >> Announcer: Live from the Javits Center in New York City. It's the Cube. Covering Inforum 2017. Brought to by Infor. >> Welcome back to the cube's coverage of Inforum here at the Javits center in New York City. I'm your host Rebecca Knight along with my co-host Dave Vellante, and Jim Kobielus who is the lead analyst for Wikibon in AI. So guys we're wrapping up day one of this conference. What do we think? What did we learn? Jim you've been, we've been here at the desk, interviewing people, and we've certainly learned a lot from them, but you've been out there talking to people, and off the record I should say. >> Yeah. >> So give us. >> I'm going to name names. >> Yes. >> If I may, I want to clarify something. >> Yeah, okay, sorry. >> I said this morning that the implied valuation was like three point seven, three point eight billion. >> Rebecca: Okay. >> Charles Phillips indicated to us off camera actually it was more like 10 and a half billion. >> Yeah, yeah. >> But I still can't make the math work. So I'm working on that. >> Okay. >> I suspect what's happened, was that a pre debt number. Remember they have a lot of debt. >> Yes. >> So I will figure it out, find out, and report back, okay. >> You do. >> So I just wanted to clarify that. >> Run those numbers okay. >> I'll call George. >> Kay, right, but Jim back to you. What do think is the biggest impression you have of the day in terms of where Infor is? >> Yeah, I've had the better part of this day to absorb the Coleman announcement which of course, ya know AI is one my core focus areas at Wikibon, and it really seems to me that, well Infor's direct competitors are the ERP space of all in cloud it's SAP, it's Oracle, it's Microsoft. They all have AI investments strategies going for in their ERP portfolios. So I was going back, and doing my own research today, just to get my head around where does Coleman put Infor in the race, cause it's a very competitive race. I referred to it this morning maybe a little bit extremely as a war of attrition, but what I think is that Coleman represents a milestone in the development of the ERP cloud, ERP market. Where with SAP, Oracle, and Microsoft, they're all going deep on AI and ERP, but none of them has the comprehensive framework or strategy to AI enable their suites for human augmentation, ya know, natural language processing, conversational UI's, Ya know, recommenders in line to the whole experience of ya know inventory management, and so forth. What infor has done with Coleman is laid out a, more than just a framework and a strategy, but they've got a lot of other assets behind the whole AI first strategy, that I think will put in them in good steady terms of innovating within their portfolio going forward. One of which is they've got this substantial infusion of capital from coke industries of course, and coke is very much as we've heard today at this show very much behind where the infor team under Charles is going with AI enabling everything, but also the Burst team is now on board with it, and the acquisition closed last month Brad Peters spoke this morning, and of course he spoke yesterday at the analyst pre-brief, and so David and I have more than 24 hours to absorb, what they're saying about where Burst fits into this. Burst has AI assets all ready. That, ya know Infor is very much committed to converging the best of what Burst has with where Coleman is going throughout their portfolio. What Infor announced this morning is all of that. Plus the fact that they've already got some Colemanize it's a term I'm using, applications in their current portfolio. So it's not just a future statement of direction. It's all that they've already done. Significant development and productization of Coleman, and they've also announced a commitment Infor with in the coming year, to bring, to introduce Coleman features throughout each of the industry vertical suite, cloud suites, like I said, human augmentation, plus automation, plus assistants, that are ya know, chat bots sort of inline. In other words, Infor has a far more ambitious and I think, potentially revolutionary strategy to really make ERP, to take ERP away from the legacy of protecters that have all been based on deterministic business rules, that a thicket, a rickety thicket of business rules that need to be maintained. Bringing it closer to the future of cognitive applications, where the logic will be in predictive, and deterministic, predictive, data driven algorithms that are continually learning, continually adapting, continually optimizing all interactions and transactions that's the statement of direction that I think that Infor is on the path to making it happen in the next couple of years in a way that will probably force SAP, Oracle, Microsoft to step up their game, and bring their cognitive or AI strategies in portfolios. >> So I want to talk some more about the horse in the track, but I want to still understand what it is. >> Jim: Yes. >> So the competitors are going to say is oh. It's Alexa. Okay, okay it is partially. >> Jim: Yeah sure. It's very reductive that's their job to reduce. >> Yeah you're right, you've lived that world for a while. Actually that was not your job, so. >> If you don't understand technology, you're just some very smart guy who talks a good talk. >> Yeah, okay. >> So, yeah. >> So, okay, so what we heard yesterday in the analyst meeting, and maybe you found this out today, was is conversational UX. >> Yes. >> It's chat wired into the APIs, and that's table stakes. It augments, it automates, an example is early payments versus by cash on hand. Should I take the early payment deal, and take the discount, or, and so it helps decide those decisions, and which can, if you have a lot of volume could be complex, and it advises it uncovers insights. Now what I don't know is how much of the IP is ya know, We'em defense essentially from Amazon, and how much is actual Infor IP, ya know. >> Good question, good question, whether it's all organically developed so far, or whether they've sourced it from partners, is an open issue. >> Question for Duncan Demarro. >> Duncan Demarra, exactly. >> Okay, so who are the horses in the track. I mean obviously there's Google, there's Amazon, there's I guess Facebook, even though they're not competing in the enterprise, there's IMB Watson, and then you mentioned Oracle, and SAP. >> Well, here's the thing. You named at least one of those solution providers, IBM for example, provides obviously a really sophisticated, cognitive AI suite under Watson that is not imbedded however, within an ERP application suite from that vendor. >> No it's purpose built for whatever. >> It's purpose built for stand alone deployment into all manner of applications. What Infor is not doing with Coleman, and they make that very clear, they're not building a stand alone AI platform. >> Which strategy do you like better. >> Do I like? They're both valid strategies. First of all, Infor is very much a sass vendor, going forward in that they don't they haven't given any indications of going into past. I mean that's why they've partnered with Amazon, for example. So it's clear for a sass vendor like Infor going forward to do what they've done which is that they're not going to allow their customers apparently to decouple the Coleman infrastructure from everything else that ya know, Infor makes money on. >> Which for them is the right strategy. >> Yeah, that's the right strategy for them, and I'm not saying it's a bad strategy for anybody who wants to be in Infor's market. >> So what is in Oracle, or in a SAP, or for that matter, a work day do, I mean service now made some AI announcements at their knowledge event. So they're spending money on that. I think that was organic IP, or I don't know maybe they're open swamps AI compenents. >> Sure, sure, A they need to have a cloud data platform that provides the data upon which to build and train the algorithm. Clearly Infor has cast a slot with AWS, ya know, SAP, Microsoft, Orcale, IBM they all have their own cloud platform. So >> And GT Nexus plays into that data corpus or? >> Yeah, cause GT Nexus is very much a commerce network, ya know, and there is EDI for this century, that is a continual free flowing, ever replenishing, pool of data. Upon which to build and train. >> Okay, but I interrupted you. You said number one, you need the cloud platform with data. >> Ya need the conversational UI, you know, the user reductive term chat bots, ya know, digital assistant. You need that technology, and it ya know, it's very much a technology in the works, its' not like. Everybody's building chat bots, doesn't mean that every customer is using them, or that they perform well, but chat bots are at the very heart of a new generation of application development conversational interfaces. Which is why Wikibon, why are are doing a study, on the art of building, and training, and tuning chat bots. Cause they are so fundamental to the UX of every product category in the cloud. >> Rebecca: And only getting more so. >> IOT, right, desk top applications. Everything's going with , moving towards more of a conversational interface, ya know. For starters, so you need a big data cloud platform. You need a chat bot framework, for building and ya know, the engagement, and ya know, the UI and all of that. You need obviously, machine learning, and deep learning capabilities. Ya know, open source. We are looking at a completely open source stack in the middle there for all the data. Ya know, you need obviously things like tenserflow for deep learning. Which is becoming the standard there. Things like Spark, ya know, for machine learning, streaming analytics and so forth. You need all that plumbing to make it happen, but you need in terms of ERP of course, you need business applications, and you need to have a business application stacked to infuse with this capability, and there's only a hardcore of really dominant vendors in that space. >> But the precious commodity seems to be data. >> Yeah. >> Right. >> Precious commodity is data both to build the algorithms, and an ongoing basis to train them. Ya see, the thing is training is just as important as building the algorithms cause training makes all the difference in the world between whether a predictive analytics, ya know ML algorithm actually predicts what it's supposed to predict or doesn't. So without continual retraining of the algorithms, they'll lose their ability to do predictions, and classifications and pattern recognitions. So, ya know, the vendors in the cloud arena who are in a good place are the Googles and the Facebooks, and others who generate this data organically as part of their services. Google's got YouTube, and YouTube is mother load of video and audio and so forth for training all the video analytics, all the speech recognition, everything else that you might want to do, but also very much, ya know, you look at natural language processing, ya know, text data, social media data. I mean everybody is tapping into the social media fire hose to tune all the NLP, ongoing. That's very, very important. So the vendor that can assemble a complete solution portfolio that provides all the data, and also very much this something people often overlook, training the data involves increasingly labeling the data, and labeling needs a hardcore of resources increasingly crowdsource to do that training. That's why companies like Crowd Flower, and Mighty AI, and of course Amazon with mechanical terf are becoming evermore important. They are the go to solution providers in the cloud for training these algorithms to keep them fit for purpose. >> Mmm, alright Rebecca, what are your thoughts as a sort of newbie to Infor. >> I'm a newbie yes, and well to be honest, yes I'm a newbie, and I have only an inch wide, an inch deep understanding of the technology, but one thing that has really resonated with me. >> You fake it really well. >> Well, thank you, I appreciate that, thank you. That I've really taken away from this is the difficulties of implementing this stuff, and this what you hear time and time again. Is that the technology is tough, but it's the change management piece that is what trips up these companies because of personalities who are resistant to it, and just the entrenched ways of doing things. It is so hard. >> Yes, change management, yes I agree, there's so many moving parts in these stacks, it's incredible. >> Rebecca: Yeah. >> If you we just focus on the moving parts that represent the business logic that's driving all of this AI, that's a governance mess in it's own right. Because what you're governing, I mean version controls and so forth, are both traditional business rules that drive all of these applications, application code, plus all of these predictive algorithms, model governance, and so forth, and so on. I mean just making sure that all of that is, you're controlling versions of that. You've got stewards, who are managing the quality of all that. Then it moves in lock step with each other so. >> Rebecca: Exactly. >> So when you change the underlying coding of a chat bot, for example, you're also making sure to continue to refresh and train, and verify that the algorithms that were built along with that code are doing their job, so forth. I'm just giving sort of this meta data, and all of that other stuff that needs to be managed in a unified way within, what I call, a business logic governance framework for cloud data driven applications like AI. >> And in companies that are so big, and where people are so disparately located, these are the biggest challenges that companies are facing. >> Yeah, you're going to get your data scientists in lets say China to build the deep learning algorithms, probably to train them, your probably going to get coders in Poland, or in Uruguay or somewhere else to build the code, and over time, there'll be different pockets of development all around the world, collaborating within a unified like dev ops environment for data science. Another focus for us by the way, dev ops for data science, over time these applications like any application, it'll be year after year, after year of change and change. The people who are building and tuning and tweaking This stuff now probably weren't the people five years ago, as this stuff gets older, who built the original. So you're going to need to manage the end to end life cycle, ya know like documentation, and change control, and all that. It's a dev ops challenge ongoing within a broader development initiative to keep this stuff from flying apart from the sheer complexity. >> Rebecca: Yes. >> So, just I don't Jim, if you can help me answer this, this might be more of a foyer sort of issue, but when we heard from the analyst meeting yesterday, Soma, their chief technical guy, who's been on the Cube before in New Orleans, very sharp dude, Two things that stood out. Remember that architecture slide, they showed? They showed a slide of the XI and the architecture, and obviously they're building on AWS cloud. So their greatest strengths are in my view, any way the achilles heel is here, and one is edge. Let's talk about edge. So edge to cloud. >> Jim : Yes. >> Very expensive to move data into the cloud, and that's where ya know, we heard today that all the analysis is going to be done, we know that, but you're really only going to be moving the needles, presumably, into the cloud. The haystacks going to stay at the edge, and the processing going to be done at the edge, it's going to be interesting to see how Amazon plays there. We've seen Amazon make some moves to the edge with snowball, and greenfield and things like that, and but it just seems that analytics are going to happen at the edge, otherwise it's going to be too expensive. The economic model doesn't favor edge to cloud. One sort of caveat. The second was the complexity of the data pipeline. So we saw a lot of AWS in that slide yesterday. I mean I wrote down dynamo DB, kineses, S3 redshift, I'm sure there's some EC2. These are all discreet sort of one trick pony platforms with a proprietary API, and that data pipeline is going to get very, very complex. >> Flywheel platforms I think when you were talking to Charles Phillips. >> But when you talk to Andy Jasse, he says look we want to have access to primitive access to those APIs. Cause we don't know what the markets going to do. So we have to have control. It's all about control, but that said, it's this burgeoning collection of at least 10 to 15 data services. So the end to end, the question I have is Oracle threw down the gauntlet in cloud. They said they'll be able to service any user request in a 150 milliseconds. What is the end to end performance going to be as that data pipeline gets more robust, and more complicated. I don't know the answer to that, but I think it's something to watch. Can you deliver that in under 150 milliseconds, can Oracle even do that, who knows? >> Well, you can if you deliver more of the actual logic, ya know, machine learning and code to the edge, I mean close the user, close to the point of decision, yes. Keep in mind that the term pipeline is ambiguous here. One one hand, it refers, in many people's minds to the late ya know, the end to end path of a packet for example, from source to target application, but in the context of development or dev ops it refers to the end to end life cycle of a given asset, ya know, code or machine learning, modeling and so forth. In context of data science in the pipeline for data science much of the training the whole notion of training, and machine learning models, say for predictive analysis that doesn't happen in real time in line to actual executing, that happens, Ya know, it happens, but it doesn't need it's not inline in a critical path of the performance of the application much of that will stay in the cloud cause that's massively parallel processing, of ya know, of tensorflow, graphs and so forth. Doesn't need to happen in real time. What needs to happen in real time is that the algorithms like tensorflow that are trained will be pushed to the edge, and they'll execute in increasingly nanoscopic platforms like your smartphone and like smart sensors imbedded in your smart car and so forth. So the most of the application logic, probabilistic ya know, machine learning, will execute at the edge. More of the pipeline functions like model building, model training and so forth, data ingest, and data discovery. That will not happen in real time, but it'll happen in the cloud. It need not happen in the edge. >> Kind of geeky topics, but still one that I wanted to just sort of bring up, and riff on a little bit, but let's bring it back up, and back into sort of. >> And this is the thing there's going to be a lot more to talk about. >> Geeking out Rebecca, we apologize. >> You do indeed, it's okay, it's okay. >> Dave indulges me. >> No, you love it too. >> Of course, no I learn every time I try to describe these things, and get smart people like Jim to help unpack it, and so. >> And we'll do more unpacking tomorrow at two day of Inforum 2017. Well, we will all return. Jim Kobielus, Dave Vellante, I'm Rebecca Knight. We will see you back here tomorrow for day two. (upbeat music)

(click) >> Hey, welcome back everybody. Jeff Frick here with theCUBE. We're in downtown San Francisco at Moscone West at the Professional BusinessWomen of California Conference. 6,000 women, this thing's been going on for 28 years. It's a pretty amazing show. We see a lot of big women in tech conferences, but this is certainly one of the biggest and it's all about diversity, not just women. And of course, if there's a women in tech event, who are we going to see? Sandy Carter. >> Woo hoo! (laughs) >> Sandy, so great to see you. CEO of Silicon Blitz and been involved with PBWC for a while. >> I had suggested to Congresswoman Jackie when I saw her about three or four years ago about doing something special for the senior women. I proposed this leadership summit, and you know what they always say, if you suggest something, be prepared to execute it. She said, "Would you help us get this going?" Three years ago, I started the Senior Leaders Forum here, and yesterday we had that forum. We had 75 amazing women from all the great companies of California Chevron, Clorox, IBM, Microsoft Intel, Amazon, you name it all the great companies here in the Bay. Oh, Salesforce, Airbnb, all goes on. >> That was like a little conference in the conference? >> It was for C-Suite only and it was about 75 women. We do three TED Talks. We pick out talks that are hot but that are very actionable for companies. So yesterday, Jeff, we talked about millennials how to have inclusion of millennials in your workforce. 50% of the workforce by 2020 will be millennials. >> Is that a harder challenge than just straight-up diversity? >> This is really important. (laughs) It may be. But I had Allison Erwiener and Erby Foster from Clorox come and speak and they did a TED talk. Then we actually do little workshops to action. What would a millennial program look like? Our second topic was around innovation. How do you link diversity to innovation? There are so many studies, Carnegie Mellon Silicon Valley, Harvard, DeLoy that shows there is a linkage but how do you get the linkage? For all these amazing diverse- >> The linkage between better business outcomes, correct? >> That's right. >> Better outcomes. >> That's right. In fact, the latest study from Harvard came out at the end of 2016 that showed not only with diverse teams do you get more innovation but more profitable innovation which is everybody's bailiwick today. We had Jeremiah Owyang of Crowd Companies who's a innovation expert come and really do that session for us. Then last but not least we talked about diversity and inclusion, primarily inclusion in the next century. What is that going to look like? We saw some facts about what's going on in changes in population, changes in diversity and then how we as companies should manage programs in order to tap into those changes. It was an awesome, awesome session. Then of course we had Pat Waters from Linkedin. She is chief talent officer there. She came and closed it out with her definition of inclusion. It was powerful. >> You won an award. >> I won an award, yes. >> Congratulations, what did you win? >> Game Changer for PBWC, and I'm really proud of it because last year we had Serena Williams speak and she was the first recipient so I guess you'd say I'm in great company because it's now Serena and I with this great award. >> Absolutely. Before we went on air we were talking about some of this next-gen diversity and thinking about getting that into programming languages and you brought up, there was some conversation around bots and obviously chat bots are all the rage and AI and ML is driving a lot of this but ultimately someone's got to write the software to teach these things how to behave so you're going to run into the same types of issues if you don't have a diversity of the thinking of the way the rules and those bots work as you have in any other situation where you have singular thinking. >> I think Jeff, you're right on. In fact, I think it's really going to accelerate the desire for diverse teams. If you think about artificial intelligence machine learning, and bots you have to train the computer. The computer's not naturally smart. There is a team that actually uses a corpus of knowledge and trains the bot. If the data that goes in my dad always said, "Garbage in, garbage out." If the data that goes in is biased then the output is biased and we're seeing that now. For instance, I was just looking at some VR headsets and people are now looking at virtual reality. You know you get a little nauseous. They've been tweaking it with artificial intelligence so that you don't get as nauseous but it was done by all men. As a result, it greatly improved the nauseousness of men but not women. That's just one example. You want your product to go for 100% of the world. >> That's weird, you'd think that would be pretty biological and not so much gender-specific. >> You would, but there are apparently differences. We talked to a doctor yesterday. There's apparently differences in motion-sickness between the two and if you only have one set of data you don't have the other. >> But then there's this other kind of interesting danger with machine learning and I think we see it a lot in what's going on in the news and causing a lot of diversion within the country in that the algorithms are going to keep feeding you more of that which you already have demonstrated an affinity to. It's almost like you have to purposefully break the things or specifically tell it, either through active action or programming that no, please send me stuff that I'm not necessarily seeing all the time. Please give me stuff that's going to give me a diversity of points of view and opinion and sources because it feels like with your basic recommendation engine it's going to keep sending you more of the same and rat hole you down one little track. >> That is true, and that's why today we have a panel and we're going to be talking about especially for AI and bots you must have diverse teams. From the session this morning I really loved one of the speakers, Kim Rivera, from HP and she said, "It's hard, but we just said 'Look, we've got to have 50% women on the board. We've got to do this.'" I think the same thing's going to be true for AI or bots Jeff, if you don't have a diverse team, you will not get the right answer from a bot. Bots are so powerful, and I was just with a group of nine year old girls and we had a coding camp and I asked them, "What do you want to do?" All of them wanted to do bots. >> Really. >> They had all played with- >> What kind of bots- >> The Zootopia- >> Did they want to do? >> They all had played with a Zootopia bot from Disney. I don't know, did you see Zootopia? >> I did not see it. I heard it was a great movie. >> It's a great movie, animated movie of the year. >> Bunnies, bunnies, bunnies as cops, right? >> That's right. In fact, the bunny is what they made into a chat bot. 10 million kids use that chat bot to get a little badge. Now all the kids are into bots. They used bots to remind them to brush their teeth to do their homework. In fact, there was a chat bot written by a 14 year old boy in Canada that's a homework reminder. It's actually really quite good. >> Also I'm thinking of is the Microsoft little kid that didn't, I guess timing is everything. >> Timing is everything, that's right. >> That one didn't work so well. >> But I guess what I would just leave with people is that when you're looking at this great, great new technology for AI and bots in particular, you must have a diverse team. You must look at your data. Your data's got to be unbiased. Like you said, if you just keep doing the same old thing you're going to get the same old answer. You've got to do something different. >> You're doing all kinds of stuff. You're working with Girls in Tech on the board there. I think you're doing some stuff with the Athena Alliance who's driving to get more women on >> Boards. >> Boards. You're really putting your toes in all kinds of puddles to really help move this thing because it also came up in the keynote. It's not a strategy problem. It's an execution problem. >> That's right, and because I'm so passionate about tech I love tech and I see this linkage today that is been never really been there that strong before but now it's almost like if you don't have diversity your AI and bots are going to fail. Forester just said that AI and bots is the future so companies have to pay attention to this now. I really think it's the moment of time. >> We're running out of time. I'm going to give you the last word. What are one or two concrete things that you've seen in your experience that leaders can do, like came up today in the keynote tomorrow to really help move the ball down the field? >> I think one is to make sure you have a diverse team and make sure that it represents diversity of thought and that could be age, it could be gender it could be sexual orientation, race you got to look at that diversity of team, that's one. Secondly, just by having a diverse team doesn't mean you're going to get great output. You've got to be inclusive. You've got to give these folks great projects. Like millennials, give them a passion project. Let them go and do something that can really make a difference. Then third, I think you have to test and make sure what you're delivering out there represents that cognitive diversity of thought so make sure that you're not just putting stuff out there just to get it out there but really double-checking it. I think those are three actionable things that you can do tomorrow. >> That's great, Sandy. Thank you very much. >> Thanks, Jeff. >> Thanks for stopping by. We just checked Sandy's calendar and there we know where to take theCUBE because she's all over the place. She's Sandy Carter, I'm Jeff Frick. You're watching theCUBE from the Professional BusinessWomen of California conference in San Francisco. Thanks for watching. (synth music)

(upbeat music) >> Live from the Mission Bay Conference Center in San Francisco, California, it's theCUBE at Google Cloud Platform Live. Here are your hosts, John Furrier and Jeff Frick. >> Okay welcome back everyone, we are live. This is theCUBE in San Francisco, California for Google Platform Conference Live, their developer conference for the cloud. I'm John Furrier, the founder of SiliconANGLE, Jeff Frick, my cohost, and we're excited to have CUBE alumni but also man about town coming to talk about containers, Kubernetes. We have Craig McLuckie, product manager at Google. Named the product Kubernetes. Welcome back. >> Thank you. It's great to be back on theCUBE. >> As I said, you're the man about town. Containers are the hottest thing going on. Really enabling a lot of new change. A lot of solidarity in the developer community around bringing cloud together, right? You're seeing people go, wow, containers are not a new concept. Docker has brought together the concept and made a huge push, just the ball got moved down the field big time. And then Kubernetes kind of tying it all together and you guys are open sourcing it. I wanted to first talk about, from your perspective, what's changed since VMware where we had a great conversation around Kubernetes? Obviously that was front and center in VMware's show, which is a huge IT enterprise vote of confidence. So now, here at Google, core developers. Large scale, backend network interconnect stuff going on. You almost connect the dots, right? Native developers really cranking out the apps? Large scale interconnect? There's a lot in the middle there between those bookends. What's changed? >> So a couple things I think have changed since I last spoke to theCUBE at VMworld. The first is we've seen an amazing amount of velocity around the Kubernetes community. Not just what Google's been doing but also what our open source community members have been contributing. And we're seeing a very fast acceleration of the overall platform. Moving quickly towards operation maturity, you know getting closer to production readiness and introducing a lot of features that are really need to both run real world applications and to go to new place, to go to a variety of new clouds. We're seeing the reality of a very highly portable and maturing way to build container based applications emerging. That's been very exciting. I think the other thing that's really interesting here is the way that we at Google have been introducing Kubernetes directly into the Google Cloud platform. Today we announced a new product called Google Container Engine which provides the quickest and easiest way to get a Kubernetes cluster up and running and managed for you on Google Cloud platform. And we're very excited about how easy it's making it for our customers to access this new way of building applications. >> Talk about this Container Engine because obviously App Engine's had huge success. Little bit of learning curve but you guys have some core front end developers that you're making that easier now but what is a Container Engine? Is it a Docker engine? Is it Docker compatible? Is it a whole new animal? What it is? What is it? >> That's great, I'm glad you asked that question. I would start by saying this, at Google we have Google Compute Engine which offers powerful, flexible, fast breeding VMs and at the other end of the spectrum we've had App Engine which offers a highly managed, very efficient way to get web applications up and running. And what we've encountered with our customers is that there is no natural way to move from one world to the other world. There's no connective tissue that exists in the middle that let's our customers think about building applications that are running on a cloud computer rather than just running on a virtual machine. And so what Google Container Engine is is a technology that let's our customers program at the cluster level. So Docker has provided this amazingly productive way to package up an application and deploy it into a node. Docker has done a great job of taking a lot of technologies that existed and making them incredibly accessible to developers. But the reality, in our experience, is that at least 80% of our customer's cost of maintaining applications comes out of the operation space so Kubernetes and Google Container Engine are an operationally viable way to build these distributed applications. It really moves our customers from thinking about deploying things into individual virtual machines to instead saying, hey, I'm just going to drop this into this cluster and it will all be wired together so I can take these little Lego building blocks I've got called containers, piece them together in ways that are intuitive and then have a very smart and effective system to run those for me on my behalf.. >> So basically a pool of VMs could be available to developer, if I get this right? So you're saying, I'm a developer, I don't have to worry about the dependencies by VMware, by VMware versus another form factor? I just let the container deal with that? Is that-- >> What we've done, yes, that's exactly right, we've created this strong separation between infrastructure operations and application operations. Docker has created a portable framework to take basically a binary and run it anywhere which is an amazing capability. But that's not enough. You also need to be able to manage that with a framework that can run anywhere so the union of Docker and Kubernetes provides this framework where you're completely abstracted from the underlying infrastructure. You could use VMware, you could use Red Hat Open Stack deployment, you could run on another major cloud provider like Rack Space or IBM and you could just build this application and deploy it there and experience this very powerful cluster first way of building and managing that app. >> Cluster first, I haven't heard that one. >> It's not a cluster you-know-what, it's a cluster first. (laughing) That trumps cloud first from Microsoft but let's go back to Kubernetes. You named the product, what does it mean? I mean it's kind of a, you don't look at a tech name, you say, it's not like alpha one, ya know? >> Kubernetes is the Greek word for the helmsman of a ship. I was looking to find a name and turns out, there's a lot of cluster management technologies and a lot of the obvious names were taken and so I had the inspiration of what is this doing? It's actually the thing that's overseeing the whole of your operation, and is planning what goes where and managing it. So Kubernetes is the helmsman of your cluster group, it's the thing that manages it. >> Did you design the algorithm to stay away from icebergs? (laughing) That's the key thing, you don't want to crash the system. But that's the challenge, you know, just joking aside, orchestration is really a hard thing. That's been a cloud phenomenon, automation. Everyone's been talking about, oh we have management software that automates and orchestrates cloud resources. But now in a cloud environment, it's more challenging now. Talk about what Kubernetes does different than older approaches to orchestration. >> I think is a very, very important consideration. When I look at the way that orchestration's been done traditionally, you tend to think about your application as being deeply tied to the underlying piece of infrastructure, so your orchestration process is provision me a basic machine, go get the packages I need, deploy my application pieces, wire it in explicitly to all the other pieces of my system and so you have to kind of build this relatively fragile system where all the piece are tied together and deeply coupled. What Kubernetes has done is provide a framework where you have a very principled, almost Lego building block that you can stick together and say, I want one of these things, I want it replicated six times, and I want it wired in to these other pieces without actually having to know about where those other pieces are deployed, how they relate to one another. It really is realizing this highly decoupled, very principled way of thinking about your environment as a cluster where you just drop your packages in and they're all wired together using virtualized networking and using this cluster centric paradigm and it radically, radically reduces the cost of operations. I could just give you an example of that. In the old days of Google, before we had these technologies inside the house, it was all we could do to keep the lights on. Like every day was an adventure, it was very hard, because our operations had our application pieces deeply tied into the physical infrastructure. When we introduced the system internally known as Borg, we changed the game. In less than a year-- >> Hold on, name is Borg? >> What was it called? >> Borg? >> Borg. >> Borg. >> Internally known as Borg. (laughing) >> Like connected to everything, like the Microsoft Borg, that's at Microsoft but Microsoft used to be called-- >> I was thinking more Arnold Schwarzenegger, but that's alright. >> Continue. I just wanted to make sure we heard that right. >> We literally doubled the number of production services we were running within a year. It's just so much easier to run things at scale. >> So provisioning, managing, it just makes a smoother operation? Smooth sailing if you will? >> It's really trying to hide provision, managing, right? You're basically, I have an app and I want to build it easily and then I want to deploy it easily and then I want it to be able to scale easily. >> Yes. >> Without having to go back and reconnect it to more stuff. It's funny because I think most people think that that's what clouds have already always done, right? There's basically compute, a networking and storage that's just in small units, virtually available to assemble however I want. But you say it, I used to have to still assemble it and disassemble it, now it's just-- >> Exactly. >> It's just plugging in. >> That's the challenge. The way we've seen cloud evolving has disappointed us a little bit because it really is just a re manifestation of the same existing first generation way of thinking about application development, application provisioning. If you challenge a lot of the fundamental assumptions, if you really step back and think about is there a better way to do this? If I have all this incredibly fungible resource that can turn up and turn down, is there a better way to build applications? Kubernetes is our invitation to the community to participate in defining that thing. We think it is a better way to build applications. We know it because we've been doing this for 10 years and it works really well for us. >> So talk about the open source angle because one, Kubernetes is open source, we've reported that live when we last chatted. Docker has huge success with their open source model. That's not well known in the main world, how the nuance and developers really are engaged and motivated to play with Docker which has it's own flywheel effect which is very viral in network effect. What's your strategy with Kubernetes? Is it standard open source blocking and tackling? Is there things you're doing to prime the pump? Is there a magical formula you guys are really nurturing and fostering? >> I am very happy with the way that the projects been run and it's been humbling to see the amount of adoption success we've had. I think that this manner of operating where we built Kubernetes as an open source project with the community, and then we take it and take exactly that and we turn it into a service and add a lot high value capabilities to it, is a pattern that's working very well for us. It's massively increased our velocity because it's not just us that are actually developing the project, we have amazing contributions from people like Red Hat. They're putting a lot of time and effort into making this thing great. Our friends at CoreOS are putting a lot of effort into it. We're able to do more because it's just more people working on it, so the velocity is far higher. The second thing is that we were able to go straight to an open offer. Normally we do these early adopter programs hidden behind the curtain, try to figure stuff out and do a lot of iteration. We didn't have to do that because the community has built the API with us, our customers have been working directly with us to shape the API. We know it's going to work for them. >> And that's helped you guys, so your differentiation doesn't really conflict with the community? >> Absolutely not. We recognized as we moved from a cloud that's worked mostly in the start up community and with internet facing companies to a cloud that's really engaging mainstream business. Our customers want multi cloud. It's critical to them. They want to be able to run in hybrid cloud. They want to have multi cloud provider relationships. They don't want to just rely on one provider and so our framework that works well everywhere but works especially well on Google, serves our business very well. >> Getting some great prompts on Crowd Chat so thanks for coming on theCUBE, always great to chat with you. You're in a hot area, we'd love to pick your brain but I want you to address three things I'm going to say to you, get your thoughts on. >> Okay. >> It can be your Google perspective, could be your own geeky perspective. Perimeter-less IT, multi cloud and mobile infrastructure. Three of the hottest areas on the planet right now in terms of people looking at investments, retooling, trying to figure things out, perimeter-less IT. Obviously perimeter IT, perimeter based security? >> Sure. >> Kind of goes away with the cloud right? >> Yeah. >> But you still need security, it's perimeter-less, so what does that mean? How do people understand and grasp that concept? >> I'm not sure I'm the right person to speak to perimeter less IT but I can say that-- >> Just in general. >> When I think about it, I think there's a couple of things that are happening here that are really interesting. When I look at the idea of perimeter-less IT, when I look at the idea of what I consider the democratization of IT, if you will, we've lived in a world where most businesses have been beholden to a specific organization that's controlled their provisioning, the policies and the set of bits they can use, everything's been controlled and IT hasn't been well loved by and large. We're moving into a world where it's a much more open ecosystem. Departments are far more empowered, anyone with a corporate credit card can go and get a machine and that's creating amazing agility and velocity for businesses. But it's introducing-- >> Creativity, too. >> A lot of creativity, but it's introducing a lot of pain as well. The hard thing is going to be creating a smart framework that allows empowered decentralization. Going from this world of highly controlled to decentralized empowerment, and I think that's where we're going to see a lot of interest from folks that are operating in the airplay space. >> Okay, multi cloud, just in general. Will people move to multiple clouds? Do you see that? UberClouds, we had Bitnami in earlier like, ah, people aren't really going to multiple clouds. They're not interested in moving workloads. Is that a state of the current situation or will it evolve to workloads anywhere? >> Multi cloud is the reality of our world. There's no serious customer I've spoken to in the last six months that has not been interested in a multi cloud relationship. Sorry, that's not true, there's no enterprise customer I've spoken to the last six months. >> That has not been interested? >> That has not been interested in multi cloud. >> And the reason is? >> In some ways. >> It's for what, resources? >> There's a couple of reasons. One is a lot of companies want to have just a multi provider relationship. They don't want to be beholden to a single cloud provider and frankly almost every customer I speak to has a massive investment in on premise infrastructure. They want to move away from a lot of the pain associated with managing that, but it's not going to happen overnight. Hybrid cloud is going to exist for quite a while. >> This is back to your empowered decentralization theme. >> And we have to provide them the tools to do that. We have to create positive pressure that moves them from those clouds to the public cloud. >> Final concept, and I've heard this a lot, kind of leads into the keynote, not necessarily the words but almost reeking of this concept of mobile infrastructure. I mean, mobile first, cluster first, kind of enables mobile first but mobile is obviously a form factor, whether it's an internet of things as a human or a device, doesn't matter it's still an endpoint the network. >> Yeah. >> It's a multitude of millions of devices so what is mobile infrastructure? Is it different? Is it the same? What's your take on it? >> It's an interesting question and the reality of our world is it's a mobile world. It's almost folly to do anything but think about mobile as the primary vehicle for customers, consumers and everyone else to interface with the internet, with the web. It certainly introduces an interesting set of challenges to application developers. I think one of the things that I am most sort of interested in cracking from a cloud provider's perspective is the world of multiple devices where you have a large set of devices in different form factors that are ultimately presenting a view of the same set of data, the same set of information and creating a set of experiences that work well in that multi device space. Moving away from a world where state is bound to a device to a world where state is based in your cloud and your device is simply providing a view or a way to interface with that data. We still have a way to go before that is fully materialized but I think that's going to be a big sort of anchor point of a lot of mobile development in the space. >> So Craig, where's the locus of competition move then? If the data center just becomes a resource that's on tap, basically, that I can just get? How do the cloud providers then differentiate? >> Basic infrastructure is relatively undifferentiated but when I look at the way that we run inside Google, we do some really, really scary smart things to make your application run for you. If you think about the way we run our infrastructure it's almost like the flight controller of a modern airplane. It's going from the old wire based control system where you move something to move a flap to a world where you have this controller that's taking in million of signals a second and making incredibly informed decisions that is optimizing the heck out of everything you do and making very fine grain corrections and I think that's going to be a huge avenue of differentiation. When you take an application, you package it and you give it to us and you trust us to run it for you and it's running at a slightly higher level, we have a much high extraction level, we can do incredibly smart things with things like machine learning technologies. We can watch how your application's running. We know how it ran last time so we can tell if something's going wrong because we have the ability to actually watch it. This is how we run internally. >> Right, right. >> It's not just about the infrastructure. It's going to be about smart systems that run your application for you. And that's going to be hard to-- >> It's really to abstract above the management of the application. It's actually the management of the application and the optimization of the application as opposed to the infrastructure? >> There's so much more value in moving from static, dumb infrastructure to actively managed, sort of precision managed container based capabilities. It's quite jarring. This was clear to me very soon after we shipped Google Compute Engine. I was able to see, we never looked inside VM so we were able to see what level of CP utilization our customer's were getting and we compared that to what we were able to run in our internal web loads and our customers are only getting like, there were several integer multiples less utilization than what they were paying for. So we knew that something could be done. We could actually move up the abstraction layer and just do a better job by actively managing and making smart decisions. And that would be very disruptive-- >> So let's play a game, we played a game with our last guest, we'll play the game of you and I are going to go into business together and be venture capitalist. >> Okay. >> Okay. >> Sounds like fun. >> What's our investment thesis? Knowing what we know, I mean, there's a lot of entrepreneurs out there really looking at the enterprise right now. The enterprise is hard, cloud is kind of like a proxy for the enterprise but it's not like your classic enterprise. I'm a tech entrepreneur, I'm a coder, I'm an architect, I'm an OS guy, systems guy, could be a creative filmmaker, whatever but I want to come in and get some white space. Is there white space out there that you see that is an opportunity for developers that could really come in and stake claim and build a really good business? It could be lifestyle business, it could be a home run. Where would we invest? >> Yeah, I think there's so much white space in this domain. We are in the very early days of getting these technologies to market. Obviously there's just bolstering the basic, sort of the fundamentals of the platform. Overlay networking, everyone's talking SDN. Obviously there's a lot of hype around that but being able to create an abstraction that allows high levels of plugability for different network fabrics as you move between clouds is interesting. Storage, and doing a better job of providing virtualized storage that is available to these containers is an area of opportunity. There's a lot of work to be done in the tuning environment, full on application lifecycle management, continuous integration, lots of opportunity in that space. And then frankly, as we start looking at taking these technologies to market and deploying them into real businesses that are running multi cloud, there's going to be a lot of the governance, risk management and compliance overlay capabilities that just don't exist. We have the ability to define policy and enforce it in a very effective way, whether it's security policy, data loss prevention policy-- >> But it has to be dynamic, right? >> And it has to by dynamically done and it has to be enforced at the node. >> That's software, that's hard software? >> And there's so much work to be done there. There's so many opportunities to either create niche, vertically oriented capabilities of service specific protocol or unique, highly valuable, cross coding capabilities. I'm very excited about the future in this space. >> Where would we get started if I was an entrepreneur? Like, hey Craig, I saw your interview, where do I get started? Writing an app engine code? I want to put the boat in the water and starting drifting into this area you just mentioned, how should I navigate in? How should I vector in? >> A lot of it depends on where you're going to be operating in the stack. I would suggest you go and learn Go. Go is rapidly, GoLang, if you want to talk about the sort of the development environment is rapidly emerging as the language for the new cloud. We're seeing a lot of work in the Go community. Docker is written in Go, Kubernetes is written in Go. So I'd start there. It's a great platform for systems development. So I'd start looking at some of the existing technologies, Docker, Kubernetes, start just assessing where the gaps are. I'd probably approach it from a systems development perspective if I was doing it but there's also going to be a lot of value higher up the chain where you can actually-- >> You can dance on top of the stack and around the stack? >> Absolutely. >> Alright so final question, are we going back to the old OS days? I know you were joking before we came on, conversational even in a way, that was pretty relevant. I mean, we're seeing concepts of systems programming of the 80's kind of, but in decentralized way. Comment on that because I think that's tying a lot of things together. >> I think that's an incredibly astute observation and I think we're moving away from a world, operating system today is a node local thing, right? So I have an operating system and it's providing an environment that abstracts me from the physical details of one piece of hardware, one machine, you know one set of resources. What we're starting to see now is the emergence of some of these distributed concepts where you're programming not to a specific singe piece of infrastructure, single piece of hardware but you're programming to a cluster and so I think it's very much like that. I think that's a very astute observation and we're going to see the buzz-- >> But no one vendor owns it. It's owned by the world. >> And nor should one. It needs to be a POSIX like ubiquitous framework that let's us get more out of these cluster centric applications. >> Very organic, I mean I love what's happening is a very organic development but yet there's some, kind of group dynamics going on around cluster and Docker's a great example. Came out of the woodwork to become a defacto standard. Probably the fastest defacto standard that I've ever seen-- >> It's been breathtaking how quickly that technology's taken hold. >> And that's just the crowd. >> Yeah. >> Just saying, hey if we don't like decide on something? We like these guys the best, they didn't piss anyone off or whatever, whatever the dynamic is. It could be double source, flywheel, but-- >> It's interesting, certainly from Google's perspective, we've noticed Docker a lot sooner than most the world did. We had technologies that we could have stood up as potentially competing capabilities but we chose not to, because the world is incredibly well served by a single standard for defining and packaging applications. Now we need to continue that and we need to build the standard for the POSIX like distributed systems standard, that people think about coding to when they're building these modern, next gen cloud V2 applications. >> Craig, I really appreciate you spending the time. Love the conversation, love kind of the long winding road we took there. We knocked out some Kubernetes. We talked about Docker containers. Talked about the future of the industry. Really appreciate it, you're awesome to have on theCUBE here, you're invited any time. CUBE alumni Craig McLuckie right on theCUBE. We'll be right back, here, live in San Francisco broadcasting exclusively from Google's developer conference here, the Cloud Platform Live Event from Google. We'll be right back after this short break. (light music)

(upbeat music) >> Live from San Francisco, California, it's theCUBE at VMWorld 2014. Brought to you by VMware, Cisco, EMC, HP, and Nutanix. (upbeat music) Now, here are your hosts, John Furrier and Dave Vellante. (upbeat music) >> Welcome back, we're here live in San Francisco for VMWorld 2014, I'm John Furrier with Dave Vellante. This is theCUBE. We expect to sue for the noise, get the tech athletes in from CEOs, entrepreneurs, startups, whoever we can get that has that signa. We have Pat Gelsinger, the CEO of VMware here in the house. Pat, great to see you again, great keynote. >> Hey, thank you. >> You've been a great friend of theCUBE, five years now running, just want to put a plug in. >> Five years? Wow. >> I want to thank you for this amazing gift of pens we got from the VMware Opening Campus Day. Great pens, celebrating you guys opening up, officially, the Palo Alto campus, how's that going? What's happening with the campus? >> Well first, the campus opening was great, thank you for joining us there for it. It really is just a fabulous place. I mean, a beautiful campus, and we have the greatest employees, so we wanted to give them the greatest place to work. The campus has gone fabulous, we've opened up almost all the buildings now on campus. Just two more to build out, and we're hosting all sorts of wonderful people who want to come in and see the coolest place in Silicon Valley now. >> It's like China over there. New cranes going up, and putting new buildings up there. Are you guys done with construction there? What's happening? You guys are expanding like crazy. >> Two more buildings to go. >> (laughs) Two more buildings to go. >> Then we're done for a while, so (laughs) almost there, almost there. I got worried when there's so many cranes going around. Do I need all my employees to wear hardhats or something? It's like, no, we're soon done with that, and we can get everybody to work. >> Robin kicked off the keynote before you came on, she talked about staying the course, and use a computing hybrid cloud server to find data, so then you came out and laid out, essentially, the vision of this transformation that's happening. What's the state of your vision there? Expand on that keynote, and share with the folks who might not have caught it live. What was the crux of the presentation? 'Cause it had a lot of Pat Gelsinger vision, it felt like it's transformative. We've even had some guests on talking about commentary, the announcements. Are they playing defense, offense? You're not a defensive player. You're an offensive player. So talk about the offensive moves for VMware, and how that keynote struck a chord there. >> The first one really started with this phrase, "brave, new IT," and the nexus of that was all of our VMware faithful. The V admins, the people who've been using this. They are becoming critically important to the businesses that they serve going forward because not only is it about them doing their job, but with SDDC, Hybrid Cloud, end-user computing, it's them redefining the entire infrastructure for the business. And when the CEO looks down, across his leadership team, who's the most competent person there to navigate through all of these IT trends that are merging to, necessarily, redefine their businesses? And we call this liquid business that's changing. So very quickly, we're seeing that businesses redefine themselves from education, to government, to transportation. Uber, today, not owning any assets, has a market cap equal to that of Hertz and Avis combined. We're just seeing these things emerge so quickly. And who's the smartest guy in technology in the room? The IT guy. Out of that, we laid out, obviously, our continuing progression with the Software-Defined Data Center, updates on major projects, bringing those components together in a big way. One of our first, and I think, most significant announcements today, was a lot of the choice announcements. We are adding an OpenStack distribution, so if you're a vCloud user, I'm going to have the programmatic ability of infrastructure through the OpenStack API's, you now get it with VMware. We also announced an embrace of containers. Containers, this 20-year overnight success where all of a sudden, lots of discussions around containers, and how can I use containers as a new app delivery model? Well, the best way to deliver apps for an enterprise, on top of the VMware infrastructure. So we announced a relationship with Google and Kubernetes, with Docker, one of the leaders in that space early, and how we're going to make them containers without compromise in the data center for enterprise customers. >> On the container piece, last year, we asked you, here, on theCUBE, about Docker and containers. You were like, oh, containers have been around for a while. What made you go, hey, this Docker thing's got legs? Was it the community thing? Part of the Open Source tie-in? Was it the interoperability? Containers is not a new concept, as you had pointed out, but what's changed for you and VMware over the past year to make that happen? >> And it still is very early. Let's be clear, John, that we're very much in this early, nascent phase, right in the hype cycle curve, you know. We're way up, we're probably going to go through the valley of despair in this technology, but very quickly, there's a broad set of these third gen developers that are saying containers is a cool way for me to package, deliver, and manage app deployment over time. We're saying if that is how people want to be able to deliver apps, then we, the preferred infrastructure for delivering apps, we're going to embrace and enable that, as well. So very quickly, it came together, and we engaged with Docker and Google as partners, and they said absolutely, we want to partner with you in this space, so all of the pieces just snapped together overnight. We've been working with them, making meaningful contributions in the space. >> That's a DevOps ethos, right? That's basically a cloud, right? >> DevOps is a funny term. It's funny, I had a bunch of my guys at the DevOps conference here, you know who was there? It was all IT guys, not developers. It's really a progression of developers to DevOps into IT, and we really say that DevOps is where developers and IT come together. We really are trying to enable DevOps to satisfy the business guys. In fact, go back to my brave theme. You're seeing Shadow IT, and developer, and line-of-business go around IT, and IT is now being through announcements, like today, armed with the tools to go to developers and say, oh no, I'm your friend. >> Step out of the shadows. >> I'm going to enable you with the coolest, most efficient infrastructure, and I'm still going to have it secure and managed, as well. You don't need to be running in these environments that we can't scale, manage, and secure. Your apps, now, can operate in an enterprise-worthy way. >> That right once run anywhere concept is very powerful, is the premise, if I understand it correctly, that you'll bring that enterprise capability, the security, and other management capabilities to that concept? >> Yeah, the VM doesn't change. We're adding Docker on top of the VM, and enabling it with some cool, new technologies, like I mentioned, Project Fargo, that actually make that delivery of the container on the VM more efficient and lighter-weight, than a bare, metal, Linux implementation of Docker. That's really powerful, it's really cool that we can do that, and we have some cool technologies that we're showing off that enable that, and will be part of our next major vSphere release. >> So you touched that base, you touched the OpenStack, you got some action going on there, and sort of, embracing, OpenStack. More developers in OpenStack. VMware has a touch act to follow when you think about the whole where we've come from. It seems so simple now. Servers underutilized, you had a 10x disruptive factor. Now, you've got to do it again. I remember Moretz used to talk about this deeper business integration. He'd talk about it like this was grand vision, but you actually, now, have been executing on that. Is that where the next wave comes from? That deeper business integration? You talked about transforming infrastructure, so how do you do it again? Is it a cost reduction, is it a business integration, is it, as you say, transforming that infrastructure? What does that mean to the customer from an operational standpoint? >> If you're the IT guy, do you want to spend a lot of your time worrying about the infrastructure? Actually, what you want to do, is have this programmable, scalable, flexible infrastructure that enables you to go worry about the business problems, which are in the apps. Because you want the IT guy spending all of his time, and most people say, how can I do new application services? How can I enable new business models, et cetera. So he wants this flexible, programmable, secure, managed infrastructure, and he wants to worry less and less about it. E.g., it needs to become more automated, more efficient, more scalable. And we walk into that discussion, say, you know, we've earned the right, CIO, because we've demonstrated more value, more efficiency, more quality of software, and we now have 80 percent of the world's applications running on top of the software that we do enlist for you. We've earned the right to show that we can do that for the full data center. To be able to do that both on and off premise, in a reliable, scalable, managed, and secure fashion, so that we enable you, Mr. IT, to go deliver the environment for the developer. To deliver the environment on or off premise, to secure all those next generation devices and applications, as well. And that's what we're off to do for you, and we deserve a seat at your table to help you do that. >> The Federation helps you with that seat, although, you guys got a pretty big role in the Federation. >> Yeah, yeah, we do. >> I wanted to ask you about the financial analyst meeting, did you get a lot of questions about that? About the whole spin-out thing, and how was that addressed? >> Actually, surprisingly-- >> Didn't come up? >> Not a question. >> 'Cause it's already come up. >> We've talked about it before. Largely, EMC is addressing those things. We've been very proactive in our position. We think the Federation is the right model. It's working, it's delivering value, we're quite committed to it, and we're showing quite a number of cases where we're adding value, as a result of it this week. We announced EMC as one of our EVO:RAIL partners. We announced the ViPR-based object service for the vCloud Air service, that we announced this week. Announcing new solutions that we're doing with them, so lots of different areas that we're just demonstrating the value that comes from the Federation. >> Well, we know Joe a little bit, we know that's not going to happen anytime soon. So what kinds of things did come up? Were they nitty gritty things around enterprise license agreements, 2015 guidance, share with us what you guys-- >> Lots of questions around 2015. >> And you guys shared a little bit more, maybe, than in the last-- >> We gave them framework to go look at 2015, lots of questions about the strategies that we've laid out. How well this NSX thing play out? How rapidly is that going to grow? vSAN, how rapidly are you seeing that grow, as well? vCloud Air, how are you going to win in that business, and do it in a margined, effective way for VMware? And how does this vCloud Air network partnership work? Based on that, how should we look at your growth profile going forward, with your traditional business, as well as these new business areas, and what's that going to look like over 15 and beyond? So those are sort of the nature of the questions. >> The Air piece is interesting to John and me because we've been trying to parse through, on a long-term basis, you guys are software everything, you talked about that, at quite some length, and the business model's great. Marginal economics, go to zero. You see some of that happening with the public cloud. The traditional outsourcing is starting to fall, that software marginal economics line. My question relates specifically to how your, whatever it is, 4,000 partners, can you replicate that kind of marginal economics at volume, or is it more of a high touch belly-to-belly model? >> We definitely are viewing this as the potential for a very scalable model, working with service providers who invest substantial capital, who have data centers, who have networks, have unique, governed assets in their own countries that they participate in, as well. We're building the stack, being prescriptive in the hardware, building the software layer that we need to go with it, so that we can operationalize the seven by 24 service that scales, and do so with this hybrid model. Not be over here in the race to the bottom, with Amazon's and Google's, we're over here focused on enterprise customers to deliver value of how these things work across the boundary of on and off premise, the Hybrid Cloud, and enable which enterprise-class services on top of the platform. We're going to do so with what we do, we're going to leverage partnerships, like Savvis, CenturyLink, like the SoftBank partnership, and we're going to enable those 3,900 partners with additional service offerings, as well. It's a very effective business model. >> But you will build out your own data centers, or... >> No, we're not building our own concrete, air conditioning, and networks, we're doing Colo for the core vCloud Air offerings for those, but we're enabling our partners to do that, as well. Here are the recipes, you go build it, and operate it, as well. >> So that's a technology transfer, IP transfer? >> For that, we get a recurring revenue stream as they go run our software in their data centers and services. The combination of the two, we think, gives us a very effective business model for the future. >> Pat, last year, I asked you about the, you announced the Hybrid Cloud, all in. I made a comment, kind of off the cuff, that's a halfway house, got you agitated. Halfway house? (laughs) And you said no, it's the final destination. I took a lot of heat for that, I fall on my sword, I'll eat my own words there, but it turns out absolutely correct, right? That's absolutely the destination. That is the number one conversation, it's Hybrid Cloud, certainly on-prem, off-premise, new economics, value creation. I got to ask you, and the question from Twitter has come in, along the same lines, is ask Pat about moving up the Stack. And I also want to hear about the end-user piece, but inside the Hybrid Cloud destination, what is the VMware vision of moving up the Stack mean, and what does that mean to you? >> Anybody who lays out a strategy, to me, it's more important to answer what you're not doing, than what you are doing. For us, we're not doing hardware, making that clear, we're enabling hardware partners. We're not doing consumer, we're focused on the enterprise customer, and we're not doing apps. We are enabling more services, enterprise services, like DR-as-a-Service, Desktop-as-a-Service, but we're not going into the app space. That's the line that we're trying to draw. Everything that's an enterprise-class service, where people need enterprise capabilities, an identity, a DR, storage capabilities, things that really are common services for apps to utilize, that's what we're doing, but that's as far north, or far up the Stack that we'll go. >> I asked Steve Herod on our Crowd Chat pregame on Friday, what the hot opportunities are for startups, he said security, or mainly, not getting caught at this perimeter-base security. What's your view on that? >> The hard, crusty exterior, and the soft, gooey inside is how I described it this morning. My morning breakfast everyday, and with it, this whole idea of micro-segmentation, NSX, really redefines how you build networks, and that's going to allow us to re-factor every aspect of security, every aspect of routing, and load balancing, et cetera. We announced the five partnership. The Palo Alto Networks partnership is really enabling us to execute on the micro-segmentation use case. It's transformational about how services and networks are operated inside of data centers, and we have the poll position here with the NSX platform. >> One of the most common question we're getting from the crowd, is when are you going to get a Twitter handle? (groans) (laughs) >> I've never been a good social guy. (talking over each other) >> We'll show you the engagement container-- >> Thank you, you can help me out with that. That'll be good, thanks. I appreciate it. (laughs) >> On end-user computing, let's go to the part because Sanjay is onboard, the acquisition, give us the update, what's coming through that? >> What a team. Sanjay has been a great leader, we brought together a great leadership team, Sumit and John Marshall. Their passionate and aggressive in that space. The combination of the new assets, the AirWatch team, Revitalization of Horizon, DaaS as a service on the platform, we just announced Cloud Volumes. It's a very cool, dynamic app capability, so overall, really coming together. Momentum increasing in the marketplace, Sanjay's done a really fine job at driving us in that area. What a difference a year makes. >> Pat, I wish we had 34 minutes, which was your record on theCUBE-- >> We're just getting started, John. (laughter drowns out speaker) >> We appreciate your time, but I want to give you the final word, and we talked about this briefly earlier, everyone always wants to ask, is this a defensive move, what's the strategy? I've never seen you as a defensive player. In all the interviews we've done, knowing your history, you're an offensive player. You talked about, years ago, get out in front of that next wave, or you'll be driftwood. I don't see that defensive. What is the VMware offense? If you could describe the offense for VMware, as a company. And answer the question, offense, defense? Are you making defensive moves, or am I off-base by categorizing it offense? >> I think we're absolutely playing offense. If you think about it, we're transforming networking, we're transforming the entire data center operation, we're delivering the first, truly hybrid cloud, enabling secure, managed environments on those devices. Unquestionably, overall, we are playing offense. Now, some things I think we should've done sooner. We should've been in the public cloud space earlier, and we're having to catch up in that space. The moves that we've taken in OpenStack, I think they're pretty well-timed. The moves that we're taking in containers, I think we are way ahead of anybody else, in terms of delivering enterprise container environments, in that respect. >> M&A activity looking good right now? (laughs) >> I just announced one last week, I got more in the pipeline, we're never finished. Organic innovation, inorganic innovation, we're playing both, and we're absolutely playing offense 'cause here, we're playing to win because our customers want the very disruptive nature of the products that we deliver with the quality, the brand of VMware. That's what they want from us. >> And more open source is part of that playbook? >> Yeah, absolutely. >> Seeing that grow? >> Absolutely, we will use open source every place that we can to accelerate the offerings that we bring to our customers. We don't mind fundamentally changing our business model, but we can add open source components to it, and we will, and today's OpenStack announcement is a great demonstration of that. >> Pat, put the bumper sticker on this to end the segment. What's the bumper sticker say for this year's VMWorld? What's on the bumper right now? What's it say for VMWorld-- >> Enabling brave, new IT. >> Pat Gelsinger, CEO of VMware here, inside theCUBE. Always great to have him. Our fifth year, we love having him on. Great tech athlete. This is theCUBE, be right back after a short break. (dull dinging)

>>Hey, welcome back and roll here. Live in San Francisco for Amazon web services summit. that's the hashtag. Go on Twitter. Go to crowd chat.net/aws summit. Rolling a special crowd chat document in the conversation. According every tweet in that room, join that community. I'm John furry, the founder's Silicon angle. This is the cube, our flagship program. We go out to the events and extract the signal from the noise. I'm joined my cohost, Jeff Frick filling in for Dave Volante. Uh, Jeff, always hard to fill up with Dave a lot day. Um, who was on those per, it doesn't look good on you. I know you're from California and Ariel Ariel Kelman worldwide marketing lead head of worldwide. Margaret Amazon. Welcome back to the cube. Thanks for having me. You were here last less than that. Reinvent, um, kinda markets itself, the company. I mean, you just tried to features out there on stage and keep on pushing new. What we try and do is lean back and just like the customers' testimonials. Let me come on. >>Yeah, I mean we try and just focusing on educating our customers. About what our services are doing, how customers are using them, which is something they ask for a lot. And then, you know, go pretty light on the marketing. Most technical people don't like to be marketed to and they find our approach quite refreshing. >>And when you're in the lead, you don't need to really worry about too much layer. You've got some meat on the bone, you've got great use cases, you've got great technology and a market leader in cloud and you're forging it a new territory. So there is a new element in the enterprise now coming in where you guys are being attacked. Certainly in the market. Google had some moves this week, as you can see, know IBM is doing HP, Oracle, the list goes on and on. So okay, those guys are kind of putting up the seawall for the big innovation way that you guys have built. The question is will it last? And so there is people really moving quickly to Amazon. The customer uptake is pretty comprehensive. So I'd say it's mainstream. So now as you go to the enterprise, you've got to do some messaging, right? You gotta you gotta have the innovation message. So what is the core opportunity for you there? >>There's a couple of things in the enterprise I think, you know, first of all we're helping people save money. We have organizations like Dow Jones that predict they're going to save over a hundred million dollars essentially by shutting down data centers and moving more of their infrastructure to the cloud. But I think the real interesting part is how we make these companies more innovative that if we can lower the cost of using technology to roll out their new projects, then essentially we take the cost of experimentation and have it almost approach zero. So then now if you want to try something new, the costs of failure aren't so high that they prevent people from sticking their neck out of the line and trying new things. And so we see a lot of these companies are adopting us more heavily. Their culture is changing their employees or are excited about trying things because when they try something out, the cost of failure is a fraction of what it was before because they don't have to buy servers. >>Delta buys all this equipment, get data center space, they can try something quickly. If it works, great, they expand. If not, they don't have to live with all this expense that they tried it out. So it's increasing the pace of innovation and also allowing more people in the company to be able to try new things, involve technology because we're eliminating these gatekeepers where before if you get a project required a lot of money, a lot of infrastructure, think about the committees you have to go, all the justifications. But if anyone could go spin up these resources with self-service, totally changed the dynamics of who can innovate. >>Yeah. I mean the whole try before you buy the puppy dog close as they used to say in the sales tactics is, let me try it before you buy it. Yeah. Shadow it as the, legitimize the fact that for very little cost and collateral damage, as Andy talks about, you can get something up and running pretty quickly. So the old I, that'll never work. Comment. That's a killer phrase of innovation gets eliminated because, no, no, no, I already tried it. Here's the numbers. Is that, is that a big part of it too? >>I'm a little bit, I mean it's almost like we need a new term there. There's, you know, people talk about shadow it and what we typically see is that once you give the CIO the keys to the cloud infrastructure and you set up a governance approach where you can decide what people can do, how much money they can spend, what things they can try. Um, then you get the best of both worlds. You still have a vetted platform from a security perspective. You have governance controls and sure people doing the right thing, but then it doesn't have to say, no, sorry, you've got to wait in line. You got to wait till next year. Um, so that is the new model that we're seeing where you're seeing developers distributed across the organization and smaller official it departments, but more people doing it stuff in the company because everyone can have access to infrastructure when they go big on cloud, especially with AWS. >>And are they getting it? Are the corporate it guys getting it that this is a good thing for them and they can leverage this to actually add more value in the company and enable more at the end of the day. More ideas. Yeah, absolutely. The companies that we talked to, look, they've got a lot of questions. If you're a big organization, you want to know if we can meet your security requirements, your compliance requirements. Can you run a sends Alaska? Well look, we want to do two things. We want to run the software the last 20 years in the cloud. Can you help us with that? And then we want to build these new cloud native applications so we can be as agile and efficient as some of these new internet startups that now we're competing with. And so we spent a lot of time with them to talk through what it should do first, how I should think about it, what apps make sense to run on us and, and you know, more importantly with the sequences, which lady first us should ask us. Like we want to go, we've, we've played around, we've tested, we've had lots of developers using this for years, but now we want to go big. I having a material percentage of our infrastructure in the cloud so we can fundamentally change how it adds value to the business. And like those are the conversations we love having the customers. >>I want to ask you about just to show by, just to get, check this out. Check the box on the interview here because I want to make sure people can understand Amazon. Reinvent your mega show. That's your global conference. And why don't you explain, explain, reinvent versus the, >>sure. So the AWS summits, um, it's our three one day event, uh, that we do maybe like 14, 15 around the world. It's two purposes. One for people that are new to AWS, they can come in one day, get an overview of what it's about, how to use it and get inspired on what they can do with it. And then for our existing customers who are having users, they get an update on what's new, which may sound kind of tactical, but we released them, you gotta do stuff right. And so that's of my biggest challenge is how do we make sure that people know what all the new stuff is. They come here for one day, go to our keynote, go to a bunch of breakout sessions, do some training, and they get ramped up on everything we've done in the past year. Speaking of it, so we had you on last year and we were here. >>So what's been the big change from 2013 to 2014? I mean, we've had a lot of new services that we've released. We're going to new areas and think about Amazon workspaces. It's more of an it business application, right? Um, what you saw our demo today wasn't people coding. It was someone actually as an end user using, um, a virtual desktop on their iPad, on their computer. And so different types of applications, but we're, we're still going after that same goal, which is to allow these enterprise it organizations to take advantage of the cloud with more workloads. Essentially the larger percentage of their projects that they're doing that we can help them with, the happier they are with the relationship and the test, the test dev conversation seems to have simmer down quite a bit where it seemed like last year that was, and that was everybody's kind of testing waters. >>That's where you had initial traction, the initial shadowing it and that, that seems to really have dying down. And I mean, I think it's kind of gone mainstream or whatever is past mainstream where, you know, if you're a big SAP shop and your developers don't have their own SAP development environments, you're kinda, you're behind the curve. Same for Oracle, for SharePoint, if that's the new standard. Um, and so people don't talk about as much because they're already doing it. Right. It's, it's a, you know, the idea of well, you know, what are the big bets, um, you know, what should we use it for next? Should I do big data analytics using, um, like our Redshift product or should they build new high-scale web applications? Should this be my mobile infrastructure? That's where more of the conversation is coming on. Now >>Eric, I want to ask you about marketing and kind of one-on-one, you know, take me through the business school level marketing relative to your vision of Amazon and how the company's operating. I see Andy sets the tone up on stage, very customer centric. We hear all the people on Amazon talk about, Hey, we listened to the customer. They said they're tight on the messaging, they're really tight on the messaging. But you know, you starting to see, you know, tweets on the wild emerge. Like the new strategy for Amazon is price reduction as a service. And you know, it's like, so you seeing these messages come out. So is that, is that your plan to message just the price reduction to show the continuous improvement in terms of cost reductions and improvements in innovation and capability and just kind of be humble. >>So what, what our market organization is trying to do is to educate our customers in the easiest, most scalable way about what our services do, what are the best practices, how could they can use them and how they can save money near site. Andy talked about it a little bit earlier. We want our customers to feel like they're spending the least amount of money they need with us cause we want a longterm relationship and a price reductions. I mean it's probably one of the top three or four most boring parts of marketing AWS because every service team is trying to relentlessly take costs out of uh, their services. And when they get to a certain point, we pass those cost savings along to customers. It's kind of like clockwork two of them. Is that an internal metric for you guys? You guys all under pressure or mandated? >>That's just the DNA of the company. Let's get the cost out. Let's strap, distract away, cost and complexity. There's some bragging rights, little competition between the teams. How many price reductions have you done? I mean, it's a sign that they're being efficient and that they're making customers happy. It's a great metric. Price reduction and also feature increase. So again, now with flash, you start to see some new stuff hit the table. Yeah, that's part of the plan, right? Price reductions and more functioning. I mean the most, one of the most important parts of our overall strategy is to constantly innovate both on building new services, let people run more things in the cloud, but then also adding new functionality based on feedback we get from our customers. We'd like to release services relatively early versus sitting in an ivory tower trying to figure out what the perfect feature set is. >>We'll get this out early. Uh, get feedback from customers because you know, we're often surprised what people do with these services and uh, you know, they take on a life of their own. But ultimately that's how we get the best. You guys are like, you guys are like the big gorilla in the industry, but I was talking to someone last night at a VIP event, San Francisco, all these CEO of venture capitalists, Oh, Amazon, they loaded with money. You know, I'm like guys, they're like a lean startup. So that's pretty much the case. We've validated in talking to some folks, you guys are like a startup. I mean you're huge, you got great resources, but it's not like you're like Swoon and money thrown it around. You guys are very tight on budgets. You don't like just throwing around money. If you want to know about Amazon's culture, just type into Google, Amazon leadership principles. >>And there's about a, is it about a dozen or so core values? One of them is frugality. It's kind of, you know, part of how we operate the company and believe in what it means is that we only spend money on things that are useful to our customers. And that's a real good grounding. And then you see, we don't have 80 foot tall posters of our products or our executives here. You know, we spend the time on computers for people to do training and when we're planning events, we want to have everything focused on stuff that's useful to customers. We build the service too. We try and be relentless and driving cost out of our suppliers so we can pass on those costs and these customers. And it's just, you know, when you, um, when you operate a frugal fashion where you really think about costs, you end up being scrappy or, and you end up innovating more, it sends a good signal to your customer base because it's like a probably a laundry list of things that you guys have laid out then you still need to do and do innovate. >>Yes, exactly. If you wasting money on, you know, weirdness people that say, Hey, we didn't, why aren't they spending that energy on building new stuff? Exactly. Like we didn't 10 Howard street and close off the road to have a rock concert held companies. I mean, we have our crowd chat. Have you've seen that? We built that all on Amazon would not be possible without it. We hear testimony and testimonial customers saying, Hey, Amazon would have been 15 people minimum just to actually manage the gear on an offside without avatars. So yeah, it's just pretty massive. So, so with that, I got to ask you, the marketing question is how do you roll up all that Goodwill, Tony, when this great, great case study data you have? I mean referenceability it's not about, I mean, the number one marketing strategy we have is let our customers do the marketing for us. >>So I mean, part of why we do these events is to let our customers and people who are not customers yet interact with each other. And even when we have a reception and one of the best marketing strategies, if you have a product that people like is you combined your customers, your prospects and alcohol, and then they, you let them talk, right? You haven't asked questions. And that's how you get the relevant. Like, okay, you don't wanna believe our salespeople talk to our customers and really get a sense of what's going on. All right, there's too much smoke and mirrors. But these old guard hardware and software companies for much more open, much more transparent, um, because we believe in our, in our products and they're available for anyone. Anytime. It's almost like it's not even worth making up things that aren't true because anyone in the world can evaluate any of our services anytime they want. >>It's almost boringly boringly good. And you hear Andy talking about, well we did this for that. We did definitely, it was like a laundry list. I was listening to the keynote. I'm like, okay, he's going to stop now. Yeah, no, I'm just like, it's more and more just dropping, dropping more and more feature releases. Um, so obviously you guys are shipping more product. You reducing the prices for shipping. I mean, pushing on services. Yeah. You push code in the cloud, we can create a box for you. You can ship that ship means, you know, Sam sends send to the cloud. But that's the dev ops culture that DevOps culture is to be scrappy but think differently. So you guys are thinking differently. Like I gotta ask you, how do you thinking differently because it's clear and ecosystems developing around me and that's something that you do have to nurture. >>You have to invest in this community and you're helping them as business partners now, not just customers. Your customer base now spans the partners. Yeah. Have you balanced it? Still? Same philosophy. What tweaks if you've made your job and an organization based upon the tsunami of an ecosystem growth. I mean our customer ecosystem is really important to our strategy and to our customers. The way we think about it as a um, cloud's new and people are gonna need help. So from consulting firms, systems integrators, managed service providers, which is a really fast growing space. We want to make sure that when our customers want to bet big on AWS, there are those trusted people with certified engineers who can help them either in the short term or longterm basis. And then on the technology partner ISV side, we spent a lot of time making sure that we work collaboratively with these companies to pre sort of certify these applications to run on AWS. >>And then we create pre configured versions of them that run in our marketplace where our customers can browse through a catalog of software pre-configured or run in AWS. They can install with one click of the button and then it just shows up on their AWS bill. So we're trying to make it a lot easier for people to use a lot of these partners technology. And you know what, we're not going to come out with everything. You know, we'd like the creativity of our partners. The customers like to know if they, if they bet on AWS and they say, huh, you know, I wonder if you know, there's some good no SQL databases that run on AWS. Oh there's Mongo, there's Cassandra and whatever space you pick, there may be something we offer and there may be four or five other solutions from our partners. We love that choice because that's what customers ask us. Well, >>congratulations on all your success now. And my final question for you is really probably the hardest question and you can answer it or not answer it. Um, obviously the competitive landscape has significantly increased the heat in the kitchen around you guys for a while you were uncontested. Yes. Some people kind of pick an ankle biting around Amazon's, you know, leadership. But now you've got some pretty big players. IBM, HP, Oracle, Google, EMC, pivotal, VMware gunning, Rackspace, trickles, OpenStack, all of those kind of going around and no, you don't focus on competition and you focus on the customer. We've heard that before, but like you gotta think about that. That's going to put some pressure. How is that affecting you guys? I see you're mindful of it. Are you guys doing anything different to address it? >>I've never seen a market before where it wasn't healthy for both the leader and for the customers to have competition. And we've always expected this to be a market that would have multiple vendors. We look at our, every other technology, a space that was new and became large. There's multiple vendors and it, you know, it enhances innovation, keeps people honest. It's a good thing. >>So the final question then is what will you tell the folks out there who are watching? Is Amazon enterprise ready, um, what's going on right now? This event, you get the big announcements, give them a recap of what you guys did today and comment on the, on the Amazon is enterprise ready or the enterprise may be ready, not ready for the Amazon. So how do you respond to all that FID out? >>Yeah, I mean that was a question people asked a lot about us in the enterprise three, four years ago. I think we've invested a pretty big deal of our R and D over the past four or five years on just maniacally going through all these enterprise features. I mean, if you look at Gartner's magic quadrant for infrastructure and service, which is 100% designed for enterprise decision makers, we're, we're the faraway leader. Uh, and um, you know, we Mark off their checklist pretty well. And I think that's one of the reasons why we're really becoming the safe choice for it managers and large organizations, large enterprises, large government agencies. Um, I mean, my biggest point of advice is to take a look at our website and we're constantly coming out with new services. And if you haven't looked at this recently, I bet you're going to go there and find some things that you didn't know. Randomness and you'll get some ideas about new projects, new workloads that you can run in the cloud. >>Okay. Final word on re-invent to now. Three major things were announced Canisius app stream and workspaces. Are you happy with what's happened since then and now? It gives a quick guys a feeling of >>yeah, I mean the, the uh, we did a private beta for all three of them. We had a lot of participation. Uh, we showed in the keynote some of the real creative applications people are building with app stream where they're streaming very graphically intensive applications out to a variety of devices. Really making it easier for developers, workspaces, the interest. I've never seen a product like this before. Um, where the customer is in the private beta are just so excited about giving us some features, talk about how we can make it better. Um, tons of, tons of energy, tons of excitement. And Canisius is one of these things where, you know, we didn't know what to expect. I mean it's, it's a, a, a realtime analytics service to ingest massive amounts of data and you can build all kinds of apps on top of it. And I think, uh, one of the things we talked about today, uh, was a gaming company. Supersolid makes classic plans to take all the click stream and usage data of their application to figure all these intelligent endgame offers and how to make their games more efficient and more fun. And uh, that's the best part is when we can come out with technology that is pretty broad and can be used for a lot of things. And then we let customers be creative and we can see what they do. >>Then they do Italia. Luckily they generally anymore, right there you'll come and you actually have the hardest and easiest job in the world kind of at the same time. One is you just have great customers. You have the sizzle and the steak, as we say, meat on the bone. Um, great product mix. You guys introducing that stuff here, prices dropping and functionality increasing and innovation having the same time. It's actually quite an amazing thing. So we're really impressed. Again, we're happy customer with Bouchut that's coming on the cube. Again, appreciate it for having me. This is the cube. This is what we do. We go out to the events, we go where the action is, and the action is at Amazon web services summit in San Francisco. This is the cube. We'll be right back with our next guest after this short break.