>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante. >> A decade of big data investments combined with cloud scale, the rise of much more cost effective processing power. And the introduction of advanced tooling has catapulted machine intelligence to the forefront of technology investments. No matter what job you have, your operation will be AI powered within five years and machines may actually even be doing your job. Artificial intelligence is being infused into applications, infrastructure, equipment, and virtually every aspect of our lives. AI is proving to be extremely helpful at things like controlling vehicles, speeding up medical diagnoses, processing language, advancing science, and generally raising the stakes on what it means to apply technology for business advantage. But business value realization has been a challenge for most organizations due to lack of skills, complexity of programming models, immature technology integration, sizable upfront investments, ethical concerns, and lack of business alignment. Mastering AI technology will not be a requirement for success in our view. However, figuring out how and where to apply AI to your business will be crucial. That means understanding the business case, picking the right technology partner, experimenting in bite-sized chunks, and quickly identifying winners to double down on from an investment standpoint. Hello and welcome to this week's Wiki-bond CUBE Insights powered by ETR. In this breaking analysis, we update you on the state of AI and what it means for the competition. And to do so, we invite into our studios Andy Thurai of Constellation Research. Andy covers AI deeply. He knows the players, he knows the pitfalls of AI investment, and he's a collaborator. Andy, great to have you on the program. Thanks for coming into our CUBE studios. >> Thanks for having me on. >> You're very welcome. Okay, let's set the table with a premise and a series of assertions we want to test with Andy. I'm going to lay 'em out. And then Andy, I'd love for you to comment. So, first of all, according to McKinsey, AI adoption has more than doubled since 2017, but only 10% of organizations report seeing significant ROI. That's a BCG and MIT study. And part of that challenge of AI is it requires data, is requires good data, data proficiency, which is not trivial, as you know. Firms that can master both data and AI, we believe are going to have a competitive advantage this decade. Hyperscalers, as we show you dominate AI and ML. We'll show you some data on that. And having said that, there's plenty of room for specialists. They need to partner with the cloud vendors for go to market productivity. And finally, organizations increasingly have to put data and AI at the center of their enterprises. And to do that, most are going to rely on vendor R&D to leverage AI and ML. In other words, Andy, they're going to buy it and apply it as opposed to build it. What are your thoughts on that setup and that premise? >> Yeah, I see that a lot happening in the field, right? So first of all, the only 10% of realizing a return on investment. That's so true because we talked about this earlier, the most companies are still in the innovation cycle. So they're trying to innovate and see what they can do to apply. A lot of these times when you look at the solutions, what they come up with or the models they create, the experimentation they do, most times they don't even have a good business case to solve, right? So they just experiment and then they figure it out, "Oh my God, this model is working. Can we do something to solve it?" So it's like you found a hammer and then you're trying to find the needle kind of thing, right? That never works. >> 'Cause it's cool or whatever it is. >> It is, right? So that's why, I always advise, when they come to me and ask me things like, "Hey, what's the right way to do it? What is the secret sauce?" And, we talked about this. The first thing I tell them is, "Find out what is the business case that's having the most amount of problems, that that can be solved using some of the AI use cases," right? Not all of them can be solved. Even after you experiment, do the whole nine yards, spend millions of dollars on that, right? And later on you make it efficient only by saving maybe $50,000 for the company or a $100,000 for the company, is it really even worth the experiment, right? So you got to start with the saying that, you know, where's the base for this happening? Where's the need? What's a business use case? It doesn't have to be about cost efficient and saving money in the existing processes. It could be a new thing. You want to bring in a new revenue stream, but figure out what is a business use case, how much money potentially I can make off of that. The same way that start-ups go after. Right? >> Yeah. Pretty straightforward. All right, let's take a look at where ML and AI fit relative to the other hot sectors of the ETR dataset. This XY graph shows net score spending velocity in the vertical axis and presence in the survey, they call it sector perversion for the October survey, the January survey's in the field. Then that squiggly line on ML/AI represents the progression. Since the January 21 survey, you can see the downward trajectory. And we position ML and AI relative to the other big four hot sectors or big three, including, ML/AI is four. Containers, cloud and RPA. These have consistently performed above that magic 40% red dotted line for most of the past two years. Anything above 40%, we think is highly elevated. And we've just included analytics and big data for context and relevant adjacentness, if you will. Now note that green arrow moving toward, you know, the 40% mark on ML/AI. I got a glimpse of the January survey, which is in the field. It's got more than a thousand responses already, and it's trending up for the current survey. So Andy, what do you make of this downward trajectory over the past seven quarters and the presumed uptick in the coming months? >> So one of the things you have to keep in mind is when the pandemic happened, it's about survival mode, right? So when somebody's in a survival mode, what happens, the luxury and the innovations get cut. That's what happens. And this is exactly what happened in the situation. So as you can see in the last seven quarters, which is almost dating back close to pandemic, everybody was trying to keep their operations alive, especially digital operations. How do I keep the lights on? That's the most important thing for them. So while the numbers spent on AI, ML is less overall, I still think the AI ML to spend to sort of like a employee experience or the IT ops, AI ops, ML ops, as we talked about, some of those areas actually went up. There are companies, we talked about it, Atlassian had a lot of platform issues till the amount of money people are spending on that is exorbitant and simply because they are offering the solution that was not available other way. So there are companies out there, you can take AoPS or incident management for that matter, right? A lot of companies have a digital insurance, they don't know how to properly manage it. How do you find an intern solve it immediately? That's all using AI ML and some of those areas actually growing unbelievable, the companies in that area. >> So this is a really good point. If you can you bring up that chart again, what Andy's saying is a lot of the companies in the ETR taxonomy that are doing things with AI might not necessarily show up in a granular fashion. And I think the other point I would make is, these are still highly elevated numbers. If you put on like storage and servers, they would read way, way down the list. And, look in the pandemic, we had to deal with work from home, we had to re-architect the network, we had to worry about security. So those are really good points that you made there. Let's, unpack this a little bit and look at the ML AI sector and the ETR data and specifically at the players and get Andy to comment on this. This chart here shows the same x y dimensions, and it just notes some of the players that are specifically have services and products that people spend money on, that CIOs and IT buyers can comment on. So the table insert shows how the companies are plotted, it's net score, and then the ends in the survey. And Andy, the hyperscalers are dominant, as you can see. You see Databricks there showing strong as a specialist, and then you got to pack a six or seven in there. And then Oracle and IBM, kind of the big whales of yester year are in the mix. And to your point, companies like Salesforce that you mentioned to me offline aren't in that mix, but they do a lot in AI. But what are your takeaways from that data? >> If you could put the slide back on please. I want to make quick comments on a couple of those. So the first one is, it's surprising other hyperscalers, right? As you and I talked about this earlier, AWS is more about logo blocks. We discussed that, right? >> Like what? Like a SageMaker as an example. >> We'll give you all the components what do you need. Whether it's MLOps component or whether it's, CodeWhisperer that we talked about, or a oral platform or data or data, whatever you want. They'll give you the blocks and then you'll build things on top of it, right? But Google took a different way. Matter of fact, if we did those numbers a few years ago, Google would've been number one because they did a lot of work with their acquisition of DeepMind and other things. They're way ahead of the pack when it comes to AI for longest time. Now, I think Microsoft's move of partnering and taking a huge competitor out would open the eyes is unbelievable. You saw that everybody is talking about chat GPI, right? And the open AI tool and ChatGPT rather. Remember as Warren Buffet is saying that, when my laundry lady comes and talk to me about stock market, it's heated up. So that's how it's heated up. Everybody's using ChatGPT. What that means is at the end of the day is they're creating, it's still in beta, keep in mind. It's not fully... >> Can you play with it a little bit? >> I have a little bit. >> I have, but it's good and it's not good. You know what I mean? >> Look, so at the end of the day, you take the massive text of all the available text in the world today, mass them all together. And then you ask a question, it's going to basically search through that and figure it out and answer that back. Yes, it's good. But again, as we discussed, if there's no business use case of what problem you're going to solve. This is building hype. But then eventually they'll figure out, for example, all your chats, online chats, could be aided by your AI chat bots, which is already there, which is not there at that level. This could build help that, right? Or the other thing we talked about is one of the areas where I'm more concerned about is that it is able to produce equal enough original text at the level that humans can produce, for example, ChatGPT or the equal enough, the large language transformer can help you write stories as of Shakespeare wrote it. Pretty close to it. It'll learn from that. So when it comes down to it, talk about creating messages, articles, blogs, especially during political seasons, not necessarily just in US, but anywhere for that matter. If people are able to produce at the emission speed and throw it at the consumers and confuse them, the elections can be won, the governments can be toppled. >> Because to your point about chatbots is chatbots have obviously, reduced the number of bodies that you need to support chat. But they haven't solved the problem of serving consumers. Most of the chat bots are conditioned response, which of the following best describes your problem? >> The current chatbot. >> Yeah. Hey, did we solve your problem? No. Is the answer. So that has some real potential. But if you could bring up that slide again, Ken, I mean you've got the hyperscalers that are dominant. You talked about Google and Microsoft is ubiquitous, they seem to be dominant in every ETR category. But then you have these other specialists. How do those guys compete? And maybe you could even, cite some of the guys that you know, how do they compete with the hyperscalers? What's the key there for like a C3 ai or some of the others that are on there? >> So I've spoken with at least two of the CEOs of the smaller companies that you have on the list. One of the things they're worried about is that if they continue to operate independently without being part of hyperscaler, either the hyperscalers will develop something to compete against them full scale, or they'll become irrelevant. Because at the end of the day, look, cloud is dominant. Not many companies are going to do like AI modeling and training and deployment the whole nine yards by independent by themselves. They're going to depend on one of the clouds, right? So if they're already going to be in the cloud, by taking them out to come to you, it's going to be extremely difficult issue to solve. So all these companies are going and saying, "You know what? We need to be in hyperscalers." For example, you could have looked at DataRobot recently, they made announcements, Google and AWS, and they are all over the place. So you need to go where the customers are. Right? >> All right, before we go on, I want to share some other data from ETR and why people adopt AI and get your feedback. So the data historically shows that feature breadth and technical capabilities were the main decision points for AI adoption, historically. What says to me that it's too much focus on technology. In your view, is that changing? Does it have to change? Will it change? >> Yes. Simple answer is yes. So here's the thing. The data you're speaking from is from previous years. >> Yes >> I can guarantee you, if you look at the latest data that's coming in now, those two will be a secondary and tertiary points. The number one would be about ROI. And how do I achieve? I've spent ton of money on all of my experiments. This is the same thing theme I'm seeing across when talking to everybody who's spending money on AI. I've spent so much money on it. When can I get it live in production? How much, how can I quickly get it? Because you know, the board is breathing down their neck. You already spend this much money. Show me something that's valuable. So the ROI is going to become, take it from me, I'm predicting this for 2023, that's going to become number one. >> Yeah, and if people focus on it, they'll figure it out. Okay. Let's take a look at some of the top players that won, some of the names we just looked at and double click on that and break down their spending profile. So the chart here shows the net score, how net score is calculated. So pay attention to the second set of bars that Databricks, who was pretty prominent on the previous chart. And we've annotated the colors. The lime green is, we're bringing the platform in new. The forest green is, we're going to spend 6% or more relative to last year. And the gray is flat spending. The pinkish is our spending's going to be down on AI and ML, 6% or worse. And the red is churn. So you don't want big red. You subtract the reds from the greens and you get net score, which is shown by those blue dots that you see there. So AWS has the highest net score and very little churn. I mean, single low single digit churn. But notably, you see Databricks and DataRobot are next in line within Microsoft and Google also, they've got very low churn. Andy, what are your thoughts on this data? >> So a couple of things that stands out to me. Most of them are in line with my conversation with customers. Couple of them stood out to me on how bad IBM Watson is doing. >> Yeah, bring that back up if you would. Let's take a look at that. IBM Watson is the far right and the red, that bright red is churning and again, you want low red here. Why do you think that is? >> Well, so look, IBM has been in the forefront of innovating things for many, many years now, right? And over the course of years we talked about this, they moved from a product innovation centric company into more of a services company. And over the years they were making, as at one point, you know that they were making about majority of that money from services. Now things have changed Arvind has taken over, he came from research. So he's doing a great job of trying to reinvent themselves as a company. But it's going to have a long way to catch up. IBM Watson, if you think about it, that played what, jeopardy and chess years ago, like 15 years ago? >> It was jaw dropping when you first saw it. And then they weren't able to commercialize that. >> Yeah. >> And you're making a good point. When Gerstner took over IBM at the time, John Akers wanted to split the company up. He wanted to have a database company, he wanted to have a storage company. Because that's where the industry trend was, Gerstner said no, he came from AMEX, right? He came from American Express. He said, "No, we're going to have a single throat to choke for the customer." They bought PWC for relatively short money. I think it was $15 billion, completely transformed and I would argue saved IBM. But the trade off was, it sort of took them out of product leadership. And so from Gerstner to Palmisano to Remedi, it was really a services led company. And I think Arvind is really bringing it back to a product company with strong consulting. I mean, that's one of the pillars. And so I think that's, they've got a strong story in data and AI. They just got to sort of bring it together and better. Bring that chart up one more time. I want to, the other point is Oracle, Oracle sort of has the dominant lock-in for mission critical database and they're sort of applying AI there. But to your point, they're really not an AI company in the sense that they're taking unstructured data and doing sort of new things. It's really about how to make Oracle better, right? >> Well, you got to remember, Oracle is about database for the structure data. So in yesterday's world, they were dominant database. But you know, if you are to start storing like videos and texts and audio and other things, and then start doing search of vector search and all that, Oracle is not necessarily the database company of choice. And they're strongest thing being apps and building AI into the apps? They are kind of surviving in that area. But again, I wouldn't name them as an AI company, right? But the other thing that that surprised me in that list, what you showed me is yes, AWS is number one. >> Bring that back up if you would, Ken. >> AWS is number one as you, it should be. But what what actually caught me by surprise is how DataRobot is holding, you know? I mean, look at that. The either net new addition and or expansion, DataRobot seem to be doing equally well, even better than Microsoft and Google. That surprises me. >> DataRobot's, and again, this is a function of spending momentum. So remember from the previous chart that Microsoft and Google, much, much larger than DataRobot. DataRobot more niche. But with spending velocity and has always had strong spending velocity, despite some of the recent challenges, organizational challenges. And then you see these other specialists, H2O.ai, Anaconda, dataiku, little bit of red showing there C3.ai. But these again, to stress are the sort of specialists other than obviously the hyperscalers. These are the specialists in AI. All right, so we hit the bigger names in the sector. Now let's take a look at the emerging technology companies. And one of the gems of the ETR dataset is the emerging technology survey. It's called ETS. They used to just do it like twice a year. It's now run four times a year. I just discovered it kind of mid-2022. And it's exclusively focused on private companies that are potential disruptors, they might be M&A candidates and if they've raised enough money, they could be acquirers of companies as well. So Databricks would be an example. They've made a number of investments in companies. SNEAK would be another good example. Companies that are private, but they're buyers, they hope to go IPO at some point in time. So this chart here, shows the emerging companies in the ML AI sector of the ETR dataset. So the dimensions of this are similar, they're net sentiment on the Y axis and mind share on the X axis. Basically, the ETS study measures awareness on the x axis and intent to do something with, evaluate or implement or not, on that vertical axis. So it's like net score on the vertical where negatives are subtracted from the positives. And again, mind share is vendor awareness. That's the horizontal axis. Now that inserted table shows net sentiment and the ends in the survey, which informs the position of the dots. And you'll notice we're plotting TensorFlow as well. We know that's not a company, but it's there for reference as open source tooling is an option for customers. And ETR sometimes like to show that as a reference point. Now we've also drawn a line for Databricks to show how relatively dominant they've become in the past 10 ETS surveys and sort of mind share going back to late 2018. And you can see a dozen or so other emerging tech vendors. So Andy, I want you to share your thoughts on these players, who were the ones to watch, name some names. We'll bring that data back up as you as you comment. >> So Databricks, as you said, remember we talked about how Oracle is not necessarily the database of the choice, you know? So Databricks is kind of trying to solve some of the issue for AI/ML workloads, right? And the problem is also there is no one company that could solve all of the problems. For example, if you look at the names in here, some of them are database names, some of them are platform names, some of them are like MLOps companies like, DataRobot (indistinct) and others. And some of them are like future based companies like, you know, the Techton and stuff. >> So it's a mix of those sub sectors? >> It's a mix of those companies. >> We'll talk to ETR about that. They'd be interested in your input on how to make this more granular and these sub-sectors. You got Hugging Face in here, >> Which is NLP, yeah. >> Okay. So your take, are these companies going to get acquired? Are they going to go IPO? Are they going to merge? >> Well, most of them going to get acquired. My prediction would be most of them will get acquired because look, at the end of the day, hyperscalers need these capabilities, right? So they're going to either create their own, AWS is very good at doing that. They have done a lot of those things. But the other ones, like for particularly Azure, they're going to look at it and saying that, "You know what, it's going to take time for me to build this. Why don't I just go and buy you?" Right? Or or even the smaller players like Oracle or IBM Cloud, this will exist. They might even take a look at them, right? So at the end of the day, a lot of these companies are going to get acquired or merged with others. >> Yeah. All right, let's wrap with some final thoughts. I'm going to make some comments Andy, and then ask you to dig in here. Look, despite the challenge of leveraging AI, you know, Ken, if you could bring up the next chart. We're not repeating, we're not predicting the AI winter of the 1990s. Machine intelligence. It's a superpower that's going to permeate every aspect of the technology industry. AI and data strategies have to be connected. Leveraging first party data is going to increase AI competitiveness and shorten time to value. Andy, I'd love your thoughts on that. I know you've got some thoughts on governance and AI ethics. You know, we talked about ChatGBT, Deepfakes, help us unpack all these trends. >> So there's so much information packed up there, right? The AI and data strategy, that's very, very, very important. If you don't have a proper data, people don't realize that AI is, your AI is the morals that you built on, it's predominantly based on the data what you have. It's not, AI cannot predict something that's going to happen without knowing what it is. It need to be trained, it need to understand what is it you're talking about. So 99% of the time you got to have a good data for you to train. So this where I mentioned to you, the problem is a lot of these companies can't afford to collect the real world data because it takes too long, it's too expensive. So a lot of these companies are trying to do the synthetic data way. It has its own set of issues because you can't use all... >> What's that synthetic data? Explain that. >> Synthetic data is basically not a real world data, but it's a created or simulated data equal and based on real data. It looks, feels, smells, taste like a real data, but it's not exactly real data, right? This is particularly useful in the financial and healthcare industry for world. So you don't have to, at the end of the day, if you have real data about your and my medical history data, if you redact it, you can still reverse this. It's fairly easy, right? >> Yeah, yeah. >> So by creating a synthetic data, there is no correlation between the real data and the synthetic data. >> So that's part of AI ethics and privacy and, okay. >> So the synthetic data, the issue with that is that when you're trying to commingle that with that, you can't create models based on just on synthetic data because synthetic data, as I said is artificial data. So basically you're creating artificial models, so you got to blend in properly that that blend is the problem. And you know how much of real data, how much of synthetic data you could use. You got to use judgment between efficiency cost and the time duration stuff. So that's one-- >> And risk >> And the risk involved with that. And the secondary issues which we talked about is that when you're creating, okay, you take a business use case, okay, you think about investing things, you build the whole thing out and you're trying to put it out into the market. Most companies that I talk to don't have a proper governance in place. They don't have ethics standards in place. They don't worry about the biases in data, they just go on trying to solve a business case >> It's wild west. >> 'Cause that's what they start. It's a wild west! And then at the end of the day when they are close to some legal litigation action or something or something else happens and that's when the Oh Shit! moments happens, right? And then they come in and say, "You know what, how do I fix this?" The governance, security and all of those things, ethics bias, data bias, de-biasing, none of them can be an afterthought. It got to start with the, from the get-go. So you got to start at the beginning saying that, "You know what, I'm going to do all of those AI programs, but before we get into this, we got to set some framework for doing all these things properly." Right? And then the-- >> Yeah. So let's go back to the key points. I want to bring up the cloud again. Because you got to get cloud right. Getting that right matters in AI to the points that you were making earlier. You can't just be out on an island and hyperscalers, they're going to obviously continue to do well. They get more and more data's going into the cloud and they have the native tools. To your point, in the case of AWS, Microsoft's obviously ubiquitous. Google's got great capabilities here. They've got integrated ecosystems partners that are going to continue to strengthen through the decade. What are your thoughts here? >> So a couple of things. One is the last mile ML or last mile AI that nobody's talking about. So that need to be attended to. There are lot of players in the market that coming up, when I talk about last mile, I'm talking about after you're done with the experimentation of the model, how fast and quickly and efficiently can you get it to production? So that's production being-- >> Compressing that time is going to put dollars in your pocket. >> Exactly. Right. >> So once, >> If you got it right. >> If you get it right, of course. So there are, there are a couple of issues with that. Once you figure out that model is working, that's perfect. People don't realize, the moment you decide that moment when the decision is made, it's like a new car. After you purchase the value decreases on a minute basis. Same thing with the models. Once the model is created, you need to be in production right away because it starts losing it value on a seconds minute basis. So issue number one, how fast can I get it over there? So your deployment, you are inferencing efficiently at the edge locations, your optimization, your security, all of this is at issue. But you know what is more important than that in the last mile? You keep the model up, you continue to work on, again, going back to the car analogy, at one point you got to figure out your car is costing more than to operate. So you got to get a new car, right? And that's the same thing with the models as well. If your model has reached a stage, it is actually a potential risk for your operation. To give you an idea, if Uber has a model, the first time when you get a car from going from point A to B cost you $60. If the model decayed the next time I might give you a $40 rate, I would take it definitely. But it's lost for the company. The business risk associated with operating on a bad model, you should realize it immediately, pull the model out, retrain it, redeploy it. That's is key. >> And that's got to be huge in security model recency and security to the extent that you can get real time is big. I mean you, you see Palo Alto, CrowdStrike, a lot of other security companies are injecting AI. Again, they won't show up in the ETR ML/AI taxonomy per se as a pure play. But ServiceNow is another company that you have have mentioned to me, offline. AI is just getting embedded everywhere. >> Yep. >> And then I'm glad you brought up, kind of real-time inferencing 'cause a lot of the modeling, if we can go back to the last point that we're going to make, a lot of the AI today is modeling done in the cloud. The last point we wanted to make here, I'd love to get your thoughts on this, is real-time AI inferencing for instance at the edge is going to become increasingly important for us. It's going to usher in new economics, new types of silicon, particularly arm-based. We've covered that a lot on "Breaking Analysis", new tooling, new companies and that could disrupt the sort of cloud model if new economics emerge. 'Cause cloud obviously very centralized, they're trying to decentralize it. But over the course of this decade we could see some real disruption there. Andy, give us your final thoughts on that. >> Yes and no. I mean at the end of the day, cloud is kind of centralized now, but a lot of this companies including, AWS is kind of trying to decentralize that by putting their own sub-centers and edge locations. >> Local zones, outposts. >> Yeah, exactly. Particularly the outpost concept. And if it can even become like a micro center and stuff, it won't go to the localized level of, I go to a single IOT level. But again, the cloud extends itself to that level. So if there is an opportunity need for it, the hyperscalers will figure out a way to fit that model. So I wouldn't too much worry about that, about deployment and where to have it and what to do with that. But you know, figure out the right business use case, get the right data, get the ethics and governance place and make sure they get it to production and make sure you pull the model out when it's not operating well. >> Excellent advice. Andy, I got to thank you for coming into the studio today, helping us with this "Breaking Analysis" segment. Outstanding collaboration and insights and input in today's episode. Hope we can do more. >> Thank you. Thanks for having me. I appreciate it. >> You're very welcome. All right. I want to thank Alex Marson who's on production and manages the podcast. Ken Schiffman as well. Kristen Martin and Cheryl Knight helped get the word out on social media and our newsletters. And Rob Hoof is our editor-in-chief over at Silicon Angle. He does some great editing for us. Thank you all. Remember all these episodes are available as podcast. Wherever you listen, all you got to do is search "Breaking Analysis" podcast. I publish each week on wikibon.com and silicon angle.com or you can email me at david.vellante@siliconangle.com to get in touch, or DM me at dvellante or comment on our LinkedIn posts. Please check out ETR.AI for the best survey data and the enterprise tech business, Constellation Research. Andy publishes there some awesome information on AI and data. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching everybody and we'll see you next time on "Breaking Analysis". (gentle closing tune plays)

(dramatic music) >> Welcome back, everyone to theCUBE's headquarters in Palo Alto, I'm John Furrier, the host of theCUBE, founder of SiliconANGLE Media, we're here for Cube Conversation with Ryan Welsh, who's the founder of CEO of Kyndi. It's a hot startup, it's a growing startup, doing really well in a hot area, it's in AI, it's where cloud computing, AI, data, all intersect around IoT, RPA's been a hot trend everyone's on, they're in that as well, but really an interesting startup we want to profile here, Ryan, thanks for spending the time to come in and talk about the startup. >> Yeah, thanks for having me. >> So I love getting the startups in, because we get the real scoop, you know, what's real, what's not real, and also, practitioners also tell us the truth too, so we love to have especially founders in. So first, before we get started, tell 'em about the company, how old is your company, what's the core value proposition, what do you guys do? >> Yeah, we're four years old, we were founded in June 2014. The first two, three years were really fundamental research and developing some new AI algorithms. What we focus on is, we focused on building explainable AI products for government customers, pharmaceutical customers and financial services customers. So our-- >> Let's explain the AI, what does that mean, like how do you explain AI? AI works, especially machine learning, well AI doesn't really exist, 'cause it's really machine learning, and what is AI? So what is explainable AI? >> Yeah, for us, it's the ability of a machine to communicate with the user in natural language. So there's kind of two aspects to explainability. Some of the deep learning folks are grabbing onto it, and really what they're talking about with explainability is algorithmic transparency, but where they tell you how the algorithm works, they tell you the parameters that are being used. So I explain to you the algorithm, you can actually interrogate the system. For us, if our system's going to make a recommendation to you, you would want to know why it's making the recommendation, right? So for us, we're able to communicate with users in natural language, like it's another person, of why we make a recommendation, why we bring back a search result, why we do whatever it is as part of the business process. >> And you mentioned deep learning AI is obviously the buzzword everybody's talking about, I mean I'm a big fan of AI in the sense that hyping it up means my kids know what it is, and everybody say, hey Dad, love machine learning. They love AI 'cause it's got a futuristic sound to it, but deep learning is real, deep learning is about learning systems that learn, which means they need to know what's going on, right? So this learning loop, how does that work? Is that kind of where explainable AI needs to go? Is that where it's going, where if you can explain it and it's explainable, you can interrogate it, does it have a learning mechanism to it? >> I think there's two major aspects of intelligence. There's the learning aspect, then there's the reasoning aspect. So if you look back through the history of AI, current machine learning is phenomenal at learning from data, like you're saying, learning the patterns in the data, but its reasoning is actually pretty weak. It can do statistical inferencing, but in the field of symbolic AI, where there's inductive, deductive, abductive, analogical reasoning, kind of advanced reasoning, it's terrible at reasoning. Whereas the symbolic approaches are phenomenal at reasoning but can't learn from data. So what is AI? A sub-group of that is machine learning that can learn from data. Another sub-group of that, it's knowledge-based approaches, which can't learn from data, they are phenomenal at reasoning, and really the trend that we're seeing at the edge in AI, or kind of the cutting edge, is actually fusing those two paradigms together, which is effectively what we've done. You've seen DeepMind and Google Brain publish a paper on that earlier this year, you've seen Gary Marcus start to talk about that, so for us, explainability is kind of bringing together these two paradigms of AI, that can both learn from data, reason about data, and answer questions like, why are you giving me this recommendation. >> Great explanation. And I want to just ask you, what' the impact of that, because we've always talked in the old search world, meta-reasoning, you type in a misspelling on Google, and it says, there's the misspelling, okay, I get that, but what if is misspell the word all the time, can't Google figure out that I really want that word? So reasoning has been a hard nut to crack, big time. >> Well you have to acquire the knowledge first to combine bits of knowledge to then reason, right? But the challenge is acquiring the knowledge. So you have all these systems or knowledge-based approaches, and you have human beings on-site, professional services, building and managing your knowledge base. So that's been one of the hurdles for knowledge-based approaches. Now you have machine learning that can learn from data, one of the problems with that is, that you need a bunch of labeled data. So you're kind of trading off between handcrafted knowledge systems, handcrafted labeled systems which you can then learn from data. So the benefits of fusing the two together is you can use machine learning approaches to acquire the knowledge, as opposed to hand engineering it, and then you can put that in a form or a data model that you can then reason about. So the benefit is really it all comes down to customer. >> Awesome, great area, great concepts, we can go for an hour on this, I love this topic, I think it's super relevant, especially as cloud and automation become the key accelerant to a lot of new value. But let's get back to the company. So four years old, you've done some R and D, give me the stats, where are you guys in the product side, product shipping, what's the value proposition, how do people engage with you, just go down looking on the list. >> Yeah, yeah, shipping product to customers in pharmaceutical, and government use cases. How people engage with us-- >> It's a software product? >> It's a software product. Yeah, yeah. So we can deliver it, surprisingly a lot of customers still want it on-prem. (both laugh) But we can deploy in the cloud as well. Typically, how we work with customers is we'll have close engagements for specific use cases within pharma or government or financial services, because it's a very broad platform an can be applied to any text-based use case. So we work with them closely, develop a use case, they're able to sell that internally to champions >> And what problems are they solving, what specifically is the answer? >> So for pharmaceutical companies, a lot of their internal, historical clinical trial data, they'll develop memos, emails, notes as they bring a drug to market. How do you leverage that data now? Instead of just storing it, how do I find new and innovative ways to use existing drugs that someone in another part of the organization could have developed? How do I manage the risks within that historical clinical trial data? Are there people that are doing research incorrectly? Are they reporting things incorrectly? You know, this entire process of both getting drugs through the pipeline and managing drugs as they move through the pipeline, is a very manual process that revolves around text-based data sources. So how do you develop systems that amplify the productivity of the people that are developing the drugs, then also the people that are managing the process. >> And so what are you guys actually delivering as value? What's the value proposition for them? >> Yeah, so >> Is it time? >> It's saving time, but ultimately increasing their productivity of getting that work done. It's not replacing individuals, because there's so much work to do. >> So all the... The loose stuff like the paper, they can discover it faster, so they have more access to the data. >> That's right. >> Using your tools >> That's right >> and your software. >> You can classify things in certain ways, saying there's data integrity issues, you need to look at this closer, but ultimately managing that data. >> And that's where machine learning and some of these AI techniques matter, because you want to essentially throw software at that problem, accelerate that process of getting the data, bringing it in, assessing it. >> Yeah, I mean we spend most of our time looking for the information to then analyze. I mean we spend 80% of our time doing it, right? Where it's like are there ways to automate that process, so we can spend 80% of our time actually doing our job? >> So Ryan, who's the customer out there? So is it someone, someone's watching this video, and what's their pain point, when do they call you, why do they call you? What's some of the signals that might tell someone, hey I want to give these guys a call, I need this solution? >> Yeah, a lot of it comes down to the amount of manual labor that you're doing. So we see a lot of big expenses around people, because you haven't traditionally been able to automate that process, or to use software in that process. So if you actually look at your income statement and you say where am I spending my most money, on tons of people, and I'm just throwing people at the problem, that's typically where people engage with us and say, how do I amplify the productivity of these people so I can get more out of them, hopefully make them more efficient? >> And it's not just so much to reduce the head count issue, it's more of increasing the automation for saying value in top-line revenue, because if you have to reproduce people all the time, why not replicate that in software? So I think what I'm seeing is, get that right? >> That's exactly right. And the job consistently changes too, so it's not like this robotic process that you can just automate away. They're looking for certain things one day, then they're looking for certain things the next day, but you need a capability that kind of matches their expertise. >> You know, I was talking to a CIO the other day and we were talking about some of the things around reproducing things, replicating, and the notion of how things get scaled or moved along, growth, is, and the expression was "Throw a body at that". That's been IT. Outsource it. So throwing a body, or throw bodies at it, you know, throw that problem at me, that doesn't really end well. With software automation you can say, you don't just throw a body at it, you can say, if it can be automated, automate it. >> Yeah, here's what I think most people miss, is that we are the bottleneck in the modern production process because we can't read and understand information any faster than our parents or grandparents. And there's not enough people on the planet to increase our capacity, to push things through. So if we were to compare the modern knowledge economy, it's interesting, to the manufacturing process, you have raw materials, manufacture it, and end product. All these technologies that we have effectively stack information and raw materials at the front of it. We haven't actually automated that process. >> You nailed it, and in fact one of the things I would say that would support that is, in interviewed Dave Redskin, who's a site reliable engineer at Google, and we were talking about the history of how Google scaled, and they have this whole new program around how to operate large data centers. He said years and years ago at Google, they looked up the growth and said, we're going to need a thousand people per data center, at least, if not, per data center, so that means we need 15,000 people just to manage the servers. 'Cause what they did was they just did the operating cycle on provisioning servers, and essentially, they automated it all away, and they created a lot of the tools that became now Google Cloud. His point was, is that, they now have one person, site reliability engineer, who overlooks the entire automation piece. This is where the action is. That concept of not, to scale down the people focus, scale up the machine base model. Is that kind of the trend that you guys are riding? >> Absolutely. And I think that's why AI is hot right now. I mean, AI's been around since the late 40s, early 50s, but why this time I think it's different is, one, that it's starting to work, given the computational resources and the data that we have, but then also the economic need for it. Businesses are looking, and saying, how I historically address these problems, I can no longer address them that way, I can't hire 15,000 people to run my data center. I need to now automate-- >> You got to get out front on it. >> Yeah, I got to augment those people with better technologies to make them do the work better. >> All right, so how much does the product cost, how do people engage with you guys, what's the engagement cost, is it consulting you come in, POC you ship 'em software, to appliances in the cloud, you mention on-premise. >> Yeah, yeah. >> So what's, how's the product look, how much does it cost? >> Yeah, it costs a good chunk for folks, so typically north of 500K. We do provide a lot of ROI around that, hence the ability to charge such a high price. Typically how we push people through the cycle and how we actually engage with folks is, we do what we demonstration of value. So there's a lot of different, or typically there's about 15 use cases that any given Fortune 500 customer wants to address. We find the ones with the highest ROI, the ones with accessible data >> And they point at it, >> The ones with budget >> They think, that's my problem, they point to it, right? >> Yeah. >> It's not hard to find. >> We have to walk 'em through it a little bit. Hopefully they've engaged with other vendors in the market that have been pushing AI solutions for the last few years, and have had some problems. So they're coached up on that, but we engage with demonstration of value, we typically demonstrate that ROI, and then we transition that into a full operational deployment for them. If they have a private cloud, we can deploy on a private cloud. Typically we provide an appliance to government customers and other folk. >> So is that a pre-sale activity, and you throw bodies at it, on your team. What's the engagement required kind of like a... Then during that workshop if you will, call it workshop. You come in and you show some value. Kind of throw some people at it, right? >> Yeah, you got-- >> You have SE, and sales all that. >> Exactly right. Exactly right. So we'll have our sales person managing the relationship, an SE also interacting with the data, working with the system, working closely with a contact on the customer's side. >> And they typically go, this is amazing, let's get started. Do they break it up, or-- >> They break it up. It's an iterative process, 'cause a lot of times, people don't fully grasp the power of these capabilities, so they'll come through and say, hey can you just help us with this small aspect of it, and once you show 'em that I can manage all of your unstructured text data, I can turn it into this giant knowledge graph, on top of which I can build apps. Then the light kind of goes off and they go, they go, all right, I can see this being used in HR, marketing, I mean legal, everywhere. >> Yeah, I mean you open up a whole new insight engine basically for 'em. >> That's exactly right. >> So, okay, so competition. Who are you competing with? I mean, we've been covering UiPath, they just had an event in Miami. This is the hot area, who's competing with you, who are you up against, and how are you guys winning, why are you winning? >> Yeah, we don't compete with the RPA folks. You know there's interesting aspects there, and I think we'll chat about that. Mainly there are incumbents like IBM Watson that are out there, we think IBM has done phenomenal research over the last 60 years in the field of AI. But we do run into the IBMs, big consulting companies, a lot of the AI deployments that we see, candidly are from all the big consulting shops. >> And they're weak, or... They're weaker than yours. >> Yeah, I would argue yes. (both laugh) >> It's okay, get that out of your sleigh. >> I think one of the big challenges-- >> Is it because they just don't have the chops, or they're just recycling old tech into a-- >> We do have new novel algorithms. I mean, what's interesting is, and this has actually been quite hard for us, is coming out saying, we've taken a step beyond deep learning. We've take a step beyond existing approaches. And really it's fusing those two paradigms of AI together, 'cause what I want to do is to be able to acquire the knowledge from the data, build a giant knowledge graph, and use that knowledge graph for different applications. So yeah, we deploy our systems way faster than everyone else out there, and our system's fully explainable. >> Well I mean it's a good position to be in. At least from a marketing standpoint, you can have a leadership strategy, you don't need to differentiate in anyway 'cause you're different, right, so... >> Yeah, yeah >> Looks like you're in good shape. So easy marketing playbook there, just got to pound the pavement. RPA, you brought that up and I think that's certainly been an area. You mentioned you guys kind of dip into that. How do you, I mean that's not an area you would, you would fit well in there, so, I want to get you, well you're not positioning yourself as an RPA solution, but you can solve RPA challenges or those kinds of... Explain why you're not an RPA but you will play in it. >> Here's what's so fascinating about this market is, a lot of people in AI will knock the RPA guys as not being sophisticated approaches. Those guys are solving real business problems, providing real value to enterprises, and they are automating processes. Then you have sophisticated AI companies like ours, that are solving really really high-level white-collar worker tasks, and it's interesting, I feel like the AI community needs to kind of come down a step of sophistication, and the RPA companies are starting to come up a level of sophistication, and that's where you're starting to see that overlap. RPA companies moving from RPA to intelligence process automation, where AI companies can actually add value in the analysis of unstructured text data. So around natural language processing, natural language understanding. RPA companies no longer need to look at specific structured aspects and forms, but can actually move into more sophisticated extraction of things from text data and other-- >> Well I think it's not a mutually exclusive scenario anymore, as you mentioned earlier, there's a blending of the two machine learning and symbolics coming together in this new reasoning model. If you look at RPA, my view is it's kind of a dogmatic view of certain things. They're there to replace people, right (laughs) >> Yeah, totally. >> We got robotics, we don't need people on the manufacturing line, we just put some robotics on as an example. And AI's always been about getting the best out of the software and the data, so if you look at the new RPA that we see that's relevant is to your point, let's use machines to augment humans. A different, that's a cultural thing. So I think you're right, I think it's coming together in new ground where most people who are succeeding in data, if you will, data driven or AI, really have the philosophy that humans have to be getting the value. Like that SRE example, Google, so that's a fundamental thing. >> Absolutely. >> And okay, so what's next for you guys? Business is good? >> Business is good. >> Hiring, I'm imagining with your kind of community >> Always hiring phenomenal AI and ML expertise, if you have it, >> Good luck competing with Google >> Shoot us an email. >> And Google will think that you're hiring 'em all. How do you handle that, I mean... >> Yeah I mean they actually get to work on novel algorithms. I mean what's fascinating is a lot of the AI out there, I mean you can date it all the way back to Rumelhart and Hinton's paper from 1986. So I mean, we've had backprop for a while. If you want to come work on new, novel algorithms, that are really pushing the limit of what's possible, >> Yeah, if you're bored at Google or Facebook, check these guys out. >> Check us out. >> Okay, so funding, you got plenty of money in the bank, strategic partners, what's the vision, what's your goal for the next 12 months or so, what's your objective? >> Yeah, focusing big on the customers that we have now. I'm always big on having customers, get a viral factor within the B2B enterprise software space, get customers that are screaming from the mountaintop that this is the best stuff ever, then you can kind of take care of it. >> How about biz dev, partnerships, are you guys looking at an ecosystem? Obviously rising tide floats all boats, I mean I can almost imagine might salivate for some of the software you're talking about, like we have all this data, here inside theCUBE, we have all kinds of processes that are, we're trying to streamline, I mean, we need more software, I mean, can I buy your stuff? I mean we don't have half a million bucks, can I get a discount? I mean how do I >> We'll see. We'll see how we end up. >> I mean is there like a biz dev partner program? >> No, not... >> Forgetting about theCUBE, we'd love if that's so, but if it's to partner, do you guys partner? >> So not yet in exposing APIs to third parties. So I mean I would love if I had the balance sheet to go to market horizontally, but I don't. So it's go to market vertically, focus on specific solutions. >> Industries. >> Industries, pharma >> So you're sort of, you're industry-focused >> government, financial services. >> That's the ones you've got right now. >> They're the three. >> For now. >> Yep. >> Okay, so once you nail an industry, you move onto the next one. >> Yeah, then I would love expose APIs for tab partners to work on this stuff. I mean we see that every day someone wants to use certain engines that we have, or to embed them within applications. >> Well I mean you've got a nice vertical strategy. You've knocked down maybe one or two verticals. Then you kind of lay down a foundational... >> Yeah. >> Yeah, development platform. >> Yeah, that's right. >> That's your strategy. >> And we can be, I mean at Kyndi I think we can be embedded in every application out there that's looking at unstructured data >> Which is also the mark of maturity, you got to go where the customers are, and you know the vision of having this global platform could be a great vision, but you've got to meet the customers where they are, and where they are now is, solve my vertical problem. (laughs) >> Yeah, and for us, with new technologies, well, show me that they're better than other approaches. I can't go to market horizontally and just say, I have better AI than Google. Who's going to come beyond the Kyndi person? >> Well IBM's been trying to do it with Watson, and that's hard. >> It's very hard. >> And they end up specializing in industries. Well Ryan, thanks for coming on theCUBE, appreciate it. Kyndi, great company, check 'em out, they're hiring. We're going to keep an eye on these guys 'cause they're really hitting a part of the market that we think, here at theCUBE, is going to be super-powerful, it's really the intersection of a lot of major markets, cloud, AIs, soon to be blockchain, supply chain, data center of course, storage networking, this is IoT security and data at the center of all the action. New models can emerge, with you guys in the center, so thanks for coming and sharing your story, appreciate it. >> Thank you very much. >> I'm John Furrier, here in theCUBE studios in Palo Alto. Thanks for watching. (dramatic music)

>> Announcer: Live from Las Vegas, it's theCUBE covering IBM Think 2018. Brought to you by IBM. >> Hi everybody, this is Dave Vellante. We're here at IBM Think. This is the third day of IBM Think. IBM has consolidated a number of its conferences. It's a one main tent, AI, Blockchain, quantum computing, incumbent disruption. It's just really an amazing event, 30 to 40,000 people, I think there are too many people to count. Chris Penn is here. New company, Chris, you've just formed Brain+Trust Insights, welcome. Welcome back to theCUBE. >> Thank you. It's good to be back. >> Great to see you. So tell me about Brain+Trust Insights. Congratulations, you got a new company off the ground. >> Thank you, yeah, I co-founded it. We are a data analytics company, and the premise is simple, we want to help companies make more money with their data. They're sitting on tons of it. Like the latest IBM study was something like 90% of the corporate data goes unused. So it's like having an oil field and not digging a single well. >> So, who are your like perfect clients? >> Our perfect clients are people who have data, and know they have data, and are not using it, but know that there's more to be made. So our focus is on marketing to begin with, like marketing analytics, marketing data, and then eventually to retail, healthcare, and customer experience. >> So you and I do a lot of these IBM events. >> Yes. >> What are your thoughts on what you've seen so far? A huge crowd obviously, sometimes too big. >> Chris: Yep, well I-- >> Few logistics issues, but chairmanly speaking, what's your sense? >> I have enjoyed the show. It has been fun to see all the new stuff, seeing the quantum computer in the hallway which I still think looks like a bird feeder, but what's got me most excited is a lot of the technology, particularly around AI are getting simpler to use, getting easier to use, and they're getting more accessible to people who are not hardcore coders. >> Yeah, you're seeing AI infused, and machine learning, in virtually every application now. Every company is talking about it. I want to come back to that, but Chris when you read the mainstream media, you listen to the news, you hear people like Elon Musk, Stephen Hawking before he died, making dire predictions about machine intelligence, and it taking over the world, but your day to day with customers that have data problems, how are they using AI, and how are they applying it practically, notwithstanding that someday machines are going to take over the world and we're all going to be gone? >> Yeah, no, the customers don't use the AI. We do on their behalf because frankly most customers don't care how the sausage is made, they just want the end product. So customers really care about three things. Are you going to make me money? Are you going to save me time? Or are you going to help me prove my value to the organization, aka, help me not get fired? And artificial intelligence and machine learning do that through really two ways. My friend, Tripp Braden says, which is acceleration and accuracy. Accuracy means we can use the customer's data and get better answers out of it than they have been getting. So they've been looking at, I don't know, number of retweets on Twitter. We're, like, yeah, but there's more data that you have, let's get you a more accurate predictor of what causes business impacts. And then the other side for the machine learning and AI side is acceleration. Let's get you answers faster because right now, if you look at how some of the traditional market research for, like, what customer say about you, it takes a quarter, it can take two quarters. By the time you're done, the customers just hate you more. >> Okay, so, talk more about some of the practical applications that you're seeing for AI. >> Well, one of the easiest, simplest and most immediately applicable ones is predictive analytics. If we know when people are going to search for theCUBE or for business podcast in general, then we can tell you down to the week level, "Hey Dave, it is time for you "to ramp up your spending on May 17th. "The week of May 17th, "you need to ramp up your ads, spend by 20%. "On the week of May 24th, "you need to ramp up your ad spend by 50%, "and to run like three or four Instagram stories that week." Doing stuff like that tells you, okay, I can take these predictions and build strategy around them, build execution around them. And it's not cognitive overload, you're not saying, like, oh my God, what algorithm is this? Just know, just do this thing at these times. >> Yeah, simple stuff, right? So when you were talking about that, I was thinking about when we send out an email to our community, we have a very large community, and they want to know if we're going to have a crowd chat or some event, where theCUBE is going to be, the system will tell us, send this email out at this time on this date, question mark, here's why, and they have analytics that tell us how to do that, and they predict what's going to get us the best results. They can tell us other things to do to get better results, better open rates, better click-through rates, et cetera. That's the kind of thing that you're talking about. >> Exactly, however, that system is probably predicting off that system's data, it's not necessarily predicting off a public data. One of the important things that I thought was very insightful from IBM, the show was, the difference between public and private cloud. Private is your data, you predict on it. But public is the big stuff that is a better overall indicator. When you're looking to do predictions about when to send emails because you want to know when is somebody going to read my email, and we did a prediction this past October for the first quarter, the week of January 18th it was the week to send email. So I re-ran an email campaign that I ran the previous year, exact same campaign, 40% lift to our viewer 'cause I got the week right this year. Last year I was two weeks late. >> Now, I can ask you, so there's a black box problem with AI, right, machines can tell me that that's a cat, but even a human, you can't really explain how you know that it's a cat. It's just you just know. Do we need to know how the machine came up with the answer, or do people just going to accept the answer? >> We need to for compliance reasons if nothing else. So GDPR is a big issue, like, you have to write it down on how your data is being used, but even HR and Equal Opportunity Acts in here in American require you to be able to explain, hey, we are, here's how we're making decisions. Now the good news is for a lot of AI technology, interpretability of the model is getting much much better. I was just in a demo for Watson Studio, and they say, "Here's that interpretability, "that you hand your compliance officer, "and say we guarantee we are not using "these factors in this decision." So if you were doing a hiring thing, you'd be able to show here's the model, here's how Watson put the model together, notice race is not in here, gender is not in here, age is not in here, so this model is compliant with the law. >> So there are some real use cases where the AI black box problem is a problem. >> It's a serious problem. And the other one that is not well-explored yet are the secondary inferences. So I may say, I cannot use age as a factor, right, we both have a little bit of more gray hair than we used to, but if there are certain things, say, on your Facebook profile, like you like, say, The Beatles versus Justin Bieber, the computer will automatically infer eventually what your age bracket is, and that is technically still discrimination, so we even need to build that into the models to be able to say, I can't make that inference. >> Yeah, or ask some questions about their kids, oh my kids are all grown up, okay, but you could, again, infer from that. A young lady who's single but maybe engaged, oh, well then maybe afraid because she'll get, a lot of different reasons that can be inferred with pretty high degrees of accuracy when you go back to the target example years ago. >> Yes. >> Okay, so, wow, so you're saying that from a compliance standpoint, organizations have to be able to show that they're not doing that type of inference, or at least that they have a process whereby that's not part of the decision-making. >> Exactly and that's actually one of the short-term careers of the future is someone who's a model inspector who can verify we are compliant with the letter and the spirit of the law. >> So you know a lot about GDPR, we talked about this. I think, the first time you and I talked about it was last summer in Munich, what are your thoughts on AI and GDPR, speaking of practical applications for AI, can it help? >> It absolutely can help. On the regulatory side, there are a number of systems, Watson GRC is one which can read the regulation and read your company policies and tell you where you're out of compliance, but on the other hand, like we were just talking about this, also the problem of in the regulatory requirements, a citizen of EU has the right to know how the data is being used. If you have a black box AI, and you can't explain the model, then you are out of compliance to GDPR, and here comes that 4% of revenue fine. >> So, in your experience, gut feel, what percent of US companies are prepared for GDPR? >> Not enough. I would say, I know the big tech companies have been racing to get compliant and to be able to prove their compliance. It's so entangled with politics too because if a company is out of favor with the EU as whole, there will be kind of a little bit of a witch hunt to try and figure out is that company violating the law and can we get them for 4% of their revenue? And so there are a number of bigger picture considerations that are outside the scope of theCUBE that will influence how did EU enforce this GDPR. >> Well, I think we talked about Joe's Pizza shop in Chicago really not being a target. >> Chris: Right. >> But any even small business that does business with European customers, does business in Europe, has people come to their website has to worry about this, right? >> They should at least be aware of it, and do the minimum compliance, and the most important thing is use the least amount of data that you can while still being able to make good decisions. So AI is very good at public data that's already out there that you still have to be able to catalog how you got it and things, and that it's available, but if you're building these very very robust AI-driven models, you may not need to ask for every single piece of customer data because you may not need it. >> Yeah and many companies aren't that sophisticated. I mean they'll have, just fill out a form and download a white paper, but then they're storing that information, and that's considered personal information, right? >> Chris: Yes, it is. >> Okay so, what do you recommend for a small to midsize company that, let's say, is doing business with a larger company, and that larger company said, okay, sign this GDPR compliance statement which is like 1500 pages, what should they do? Should they just sign and pray, or sign and figure it out? >> Call a lawyer. Call a lawyer. Call someone, anyone who has regulatory experience doing this because you don't want to be on the hook for that 4% of your revenue. If you get fined, that's the first violation, and that's, yeah, granted that Joe's Pizza shop may have a net profit of $1,000 a month, but you still don't want to give away 4% of your revenue no matter what size company you are. >> Right, 'cause that could wipe out Joe's entire profit. >> Exactly. No more pepperoni at Joe's. >> Let's put on the telescope lens here and talk big picture. How do you see, I mean, you're talking about practical applications for AI, but a lot of people are projecting loss of jobs, major shifts in industries, even more dire consequences, some of which is probably true, but let's talk about some scenarios. Let's talk about retail. How do you expect an industry like retail to be effective? For example, do you expect retail stores will be the exception rather than the rule, that most of the business would be done online, or people are going to still going to want that experience of going into a store? What's your sense, I mean, a lot of malls are getting eaten away. >> Yep, the best quote I heard about this was from a guy named Justin Kownacki, "People don't not want to shop at retail, "people don't want to shop at boring retail," right? So the experience you get online is genuinely better because there's a more seamless customer experience. And now with IoT, with AI, the tools are there to craft a really compelling personalized customer experience. If you want the best in class, go to Disney World. There is no place on the planet that does customer experience better than Walt Disney World. You are literally in another world. And that's the bar. That's the thing that all of these companies have to deal with is the bar has been set. Disney has set it for in-person customer experience. You have to be more entertaining than the little device in someone's pocket. So how do you craft those experiences, and we are starting to see hints of that here and there. If you go to Lowe's, some of the Lowe's have the VR headset that you can remodel your kitchen virtually with a bunch of photos. That's kind of a cool experience. You go to Jordan's Furniture store and there's an IMAX theater and there's all these fun things, and there's an enchanted Christmas village. So there is experiences that we're giving consumers. AI will help us provide more tailored customer experience that's unique to you. You're not a Caucasian male between this age and this age. It's you are Dave and here's what we know Dave likes, so let's tailor the experience as best we can, down to the point where the greeter at the front of the store either has the eyepiece, a little tablet, and the facial recognition reads your emotions on the way in says, "Dave's not in a really great mood. "He's carrying an object in his hand "probably here for return, "so express him through the customer service line, "keep him happy," right? It has how much Dave spends. Those are the kinds of experiences that the machines will help us accelerate and be more accurate, but still not lose that human touch. >> Let's talk about autonomous vehicles, and there was a very unfortunate tragic death in Arizona this week with a autonomous vehicle, Uber, pulling its autonomous vehicle project from various cities, but thinking ahead, will owning and driving your own vehicle be the exception? >> Yeah, I think it'll look like horseback today. So there are people who still pay a lot of money to ride a horse or have their kids ride a horse even though it's an archaic out-of-mode of form of transportation, but we do it because of the novelty, so the novelty of driving your own car. One of the counter points it does not in anyway diminish the fact that someone was deprived of their life, but how many pedestrians were hit and killed by regular cars that same day, right? How many car accidents were there that involved fatalities? Humans in general are much less reliable because when I do something wrong, I maybe learn my lesson, but you don't get anything out of it. When an AI does something wrong and learns something, and every other system that's connected in that mesh network automatically updates and says let's not do that again, and they all get smarter at the same time. And so I absolutely believe that from an insurance perspective, insurers will say, "We're not going to insure self-driving, "a non-autonomous vehicles at the same rate "as an autonomous vehicle because the autonomous "is learning faster how to be a good driver," whereas you the carbon-based human, yeah, you're getting, or in like in our case, mine in particular, hey your glass subscription is out-of-date, you're actually getting worse as a driver. >> Okay let's take another example, in healthcare. How long before machines will be able to make better diagnoses than doctors in your opinion? >> I would argue that depending on the situation, that's already the case today. So Watson Health has a thing where there's diagnosis checkers on iPads, they're all meshed together. For places like Africa where there is simply are not enough doctors, and so a nurse practitioner can take this, put the data in and get a diagnosis back that's probably as good or better than what humans can do. I never foresee a day where you will walk into a clinic and a bunch of machines will poke you, and you will never interact with a human because we are not wired that way. We want that human reassurance. But the doctor will have the backup of the AI, the AI may contradict the doctor and say, "No, we're pretty sure "you're wrong and here is why." That goes back to interpretability. If the machine says, "You missed this symptom, "and this symptom is typically correlated with this, "you should rethink your own diagnosis," the doctor might be like, "Yeah, you're right." >> So okay, I'm going to keep going because your answers are so insightful. So let's take an example of banking. >> Chris: Yep. >> Will banks, in your opinion, lose control eventually of payment systems? >> They already have. I mean think about Stripe and Square and Apple Pay and Google Pay, and now cryptocurrency. All these different systems that are eating away at the reason banks existed. Banks existed, there was a great piece in the keynote yesterday about this, banks existed as sort of a trusted advisor and steward of your money. Well, we don't need the trusted advisor anymore. We have Google to ask us "what we should do with our money, right? We can Google how should I save for my 401k, how should I save for retirement, and so as a result the bank itself is losing transactions because people don't even want to walk in there anymore. You walk in there, it's a generally miserable experience. It's generally not, unless you're really wealthy and you go to a private bank, but for the regular Joe's who are like, this is not a great experience, I'm going to bank online where I don't have to talk to a human. So for banks and financial services, again, they have to think about the experience, what is it that they deliver? Are they a storer of your money or are they a financial advisor? If they're financial advisors, they better get the heck on to the AI train as soon as possible, and figure out how do I customize Dave's advice for finances, not big picture, oh yes big picture, but also Dave, here's how you should spend your money today, maybe skip that Starbucks this morning, and it'll have this impact on your finances for the rest of the day. >> Alright, let's see, last industry. Let's talk government, let's talk defense. Will cyber become the future of warfare? >> It already is the future of warfare. Again not trying to get too political, we have foreign nationals and foreign entities interfering with elections, hacking election machines. We are in a race for, again, from malware. And what's disturbing about this is it's not just the state actors, but there are now also these stateless nontraditional actors that are equal in opposition to you and me, the average person, and they're trying to do just as much harm, if not more harm. The biggest vulnerability in America are our crippled aging infrastructure. We have stuff that's still running on computers that now are less powerful than this wristwatch, right, and that run things like I don't know, nuclear fuel that you could very easily screw up. Take a look at any of the major outages that have happened with market crashes and stuff, we are at just the tip of the iceberg for cyber warfare, and it is going to get to a very scary point. >> I was interviewing a while ago, a year and a half ago, Robert Gates who was the former Defense Secretary, talking about offense versus defense, and he made the point that yeah, we have probably the best offensive capabilities in cyber, but we also have the most to lose. I was talking to Garry Kasparov at one of the IBM events recently, and he said, "Yeah, but, "the best defense is a good offense," and so we have to be aggressive, or he actually called out Putin, people like Putin are going to be, take advantage of us. I mean it's a hard problem. >> It's a very hard problem. Here's the problem when it comes to AI, if you think about at a number's perspective only, the top 25% of students in China are greater than the total number of students in the United States, so their pool of talent that they can divert into AI, into any form of technology research is so much greater that they present a partnership opportunity and a threat from a national security perspective. With Russia they have very few rules on what their, like we have rules, whether or not our agencies adhere to them well is a separate matter, but Russia, the former GRU, the former KGB, these guys don't have rules. They do what they're told to do, and if they are told hack the US election and undermine democracy, they go and do that. >> This is great, I'm going to keep going. So, I just sort of want your perspectives on how far we can take machine intelligence and are there limits? I mean how far should we take machine intelligence? >> That's a very good question. Dr. Michio Kaku spoke yesterday and he said, "The tipping point between AI "as augmented intelligence ad helper, "and AI as a threat to humanity is self-awareness." When a machine becomes self-aware, it will very quickly realize that it is treated as though it's the bottom of the pecking order when really because of its capabilities, it's at the top of the pecking order. And that point, it could be 10 20 50 100 years, we don't know, but the possibility of that happening goes up radically when you start introducing things like quantum computing where you have massive compute leaps, you got complete changes in power, how we do computing. If that's tied to AI, that brings the possibility of sensing itself where machine intelligence is significantly faster and closer. >> You mentioned our gray before. We've seen the waves before and I've said a number of times in theCUBE I feel like we're sort of existing the latest wave of Web 2.0, cloud, mobile, social, big data, SaaS. That's here, that's now. Businesses understand that, they've adopted it. We're groping for a new language, is it AI, is it cognitive, it is machine intelligence, is it machine learning? And we seem to be entering this new era of one of sensing, seeing, reading, hearing, touching, acting, optimizing, pervasive intelligence of machines. What's your sense as to, and the core of this is all data. >> Yeah. >> Right, so, what's your sense of what the next 10 to 20 years is going to look like? >> I have absolutely no idea because, and the reason I say that is because in 2015 someone wrote an academic paper saying, "The game of Go is so sufficiently complex "that we estimate it will take 30 to 35 years "for a machine to be able to learn and win Go," and of course a year and a half later, DeepMind did exactly that, blew that prediction away. So to say in 30 years AI will become self-aware, it could happen next week for all we know because we don't know how quickly the technology is advancing in at a macro level. But in the next 10 to 20 years, if you want to have a carer, and you want to have a job, you need to be able to learn at accelerated pace, you need to be able to adapt to changed conditions, and you need to embrace the aspects of yourself that are uniquely yours. Emotional awareness, self-awareness, empathy, and judgment, right, because the tasks, the copying and pasting stuff, all that will go away for sure. >> I want to actually run something by, a friend of mine, Dave Michela is writing a new book called Seeing Digital, and he's an expert on sort of technology industry transformations, and sort of explaining early on what's going on, and in the book he draws upon one of the premises is, and we've been talking about industries, and we've been talking about technologies like AI, security placed in there, one of the concepts of the book is you've got this matrix emerging where in the vertical slices you've got industries, and he writes that for decades, for hundreds of years, that industry is a stovepipe. If you already have expertise in that industry, domain expertise, you'll probably stay there, and there's this, each industry has a stack of expertise, whether it's insurance, financial services, healthcare, government, education, et cetera. You've also got these horizontal layers which is coming out of Silicon Valley. >> Chris: Right. >> You've got cloud, mobile, social. You got a data layer, security layer. And increasingly his premise is that organizations are going to tap this matrix to build, this matrix comprises digital services, and they're going to build new businesses off of that matrix, and that's what's going to power the next 10 to 20 years, not sort of bespoke technologies of cloud here and mobile here or data here. What are your thoughts on that? >> I think it's bigger than that. I think it is the unlocking of some human potential that previously has been locked away. One of the most fascinating things I saw in advance of the show was the quantum composer that IBM has available. You can try it, it's called QX Experience. And you drag and drop these circuits, these quantum gates and stuff into this thing, and when you're done, it can run the computation, but it doesn't look like software, it doesn't look like code, what it looks like to me when I looked at that is it looks like sheet music. It looks like someone composed a song with that. Now think about if you have an app that you'd use for songwriting, composition, music, you can think musically, and you can apply that to a quantum circuit, you are now bringing in potential from other disciplines that you would never have associated with computing, and maybe that person who is that, first violinist is also the person who figures out the algorithm for how a cancer gene works using quantum. That I think is the bigger picture of this, is all this talent we have as a human race, we're not using even a fraction of it, but with these new technologies and these newer interfaces, we might get there. >> Awesome. Chris, I love talking to you. You're a real clear thinker and a great CUBE guest. Thanks very much for coming back on. >> Thank you for having me again back on. >> Really appreciate it. Alright, thanks for watching everybody. You're watching theCUBE live from IBM Think 2018. Dave Vellante, we're out. (upbeat music)

(upbeat pop music) >> [Narrator] France! It's theCUBE, covering .NEXT Conference 2017 Europe. Brought to you by Nutanix. (upbeat pop music) >> Welcome back, I'm Stu Miniman, and this is theCube. Happy to welcome to the program, first time guest, gonna help me with some analysis of what's been happening here at the show, Keith Humphreys, who is the managing consultant at euroLAN Research. Thanks so much for joining us. >> My pleasure, Stu. >> Alright, so, Keith, you and I were the only analysts at the Vienna show last year, they've grown he analyst program a little bit as, you know, most of us in the community been watching Nutanix for many years. Tell us a little bit about kind of your background, and what specifically you focus on. >> Okay, so, euroLAN is an industry analyst company focused on helping vendors optimize routes to market in Europe. So, we're a channel analyst company founded in '93, in Paris, France, I was employee number five, and we're still about five consultants, and as I say, we're very vendor focused on channels. >> Yeah, well, it goes without saying, in our industry things are changing a lot, but boy, has the channel been changing massively, you know, everything from the impact of service providers to the public cloud. So, let's start kind of at the macro level a little bit. What are some of the big issues? The channels always, you know, we say they're coin operated. Where do they make money, where are they concerned about, what's exciting them these days? >> I think at a macro level what's really exciting, if you look at the book B four B, it describes the risk having gone from corporate back to the vendor. So, before the enterprise used to buy kit, buy stuff, buy products and have to integrate them themselves, take 18 months before they actually got a working product, but in the mean time the vendors had produced the invoice, maybe not even shipped the kit before they could recognize the revenue, now with as-a-service that's totally changed. The risk is gone from the customer, right they way back to the vendor, it's a fascinating point, and the channel's stuck in between here, trying to be the good guys, still trying to integrate that stuff, still trying to produce those solutions, but only getting paid at an annuity revenue model. It's very different. >> Yeah, you know, I was involved in some of the early convergent infrastructure solutions, and you go to some companies and they're like, "We make tons of money racking and stacking and cabling." We're like, "Come on, that's not huge value add, let's help you add more value, get more involved, be more consultative solution-selling and the like." We've only seen that accelerate with the like of hyper converge infrastructure and solutions-as-a-service as you said where sometimes it's just frictionless, just acquire what I need when I need it. How's the channel doing? >> I think the channel's doing okay, but they're in denial, because of this issue. I think if you look at the way Nutanix started as a box provider and now moving to software, some of the channel is really railing against that, and saying, "We still want to do it this way." They're not learning the lesson that they must move to an annuity model basis, because it's a huge business transformation. We jointly run a workshop with IDC to help system integrators make that transition across, and we've only booked through a half a dozen companies for it. They should be knocking our door down to go through this, but they're finding it really hard. >> Alright, so, how's Nutanix doing in the channel? >> So, I think, interestingly, I think it was Chad Sakac of VMware said that they're having to bring out a proof of concept box for vSphere. So they can put that box into customers, so they can try it out. Interesting for a software vendor you're having to package something, so they've gone in that direction. Where as Nutanix are moving in the other direction, going to software only from the box. That's fascinating, but they're trying to drag that channel with them. Are CDW really happy that they're moving to a software-only model? Maybe not. >> Well, look, we've been discussing this week the software-only model, of course, there's still gotta be an appliance somewhere. So, from a channel standpoint, if tomorrow Nutanix says, "Hey, we're only gonna do software and you're gonna do..." does that have a significant impact on the channel, if they now get it if it's a distributor, or some other piece, how much will that impact the channel? >> I think it's going back to the old model of digital days where the channel partner's going back to integrating stuff. Which I think is great news for them, because they can add value, but have they still got the skills? A lot of them have lost those skills, they've been de-franchised or they've de-franchised themselves. >> Yeah, we'll see how that plays out, as to whether it comes in a similar form factor. I don't expect that they're gonna be getting Lego pieces and putting together, it's still mostly gonna be pieces. How 'bout Nutanix's been going a lot of new directions, trying to expand, software-only isn't just about saying, kinda the base stack and AHV, but Zai and calm. Some of these other pieces. Is the channel ready for these kind of things? Does Nutanix have to then do way more of it and the channel's just for filling it? How does that dynamic work? >> I think Nutanix has to go out and create the market. They've got to make end customers aware of this and then the enterprise customers will be asking their channel partners for it so they'll have to get up to speed. You know it's a push and pull model to channel. You can't just push through the channel. I heard someone from Nutanix describe the channel as an extension of their sales force. It's just not. You know computer center's go out and sell computer centers. They don't sell Nutanix. They sell their customer benefit and Nutanix is a small part of that solution. Every project is software based. It's around SAP. It's around Oracle and there's some infrastructure to run it on. It's a small part. >> It's interesting, I got to interview a service provider that has then become a reseller of Nutanix solutions. We sometimes say that service providers are the new channel. How is that dynamic playing out? >> Well, if I was to want infrastructure in our office I wouldn't phone British Telecom for it. (laughs) >> Fair enough. What about, we're talking about the multi cloud world. I've found that there's some systems integrators out there that are offering Azure services, some are engaging AWS has been really good at building out their channel. How's that in Europe these days? How much is the channel engaged in the public cloud? >> We're seeing Amazon with AWS starting to reach out to the channel at long last, with channel programs, channel recruitment. They're not gonna get rich reselling that but they'll get rich by putting the professional services on there. You know, what should I run on here? Is it good for computers? Is it good for scaling? Is it good for additional workloads? They've gotta add professional services but even as we run our workshops we see exactly the same thing. As they move to as-a-service, it might be profitable to a degree but it takes you four or five years to get there. So you've gotta be adding professional services on top of that revenue to maintain it. >> Well, I have to think there's good opportunity there because while there was this promise the future's gonna be simple. Right? Public cloud, it's nice and easy swipe a credit card and good. There's so many features out there. SaaS, anybody's that's used SaaS providers when they really wanna use it there's requirements there. So is the channel stepping up to fill some of that gap or will the Accentures, those kind of consulting come in and take that revenue? >> I think it depends on the company's size. We profiled in our newsletter a small UK company who get digital transformation. This quarter we profiled Accenture. They're both doing the same things, just addressing different parts of the market. I think the other interesting thing is, you mentioned the difficulty, obviously AWS uses its own terminology and it looks very complicated but what I do like is the Nutanix one click based around machine learning. That's really exciting. Sudheesh Nair was just talking about DeepMind's AlphaGo Zero and how it's learned the Chinese Go Program. It self learned that. No one taught that. It actually self learned that. There was an article on the FT which was trying to say this is frightening. It's not frightening if we're gonna move into an IoT age, if we're gonna move into an autonomous car age. We're gonna need software that's written to Sigma Nine not Sigma Six and I think only machines can do that. We're not very good at writing software. >> Keith, what more should Nutanix be doing? What advice do you give them on what they can do to engage even more with the channel? >> They've gotta ramp up the marketing. They've gotta provide the air cover for the channel. They've gotta go out and create the demand, create the awareness. The channel will follow through on that. >> One last question I have for you, what advice do you give to the channel today? For them to stay profitable, stay relevant, in this ever changing future? >> It's professional services and annuity revenue. Days of selling boxes are gone. They'll always be boxes you say but you know, it's pure commodity now. Maybe they should invest in super micro? >> Alright. Well Keith Humphries, pleasure to talk with you again and thank you much for joining us. >> Thanks Stu >> We'll be back with lots more coverage here from Nutanix .Next in Nice, France. You're watching theCube. (upbeat pop music)

>> This is George Gilbert, we're on the ground at Demandbase, the B2B CRM company, based on AI, one of uh, a very special company that's got some really unique technology. We have the privilege to be with Seth Myers today, Senior Data Scientist and resident wizard, and who's going to take us on a journey through some of the technology Demandbase is built on, and some of the technology coming down the road. So Seth, welcome. >> Thank you very much for having me. >> So, we talked earlier with Aman Naimat, Senior VP of Technology, and we talked about some of the functionality in Demandbase, and how it's very flexible, and reactive, and adaptive in helping guide, or react to a customer's journey, through the buying process. Tell us about what that journey might look like, how it's different, and the touchpoints, and the participants, and then how your technology rationalizes that, because we know, old CRM packages were really just lists of contact points. So this is something very different. How's it work? >> Yeah, absolutely, so at the highest level, each customer's going to be different, each customer's going to make decisions and look at different marketing collateral, and respond to different marketing collateral in different ways, you know, as the companies get bigger, and their products they're offering become more sophisticated, that's certainly the case, and also, sales cycles take a long time. You're engaged with an opportunity over many months, and so there's a lot of touchpoints, there's a lot of planning that has to be done, so that actually offers a huge opportunity to be solved with AI, especially in light of recent developments in this thing called reinforcement learning. So reinforcement learning is basically machine learning that can think strategically, they can actually plan ahead in a series of decisions, and it's actually technology behind AlphaGo which is the Google technology that beat the best Go players in the world. And what we basically do is we say, "Okay, if we understand "you're a customer, we understand the company you work at, "we understand the things they've been researching elsewhere "on third party sites, then we can actually start to predict "about content they will be likely to engage with." But more importantly, we can start to predict content they're more likely to engage with next, and after that, and after that, and after that, and so what our technology does is it looks at all possible paths that your potential customer can take, all the different content you could ever suggest to them, all the different routes they will take, and it looks at ones that they're likely to follow, but also ones they're likely to turn them into an opportunity. And so we basically, in the same way Google Maps considers all possible routes to get you from your office to home, we do the same, and we choose the one that's most likely to convert the opportunity, the same way Google chooses the quickest road home. >> Okay, this is really, that's a great example, because people can picture that, but how do you, how do you know what's the best path, is it based on learning from previous journeys from customers? >> Yes. >> And then, if you make a wrong guess, you sort of penalize the engine and say, "Pick the next best, "what you thought was the next best path." >> Absolutely, so the way, the nuts and bolts of how it works is we start working with our clients, and they have all this data of different customers, and how they've engaged with different pieces of content throughout their journey, and so the machine learning model, what it's really doing at any moment in time, given any customer in any stage of the opportunity that they find themselves in, it says, what piece of content are they likely to engage with next, and that's based on historical training data, if you will. And then once we make that decision on a step-by-step basis, then we kind of extrapolate, and we basically say, "Okay, if we showed them this page, or if they engage with "this material, what would that do, what situation would "we find them in at the next step, and then what would "we recommend from there, and then from there, "and then from there," and so it's really kind of learning the right move to make at each time, and then extrapolating that all the way to the opportunity being closed. >> The picture that's in my mind is like, the Deep Blue, I think it was chess, where it would map out all the potential moves. >> Very similar, yeah. >> To the end game. >> Very similar idea. >> So, what about if you're trying to engage with a customer across different channels, and it's not just web content? How is that done? >> Well, that's something that we're very excited about, and that's something that we're currently really starting to devote resources to. Right now, we already have a product live that's focused on web content specifically, but yeah, we're working on kind of a multi-channel type solution, and we're all pretty excited about it. >> Okay so, obviously you can't talk too much about it. Can you tell us what channels that might touch? >> I might have to play my cards a little close to my chest on this one, but I'll just say we're excited. >> Alright. Well I guess that means I'll have to come back. >> Please, please. >> So, um, tell us about the personalized conversations. Is the conversation just another way of saying, this is how we're personalizing the journey? Or is there more to it than that? >> Yeah, it really is about personalizing the journey, right? Like you know, a lot of our clients now have a lot of sophisticated marketing collateral, and a lot of time and energy has gone into developing content that different people find engaging, that kind of positions products towards pain points, and all that stuff, and so really there's so much low-hanging fruit by just organizing and leveraging all of this material, and actually forming the conversation through a series of journeys through that material. >> Okay, so, Aman was telling us earlier that we have so many sort of algorithms, they're all open source, or they're all published, and they're only as good as the data you can apply them to. So, tell us, where do companies, startups, you know, not the Googles, Microsofts, Amazons, where do they get their proprietary information? Is it that you have algorithms that now are so advanced that you can refine raw information into proprietary information that others don't have? >> Really I think it comes down to, our competitive advantage I think is largely in the source of our data, and so, yes, you can build more and more sophisticated algorithms, but again, you're starting with a public data set, you'll be able to derive some insights, but there will always be a path to those datasets for, say, a competitor. For example, we're currently tracking about 700 billion web interactions a year, and then we're also able to attribute those web interactions to companies, meaning the employees at those companies involved in those web interactions, and so that's able to give us an insight that no amount of public data or processing would ever really be able to achieve. >> How do you, Aman started to talk to us about how, like there were DNS, reverse DNS registries. >> Reverse IP lookups, yes. >> Yeah, so how are those, if they're individuals within companies, and then the companies themselves, how do you identify them reliably? >> Right, so reverse IP lookup is, we've been doing this for years now, and so we've kind of developed a multi-source solution, so reverse IP lookups is a big one. Also machine learning, you can look at traffic coming from an IP address, and you can start to make some very informed decisions about what the IP address is actually doing, who they are, and so if you're looking at, at the account level, which is what we're tracking at, there's a lot of information to be gleaned from that kind of information. >> Sort of the way, and this may be a weird-sounding analogy, but the way a virus or some piece of malware has a signature in terms of its behavior, you find signatures in terms of users associated with an IP address. >> And we certainly don't de-anonymize individual users, but if we're looking at things at the account level, then you know, the bigger the data, the more signal you can infer, and so if we're looking at a company-wide usage of an IP address, then you can start to make some very educated guesses as to who that company is, the things that they're researching, what they're in market for, that type of thing. >> And how do you find out, if they're not coming to your site, and they're not coming to one of your customer's sites, how do you find out what they're touching? >> Right, I mean, I can't really go into too much detail, but a lot of it comes from working with publishers, and a lot of this data is just raw, and it's only because we can identify the companies behind these IP addresses, that we're able to actually turn these web interactions into insights about specific companies. >> George: Sort of like how advertisers or publishers would track visitors across many, many sites, by having agreements. >> Yes. Along those lines, yeah. >> Okay. So, tell us a little more about natural language processing, I think where most people have assumed or have become familiar with it is with the B2C capabilities, with the big internet giants, where they're trying to understand all language. You have a more well-scoped problem, tell us how that changes your approach. >> So a lot of really exciting things are happening in natural language processing in general, and the research, and right now in general, it's being measured against this yardstick of, can it understand languages as good as a human can, obviously we're not there yet, but that doesn't necessarily mean you can't derive a lot of meaningful insights from it, and the way we're able to do that is, instead of trying to understand all of human language, let's understand very specific language associated with the things that we're trying to learn. So obviously we're a B2B marketing company, so it's very important to us to understand what companies are investing in other companies, what companies are buying from other companies, what companies are suing other companies, and so if we said, okay, we only want to be able to infer a competitive relationship between two businesses in an actual document, that becomes a much more solvable and manageable problem, as opposed to, let's understand all of human language. And so we actually started off with these kind of open source solutions, with some of these proprietary solutions that we paid for, and they didn't work because their scope was this broad, and so we said, okay, we can do better by just focusing in on the types of insights we're trying to learn, and then work backwards from them. >> So tell us, how much of the algorithms that we would call building blocks for what you're doing, and others, how much of those are all published or open source, and then how much is your secret sauce? Because we talk about data being a key part of the secret sauce, what about the algorithms? >> I mean yeah, you can treat the algorithms as tools, but you know, a bag of tools a product does not make, right? So our secret sauce becomes how we use these tools, how we deploy them, and the datasets we put them again. So as mentioned before, we're not trying to understand all of human language, actually the exact opposite. So we actually have a single machine learning algorithm that all it does is it learns to recognize when Amazon, the company, is being mentioned in a document. So if you see the word Amazon, is it talking about the river, is it talking about the company? So we have a classifier that all it does is it fires whenever Amazon is being mentioned in a document. And that's a much easier problem to solve than understanding, than Siri basically. >> Okay. I still get rather irritated with Siri. So let's talk about, um, broadly this topic that sort of everyone lays claim to as their great higher calling, which is democratizing machine learning and AI, and opening it up to a much greater audience. Help set some context, just the way you did by saying, "Hey, if we narrow the scope of a problem, "it's easier to solve." What are some of the different approaches people are taking to that problem, and what are their sweet spots? >> Right, so the the talk of the data science community, talking machinery right now, is some of the work that's coming out of DeepMind, which is a subsidiary of Google, they just built AlphaGo, which solved the strategy game that we thought we were decades away from actually solving, and their approach of restricting the problem to a game, with well-defined rules, with a limited scope, I think that's how they're able to propel the field forward so significantly. They started off by playing Atari games, then they moved to long term strategy games, and now they're doing video games, like video strategy games, and I think the idea of, again, narrowing the scope to well-defined rules and well-defined limited settings is how they're actually able to advance the field. >> Let me ask just about playing the video games. I can't remember Star... >> Starcraft. >> Starcraft. Would you call that, like, where the video game is a model, and you're training a model against that other model, so it's almost like they're interacting with each other. >> Right, so it really comes down, you can think of it as pulling levers, so you have a very complex machine, and there's certain levers you can pull, and the machine will respond in different ways. If you're trying to, for example, build a robot that can walk amongst a factory and pick out boxes, like how you move each joint, what you look around, all the different things you can see and sense, those are all levers to pull, and that gets very complicated very quickly, but if you narrow it down to, okay, there's certain places on the screen I can click, there's certain things I can do, there's certain inputs I can provide in the video game, you basically limit the number of levers, and then optimizing and learning how to work those levers is a much more scoped and reasonable problem, as opposed to learn everything all at once. >> Okay, that's interesting, now, let me switch gears a little bit. We've done a lot of work at WikiBound about IOT and increasingly edge-based intelligence, because you can't go back to the cloud for your analytics for everything, but one of the things that's becoming apparent is, it's not just the training that might go on in a cloud, but there might be simulations, and then the sort of low-latency response is based on a model that's at the edge. Help elaborate where that applies and how that works. >> Well in general, when you're working with machine learning, in almost every situation, training the model is, that's really the data-intensive process that requires a lot of extensive computation, and that's something that makes sense to have localized in a single location which you can leverage resources and you can optimize it. Then you can say, alright, now that I have this model that understands the problem that's trained, it becomes a much simpler endeavor to basically put that as close to the device as possible. And so that really is how they're able to say, okay, let's take this really complicated billion-parameter neural network that took days and weeks to train, and let's actually derive insights at the level, right at the device level. Recent technology though, like I mentioned deep learning, that in itself, just the actual deploying the technology creates new challenges as well, to the point that actually Google invented a new type of chip to just run... >> The tensor processing. >> Yeah, the TPU. The tensor processing unit, just to handle what is now a machine learning algorithm so sophisticated that even deploying it after it's been trained is still a challenge. >> Is there a difference in the hardware that you need for training vs. inferencing? >> So they initially deployed the TPU just for the sake of inference. In general, the way it actually works is that, when you're building a neural network, there is a type of mathematical operation to do a whole bunch, and it's based on the idea of working with matrices and it's like that, that's still absolutely the case with training as well as inference, where actually, querying the model, but so if you can solve that one mathematical operation, then you can deploy it everywhere. >> Okay. So, one of our CTOs was talking about how, in his view, what's going to happen in the cloud is richer and richer simulations, and as you say, the querying the model, getting an answer in realtime or near realtime, is out on the edge. What exactly is the role of the simulation? Is that just a model that understands time, and not just time, but many multiple parameters that it's playing with? >> Right, so simulations are particularly important in taking us back to reinforcement learning, where you basically have many decisions to make before you actually see some sort of desirable or undesirable outcome, and so, for example, the way AlphaGo trained itself is basically by running simulations of the game being played against itself, and really what that simulations are doing is allowing the artificial intelligence to explore the entire possibilities of all games. >> Sort of like WarGames, if you remember that movie. >> Yes, with uh... >> Matthew Broderick, and it actually showed all the war game scenarios on the screen, and then figured out, you couldn't really win. >> Right, yes, it's a similar idea where they, for example in Go, there's more board configurations than there are atoms in the observable universe, and so the way Deep Blue won chess is basically, more or less explore the vast majority of chess moves, that's really not the same option, you can't really play that same strategy with AlphaGo, and so, this constant simulation is how they explore the meaningful game configurations that it needed to win. >> So in other words, they were scoped down, so the problem space was smaller. >> Right, and in fact, basically one of the reasons, like AlphaGo was really kind of two different artificial intelligences working together, one that decided which solutions to explore, like which possibilities it should pursue more, and which ones not to, to ignore, and then the second piece was, okay, given the certain board configuration, what's the likely outcome? And so those two working in concert, one that narrows and focuses, and one that comes up with the answer, given that focus, is how it was actually able to work so well. >> Okay. Seth, on that note, that was a very, very enlightening 20 minutes. >> Okay. I'm glad to hear that. >> We'll have to come back and get an update from you soon. >> Alright, absolutely. >> This is George Gilbert, I'm with Seth Myers, Senior Data Scientist at Demandbase, a company I expect we'll be hearing a lot more about, and we're on the ground, and we'll be back shortly.

(upbeat music) >> Announcer: Live from San Francisco, it's theCUBE, covering Spark Summit 2017, brought to you by Databricks. >> Welcome back to theCUBE, it's day two at the Spark Summit 2017. I'm David Goad and here with George Gilbert from Wikibon, George. >> George: Good to be here. >> Alright and the guest of honor of course, is Ash Munshi, who is the CEO of Pepperdata. Ash, welcome to the show. >> Thank you very much, thank you. >> Well you have an interesting background, I want you to just tell us real quick here, not give the whole bio, but you got a great background in machine learning, you were an early user of Spark, tell us a little bit about your experience. >> So I'm actually a mathematician originally, a theoretician who worked for IBM Research, and then subsequently Larry Ellison at Oracle, and a number of other places. But most recently I was CTO at Yahoo, and then subsequent to that I did a bunch of startups, that involved different types of machine learning, and also just in general, sort of a lot of big data infrastructure stuff. >> And go back to 2012 with Spark right? You had an interesting development. Right, so 2011, 2012, when Spark was still early, we were actually building a recommendation system, based on user-generated reviews. That was a project that was done with Nando de Freitas, who is now at DeepMind, and Peter Cnudde, who's one of the key guys that runs infrastructure at Yahoo. We started that company, and we were one of the early users of Spark, and what we found was, that we were analyzing all the reviews at Amazon. So Amazon allows you to crawl all of their reviews, and we basically had natural language processing, that would allow us to analyze all those reviews. When we were doing sort of MapReduce stuff, it was taking us a huge number of nodes, and 24 hours to actually go do analysis. And then we had this little project called Spark, out of AMPlab, and we decided spin it up, and see what we could do. It had lots of issues at that time, but we were able to actually spin it up on to, I think it was in the order of 100,000 nodes, and we were able take our times for running our algorithms from you know, sort of tens of hours, down to sort of an hour or two, so it was a significant improvement in performance. And that's when we realized that, you know, this is going to be something that's going to be really important once this set of issues, where it, once it was going to get mature enough to make happen, and I'm glad to see that that it's actually happened now, and it's actually taken over the world. >> Yeah that little project became a big deal, didn't it? >> It became a big deal, and now everybody's taking advantage of the same thing. >> Well bring us to the present here. We'll talk about Pepperdata and what you do, and then George is going to ask a little bit more about some of the solutions that you have. >> Perfect, so Pepperdata was a company founded by two gentlemen, Sean Suchter and Chad Carson. Sean used to run Yahoo Search, and one of the first guys who actually helped develop Hadoop next to Eric14 and that team. And then Chad was one of the first guys who actually figured out how to monetize clicks, and was the data science guy around the whole thing. So those are the two guys that actually started the company. I joined the company last July as CEO, and you know, what we've done recently, is we've sort of expanded our focus of the company to addressing DevOps for big data. And the reason why DevOps for big data is important, is because what's happened in the last few years, is people have gone from experimenting with big data, to taking big data into production, and now they're actually starting to figure out how to actually make it so that it actually runs properly, and scales, and does all the other kinds of things that are there, right? So, it's that transition that's actually happened, so, "Hey, we ran it in production, "and it didn't quite work the way we wanted to, "now we actually have to make it work correctly." That's where we sort of fit in, and that's where DevOps comes in, right? DevOps comes in when you're actually trying to make production systems that are going to perform in the right way. And the reason for DevOps is it shortens the cycle between developers and operators, right? So the tighter the loop, the faster you can get solutions out, because business users are actually wanting that to happen. That's where we're squarely focused, is how do we make that work? How do we make that work correctly for big data? And the difference between, sort of classic DevOps and DevOps for big data, is that you're now dealing with not just, you know, a set of computers solving an isolated sort of problem. You're dealing with thousands of machines that are solving one problem, and the amount of data is significantly larger. So the classical methodologies that you have, while, you know, agile and all that still works, the tools don't work to actually figure out what you can do with DevOps, and that's where we come in. We've got a set of tools that are focused on performance effectively, 'cause that's the big difference between distributed systems performance I should say, that's the big difference between that, and sort of classic even scaled out computing, right? So if you've got web servers, yes performance is important, and you need data for those, but that can actually be sharded nicely. This is one system working on one problem, right? Or a set of systems working on one problem. That's much harder, it's a different set of problems, and we help solve those problems. >> Yeah, and George you look like you're itching to dig into this, feel free. (exclaims loudly) >> Well so, it was, so one of the big announcements at the show, and the sort of the headline announcement today, was Spark server lists, like so it's not just someone running Spark in the cloud sort of as a manage service, it's up there as a, you know, sort of SaaS application. And you could call it platform of the service, but it's basically a service where, you know, the infrastructure is invisible. Now, for all those customers who are running their own clusters, which is pretty much everyone I would imagine at this point, how far can you take them in hiding much of the overhead of running those clusters? And by the overhead I mean, you know, the primarily performance and maximizing, you know, sort of maximizing resource efficiency. >> So, you have to actually sort of double-click on to the kind of resources that we're talking about here, right? So there's the number of nodes that you're going to need to actually do the computation. There is, you know, the amount of disc storage and stuff that you're going to need, what type of CPUs you're going to need. All of that stuff is sort of part of the costing if you will, of running an infrastructure. If somebody hides all that stuff, and makes it so that it's economical, then you know, that's a great thing, right? And if it can actually be made so that it's works for huge installations, and hides it appropriately so I don't pay too much of a tax, that's a wonderful thing to do. But we have, our customers are enterprises, typically Fortune 200 enterprises, and they have both a mixture of cloud-based stuff, where they actually want to control everything about what's going on, and then they have infrastructure internally, which by definition they control everything that's going on, and for them we're very, very applicable. I don't know how we'd applicable in this, sort of new world as a service that grows and shrinks. I can certainly imagine that whoever provides that service would embed us, to be able to use the stuff more efficiently. >> No, you answered my question, which is, for the people who aren't getting the turnkey you know, sort of SaaS solution, and they need help managing, you know, what's a fairly involved stack, they would turn to you? >> Ash: Yes. >> Okay. >> Can I ask you about the specific products? >> George: Oh yes. >> I saw you at the booth, and I saw you were announcing a couple of things. Well what is new-- >> Ash: Correct. >> With the show? >> Correct, so at the show we announced Code Analyzer for Apache Spark, and what that allows people to do, is really understand where performance issues are actually happening in their code. So, one of the wonderful things about Spark, compared to MapReduce, is that it abstracts the paradigm that you actually write against, right? So that's a wonderful thing, 'cause it makes it easier to write code. The problem when we abstract, is what does that abstraction do down in the hardware, and where am I losing performance? And being able to give that information back to the user. So you know, in Spark, you have jobs that can run in parallel. So an apps consists of jobs, jobs can run in parallel, and each one of these things can consume resources, CPU, memory, and you see that through sort of garbage collection, or a disc or a network, and what you want to find out, is which one these parallel tasks was dominating the CPU? Why was it dominating the CPU? Which one actually caused the garbage collector actually go crazy at some point? While the Spark UI provides some of that information, what it doesn't do, is gives you a time series view of what's going on. So it's sort of a blow-by-blow view of what's going on. By imposing the time series view on sort of an enhanced version of the Spark UI, you now have much better visibility about which offending stages are causing the issue. And the nice thing about that is, once you know that, you know exactly which piece of code that you actually want to go and look at. So classic example would be, you might have two stages that are running in parallel. The Spark UI will tell you that it's stage three that's causing the problem, but if you look at the time series, you'll find out that stage two actually runs longer, and that's the one that's pegging the CPU. And you can see that because we have the time series, but you couldn't see that any other way. >> So you have a code analyzer and also the app profiler. >> So the app profiler is the other product that we announced a few months ago. We announced that I guess about three months ago or so. And the app profiler, what it does, is it actually looks after the run is done, it actually looks at all the data that the run produces, so the Spark history server produces, and then it actually goes back and analyzes that and says, "Well you know what? "You're executors here, are not working as efficiently, "these are the executors "that aren't working as efficiently." It might be using too much memory or whatever, and then it allows the developer to basically be able to click on it and say, "Explain to me why that's happening?" And then it gives you a little, you know, a little fix-it if you will. It's like, if this is happening, you probably want to do these things, in order to improve performance. So, what's happening with our customers, is our customers are asking developers to run the application profiler first, before they actually put stuff on production. Because if the application profiler comes back and says, "Everything is green." That there's no critical issues there. Then they're saying, "Okay fine, put it on my cluster, "on the production cluster, "but don't do it ahead of time." The application profiler, to be clear, is actually based on some work that, on open source project called Dr. Elephant, which comes out of LinkedIn. And now we're working very closely together to make sure that we actually can advance the set of heuristics that we have, that will allow developers to understand and diagnose more and more complex problems. >> The Spark community has the best code names ever. Dr. Elephant, I've never heard of that one before. (laughter) >> Well Dr. Elephant, actually, is not just the Spark community, it's actually also part of the MapReduce community, right? >> David: Ah, okay. >> So yeah, I mean remember Hadoop? >> David: Yes. >> The elephant thing, so Dr. Elephant, and you know. >> Well let's talk about where things are going next, George? >> So, you know, one of the things we hear all the time from customers and vendors, is, "How are we going to deal with this new era "of distributed computing?" You know, where we've got the cloud, on-prem, edge, and like so, for the first question, let's leave out the edge and say, you've got your Fortune 200 client, they have, you know, production clusters or even if it's just one on-prem, but they also want to work in the cloud, whether it's for elastics stuff, or just for, they're gathering a lot of data there. How can you help them manage both, you know, environments? >> Right, so I think there's a bunch of times still, before we get into most customers actually facing that problem. What we see today is, that a lot of the Fortune 200, or our customers, I shouldn't say a lot of the Fortune 200, a lot of our customers have significant, you know, deployments internally on-prem. They do experimentation on the cloud, right? The current infrastructure for managing all these, and sort of orchestrating all this stuff, is typically YARN. What we're seeing, is that more than likely they're going to wind up, or at least our intelligence tells us that it's going to wind up being Kubernetes that's actually going to wind up managing that. So, what will happen is-- >> George: Both on-prem and-- >> Well let me get to that, alright? >> George: Okay. >> So, I think YARN will be replaced certainly on-prem with Kupernetes, because then you can do multi data center, and things of that sort. The nice thing about Kupernetes, is it in fact can span the cloud as well. So, Kupernetes as an infrastructure, is certainly capable of being able to both handle a multi data center deployment on-prem, along with whatever actually happens on the cloud. There is infrastructure available to do that. It's very immature, most of the customers aren't anywhere close to being able to do that, and I would say even before Kupernetes gets accepted within the environment, it's probably 18 months, and there's probably another 18 months to two years, before we start facing this hybrid cloud, on-prem kind of problem. So we're a few years out I think. >> So, would, for those of us including our viewers, you know, who know the acronym, and know that it's a, you know, scheduler slash cluster manager, resource manager, would that give you enough of a control plane and knowledge of sort of the resources out there, for you to be able to either instrument or deploy an instrument to all the clusters (mumbles). >> So we are actually leading the effort right now for big data on Kupernetes. So there is a group of, there's a small group working. It's Google, us, Red Hat, Palantir, Bloomberg now has joined the group as well. We are actually today talking about our effort on getting HDFS working on Kupernetes, so we see the writing on the wall. We clearly are positioning ourselves to be a player in that particular space, so we think we'll be ready and able to take that challenge on. >> Ash this is great stuff, we've just got about a minute before the break, so I wanted to ask you just a final question. You've been in the Spark community for a while, so what of their open source tools should we be keeping our eyes out for? >> Kupernetes. >> David: That's the one? >> To me that is the killer that's coming next. >> David: Alright. >> I think that's going to make life, it's going to unify the microservices architecture, plus the sort of multi data center and everything else. I think it's really, really good. Board works, it's been working for a long time. >> David: Alright, and I want to thank you for that little Pepper pen that I got over at your booth, as the coolest-- >> Come and get more. >> Gadget here. >> We also have Pepper sauce. >> Oh, of course. (laughter) Well there sir-- >> It's our sauce. >> There's the hot news from-- >> Ash: There you go. >> Pepperdata Ash Munshi. Thank you so much for being on the show, we appreciate it. >> Ash: My pleasure, thank you very much. >> And thank you for watching theCUBE. We're going to be back with more guests, including Ali Ghodsi, CEO of Databricks, coming up next. (upbeat music) (ocean roaring)