>> From theCube Studios in Palo Alto in Boston, bringing you data driven insights from theCube and ETR, this is breaking analysis with Dave Vellante. >> As we reported in our last episode tech spending overall continues to be significantly muted relative to 2019. Now, our forecast continues to project a 4 to 5% decline in 2020 spending, and a tepid 2% increase in 2021. This is based on the latest data from ETR surveys of CIOs and other it buyers. Nonetheless, there continues to be some sectors and vendor bright spots in what is generally an overall challenging market. Hello everyone, and welcome to this week's Wikibon Cube Insights powered by ETR. My name is Dave Vellante, and in this breaking analysis, we welcome back Erik Bradley from ETR to provide added color from my solo flight from last time. Erik always a pleasure to see you, thanks so much for coming back in theCube. >> I always enjoy it. Happy Friday Dave, We're almost through. >> Happy Friday. They just blend together. Guys, if you would bring up the first slide, I just want to summarize the situation. This is from ETR's latest findings, I just extracted some. And I want to go down very quickly, Erik, and then get your take. As I said, technology buyers expect the downturn for 2020, but this quarter, coming into fourth quarter, minus 3.2% was ETR's forecast, that's year to year spending decline and a 2% uptick in 2021. Now, Erik this is slightly, what I call it slightly less bad, relative to last quarter. So sequentially it's less bad. >> Yeah, there's a couple of things to break down there. So first to begin with, beginning of the year, when we launched not only our spending attention surveys, we did a simultaneous COVID impact survey, and that's where we caught originally a 5% decline was expected. So although negative 3.2 was probably the worst quarter over quarter lapse we've seen, as a matter of fact it is the lowest drop we've had theory, going into 2021, the IT people that we've actually surveyed are actually expecting a 2% increase. So there is a reason for optimism, but if we're looking at the current data set, there is no doubt the picture remains a little bit bleak. We can go into different sectors and vendors where they are impacted, but I think maybe if you're willing, I think it might be worth just sort of breaking down the demographics of the survey a little bit and how we got to that 3.2% survey over survey decline. >> Yeah, and we have a chart on that. But before we get that, I just wanted to lay out some of the other key points of your analysis. The other one, which is we talked about this in the last episode, we call it a slow thawing. Hiring an IT project freezes are thawing, with fewer companies expecting layoffs. So that gives us some bright spots, but there are definitely a widening bifurcation between vendors gaining share and those who are donating share. And then, you know, again, relative to last quarter survey we're seeing government and education and fortune 100, you guys are showing the deepest cuts from the last survey. Where's IT Telco, retail and retail consumer are showing a little bit more stability. And then of course you talked about the work from home which we've covered doubling from pre pandemic. Pretty interesting findings from your COVID survey. >> Yeah, it's a fantastic, and this is the fourth iteration of this survey that we've done now. So we've been able to track it very quickly, launched it in the field when we realized the true impact of what was happening in early March. This is our fourth version, and we've been able to track it overall. Yes, without a doubt government, education are being the biggest impact, the biggest declines without a doubt. Now, clearly the caveat to that is if there's any sort of government policy maybe those could actually help a little bit, but for right now, those are getting hit the most. Retail consumer is fairing much, much better, and the IT companies, as generally, we're seeing in the market as well, they can, you know, are still spending money and still moving. But the reason for optimism actually comes from multiple metrics. And I will say, we have caught a bottom on all of the negative metrics at this point. Now, who knows what will happen the next time we do it, right? The world is always fluid. But based on this, this is our fourth iteration of this survey, whether it be IT projects being frozen, whether it be layoffs, whether it be just overall expected budget increase, everything looks like it is already bottomed and there is some optimism going into 2021. Of course, the January survey that we launched will be able to corroborate that hopefully, and we'll have much more granularity into those findings at that time. >> Great. Okay, now let's get into the demographics that you referenced for. This next slide shows those. The record number of respondents Erik, congratulations on that. And so take us through the makeup of the survey respondents guys, if you bring up this next slide. >> Yeah. So for the October 20, what we're really doing here is we're asking the it decision makers to update the survey responses they gave us in July. We're basically saying, okay, you thought you were going to spend this in the back half, what did you actually do? And in this particular survey we had 1,438 qualified IT decision makers get involved. That's 60% of the fortune 100 is represented, almost a quarter of the global 1000, and we had about 35% of the fortune 500. The industry breakdown is all across the board, whether it's financials/insurance, IT/Telco, we have industrials/manufacturing, we have energy/utilities, we have government. So it's really a great cross section. Now, geographically, that tends to be about 80% North America. We are heavily concentrated in that area, but we also have a 12% EMEA, 5% APAC and remainder is Latin AmErika. If there were any visibility concerns at all would probably be in China. It's just not that easy to get qualified IT decision makers from China to respond to us. But that's an area we are working on going forward, but overall a huge survey response, certainly meaningful end, and we're very happy with the data that we collected this time. >> Okay, thank you for that. Now, I want to go into the next graphic here, and I want to look at how net score has changed over time. And I want to remind people that, so this slide basically goes back to 2016, and shows some ebbs and flows and then some real strength coming in, 'cause you see 17 and 18, and you may forget going into Q4'19 and into 2020, the ETR data was telling us, hey, things are going to slow down a little bit. It's hard to remember that. And so, and the thinking back then was okay, last couple of years, people have spent a lot on digital transformation, and would a lot of experimentation, they were hanging on to their legacy stuff, and with all that technical debt and they were experimenting with a lot of the new technologies. And what we saw coming into Q4 2019 was people beginning to unplug some of that and making bets basically, unplugging some of the legacy stuff. Oh, and by the way, maybe saying hey, the new stuff that we tried didn't work, we're going to do less experimentation. So we saw a somewhat depressed next score, and you can see that in here coming into 2020, and then of course COVID hit and you can see the bottom fell out. But wow what a drop, I mean, that says it all, a lot different than what we're seeing in the stock market. >> Yeah, first of all, just a great recap on what we caught last year. Really well done. So at that time there was concurrent spending. There was a lot of proof of concepts being done. People weren't exactly sure how to transition off, how fast they were going to get into the cloud, how fast they could make that digital transformation. And they were kicking the tires on everything, and there was a ton of spend. It was the golden era of IT spending at the time. But we did catch that some of that was coming down. So what we will see now is obviously that spending was going to cool off either way, but now with the global pandemic impact hitting what we've caught, of course, is the biggest survey over survey decline. 3.2% was matched at one other point in our survey's history, but that was at very elevated spendings, so that drop was not as meaningful. When we're seeing from a more baseline that drop right now is extremely seasonal, and extremely meaningful, my apologies. Now, I do want to make a quick caveat that usually the October survey catches some seasonality, because a lot of people have expected spend in the back half that doesn't always materialize. But make no mistake, this is way beyond our normal seasonality. This trough is a real metric. >> Yeah, and when I talk to buyers and I talk to even salespeople, for if you want the truth, you'll talk to salespeople, if you can get the truth out of them, which you usually can. Sales and engineering, that's really if we want to know what's happening in companies, but they will tell you that their visibility, same with the buyers, they're saying, look, I think I'm going to spend and I think I'm going to get approval on it, but the normal buying signals, you kind of have to take with a grain of salt because it's, the buyers don't know the sellers don't really know. I mean, they think they've got reasonable visibility but things change so fast as we know. So you have to be really, really careful. All right, let's drill in to some of the sectors, and that's really the next two slides, guys, if you bring up the first of the next two. So this shows the change from July to October. So the last survey to this survey, 2020, and the green bars of July, yellow bars are October. And you can see right away, jumps out at you, container orchestration and ML and AI, and we've got some other data on this jump right off the charts. They're still elevated levels, so that's a real positive. You can see AI actually, maybe waning a bit, and I think that's probably, Erik, is a lot of it is just, you don't even see it, it's just embedded. But take us through this first chart and then we'll dig into some of these sectors. What are you seeing? >> Yeah, certainly. So from a sector breakdown point of view, that lesson, none of them were spared, let's be honest, right? There's a slow down in spending. But containers and containerization were by far the most stable. So clearly this is a priority. People are recognizing that they need to go that route. Nobody wants to be tied to any particular cloud provider. So container and containers are moving the best, they are looking about as stable as they can be. When we drill down a little bit further in there, we're seeing Kubernetes of course, Microsoft and AWS really supporting in that sector. Now, when you talk about the ones that had the biggest survey over survey declines, we are looking at ML/AI, but like you said, still elevated spend. So even though there was a big survey over survey decline, the overall spending intentions are healthy. Nobody is getting away from it. Also to corroborate that in the COVID impact study, we asked people, given the current situation where their priorities are, and unfortunately in that area ML/AI and the RPA we're actually not positioned as well. So it actually corroborates the COVID impact survey, corroborates what we're seeing here in our larger intentions. Now, when you look at ML/AI, Microsoft is still very well suited in that area. Virtualization was another big area that dropped, which was interesting because I think the immediate COVID impact and the work from home, we saw a little spike there. I think we definitely saw companies like Citrix, right? F5 and Nutanix and AWS workspaces. They all had a really good impact, positive, when we first hit, but virtualization is dropping quite a bit there. And again, no surprise, Microsoft is well positioned as well. And then lastly, enterprise content management also had a big, big drop-off, and there you're looking at Adobe Box, Open Text, those are the type of companies that seem to be having the biggest survey over survey decline and ECM. >> Yeah. And I just want to make a comment on this first of the two slides. Is you see security, it's okay, there's a little bit of decline, but there's the story of the haves and the have nots. If you're an end point security, you're in cloud security, you're in identity access management, there's some real tailwinds for you right now. You're seeing that with Octa, CrowdStrike and Zscaler, SailPoint, you know, had a really good quarter. So that's the story of kind of the, a mixed bag. If you go to the next slide, guys, what jumps out here on the second sector breakdown, and Erik you alluded to this as RPA, very elevated, although down, somewhat still, again, very elevated and cloud computing. I mean, that's all everybody wants to talk about. This is a large market that continues to grow very, very fast. >> Yeah. It's a A2 cloud, right? I mean, even the cloud, we're kind of shocked and we saw that too. But, you know, again, it's still a healthy survey at 4Cloud. Spending is still there, but what we are seeing is a pretty big survey over-serving decline that is probably, if you had to translate that, it's going to show slower growth. Still double digit growth, but slower than we expected. And interestingly in the cloud, again, Microsoft is very steady, GCP steady. We saw AWS soften a little bit, and that's something that I think we need to keep an eye on there, we are seeing some softening trends. IBM and Oracle, unfortunately, no matter how hard they push, it doesn't really seem to be making a dent, at least with our it decision makers that respond to the survey. But one thing that was interesting was VMware on AWS actually looked much, much better than VMware alone. So on the cloud side, those are pretty interesting takeaways. >> Yeah, we talked about that a couple of episodes back as the, well, couple of things to pick up on your comments. You mentioned IBM and Oracle, they're just so large, they're growing businesses are not growing fast enough and they're not large enough to offset the decline and their declining businesses. Yet they're huge, they have, they throw off a lot of cash and so maybe their stock's not going through the roof, but they're pretty stable companies from that regard. I wonder, maybe AWS is starting to hit some of those, the law of large numbers. I mean, it's still growing very, very rapidly for a 45 plus billion dollar organization, still growing well into the double digits, so it just gets harder. And then, but the other thing I wanted to pick up on is you mentioned VMware cloud on AWS, we're seeing those hybrid solutions really start to pick up the multi-cloud solutions, which I was a real skeptic a couple of years ago 'cause it wasn't really real, now becoming real. And I think when you talk to, you know this well from your Ven discussions, people are looking at options for cloud. They want multiple clouds, the right horse for the right course, they want to reduce their risk, they want to ensure exit strategies and some clouds are just better at some things than others. >> Yeah, completely agree. And as you know, I do interview a lot of these IT decision makers that we survey to get a little more granularity and to dig into the details, and you and I just, great example. We did a session on Data Warehousing as a Service, we're at Snowflake. And the main reason that people love them is 'cause they have cloud portability. They can move across multiple clouds. Nobody wants to be tied to one cloud provider, they need to be agnostic. And if you look at, you know, something like Microsoft, right? Their Software Suite is fantastic. So most people are going to be aligned for them. They provide great active directory, the enterprise applications are absolutely incredible. But if you're looking to do straight ML/AI or straight data warehousing, maybe AWS Redshift, maybe Google Big Query might be a better fit for you. There's no reason to be tied into one. So what we're seeing more and more is those vendors that offer cloud portability or hybrid availability to do some on-prem for security, some cloud, they're really taking a step up in our recent surveys. Another comment you made Dave, if I can just backtrack to it is, you kind of mentioned how some of the vendors are taking more and more share. We are continuing to see this theme of a widening bifurcation, where although the overall spend that pie is shrinking, the leading vendors are taking much bigger slices from that pie. And that is continuing across the entire year. >> Yeah, definitely a time of disruption. So thank you for bringing that up. Okay, the next graphic I want to show you is actually a motion graphic, and what we're showing here is one of our favorite views. On the vertical axis you've got net score, remember, net score, essentially ETR, every quarter like clockwork asks customers are you spending more you're spending less, it's more granular than that, but essentially they subtract the red from the green and that leaves you with net score. So the higher the net score the better on the vertical axis, on the on the horizontal is axis is market share, its presence, its pervasiveness in the dataset. So you want to be up into the right, of course, like all these charts and XY's. And what we're showing here is, we go back to October, 2018. Remember this is the October survey and you can see the movement and what's happening. And a couple of points here really is one is container orchestration and container platforms, cloud, RPA, ML, they all stand out. And now we, you can see the the context of their "market share" as well, and you see that bunching, you see some of the Legacy stuff, the more mature markets like storage and PC tablets and laptops. They don't have a huge next or outsourcing, not a big net score, but they're there and they're kind of bunched up, down in the middle. But you can also see how they've slowly got depressed over time, even the elevated ones. Nobody in the recent survey is over a 60% net net score. I think you guys said that the overall net score was the lowest in history. So this is just a good way to visualize the various sectors and how spending, momentum and share is shifting. >> Yeah, that's a very good point, and you are right. The overall survey net score is actually 25.3% and it is the lowest ever we've captured. So that actually is translating into what we expect to be single digit declines in overall growth in IT budgets, which again is in line with what we've been saying. We caught early on about negative 5 1/2, that is improved now it's in this quarter to about negative 3 1/2, but if you look at the mid point here, we're very clearly in mid single digit declines, and the entire area is being impacted. Now, there are certainly some areas that are more important than others, there's no doubt about it. But yeah, outsourcing is one you mentioned, absolutely getting decimated. Nobody really has the money right now to be doing IT outsourcing, that's just not a priority. The priority is remote connectivity, remote security, how do I get identity access and governance to make sure that my employees are doing what they're supposed to be doing, even though they're not on my network anymore. All of those things are continuing. And as you saw on the COVID-19 Impact Survey, they're not going away. You had mentioned on a solo session you did, I think a week ago, where you have cited our data saying that permanent workforce is going to double from where it was in pre-pandemic levels. So that means a lot of the people that slapped a bandaid on their networking to get their employees to work from home, that bandaid solution is not going to work. They need to find one that's permanent now. So the areas of spend, although it is declining, there are very clear delineations of where that spend is going. >> Yeah, I want to just pick up on something you said about the work from home doubling, 'cause I've shared that data with some folks and had some discussions. We're talking about people that work from home, not come in a couple of times a week, this is the work from home component. And so I think the hybrid is going to increase as well, but the hardcore work from home, I think it was mid-teens, 16% or something doubling in the post pandemic was the expectation. And again, I just wanted to sort of clarify that I think your data there is quite good. How about some of the vendors? I think, now that's Snowflakes public, you guys may be doing some forecasts there. Let's start there. >> Sure, yeah. So it's fun to talk about the high level, right? And talk about the sector breakdown and where we're seeing things, but at the end of the day, people just love to talk about the individual vendors. So there's a few things that were interesting, yeah. We were able to finally come out with a real viewpoint on Snowflake now that they're out in public, and we kind of launched with a positive to neutral viewpoint. I don't think there's going to be anything here that shocks you. We're absolutely outstanding expansion rates. All the commentary we get from our CIOs are just incredible, the market share gains are about as high as you're going to see in the survey, they are extremely well positioned to continue executing, and this is not in the data set, but we also know that that management team is fantastic. I would think that they had set themselves up coming out as a public company not to completely disappoint. And everything in our data set shows absolutely no reason why they would disappoint. >> Well, and so you may be wondering folks, like, well, wait a minute, with all that great news, I mean, how could they be positive to neutral. Maybe it maybe neutral, the reason is because they have a 66, roughly $66 billion valuation. And what ETR is doing is they're taking that into consideration as well relative to, so they're looking at the street forecast, the consensus forecast and saying, okay, how does the data line up to that? And so a lot of people are asking the question, can Snowflake live up to its valuation. I don't think there's any lack of total available market here. I mean, it's very, very large, the data market, it's enormous. And as, just a plug for an event that we're doing on November 17th, it starts, we're doing a global event, and we're going to be looking at this issue very closely, interviewing customers and partners and executives and, you know, you can judge for yourself if you think the vision, they're putting out this vision of a data cloud. You see this, if this vision, you think is going to have a big enough term that they can grow into, and as Erik said, great management team, will they be able to execute? Decide for yourself, but very exciting IPO obviously that we've tracked quite closely. Elastic is another one that you guys have followed quite closely. I know you've got some data there that you want to share as well. >> Yeah, I certainly do. The APM spaces is really interesting. One last quick point on Snowflake. We don't have regression forecasts on them, because they haven't been out public long enough for us to be able to do that sort of back-testing. So without that data science behind us, we will never really go with a full positive. So to your point that saying positive to neutral is not negative or neutral stance whatsoever, it's just without that regression support behind our data, that's what we just tend to do. Because at the end of the day, we're a data science company, so.. >> Yeah. You need some some history there to really make those calls. But yeah, let's talk about Elastic. >> Yeah, sure, you got it. So recently I hosted a panel on the APM and monitoring space. It was incredibly enlightening. It's a very crowded space that our CIOs told us is right for disruption. And it ended up being a little bit of an avalanche in our data, because it wasn't just Elastic, but it was also Splunk and Dynatrace that we ended up putting ratings on. Now, Elastic as we know is an open source model, a freemium to pay type of model. And we normally try to stay away from open source models, 'cause it's kind of hard to predict how that converts to revenue, but the data was so strong that again, we came out with a positive to neutral rating on Elastic. It was based on just elevated spend levels across, there was almost no negativity, we weren't seeing any decrease or replacement indications, really solid positioning in the fortune 500 accounts, which I was a bit surprised about. And the other thing here is that Elastic tends to be really expanding in the information security. This is no longer just about monitoring and logging, they are becoming a very relevant infosec play and they are breathing down the necks of Splunk. They can do the same thing and they can do it much cheaper. The caveat being, you need to have the IT and the human skillset to run Elastic. So it really comes down to, are you sophisticated enough with the human capital management to run it? But everything we saw here just incredibly improved competitive positioning, they actually had the number one net score in all of information security in any vendor that had over 50 citations. It was just too hard to ignore, we had to come out with a positive neutral. >> That's super interesting Erik, and of course, yeah, we covered that space recently. Everybody wants a piece of Splunk and have for a number of years, but, you know, you see in Datadog come after it, then you see some startups getting into the space. Jeremy Burton launched his company, Observe, Honeycomb is in that, they kind of coined the term observability. Kakao Search is another one. Ed Wall's joined that company, and so you see a lot of folks really going after that space, why not? I mean, it's such a successful company. The pickup of SignalFX filling some holes, we talked about that on the Ven, and it's a very interesting space, and one I think has some somewhat depressed levels from a net score standpoint but as some of your Ven observers said, this market is here to stay and it becoming much more important as part of digital transformation, as part of a dashboard of digital transformation. >> Yeah. Coining that term observability really just hit it on the nail on the head. When we just talked about monitoring an application, that's not what it's about anymore, right? You need to have observability in multi hybrid cloud environments, whether it's your infrastructure or people actually writing code for your application. And so that single pane of glass, end-to-end is the holy grail of monitoring, and that's what these guys are pushing for. The New Relics, the Datadog's, the Elastics, they're getting there more quickly than Splunk and Dynatrace or AppDynamics from Cisco are. That's what the people are telling us, the ones I speak to, the CIOs that use it in the field. They're getting there more quickly and they're doing it more cheaply. Now, this is not to say Splunk is not a great company, we know it is. And also Splunk has more API integration into any ecosystem you want. They're not getting pulled or ripped out anytime soon, we're not saying that. But when we look at our data, we had no choice but to come out with a neutral to negative. They are deteriorating and their spending intentions, their customer growth is completely stalling, we're not seeing any more increased perversion in our dataset or among customers. There just wasn't really anything we could really do. Looking at the data set and that's what we do, we had no choice. There's a lot of skepticism heading into the back half of this year and next year, there's so much competition coming after them, and some of these people are just giving it away for free. It's pretty hard to compete with free. >> Yeah, free is very powerful. All right, speaking of skepticism, Rackspace had their IPO, what do you see in there? >> Oh man, I'm not really sure how to start there. But listen, I don't want to beat a company while it's down, but their net scores are actually negative. I think at the negative 20% range, if I could possibly recall that. But listen, Rackspace, when they were private, let's give them some credit, right? They decided to go out and buy a bunch of different managed service providers, they tried to align themselves with AWS, with Oracle. So they've got this whole bundle thing right now that isn't just straight cloud computing anymore. We'll see if that plays out. But clearly we saw that the IPO was not a very special IPO. In this environment the valuations in the technology stocks being very elevated, having a negative IPO was very telling. But sticking straight to the data, basically we're seeing negativity across several years, it's the worst position vendor in cloud computing that we even cover. We just had to take a look at it right now, and just be honest and say according to the data, this is a very negative data set, there just isn't much we can do about it. Wish them the best, I hope their MSP revenue starts kicking in, and hopefully it'll change. But for right now the snapshot of our data was quite dire. >> Okay, Erik, Well, thanks so much. So let's update folks, so the ETR is exiting, it's quiet, period, which I love, because that means I can have the data and share with you. So we'll be updating our cloud scenarios, security, automation, our infrastructure, and many other segments as well. Certainly the data piece, we've been tracking snowflake very closely. And of course, Erik, you guys are already gearing up for your January survey. So, you know... >> It never ends Dave. And I've... >> Well, I got a really... I've got a sizzle panel that I'm doing next week as well, where we got four sizzles talking about security threats and priorities for 2021. So as soon as I wrap that, you'll be the first one I get my summary to. >> Oh, those are great. I mean, there's such deep dives with practitioners, and it's just an open discussion. So Erik Bradley, thanks so much for coming back in theCube. >> Have a great weekend Dave. >> Yeah, you too. And thank you for watching everybody this episode of Cube Insights powered by ETR. Go to etr.plus, that's where all the survey action is. I publish every week on wikibon.com and siliconangle.com. All these episodes are available on podcast. Wherever you watch, you can DM me, I'm @DVelllante. I post on LinkedIn, you can comment there or email me @david.vellanteat, @siliconangle.com. This is Dave Vellante for Erik Bradley. Thanks for watching everybody, we'll see you next time. (upbeat music)

>> from San Matteo. It's the Cube covering scaler. Innovation Day. Brought to You by Scaler >> Ron Jon Furry with the Cube. We're here for an innovation day at Scale ER's headquarters in San Mateo, California Profile in the hot startups, technology leaders and also value problems. Our next guest is Casey Clark, whose chief customer officer for scale of great to See You See >> you as well. >> Thanks for having us. >> Thanks for coming in. >> So what does it talk about the customer value proposition? Let's get right to it. Who are your customers? Who you guys targeting give some examples of what they're what they're doing with >> you. We sell primarily to engineering driven companies. So you know, the top dog is that the CTO you know, their pride born in the cloud or moving heavily towards the cloud they're using, you know, things like micro services communities may be starting to look at that server list. So really kind of forward thinking, engineering driven businesses or where we start with, you know, some of the companies that we work with, you know, CareerBuilder, scripts, networks, Discovery networks, a lot of kind of modern e commerce media B to B B to C types of sass businesses as well. >> I want it. I want to drill down that little bit later. But, you know, basically born the cloud that seems to be That's a big cloud. Native. Absolutely. All right, So you guys are startup. Siri's a funded, which is, you know, Silicon Valley terms. You guys were right out of the gate. Talk about the status of the product. Evolution of the value proposition stages. You guys are in market selling two customers actively. What's the status of the products? Where Where is it from a customer's standpoint? >> Sure, Yeah, we've got, you know, over 300 customers and so fairly mature in terms of, you know, product market status. We were very fortunate to land some very large customers that pushed us when we were, you know, seven. So on employees, maybe three or four years ago, and so that that four system mature very quickly. Large enterprises that had anyway, this one customers alando in Germany. They're one of the largest commerce businesses in Europe and they have 23 1,000 engineers. He's in the product on the way basis, and we landed them when it was seven employees, you know, three or four years ago. And so that four system insurance it was very easy for us to go to other enterprises and say, Yeah, we can work with you And here's the proof points on how we've helped >> this business >> mature, how they've improved kind of their their speed to truth there. Time to answer whenever they have issues. >> And so the so. The kind of back up the playbook was early on, when had seven folks and growing beta status was that kind of commercially available? When did it? When was the tipping point for commercially available wanted that >> that probably tipped. When I joined about a little under four years ago, I had to convince Steve that he was ready to sell this product, right, as you'd expect with a kind of technical founder. He never thought the product was ready to go, but already had maybe a dozen or so kind of friends and family customers on DH. So I kind of came in and went on my network and started trying to figure out who are the right fit for this. Andi, we immediately found Eun attraction, the product just stood up and we started pushing. And so >> and you guys were tracking some good talent. Just looking. Valley Tech leaders are joining you guys, which is great sign when you got talent coming in on the customer side. Lots changed in four years. I'll see the edge of the network on digital transformation has been a punchline been kind of a cliche, but now I think it's more real. As people see the power of scale to cloud on premises. Seeing hybrid multi cloud is being validated. What is the current customer profile when you look at pure cloud versus on premise, You guys seeing different traction points? Can you share a little bit of color on that? >> Yeah, So I talked a little bit about our ideal customer profile being, you know, if he's kind of four categories e commerce, media BTB, sas B to see sass. You know, most of these companies are running. Some production were close in the cloud and probably majority or in the cloud. When we started this thing and it was only eight of us and Jesus has your were never talked about. We're seeing significant traction with azure and then specific regions. Southeast Asia G C. P. Is very hot. Sourcing a high demand there and then with the proliferation of micro services communities has absolutely taken off. I mean, I'll raise my hand and say I wasn't sure if it was going to communities and bases two years ago. I was say, I think Mason's going to want to bet the company on. Thank God we didn't do that. We want with communities on DH, you know? So we're seeing a lot more of kind of these distributed workloads. Distributed team development. >> Yeah, that's got a lot of head room now. The Cube Khan was just last week, so it's interesting kind of growth of that whole. Yet service measures right around the corner. Yeah, Micro Service is going to >> be a >> serviceman or data. >> Yeah, for sure it's been, and that's one of the big problems that we run in with logs that people just say that they're too voluminous. It's either too hard to search through it. It's too expensive. We don't know what to deal with it. And so they're trying to find other ways to kind of get observe ability and so you see, kind of a growth of some of the metrics companies like data dog infrastructure monitoring, phenomenal infrastructure, modern company. You've got lots of tracing companies come out and and really, they're coming out because there's just so many logs that's either too expensive, too hard, too slow to search through all that data. That's where your answers live on DH there, just extracting, summarizing value to try to kind of minimize the amount of search. You have to >> talk about the competition because you mentioned a few of them splunk ce out there as well, and there public a couple years ago and this different price point they get that. But what's why can't they scale to the level of you guys have because and how do you compare to them? Because, I mean, I know that is getting larger, but what's different about you guys visited the competition? >> Absolutely. This is one of the reasons why I joined the company. What excites me the most is I got to go talk to engineers and I could just talk shop. I don't really talk about the business value quite as much. We get there at some point, obviously, but we made some very key decisions early on in the company's history. I mean, really, before the company started to kind of main back and architectural decisions. One we don't use elastics search losing any sort of Cuban indexing, which is what you know. Almost every single logging tool use is on the back end. Keyword indexes. Elastic search are great for human legible words. Relatively stale lists where you're not looking through, you know, infinite numbers of high carnality kind of machine data. So we made an optimized decision to use no sequel databases Proprietary column in our database. So that's one aspect of things. How we process in store. The data is highly efficient. The other pieces is worse, asked business, But we're true. SAS were true multi tenant. And so when you put a query into the scaler, every CP corn every server is executing on just that quarry is very similar way. Google Search works. So not only do we get better performance, we get better costume better scalability across all of our customers, >> and you guys do sail to engineering led buyer, and you mentioned that a lot of sass companies that are a lot of time trying to come in and sell that market bump into people who want to build their own. Yeah, I don't need your help. I think I might get fired or it might make me look good. That seems to be a go to market dynamic or and or consumption peace. What's your response to that? How does that does that fared for you guys? >> Engineers want to engineer whether it's the right thing or not, right? And so that is always hard. And I can't come in and tell your baby's ugly right because your baby is beautiful in your eyes and so that is a hard conversation have. But that's why I kind of go back to what I was saying. If we just talk shop, we talk about, you know, the the engineering decisions around, you know, is that the right database? Is this the right architecture? And they think that they started nodding and nodding, nodding, And then we say, And the values are going to be X y and Z cost performance scale ability on dso when you kind of get them to understand that like Elastics, which is great for a lot of things. Product search Web search. Phenomenal, but log management, high card. Now that machine did. It's not what it's designed for. Okay. Okay, okay. And then we start to get them to come around and say, Not only can you reallocate I mean, we talked about how getting talent is. It's hard. Well, let's put them back on mission critical business, You know, ensuring objectives. And we get, you know, service that this is all we do. Like you gonna have a couple people in there part time managing a long service. This is all we do. And so you get things like like tracing that were rolling out this quarter, you know, better cost optimization, better scalability. Things you would never get with an >> open. So the initial reaction might be to go in and sell on hey, cheaper solution. And is an economic buyer. Not really for these kinds of products, because you're dealing with engineers. Yeah. They want to talk shop first. That seems to be the playbook. >> Are artists is getting that first meeting and the 1st 1 is hard because that, you know, they're busy. Everybody's busy, They just wave you off. They ignore the email, the calls in and we get that. But once we get in, we have kind of this consultation, you know, conversation around. Why, why we made these technology decisions. They get it. >> Let's do a first meeting right now. People watching this video, What's the architectural advantages? Let's talk shop. Yeah, why, you guys? >> Yeah, absolutely so kind of too technical differentiators. And then three sort of benefits that come from those two technical choices. One is what I mentioned this proprietary, you know, columnar. No sequel database specifically designed for kind of high card in ality machine, right? There is no indexes that need to be backed up or tuned. You know, it's it's It's a massively parallel grab t its simplest form. So one pieces that database. The other piece is that architecture where we get, you know, one performance benefits of throwing every CP corn every several unjust trickery. Very someone way. Google Search works If I go say, How do I make a pizza and Google? It's not like it goes like Casey server in a data center in Alaska and runs for a bit. They're throwing a tonic and pure power every query. So there's the performance piece. There is the scale, ability piece. We have one huge massive pool of shared compute resource is And so you're logged, William. Khun, Spike. But relative to the capacity we have, it means nothing. Right? But all these other services, they're single tenant, you know, hosted services. You know, there's a capacity limit. And you a single customer. If you're going, you know, doubles. Well, it wasn't designed to handle that log falling, doubling. And then, you know, the last piece is the cost. There is a huge economies of scale shared services. We we run the system at a significantly lower cost than what anybody else can. And so you get, you know, cost, benefits, performance by defense and scale, ability >> and the life of the engineer. The buyer here. What if some of the day in the life use case pain in the butt so they have a mean its challenges. There's a dead Bob's is basically usually the people who do Dev ups are pretty hard core, and they they love it and they tend to love the engineering side of it. But what of the hassles with them? >> Yeah, Yeah, >> but you saw >> So you know, kind of going back to what we're all about were all about speed to truth, right? In kind of a modern environment where you're deploying everyday multiple times per day. Ah, lot of times there's no que es your point directly to the production, right? And you're kind of but is on the line. When that code goes live, you need to be able to kind of get speed to truth as quickly as possible, right? You need to be able to identify one of problem went wrong when something went wrong immediately, and they needed to be able to come up with a resolution. Right? There's always two things that we always talk about. Meantime, to restore it meantime, to resolution right there is. You know, maybe the saris are responsible for me. Time to restore. So they're in scaler. They get alert there, immediately diving through the logs to regret. Okay, it's this service. Either we need to restart it. Or how do we kind of just put a Band Aid on top? It's to make sure customers don't see it right. And then it gets kicked over to developer who wrote the code and say, Okay, now. Meantime, the resolution, How long until we figure out what went wrong and how do we fix it to make sure it doesn't happen again? And that's where we help. >> You know, It's interesting case he mentioned the resolution piece. A lot of engineers that become operationalized prove your service, not operations. People just being called Deb ops is that they have to actually do this as an SL a basis when they do a lot of AP AP and only gets more complicated with service meshes right now with these micro services framework, because now you have service is being stood up and torn down and literally, without it, human intervention. So this notion of having a path of validation working with other services could be a pain in the butt time. >> Yeah, I mean, it's very difficult. We've, you know, with some of the large organizations we work with you worked with. They've tried to build their own service, mashes and they, you know, got into a massive conference room and try to write out a letter from services that are out there in the realities they can't figure out. There's no good way for them to map out like, who talks toe what? When and know each little service knows, like Okay, well, here's the downstream effects, and they kind of know what's next to them. They know their Jason sees, but they don't really know much further than that on the nice thing about, you know, logs and all kind of the voluminous data that is in there, which makes it very difficult to manage. But the answers are are in there, right? And so we provide a lot of value by giving you one place to look through all of >> that cube con. This has been a big topic because a lot of times just to be more hard core is that there could be downtime on the services They don't even know about >> it. Yeah. Yeah, That's exactly >> what discovering and visualizing that are surfacing is huge. Okay, what's the one thing that people should know about scaler that haven't talked you guys or know about? You guys should know about you guys Consider. >> Yeah. I mean, I think the reality is everybody's trying to move as quickly as possible. And there is a better way, you know, observe, ability, telemetry, monitoring, whatever you call your team Is court of the business right? Its core to moving faster, its core to providing a better user experience. And we have, you know, spent a significant amount of time building. You need technology to support your business is growth. Andi, I think you know you can look at the benefits I've talked about them cost performance, scalability. Right? But these airline well, with whatever you're looking at it, it's PML. If it's, you know, service up time. That's exactly what we provide. Is is a tool to help you give a better experience to your own customers. >> Casey. Thanks for spend the time. Is sharing that insight? Of course. We'd love speed the truth. It's our model to Cuba. Go to the events and try to get the data out there. We're here. The innovation dates scales Headquarters. I'm John for you. Thanks for watching