>>From the cube studios in Palo Alto, in Boston, bringing you data driven insights from the cube and ETR. This is breaking analysis with Dave ante. >>When Frank sluman took service, now public many people undervalued the company, positioning it as just a better help desk tool. You know, it turns out that the firm actually had a massive Tam expansion opportunity in it. SM customer service, HR, logistics, security marketing, and service management. Generally now stock price followed over the years, the stellar execution under Slootman and CFO, Mike scar Kelly's leadership. Now, when they took the reins at snowflake expectations were already set that they'd repeat the feet, but this time, if anything, the company was overvalued out of the gate, the thing is people didn't really better understand the market opportunity this time around, other than that, it was a bet on Salman's track record of execution and on data, pretty good bets, but folks really didn't appreciate that snowflake. Wasn't just a better data warehouse that it was building what they call a data cloud, and we've turned a data super cloud. >>Hello and welcome to this. Week's Wikibon cube insights powered by ETR in this breaking analysis, we'll do four things. First. We're gonna review the recent narrative and concerns about snowflake and its value. Second, we're gonna share survey data from ETR that will confirm precisely what the company's CFO has been telling anyone who will listen. And third, we're gonna share our view of what snowflake is building IE, trying to become the defacto standard data platform, and four convey our expectations for the upcoming snowflake summit. Next week at Caesar's palace in Las Vegas, Snowflake's most recent quarterly results they've been well covered and well documented. It basically hit its targets, which for snowflake investors was bad news wall street piled on expressing concerns about Snowflake's consumption, pricing model, slowing growth rates, lack of profitability and valuation. Given the, given the current macro market conditions, the stock dropped below its IPO offering price, which you couldn't touch on day one, by the way, as the stock opened well above that and, and certainly closed well above that price of one 20 and folks express concerns about some pretty massive insider selling throughout 2021 and early 2022, all this caused the stock price to drop quite substantially. >>And today it's down around 63% or more year to date, but the only real substantive change in the company's business is that some of its largest consumer facing companies, while still growing dialed back, their consumption this past quarter, the tone of the call was I wouldn't say contentious the earnings call, but Scarelli, I think was getting somewhat annoyed with the implication from some analyst questions that something is fundamentally wrong with Snowflake's business. So let's unpack this a bit first. I wanna talk about the consumption pricing on the earnings call. One of the analysts asked if snowflake would consider more of a subscription based model so that they could better weather such fluctuations and demand before the analyst could even finish the question, CFO Scarelli emphatically interrupted and said, no, <laugh> the analyst might as well have asked, Hey Mike, have you ever considered changing your pricing model and screwing your customers the same way most legacy SaaS companies lock their customers in? >>So you could squeeze more revenue out of them and make my forecasting life a little bit easier. <laugh> consumption pricing is one of the things that makes a company like snowflake so attractive because customers is especially large customers facing fluctuating demand can dial and their end demand can dial down usage for certain workloads that are maybe not yet revenue producing or critical. Now let's jump to insider trading. There were a lot of insider selling going on last year and into 2022 now, I mean a lot sloop and Scarelli Christine Kleinman. Mike SP several board members. They sold stock worth, you know, many, many hundreds of millions of dollars or, or more at prices in the two hundreds and three hundreds and even four hundreds. You remember the company at one point was valued at a hundred billion dollars, surpassing the value of service now, which is this stupid at this point in the company's tenure and the insider's cost basis was very often in the single digit. >>So on the one hand, I can't blame them. You know what a gift the market gave them last year. Now also famed investor, Peter Linsey famously said, insiders sell for many reasons, but they only buy for one. But I have to say there wasn't a lot of insider buying of the stock when it was in the three hundreds and above. And so yeah, this pattern is something to watch our insiders buying. Now, I'm not sure we'll keep watching snowflake. It's pretty generous with stock based compensation and insiders still own plenty of stock. So, you know, maybe not, but we'll see in future disclosures, but the bottom line is Snowflake's business. Hasn't dramatically changed with the exception of these large consumer facing companies. Now, another analyst pointed out that companies like snap, he pointed to company snap, Peloton, Netflix, and face Facebook have been cutting back. >>And Scarelli said, and what was a bit of a surprise to me? Well, I'm not gonna name the customers, but it's not the ones you mentioned. So I, I thought I would've, you know, if I were the analyst I would've follow up with, how about Walmart target visa, Amex, Expedia price line, or Uber? Any of those Mike? I, I doubt he would've answered me anything. Anyway, the one thing that Scarelli did do is update Snowflake's fiscal year 2029 outlook to emphasize the long term opportunity that the company sees. This chart shows a financial snapshot of Snowflake's current business using a combination of quarterly and full year numbers in a model of what the business will look like. According to Scarelli in Dave ante with a little bit of judgment in 2029. So this is essentially based on the company's framework. Snowflake this year will surpass 2 billion in revenues and targeting 10 billion by 2029. >>Its current growth rate is 84% and its target is 30% in the out years, which is pretty impressive. Gross margins are gonna tick up a bit, but remember Snowflake's cost a good sold they're dominated by its cloud cost. So it's got a governor. There has to pay AWS Azure and Google for its infrastructure. But high seventies is a, is a good target. It's not like the historical Microsoft, you know, 80, 90% gross margin. Not that Microsoft is there anymore, but, but snowflake, you know, was gonna be limited by how far it can, how much it can push gross margin because of that factor. It's got a tiny operating margin today and it's targeting 20% in 2029. So that would be 2 billion. And you would certainly expect it's operating leverage in the out years to enable much, much, much lower SGNA than the current 54%. I'm guessing R and D's gonna stay healthy, you know, coming in at 15% or so. >>But the real interesting number to watch is free cash flow, 16% this year for the full fiscal year growing to 25% by 2029. So 2.5 billion in free cash flow in the out years, which I believe is up from previous Scarelli forecast in that 10, you know, out year view 2029 view and expect the net revenue retention, the NRR, it's gonna moderate. It's gonna come down, but it's still gonna be well over a hundred percent. We pegged it at 130% based on some of Mike's guidance. Now today, snowflake and every other stock is well off this morning. The company had a 40 billion value would drop well below that midday, but let's stick with the 40 billion on this, this sad Friday on the stock market, we'll go to 40 billion and who knows what the stock is gonna be valued in 2029? No idea, but let's say between 40 and 200 billion and look, it could get even ugly in the market as interest rates rise. >>And if inflation stays high, you know, until we get a Paul Voker like action, which is gonna be painful from the fed share, you know, let's hope we don't have a repeat of the long drawn out 1970s stagflation, but that is a concern among investors. We're gonna try to keep it positive here and we'll do a little sensitivity analysis of snowflake based on Scarelli and Ante's 2029 projections. What we've done here is we've calculated in this chart. Today's current valuation at about 40 billion and run a CAGR through 2029 with our estimates of valuation at that time. So if it stays at 40 billion valuation, can you imagine snowflake grow into a 10 billion company with no increase in valuation by the end, by by 2029 fiscal 2029, that would be a major bummer and investors would get a, a 0% return at 50 billion, 4% Kager 60 billion, 7%. >>Kegar now 7% market return is historically not bad relative to say the S and P 500, but with that kind of revenue and profitability growth projected by snowflake combined with inflation, that would again be a, a kind of a buzzkill for investors. The picture at 75 billion valuation, isn't much brighter, but it picks up at, at a hundred billion, even with inflation that should outperform the market. And as you get to 200 billion, which would track by the way, revenue growth, you get a 30% plus return, which would be pretty good. Could snowflake beat these projections. Absolutely. Could the market perform at the optimistic end of the spectrum? Sure. It could. It could outperform these levels. Could it not perform at these levels? You bet, but hopefully this gives a little context and framework to what Scarelli was talking about and his framework, not with notwithstanding the market's unpredictability you're you're on your own. >>There. I can't help snowflake looks like it's going to continue either way in amazing run compared to other software companies historically, and whether that's reflected in the stock price. Again, I, I, I can't predict, okay. Let's look at some ETR survey data, which aligns really well with what snowflake is telling the street. This chart shows the breakdown of Snowflake's net score and net score. Remember is ETS proprietary methodology that measures the percent of customers in their survey that are adding the platform new. That's the lime green at 19% existing snowflake customers that are ex spending 6% or more on the platform relative to last year. That's the forest green that's 55%. That's a big number flat spend. That's the gray at 21% decreasing spending. That's the pinkish at 5% and churning that's the red only 1% or, or moving off the platform, tiny, tiny churn, subtract the red from the greens and you get a net score that, that, that nets out to 68%. >>That's an, a very impressive net score by ETR standards. But it's down from the highs of the seventies and mid eighties, where high seventies and mid eighties, where snowflake has been since January of 2019 note that this survey of 1500 or so organizations includes 155 snowflake customers. What was really interesting is when we cut the data by industry sector, two of Snowflake's most important verticals, our finance and healthcare, both of those sectors are holding a net score in the ETR survey at its historic range. 83%. Hasn't really moved off that, you know, 80% plus number really encouraging, but retail consumer showed a dramatic decline. This past survey from 73% in the previous quarter down to 54%, 54% in just three months time. So this data aligns almost perfectly with what CFO Scarelli has been telling the street. So I give a lot of credibility to that narrative. >>Now here's a time series chart for the net score and the provision in the data set, meaning how penetrated snowflake is in the survey. Again, net score measures, spending velocity and a specific platform and provision measures the presence in the data set. You can see the steep downward trend in net score this past quarter. Now for context note, the red dotted line on the vertical axis at 40%, that's a bit of a magic number. Anything above that is best in class in our view, snowflake still a well, well above that line, but the April survey as we reported on May 7th in quite a bit of detail shows a meaningful break in the snowflake trend as shown by ETRS call out on the bottom line. You can see a steady rise in the survey, which is a proxy for Snowflake's overall market penetration. So steadily moving up and up. >>Here's a bit of a different view on that data bringing in some of Snowflake's peers and other data platforms. This XY graph shows net score on the vertical axis and provision on the horizontal with the red dotted line. At 40%, you can see from the ETR callouts again, that snowflake while declining in net score still holds the highest net score in the survey. So of course the highest data platforms while the spending velocity on AWS and Microsoft, uh, data platforms, outperforms that have, uh, sorry, while they're spending velocity on snowflake outperforms, that of AWS and, and Microsoft data platforms, those two are still well above the 40% line with a stronger market presence in the category. That's impressive because of their size. And you can see Google cloud and Mongo DB right around the 40% line. Now we reported on Mongo last week and discussed the commentary on consumption models. >>And we referenced Ray Lenchos what we thought was, was quite thoughtful research, uh, that rewarded Mongo DB for its forecasting transparency and, and accuracy and, and less likelihood of facing consumption headwinds. And, and I'll reiterate what I said last week, that snowflake, while seeing demand fluctuations this past quarter from those large customers is, is not like a data lake where you're just gonna shove data in and figure it out later, no schema on, right. Just throw it into the pond. That's gonna be more discretionary and you can turn that stuff off. More likely. Now you, you bring data into the snowflake data cloud with the intent of driving insights, which leads to actions, which leads to value creation. And as snowflake adds capabilities and expands its platform features and innovations and its ecosystem more and more data products are gonna be developed in the snowflake data cloud and by data products. >>We mean products and services that are conceived by business users. And that can be directly monetized, not just via analytics, but through governed data sharing and direct monetization. Here's a picture of that opportunity as we see it, this is our spin on our snowflake total available market chart that we've published many, many times. The key point here goes back to our opening statements. The snowflake data cloud is evolving well beyond just being a simpler and easier to use and more elastic cloud database snowflake is building what we often refer to as a super cloud. That is an abstraction layer that companies that, that comprises rich features and leverages the underlying primitives and APIs of the cloud providers, but hides all that complexity and adds new value beyond that infrastructure that value is seen in the left example in terms of compressed cycle time, snowflake often uses the example of pharmaceutical companies compressing time to discover a drug by years. >>Great example, there are many others this, and, and then through organic development and ecosystem expansion, snowflake will accelerate feature delivery. Snowflake's data cloud vision is not about vertically integrating all the functionality into its platform. Rather it's about creating a platform and delivering secure governed and facile and powerful analytics and data sharing capabilities to its customers, partners in a broad ecosystem so they can create additional value. On top of that ecosystem is how snowflake fills the gaps in its platform by building the best cloud data platform in the world, in terms of collaboration, security, governance, developer, friendliness, machine intelligence, etcetera, snowflake believes and plans to create a defacto standard. In our view in data platforms, get your data into the data cloud and all these native capabilities will be available to you. Now, is that a walled garden? Some might say it is. It's an interesting question and <laugh>, it's a moving target. >>It's definitely proprietary in the sense that snowflake is building something that is highly differentiatable and is building a moat around it. But the more open snowflake can make its platform. The more open source it uses, the more developer friendly and the great greater likelihood people will gravitate toward snowflake. Now, my new friend Tani, she's the creator of the data mesh concept. She might bristle at this narrative in favor, a more open source version of what snowflake is trying to build, but practically speaking, I think she'd recognize that we're a long ways off from that. And I also think that the benefits of a platform that despite requiring data to be inside of the data cloud can distribute data globally, enable facile governed, and computational data sharing, and to a large degree be a self-service platform for data, product builders. So this is how we see snow, the snowflake data cloud vision evolving question is edge part of that vision on the right hand side. >>Well, again, we think that is going to be a future challenge where the ecosystem is gonna have to come to play to fill those gaps. If snowflake can tap the edge, it'll bring even more clarity as to how it can expand into what we believe is a massive 200 billion Tam. Okay, let's close on next. Week's snowflake summit in Las Vegas. The cube is very excited to be there. I'll be hosting with Lisa Martin and we'll have Frank son as well as Christian Kleinman and several other snowflake experts. Analysts are gonna be there, uh, customers. And we're gonna have a number of ecosystem partners on as well. Here's what we'll be looking for. At least some of the things, evidence that our view of Snowflake's data cloud is actually taking shape and evolving in the way that we showed on the previous chart, where we also wanna figure out where snowflake is with it. >>Streamlet acquisition. Remember streamlet is a data science play and an expansion into data, bricks, territory, data, bricks, and snowflake have been going at it for a while. Streamlet brings an open source Python library and machine learning and kind of developer friendly data science environment. We also expect to hear some discussion, hopefully a lot of discussion about developers. Snowflake has a dedicated developer conference in November. So we expect to hear more about that and how it's gonna be leveraging further leveraging snow park, which it has previously announced, including a public preview of programming for unstructured data and data monetization along the lines of what we suggested earlier that is building data products that have the bells and whistles of native snowflake and can be directly monetized by Snowflake's customers. Snowflake's already announced a new workload this past week in security, and we'll be watching for others. >>And finally, what's happening in the all important ecosystem. One of the things we noted when we covered service now, cause we use service now as, as an example because Frank Lupin and Mike Scarelli and others, you know, DNA were there and they're improving on that service. Now in his post IPO, early adult years had a very slow pace. In our view was often one of our criticism of ecosystem development, you know, ServiceNow. They had some niche SI uh, like cloud Sherpa, and eventually the big guys came in and, and, and began to really lean in. And you had some other innovators kind of circling the mothership, some smaller companies, but generally we see sluman emphasizing the ecosystem growth much, much more than with this previous company. And that is a fundamental requirement in our view of any cloud or modern cloud company now to paraphrase the crazy man, Steve bomber developers, developers, developers, cause he screamed it and ranted and ran around the stage and was sweating <laugh> ecosystem ecosystem ecosystem equals optionality for developers and that's what they want. >>And that's how we see the current and future state of snowflake. Thanks today. If you're in Vegas next week, please stop by and say hello with the cube. Thanks to my colleagues, Stephanie Chan, who sometimes helps research breaking analysis topics. Alex, my is, and OS Myerson is on production. And today Andrew Frick, Sarah hiney, Steven Conti Anderson hill Chuck all and the entire team in Palo Alto, including Christian. Sorry, didn't mean to forget you Christian writer, of course, Kristin Martin and Cheryl Knight, they helped get the word out. And Rob ho is our E IIC over at Silicon angle. Remember, all these episodes are available as podcast, wherever you listen to search breaking analysis podcast, I publish each week on wikibon.com and Silicon angle.com. You can email me directly anytime David dot Valante Silicon angle.com. If you got something interesting, I'll respond. If not, I won't or DM me@deteorcommentonmylinkedinpostsandpleasedocheckoutetr.ai for the best survey data in the enterprise tech business. This is Dave Valante for the insights powered by ETR. Thanks for watching. And we'll see you next week. I hope if not, we'll see you next time on breaking analysis.

>>From San Francisco. It's the cube covering PagerDuty summit 2019 brought to you by PagerDuty. >>Hey, welcome back everybody. Jeff Frick here with the Q. We're a PagerDuty summit. It's the fourth year of the show. He's been here for three years. It's amazing to watch it grow. I think it's finally outgrown the Western Saint Francis here in lovely downtown San Francisco and we're really excited to be joined by our next guest. He's Alex Solomon, the co founder, co founder and CTO PagerDuty. Been at this over 10 years. Alex, first off, congratulations. And what a fantastic event. Thank you very much and thank you for having me on your show. So things have changed a lot since we had you on a year ago, this little thing called an IPO. So I'm just curious, you know, we have a lot of entrepreneurs. I watch a show as a founder and kind of go through this whole journey. What was that like? What are some of the things you'd like to share from that whole experience? >>Yeah, it was, it was incredible. I I, the word I like to use is surreal. Like just kind of going through it, not believing that it's real in a way. And adjoining by my, my lovely wife who came, came along for this festivities and just being able to celebrate that moment. I know it is just a moment in time and it's not, it's not the end of the journey certainly, but it is a big milestone for us and uh, being able to celebrate. We invited a lot of our customers, our early customers have been with us for years to join us in that, a celebration. Our investors who have believed in us from back in 2010. Right, right. We were just getting going and we just, we just had a great time. I love it. I love 10 year overnight success. 10 years in the making. >>One of my favorite expressions, and it was actually interesting when Jenn pulled up some of the statistics around kind of what the internet was, what the volume of traffic was, what the complexity in the systems are. And it's really changed a lot since you guys began this journey 10 years ago. Oh, it has. I mean back then, like the most popular monitoring tool is Nagios and new Relic was around but just barely. And now it's like Datadog has kind of taken over the world and the world has changed. We're talking about not just a microservices by containers and serverless and the cloud basically. Right. That's the kind of recurring theme that's changed over the last 10 years. But you guys made some early bets. You made bets on cloud. He made bets on dev ops. He made bets on automation. Yeah, those were pretty good. >>Uh, those, those turn out to be pretty good places to put your chips. Oh yeah. Right place, right time and um, you know, some, some experiential stuff and some just some raw luck. Right. All right, well let's get into it. On top of some of the product announcements that are happening today, what are some of the things you're excited to finally get to showcase to the world? Yeah, so one of the big ones is, uh, related to our event intelligence release. Uh, we launched the product last year, um, a few months before summit and this year we're making a big upgrade and we're announcing a big upgrade to the product where we have, uh, related incidents. So if you're debugging a problem and you have an incident that you're looking at, the question you're gonna ask is, uh, is it just my service or is there a bigger widespread problem happening at the same time? >>So we'll show you that very quickly. We'll show you are there other teams, uh, impacted by the same issue and we'll, we, we actually leveraged machine learning to draw those relationships between ongoing incidents. Right. I want to unpack a little bit kind of how you play with all these other tools. We, you know, we're just at Sumo logic a week or so ago. They're going to be on later their partner and people T I think it's confusing. There's like all these different types of tools. And do you guys partner with them all? I mean, the integration lists that you guys have built. Um, I wrote it down in service now. It's Splunk, it's Zendesk, it goes on and on. And on. Yeah. So explain to folks, how does the PagerDuty piece work within all these other systems? Sure. So, um, I would say we're really strong in terms of integrating with monitoring tools. >>So any sort of tool that's monitoring something and we'll admit an alert, uh, when something goes down or over an event when something's changed, we integrate and we have a very wide set of coverage with all, all of those tools. I think your like Datadog, uh, app dynamics, new Relic, even old school Nagios. Right. Um, and then we've also built a suite of integrations around all the ticketing systems out there. So service now a JIRA, JIRA service desk, um, a remedy as well. Uh, we also now have built a suite of integrations around the customer support side of things. So there'll be Zendesk and Salesforce. That's interesting. Jen. Megan had a good example in the keynote and kind of in this multi system world, you know, where's the system of record? Cause he used to be, you want it, everybody wanted it to be that system of record. >>They wanted to be the single player in the class. But it turns out that's not really the answer. There's different places for different solutions to add value within the journey within those other applications. Yeah, absolutely. I, I think the single pane of glass vision is something that a lot of companies have been chasing, but it's, it's, it's really hard to do because like for example, NewRelic, they started an APM and they got really good at that and that's kind of their specialty. Datadog's really good at metrics and they're all trying to converge and do everything and become the one monitoring solution to the Rooney rule them all right. But they're still the strongest in one area. Like Splunk for logs, new Relic and AppDynamics for APM and Datadog for metrics. And, um, I don't know where the world's going to take us. Like, are they, is there going to be one single monitoring tool or are, are you going to use four or five different tools? >>Right. My best guess is your, we're going to live in a world where you're still gonna use multiple tools. They each can do something really well, but it's about the integration. It's about building, bringing all that data together, right? That's from early days. We've called pager duty, the Switzerland monitoring, cause we're friends with everyone when we're partners with everyone and we sit on top right a work with all of these different roles. I thought her example, she gave him the keynote was pretty, it's kind of illustrative to me. She's talking about, you know, say your cables down and you know, you call Comcast and it's a Zendesk ticket. But >>you know then that integrates potentially with the PagerDuty piece that says, Hey we're, you know, we're working on a problem, you know, a backhoe clipped the cable down your street. And so to take kind of that triage and fix information and still pump that through to the Zen desk person who's engaging with the customer to actually give them a lot more information. So the two are different tracks, but they're really complimentary. >>Absolutely. And that's part of the incident life cycle is, is letting your customers know and helping them through customer support so that the support reps understand what's going on with the systems and can have an intelligent conversation with the customer. So that they're not surprised like a customer calls and says you're down. Oh, good to know. No, you want to know about that urge, which I think most people find out. Oh yeah. Another thing >>that struck me was this, this study that you guys have put together about unplanned work, the human impact of always on world. And you know, we talk a lot in tech about unplanned maintenance and unplanned downtime of machines, whether it's a, a computer or a military jet, you know, unplanned maintenance as a really destructive thing. I don't think I've ever heard anyone frame it for people and really to think about kind of the unplanned work that gets caused by an alert and notification that is so disruptive. And I thought that was a really interesting way to frame the problem and thinking of it from an employee centric point of view to, to reduce the nastiness of unplanned work. >>Absolutely. And that's, that V is very related to that journey of going from being reactive and just reacting to these situations to becoming proactive and being able to predict and, and, uh, address things before they impact the customer. Uh, I would say it's anywhere between 20 to 40 or even higher percent of your time. Maybe looking at software engineers is spent on the some plant work. So what you want to do is you want to minimize that. You want to make sure that, uh, there's a lot of automation in the process that you know what's going on, that you have visibility and that the easy things, the, the repetitive things are easy to automate and the system could just do it for you so that you, you focus on innovating and not on fixing fires. Right? Or if you did to fix the fire, you at least >>to get the fire to the right person who's got the right tone to fix the type. So why don't we just, you know, we see that all the time in incidents, especially at early days for triage. You know, what's happening? Who did it, you know, who's the right people to work on this problem. And you guys are putting a lot of the effort into AI and modeling and your 10 years of data history to get ahead of the curve in assigning that alerted that triage when it comes across the, the, uh, the trans though. >>Yeah, absolutely. And that's, that's another issues. Uh, not having the right ownership, get it, getting people, um, notified when they don't own it and there's nothing they can do about it. Like the old ways of, of uh, sending the alert to everyone and having a hundred people on a call bridge that just doesn't work anymore because they're just sitting there and they're not going to be productive the next day I work cause they're sitting there all night just kind of waiting for, for something to happen. And uh, that's kinda the, the old way of lack of ownership just blasted out to everyone and we have to be a lot more target and understand who owns what and what's, what, which systems are being impacted and they only let getting the right people on the auto call as quickly as possible. The other thing that came up, which I thought, you know, probably a lot of people are thinking of, they only think of the fixing guy that has to wear the pager. >>Sure. But there's a whole lot of other people that might need to be informed, be informed. We talked about in the Comcast example that people interacting with the customer, ABC senior executives need to be in for maybe people that are, you know, on the hook for the SLA on some of the softer things. So the assembly that team goes in need, who needs to know what goes well beyond just the two or three people that are the fixing people? Right. And that's, that's actually tied to one of our announcements, uh, at summit a business, our business response product. So it's all about, um, yes, we notify the people who are on call and are responsible for fixing the problem. You know, the hands on keyboard folks, the technical folks. But we've expanded our workflow solution to also Lupin stakeholders. So think like executives, business owners, people who, um, maybe they run a division but they're not going to go on call to fix the problem themselves, but they need to know what's going on. >>They need to know what the impact is. They need to know is there a revenue impact? Is there a customer impact? Is there a reputational brand impact to, to the business they're running. Which is another thing you guys have brought up, which is so important. It's not just about fixing, fixing the stuck server, it's, it is what is the brand impact, what is the business impact is a much broader conversation, which is interesting to pull it out of just the, just the poor guy in the pager waiting for it to buzz versus now the whole company really being engaged to what's going on. Absolutely. Like connecting the technical, what's happening with the technical services and, and uh, infrastructure to what is the, the impact on the business if something goes wrong. And how much, like are you actually losing revenue? There's certain businesses like e-commerce where you could actually measure your revenue loss on a per minute or per five minute basis. >>Right. And pretty important. Yeah. All right Alex. So you talked about the IPO is a milestone. It's, it's fading, it's fading in the rear view mirror. Now you're on the 90 day shot clock. So right. You gotta keep moving forward. So as you look forward now for your CTO role, what are some of your priorities over the next year or so that you kind of want to drive this shit? Absolutely. So, um, I think just focusing on making the system smarter and make it, uh, so that you can get to that predictive Holy grail where we can know that you're going to have a big incident before it impacts our customers. So you can actually prevent it and get ahead of it based on the leading indicators. So if we've seen this pattern before and last time it causes like an hour of downtime, let's try to catch it early this time and so that you can address it before it impacts for customers. >>So that's one big area of investment for us. And the other one I would say is more on the, uh, the realtime work outside of managing software systems. So, uh, security, customer support. There's all of these other use cases where people need to know, like, signals are, are being generated by machines. People need to know what's going on with those signals. And you want to be proactive and preventative around there. Like think a, a factory with lots and lots of sensors. You don't want to be surprised by something breaking. You want to like get proactive about the maintenance of those systems. If they don't have that, uh, you know, like say a multi-day outage in a factory, it can cost maybe millions of dollars. Right. >>All right, well, Alex, thanks a lot. Again, congratulations on the journey. We, uh, we're enjoying watching it and we'll continue to watch it evolve. So thank you for coming on. Alright, he's Alex. I'm Jeff. You're watching the cube. We're at PagerDuty summit 2019 in downtown San Francisco. Thanks for watching. We'll see you next time.

>> from Austin, Texas. It's Theo Cube, covering your storage. Accelerate 2019. Brought to you by pure storage. >> Welcome to Austin, Texas. I'm Lisa Martin at Pure Accelerate 2019. This is the fourth pure accelerate. I'm here with my co host, David. Dante and David are pleased to be welcoming back to the Cube, the chairman and CEO of Pier storage. Charlie Giancarlo. Charlie, Welcome back to the Cube. >> Thank you. Such a pleasure to be here >> already. Getting loud on the keynote. Just rapping about 3000 folks here. Standing room only. We just came from the keynote. Something symbolic. Besides, the location of this event is that you are just about to celebrate the 10th anniversary of pure storage >> of our founding. October 1st. >> Yes, just around the corner. Tremendous innovation. As you say it. Overnight success in 10 years delivering 10 X and prevents us a little bit of a preview about what you shared in the Kino. What's to come in the next 10 years? >> Exactly right. It is wonderful to be able to sell. They celebrated birthday and able to talk about what you've delivered over the 1st 10 years. But it also gave us the opportunity to really say Okay, what's the second decade going to be about? What is it gonna be like? And way were planning not only for this, but for the year that we were gonna put in place of development. We said, Well, you know, we've brought a lot of things to storage and to the storage array. We made it much simpler. We made it upgradeable, non disruptive Lee, meaning that customers would have a continuously new product in their environment. Andi started to bring it into the cloud. And we said, You know, for our second decade, we want to transform the entire storage experience. We don't want it to be about boxes and a raise. We wanted to be about a storage system for the entire enterprise. That's multi protocol, multi cloud, multi tearing or what we call storage classes and entirely automated so that when an application calls for storage, service is it's delivered automatically without humans getting involved. That is completely as a service consumed as a service, delivered as a service entirely automated in the back end. So this is the goal that we have for our second decade. We think we're going to deliver it over the next several years. But of course, for us to go down the entire customer journey is a great mission for us for next decade. >> So in terms of, you know, I don't want to make it sound like the first decade was easy because you were really the only all flash array company. Thio reach escape velocity and many. But at the same time you caught DMC flat footed. You drove a truck through their install base and obviously the rest is history. I feel like the main job of the CEO is too. Is Tam expansion, right? You're focused on that. There's a I there's new workloads. There's the cloud, there's multi cloud. And in your entering new territory now, yes, maybe no. Guys like eight of us, they're not flat footed, right? You've got Europe against Google and Cisco and Microsoft in the multi cloud arena. But you're a specialist on one. If you could talk about your vision in terms of tam expansion, >> thank you very much for that question. The TAM expansion really is following where solid state takes us. You know, we've gone from a world that was where believe it or not, most computers still had mechanical systems operating them. It's sort of like having a mechanical calculator rather than Elektronik calculator, right? We had mechanical discs in our computers literally spinning rust, right? And it's only been in the last decade where a semiconductor, you know, where solid state has taken the place of that called Flash, right? Well, as that continues to get less expensive, we now can bring not only flash performance into disc economics, but more importantly, now we can finally have modern software that is driving the need for having greater flexibility with our data. As data grows it. Now we say it has gravity. That is, it gets heavy. It gets hard to manage hard, hard to move between different environments. And now a lot of infrastructure operators are spending much more time managing their data, managing the storage systems for their data than they are managing anything else in the data center environment. We want to eliminate all that. We want to automate all of that, you know, on the theme of decades. Two decades ago, every application had its own individual communication stack. There were dozens of different protocols and a dozen different networks in every company. One decade ago, every application had its own custom hardware stack and custom operating system stack. Well, today there's one network. It's called the Internet. Today, everything, every application, every server is virtualized, allowing mobility. And yet storage is still static way want this decade a bit to be about making storage and data dynamic and really responsive to the needs of the application environment? >> So >> what if you >> could compare this opportunity to some other mega trends that you've been part of? You were there in the early days of wireless when nobody wanted to buy wireless saw the I P changeup. People think the minicomputer was killed by the microprocessor in apart. It was, but it was I p. It was destroyed. Many computer everybody had their own networks. >> Where do you >> put so that the trend that you're after? How do you compare and what are your expectations? >> I think it's an analogous trend, and it's you know, this long term trend of vertical, whether it's vertical industries or vertical technology's going to becoming horizontal. So let's just give a couple of examples again. Networking was tightly tied to the application, and every application had its own network and its own set of protocols right that was vertically tied. Now networking is horizontal. It's all I P. Right again, we'll go back to applications. Applications had a vertical stack. The entire stack hardware and software was tied to specific application today that's been made virtualized and therefore horizontal. You could move applications among different servers. Storage is still vertical. It's still tied very tightly to the to the rack. And there are a lot of good reasons for that. You needed a high speed interface. High speed networking didn't exist. Disks were slow. They could only support one application at a time, with solid state that no longer exists. So now weaken, make storage free. We can make it ah, horizontal layer rather than tightly tied to any individual application. And that's what the next decades gonna be about >> Business leaders today, I feel there's so much more open than when we started in this. In this industry, where you know the famous line about Ken Olsen, Unix is snake oil and those that you old enough to remember that business leaders today they recognize the trend is your friend right. So gentleman from AWS at 88% of the customers and a gardener survey said their cloud first, but 86% are still spending on Prem. Right In the old days, when I said I'll keep it on Prime and Amazon so we'll keep it in the cloud. And yet you guys, customers, they're sort of forcing you to come together. Yes, I wonder if you could talk about that dynamic and specifically your cloud strategy? >> Absolutely So our cloud strategy is really quite simple. We want to make the cloud and every cloud appear to an application developer to be the same as it is on Prem. With all the advanced service is the advanced applications. It interfaces the same AP eyes because largely applications have been especially primary to your applications have been developed for with on Prem interfaces and on Prem service is the cloud, while wonderful from the standpoint of being able to be dynamic, does not have sophisticated service is for data. And so by making it appear to be the same to the application into the developer on premise in the cloud, it just makes the entire system or dynamic it allows for for companies to more easily move applications to the cloud or to another cloud or back on Prem. And it changes the dynamic and the decision making of enterprises not to. How much work do we have to do to move something to the cloud? But where is it best placed economically and based on service is we take it out of being a technology decision and make it more of an economic decision. >> Why were you in a unique position relative to your competition? I mean, why can't deli emcee or net app for IBM sort of take that same AP I economy mentality and drive it through their portfolio and get to market fast? And why is your pure unique? >> Well, for one, it takes investment will invest 18% of revenue in R and D this year. Nearly all of our competitors are spending less than 5% there, really viewing storage as an old antiquated market, not as a high tech market. They're reaping, if you will, rather than selling on re really view storage as next frontier off great innovation and our competitors largely don't see that. >> Let's talk about a little bit digging into the evolution of your Amazon Web service is relationship. We talked about that a minute ago when you guys talked about Announce Cloud Block store. There's dozens of customers in beta. Are they viewing it as this bridge, the hybrid cloud? And what are some of the benefits? If you could talk about it from any of those customers that are abated, what are they? What are you starting to see so far? That's really exciting, that this is the delivering or will be the modern data experience Way had >> a great speaker from eight of us onstage today, and I think he summed it up really well. At the end of his talk, he said that now the migration to cloud is easy because pure has done all the heavy listed lifting for you to take your enterprise applications and move them into the cloud. I mean, I think all the cloud players recognize that while they have provided some great capabilities, especially for Dev ops, that the level of of sophistication and the completion of service is for things like very complex enterprise. APS have not been fully accomplished yet, and so they recognize that experts like pure who have been delivering against enterprise primary tier applications for a long time have a lot to add in terms of the sophistication of our product in their environment. I think what they also recognize is that it's hard for customers to rewrite their applications to a completely different set of data. AP eyes and mind. You'd not only does, for example, he ws have different AP eyes in their cloud than customers have on Prem. But Azure has different AP eyes and then Amazon. Google has yet different, and so for a customer to write their application three or four times is really beyond what is in the interest of most customers. We have taken all that heavy lifting and enabled a customer to take their applications. They've already written, whether on cloud or in the print on Prem, and to move it in those other environments with much less investment. >> And let me let me try to explain, as I understand it, and make sure I got a right is essentially, What you've done is take the pure software stack and management framework and then using AWS Service's E C two High Priority E. C two's front ended on s3 cheap Best three created block storage. That's higher availability, probably faster rights, right? Three Real Boat reads and writes, are probably comparable with the pure experience. That's right on, Baby. You got to pay a little bit more for that. But you get you get better availability and there's value there. >> Actually, the beautiful thing is that we create an environment in AWS where it's faster, that is, the storage is faster. That it has a very higher reliability has. All of the service is that customers want tohave such as snapshots, replication and encryption. And the entire bill between what they pay for pure and what they pay for eight of us is no more than what they would pay for A W S on its own. For those storage service is >> because you're using cheaper s3. To me, this is brilliant. Eight others is happy because they're selling E. C. To an s3. You're happy because you're making money on your software. Stock was happy because they get the pure experience in the cloud. It's exactly actually quite innovative. >> It's almost matching >> quickly. Talk about Nan pricing. I know that was an issue this quarter. It hurt revenues a little bit on the stock drop, but then when you saw everybody else announced, the stock went back up because you're was 28% growth to everybody else's minus 16 minus 21 0 was the best. But to me, lower Nan pricing is a is an opportunity for you. It's a tailwind to go eat into more of the spinning dis market. Do you see it that way? >> No. Absolutely right. I mean, when it all hits in 1/4 it could be a challenge. But over time, the consistent and fast decrease in Nan pricing simply means that we will eventually get to solid state for all storage. I have no doubt about that. The days of disk are certainly numbered, and what that does is open up the entire storage market. Today, disc is only by terabytes. 15% of the storage market flashes only 15%. So it eventually we have 85% of storage market still to go after, and we believe that one day that will be all solid state. >> I want to ask you about the macro you guys said on the call. You really not concerned about the macro. You don't win on pricing. You don't lose on pricing that even a downturn. You guys feel like you can gain share. And I would agree with that. By the way, of course, we don't want a downturn. Got it? But if you don't have a downturn, But what are your thoughts on your ability to compete independent of Of of the macro. >> Right. So, you know, we have from day one, obviously, we had no sales when we got started. Right? So every sale we've made has always been a competitive sale. There was always someone that we had to displace, right? Some some incumbent. And that speaks to the type on the quality of the sales and marketing team that we have, right? Not only they aggressive, but you know, in the parlance of the industry, they're hunters. I think a lot of companies, once you become more mature, you develop more farmers in your in your sales force, right? Managing the customer account, managing the install base and so forth. And when the macro is flat or down, you suffer. You know, from you suffer overall from that because you haven't been used to expanding your footprint. In our case, I think even when the Makri is down not that we won't be hurt by it. We will. But because we have a team of hunters, we continue to gain market share away. Will >> you >> change it? It's hard to predict, right, But But Frank's Lupin once told me, Hey, if things change, I can turn this on. And we could become an a T. M when he was running the service. Now, right now, you're going for growth in the street rewards growth. You got a three plus X revenue multiple. Everybody else is lucky to get one X so that they're rewarding you for growth. Do you feel like if things change that you might turn those knobs a little bit? Or is it you know, >> So I don't expect things to change for quite some time, but, you know, we produce 70% gross margin in the last quarter, right? I mean, most of our competitors are in the fifties, right? If not, if not the forties. So clearly growth costs money in this business, right? You have to build your sales force before they start producing for you. You have to invest in marketing before they start producing. And because of our high focus around R and D right, which is all about new products again, your front ending your costs before the before the growth actually comes in. So now we're gonna continue to focus on growth. And as long as we believe that the medium to long term growth for us is in the thirties, you know, high twenties, thirties, even maybe even forties, we're going to continue to operate profitably but relatively lower profit once growth slows down. Yeah. I mean, it will all start flowing. >> Reassess it at that time. At least our data and the data shows that pure is in a position from a spending intention standpoint to continue to gain share. We don't see any change to that in the next several quarters. >> Last question for you, Charlie. We got to talk about a I we talked about at every conference. When we're looking at pure and customer conversations, it's about data data. Is oil lifeblood gold, currency, whatever you wanna call it? How? What is that conversation that that tape, urine and video have together in customers about? How can data ignite our workloads. Help companies identify new products. New service is deliver more automation. This is >> probably one of my favorite topics. When I'm talking to customers is how to make data actually useful. Not so much the, you know, the bits and bytes of how do you actually store it? But you know, what does it mean to them is a business but also to their customers because a lot of times they're using it for overall customer benefit. And the great part of that conversation and whether it's us or in video or both of us together, is we both use it for our to improve our business and our customers lives as well. You know, we talk today about how we have 15 petabytes of operational data from our customers, a raise, right, how they're performing. And we analyze that on a on an hour by hour basis toe look to see. Is the customer getting to the point where they need where they didn't need to modify how they're operating or where they need to upgrade, or where they need to add or even reduce more capacity so that they don't fall? You know they don't trip over things that will get their business in trouble. So it And now we even allow the customer to analyze their business. And do what if scenario plant planning to say, Well, if I'm going to double the amount of customer transactions I have, you know, what will that mean from an infrastructure Sandpoint? You know? Well, I need to change your upgrade. So, you know, this has been great fun because we are in the same boat as our customers, depending on a I to improve our our mutual customers experience. But >> this conversation is best. Very insightful. Charlie, Thank you for joining David Me on the Cube today. Again. Happy 10th anniversary. Here we look forward to the next two days >> and happy 10th year to you. >> Thanks very much. >> That's right for day, Volante. I'm Lisa Martin. You're watching the Cube from pure accelerate. 19

>> live from San Francisco, celebrating 10 years of high tech coverage. It's the Cube covering Veum World 2019. Brought to you by VM Wear and its ecosystem partners. >> Welcome back, everyone. Day three Q coverage here in San Francisco for V emerald. 2019. I'm just for a student, Um, in here with David Lan. Take days free kick off. We have two sets wall to wall coverage. Guys, this is the time where we get to take a deep breath two days under our belts look and reflect on all the news we've covered in a dark to last analysis sessions but also kind of riff on. We got two nights in hallway conversations we learned a lot of the party means do. I learned a lot last night. Dave. I know you. You learned a lots, do you, Thomas? When things that the chatter Certainly twittersphere hashtag the emerald. A lot of action on there, but it's the hallway conversations. It's the party that people have a few cocktails in them day that you start to hear the truth. The real deal comes out, >> No doubt. And and again Jon Stewart, there's real concern over from the from the practitioners we talked to about this acquisition spree. Are they going to be integrated? Are they going to just throw all this stuff at us and keep jamming products and service is down our throats? Or is this going to be a coherent set of solutions that solves our problem? We also had a little little interesting side conversation about, you know, Snowflake, Frank's lumens new company and how basically Frank is bringing back the Pirates from Data Domain and from service. Now Mike Scarpelli is over there. He's a rock star. CFO Beth White is eventually is back over there. And Frank's Lupin. He's the guy who takes companies from, you know, 100 million to a billion, so that's gonna be >> very serious money making him going on there. >> We have been following his career for a number of years now. We watched him take data domain. We watched him pull that that rabbit out of his hat with the sale with net app, and then the emcee swooped in. And then we saw what he did service. Now we've documented this is an individual to watch, you know, >> he's a world class management team member I mean, he's executes. >> Oh, yeah, no doubt. And >> he has >> a formula that's been proven and in time and time again. And to me, the biggest testament salute Min is the success of the continued success of Data Domain. After he left Hey, he really helped clean up the emcees data protection mess. Um, and then the second thing is, look at service now is performance after he left, I haven't missed a beat. And, yeah, John Donahoe, great executive and all, but it's because Frank's Lubin had everything in place and that was a really well run >> dry. And they got a nice little oracle like business model. >> Yeah. No, you're right. They kind of, you know, the big complaint now as well. Your price is too high that Oracle. >> What have you learned? What you hear in the hallways? I mean, a lot of chatter. >> Yes, John, we We've been reflecting back a lot. It's 10 years in 10th year of the Cube here and back here in San Francisco. The new Mosconi, our third show that I've been at this year in Mosconi and we always track year to year. But since it's been what 45 years since we were here for VM World. When I talked to the average vendor. When I talk to you know, the analysts here were like, Oh, thank goodness we're not in Vegas. When I talked to the average attendee, they're like, Oh my God, what happened to San Francisco since last time we were here? It is too expensive. And the experience walking around San Francisco has really not nearly as nice as it might have been five or 10 years ago. And many of them we were talking to, Ah, woman that runs an event that has been Vegas in San Francisco. And she said, Oh, we did in San Francisco and got tremendous feedback. Don't do it there again. Brings back to Vegas both for costs and the enjoyment of being around the environment. >> Where was a shit show here in San Francisco is horrible right now, I got to say to your right eye was walking this morning from my hotel. Literally. A homeless person passed out the middle of the sidewalk. Um, your smells like urine. It's P, and it's It's just I mean, it's really bad this tense now. I mean City of San Francisco is gonna do some. Mosconi, by the way, has been rebuilt. Awesome. So, you know, in terms of the new Mosconi stew, that's a serious upgrade. Hotel rooms are scarce and just the homeless problem. It's just ridiculous. I don't know what they're >> doing. So one of the other big things when I was reflecting coming into here two years ago when VM wear really started down right before the war on AWS announcement, they made a big announcement. IBM because they had sold off the cloud air toe Oh, VH And for two years Oh, VH was a big partner, Talked about that transition, said we handed off this great asset over h isn't here at the show. I was like, Oh, my gosh, you know, that was, you know, such a big story and other companies like New >> 12. That's good. One lets someone who's not at the show and why. Yeah, oh, VH wired to hear >> They aren't here because, well, they've got customers. More of them are in Europe That was supposed to be a big entry into the United States. Obviously, it wasn't as valuable for them to be here, even though I'm sure they're still part of that service provider ecosystem. They have other big one for us, and we've had on the Cube Nutanix. You know, we've had Dheeraj Pandey. First time we had him on was that this show is still the majority of Nutanix. Customers are VM where customers I've talked to lots of Nutanix customers at the event, even part of the analyst event. Some of the customers I talked to were like, Oh, yeah, my hardware stacks Nutanix and amusing NSX. And I'm using other things there. But they are not here. They're not allowed to be at the show. And I >> mean, they were blatantly told they can't come. >> They can't come here. They can't come to the regional things. They can't do the partner things. So that that that relationship is definitely >> from red hat. What kind of presence have you seen from Red s? >> So their number companies like red Hat that they're kept at a lower level of sponsorship. So they're here. They participate, you know. Open shift, of course, is you know, big enemy for cloud native. Lots of open shift runs on V sphere. So many of those companies that are part of the ecosystem, but not the ones that they want to celebrate and put front and forward. So it's always interesting kind of walk around on those. Even Microsoft is an interesting relationship for, you know, decades with the M wear. You know, of course, azure they partner with. But hyper V was long a competitors. So, you know, we understand those competitive relationships >> could be interesting. Stew and Dave on the ecosystem Jerry Chan Day when we just doing my interview yesterday on the other set mentioned that the ecosystem reinvents itself the community. The question now is with Delhi emceeing Del Technologies obviously heard Michael Dell essentially laying out his plan, which is he's got. He's trying to keep people distracted, but the bottom line is going to top people putting together the cloud right well service provider model. So you know, that's what he's gonna be a big impact. VM wear the crown jewel of Del Technologies certainly is looking more and more like It's >> well and yesterday remember the first VM world we did in 2010? It was It was del I mean course and see only the time Who's Del? It was H p Yes, the emcee was there, but it was net app. I mean, everybody could've had equal standing yesterday at the keynotes. It was Project Dimension of V M, where cloud on Delhi emcee and long keynotes >> data protection into the VM were >> also it's It's all very heavily, you know, Jeff Clarke has his his thumb on, you know, the the deli emcee folks pushing that through Veum where Michael is orchestrating the whole thing. Pat obviously is allowing it. I was sitting in the audience Next next, Some folks from Netapp they're like, you know, this kind of a bummer. Calvin Sito from h p e tweeted Wow how to stick it in the face of your ecosystem partners. He then later went on Facebook saying, Hey, I love this ecosystem, so sort of balancing it out because, you know, he wants to be a good, good citizen, but clearly the ecosystem partners who basically brought VM where you know, to the the position where it's in through distribution, our little ruffled. Right now you can't blame him, But at the same time, the mandate is clear. Michael Dell is driving his products and his solutions through VM were period the end. And, you know, if you don't like it, leave >> right. They had such great success with V San and VX rail in that joint product development and go to market. If they can replicate that with a number of other solutions, they get that the synergies. If >> you don't like it, don't leave. That leave is worse than that. They say you don't like it, you know, invited you. But >> how about what Pat said yesterday in the Cube about when they announced on Gwen heavily leaned into V san. He said publicly that Joe Tucci was pissed and I hate her. They were going at it so that so that shows you the change, right? I mean, so so so e m. C. When it owned VM where was very cautious about allowing Veum wears a software company to drive value somewhere Now is just acting like a software company. >> Well, I think I mean, I learned last night's do, um and you can appreciate this. I learned that the top executives of'em where are looking heavily and working hard at understanding and drive them kubernetes cloud native thing because this is not a throwaway deal. This is not a you know, far anything that they are investing. They get their top brass tech execs on kubernetes fto. Two big players job. Ada, Craig McCaw calumnies. We know interviews since day one, but I think the cloud native thing is going to be interesting. And I think it's gonna be evolution. I think there's gonna be a very dynamic road thing's gonna be a series, of course, corrections, but directionally they're all in on. They're going for it, they're not. >> And actually, I had a, you know, good discussion with Chad Attack. It's a good friend of the program now working at GM, where for the first time, but came from AMC worked at Pivotal. He said, culturally, such a gap between VM wear don't have to touch your app, you know, move everything along lifted shift is nice and easy versus pivotal, you know must go completely You know, dual programming, you know, agile everything there, so bridging those because there's multiple paths and the rail pharaoh announcement is that would be cloud native stuff that won't necessarily go to the EMS. We're going to retool V EMS to now be a platform for kubernetes so that they have a few passed to bridge or to build towards the future. Here's the >> answer strategy. Discussion That and Rayo Farrell was now running Cloud native. Think this is just really >> ties in the interesting discussion that I had with some folks was that you've essentially got well, Jerry Chen brought this up last time we had him on it and reinventing because >> we have >> a conversation all the time about this Amazon have to go up the stack. And Jerry Chen made a really he said, Look, it they're not They're not gonna become an e r peace offer company. What they're gonna do is give tools to the builders so that they can disrupt Europea. They can disrupt service. Now they can disrupt Oracle. That's their strategy, at least for now. Okay, so what does that say? I think the strategy discussion inside of'em were and and l is about by whatever clouds gonna be 35 to 50% of the market. Fine. And the cloud native abs. Great. But you got this mission critical. E r p is an example. Database saps that are on Prem. What we have to do is keep them there. So we're going to sell to the incumbents and we're going to give them cloud native tools, toe modernize. Those APS have build new acts on Prem, and that's the that is the collision course that's coming. So the big question is, can the cloud native guys and AWS disrupt that >> huge? I've always said I'm is on and like the way they're coming in, a tsunami is coming in. And who's gonna build that sea wall to stop it right? And that's essentially only hope that these guys have. You look at all the competitive strategy. Was Oracle. Whoever just gotta stop it? You can't like >> the sea >> wall. That's a great building. A sea wall I was, I would say, is Is that you know, they're only hope at this point is to, you know, get in the game because see Amazon is the stack. They're not really moving up the stack. You hear that from Cisco and Dale and other people? That's where it's a game of musical chairs. Right now, the music's you know, there's still a lot of shares left, but soon chairs getting pulled away and Cisco Deli emcee VM, where they're all fighting for these big chairs. And one >> thing >> we talked about yesterday is that VM wears very directional, product driven. Otherwise they pick a direction, is a statement of direction and don't really have a lot of meat on the bone. In the product side, Sister is actually in market with service providers there in market with NETWORKINGS to this no vapor there that's installed basis and incumbent business. You have developers Esso Baton talks about suffered to find data center, suffer defined networking. I mean, come on, Really. I mean, they're getting there, but it didn't have the complete solution. Cisco >> Coming into this week, I expected here a bit more about the progress and all the customers of'em wear on AWS and feel like Vienna actually downplayed the AWS. We know what a strong partnership it is at every Amazon show we go to, and we got a lot of them Now there's a big presence there, and I can talk to customers that are starting to roll out and move there, but it felt like it was David's. You pointed out there are some messaging differences when you talk about multi cloud and how they're positioning it. So, you know, put those >> here Amazon. If your Amazon you're not happy with Microsoft Dell Technologies World The big announcement that was positioned a cloud foundation Although it wasn't a joint engineering, But the press picked it up as though the Amazon deal has been replicated with Microsoft and Google. I mean, you gotta be gotta be hurt if your Amazon >> So I've I've just been taking notes this this event, there's I've noted at least five major points of difference between a W s what they're saying and their philosophy and the anywhere so eight of us. We know they they don't talk multi cloud. They've told their partners, If you're doing joint marketing with us, you cannot say multi cloud aws that reinforce John. We saw this. Steven Schmidt said that this narrative that security is broken doesn't help the industry. Security's not broken, you know, we're doing great. The state of the nation is wonderful. Aws Matt. Not really. I agree. By the way. Uh, that's not the case. I agree with Pat saying Security's broken. It's a do over VM where wants to be the best infrastructure and developer software company. Who's the best infrastructure and software development platform. Eight of us. The M one wants to be the security cloud. Who's the security cloud? Eight of us. And then, uh, they talked about 10,000 cloud data Listeners are those really cloud data centers at Vienna. And the last one was this was a little nuanced Veum was talking about We know about migrating, modernize, lifted ship shift and then modernize The empire's not talking about modernize and then migrate. If you want to. I totally in conflict >> as a collision course. That's got Look, look, look at the data center was Look, it looks like we're going. We're going away, right to the data center. Staying. That's music to Michael Dell's VM. Where's years they live in the Data City? Do you pointed out yesterday? Data Senate goes away. So does begin. Where's business? >> One of things. I'm surprised. I'm wondering you both have talked to some of the service fighter telco pieces of'em, where they're doing that project dimension, which is the VM where stack on del that looks just like outposts on. And I know they had deployments on this for months. If I was them, you know, it's everybody's hearing about Outpost to talk about it, being more like we're already doing it in. This has you in that Amazon ecosystem. It might be a little strong for the Amazon story, but have you been hearing any about that this week? >> I think they keep a lot of cards close to the chest, but it's clear from the announces that they're doing certainly del the VM, where on Delhi Emcee Cloud or whatever it's called, it's not a cloud but their their infrastructure that is essentially a managed service. That's gonna be really strong for I t. People, because I think that the value proposition of going toe i t and saying we have this, you don't need to do anything. It's very strong, I mean, because I didn't want him >> and justified because this the project to mention it is that single, that thinner stack like what we saw on Outpost in the Amazon video, as opposed to Veum, where cloud on AWS, which is the full C i r h d. I stack. >> I haven't heard anything still on >> well, but the conversation I had from from Vienna, where standpoint, they could make money on that manage service. That's why it's the preferred partnership, right? And so that's their part of their cloud play. If you don't have a public cloud, I said this yesterday, you have to redefine Cloud and you have to get into cloud service. And that's what's happening. And that's exactly what's happening. And what I like about what V M where is doing is they are transitioning their model to a sass based model. Now it's only 12 and 1/2 percent of the revenues today. But both pivotal and carbon black are gonna add, you know, ah, $1,000,000,000 next year to that subscription based $3 billion in year two. Um, and so you know, Pat said the other day, I think we could get to 50 50. I don't necessarily think in the near term we're gonna go beyond that. It's not the Adobe >> way could be critical. Critical of'em were in some areas, but I gotta tell you their core strength that they went to a software operators on the data center friend of prices. That's been a great strategy. Focusing on their core building from there is Jerry 10 point out adding other products so their software company, So I think they're really got a good solution. And you? The data shows that people are increasing their spending, John. Just one based on >> that. Because I had a couple of really good conversation with customers, customers that would deploy VCF So they've got the full stack on there. So using H C I, but not necessarily on Dell hardware, could be Cisco Hardware. Could be HB hardware in the like or they're buying NSX. But the virtual ization team owns it, and they get kind of put in. A box storage team says That's not the array I'm used to buy. Well, maybe I'll put a pure storage box and put it in between. The networking team says I'm refreshing my Cisco hardware. You know, we're like, but we have NSX, and it's great. Well, you can use NSX over there. We're going to use a C I over here. So the term I heard from a number of customers is organizations still have hardware to find roles, and they're trying to figure out how to move to that software world. Which hurts me, cause I spent years trying to get beyond silos and helping people you know, move through those environments. And still, in 2019 it's a big challenge. That organizational shift is we know how tough that is. >> So just couple points in the data, because you're right. There are some countervailing trends, though. So, yes, people are spending Maurin VM where in the second half. But at the same time, the data shows that cloud is hurting VM wear spend. So this that's kind of gets interesting. Our containers gonna kill VM where? No, there's no evidence that container's air hurting VM where spend. But there's clearly risks there, you know, as we've talked about who's best position of multi cloud. Well, it turns out three guys with the public cloud are best positioned in multi Google and Microsoft on, and so and then the pivotal thing is interesting, and ties ties all this in so that the data is actually really interesting. It's like you're seeing tugs at both sides, and I think your your notion about the seawall is dead on. That's exactly what they're doing. >> You see that with Oracle's trying to stop jet. I just want they can't win this one to stop Amazon just on the tracks gave great data. Great reporting, Stoop. Good observations. Get all the day that night and parties we're gonna certainly keep doing that. Day three of wall to wall coverage here. You bringing to the insights and interviews here live from the Emerald Twin 19. Stay with us for more after this short break.

>> From Las Vegas. It's the cute covering knowledge sixteen Brought to you by service. Now carry your host David, Dante and Jeffrey. We're >> back. This is knowledge. Sixteen. This is the Q. We go out to the events. We extract the signal from the noise. This is day one of a three day Walter Wall coverage. The Cube has of knowledge. Sixteen Hashtag No. Sixteen like a lander is here. He's the CEO and vice chancellor of college services at Lone Star College. Longtime Cuba Lem like it's great to see again. >> Good scene again to >> another is >> great to catch up with this >> place, Another knowledge have a bigger and better than ever. You're you're speaking later on this afternoon. You've been over at the CIA event house this year going for you. You know, it's going >> great. The CIA oven, of course, is excellent lot of leadership foundations. Keynote TOC where, you know, service now is heading right now. Kind of. You know, that the shift and I always were still back to one of the themes from eons ago. Let's kill email. But the reality is emails not dead. So as we focus on it, you know, I came into this from the stance of moving the enterprise service management. So as I bring a team here, we really get the opportunity to see where we're at today in that comparison, and then how we can leverage the platform and move yourself forward >> So your role is evolving at Lone Star College, You said off camera, you're not giving up a title. A CIA, your CEO. >> Yes, I am the CEO >> and bread. That's not Teo, but your responsibilities are expanding. Talk about that side of things well, >> so well, last year actually been a year and a half. Now human resource is put underneath me. That's why the title change and all that to fit better and then analytics because, you know, analytics is not it much. People want us to think it should be buried inside of it. It never should, because it's about the business process. About the business service human resource is was just around the concept of aligning that service management what we had completed in it around service excellence. One of my right hand's basically put it as customer delight. Our focus is on customer no light. So it is about that communications piece. How do you talk to your customer? How do you move forward? How do you understand what their challenges are and help them find a solution. It may not be its instead of saying no, I can't do that for you. Sorry. You're out of luck. So in that, in that evolution, we've really moved ourselves forward on the enterprise service management platform side and early days, financial aid. We brought in student call centers. Now you've got human. Resource is were talking earlier about We're moving our legal in there. It's going to accelerate the pace it takes to get a contract illegal down TTO one day, maybe two days or some way didn't catch their approvals fast enough. So that's the big transformation from an organization >> of automated. That whole process over I actually, before going, I want to ask you questions about analytics. So you have. Ah, datas are that's working for you outside of it. Is that right or you? The days are >> well, you know, I actually have a team, >> have a data >> team s o. We're talking two different sets. Analytics too, because we're actually using service now. Analytics when it comes to the Service management analytics. Right. But for the organizational analytics, we actually have a large team that that does our analytics everything from dash boarding through, You know, in our case, core institutional reporting that's required. >> And is there a chief data officer as part of that team? >> I have a personal leading that group. >> De facto even >> factor. Yes. >> So there's a lot of discussion to about whether the CDO should report to the c. E. O. In this case, it does. But you had you had said things questions as to whether or not that Data Analytics function should be in it. It's not a night function. We kind of agree on that, but yes, but what kind of reports in to the head of, Well, >> you know, But see, when I when I sit down at that table, I sit down as the vice chancellor college services. So I have to sit down with three separate hats in front of me. Andi, I can't favor one over the other. Otherwise I wouldn't be doing my job currently. So when I look at the analytic side from a perspective, I will get on my team that provides the data, my database services and, you know, why are you not getting this done or what's happening here? So I've gotta look at it from all areas >> like Bill Belichick, GM coach way Tom Brady. You got to figure out who >> you are. At that point, I'm >> well. So is this how the role of the CEO is evolving? I mean, we've heard of this event previously. Frank's Lupin one year a couple years ago, said CEO should be a business person. Absolutely certainly seen examples of that. Now you're sort of given responsibility for you. No other services beyond just services. How was that role evolving? >> Well, rolls about for years. The question is, Is the CIA evolving? So? And that's where the challenges in the organization. So a lot of CEOs they're going through this process now where they're understanding that, Yes, I need to understand what are the business goals and objectives howto achieve those goals howto I had value to the organization. How did not become a cost center that has a target on my back? How you become an enabler enabler for the business And that's really where we came into that part of the process because we're recognized that Alcide nightie was here trying to help find solutions and provide better customer service. I myself come from a background in higher it for a long time through different institutions. And so when somebody talk to me about student services or student success, these air topics, I understand. I came to Lone Star originally because I didn't feel I had the strength in the academic side. And so when I first arrived there, I was really focused on academic understanding how the academic side operates and what they need in it. So I've had the opportunity to get well rounded in education, but it doesn't. It really is just about anybody that comes into this role. You must understand the business you're in, and then the next part is you need to be able to talk. I have an intelligent conversation around a topic area, bring value to the organization and come back with ideas. Well, you know, if we did this so the legal one was rather interesting because we had a new general counsel. Come on, and we're trying to help him, and he's like, Well, there has to be something better. You ask me. It's a better way to approach this. And we were able to dig through. Is that you know, What service? Now we've been doing this in HR. We're doing this here. So finally, we've got them into service now. And they see an opportunity the same way we see it. Which is we're improving. We're getting rid of the little stuff, the mundane work, You know that the task orientated work and we're focusing on the things that are really a challenge. And it has been there for a while because self service and all the other opportunities we've given the customer. Now we can shift that back and say, Okay, I cannot focus on what does the hard thing to get completed. How Doe I really put in effort in and a lot of a lot of staff hours into this one piece. >> So you started service management You mentioned hr Legal >> Financial Aid General Student Carlson are We're looking at scholarships right now. We tell a little bit ideas around our foundation in scholarships and what we could do for them. Grants. Grants are very big challenge because you have to really track and trend your grants. When you look at it, sm the areas that we've matured there are phenomenal, and then we're getting ready now to move and I Tom, which we didn't do because we already built a complete structure around that we were feeding that to service now. So now I'm looking at from opportunity that if I can eliminate a lot of the tools, I put in a play and get into one single tool and maximize the value of that tool. So I think you heard me many times when we talked in this. It's never about the tool. It's always about people in a process first. And then how does the tool come in? Well, this platform, we can actually adjust that because we're not We're not bound by the tool. Like the legal module. They have a great legal module. Well, it didn't fit what we needed. So it's been adjusted accordingly. T meet our needs from the platform side by keeping the core components so we haven't customized. We haven't taken it to a path where we can never upgrade. But at the same time as we looked at the process they had and how do we take that process and then actually put it into play with service now? >> And they were all inward service now do you worry about locking? >> Always. I think >> that Do you manage that risk? >> Well, the very first thing, to be honest with you is any time you enter in any cloud situation or any product situation, you want an exit strategy of some kind In case something goes wrong, something happens. You have to be at that point. So the only way to manage it really is to one. Keep a good, strong partnership. I believe that I have a strong partnership was service now. I don't believe it's a vendor relationship and I think that's critical because as we look at what we're doing each time as a partner, were were engaged with things like Where you heading? What's happening next? You know what? And then the same thing with the user group community were engaged with that group. So from a partner standpoint, we look at that first. But if the worst case scenario came, I've got to be able to get out of the solution. I've gotta have an exit strategy which we actually had designed before we went into it. Now the question becomes is we get further and further entrenched. What do we do and I'm comfortable. I'm comfortable that the company and the operations are going the right direction for me at the same time. If I'm gonna protect my organization to make sure we're safe. >> And that's a big, big part of transparency on the part of service now and your ability to communicate, you know your road map and your needs, I mean, a scale of one to ten ten being, you know, really transparent. How Where would you put service now as an organization >> who? That's a tough one, Especially when I'm sitting here. >> Uh, Frank's not around is a freaking God. He's breathing guy. Let's see. You know, >> a CZ forest transparency. I would give him good, strong seven. >> Yeah, >> I think I would. No company can be completely transparent. They've got a lot of things working in the back room or ideas that they're moving forward >> because they don't know. They don't know what they don't know. Going. Yeah, >> but there's there's ideas that they have that they're moving forward. It's gonna like today with the watch demo. I'm like, Oh, yeah, I love wearables. I you know, I live off. I could very easily now just say Oh, yeah, I just >> got an e mail. Sorry. Yeah, but, >> uh, at the same time is, you know, for them to bring that forward at this point. So they're creative and looking at these items, but they don't want to get out there too soon. >> I'm curious on the partner vendor, you know, mentioned a couple aspects of what defines that relationship of all the vendors you have. How many do you consider to be? You know, close business partners where your, you know, really sitting at the table and building a long term relationship, You gotta have an exit, but its life so much easier. If >> you're working with a partner verse a vendor right now, I would stay out of our partner strategy. We've got four. That's it. But those are four core providers for the organisation. Their leaders in the market space. That's the other key. Most my partnerships or with leaders, of course service. Now, at the time when we first engaged with them and actually I would say, from a partnership standpoint, a strong partner was service. Now, probably since about two thousand ten, we've been on the platform since two thousand eight. So we built that partnership over that first couple of years. You got past that vendor relationship and then moved on from there. But right now, just our core technology stack would be sitting in that partnership room, and I've got others than in that court Technologies. Technically, I'm not a partner there. A vendor there there were by cell. They have a great product, but they don't really want to bring us into that point. And we really haven't approached that point. >> We had a great discussion off camera about you had mentioned. You're looking at potentially expanding into this security realm with service now. And you were sharing with me like your philosophy on security. So I want to document that The premise that I'm going to put forth summarizing our conversation is, you should organizations increasingly should treat security as an ongoing part of their business continuity plans, not necessarily as a sort of separate stovepipe managed by a few security practitioners. Is that a fair summary? >> Yeah, Service continuity is what I use. I don't have >> service continuity, service continuity, that your business. Yeah, it always comes >> out to service continuity. How do you How do you continue that process and provide the same level of service in the in the event. It's very simple to me as I look at all those events as like problem management incident management, you have a response that you have to take, so it has to be inherit. It has to be natural. You just do it way we're talking about that. That response, specially for security, is what's more important is that you have everything planned out and you're ready to deal with that incident in that rock response because it's gonna happen. So how you handle that response can actually dictate your future, right? Wei had that little bit of that discussion there, too. So it does come down to that service continuity. How do you continue to move forward as and get through that threat and then afterwards make sure that you prevent that from happening again. >> Unlike many CEOs that I talked to, your discussions with the overseers at the college are not entrenched largely in the security discussion. You've earned some level of trust with regard to your capabilities. Is a business your ability to respond. Can you talk about that a little bit? How you actually achieve that, what expectations you were able to set and how you're able to execute on that? >> Well, the biggest, biggest part, especially when you look at it at that event, it's how. How is it performed overall over the history? You've gotta have some history. You've gotta have some credentials. How do you deal with these responses in these emergencies? That gives you a little bit more slack in that process, but it is about constant communications. So what the board received for me is communications. It's very straightforward. Typically, in an annual report type format, Short updates clear, concise updates. But then, when event happens, we're talking about the flood that happened in Houston, and very quickly I had an email out and my service test team was already on it. They already implemented their service continuity because while we may be shut down, we have students online taking classes. We have students that need to know what's going on, what's happening so they're calling in, and our service desk continued on through that entire process without issue. So they see that as an example on a regular basis. If we have a system down, everybody gets to see exactly. We did X, Y and Z or if we even have a like today, I should say today Monday we had a blip. We did, Nam. We have. We saw performance degradation. We immediately had a team on. We had a WebEx open with everything running. So we're preparing for a service continuity event that didn't happen. And they see those two because the business units are getting these notifications. Hey, we've gotta WebEx open. We have this issue coming up, and when they see that, they realize how fast we are to respond to what could be a potential issue that we built that trusting relations. >> So that's a good example. If I understand it correctly, the regime that you've put in place puts a heavy emphasis on the response. I mean, obviously you're trying to stop the bad guys who wouldn't go innovated on the response as well. Is that a fair assessment? >> Yes. I mean, the threats, goingto threats gonna happen. The threat happens all the time. So it is about that response. It is being quick to respond to communicate and take care of the problem. >> Do you think that's changed amongst the CEO community in the last ten years that that the shift in mindset toward that response versus so to keep him out big dig a bigger mode, Wider moat. >> Well, you can dig a big, wide moat. Doesn't matter. >> I think I've >> got these big, robust to hot data centers. Amazing firewalls. They're redundant. You tried overload him. They're going to take over. I've got next gen firewalls behind that. I've got you. Just you, layer layer. This tax of protection I have put in you still have to prepare that we're talking about it is Okay, so that's the perimeter. Well, inside my perimeter is one hundred thousand students, those hundred thousand students around my network. So how do I protect against that? So now I have inside perimeter protection. You can build all this entrenchment that you want to build. But the reality is you need we prepared Just gonna happen that you are. Somebody is going to get to that point. Or at least then the alarms up that you have to respond to >> service now is talking yesterday at the financial analyst meeting about you know, the statistic. And I've heard a range here, but it's large that that after an intrusion it takes, on average two hundred five days for the average organization toe. Realize that there's been an intrusion. I've seen numbers as high as three, three, three, fifty, etcetera. Um, first of all, does that sound consistent with what you see in there in the real world and conservative now help compress that time. >> So the interest was service. Now, of course, is tracking and trending those responses. I, tom and Service watch. There's a lot opportunities with those tools and course we have a perimeter we have a pile of tools were using. In our case, our threats are a bit different because, of course, we're not a big financial institutions. So we were not right with all those other pieces. But you're from the days to recover from a major event and my peers and what that have actually experienced a data loss event? Yeah, it easily is that it is easy. That >> and you think, feel is, though that service now could help you attack that compress that >> yes, mainly through the data collection and then the reporting and then as the events going on all of this information that's happening in the problem management side. What you're seeing from outside information coming in and technicians on the inside updating information as they go through it. You have a comprehensive log of the event from start to finish. >> Now you're speaking just right after this. I think you're just what? You're what you're talking about. >> The shift for my tea service management. Teo Enterprise Service Management. It's actually Enterprise. Wow. But I'm actually walking through the journey. But the best part about that is it's the pitfalls we learned along the way because Wei didn't know we went to Enterprise Service Management. It's kind of I think we had a discussion when we went to the cloud. I didn't know we went to cloud. Exactly. I just knew we went to this heavy virtualization, these two out data centers and I kind of realized, Wow, we really pushed into this new this new wage, this new change. >> We've got a new operating model on on, >> you know. But now yeah, it really is about how we are journey to enterprise service management and the fact that we actually started in a price servicemen before I've even heard of it. It just was around The fundamentals of Hungary. Better service provider. How can we help our customers, uh, achieve their objectives and the business units make it simpler? >> My last question is, what's exciting you these days? A CEO practitioner. What? Float your boat? True. >> What's exciting? You see, I asked if you're gonna give me any hard >> questions for you. That's exciting. >> You know, What excites me is that you're seeing the maturity level of a cloud. The platform side. It is so flexible that you can respond to a customer need quickly that you, khun dynamically spin up the capacity Your When I first started this process, trying to build this high availability was difficult. Now hie availability is really not difficult. It's just around. The process is so that the maturity of the technology and the maturity the service piece that excites me. But it also excites me when I start seeing new team, people come into the market space and they understand that already they're coming in with an idol understanding there they're coming down, understand that business mentality. So original Lighty practitioners didn't have that business background. They didn't have that communication skill you're seeing a lot more of it. The organization now. >> Well, you're a real leader in this space. You've got a lot of experience. Appreciate you sharing your knowledge. And I'm sure the service now community does as well. So good luck with your talk this afternoon. And thanks again for coming. >> Thank you. It's great being here. >> All right, Link a lender. Always a pleasure. Keep right, everybody. This is the cue. We'LL be back Live from Mandalay Bay. This is knowledge sixteen. Right back. >> Service. Now is the time.

but cube at servicenow knowledge 14 is sponsored by service now here are your hosts Dave vellante and Jeff trick here we go hi buddy we're back this is Dave vellante with Jeff freak this is the cube we go out to the events we extract the signal from the noise we have a crowd chatting on its crowd chat / no 14 so check that out put your tweets in crouch at awesome engagement app Frank's Lupin is here president CEO of service now Frank it's it's a pleasure to have you back on the cube great to see again great to be here thanks things how you feeling I'm feeling great no I got that keynote got the keynote out this morning you had the financial analyst in yesterday had the industry analyst and they're working you hard absolutely it's a circus yeah so your keynote this morning was great I was right up front they have a nice spot for the industry analyst so appreciate that take good notes but one of the themes that you struck was really hit home to me because you talked about transforming IT from essentially a cost center into a value producer and how service now is at the heart of that and and how the role of the CIO is changing so one of you could sort of summarize and talk a little bit about how you see the role of IT and generally in the CIO specifically changing and what role service now plays in that transformation yeah just just to give a little bit on macro context right that's sort of the worst of all scenarios that we see out there where I t is essentially viewed as as a commodity as a utility and as a result you know people don't see much impact I just want to get a cheaper cheaper cheaper and they want to cut more costs out of the infrastructure and staffing levels and so on and actually is just an organization that we're tolerating because I guess we have to have email and Internet access and all that sort of thing now you go looking into broader world around what technology has done to change business right what amazon has done based on their technology platform what we've seen an online banking you know what we're seeing an online education there's just just incredible examples of innovation using technologies now aighty hasn't done that for their own enterprises they happen in some instances are some some really great examples out there where I t did impacted business but by and large IT is not viewed as to go to people that know how to bring technology into business you know in a way that that really turns the tables on the competition do some mind-blowing things i always ask CIOs when i when i meet him and says what have you done in the last 12 months that really blew people's minds or in terms of applying technology to business problems right and they start sort of thinking like i'll actually it is surely nothing i can think of well that's probably you know a question you should be asking yourself all the time right if it's not when lightning in a bottle when it's not the sort of thing that sort of lights up the whole enterprise like we won't do it is we have to do this that excitement then you're shooting too low and you know in general I find the the cost obsession and IT is an indication that we're not looking for the opportunity and I think that's that that's it that's a damn shame or we're here to change that well you talked about panning for gold was that proposed here in California and it's also a propellant you your company is smoking hot and you know your your commonly associated with the likes of workday and Salesforce and sponsor must be very very proud of that but also there's gold and then RIT shops right there's goal than those organizations that's not being being mined and and you know I think you talk about your penetration is what twenty percent of your your target your global 2000 where we have footprint in about eighteen percent of the enterprises that we think are relevant and appropriate to us but within those eighteen percent you know we were probably a third saturated so so very early innings for service now even though we've achieved considerable scale and very high growth at that scale so when you go into one of your accounts can you discern actual that actual value production vision that you set forth can you see it can you touch it can you you know to this to a skeptic a prospectus yeah Frank that sounds good but can you actually sort of provide proof points yeah managing surface is just essential in terms of economizing and saving money and here's why no I'll give you some some very pedestrian examples that we've seen in real life and the human resources department and probably get the example because I t everybody sort understands how to how the game works right HR organizations historically have not had service models they have that email and phones and so on the problem just called somebody as a result that was a huge amount of work that preoccupied the HR organization that nobody knew what people were working on and the staffing grew and grew and grew to deal with the growing volume of ink wires and problems and changes and so on until they have systems service models and they have reporting and analytics that showed them what was consuming their time once you know that you can put initiatives in place to start dealing with the underlying causes that are driving that work I have seen HR organizations dwindle their staffing by 50% just by understanding what of this day we're working on right that's what service management is all about instead of just delivering service you're managing and once that quarter drops by the way IT organizations they get this in space right because you know large enterprises they got fifty hundred thousand one hundred fifty thousand instance flowing to their organization a month it's a huge consumer of resource right if you go to these other service domains and you see very similar things this layer of software really optimizes that resource well the way they attack it oftentimes is human resource doesn't that scare a lot of prospects away when they hear oh wow near cup service now and they're going to replace all these these people it's a it's a good question actually wrote a blog post about it recently as well there is no doubt that in the economy at large we're going to see massive substitution from people to systems why because the technology is here and the economic imperative is here it's very much a societal and social question but you know here's the thing see alternative you know are we going to try and stop it and not do it it's going to happen the markets are going to run their course what needs to happen is that we adjust you know for example you know in education we have a lot of teachers right what's going to happen to teachers when education is delivered through online streaming well teachers gobble you want to become crooklyn developers in other words evolve and change in their roles because education is going online slowly but let's go into why because the format the service experience is that much better it scales that much better in step much more economical than what we currently have well you said today in your key note that the system is broken you know I'm having to put four kids through school I appreciate a nudge there to the educational system why did it take so long I mean these are the IT guys ease of the technology guys in the organization they're there to deliver value why did it take so long for this kind of transformational yeah wave Steve Jobs has been the late Steve Jobs been quoted many times people don't know what they want until I show it to him and that's sort of what we're doing we're showing it to him that's what we did this morning we're showing people what they can aspire to that's what we're here for we're trying to stimulate inspire motivate give people a sense of mission right as opposed to keeping the lights on managing crises running around with your hair on fire that's not a very attractive you know a view to half of your organization and what you do all day right yeah so I have it struck again by your keynote the Affordable Care Act affectionately known as Obamacare they not the government not a customer of yours or what's the scoop oh no they could you have helped with had problem we could have for sure but then again many people cook that for the foot of people then software and technology they look at something like that yeah last night I set a dinner with Adam infrastructure for Kaiser Permanente and they had a certainly know the problems of open enrollment that a massive scale and certainly we didn't want to trivialize the problem it is really really hard to need to operate the service like that at the scale that that they need to but there is no doubt that you know we don't need any new core technology to build systems like that I mean the technology exists the skills exists sure that I want to walk better than so let's talk about your business a little bit this year third year now right since you've joined service now exactly three years this week yeah so let's sort of break that down but when you when you join service now that the discussion was around and you talked about this yesterday the the whole team and everybody was looking at help desk saying wow how can these these these values be justified and of course you blew that away and now people are beginning to understand that it's interesting to note that data domain you sold the company i think for what 2.5 billion the entire market is is now greater than the market that it replaced interesting that's right the market was three billion it's now I according obviously bigger than three billion and growing yeah you know so that's kind of interesting now that's a much more confined market you know you talked about the tons of the team they're being finite you always knew it was finite here it's different you guys have started to sort of fine tune your tam analysis and communicate that it's still hard because you just don't know the how people are going to use your software they're finding new ways but the team and I took a stab and I came up with 30 billion but it was a top-down it wasn't a bottom up and it was I had to get the blog post out so it's kind of a back of the napkin but still it's very very large clearly a multiple of the IT service management market so I wonder if you could talk about sort of the the evolution of your thinking in terms of the market opportunity with service now were you always sort of where we are today or that have to evolve over time now it has evolved I'd say dramatically obviously the expansion from what used to be called help desk management to IT service management basically you know exploded the market at least 5-fold and they were licensing five to ten times as many people on our system now for itsm purposes then we used to and in the mid 90s during to help desk area because back then all we did was licensed people ever physically on the help desk right people that would take phone calls and emails and so on now really everybody in the IT organization is an actor and a participant in the workflow of service management you may be a DBA maybe a network engineer you're going to get when an incident comes in or a problem is defined you're going to be part of that workflow right so that Dad expansion was not understood early on but beyond that services is everything is everywhere and services everything and every physical and even non physical assets have service models around them so once you start looking forward you see it absolutely everywhere you know I don't know what's a few billion among friends you know I know all that the numbers are but this is heavily transformational I think one of the things that people struggle with they're looking for a line of sight right in our company like workday is viewed very possibly why because they're seeing them take dollar for dollar market evaluation away from companies that they can identify recipe in Oracle and so on feels very credible to gamma that's 250 billion dollars or mark oh I can see those guys from work the Oracle Sapa okay take a chunk out of their eyes I know you go look at service now you need to have more imagination there's this great court from Arthur Schopenhauer that I showed you yesterday which said you know you know takedowns to hit a target that nobody else can hit but it takes genius to hit a target on nobody else can see right it's transformational right what worked it does is modern with what service now does this transformation is fundamentally different so when you came on to service now I presume your focus was putting in the infrastructure and the process is to make sure that you could scale just having watched you in your career you're you're big on growth and yeah you're pretty aggressive so so take us through sort of you know where you sort of started and what the emphasis was and and where it is now be clearly you're investing in sales and marketing you're investing in AP I didn't know this the substantial number of global 2000 companies in asia-pacific so that's another so how is that I mean break that down into maybe one or two or three sort of segments of your attention and effort there there's sort of you can sort of split up in two major stages or phases the first phase you know when when I took over the helm of the company was very much focused on operationalizing stabilizing scale being able to deliver what we're already doing in a consistent and predictable manner and that was not a minor task because because the company had grown so fast but hadn't been able to basically catch itself in terms of bill into business building the organization underneath its business so that preoccupied us tremendously the whole thing about cloud is is not like there's a lot of people you know running around out there to actually no clout that understand clot that can build clouds and how many people do you know that I've actually done this because there's you know three years ago I mean they were far and few we actually recruited people that have built the original cloud of ebay because those guys were pioneers they have solved a lot of the problems associated with cloud early on we saw a lot of people that understood data centers the cloud this is almost in verse two data centers the mentality that you need to to run them davos phase one before us and we sort of got through that you know about you know a year and a half ago for sure about a year ago and we started to shift gears you know really from the operational infrastructure concentration that we've had to really trying to drive strategically the business towards enterprise service management they're really expanding the addressable market way beyond where we had been before we were going to market until i see i l-look itsm replacement you have to do it you're sitting on 10 15 20 year old software it's crappy it's got to go fine we're going to do that right but we want to give you this much bigger perspective managing service in the enterprise and you know make that a mission that you can own as a CEO and drive throughout your organization over a period of years and a lot of our customers have road maps that are 24 36 months and it shows you all the things they're going to knock off over that period of time and all the different you know parksley enterprises to sell is its engineering its market yourself so on yes okay so Tam expansion and now obviously accessing that to him we hire in a lot of sales people and go to market I was struck walking around the exhibit hall last night because you just announced app creator I think last year yep knowledge I was struck by you know that the booth down there with the number of apps I mean it's just astounding where that's going wouldn't have predicted you know some of them that I that I saw so that's obviously part of the the tam expansion as well I wonder if we could talk about the importance of a single system of record in order to achieve that vision because it's not always easy right politically people want to keep data in their own little silos so how does that work you can't force it in because it sort of just happen organically how critical is that to your success I mean when you have applications or services that relate to each other like for example you know this morning we showed in a demo I think we're sure like seven or eight different applications in the course of one demonstration the reason that is a single system of record matters so much when you do that is all these apps need to be aware of each other right when your when your staff in the projects you need to look at the resource management well that resource management relates to the skill requirements as well the skills that are available right what you don't want is these apps living in their own universes with their own data moss your own database because now you have to start the hack integrations between them to make any sense out of that and that's the world we lived and that's been the bane of software existence for for so long the ServiceNow said I'm not going to do that okay every application that relates to any other application they're going to be operating on exactly the same data model and by the way you see that throughout our platform right when you bring up an asset in the CMDB like a server or a rather or Santa whatever it is you'll be able to see all the other data artifacts throughout the platform like instantly problem of changes in projects and tasks that relate to that particular asset there's nobody else that can do that right and we provide the 360-degree visibility that makes application development so compelling because you know all the users are already defined the system you don't even have to get started with that you only define users once right you reuse all that and all the other artifacts already exists so you get this data gravitas that the more data that is there to richer the application with almond environment becomes yeah we talked about this too at the analyst meeting about the relationship to your M&A strategy you've got to be selective it's got to fit in to that single system of record does that however limit your choices in rule absolute limit our choices but you know this is the commitment from an architectural standpoint that we make us that we're not going to repeat what legacy vendors have done is I mean you know 50 apps whole stand along to hack integrations between them as I said that's the world our customers want to leave behind because it was just horrible former from an efficiency standpoint after a while all you people do is managing the operability of the patchwork plethora of assets that they have they're not doing anything productive and in our world they don't they do none of that right they're not upgrading software because it's the clouds you know we do that and they're not hacking integrations between apps because there is no constant of integration on service not with all the apps are aware through a shared data model so is there still plenty of M&A opportunity for you out there though I mean your stocks up I know it's off a little bit lately which I think it's really healthy I'm happy about that nice little breather but still you know you've made great progress adding value you can obviously use your stock as acquisition card co there's still plenty of opportunities for you notice there's absolutely tons of opportunities again in a day you know software infrastructure is it's very similar and very common between application itself for us to bring an application into our user interface framework I mean they have to have a user interface framework of some sort right so whether we replace what they have with ours with a replace the data structure we replace the underlying cloud we can do all those things right the question is is there going to be hard is it going to be expensive is it going to be time-consuming or maybe not as much and that will influence how attractive we are to the asset all right Frank we're way over on time but I could go forever i mean really appreciate you coming on CX for having us here it's really fantastic event all right keep it right to everybody we're back with our next guest this is the cube we're live from moscone right back

okay we're back this is painful on time with Wikibon org and this is the cube silicon angles continuous production we here at knowledge service now's big customer event i'm here with my co-host Jeff Frick this morning we were broadcasting live from sa p sapphire my colleague john furrier jeff kelly and david foyer were down here but we're here in Las Vegas at the aria hotel we're here with dave schneider who's the senior vice president of worldwide sales and services at service now Dave welcome to the cute thank you for having me a lot of good energy here talking to customers said Brian Lily on from from Equinix great case study great story we were Jeff and I were at the you know the customer event last night just cruising around talking to customers talking to prospects everybody's really excited what are they what are they telling you I think what the colonists is that what what we're all about which is making customers successful in their journey both the IT Service Management and allowing IT to be helpful to the entire organization is actually working and that the value they're getting from the investment around our technology is yielding really good results for their country so when you go to meet customers you know describe paint a picture for us of you know new customers new prospects what's the environment like no I think it range is a lot between customer experiences so as people are becoming more and more comfortable to cloud idea service we're seeing people really just rotate naturally to that wanting to get away from fixed fixed offerings and traditional and hosted systems internal there into internal their networks so we're seeing a lot of excitement about that and then there's some disbelief there's some displeased but actually after all these years of trying that they can actually make IT an effective part of an organization and our tools and our solutions really help them do that so when you say all these years of time what have they tried that's not work it seems like they've tried everything they've tried they tried remedy the tribe Peregrine they tried I have a corona motor tool right absolutely so I think what happens in IT is it you know they've been the Forgotten ones they've been the ones that didn't have the opportunity to invest as the other lines of business for a below best to keep themselves competitive in the marketplace now we're giving them best-in-class tools so that they are no longer hindered by the lack of sophistication they want that so you get your getting penalized in a sense by you know the past failures of other initiatives right that's the big barrier that you have to come over it is that inertia the existing disbelief is that right I think there's some disbelief also I think I T is often starved for resources i T is a cost to an organization not necessarily seen as a benefit by the financial parts of the organization however if used correctly they can be turned into an asset class and make the whole organization more competitive this morning we had GE talking on stage and they were able to do a massive transformation using the tool to generate millions of dollars of cost savings and additional revenue streams yeah I mean I've been saying to me this is all about global scale and demonstrating IT value and excellence throughout the organization are you finding that you're so we talked about sort of your prospects when you go in when you go in after customers implemented let's say for a year or so what's different what's changed and particularly i'm interested in that notion of IT value is their heightened awareness of IT value throughout the organization well so i think part of what happens is IT changes the perception of IT and organization gets changed through the transformation with our tool they go from as we we often say the Department of node or the Department of now that's a real thing and that that kind of confidence the swagger that the people have nit for IT kind of gets reestablished and you see people really proud of doing what they're doing and knowing that they're bringing a real value to their their customer is really an important part of what we do so the new confidence that these organizations have on delivering value of their customer the ability to support and integrate hundreds of tools potentially into a single platform record that's transformative to a CIO or to an IT executive who didn't know where things were in when the bad things would happen they couldn't tell what was causing the event and know how to fix it so what questions do you ask prospective customers what's your sort of list of top two or three questions that you start with I think first of all is why would you continue down the path that you are if there is something better what what would keep you from doing it and then we also look for other initiatives that are important to the business where what's driving them so if they've done a lot of integrations through acquisitions that's a huge opportunity for cost savings and aggregation into one one set of tools okay let's talk a little bit about your sort of sales organization you guys I think have these show you let's let me back up a little bit so you start with it I presume incident management problem management maybe even change management is that right is that the starting point so we get brought in to solve a lot of different problems now in an IT organization so it's not uncommon that someone would think about replacing their old help desk or incident management system we always say help desk is sort of like to four letter words you really try to make the desk go away because our customers don't want us sitting behind desks they want us to be out talking to them or they want to self help themselves and so we start maybe with looking at the historical systems very quickly we try to get into a much broader conversation okay and then my understanding is your sales organization has evolved where you will both look at existing customers helping them utilize the platform further beyond maybe just the core helpdesk an incident management problem management and utilize service now as a platform for other areas can you talk about that a little bit so went once when we get involved with a customer the customer is a customer for life so we kind of have a mantra inside of service now which is love that customer and if you love the customer and you do things for and on behalf of them teaching them about the technology and how they can benefit from it we get additional businesses they're more and more successful so every time we interface with the customer it's an opportunity to throw them an opportunity to make them more successful every time they do something to add technology around us they're saving money and probably growing their license business with us but having a pretty good at bit so it's interesting when we were at the event last night for the people who weren't here there were pictures of cakes all over the place there was there was cakes on the table and there was a slideshow with cakes and I said so what is the story with the cake what's in it and I kind of know the stories but it's good to follow till you said about what's really cared about a lot of us like sugar so there is that there's this common desire to celebrate so actually it was solving not not coming tonight well it's not common IT but it actually started with one customer or a couple different customers well when we went go lives the customer actually themselves they didn't go buy a store-bought cake they baked their own cake and they would decorate the cake in various ways and most of them had service now or Thank You service now it's part of it they really viewed this as a setting free element and so they were celebrating like a birth or a wedding like anything else that we celebrate in life they were celebrating with a kick and so it became a tradition I can't tell you how many hundreds of cakes I've now eaten but it's really a fun thing to do and it kind of keeps on a life about life of its own and sometimes I'll do interim cakes when they do go live with a new module or other aspects and call those cupcakes it's it's interesting as they said we were down at the event last night talking to a lot of customers and potential customers and the vibe is very good and the other vibe that's that that picked up this morning I mean the Kino started at 8am right this is not a sleep and group of people these are people that are up and ready to go everyone was waiting to eat at six thirty they were on the ground and so these are people that are working you know they're they're getting stuff done this is not kind of a hangout tech crowd well I mean there was some hanging out last night there was all hang out last night however I will say this event is all about the customer more than eighty percent of the content is taught by customers to customers they come up with the content they're here because they want to learn and so they don't want to miss a thing they're going to bring the ideas back to their companies and implement change and so they view themselves through service now is an opportunity to make a massive the organization it's obviously a pretty darn good career move for a lot of the customers as well who gets successful with us but most importantly they want to be here and we're thrilled to have them because you know quite honestly I get energy i sat in that keynote presentation and I got so much energy listening to the panel I was fired up and ready to go David you guys have a ninety-six percent renewal rate which is that's the same how is it that you've been able to achieve that what what's the secret sauce behind that what a customer's tell you so it fluctuates a little bit but it's been a 95 plus 4 13 quarters in a row I think really the issue is if you do right by the customers where why would they go somewhere else the alternatives just aren't that good but most importantly if you're delivering value every day through an engagement if you're bringing technology to bear to solve a problem once you solve the problem you don't need to Joe try something else you look two ways to leverage what you've already built and moved forward so the four or five percent of customers that disappear many of those are through acquisitions right companies got acquired and went out of business very rarely is that they made a choice to go with a different technology you guys don't and maybe used to in the early days but you don't sort of overwhelm your messaging with with cloud you know some of these some of the SAS companies do can you talk about sort of how you sell to organizations and a little bit more more depth it's not a it's almost night not a hard core technology sell its really around business process and value can you talk more so we sell to multiple levels in a company so there there are folks that are functionally responsible for different aspects of what we do let it be incident management or help desk let it be people that are trying to build knowledge management systems or trying to do employee self-service those are different constituents that will talk to in a sales campaign and then we often will try to reach the CIO or an executive NIT you give them the message of what we can really provide because you know people don't start off thinking you know I want to replace my helpdesk them and end up with the RP for IT we've got to convince them or give them the possibility that that's or sorry paint the picture that the possibilities are real so to customers do they do I mean a lot so many projects today are not not IT projects their business driven yes and there's a business case around them and the whole ir r and r roi etc and pv whatever it is how do people conduct a business case for service now it ranges dramatically depending on what problem they're trying to solve but you know some of what we do is sort of like an oxygen water problem right you can't live today without breathing or drinking some water you can't live in IT without solving some of these problems so it's an oxygen issue the nice to have things are quickly becoming oxygen issues employee self-service are you kidding me you're not gonna have a system that lets employees help themselves why wouldn't you do that why wouldn't you have an automated password reset process to save money why wouldn't you do cloud provisioning to save money these are these are oxygen issues can't live without them type of problems for IT organizations and the reality is they're not getting the job done today so being able to show them a way to make it transformed is great we do intercede a lot of times during an upgrade process or during that consolidation phase where they realize we've got hundreds of tools and they're all in little islands they're not talking to each other and they don't have any data that they can trust so you strive for this consumer like experience we're hearing that a lot what are your customers telling you about oh how well you're doing that I think the exciting things we're going to see tomorrow with Fred's keynote presentation on the handheld on tablet device interfaces are really all about continuing that push towards consumerization nobody wants to use a green screen interface that was designed in the 80s anymore our customers are wanting the same kind of tools they had or they have when they go home when they use google or they use amazon they want the same kind of experience when they're at work and so we provide them the ability to make that happen and that's really transformative to how people perceive IT it is it is it more the IT staff that wants that type of experience or their their customers their clients and their own company are telling them this is our expectation if she said only use Google is only amazon is no I mean I go as far to say is if I'm going to an old guard custom or the old tools and I'm trying to recruit the generation that's coming into the workforce today and I'm showing user interfaces that looking at acquitted and old that employee base isn't going to stay there very long so if you want to be able to grow your business with today's talent on a global scale you need tools that look familiar and that people want to use I'm looking at your screen over there it looks pretty sexy it doesn't look anything like it did 10 years ago Yeah right so did your workforce like Frank's Lupin you're hiring by Mars what are you hiring what are you looking for we're hiring athletes we're hiring people to care we love that Natalie yeah absolutely i'll check out i mean if i could say it one way is if you want to love your customer and sell transformative technology and you want to be part of something that's bigger than you because that's what i'm looking for i'm looking for people that want to join us create something special make a difference not just in our lives which is nice and fun we're really focused on the customer is when you change your customers experience in their perception it has gifts beyond cakes it has gifts beyond making a great company these are lifelong relationships you'll have and even opportunity to that at service now well the enthusiasm here at knowledge is palpable you talk to the customers and they all smiles on their faces they want to be here they want as you said David share their stories most of the content coming from customers and then of course the cube so keep it right there I'll be back with Jeff brick David thank you very much for coming in the cube and sharing your story this is the cube this is knowledge we're here live in Vegas we'll be right back with our next guest right after this great thanks good