>> Live, from Washington, DC it's theCUBE. Covering AWS Public Sector Summit 2018. Brought to you buy Amazon Web Services and it's ecosystem partners. >> Hey, welcome back everyone. We're live here in Washington, DC with theCUBE's exclusive coverage of Amazon Web Services Public Sector Summit. I'm John Furrier with Stu Miniman. It's a huge show, it's like the reinvent for public sector and it's really booming. Our theCUBE allumnis on Josh Stella, CEO of Fugue. And Peter O'Donoghue, Vice President of Service Application Services at Unisys. You guys are back for the third time. We first interviewed you guys last year here in that reinvent, as well. Good to you back, thanks for joining us again. >> Thanks for having us back on. >> Thanks yeah, great. >> I love to connect the dots. It's almost like the trajectory. And we were talking yesterday about Cloud and how Amazon and other Cloud players, and Stew brought up a term called having experience. And then we were talking about this economies scale. This is really where people who have done it over time, have got their requisite, experience, scar tissue, and learnings. Some jump to try to deliver everything at once. You guys have been together for a while working together. What's the update on the trajectory as you guys go Cloud first? What's the status, what's goin' on? >> You guys made an announcement this week right? >> Sure, yeah, yeah. So, yeah we at Unisys are super excited to announce our new Cloud offering called Cloud Forte. And your point about takin' the lessons from experience and really embedding those into a capability, that's really what Cloud Forte is about. I think, ya know, at a very high level Cloud Forte it's got two major kind of sets of capabilities. One is like subscription services, which is around management and governance of AWS. And actually we've designed it to solve like really tricky problems, that our public sector and frankly our commercial clients are really struggling with. And the second set of services are really professional services, that allow for any need to facilitate and catalyze adoption at scale. And actually they go head on addressing some of the trickiest problems in that space, as well. >> Well, take a minute and just explain, what does the product do? What's the value proposition of this new service? >> Okay. Well, at the management and governance tier, let me tell you what the problems that it solves. I can go into all the minutiae, but I think we could be here a while right? It solves some big problems. Problem one that it solves is, commercially, public sector, and actually federal wise organizations have a tough time managing the finances of AWS Cloud consumption. Actually having the transparency and visibility, and being able to comply with the Antideficiency Act, being able to manage funding, and also being able to tie it back to contracts and contract line owners sounds trivial enough, but it's really a thorn in the side of a lot of folks really trnna adopt Cloud. I would say the second element is what we're calling our command bundle. And the command bundle really kind of, it deliberately kind of solves the... It feels the gap of the shared responsibility model. I think we all here are deeply aware of what that means. But, that's really kind of the air gap, if you will, between while AWS it supports out of the box, and quite frankly what customers need to support. So, things like, classic things like service catalog management, patch management, back up and recovery, IT operations, incident management, asset management. All those things. We've built and we've constructed basically in a flexible framework. A light weight framework that allows folks to do, to go fast. But also has that enterprise level of governance that people people expect to see from the cloud. One of the key elements of our command bundle is what Josh's organization provides, is the Fugue policy engine. So, we find that in order to provide Cloud, it's really important to be able to have those guardrails. To provide basically a nanny like supervisor to make sure that what's deployed is compliant. And actually what's deployed and what's running in production, stays compliant with security policy. So, that's really what command is all about. >> Josh, how about what's under the hood? We've had a lot of conversation on policy and automation. It's third year in on our conversations. What's going on under the hood, what's happening with the things that you guys are doing with Unisys? >> Yeah, so when we last talked they hadn't announced this yet, so we couldn't quite explain what we're working on together. But, we're working with Unisys and other organizations to provide that full automation of the entire infrastructure layer. And it's just fire and forget infrastructure on Cloud. So, one of the things we're seeing consistently is people are really starting to struggle. The markets really maturing around the need to fully automate remediation of problems, detection and remediation. Where the old model of use a monitoring solution, throws a ticket over the wall, search for the pilot tickets. You might have hours, days, weeks, where you're exposed and your data leaks. And Fugue fixes that in under a minute. So, that's what we've been workin' on together and we love the partnership because Unisys has experience in the engagement on the federal side of the market. And Fugue is baked in to just provide all that goodness. >> What's the impact of that? Because you compared kind of the old way to the new way you guys are doing. Just kind of give some categorical or anecdotal color behind what the impact is from that. What does it do, save people's lives, saves time, money. What's the impact? >> Yeah, I'll tell ya the impact and I'll describe a use case. So, we're working with another customer and they came to us and said, in our hosted environments on AWS we have over 500 events a day, where configuration has drifted. And every one of those we have to investigate. We have to come up with a plan. Then we have to execute the plan. Then we have to write a report on how it will never happen again, 500 a day. So, with Fugue, every one of those just is automatically fixed and reported within about 30 seconds to a minute. So, the impact of this is a team of three completely overwhelmed folks, who were looking to hire 10 people to try to, as their Cloud presence group, they just had to staff a larger and larger Cloud services desk. Actually the three people that they have are now on to doing other work. Because it's just automated. >> So, Peter help connect the dots for us, for your customers on the federal side because we know there's been push back. Sometimes customer, oh automation sounds great, but ah wait, on the government side I've got regulations, I've got processes, I've got hurdles that we might need to do. So, how do we get beyond those? >> Well, I think that's a great question. I would say that, so as I was talking about the Cloud Forte offering that, there's a set of offerings in the professional services domain too. We actually have our accelerated bundle, right? And actually one of the things that we, we really believe as important as folks to adopt Cloud is, in order to leverage Cloud most effectively, you really need a mind shift. So, we have like two of the legs of our offerings went around the order of chain management. And kind of making that major transformation for human capital. And actually what really good looks like is folks who actually think Cloud natively, right? So, we find the most successful clients are folks who've kind of made that leap. The other kind of dimension is is around process and process change. And we see ITIL has been super affective and has been kind of a stone wall of enterprise IT for a long time. But, we see that as folks move to the Cloud one of the strong recommendations we make and we have process offerings, is how do we renew... My management in governance process is to actually embrace more DevOps thinking, embrace more of everything as code thinking, including policy. Because what we find is, as I think you're hinting at right, is as folks move to the Cloud you can kind of have like almost a goldilocks scenario. Where, like on one hand I've taken the really heavy weight processes and tools from my data center into my thinking, and I've got now kind of a Porsche 911, but I've put donut wheels on it and I can't move very quickly, and I'm kind of frustrated with it, right? On the other extreme, I've got like the SharePoint era of 2005, 2006 where it is the wild west. It's pandemonium, and God only knows what's goin' on right there. So, what we're trynna do is is really looking for effective enterprise and having transparent governance, making sure that the great lessons learned of before are there. But, we have like a light weight extensible frame work that we have the nanny guardrails on it, so we can understand where this policy drifts. >> And the beauty of this is ya know the APIs giveth and the APIs taketh away. The APIs are why we can go so fast, but it's also why it's really easy to hurt yourself. That's what Fugue is there for. We let you go just as fast, and when can show that all those processes, like in ITIL having a CMDB, that's a side affect of running Fugue. You can query Fugue and you've got your configuration data. >> How you made them go fast, I get that. But how do you protect from breaking, what's the other half? >> Yeah, sure, so the Fugue approach, and Unisys are doing some other things on top of this. But, the Fugue approach is you cannot deploy something unless it is both correct and meets policy and compliance. >> That's the guardrails you're talking about. >> That's the guardrails. And unlike anything else, Fugue tells you exactly how you got it wrong, why, and how to fix it. So, it's not just a big no, at the end of the process. It's hey, on 147 you're not allowed to have unencrypted volumes so change that. Then once the infrastructure is provision, so it must be correct up front, once it's provisioned Fugue will never let it drift again. Again, within 30 seconds to a minute we've seen it needs changed, and we've fixed it. And what that means is... >> Intelligence. >> It is. >> You bring intelligence do it, ya fix it, again this the, this is why I love the automation whole Cloud thing. The non believers don't understand the value of this. I call them the Cloud non believers because this is just game changing. You mentioned the point about the efficiency of people not having to bulk up manual labor to lock down and just open up so many security holes. Peter, I've got to ask you, I hate to put you on the spot here, what's it like now working with Fugue? You guys have done a lot of work together. What's the outcomes? Tell us about the experience. And what is it about their solution that really helps you out? >> Okay, sure. Well, I mean I think the most obvious ya know, response there is is the fact that we've baked it in, and it's part of the solution, it's one of the core tenants, and components within our command bundle. That in itself is a major part of our strategy. What we find in our customers, ya know we do find clients actually kind of range in where they are in terms of their Cloud adoption. And we're also finding with our Cloud Forte bundle folks actually will adopt different parts of it at different times. But, actually we do find clients are very interested... Actually, I think our best clients are folks who actually have been been playing with CI/CD and they've been playing with Cloud. But, they've actually kind of started to see that the sprawl affect is actually starting to happen. And they're looking to have speed, but also security at the same time. We find that the integration of Fugue, and that just, that kind of, that insane Cloud native thinking, and this kind of like ability to speak AWS natively as a native language is really important differentially, when we bring a joint solution to our client. >> How many of the scale pieces created? Josh I want to give you that final word on your, give us an update on your business. What's goin' on? What's the value possession look like now? Obviously, automation we're believers, we just talked about that. But, where's it go next? What's up with Fugue? >> Sure, so what's up for Fugue, all kinds of things over the next quarter or two that we'll be releasing. That I can't quite talk about yet, or my product lead will kill me. But, one of the things we've put a ton of work into is around pre-building libraries of policy for our customers. So, Nist 800-53 for federal we've implemented a lot as policy now. PCI, HIPPA, all kinds of standards, so that when they purchase Fugue they just get these out of the box. It's amazing to watch somebody who's been on Cloud for a little while bring up the Fugue compose or a visualization engine, go discover all their infrastructure, and then do import HIPPA, and find all the little red dots of where they're actually, have been running wrong, fix it all in less than an hour, and not worry about it again. So, we're doing a lot of business in federal. We're doing a lot of business with partners. And we're also doing a lot of business in commercial now, mostly on the larger enterprise side. The value prop is really around that controlling sprawl over time and automated remediation. There's lots of kinds of automation that are partial, unless the system like Fugue does can fix everything, if there are any gaps in that, you're back to manual world. So, it's a kind of binary scenario, so yeah. >> You kind of never give it up, unless you can fully let go of it. >> That's right, that's right. >> Awesome, well congratulations on the part, you want to... >> Can I pull string on that though, I mean I think this another great concrete example of why we like working with you guys. It's part of our business obviously, I would say one of the major blockers getting folks to the Cloud is what do we do with ATOs that folks already have? And how do I bring those security credidations into the Cloud? So, if you think of you know where I think the industry is going to go next, is automation frameworks that allow me to quickly figure out what I inherit, what controls or balance I need to address as I move to the Cloud. But, the fact that Fugue is looking at natively kind of having as a primary citizen of their policies, this idea of those Nist controls, that's going to help provide transparency and visibility. So, that's actually going to be key part of being able to shorten the time to get to an ATO. >> Well, that certainly accelerates the discovery piece. >> Absolutely. >> Then ya kind of understand what ya have first and then you attack it with automation. >> Exactly. >> And everything seems more efficient, that's the goal right? >> Yeah, so this is why you know the true believer there's concrete reality there. Which is I can demonstrate, but I can demonstrate in real time that I'm complying all the time. I mean we've never really had that before, right? >> Yes. I mean again, this wave is coming. And love the commentary again. Public sector is very interesting, it's just being disrupted heavily and at a highly accelerated rate. You guys are doing a great job. Good to see ya Josh, Peter great to see you. CUBE coverage here in Washington, DC. Bringing all the action expected from us, I'm John Furrier with Stu Miniman. Stay with us, we'll be right back with more after this short break. 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>> Announcer: Live from Las Vegas, it's theCube, covering the AWS re:Invent 2017 presented by AWS, Intel, and our ecosystem of partners. >> Welcome back, everyone. Here, in Las Vegas for TheCUBE's exclusive coverage of AWS re:Invent 2017 Amazon Web Service's Annual Conference. It's a zoo every year. Forty-five thousand people. Just seven years ago they couldn't get 4000 people to come, now the business exploding. Eighteen billion dollars of infrastructure, completely changing the game. I'm John Furrier. Our next two guests are Josh Stella who is the CEO of Fugue and Peter O'Donoghue, vice president of application services at Unisys Federal. Guys, welcome to theCUBE. Welcome back. >> Thank you. Welcome to theCUBE. >> Thank you, John. >> So you guys are in the heart of it. We've talked many times about the DevOps ethos at the Amazon public sector event. Man, it's a changing of the guard happening in front of our eyes. >> Peter: Absolutely. >> Seeing a whole new way of re-imagining how to deploy services in kind of the old school infrastructure world. But now taking over the applications. This is disruption. Share some insight, what's going on? >> Well, actually I really appreciate your lead in because, we're seeing like lots of big patterns happening at the same time, particularly with, my business that I look after, that I look at, is the federal sector. And actually, I think in the precursor we were talking about federal used to be slower and more staid. And that's still true in some cases, but actually the rate of acceleration is really taken off, but I think the big patterns we're seeing is you know, the CIO who looks at the Cloud as compute, network, and storage, that CIO is alive and well, and actually we sell and we provide managed services to that type of business. But we're seeing kind of like a greater focus and greater concentration on folks who actually want, they see the Cloud as really kind of an inflection point to break with tradition and actually to be able to consume native services, so they can actually affect and bring mission outcomes more effectively. In my own experience I've seen like two mission customers in a space of months to be able to solve like really serious problems and significant problems that they faced, but they wouldn't have been able to do it without being able to access RDS or ELB or Lamda, and these are becoming like the essential building blocks, the Lego blocks, if you will, of building modern Cloud native applications. >> So you're saying they solved the problem that was unique right there on the spot, which is great, you know, good job Cloud. But the question really is, would that ever have been solved in the old model? They would have been probably in a room arguing over architecture. I mean a lot of this is about looking at a solution, jumping on it, making it happen, not sitting in a room arguing. >> That's right. >> Get RFP out there. >> Josh: Yeah, exactly. Well, I think a lot of this has to do with infrastructure and policy as code. Because if you can express these thing as code, you can try things in an hour or two, instead of having to go through the RFP, sit on a whiteboard, waterfall design it. You can experiment without fear of failure because the costs are so low. And that's also bleeding over into public sector as well. >> I heard a quote this morning, I'll share it with you. I know it's a public sector kind of quote. The guy was up onstage really presenting how he transformed his entire, you know, I won't say the name to protect the innocent, but it was pretty massive transformation. He goes, "We couldn't use Amazon a few years ago because it was too cool." Meaning it's new. So the government's kind of like, well, you know, it's not yet tested, security. And security's always been the issue for this one group. He goes, "But now it's not cool to use it, so we can use it." Meaning, it's proven. So, it's kind of the opposite. When it's boring it's cool. When it's boring it must be good. Kind of a federal mindset, I won't try to pitch into the whole federal too much there, but the reality is tried, proven, tested, certified. There are some serious things that have to go on in both enterprise and now on federal. Amazon is continuing to move the needle while doing the heavy work. I mean, that's hard. So once they break through that, then you got the creativity going on. So take us through where we are in this, because the GovCloud is pretty disruptive. How far are we in the Cloud game in you guys' opinion of that getting the job done, checking the boxes of the certifications. I know there's FedRAMP, there's a bunch of other stuff. Is that mostly done right now? I mean how much more work is needed before everyone goes, okay Cloud is the standard? >> Well actually, (mumbles) >> Well let me try to answer, and I think Josh'll have an opinion on, too. Is I think the FedRAMP certification, I think, has been, I would say, probably if not the single most, one of the most important kind of factors in amplifying or accelerating Clouded option in the federal government. And actually, we've also seen that manifest in the state and local markets as well. Which is, we don't really have an equivalent, but if you're on FedRAMP, that's definitely good enough for us. That has become the defacto standard. But we find, though, is, and actually this is where, we really appreciate a product like Fugue, is actually folks find that, I mean actually, you asked about like major patterns or major trends. Like another major trend that we see, and actually I'll kind of come back to your question is, is that there's a significant shortage in talent and knowledge and skills to be able to manage the Cloud, and actually it's such a phenomenally different kind of mindset, so, like to properly govern and manage the Cloud, is actually a really difficult thing. So, you know, >> Good point. >> As a tradition, we got a lot of managed service provider business in our history. And if you look at, say Amazon, you know some folks would look at it as almost an existential threat. But in fact, we don't. It just means that you need to move into a different place in the stack to add value. And actually that place for us is that, you know, in terms of being able to amplify and accelerate that, the planning for, the migrating to, the running workloads in, in a scalable way, cost effective way, securely, and being able to build Cloud natively, our customers are really struggling with that. And they can do it, we've seen them do it one offs, but to be able to do a scale, so being able to really attack the knowledge gap from a human resource perspective? >> John: Great point. >> But also, encapsulating that into templatizing and putting nanny guardrails in are really important. Well that's a great point. There was a conversation I was involved in this morning with the CIA where they basically admitted, we got a lot of smart people, we can build a Cloud. Running and maintaining it... >> Josh: That's right. >> Are two different things. So this is kind of a false trap that a lot of people could fall into. Oh yeah, the Cloud, it's no problem. >> Josh: Yeah. >> So this is where the issues come in. Thoughts on that? >> Yes. >> And what you guys are doing? So I think we've entered the second phase of Clouded option. The first phase was kind of shadow IT bought them up. When I was at AWS I'd go into a customer, they'd say we're not on the Cloud. And then we found out we had 130 accounts that were swiped credit cards. >> John: Don't tell anyone. >> Yeah, don't tell anybody. Help us... >> Secret region. >> Help us sort this out. >> How is this the prototype? Honest, that's right. >> But now the market has changed. And so whether it's commercial or federal or other spaces, we're now in this phase two where these are strategic adoption of Cloud at an enterprise level. And to do that you need automation, you need repeatability, you need consistency, you need policy enforcement, and so that's where a system like Fugue packages all that together, which accelerates the whole operation of that. You know, I don't like the term centralized, because what Fugue allows you to do is assert some things and then decentralize the innovation aspect. >> It reminds me of the whole fabric and the whole grid days. But you bring up a good point, phase two is about kind of grownup Cloud. And so, that begs the question, now what are you guys working on, Unisys and, what's the story between your partnership? Talk about that. Because you know, people are relying on you guys as suppliers, so you have to stand alone and be successful. We talked about your company, but partnering is now important. >> Peter: That's right. >> Who you partner with and why, and what's the outcome options for the customers? >> Well, we're super excited about our relationship with Fugue. And actually primarily, as I talked earlier, we do see the big challenges that the market has right now. There is this huge gap from a knowledge and talent perspective. And also, the pioneers have gone into the Cloud, but now you have to have the settlers there. So how do we kind of attack those at the same time? So, when we're looking for a management platform, you know, we look for three things that really were important to us. The first is, is what I call expressiveness. So actually, I've got a lot of experience implementing kind of like more IT ops, like classical, like Cloud broker solutions, and we found that, you know, in order to be able to build a solution quickly for customers, you need to be able to express yourself. I mean, you can't manage and you can't govern, and you can't meter, you can't bill for, you can't apply policy for what Dr Vogels calls the primitives, right? So if I've only got like three or four primitives, my ability to manage and govern is really limited, right? It's almost like, the metaphor I would use would be maybe somebody gives you a keyboard, you got a half a dozen keys on there, and you're trying to write the great American novel. You can't do that, right? So, expressiveness, being able to articulate the right models and templatize and govern. That's kind of concern number one. Concern number two that we think is really important is, is it kind of goes at that knowledge management piece. We're making a major investment within Unisys Federal, and we're looking at hundreds and hundreds of our associates to be trained and certified, and we're building it a Cloud (mumbles) enablement. But we're looking to encapsulate our best practices and templatize those. So to the point... >> And Josh fits in there what, from a software standpoint? >> Well, he actually provides the way for us to capture that knowledge. So, in terms of what our policies in terms of governing say, you know, load balancers or EC2 instances or you know, how we're gonna manage S3 and gonna protect S3. You know, policies and best practices up and down the stack. Like, even governance processes around dev test environments. We're not gonna leave dev environments flapping in the wind for months on end where people are running up big bills, right? >> John: Got it. >> So Josh's product helps us manage that. And the third thing is what I call like the nanny rails. Now my daughter has just learned how to drive a car. And some of the choices that we made, we took into consideration like lane changing things and like crash avoidance and so and so forth. So, what we want, and actually Josh brought this up very elegantly is, is we want, the forward-leaning federal agencies to be able to go quick. But we want to put the guardrails behind them and have like that nanny kind of supervision behind them so that if things start drifting out of compliance we can drag them back. >> You can notify them, right? >> Some instrumentation. >> Absolutely. Absolutely. >> And management. >> Well, it's not just notification with Fugue. We don't let you do the wrong thing. And then if somebody goes in later and breaks it, we fix it. So instead of mean time to response of 15 minutes for your monitoring solution, then however long for somebody to pick up the notification, then to respond to it. With Fugue, within 30 seconds we've seen it and we've fixed it. And so that is a real game changer in terms of... >> Yeah, you guys are very impression with DevOps, they way you connect it. And the theme is connecting the tech to business. And in this case it's government, but that's your customer. What's new with you guys? Any announcements here? What's the story? >> Oh yeah, we have... >> Give us the update quick. >> Thank you very much. We have two big announcements. So it used to be, to use all the great management features of Fugue you had to build things using Fugue. So as of today you can download the new version of the system, you can point it at your existing AWS infrastructure. We autogenerate code and diagrams to show you what you're running. You can compare policy against that. So you don't have to write any code. And then when you've got it right, you can just apply Fugue to that. You can import that infrastructure into Fugue management. So a lot of our customers are telling us we have years of development on AWS. It was not done using best practices. We allow you to go back and fix that really quickly without recreating your infrastructure. >> So go in, do some maintenance without breaking it, tearing it down, building it up. >> and then you get all the benefits of Fugue enforcement. Every 30 seconds we examine the environment. If anything breaks we fix it. And so the ability to just pull that into Fugue and do it easily. >> Well it's great that you guys are successful. Congratulations on the partnership with Unisys. Big name, brand name. You guys obviously experienced, trusted advisors and partners to Federal. Personal question for you, Josh. You know, as you look back at the Amazon mothership. >> Josh: Yes. >> You gotta be like, damn that was a good ride. As an alumni and an extender, you're bringing that DNA to your company that you founded. What's it like? I mean, you feel good? You got a spring in your step? You kinda wish you were back on the mothership? >> Oh no, you know it's great working with AWS because I love doing what I'm doing now more than anything I've ever done. And they are great partners to us. They are so helpful. So I love coming back and seeing all my friends at Amazon. >> They're all bosses now. They're managers. >> Josh: That's right, that's right. >> Promoted. >> But being able to go out and do something that's really your vision, there's nothing like it in the world. >> John: I agree. >> Yeah. >> Being an entrepreneur certainly you can control your own destiny. It's a lot of fun, lot of passion. >> Josh: Yeah. >> Congratulations. >> Josh: Thank you. >> The Fugue CEO here with his partner in Unisys here in theCUBE. Live coverage day one. We've got two more live days. It'll be wall to wall. Big parties tonight. Lot of events, lot of action. Forty-five thousand people here in Las Vegas. I'm John Furrier. Thanks for watching. We'll be right back.

>> Announcer: Live from Manhattan, it's theCUBE. Covering AWS Summit, New York City 2017. Brought to you by Amazon Web Services. >> And we are live here at the Javits Center, continuing on theCUBE, our coverage of AWS Summit 2017, here in Midtown. Starting to wind down, tail end of the day but still a lot of excitement here on the show floor behind us, as there has been all day long. Joining us now along with Stu Miniman, I'm John Walls, is Josh Stella, who is the CEO and Co-Founder of Fugue, a Washington DC and Frederick, Maryland based company. Josh, thanks for being with us. >> Gentlemen, thanks for having me on theCUBE. >> You bet, first time, I think, right? >> Nope, second time. >> Oh, sorry, second time. >> Yeah. >> Alright, so a CUBE vet. >> A CUBE vet, there you go. >> Alright, so for our folks, viewers at home who might not be too familiar with Fugue. >> Josh: Sure. >> Tell us a little bit about what you do and I'm always curious about the origin of the name. Where'd that, you know, where that came from. >> Sure thing, sure. So what Fugue is, is an infrastructure automation system for the Cloud. So, it builds everything you need on the Cloud. It constantly monitors and operates it. It corrects it if anything goes wrong and it gives you a full view of everything in your infrastructure. We like to say you go fast. That's why you're going to Cloud, is to be able to go fast. You need to be able to see everything and get it right. Fugue gives you all of those capabilities at a different level than anything else out there. The name actually comes from music. From a form of musical composition called a fugue. And there might be some folks in the audience who remember Hofstadter's book Godel, Esher, Bach. That was actually where the idea came from. That and there aren't many English words left that are real words and I didn't want to make something up. >> So, you could get the website for it, so it was good to go? >> Yeah, we used fugue.co so that was part of it, sure. >> It worked out for you, then. >> It worked out, yeah. >> Well, for a guy I know who's big into astronomy, I guess Cloud would be, that seems to make sense, right? That you'd be tied into that. Just in general, Cloud migration now. What we're seeing with, this massive paradigm shift, right? >> Yes. >> That's occurring right now. What's in your mind, the biggest driver, you know, of that? Why are people now seriously on the uptake? >> Sure, so when I was at AWS, most of the growth that we saw was sort of, bottom-up. We would go into a new customer and they'd say, we didn't think we were on Cloud. And then we looked and there are 130 Cloud accounts, on AWS, scattered throughout the organization. That was kind of the first motion of Clouded option. We're really now in the second wave and this wave is strategic. It's where CIOs, CEOs and CTOs are saying this is the right way to go. They do security well, it's more cost-effective. More than anything, it allows us to move fast, iterate, be disruptive ourselves. Instead of letting the other guys, who are moving fast on Cloud disrupt us. So these are the big drivers. What Fugue does, is it allows your Cloud desk, and almost any of these organizations that are in this, sort of, phase two motion. It's not all bottom up. They're starting to say, how do we really want to get our hands around this? And so, what Fugue allows you to do is let your developers go even faster than they could without it but where things like policy has code, and infrastructure has code, are just baked in from the front. So, your developers can go really quickly, iterate and the system will actually tell them when they're doing something that isn't allowed by, for example, a regulatory regime or a compliance requirement. And, once you've built those things, Fugue makes sure their always running properly. So, it's a really powerful technology for migration. >> Josh, I'm wondering if you could take us in that dynamic you just talked about because the stuff where, the developers were just playing with it, we definitely saw it, you know. My joke, when I went to an audience was like, there's two types of customers out there. Those that know their using AWS and those that don't realize that they are using AWS. >> Josh: Yeah, exactly. >> But, when you switch to the top-down, it's, how do you get buy-in? How do you get, you know, that developer and the operator, you know, all on the same page. And, even you say today, most companies say, I have a Cloud strategy, but everybody's strategy is different and there's still, kind of, the ink's drying and as, you know, most people say, strategy means it's good for today. maybe not two years from now. >> Josh: Yeah. >> But, what are you seeing in the customer base, as some of those organizational dynamics, strategy dynamics. >> Sure, so, what we're seeing are, people are confused I think, still, about where this whole thing's going. There's a lot of clarity about where it's been, what it can do for you now. That's coming into a clear focus. But, we're in this moment of, not just moment, decade of huge change in computing. And we're still probably less than halfway through this sea change. So, I'd say the strategy, what we advise people, is the strategy has to be really thinking more about the future, that is unknown. As much as the present, that's known. And that's a difficult thing to do. Our approach to that has been, and then, how do you unify the, kind of, the intentions of the executives and the developers. Well, with developers you have to give them great tools. You have to give them things they want to use. You can't impose, kind of, these old enterprising systems on them. They will find ways around it. So, with Fugue, we wrote this very elegant functional programming language where the developers have far more power to do infrastructure as code than with anything else. It's a very beautiful, elegant language. Lots of developer tooling around that. We're just coming out within the next couple of weeks, here, an open beta on a visualization system. So, as you're writing your infrastructure as code, you automatically can see a diagram of everything that will be deployed. So, developers really like those aspects of Fugue. We speak their language. I'm the CEO, I've been a developer for 30 years. From the other side of the equation though, the executive level, the leadership of the organization, they need assurance that what's being built is going to be correct. Is going to be within the bounds of what's allowed by the organization and can adapt to change as it comes down the pike. So, and this gets back to strategy. So, we have the kind of, everything being built with virtual machines and attached disks. And now, you know, containers are really a huge trend, a really great trend but it's not the end. You have things like Lambda. You have things like machine learning as services. And the application boundaries around all of those things, the ones that are there now, and where it's going in the future. And so Fugue is very much architected to grow with that. >> Yeah, absolutely. I'm curious what you're seeing from customers. It used to be, I think back to, you know, virtualization. It was, you know, IT was a cost center and how do we squeeze money out. Then it was, how can IT respond to the business? And now, you know, the leading edge customers, it's how's IT driving business? I think about machine learning, you know, IOT, a lot of the customers we've talked to, that are using serverless, it's you know, I can be more profitable from day one. I can react much faster. What are the dynamics you're seeing? Kind of the role in IT and, you know, the business? >> Yes, thanks, that's a great question. So, you know, software's eating the world and the Cloud is software, if you do it right. The use of the Cloud is software. And so, we're definitely seeing that. Where it used to be that IT was this big fixed cost center, and you were trying to just get more efficiency out of it. You know, maybe extend your recap cycles if you could get away with it, kind of. Now, it's really a disruptive offensive capability. How am I going to build the next thing that expands my market share? That goes after, other people are trying to be disruptive. So, you have to be able to go really, really fast in order to do that, yeah. >> So, one of the announcements today was the AWS migration hub. And it sounds great, I've got all of these migrations out there and it's going to help them put together but it reminds me of, kind of, we have the manager of managers. Because, there's so many services out there, you know, public Cloud, you know, it used to be like, oh Cloud's going to simplify everything. It's like, no, Cloud is not simplifying anything. We always have, kind of, the complexity. How do you help with that? How are customers grappling with the speed of change and the complexity. >> Josh: Sure. >> It is now? >> So, through automation and code. And that's the whole way through the stack. People used to think about software just being application. Then in the more recent, I'd say in the last 18 months, people have really figured out that actually, no, the configuration of the system, the infrastructure, if you will, although even that's a bit anachronistic. Has to be code, so does security. Everything needs to be turned into code so that the build process is minutes, not days or hours. So, we have a customer in financial services, for example, that uses Fugue to build their entire CICD pipeline and then integrate itself with it, so that all of their infrastructure and security policies are completely automated whenever a developer does a pull request. So, if they do a pull request, out comes an infrastructure. If that infrastructure did not meet policy, it's a build fail. So, the way you adapt to all this complexity is through automation. And it's going to get worse, not better as these services proliferate. And as the application boundaries are drawn around wider and wider classes of services. >> Yeah, and that's I guess to ask about. Is that, if I come in to the Cloud and I have X workload, you know, and it's. And all of a sudden, here comes this and here comes that. Now I can do this, now I have new capabilities. And it's growing and growing. My managing becomes a whole different animal now, right? >> Josh: Yes. >> How do I control that? How do I keep a handle on that and not get overwhelmed by the ability to do more and then people within my own company wanting to do more. >> Yeah, so what you're getting at there, I think, is that people go into this thinking the day one problem is the hard one. It's not. >> John: Mine's going to be when it becomes exponentially larger. >> Yeah, and the day two on problem is the hard one. Now I've built this thing. Is it right anymore? >> John: Right. >> Is it doing what it's supposed to do? Who owns it? >> Right, so all these things are what Fugue was built to address. We don't just build stuff on Cloud. We monitor it every 30 seconds and if anything gets out of specification we fix it. So the effect of this is, as you're building and building and building, if Fugue is happy, your infrastructure is correct. So you no longer have to worry about what's out there, it is operating as intended at the infrastructural layer. So, I think that you're exactly right. You get to these large scales and you realize, wow, I have to automate everything. Typically inside of enterprises, they're kind of hand rolling a bunch of point solutions and bags of python and bash script to try to do it. It's a really hard problem. >> So Josh, it's been a year since you came out of stealth, you know, what's been exciting? What's been challenging? What do you expect to see by the time we catch up with you a year from now? >> Yeah, sure, so what's been exciting is the amount of real traction and interest we're getting out of, like, financial services, government and health care, those kinds of markets. I'd say, it's also been exciting to get the kind of feedback that we have from our early customers, which is, they really become evangelists for us and that feels great when you give people a technology that they don't just use but they love. That's very exciting. A year from now, you're going to see a lot from us. Over the next six to nine months, in terms of product releases. We're going to be putting something out at reinvent, I can't get too much into it. That really changes some of the dynamics around things like being able to adopt Cloud. So, a lot of exciting stuff's coming up. >> It sounds like you've got a pretty interesting runway ahead of you. And you certainly have your hands full. But I think you've got a pretty good hand on it. So, congratulations on a very good year. >> Thank you. >> And we wish you all the best success down the road as well. >> Great, thanks for your time. >> You bet, Josh,thank you. Josh Stella from Fugue joining us here on theCUBE. Back with more from the Javits Center, we're at Midtown Manhattan at AWS Summit 2017.

(energetic techno music) >> Announcer: Live from Washington D.C., it's theCUBE. Covering AWS Public Sector Summit 2017. Brought to you by Amazon Web Services, and its partner, Ecosystem. >> Interviewer: So what can Fugue do for you? Well, I'm going to guess that they can take your agency to the Cloud. >> Josh: You're, you're correct, Jeff. >> John W.: That's exactly what I'm looking at over here, the Fugue booth here, on the show floor at AWS Public Sector Summit 2017. Welcome inside, live on theCUBE channel, John Wells and John Furrier, and Josh Stella, who is the founder, and CEO of Fugue. Did I get it right, by the way? >> You did get it right. >> Jeff: You're taking the agencies to the Cloud, correct. >> Taking agencies to the Cloud, taking companies to the Cloud, too, but of course, this is worldwide public sector, so we're focused on the agencies today. >> Yeah, we were just talking before this even started, just a little historical background here, you were with Amazon back in 2012, when this show started, and you told me that your commission with your colleagues was to get 600 attendees. >> Yeah, we wanted to get 600, I think we got 750, which is classic Amazon style, right. >> John W.: Bonus year. >> We go over. But yeah, over 10,000 registered this year, it's amazing. >> Which shows you that this explosive growth of this area, in terms of the public sector. So let's talk about Fugue a little bit. >> Sure. >> Before we dive a little bit, share with our viewers, core competencies, what your primary mission is. >> So Fugue is an automation system. Fugue is a way to completely automate the Cloud API surface. It's true infrastructure as code, so unlike a deployment tool that just builds something on Cloud, Fugue builds it, monitors it, self-heals it, modifies it every time, alerts if anything drifts, and we've added a layer to that for policy as codes. So you can actually express the rules of your organization, so if you're a government agency, those might be NIST or FISMA rules. If you're a start-up, those might be, we don't open SSH to the world. Those can be just expressed as code. So Fugue fully automates the stack, it doesn't just do deployment, and we just released the team conductor, that will manage dozens of AWS accounts for you, so many of our customers in financial services, and other enterprises have many, many AWS accounts. Fugue allows you to kind of centralize all of that control without slowing down your developers. Without getting in the way of going fast. >> John W.: And what, why is that big news? >> It's big news because in the past, the whole core value prop of Cloud is to go fast, is to innovate, iterate, be disruptive, and move quickly. What happens, though, is as you do that, at the beginning, when you're starting small, it looks pretty easy. You can go fast. But you learn pretty quickly over time that things get very messy and complex. So Fugue accelerates that going-fast part, but keeps everything kind of within the bounds of knowing who's running things, knowing what resources you're actually using. Who built what, who has permissions to do what. So it's really this foundational layer for organizations to build and control Cloud environments. >> Josh, one of the things we talked about in the opening was the government's glacial case of innovation over the years. But the pressure is on the innovate. So the, lot of emphasis on innovation. In an environment that's constrained by regulation, governance, policies. So they have kind of an Achilles heal there, but Cloud gives them an opportunity at a scale point to do something differently, I want to dip into that, but I'll set this question up by quoting a CIO I chatted with who's in the government sector. He's like, "Look, Cloud's like, jumping out of a plane "with a parachute I didn't even know was going to open up." So this is kind of a mindset, he was over generalizing, but again, to the point is, trust, scale, execution, risk. >> Mhm, mhm. >> It's a huge thing. >> Absolutely. >> How do you guys solve that problem for the agencies that want to go to the Cloud, because, certainly they want to go there, I think it's a new normal as Werner said. What do you guys do to make that go away? How do you make it go faster? >> Sure, so Amazon and other Cloud vendors have done a great job of building a very highly trusted, low level infrastructure that you can put together into systems. That's really the core offering. But there's still, in government agencies, as you point out, this need to follow rules and regulations and policies, and check those. So, one of the things Fugue does, is allows you to actually turn those rules into executable compiled code. So, instead of finding out you're breaking a rule a month later, in some meeting somewhere, that's going to loop back, it'll tell you in ten milliseconds. And how to fix it. So we allow you to go just as fast as anyone can on Cloud, but meeting all those extra constraints and so on. >> So you codify policies, and governance type stuff, right? >> That's part of what we do, but we also automate the entire infrastructure and grid. >> So this is the key, this is what I want to kind of jump to that next point. That's cool, but it would make sense that machine learning would probably be like an interesting take away. Cuz' everyone talks about training, data models, and it sounds like what you're doing, if you codify the policies, you probably set up well for growing and scaling in that world. Is that something that's on your radar? >> Sure. >> How do you guys look at that whole, okay I've got machine learning coming down the pike, everyone wants to get their hands on some libraries, and they want to get to unsupervised at some point. >> Yes, yeah it's a great question. So Fugue is really a bridge to that future where the entire infrastructure layer is automated and dynamic. And that's what you're talking about, where you have machine learning that are helping you make decisions about how to do computing. A lot of folks aren't ready for that yet. They're still thinking about the Cloud as kind of a remote data center, in our view, it's actually just a big distributed computer. And so, when you think about things like whether it's machine learning, or just algorithms to run over time that modify these environments to make them more efficient. Fugue is definitely built to get you there, but we start where you're comfortable now, which is just the first thing we have. >> Yeah of course, when you're still early to tells in the water, all kinds of data issues, you see the growth there. So the question is, what is the low hanging fruit for you? What are the use cases? Where are you guys winning, and what's new with your codifying the policies that you're releasing here? What's the use cases, and what're you guys releasing? >> Yeah, so common use case for us is integration with CI, CD, and DevOps for the entire infrastructure chain. So, you'll have organizations that want to go to a fully automated deployment management of infrastructure. And what they've learned in the past is, without Fugue, they might get some of the deployment automated, with a traditional CM tool or something like this, but because they're not doing the self healing, the constant maintenance on the environment, the updating of the environment, the alerting on it, there's a big missing link in terms of that automation. So, we're getting a lot of resonance in the financial services sector, and folks who are sophisticated on Cloud, and are doing large-scale Cloud operations. So, if you think about, uh, Netflix can build full automation for themselves, because they're Netflix. But not everyone fits in that boat. So Fugue is sort of the sorts of capabilities that Netflix built in a very specific way for themselves, we don't use their tools. We're a general purpose solution to that same class of problems. So, really, where we're winning is in automation of, again, deployments and operations of those deployments, but also in things like policy. We're seeing that not just in government but in the private sector as well. >> What are the big bottlenecks, what are the roadblocks for the industry? >> The roadblocks for the industry certainly are bringing, sort of, a legacy patterns to Cloud. Imagining it's a remote data center, thinking of it as virtual machines and storage, instead of just, infinite compute, and infinite resources that you put together. >> John F.: So the mindset's the bottleneck. >> Absolutely, it's cultural, yeah, yeah. And skillset, because in the DevOps Cloud world, everything should be code, and therefore everyone has to be a developer. And so, that's a little new. >> Is scale a big issue for you guys, with your customers? Is that something that they're looking for? And what's the kind of, scope of some of your customers and your use cases in government Clouds. >> Yeah, sure, absolutely. I mean, a lot of us came from AWS, so we know how to build things at scale. But yeah, y'know, a lot of folks start small with Fugue, but they go to very large, very quickly, has been our experience. So, scale across dozens, or hundreds AWS accounts-- >> That's where the automation, if they're not set up properly, bites them in the butt pretty much, right? >> Absolutely, absolutely. So yeah, we get a lot of that too. Going back in and helping people put their system back together the right way for Cloud, because they went there from the-- >> Alright, so what's the magnified learnings from this, from your experience with your company, mobile rounds of finance, you guys are well financed, one of the best venture capitals, the firm's NEA, great backer, you guys are doing well. Over the years, what have you learned, what's the magnification of the learnings, and how do you apply it to today's marketplace? >> Um, we are in a massive transition. We're just beginning to see the effects of this transition. So, from 1947 until the Cloud, you just had faster, smaller, Von Neumann machines in a box. You had any ax that got down to the size of your wristwatch. The Cloud is intrinsically different. And so there is an opportunity now, that's a challenge, but it's a massive opportunity to get this new generation of computing right. So I'd say that the learnings for me, as a technologist coming into a CEO role, are how to relate these deeply technical concepts to the world in ways that are approachable, and that can show people a path that they want to get involved with. But I think the learnings that I've had at AWS and at Fugue are, this is the beginning of this ride. It's not going to end at containers, it's not going to end at Lambda, it's going to continue to evolve. And the Cloud in ten years is going to look massively different than it does now. >> So, when you said, "to get it right," the computer, I mean, such as, or in what way, I mean, we have paths right, routes you could take. So you're saying that there are a lot of options that will be pitfalls, and the others that would be great opportunities. >> Well, that's absolutely right. So, for example, betting on the wrong technologies too soon, in terms of where the Cloud is going to finally land, is a box canyon, right. That's an architectural dead end. If you cannot compose systems across all these disparate Cloud surfaces, the application boundary, the system boundary is now drawn across services. You used to be able to open an IDE, and see your application. Well, now that might be spread across virtual machines, containers, Lambda, virtual discs, block storage, machine learning services, human language recognition services. That's your application boundary. So, if you can't understand all of that in context, you're in real trouble. Because the change is accelerating. If you look at the rate of new services, year over year in the Cloud, it's going up, not down. So the future's tougher. >> So, if I'm a government service, though, and I think John just talked about this, I'm just now getting confidence, right? >> Yes. >> I'm really feeling a little bit better, because I met somebody to hold my hand. And then I hear on the other hand, say, we have to make sure we get this right. So now all of a sudden, I'm backing off the edge again. I'm not so sure. So how do you get your public sector client base to take those risks, or take those daring steps, if you will. You know, we've had a lot of really great conversations and have a lot of great relationships in public sector, what we're seeing there is, like in the commercial world. I mean, public sector wasn't that far behind commercial on Cloud. When I was at Amazon, y'know, five years ago, I worked mostly with public sector costumers, and they were trying hard there, they were champions already, moving there. So, one of the things that Fugue does very effectively is, because we have this ability to deterministically, programmatically follow the rules, it takes it off of the humans, having to go and check. And that's always the slow and expensive part. So we can give a lot of assurance to these government agencies that, for example, if one of their development teams chooses to deploy something to Cloud, in the past, they'd have to go look for that. Well, with Fugue, they literally cannot deploy it, unless it's correct. And that's what I mean by "get it right." Is the developer, who's sitting there, and I've been a developer for decades, they want to do things by the rules. They want to do things correctly. But they don't always want to read the stack of books like this, and follow, y'know, check their boxes. So, with Fugue, you just get a compiler error and you keep going. >> Josh, I wanted to ask you about a new category we see emerging, it's really not kind of mainstream yet, by Wikibon research, and still getting in theCUBE, we get to see things a little bit early. Plus we have a data science team to skim through the predictive analytics. One thing that's clear is SAS businesses are emerging. So, SAS is growing at an astounding rate, platform is a service, and infrastructure's a service, I mean, Javassist doesn't think to see it that way, I don't you do either. It's infrastructure and SAS pretty much. So pretty much, everyone's going to, at some point, be a Cloud service provider. And there'll be a long tail distribution, we believe, on niche, to completely huge, and the big ones are going to be the Amazons, the Facebooks, the Google, but then there's going to be service providers that is going to emerge. They're going to be on Clouds, with governments, so we believe that to be true. If you believe that to be true, then the question is, how do I scale it? So, now I'm a solution architect in an enterprise. And like you said, it's intrinsically different in the Cloud than it was, say on premise, or even the critical traditional enterprise computing. I've got to now completely change my architectural view. >> Yes. >> If you think it's a big computer, then you've got to be an operating systems guy. (laughs) You've got to say, okay, there's a linker, there's a load, there's a compiler, I've got subsystems, I got IO. You got to start thinking that way. How do you talk to your friends, and colleagues, and customers around how to be a new solutions architect. >> Yeah, so I think it's a balancing act. Because we are this transition stage, right. The modern Cloud is still a Prius. (chuckles) And the future Cloud is the Tesla, in terms of how customers use it. We're in this transition phase in technologies, so you have to have one foot in both camps. Immutable infrastructure patterns are incredibly important to any kind of new development, and if you go to the Fugue.cosite or O'Reily, we wrote a little book with them on immutable infrastructure patterns. So, the notion there is, you don't maintain anything, you just replace it. So you stand a compute instance, Verner likes to talk about, these are cattle, not pets, Y'know, or paper cuff computing, that's right. You never touch it, you never do configuration management, you crumple it up, throw it away, and make a new one. That's the right new pattern, but a lot of the older systems that people still rely upon don't work that way. So, you have to have a foot in each camp as a solutions architect in Cloud, or as the CEO of a Cloud company. You have to understand both of those, and understand how to bridge between them. And understand it's an evolution-- >> And the roles within the architecture, as well. >> That's right. >> They coexist, this coexistence. >> Absolutely. You know, it's interesting you said, "everyone's going to become a service provider." I'd put that a little differently, the only surface that matters in the future is APIs. Everything is APIs. And how you express your APIs is a business question. But, fundamentally, that's where we are. So, whether you're a sales force with a SAS, I really don't like the infrastructure and SAS delineation, because I think the line's very blurred. It's just APIs that you compose into applications. >> Well, it's a tough one, this is good debate we could have, certainly, we aren't going to do it live on theCUBE, and arm wrestle ourselves here, and talk about it. But, one of the things about the Cloud that's amazing is the horizontal scalability of it. So, you have great scalability horizontally, but also, you need to have specialty, specialism at the app layers. >> Josh: Yes. >> You can't pick one or the other, they're not mutually exclusive. >> Josh: That's right. >> So, you say, okay, what does a stack look like? (laughs) If everything's in API, where the hell's the stack? >> Yeah, well that's why we write Fugue. Because Fugue does unify all that. Right, you can design one composition in Fugue. One description of that stack. And then run the whole thing as a process, like you would run Apache. >> So you're essentially wrapping a system around, you like almost what Docker Containers is for microservices. You are for computing. >> And including the container's managers. (John F. Laughs) So that's just one more service to us, that's exactly right. And, y'know, you asked me earlier, "how does this affect agencies?" So one thing we're really excited about today is, we just announced today, we're live on GovCloud, so we support GovCloud now, you can run in the commercial regions, you can run in GovCloud, and one of the cool things you can do with Fugue, because of that system wrapping capability, is build systems in public regions, and deploy them on GovCloud and they'll just work, instead of having to figure out the differences. >> Oh that's what what you think about the Cloud, standing up's something that's a verb now. "Hey I'm going to stand this up." That's, what used to be Cloud language, now that's basically app language. >> I think what you're getting at here is something near to my heart, which is all there are anymore are applications. Talking about infrastructure is kind of like calling a chair an assembly of wood. What we're really about are these abstractions, and the application is the first class citizen. >> I want to be comfortable, and sit down, take a load off. >> Josh: That's right, that's right. >> That's what a chair does. And there's different versions. >> John W.: You don't want to stand up, you want to sit down. >> And there's different, there's the Tesla of the chairs, and then there's the wooden hard chair for your lower back, for your back problems. >> Josh: Exactly, exactly. >> The Tesla really is a good use case, because that points to the, what I call, the fine jewelry of a product. Right, they really artistically built amazing product, where the value is not so much the car, yeah there's some innovations with the car, you've got that, with electric. But it's the data. The data powering the car that brings back the question of the apps and the data, again, I want to spend all my time thinking about how to create a sustainable, competitive advantage, and serve my customers, rather than figure out how to architect solutions that require configuration management, and tons of labor. This is here the shift is. This is where the shift is going from non-differentiated operations to high-value added capabilities. So, it's not like jobs are going up. Yeah, some jobs are going away, I believe that. But, it's like saying bank tellers were going to kill the bank industry. Actually, more branches opened up as a result. >> Oh yeah, this is the democratization of computing as a service. And that's only going to grow computing as a whole. Getting back to the, kind of, fine jewelry, you talked about data as part of that, I believe another part of that is the human experience of using something. And I think that is often missing in enterprise software. So, you'll see in the current release of Fugue, we just put into Beta a very, we've spent about two years on it, a graphic user interface that shows you everything about the system in an easily digestible way. And so, I think that the, kind of, the effect of the iPhone on computing in the enterprise is important to understand, too. The person that's sitting there at an enterprise environment during their day job gets in their Tesla, because they also love beautiful things. >> Well, I mean, no other places for you guys to do that democratization, and liberation, if you will. The government Cloud, and public sector, is the public sector. They need, right now they've been on antiquated systems for (chuckles) yeah, not only just antiquated, siloed, y'know, Cobol systems, main framed, and they've got a lot of legacy stuff. >> There is, there's a lot of legacy stuff, and they're a lot of inefficiencies in the process model in how things get done, and so, we love that AWS has come in, and when we were there, we helped do that part. And now with Fugue, we want to take these customers to kind of, the next level of being able to move forward quickly. >> Well, if you want to take your agency to the Cloud, Fugue is your vehicle to do that. Josh Stella, founder, CEO. Thanks for being with us here on theCUBE. >> Thanks so much. >> We appreciate it. We'll continue, live from Washington, D.C. Nation's capital here, AWS Public Sector Summit, 2017 on theCUBE. >> John F.: Alright, great job, well done. (upbeat techno music)

>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> The pandemic precipitated what is shaping up to be a permanent shift in cybersecurity spending patterns. As a direct result of hybrid work, CSOs have vested heavily in endpoint security, identity access management, cloud security, and further hardening the network beyond the headquarters. We've reported on this extensively in this Breaking Analysis series. Moreover, the need to build security into applications from the start rather than bolting protection on as an afterthought has led to vastly high heightened awareness around DevSecOps. Finally, attacking security as a data problem with automation and AI is fueling new innovations in cyber products and services and startups. Hello and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis, we present our quarterly findings in the security industry, and share the latest ETR survey data on the spending momentum and market movers. Let's start with the most recent news in cybersecurity. Nary a week goes by without more concerning news. The latest focus in the headlines is, of course, Russia's relentless cyber attacks on critical infrastructure in the Ukraine, including banking, government websites, weaponizing information. The hacker group, BlackByte, put a double whammy on the San Francisco 49ers, meaning they exfiltrated data and they encrypted the organization's files as part of its ransomware attack. Then there's the best Super Bowl ad last Sunday, the Coinbase floating QR code. Did you catch that? As people rushed to scan the code and participate in the Coinbase Bitcoin giveaway, it highlights yet another exposure, meaning we're always told not to click on links that we don't trust or we've never seen, but so many people activated this random QR code on their smartphones that it crashed Coinbase's website. What does that tell you? In other news, Securonix raised a billion dollars. They did this raise on top of Lacework's massive $1.3 billion raise last November. Both of these companies are attacking security with data automation and APIs that can engage machine intelligence. Securonix, specifically in the announcement, mentioned the uptake from MSSPs, managed security service providers, something we've talked about in this series. And that's a trend that we see as increasingly gaining traction as customers are just drawing in and drowning in security incidents. Peter McKay's company, Snyk, acquired Fugue, a company focused on making sure security policies are consistent throughout the software development life cycle. It's a really an example of a developer-defined security approach where policy can be checked at the dev, deployment, and production phases to ensure the same policies are in place at all stages, including monitoring at runtime. Fugue, according to Crunchbase, had raised $85 million to date. In some other company news, Cisco was rumored to be acquiring Splunk for not much more than Splunk is worth today. And the talks reportedly broke down. This would be a major move in security by Cisco and underscores the pressure to consolidate. Cisco would get an extremely strong customer base and through efficiencies could improve Splunk's profitability, but it seems like the premium Cisco was willing to pay was not enough to entice board to act. Splunk board, that is. Datadog blew away its earnings, and the stock was up 12%. It's pulled back now, thanks to Putin, but it's one of those companies that is disrupting Splunk. Datadog is less than half the size of Splunk, revenue-wise, but its valuation is more than 2 1/2 times greater. Finally, Elastic, another Splunk disruptor, settled its trademark dispute with AWS, and now AWS will now stop using the name Elasticsearch. All right, let's take a high level look at how cyber companies have performed in the stock market over time. Here's a graph of the Cyber ETF, and you can see the March 1st crosshairs of 2020 signifying the start of the lockdown. The trajectory of cybersecurity stocks is shown by the orange and blue lines, and it surely has steepened post March of 2020. And, of course, it's been down with the market lately, but the run up, as you can see, was substantial and eclipsed the trajectory of the previous cycles over the last couple of years, owing much of the momentum to the spending dynamics that we talked about at our open. Let's now drill into some of the names that we've been following over the last few years and take a look at the firm level. This chart shows some data that we've been tracking since before the pandemic. The top rows show the S&P 500 and the NASDAQ prices, and the bottom rows show specific stocks. The first column is the index price or the market cap of the company just before the pandemic, then the same data one year later. Then the next column shows the peak value during the pandemic, and then the current value. Then it shows in the next column where it is today, in percentage terms, i.e., how far has it pulled back from the peak, then the delta from pre-pandemic, in other words, how much did the issue earn or lose during the pandemic for investors? We then compare the pre-pandemic revenue multiple using a trailing 12-month revenue metric. Sorry, that's what we used. It's easy to get. (laughs) And that's the revenue multiple compared to the August in 2020, when multiples were really high, and where they are today, and then a recent quarterly growth rate guide based on the last earnings report. That's the last column. Okay, so I'm throwing a lot of data at you here, but what does it tell us? First, the S&P and the NAS are well up from pre-pandemic levels, yet they're off 9% and 15%, respectively, from their peaks today. That was earlier on Friday morning. Now let's look at the names more closely. Splunk has been struggling. It definitely had a tailwind from the pandemic as all boats seem to rise, but its execution has been lacking. It's now 30% off from its pre-pandemic levels. (groans) And it's multiple is compressing, and perhaps Cisco thought it could pick up the company for a discount. Now let's talk about Palo Alto Networks. We had reported on some of the challenges the company faced moving into a cloud-friendly model. that was before the pandemic. And we talked about the divergence between Palo Alto's stock price and the valuations relative to Fortinet, and we said at the time, we fully expected Palo Alto to rebound, and that's exactly what happened. It rode the tailwinds of the last two years. It's up over 100% from its pre-COVID levels, and its revenue multiple is expanding, owing to the nice growth rates. Now Fortinet had been doing well coming into the pandemic. In fact, we said it was executing on a cloud strategy better than Palo Alto Networks, hence that divergence in valuations at the time. So it didn't get as much of a boost from the pandemic. Didn't get that momentum at first, but the company's been executing very well. And as you can see, with 155% increase in valuation since just before the pandemic, it's going more than okay for Fortinet. Now, Okta is a name that we've really followed closely, the identity access management specialist that rocketed. But since it's Auth0 acquisition, it's pulled back. Investors are concerned about its guidance and its profitability. And several analyst have downgraded their price targets on Okta. We still really like the company. The Auth0 acquisition gives Okta a developer vector, and we think the company is going hard after market presence and is willing to sacrifice short-term profitability. We actually like that posture. It's very Frank Slupin-like. This company spends a lot of money on R&D and go-to-market. The question is, does Okta have inherent profitability? The company, as they say, spends a ton in some really key areas but it looks to us like it's going to establish a footprint. It's guiding revenue CAGR in the mid-30s over the mid to long-term and near term should beat that benchmark handily. But you can see the red highlights on Okta. And even though Okta is up 59% from its pre-pandemic levels, it's far behind its peers shown in the chart, especially CrowdStrike and Zscaler, the latter being somewhat less impacted by the pullback in stocks recently, of course, due to the fears of inflation and interest rates, and, of course, Russian invasion escalation. But these high flyers, they were bound to pull back. The question is can they maintain their category leadership? And for the most part, we think they can. All right, let's get into some of the ETR data. Here's our favorite XY view with net score, or spending momentum on the Y-axis, and market share or pervasiveness in the data center on the horizontal axis. That red 40% line, that indicates a highly elevated spending level. And the chart inserts to the right, that shows how the data is plotted with net score and shared N in each of the columns by each company. Okay, so this is an eye chart, but there really are three main takeaways. One is that it's a crowded market. And this shows only the companies ETR captures in its survey. We filtered on those that had more than 50 mentions. So there's others in the ETR survey that we're not showing here, and there are many more out there which don't get reported in the spending data in the ETR survey. Secondly, there are a lot of companies above the 40% mark, and plenty with respectable net scores just below. Third, check out SentinelOne, Elastic, Tanium, Datadog, Netskope, and Darktrace. Each has under 100 N's but we're watching these companies closely. They're popping up in the survey, and they're catching our attention, especially SentinelOne, post-IPO. So we wanted to pare this back a bit and filter the data some more. So let's look at companies with more than 100 mentions in the same chart. It gets a little cleaner this picture, but it's still crowded. Auth0 leads everyone in net score. Okta is also up there, so that's very positive sign since they had just acquired Auth0. CrowdStrike SalePoint, Cyberark, CloudFlare, and Zscaler are all right up there as well. And then there's the bigger security companies. Palo Alto Network, very impressive because it's well above the 40% mark, and it has a big presence in the survey, and, of course, in the market. And Microsoft as well. They're such a big whale. They skew the data for everybody else to kind of mess up these charts. And the position of Cisco and Splunk make for an interesting combination. They get both decent net scores, not above the 40% line but they got a good presence in the survey as well. Thinking about the acquisition, Al Shugart was the CEO of of Seagate, and founder. Brilliant Silicon valley icon and engineer. Great business person. I was asking him one time, hey, you thinking about buying this company or that company? And of course, he's not going to tell me who he's thinking about buying or acquiring. He said, let me just tell you this. If you want to know what I'm thinking, ask yourself if it were free, would you take it? And he said the answer's not always obviously yes, because acquisitions can be messy and disruptive. In the case of Cisco and Splunk, I think the answer would be a definitive yes It would expand Cisco's portfolio and make it the leader in security, with an opportunity to bring greater operating leverage to Splunk. Cisco's just got to pay more if it wants that asset. It's got to pay more than the supposed $20 billion offer that it made. It's going to have to get kind of probably north of 23 billion. I pinged my ETR colleague, Erik Bradley, on this, and he generally agreed. He's very close to the security space. He said, Splunk isn't growing the customer base but the customers are sticky. I totally agree. Cisco could roll Splunk into its security suite. Splunk is the leader in that space, security information and event management, and Cisco really is missing that piece of the pie. All right, let's filter the data even more and look at some of the companies that have moved in the survey over the past year and a half. We'll go back here to July 2020. Same two-dimensional chart. And we're isolating here Auth0, Okta, SalePoint CrowdStrike, Zscaler, Cyberark, Fortinet, and Cisco. No Microsoft. That cleans up the chart. Okay, why these firms? Because they've made some major moves to the right, and some even up since last July. And that's what this next chart shows. Here's the data from the January 2022 survey. The arrow start points show the position that we just showed you earlier in July 2020, and all these players have made major moves to the right. How come? Well, it's likely a combination of strong execution, and the fact that security is on the radar of every CEO, CIO, of course, CSOs, business heads, boards of directors. Everyone is thinking about security. The market momentum is there, especially for the leaders. And it's quite tremendous. All right, let's now look at what's become a bit of a tradition with Breaking Analysis, and look at the firms that have earned four stars. Four-star firms are leaders in the ETR survey that demonstrate both a large presence, that's that X-axis that we showed you, and elevated spending momentum. Now in this chart, we filter the N's. Has to be greater than 100. And we isolate on those companies. So more than 100 responses in the survey. On the left-hand side of the chart, we sort by net score or spending velocity. On the right-hand side, we sort by shared N's or presence in the dataset. We show the top 20 for each of the categories. And the red line shows the top 10 cutoffs. Companies that show up in the top 10 for both spending momentum and presence in the data set earn four stars. If they show up in one, and make the top 10 in one, and make the top 20 in the other, they get two stars. And we've added a one-star category as honorable mention for those companies that make the top 20 in both categories. Microsoft, Palo Alto Networks, CrowdStrike, and Okta make the four-star grade. Okta makes it even without Auth0, which has the number one net score in this data set with 115 shared N to boot. So you can add that to Okta. The weighted average would pull Okta's net score to just above Cyberark's into fourth place. And its shared N would bump Okta up to third place on the right-hand side of the chart Cisco, Splunk, Proofpoint, KnowBe4, Zscaler, and Cyberark get two stars. And then you can see the honorable mentions with one star. Now thinking about a Cisco, Splunk combination. You'd get an entity with a net score in the mid-20s. Yeah, not too bad, definitely respectable. But they'd be number one on the right-hand side of this chart, with the largest market presence in the survey by far. Okay, let's wrap. The trends around hybrid work, cloud migration and the attacker escalation that continue to drive cybersecurity momentum and they're going to do so indefinitely. And we've got some bullet points here that you're seeing private companies, (laughs) they're picking up gobs of money, which really speaks to the fact that there's no silver bullet in this market. It's complex, chaotic, and cash-rich. This idea of MSSPs on the rise is going to continue, we think. About half the mid-size and large organization in the US don't have a SecOps, a security operation center, and outsourcing to one that can be tapped on a consumption basis, cloud-like, as a service just makes sense to us. We see the momentum that companies that we've highlighted over the many quarters of Breaking Analysis are forming. They're forming a strong base in the market. They're going for market share and footprint, and they're focusing on growth, at bringing in new talent. They have good balance sheets and strong management teams and we think they'll be leading companies in the future, Zscaler, CrowdStrike, Okta, SentinelOne, Cyberark, SalePoint, over time, joining the ranks of billion dollar cyber firms, when I say billion dollar, billion dollar revenue like Palo Alto Networks, Fortinet, and Splunk, if it doesn't get acquired. These independent firms that really focus on security. Which underscores the pressure and consolidation and M&A in the whole space. It's almost assured with the fragmentation of companies and so many new entrants fighting for escape velocity that this market is going to continue with robust M&A and consolidation. Okay, that's it for today. Thanks to my colleague, Stephanie Chan, who helped research this week's topics, and Alex Myerson on the production team. He also manages the Breaking Analysis podcast. Kristen Martin and Cheryl Knight, who get the word out. Thank you to all. Remember these episodes are all available as podcasts wherever you listen. All you do is search Breaking Analysis podcast. Check out ETR's website at etr.ai. We also publish a full report every week on wikibon.com and siliconangle.com. You can email me at david.vellante@siliconangle.com. @dvellante is my DM. Comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week. Be safe, be well, and we'll see you next time. (upbeat music)

>> Narrator: Live from Washington DC, it's theCube, covering AWS Public Sector Summit 2017. Brought to you by Amazon Web Services and its partner Ecosystem. >> Welcome back here to Washington, D.C. You're watching Cube Live here at Silicon Angle T.V. The flagship broadcast of Silicon Angle. We are at AWS Public Sector Summit 2017 wrapping up day one coverage here in the Walter Washington Convention Center. Along with John Furrier, we are now joined by our esteemed colleague Jeff Frick who's been alongside all day handling all the machinations behind the scenes. >> Behind the scenes, John. >> John: Doing an admirable job of that, Jeff. >> So what do you think, our first ever visit to your town. >> John: I love it, I love it. >> I sense something tableau at the Opry. The Opry's the other big convention center, here, or Graceland. >> International Harbor. >> It's the same company. >> National harbor, MGM. >> You're a D.C. guy. >> Gaylord. >> Gaylord, thank you. >> What's the connection? So we going to get some tickets for the Nationals game? >> We got Nats game tonight, Strasburg pitched last night, did not pitch well, but who knows? Maybe we'll get Gio tonight. >> Well the action certainly Amazon Web Services >> Yeah let's talk about what we have going on here today, Jeff. >> Well, I mean, we interviewed, you and I did some great interviews. Intel came on, which is obviously Bellwether in the tech business. Jeff, former Intel employee knows what it's like to march to the cadence of Moore's law and Intel is continuing to do well in platinum sponsor or diamond sponsor here at the event. Look it, the chips are getting smarter and smarter, security at the Silicon, powering 5G, a networks transmission, a lot of the plumbing that's going on in cloud and in cars and devices and companies, it's going to all be connected. So it's a connected world we're living in and Intel's going to be a key part of that so they're highly interested and motivated by all the people that are popping up in the cloud. >> We were just talking and Jeff, I know, you're able to listen on the last interview that we did, but a point that you made, that, you know, a point that you raised, about four years ago, when the CIA deal came down and AWS is ON one side and IBM's on the other, and AWS wins that battle. You called it the shot heard round the cloud. And that, now four years later, has turned out to be a hugely pivotal moment. >> Yeah, I mean this is like moments in time history here, again, documenting it on the Cube for the first time. I don't think anything was written about this I'll say it since we're going to be analyzing it. The shot heard around the cloud was 2013 when AWS public sector under Teresa Carlton's team and her leadership, beat IBM for the Central Intelligence Agency, CIA, contract. Guaranteed lots of spec for IBM. Amazon comes out of the woodwork and wins it. And they won it because essentially the sales motion and the power of IBM had this thing lopped in. But at that time the marketplace was booming with what we call Shadow IT, where you could put your credit card down and go into Amazon cloud and get some instants. What happened was someone actually cut a little prototype, showed their boss, and they said, "I like that better than that, let's do a bake-off." So what happened was at the last minute, new opportunity comes in and then they do what they call a bake-off. Bake-offs and RAPs come in and they won. Went to court and the judge in the ruling actually said Amazon has a better product. So they ruled in favor of Amazon Web Services. That was what I called the shot heard around the cloud. Since that point on, the cloud has become more legitimate every single day for not only startups, enterprises, as well as now public sector. So shot heard around the cloud fast forward to today, this show's on a trajectory to take on the pace of re:Invent, which as their core Amazon Web Services show, then of course which is why we're here chronicalizing this moment in history. This is where we believe, Jeff you and I talked about this, and Dave Alante and I talked about the research team, this is where the influction point kicks up. This is a new growth pillar unpredicted by Wall Street, new growth predictor for revenue for Amazon, they're already a cash machine. They're already looking like a hockey stick this way. You add on public sector, it's going to be phenomenal. So, a lot of people are seeing it but this is just growing like a weed. >> Jeff, follow up on that. >> I was going to say, the two mega trends, John, that we've talked about time and time again, and Teresa Carlson and team have done a terrific job here in the public sector, but I always go back to the James, Tuesday night in the James Hamilton at re:Invent, and if you've never gone you got to go, and he talks about just all these big iron infrastructure investments that Amazon continues to make because they have such scale behind them. Whether it's in chips, whether it's in networking, whether it's in new fibers that they're running across the oceans. They can invest so much money to the benefit of their customers, whether it be security, you know, in all the areas of compute, that is fascinating to me. The other thing we always hear about, about cloud, right, is at some point, it's cheaper to own rather than rent. We just keep coming back to Netflix, like at nighttime, I think Netflix owns whatever the number, 45 percent of all internet traffic in the evening is Netflix, whatever the number is. They're still on Amazon. So, it's not necessarily better to rent than buy. You have to know what you're doing and we were at another show the other day, it was Gannet, the newspaper company. When they're using a lot of servers, they use hundreds, but he said there are sometimes, using AWS, that they actually turn all the servers off. You cannot do that in a standard infrastructure world. You can't turn everything off and then on. Which again, you got to manage it. You don't want the expensive bill. But to me, being able to leverage such scale to the benefit of every customer whether it's Netflix or a startup, it's pretty tough. >> And this is the secret, and this is something again, shared with the Cube audience, here, is not new to us, but we're going to re-amplify it because the people make a mistake with the cloud, it's in one area, they don't match the business model to their variable cost expenses. If you get into the cloud business, and you can actually ratchet your revenue coming in and then manage that cost delta redline, blackline, know where those lines are, as long as you're in the black, and revenue, and you then have the cost variable step up with your revenue, that is the magical formula. It's not that hard, it's back of an envelope. >> Right, right. >> Red line cost, black line revenue. >> The other great story, it was from summit, actually, in San Francisco earlier this year, at they keynote, they had Nextdoor, everybody knows Nextdoor it's the social media for your mom, my mom. They love it, right, people are losing dogs, and looking for a plumber, but the guy talked from about Nextdoor. >> John: Don't knock Nextdoor. >> I don't knock Nextdoor, the Nextdoor CEO gets up and he said, well, I laugh because the Nextdoor guy's mom didn't know what he did until he did Nextdoor. Anyway, he said, you know, we have the entire production system for Nextdoor. And then we would build production plus one on a completely separate group of hardwares inside of Amazon. When that was tested out and ready to run, guess what, we just turn off the first one. You can't, you can't, you can't do that in an owned infrastructure world. You can't build N and N plus one and N plus two and turn off N, you just can't do that. >> Well, the Fugue CEO, Josh, everyone should check out on Youtube.com/siliconangle, he was awesome. He basically saw a throwaway infrastructure mindset to your point about Nextdoor. You build it up and then you bring your new stuff in, you digitally throw it away. >> Right, right. >> That's the future. And this is the business model aspect. And public sector, we were joking, look it, let's just be honest with ourselves, it is a glacier antiquated old systems, people trying hard, you know, government servants, you know, that, employees of the government, not appointees, they don't have a lot of budget and they're always under scrutiny for cost. So the cost benefits always there and they have old systems. So they want new systems. So the demand is there. The question is, can they pull it off. >> So, talk about the government mindset or the shift. We've heard a little bit about that today. About how, to the point that you just made there, John, that you know, very reluctant, some foot-dragging going on, that's historical, that's what happens. But now, maybe the CIA deal, whatever it was, we hit that tipping point, and all the sudden, the minds are opening, and some people are embracing, or being more engaging, with new mousetraps, with better ways to do things. >> We've got the speakers coming on here, so we should wrap it up real quick. Final thoughts, from Day One. >> I was just going to say that the other thing is that before there was so much fat, in not only government in general, but in infrastructure purchasing, 'cause you had to, you better not run out of hardware at Q3 when you're running the numbers. So everything was so over provision, so much expense and over provisioning. With Amazon you don't need to over provision. You can tap it when you need it and turn it off so there's a huge amount of budget that should actually be released. >> I want to ask you guys, we'll wrap up here, final, since you're emceeing, final thoughts. What is your impression of day one? I'll start here and you guys can have time to think of an answer. My takeaway for public sector is Teresa Carlson has risen up as a prime executive for Amazon Web Services. She went from knocking doors eight years ago to full on blown growth strategy for Amazon. And it's very clear, they're not there yet. They only have 10,000 people here, so the conference isn't that massive. But it's on its way to becoming massive. Here's their issue. They have to start getting the cadence of re:Invent launches into the public sector. And that's the big story here. They are quickly shortening the cycles between what they launch at Amazon re:Invent and what they roll out of the public sector. The question is how fast can they do that? And that's what we're going to be watching. And then the customer behaviors starting to procure. So greenlight for Amazon. But they got to get those release cycles. Stuff gets released at Amazon re:Invent, they got to roll them with government, shorten that down to almost zero, they'll win. >> Yeah, my just quick impression is, I like to look at the booth action, because we've all had booth duty, right. What's going on in the booths? Did the people that paid for a booth here feel like they got their money's worth? And the traffic in the booths has been good, they've been three deep, four deep. So the people that are here are curious they're interested, they're spending time going booth to booth to booth, and that's a very good sign. >> This is a learning conference. Alright your thoughts. >> I would say, the only thing that is, I wouldn't say it's a red light by any means, but it's like a caution light, it's about budgets, you know, when you run government, you're always, you are vulnerable to somebody else's budget decision. I'm, you know, whether it's Congress, whether it's a city council, whether it's a state legislation, whatever it is, that's always just kind of a, a little hangup you have to deal with because you might have the best mousetrap in the world, but if somebody says nah, you can't write that check this year, maybe next year. We're going to put our money somewhere else. That's the only thing. >> I got my Trump joke in, I don't know if you heard that, but my Trump joke is, I'll say it at the end, there's a lot of data lakes in D.C., and they've turned into data swamps. So Amazon's here to drain the data swamp. >> Jeff: He got it in. He's been practicing that all week. >> I've heard it three times, are you kidding? Funny every time. >> Well you know our Cube, you know we talk about data swamps. I hate the word data lake, as everyone knows, I just hate that word, it's just not. >> Well, there is value in that swamp. >> Hated the word data lake. >> For Jeff Rick, John Furrier, I'm John Walsh. Thank you for joining us here at the AWS Public Sector Summit 2017. Back tomorrow with more coverage, live here on the Cube.

>> Narrator: Live from Washington DC, it's the CUBE. Covering AWS Public Sector Summit 2017. Brought to you by Amazon Web Services and its partner Ecosystem. >> Welcome back here on the CUBE, the flagship broadcast of Silicon Angle TV along with John Furrier, I'm John Wallace. We're here at AWS Public Sector Summit 2017, the sixth one in its history. It's grown leaps and bounds and still a great vibe from the show for us. It's been packed all day John. >> It's the new reinvent for the public sector, so size wise it's going to become a behemoth very shortly. Our first conference, multi-year run covering Amazon, thanks to Theresa Carlson for letting us come and really on the front lines here, it's awesome. It's computing right here, edge broadcasting, we're sending the data out there. >> We are, we're extracting the signal from the noise as John always likes to say. Government, educations all being talked about here this week. And with us to talk about that is Max Peterson, he's a general manager at the AWS and Max, thank you for joining us, we appreciate that. >> Thank you for the invitation. >> And I knew we were in trouble with our next guest, cause I said this is John, I'm John, he said, this is Max and I'm Max. I said no you're not, I know better than that. Andre Pienaar who's a founder and chairman of C5 Consulting, Andre, thank you for being here on the CUBE. >> It's great pleasure being here. >> Alright let's just start off first off with core responsibilities and a little bit about C5 too for our audience. First off, if you would Max, tell us a little bit about your portfolio-- >> Sure. >> At AWS and then Andre, we'll switch over to C5. >> I think I might have the best job in the world because I get to work with government customers, educational institutions, nonprofits who are all working to try and improve the lives of citizens, improve the lives of students, improve the lives of teachers and basically improve the lives of people overall. And I do that all around the world. >> That is a good job. Yeah, Andre. >> Max will have to arm wrestle for who has got the best job in the world, because in C5, we have the privilege of investing into fast growing companies that are built on Amazon Cloud and that specializes in cyber security, big data and cloud computing and helps to make the world a safer place. >> I'm willing to say >> Hold on I think we have the best job. >> we both have the best job. >> Now wait a minute, we get to talk to the two of you, are you kidding? >> Yeah, I've got the best, we talk to all the smartest people like you guys and it can't get better than that. >> You're just a sliver of our great day. >> That's awesome, we have established we all have great jobs. >> Andre, so you hit cyber, obviously there is not a hotter topic, certainly in this city that is talked about quite a bit as you're well aware so let's just talk about that space in general and the kinds of things that you look for and why you have this interest and this association with AWS. >> So the AWS cloud platform is a game changer for cyber security. When we started investing in cyber security, and people considered cloud, one of their main concerns was do I move my data into the cloud and will it be secure? Today it's the other way around because of the innovation that AWS has been driving in the cyber security space. People are saying, we feel we are much more secure having the benefit of all innovation on the cloud platform in terms of our cyber security. >> And the investment thesis that you guys go after, just for the record, you're more on the growth side, what stage of investments do you guys do? >> We're a later stage investor so the companies we invest in are typically post revenue but fast growing in visibility and on profitability. >> So hot areas, cyber security, surveillance, smart cities, autonomous vehicles, I mean there's a data problem going on so you see data and super computing coming back into vogue. Back when I was a youngling in college, they called it data processing. The departments and mainframes, data processing and now you have more compute power, edge compute, now you have tons of data, how is all that coming in for and inching in the business models of companies. This is a completely different shift with the cloud. But you still need high performance computing, you still need huge amounts of data science operations, how do companies and governments and public sectors pull up? >> I think just the sheer volume of data that's being generated also by the emerging internet of things necessitates new models for storing and processing and accessing data and also for securing it. When big enterprises and governments think about cyber security, they really think about how do we secure the most valuable data that's in our custody and our stewardship and how do we meet that obligation to the people who have provided that data to us. >> How would you summarize the intrinsic difference between old way, new way? Old way being non-cloud and new way being cloud as we look forward? >> I think that was a pretty good summary right there. New way is cloud, old way is the legacy that people have locked up in their data centers and it's not just the hardware that is the legacy problem, the data is the legacy problem. Because when you have all that information built in silos around government, it makes it impossible to actually implement a digital citizen experience. You as a citizen would like to be able to just ask your question of government and let them sort out what your postal code was, what your benefits information was, right? You can't do that when you've got the data, much less the systems, locked up in a whole bunch of individual departments. >> Well merging of data, sharing data as an ethos and the cyber security world, where there's an ethos of hey, you know, we're going to help each other out because the more data, the more they can get patterns into the analytics which is a sharing culture. That's not really the way it is. I got governance, I got policy issues. >> Well policing is a good example. In the Washington DC area, there are 19 law enforcement agencies with arresting powers and that data is being kept in completely separate silos. Whereas if we're able to integrate and share that data, you will be able to draw some very useful predictive policing conclusions from that which can prevent and detect crime. >> That's a confidence issue and that's where your security point weighs in. Let me get back to what you said about the old way, new way thing. Another bottleneck or barrier, or just hurdle if you will, in cloud growth, has been cultural. Mindset of management and also operational practices, you have a waterfall development cycles or project management versus agile, which is different. That's a different cultural thing so you got all the best intentions in the world, people could raise their hand put stuff in the cloud, but if you can't scale out, you're going to be on this cadence where projects aren't going to get that ROI picture generated so the agility, how are you guys seeing that developing? >> I would tell you the first thing that it takes is leaders and that's what this conference is about. It's about telling the stories of customers who have seen the potential and who are now leaders. It takes something, it takes a spark to start it and the most powerful spark that we've seen, are customer testimonials, who come forward and they explain, hey I was doing this the old way. A lot of times for a cost reason or a new mandate, they have to come up with a new way to invent and they made that selection of the cloud and that's what so often changed the opportunity that they can address. Here's just using that data as an example, transport for London in the UK has a massive amount of data that comes from all of the journey information. They started their journey to the cloud four years ago and it started with the simple premise of I needed to save costs. They saved money and they were able to take that money and reprogram it now to figuring out how do we unlock the data to generate more information for commuters. Finally, they were able to take that learning and start spinning it into how do I actually improve the journey by using machine learning, artificial intelligence and big data techniques? Classic progression along the cloud. Save some money, reinvest the savings and then start delivering new innovation on that point. >> I was going to ask you the use cases. You jumped right in. Andre, can you just chime in and share your opinion on this or anecdotal or story or data around use cases that you see out there that can point to saying, that's game changing that's transformative, that's disruptive. >> Well one of the customer stories that Max referred to that was a real game changer in cyber security was when the CIA said that they were going to adopt the AWS cloud platform. Because people said if US Intelligence community has the confidence to feel secure on AWS cloud, why can't we? AWS have evolved cyber security from being an offering which is on top of the cloud and the responsibility of the client to something which is inside the cloud which involves a whole range of services and I think that's been a complete game changer. >> The CIA deal, Dave Velanto is not here, my partner in crime as well, I call it the shot heard all around the cloud, that was a seminal moment for AWS in chronicling your guys journey over the years but I've been following you guys since the barely birth days and how you've grown up, that was a really critical moment for AWS in the public sector so I want to ask you guys both a question, right now, 2017 here at public sector conference, what's the perception of AWS outside of the ecosystem? Clearly cloud is the new normal, we heard previously, I agree with that. But what's the perception of the viability, the production level? What's the progress part in the minds of the folks? How far are we in that journey cause this is a breakout year, this year. That was the shot heard around the cloud, now there seems to be a breakout year, almost a hockey stick pick up. >> It's another example of how it takes leadership and it was the shot heard round the cloud, what we're seeing though is now many, many people are picking up that lead and using it to their advantage. The National Cyber Security Center in the UK told a story today that's pretty much a direct follow on. They're now describing to their agencies what they should do to be safe on the cloud. They're not giving them a list of rules that they need to try and go check off. It's very much about enabling and it's very much about providing the right guidance and policy. It's unlocking it instead of using security as a blocker in that example. Much more than just that one example, all over the world-- >> But people generally think okay this is now viable. So in terms of the mind of the people out in the trenches, not in the front lines like here, thoughts on your view on the perception of the progress bar on AWS public sector. >> John, one of the best measures of how the AWS cloud is perceived is what's happening in the startup scene. 90% of all startups today get born on the Amazon cloud in the US. 70% of all startups in France gets born in AWS cloud. This is the future voting for cloud and saying this is where we want to be, this is where we can scale this is where we can grow-- >> If you can believe APIs will be the normal operational interface subsystems and data, then you essentially have a holistic distributed cloud, aka computer. That's the vision. So what's the challenge? What do you guys see as the challenge, is it just education, growth? You only have 10,000 people here, it's not like it's 30 yet. >> Well you heard one of the, or you hit on one of the things that's key and that's policy. You really do have to break through the old government bureaucracy and the old government mentality and help set the new policies. Whether it's economic policies that help enable small businesses to launch and use the cloud. Whether it's procurement policies that allow people to actually buy tech and use tech fast, or whether it's the basic policy of the country. The UK now has a policy of being digital native, cloud native. >> The ecosystem's interesting, Andre, you mentioned startup, because I think for me, challenge opportunity is to have Amazon scale up, to handle the tsunami of Ecosystem partners that could be as you said, we just talked to Fugue here. Amazing startup funded by New Enterprise Associates, NEA, they're kicking ass, they're just awesome. You go back 10 years ago, they wouldn't even be considered. >> Absolutely. >> So you've got an opportunity to jam everyone in the marketplace and let it be a free for all, it's kind of like a fun time. >> It's a great time and in the venture capital world, being architect on the Amazon cloud has become a badge of quality. So increasingly venture capital firms are looking for startups that run on the AWS cloud and use them in an innovative way. >> Well on the efficiency on the product side, but also leverage on the capital side. >> Exactly. You need less capital. >> Been a provision of data center, what? >> You need less capital and secondly, also, you can fail much faster and then still have space and time to build it and restart. I think failing faster is something from an investment point of view that is really attractive. >> John: Final question. >> John: Failing faster? >> Failing faster. Because what you don't want are the long drawn out deaths of businesses. Because that's a sure way to destroy value of money. >> I think the other part though is fix faster. >> Fix faster. >> And that's exactly what the cloud does so instead of spending an immense amount of time and energy trying to figuring out precisely what I need to build, I can come up with the basic idea, I can work quick, I can fail fast, but I can fix it fast. >> Alright, well you mentioned the golden time, the golden era, and I think you both have captured it, so I think both your jobs would be up there at the top of the shelf. >> Thank you John. >> You mentioned 19 agencies by the way here in DC that can arrest, I have parking tickets from every one of them. >> Andre: I'm glad they haven't arrested you yet John. >> No, that's the price you pay for living in this city. >> Thanks John and John. >> Max, Andre thank you very much. >> John and John thank you. >> Cheers. >> Back with more here from AWS Public Sector Summit 2017, live, Washington DC, you're watching the CUBE.