>>from around the globe. It's the Cube presenting Cuban cloud brought to you by silicon angle. Welcome to the cubes event. Virtual event. Cuban Cloud. I'm John for your host. We're here talking to all the thought leaders getting all the stories around Cloud What's going on this year and next today, Tomorrow and the future. We gotta featured startup here. Jonah Clipper, who is the CEO and founder of Stack Hawks. Developing security software for developers to have them put security baked in from the beginning. Johnny, thanks for coming on and being featured. Start up here is part of our Cuban cloud. Thanks for joining. >>Thanks so much for having me, John. >>So one of our themes this year is obviously Cloud natives gone mainstream. The pandemic has shown that. You know, a lot of things have to be modern. Modern applications, the emerald all they talked about modern applications. Infrastructure is code. Reinvent, um is here. They're talking about the next gen enterprise. Their public cloud. Now you've got hybrid cloud. Now you've got multi cloud. But for developers, you just wanna be building security baked in and they don't care where the infrastructure is. So this is the big trend. Like to get your thoughts on that. But before we jump in, tell us about Stack Hawk What you guys do your founded in 2019. Tell us about your company and what Your mission is >>Awesome. Yeah, our mission is to put application security in the hands of software developers so that they can find and fix upset books before they deployed a production. And we do that through a dynamic application scanning capability. Uh, that's deployable via docker, so engineers can run it locally. They can run it in C I C. D. On every single PR or merge and find bugs in the process of delivering software rather than after it's been production. >>So everyone's talking about shift left, shift left for >>security. What does >>that mean? Uh, these days. And what if some of the hurdles that people are struggling with because all I hear is shift left shift left from, like I mean, what does What does that actually mean? Now, Can you take us through your >>view? Yes, and we use the phrase a lot, and I and I know it can feel a little confusing or overused. Probably. Um, When I think of shift left, I think of that Mobius that we all look at all of the time, Um, and how we deliver and, like, plan, write code, deliver software and then manage it. Monitor it right like that entire Dev ops workflow. And today, when we think about where security lives, it either is a blocker to deploying production. Or most commonly, it lives long after code has been deployed to production. And there's a security team constantly playing catch up, trying to ensure that the development team whose job is to deliver value to their customers quickly, right, deploy as fast as we can, as many great customer facing features, um there, then, looking at it months after software has been deployed and then hurrying and trying to assess where the bugs are. And, um, trying to get that information back to software developers so that they can fix those issues. Shifting left to me means software engineers are finding those bugs as their writing code or in the CIA CD pipeline long before code has been deployed to production. >>And so you guys attack that problem right there so they don't have to ship the code and then come back and fix it again. Or where we forgot what the hell is going on. That point in time some Q 18 gets it. Is that the kind of problem that that's out there? Is that the main pain point? >>Yeah, absolutely. I mean a lot of the way software, specifically software like ours and dynamic applications scanning works is a security team or a pen tester. Maybe, is assessing applications for security vulnerability these, um, veteran prod that's normally where these tools are run and they throw them back over the wall, you know, interrupting sprints and interrupting the developer workflow. So there's a ton of context switching, which is super expensive, and it's very disruptive to the business to not know about those issues before they're in prod. And they're also higher risk issues because they're in fraud s. So you have to be able to see a >>wrong flywheel. Basically, it's like you have a penetration test is okay. I want to do ship this app. Pen test comes back, okay? We gotta fix the bug, interrupts the cycle. They're not coding there in fire drill mode. And then it's a chaotic death spiral at that point, >>right? Or nothing gets done. God, how did >>you What was the vision? How did you get here? What? How did you start? The company's woke up one morning. Seven started a security company. And how did what was the journey? What got you here? >>Sure. Thanks. I've been building software for software engineers since 2010. So the first startup I worked for was very much about making it easy for software engineers to deploy and manage applications super efficiently on any cloud provider. And we did programmatic updates to those applications and could even move them from cloud to cloud. And so that was sort of cutting my teeth and technology and really understanding the developer experience. Then I was a VP of product at a company called Victor Ops. We were purchased by spunk in 2018. But that product was really about empowering software engineers to manage their own code in production. So instead of having a network operations center right who sat in front of screens and was waiting for something to go wrong and would then just end up dialing there, you know, just this middle man trying to dial to find the person who wrote the software so that they can fix it. We made that way more efficient and could just route issues to software engineers. And so that was a very dev ops focused company in terms of, um, improving meantime to know and meantime to resolve by putting up time in the hands of software engineers where it didn't used to live there before it lived in a more traditional operations type of role. But we deploy software way too quickly and way too frequently to production to assume that another human can just sit there and know how to fix it, because the problems aren't repeatable, right? So So I've been living in the space for a long time, and I would go to conferences and people would say, Well, I love for, you know, we have these digital transformation initiatives and I'm in the security team and I don't feel like I'm part of this. I don't know. I don't know how to insert myself in this process. And so I started doing a lot of research about, um, how we can shift this left. And I was actually doing some research about penetration testing at the time, Um, and found just a ton of opportunity, a ton of problems, right that exist with security and how we do it today. So I really think of this company as a Dev Ops first Company, and it just so happens to be that we're taking security, and we're making it, um, just part of the the application testing framework, right? We're testing for security bugs, just like we would test for any other kind of bucks. >>That's an awesome vision of other great great history there. And thanks for sharing that. I think one of the things that I think this ties into that we have been reporting aggressively on is the movement to Dev Stack Up, Dev, Ops Dev SEC Ops. And you know, just doing an interview with the guy who stood up space force and big space conversation and were essentially riffing on the idea that they have to get modern. It's government, but they got to do more commercial. They're using open source. But the key thing was everything. Software defined. And so, as you move into suffer defined, then they say we want security baked in from the beginning and This is the big kind of like sea level conversation. Bake it in from the beginning, but it's not that easy. And this is where I think it's interesting where you start to think, uh, Dev ops for security because security is broken. So this is a huge trend. It sounds easy to say it baked security in whether it's an i o T edge or multi cloud. There's >>a lot >>of work there. What should people understand when they hear that kind of platitude of? I just baked security and it's really easy. It's not. It's not trivial. What's your thoughts on >>that? It isn't trivial. And in my opinion, there aren't a lot of tools on the market that actually make that very easy. You know, there are some you've had sneak on this program and they're doing an excellent job, really speaking to the developer and being part of that modern software delivery workflow. Um, but because a lot of tools were built to run in production, it makes it really difficult to bake them in from the beginning. And so, you know, I think there are several goals here. One is you make the tooling work so that it works for the software engineer and their workflow. And and there's some different values that we have to consider when its foreign engineer versus when it's for a security person, right? Limit the noise, make it as easy as possible. Um, make sure that we only show the most critical things that are worth an engineer. Stopping what they're doing in terms of building business value and going back and fixing that bugs and then create a way to discuss in triage other issues later outside of the development. Workflow. So you really have to have a lot of empathy and understanding for how software is built and how software engineers behave, I think, in order to get this right. So it's not easy. Um, but we're here and other tools air here. Thio support companies in doing that. >>What's the competitive strategy for you guys going forward? Because there's a big sea change. Now I see an inflection point. Obviously, Cove it highlights. It's not the main reason, but Cloud native has proven it's now gone mainstream kubernetes. You're seeing the big movement there. You're seeing scale be a huge issue. Software defined operations are now being discussed. So I think it's It's a simple moment for this kind of solution. How are you guys going to compete? What's what's the winning strategy? How are you guys gonna compete to win? >>Yeah, so there's two pieces to that one is getting the technology right and making sure that it is a product that developers love. And we put a ton of effort into that because when a software engineer says, Hey, I'd love to use the security product, right? CSOs around the world are going to be like, Yes, please. Did a software engineer just ask me, You have the security product. Thank you, Right. We're here to make it so easy for them and get the tech right. And then the other piece, in terms of being competitive, is the business model. There were something like, I don't You would know better than me, but I think the data point I last saw was like 1300 venture backed security companies since 2012 focused on selling to see SOS and Fortune 2000 companies. It is a mess. It's so noisy, nobody can figure out what anybody actually does. What we have done is said no, we're going to take a modern business model approach to security. So you know, it's a SAS platform that makes it super easy for a software engineer or anybody on the team to try and buy the software. So 14 day trial. You don't have to talk to anybody if you don't want Thio Awesome support to make sure that people can get on boarded and with our on boarding flow, we've seen that our customers go from signing up to first successful scan of their platform or whatever app they chose to scan in a knave ridge of about 10 minutes. The fastest is eight, right? So it's about delivering value to our customers really quickly. And there aren't many companies insecurity on the market today. That do that? >>You know, you mentioned pen test earlier. I I hear that word. Nice shit. And, like, pen test penetration test, as it's called, um, Sock reports. I mean, these are things that are kind of like I got to do that again. I know these people are doing things that are gonna be automated, but one of the things that cloud native has proven as be killer app is integrations because when you build a modern app, it has to integrate with someone else. So there you need these kind of pen tests. You gotta have this kind of code review. And as code, um, is part of, say, a purpose built device where it's an I o T. Edge updates have toe happen. So you need mawr automation. You need more scale around both updating software to, ah, purpose built device or for integration. What's your thoughts in reaction to that? Because this is a riel software challenge from a customer standpoint, because there are too many tools out there and every see so that I talk to says, I just want to get rid of half the tools consolidate down around my clouds that I'm working through my environment and b'more developer oriented, not just purchasing stuff. So you have all this going on? What's your reaction to that? You got the you know, the integration and you've got the software updates on purpose built devices. >>Yeah, I mean, we I make a joke a little bit. That security land is like, you know, acronyms. Dio there are so many types of security that you could choose to implement. And they all have a home and different use cases that are certainly valuable toe organizations. Um, what we like to focus on and what we think is interesting and dynamic application scanning is because it's been hard toe automate dynamic application for especially for modern applications. I think a lot of companies have ignored theon pertuan ity Thio really invest in this capability and what's cool about dynamic. And you were mentioning pen testing. Is that because it's actively attacking your app? It when you get a successful test, it's like a It's like a successful negative test. It's that the test executed, which means that bug is present in your code. And so there's a lot less false positives than in other types of scanning or assessment technologies. Not to say there isn't a home for them. There's a lot of we could we could spend a whole hour kind of breaking down all the different types of bugs that the different tools confined. Um, but we think that if you want to get started developer first, you know there's a lot of great technologies. Pick a couple or one right pick stack hawk pick, sneak and just get started and put it in your developer workflow. So integrations are super important. Um, we have integrations with every C I C. D provider, making it easy to scan your code on every merge or release. And then we also have workflow integrations for software engineers associated with where they want to be doing work and how they want to be interrupted or told about an issue. So, you know, we're very early to market, but right out of the gate, we made sure that we had a slack integration so that scans are running. Or as we're finding new things, it's populating in a specific slack channel for those engineers who work on that part of the app and you're a integration right. If we find issues, we can quickly make tickets and route them and make sure that the right people are working on those issues. Eso That's how I think about sort of the integration piece and just getting started. It's like you can't tackle the whole like every accurate, um, at once like pick something that helps you get started and then continue to build out your program, as you have success. >>A lot of these tools can they get in the hands of developers, and then you kind of win their trust by having functionality. Uh, certainly a winning strategy we've seen. You know, Splunk, you mentioned where you worked for Data Dog and very other tools out there just get started easily. If it's good, it will be used. So I love that strategy. Question. I wanna ask you mentioned Dr earlier. Um, they got a real popular environment, but that speaks to the open source area. How do you see the role of open source playing with you guys? Is that gonna be part of your community outreach? Does the feed into the product? Could you share your vision on how stack hawks engaging and playing an open source? >>Yeah, absolutely. Um So when we started this company, my co founders and I, we sat down and said here, What are the problems? Okay, the world doesn't need a better scanner, right? If you walk the floor of, ah, security, uh, conference. It's like our tool finds a million things and someone else is. My tool finds a million and five things. Right, And that's how they're competing on value. It's really about making it easy to use and put in the pipeline. So we decided not to roll. Our own scanner were based on an open source capability called Zap the Set Attack Proxy. Uh, it is the most the world's most downloaded application scanner. And, uh, actually we just hired the founder of Zap to join the Stack Hawk team, and we're really excited to continue to invest in the open source community. There is a ton of opportunity to grow and sort of galvanize that community. And then the work that we do with our customers and the feedback that we get about the bugs we find if there, ah, false positive or this one's commonly risk accepted, we can go back to the community, which were already doing and saying, Hey, ditch this rule, Nobody likes it or we need to improve this test. Um, so it's a really nice relationship that we have, and we are looking forward to continuing to grow that >>great stuff. You guys are hot. Start of love. The software on security angle again def sec. Cox is gonna be It's gonna be really popular. Can you talk about some of the customer success is What's the What's the feedback from customers? Can you share some of the use cases that you guys are participating in where you're winning? You mentioned developers love it and try It can just give us a couple of use cases and examples. >>Yeah. Ah, few things. Um ah, lot of our customers are already selling on the notion. Like before we even went to G A right. They told all of their customers that they scan for security bugs with every single release. So in really critical, uh, industry is like fintech, right. It's really important that their customers trust that they're taking security seriously, which everybody says they dio. But they show it to their customers by saying here, every single deploy I can show you if there were any new security bugs released with that deploy. So that's really awesome. Other things We've heard our, uh, people being able to deploy really quickly thio the Salesforce marketplace, right? Like if they have toe have a scan to prove that that they can sell on Salesforce, they do that really rapidly. Eso all of that's going really well with our customers. >>How would I wanna How would I be a customer if I was interested in, um, using Stack Hawks say we have some software we wanna stand up, and, uh, it's super grade. And so Amazon Microsoft Marketplace Stairs Force They'll have requirements or say I want to do a deal with an integration they don't want. They want to make sure there's no nothing wrong with the code. This seems to be a common use case. How doe I if I was a customer, get involved or just download software? Um, what's the What's the procurement? What's the consumption side of it looked like, >>Yeah, you just go to Stockholm dot com and you create an account. If you'd like to get started that way so you can have a 14 day free trial. We have extremely extensive documentation, so it's really easy to get set up that way. You should have some familiarity. Or grab a software engineer who has familiarity with a couple of things. So one is how to use Docker, right? So Docker is, ah, deployment mechanism for the scanner. We do that so you can run it anywhere that you would like to, and we don't have to do things like pierce firewalls or other protective measures that you've instrumented on your production environment. You just run it, um, wherever you like in your system. So locally, C I c d So docker is an important thing to understand the way we configure our scanner is through a, um, a file. So if you are getting a scan today, either your security team is doing it or you have a pen tester doing it. Um, the whole like getting ready for that engagement takes a lot of time because the people who are running the tests don't know how the software was built. So the way we think about this is, just ask them. So you just fill out a Yamil file with parameters that tell the scanner what to dio tell it how to authenticate and not log out. Um, feed us an A p. I speak if you want, so weaken super efficiently, scan your app and you can be up and running really quickly, and then that's it. You can work with our team at any time if you need help, and then we have a really efficient procurement process >>in my experience some of the pen tests of firms out there, is it? It's like the house keeping seal of approval. You get it once and then you gotta go back again. Software change, new things come in. And it's like, Wait a minute, what's the new pen test? And then you to write a check or engaged to have enough meeting? I mean, this is the problem. I mean, too many meetings. Do you >>guys solve that problem? Do >>you solve that problem? >>We solve a piece of that problem. So I think you know, part of how I talk about our company is this idea that we live in a world where we deploy software every single day. Yet it seems reasonable that once a year or twice a year, we go get a pen test where human runs readily available, open source software on our product and gives us a like, quite literal. Pdf of issues on. It's like this is so intellectually dishonest, like we deploy all of the time. So here's the thing. Pen tests are important and everybody should do them. But that should not be the introduction to these issues that are also easy to automate and find in your system. So the way we think about how we work with pen testers is, um, run, stack hawk or zapped right in an automated fashion on your system, and then give that, give the configuration and give the most recent results to your pen tester and say, Go find the hard stuff. You shouldn't be cutting checks for $30,000 to a pen tester or something that you could easily meet in your flare up. Klein. You could write the checks for finding finding the hard stuff that's much more difficult to automate. >>I totally agree. Final question. Business model Once I get in, is it a service software and services? A monthly fee? How do you guys make money? >>Yep, it is software as a service, it is. A monthly fee were early to market. So I'm not going to pretend that we have perfectly cracked the pricing. Um, but the way that we think about this is this is a team product for software engineers and for, you know, informed constituents, right? You want a product person in the product. You want a security person in the product? Um, and we also want to incent you to scan your APS And the most modern fashion, which is scanning the smallest amount of http that lives in your app, like in a micro services architecture because it makes a lot easier, is easy to isolate the problems where they live and to fix those issues really quickly. So we bundle team and for a UPS and then we scale within, uh, companies as they add more team. So pen users. 10 APS is 3 99 a month. And as you add software engineers and more applications, we scale within your company that way. >>Awesome. So if you're successful, you pay more, but doesn't matter. You already succeeded, and that's the benefit of by As you go Great stuff. Final question. One more thing. Your vision of the future. What are the biggest challenges you see in the next 24 months? Plus beyond, um, that you're trying to attack? That's a preferred future that you see evolving. What's the vision? >>Yeah, you've touched on this a couple of times in this interview with uh being remote, and the way that we need to build software already has been modernizing, and I feel like every company has a digital transformation initiative, but it has toe happen faster. And along with that, we have to figure out how Thio protect and secure these Moderna Gail. The most important thing that we do the hearts and minds of our support engineers and make it really easy for them to use security capabilities and then continue to growth in the organization. And that's not an easy thing tied off. It's easy change, a different way of being security. But I think we have to get their, uh, in order to prepare the security, uh, in these rapidly deployed and developed applications that our customers expect. >>Awesome. Jodi Clippers, CEO and founder of Stack Hawk. Thank you for coming on. I really appreciate it. Thanks for spending the time featured Startup is part of our Cuban cloud. I'm Sean for your host with silicon angle to Cube. Thanks for watching

>>Locke from Las Vegas. It's the cube hovering AWS reinvent 2019 brought to you by Amazon web services and along with its ecosystem partners. >>Welcome back to the cube Lisa Martin with Stu Miniman and we are alive on the show floor at AWS reinvent 19 with thousands of people. Stu and I have one of our cube Olam back. Joining us, we've got Gail Habermann, senior director of cloud services from new chats. Welcome back. Thank you for having me. And you're on brand with your Nutanix pin for president though. Nutanix right here. All right, so here we are, day three of re-invent 65,000 or so folks here. This is show floor has been nonstop for days. Big theme as been about outpost and what outposts and what AWS is doing there. But Newtanics you guys have been talking about hybrid cloud for years. What does all of the buzz about outpost? What does that mean for you guys? >>Yeah, I think, uh, this GA really validates our strategy and what we've been hearing from customers for many years around the need for hybrid and more broadly, I think consistency, consistency across the environments as a way or means to actually adopt hybrid, uh, ineffective manner is a longterm strategy. And I think, uh, AWS now realizing that and working in this direction, we see that with outpost and with a weather announcing with local as well. The idea is that you really need to have a consistent way to manage across different environments and ideally same construct as well. And that's what they're doing specifically with outpost. Uh, the direction we're being taking is the same where our software can run both on-prem but also in public cloud and edge so that the same applications, whether traditional or modern can run in the same way. So that not only mobility is easy, but people can use the same skill sets that they've developed over the many years, uh, across different environments. >>Yeah. Kelly, it's been fascinating for me to watch the maturation of the market. Of course. Newtanics his original design was, let's take these hyperscale type of architectures and bring it to the enterprise. Now we're seeing the intersection of what's happening at the enterprise and the public cloud and the environment. But you know, tile back a few years. The first time Newtanics came to this show, it was right after the acquisition of a small company called XY on and it was like, okay, it was exciting, but the Newtanics and Amazon connection was, we're trying to all figure out how the dots go together. Fast forward to today, uh, you know, bring us up to, you know, how Amazon, Nutanix and those solutions work together for your customers. >>Sure. So the latest initiative that we've announced as early access is Nutanix clusters where we use our software not only on prem now, but also on AWS bare metal instances. So for those who know, our software for many years have collapsed storage and compute into a single pool of resources that customers can deploy very easily and scale out as needed on a variety of hardware platforms. Traditionally in their data centers. Now we use the exact same software but on AWS, Bermuda instances. And what that means is that the same applications as is can be used either on prem or public cloud. So it's really easy for customers, for their business and mission. A mission critical applications. >>Yeah. I want to highlight a thing you talked about there, that bare metal service from Amazon, which is a relatively new thing. My understanding that was designed for the VMware on AWS, but they're opening up for ecosystem partners to do. And you said Nutanix clusters, is that what I had heard about at dot. Nexen was called XY clusters before. >>Yes. As part of this early access, we've renamed this, um, to Nutanix lessors, but this is the same idea, uh, in the idea is really that customers can now use our software. Uh, in AWS you see other cloud vendors also starting to offer bare metal services for this exact reason. And we are really evolving our company as well, where our software itself is going to be portable. So customers know they deploy our software, for example, on prem today they have a direct path to AWS. And other clouds in the future because we have heard from many customers that perhaps replatform let's say to AWS now, they're not sure what to do if they ever wanted to go to another vendor. Right. Um, so what we were trying to do is have a single platform that can go, can support multiple clouds and also the software itself has to be portable. And so that's the path we're on. >>What about portability? What are some of the key use cases that it will enable customers to achieve? >>Yeah, so many, many times now we hear that the customers are not looking to manage their physical infrastructure anymore. And so in cases where perhaps they acquired multiple companies and they have kind of a data center sprawl, they want to consolidate, one option is to consolidate into a data SQL data center. But another option now would be to consolidate into AWS location near them or in the region that they need. But the key here in the case of clusters is that the same VMs, same third party integrations that have had daily practices cannot work simply managed on AWS as opposed to managing their own data center. So it eases the operational burden, but it does not require a big lift and replatforming to achieve that. >>Yeah. So I was hearing, sorry, so I was hearing one of the loud and clear when you were saying that operational efficiency seems pretty loud and clear as a key benefit. >>Alright. So kill what you're describing there really reminds me of what I'm hearing from customers when they're talking about one of the reasons that they're adopting Coobernetti's. Uh, of course Amazon has a, you know, various ways to leverage Kubernetes socially EKS day down to the far gate, uh, it being supported there. Um, I know has carbon two carbon Nutanix clusters, how does that go together in the whole group and Eddie's story? Yes. >>So when I talk about clusters, it's really the, the entire South of that that we have that can be used across the, across the environments in that software stack includes many aspects to it. Of course the core is does having very resilient infrastructure software that you can run applications on, but it has many other phases to it. And one of them is containers. So like you run virtual machines either on our hypervisor or third party hypervisors. You can also run containers on any Coubernetties or our Kubernetes that we support as part of that software. And that whole thing is portable. So really what I'm talking about here is very foundational and definitely supports carbon as well. So customers know that both traditional and modern applications can, can be poured across clouds. Give us some customer examples where you've seen a legacy enterprise that has to transform in order to stay in business. >>I was working with Nutanix to do just that. Yes. So we have many customers, especially on the high end of the market and to your point, pharmaceuticals with security concerns, financial services that want to modernize, but they have very heavy investments in their traditional and business critical applications. And now that their cloud journey is maturing, they want to address those workloads. Those workloads are very hard to migrate or to replatform specifically. So they're looking for this way to maintain all the investments that they've done over years, but also get the benefits of public clouds where it's appropriate either for migration or for bursting. And so having that same software that could run the same VMs as is across multiple environments is a perfect solution for them. You know, eliminating the need to utilize different cloud native services. Maybe they'll do that over time, but right now this really helps them save millions because we hear from many customers. To your point, the CIO has the mandate to do this transformation, but I can't do it. Or my teams have resistance to do it because of this investments. >>Yeah, kill. I'm glad. Glad you're hitting on that transfer nation note because Nutanix itself has gone through a bit of a transformation recently, all software, that model, it feels like we've kind of gone through that transition. What does that help Nutanix learn when when you're working with your customers that you know, transformation is not easy, that the keynote talked about, that you need leadership involved and this chest can't be an incremental thing. You need to take bold moves to move things forward. And Nutanix itself has gone through some own of its own transformation. Absolutely. >>As always with Nutanix, we were very aggressive with execution, both in product velocity and here also in terms of business models. So we've moved from hardware to software and now to subscription. We find that customers absolutely love the notion that they have a lot more flexibility in terms of subscription. And as I mentioned before, we're evolving this further to support multiple clouds. And because we believe the, the five to 10 years ahead of us are going to be all about cloud everywhere rather than just on-prem. Uh, we need to support that in terms of our motto. And so we're going through that transformation ourselves. >>One of the things also that was talked about this week is just, well, maybe not talked about as multi-cloud, right? That's kind of a four letter word for Amazon, but it is often an operating model that we see a lot of customers are in for various reasons. Maybe not strategic. Maybe it's more we've inherited this or an enterprise as acquired smaller companies that have myriad cloud solutions and this is more of a reality than anything else. Some of the many announcements that AWS has made this week. You talked about this sort of validating the direction that Nutanix has been going in, but from what is the signal to you in terms of of Amazon's own evolution? >>Yes, I think we are really seeing an evolution, you know, while resisting the change to some extent. So I agree with you. Moldy cows, absolute no-no hybrid was a no-no. Now, hybrid is embraced, I think for a hybrid. There really are trying to reach for greater adoption for, I think the hard part. Like I mentioned before, business and mission critical applications, that's the main thing. I think with multi there's still resistance, but it's absolutely critical. Like you're saying, every EBC meeting that I've been here, customers talk about multi cloud because of organic adoption or evolution or acquisitions and so it's absolutely critical to have tuning like our hybrid cloud services that support multiple clouds. So we have services that support governance across clouds, cost optimization, security, compliance, automation, self-service. All these things really help customers, customers drive towards a more unified or harmonized way of managing multiple environments. And it's absolutely critical. I agree. >>We look into like a magic crystal ball kind of in the spirit of evolution. We look at cloud one. Dot. Oh, John furrier talks a lot about cloud two. Dot. Oh no. What if you look, say down the road the next five years, what do you think the state of cloud is going to look like? >>Yeah, I think our vision has been, and I really see this materializing as cloud everywhere rather than thinking about cloud is a centralized place where that is the cloud. Uh, if you think about even, uh, edge requiring heavy local processing, real compute, real storage, uh, very sensitive in terms of latency for networking. Uh, maybe our car is even right, are going to be a little mobile data centers. And so there's going to be a need to have cloud everywhere while still offloading some stuff for centralized processing. So we really need to find a way to bring that cloud everywhere. And what we've been working at Newtanics is towards that division of bringing that platform that has strong resiliency, uh, uh, very good latency sensitive workloads everywhere we might need it, uh, in preparation for that vision. And I think it's going to be very exciting to see how all these vendors and customers evolve their environment over time. It's going to be, I think, very different from what we thought about 20 years ago for sure. >>Do you see any one industry in particular as really right for this to be able to do, not just bring cloud everywhere but to live it and really completely flip an industry on its head? Anything that really kind of pops into your mind? >>Um, I'm not sure. I think in terms of vision it's going to be across the industries, but the more you have applications that do require that edge processing to be, again, low latency and robust. So IOT use cases, for example, with cus with retail, uh, maybe manufacturing and so on. I think we're going to see these guys lead the, the wave here because they simply cannot offload everything to the cloud, but others are going to follow it because it just makes sense. And if it's not an anomaly, then they'll be more comfortable in that process. >>So much change to come, but also so much opportunity. Gil, thank you for joining Stu and me on the cube this morning. Great to be here. Thank you very much. Our pleasure for Stu Miniman. I'm Lisa Martin and you're watching the cube live from AWS, reinvent 19 from Vegas. Thanks for watching.

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hi everybody welcome to this breaking analysis this is Dave Volante and VMware announced yesterday its quarterly results and it also announced the acquisition of two companies pivotal which was the news was broken before of the earnings announcement but also carbon black a Walton Massachusetts based security company and you may be wondering what the hell is VM we are up to what are they doing and I want to sort of unpack that and explain it to you from my perspective so pivotal and carbon black are getting paid 2.7 billion and 2.1 billion dollar respectively is the value of those deals so VMware is paying an enterprise value to sales ratio of 3.8 and 7x respectively for pivotal and carbon black the motivation here in my view is really to clean up pivotal I'm going to explain that in a second and also to increase VMware's cloud multi cloud and recurring revenue contributions today the SAS business of VMware is only about 12% of the company's revenue so they want to increase that because they want to have a cloud like model and recurring revenue the challenge for a company like VMware who's largely based on perpetual license models upfront get paid for the whole license and then you do some maintenance is it's like a heroin injection you get the big rush of cash whereas with the recurring revenue model you're streaming out over and deferring it over a twelve or thirty six month or 24 month period and so the revenue impact is somewhat negative on the income statement and that's putting a little bit pressure on the stock but VMware management understands that that long term it's a much more predictable and attractive business model to be a SAS company than it is to be a traditional license based perpetual license based software company now the pivotal deal is somewhat complicated and of course when Michael Dell's involved we tend to have these complicated transactions as organization is very savvy in terms of from a financial standpoint we saw that remember when Michael Dell and Silverlake bought a EMC for 67 billion dollars they shelled out only only four billion dollars of their own cash now they took out a lot of debt but it was a very interesting and complicated financial transaction so part of this is cleaning up some of that transaction that all I'll explain in my opinion VMware is getting a pretty good deal for both pivotal and a decent deal for carbon black so so let me explain first of all Alex if you would bring up the the chart on pivotal let's take a look at it now you can see here you know pivotal did its IPO you know last year a when IPO is I think that we know close to a four billion dollar valuation and you can see the stock is not performed well subsequent to that it you know it was never able to get back to its IPO price it had a you know decent uptick you know in in March of this year as the market was running up and you can see the earnings miss in in the late spring early summer back in the June announcement date big hit there the company's been struggling in the marketplace you know it's got a lot of assets remember pivotal was originally put together as a collection of what I used to call misfit toys some of the EMC assets some of the VMware assets they put together at Palmer its you know created this entity to try to create a platform for application development Michael Dell saw this as an opportunity to take it public and actually you know create another asset in part of the Dell family but you can see here post June you know the the decline in the stock price and then you see the announcement from VMware or the rumor that came out actually was an announcement that came out in the press this week and the stock jumped over 70% on a day when the Dow dropped 800 points but you can see now the the today's price it was fourteen eighty eight when I took this snapshot about 50 cents on the dollar from the IPO price and so you can see that that VMware and Michael Dell are kind of doing the top cat they did the IP that pulled the coin back and now they're gonna repurchase the stock so kind of interesting but here's what the interesting part is VMware is only paying nine hundred million dollars in cash to the public shareholders how can that be so here's the deal vmware already owns about 15% of pivotal where dell owns about 70 percent of the company so what's happened l controls 95 percent of the voting shares which is why you know one of the reasons why this stock really never took off it's one of those one of those ownership structures and governance structures where you know a single individual really controls the stock so that often times keeps stock prices down but nonetheless Dells 70% is being exchanged for VMware stock for pivotal stocks that are owned by Dell so let me read you the statement Alex if you could bring up that statement from the earnings call this is from the VMware a CFO explaining the mechanics with regards to pivotal VMware has agreed to acquire a pivotal at a blended price per share of eleven dollars and 71 cents comprised of $15 per share in cash to public stockholders that's why the stock is trading at 14 dollars and 88 cents today and a little bit of arbitrage flowed in there and VMware's Class B common shares exchange for pivotal Class B common shares held by Dell technologies in an exchange rate of point zero five five VMware shares for each pivotal share the transaction has an excuse me enterprise value of 2.7 billion Dell technologies will receive approximately 7.2 million shares of VMware Class B common stock and now drew aggregate this results in an expected net cash payout for VMware of 0.8 billion I said I said point nine billion the impact of the equity issue to Dell technologies would increase its ownership stake in VMware by approximately 0.34 percentage points to a total of 81 0.09 percent based on the shares currently outstanding as it said VMware currently holds 15 percent of outstanding shares pivotal ones clothes will update blahblahblah so Michael Dell's buying VMware stock he's increasing his share of VMware which is also a kind of an interesting side note but now let's look at the pivotal fundamentals does this make strategic sense yes in my opinion why is that this is all about containers and it's all about next-generation application development for cloud it's also a hedge for VMware everybody said containers are gonna kill VMware well it's it's a hedge in the instance that that that containers start to impact VMware's traditional virtualization business now as I showed yesterday on the video where I was looking at ETR research there's no evidence today that it containers are slowing down the spending on VMware you deploy containers in many many ways certainly they're deployed in in bare metal and that's somewhat of a risk to a VMware but they're also they're also deployed on top of virtual machines on top of VMware so you know right now it's not been a negative for for VMware and by acquiring pivotal it can bring those synergies into the VMware mothership which is Dells a software mothership I call it and there's also synergies in sales and marketing and R&D and it kind of cleans up pivotal and consolidates the assets now let's look at carbon black this is a security play and it's really a different story than pivotal first you got to remember the Pat Gallagher told John Fourier in me several years ago in the cube that security is a do-over and I'll tell you right now Pat Gail singer and VMware are architecting a security do-over you've got on pram you've got hybrid you've got cloud you've got multi ply cloud traditional security models aren't gonna cut it so let's look at this clip by pat gyal singer and he'll it'll give you a sense of how he and VMware are thinking about the future watch this and we'll come back and talk about it Steve Herod on our Crouch at pre game on Friday with the hot opportunities are for startups he said security or mainly not getting caught at this perimeter basically what's your view on that well you know the krusty you know the hard crust the exterior and the soft gooey inside as I described it this morning my morning breakfast every day and you know with it right this whole idea of micro segmentation and nsx really redefines how you build networks and that's gonna allow us to refactor every aspect of security every aspect of routing and load balancing etc okay so what Pat was saying is he's talking about micro segmentation nsx the critical acquisition from nice Syrah refactoring security and everything security is a do-over okay Alex let's bring up the chart of carbon black I wanna I want to look at that and explain to our audience kind of what's going on there so you can see it's a it's a little bit of a different picture from from pivotal you've got that kind of bathtub look to it so you see at the IPO it was a hot company but it underperformed and and it was struggling there you know coming into at the end of last year and then into 2019 you could see it was kind of bouncing around at its lows and then what happened was you saw it earlier this year the company guided down so you can see that you know big drop after into February announced you big spike downwards they guided down the CFO resigned and there were several down grades from Wall Street analysts and that really crushed the stock but then you sort of bouncing back through May and then what happened is you know you had this growth company they've grown at 25 to 30% a year and they beat earnings estimates in May so they guide it down in in February but then they beat and you had a new CFO you just kind of had this new renewed emphasis on on the company and then this summer they hired morgan stanley and so the acquisition rumors started and that you can see you know into august it starts to pick up again so i have no doubt that this was a competitive bid of vmware wanted it so so here's another comment that i want to share with you from last year at VMworld and again it'll give you an additional insight as to how Pat Gallagher is thinking about the future go ahead and play the clip and then we'll come back what together into my application and in that sense the application is a network of these different services data sources etc and we believe in that you're bridging across silos isn't important it is essential to do that yeah because as you say security models across that you know how does the you know when that application isn't performing like I expect it to how do I go even debug it so think about what Pat said the application is a network of services services it's not as such it's not important it's essential that we deliver that in a consolidated model including security models okay so you got VMware looking to make its platform the place to run modern apps you got carbon black at 250 million dollar company trading at a discount of about 5.5 X revenue they got strong growth at the time but 25 to 30 percent of years it's consistent and then nearly 40 percent of its business is coming from the cloud and the cloud business is growing at 70 percent a year so VMware remember jettisoned its cloud business vCloud air but it still has a desire it covets participating in cloud at least in the form of multi cloud and on-prem cloud like experiences Carbon Black is a modern endpoint security company you heard John's question about the perimeter and you know you can't build moats anymore you you really endpoints are really the the new vulnerability especially when you start thinking about IOT so VMware is desirous of cloud revenue multi cloud and recurring revenue you got a growth company that's looking to sell they've got leading technology as I said this it was a competitive bid and VMware wanted it so now the other thing is VMware knows carbon black they've they've integrated carbon black into its app defense offering and VMware has been expanding its portfolio not so quietly lately app defense NSX has a you know with its micro segmentation is really a security use case AirWatch has a security component cloud choreo ee8 security was another acquisition bracket intrinsic was you know these little tuck-ins you sort of draw a picture of how Dell senior and VMware are starting to build out its portfolio again making vmware the software mothership security is a critical component of that it also gives VMware much more of a strategic entrance into the c-suite particularly with the chief information security officer we've talked many times on the cube that security is now a board level discussion to the extent that VMware can be the platform for multi cloud security and of course you know that's not assured right there battling cisco who's coming at it from a network position they're battling google who's coming you know announced anthos they're certainly battling Microsoft certainly IBM and Red Hat have similar designs and as we've said watch this space Amazon ultimately we think is going to get into this area but any rate VMware's making security a fundamental part of its platform it's bridging those silos is what what Pat Gayle singer talked about in the video and giving you access to sets of infrastructure so with pivotal it's building out you know in cloud native application development and and tooling container technology and that's clearly strategic to its multi cloud strategy helps VMware stay relevant VMware doesn't own a cloud so it's got to move fast and be first in this multi cloud space ok so let me summarize VMware's gonna spend 2.7 billion on two key acquisitions they're gonna add it's gonna add a billion dollars in two points of revenue growth that's largely in SAS and hybrid cloud and recurring revenue for VMware and three billion dollars in year two now let me do some Volante math for you VMware trades at about five to six times revenue so essentially they just added five to six billion dollars in market value in year one and by the way the stock is off eight percent today so because of these acquisitions so and it's got upside in my view assuming that you know there's not some big economic downturn but we're talking about 15 to 18 billion in market cap in year two so this acceleration VMware's transition to SATs ass it's a cash flow positive and the creative acquisitions in year two according to vmware vmware throws off nearly four billion dollars in annual and operating annually and operating cash flow to me this is a good use of cash balancing acquisitions and to continue growth and tuck in your ability to be that platform for cloud and multi cloud services and hybrid cloud is a good use of cash I like it better than stock buybacks frankly so a combination of stock buybacks organic Rd which VM was very strong engineering culture and acquisitions in this case using your stock as currency I like the deals we're gonna watch him very closely and we're gonna be talking about this this next week at vmworld so watch the cube at vmworld the cube net will be there myself john fourier stu minimun Jeff Rick the entire team celebrating our 10th year at vmworld if you have any questions on this or comments please tweet me at diva want a thanks for watching everybody we'll see you next week

>> Hello everyone. Welcome to this CUBE conversation. I'm John Furrier host like you here in our Palo Alto studio here in Palo Alto. Here with Dominic Wilde, known as Dom, CEO of SnapRoute, a hot new startup. A great venture. Backers don. Welcome to skip conversation. So love having to start ups. And so talk about Snape route the company because you're doing something interesting that we've been covering your pretty aggressively the convergence between Dev Ops and Networking. We've known you for many, many years. You were a former Hewlett Packard than you woodpecker enterprise running the networking group over there. You know, networking. And you're an operator. Snap rows. Interesting, because, um, great names back behind it. Big venture backers. Lightspeed Norwest, among others. Yes. Take a minute. Explain what? A SnapRoute. >> So SnapRoute was founded to really address one of the big, big problems we see in infrastructure, which is that, you know, essentially the network gets in the way of the deployment the rapid and angel deployment of applications. And so in the modern environment that we're in, you know, the business environment, highly competitive environment of disruption, continuous disruption going on in our industry, every company out there is constantly looking over their shoulder is, you know, making sure that they're moving fast enough there innovating fast enough that they don't want to be disrupted. They don't want to be overrun by, you know, a new upstart. And in order to do that, you know the application is is actually the work product that you really want to deploy, that you you want to roll out, and you want to be able to do that on a continuous basis. You want to be really agile about how you do it. And, quite frankly, when it comes to infrastructure, networking has been fifteen years behind the rest of the infrastructure and enabling that it's, ah, it's a big roadblock. It's obviously, you know, some of the innovations and developments and networking of lag behind other areas on what we snap Brown set out to do was to say, You know, look, if we're if we're going to bring networking forward and we're going to try and solve some of these problems, how do we do that? In a way, architecturally, that will enable networking to become not just a part of Ah, you know a cloud native infrastructure but actually enable those those organizations to drive forward. And so what we did was we took all of our sort of devops principles and Dev ups tools, and we built a network operating system from the ground up using devops principles, devops architectures and devops tools. And so what we're delivering is a cloud native network operating system that is built entirely on containers and is delivered is a micro services architecture on the big...one of the big value propositions that we deliver is what we call see a CD for networking, which is your continuous integration. Continuous deployment is obviously, you know, Big devops principal there. But doing that for networking, allowing a network to be constantly up enabling network Teo adapt to immutable infrastructure principles. You know we're just replacing pieces that need to be replaced. Different pieces of the operating system can be replaced If there's a security vulnerability, for instance, or if there's ah, bugger and you feature needed so you know we can innovate quicker. We can enable the network to be more reliable, allow it to be more agile, more responsive to the needs of the organization on all of this, fundamentally means that your Operation shins model now becomes ah, lot more unified. A lot more simple. You. Now, we now enable the net ox teams to become a sort of more native part of the conversation with devils. Reduce the tension there, eliminate any conflicts and everything. And we do that through this. You know, this innovative offices. >> Classically, the infrastructure is code ethos. >> Yeah, exactly right. I mean, it's you know, a lot of people have been talking about infrastructure is code for a long, long time. But what we really do, I mean, if if you deploy our network operating system you employ onto the bare metal switching, then you really enable Dev ops to hang have, you know, I take control and to drive the network in the way they want using their native tool chains. So, you know, Cuba Netease, for instance, ears. You know that the big growing dev ops orchestration to all of the moment. In fact, we think it's more than of the moment. You know, I've never seen in the industry that sort of, you know, this kind of momentum behind on open source initiative like there is behind Cuba. Netease. And we've taken communities and baked it natively into the operating system. Such that now our network operating system that runs on a physical switch can be a native part off that communities and develops tool >> Dom, I want to get to the marketplace, dynamics. Kind of what's different. Why now? But I think what's interesting about SnapRoute you're the chief of is that it's a venture back with big names? Yeah. Lightspeed, Norwest, among others. It's a signal of a wave that we've been covering people are interested in. How do you make developers deploy faster, more agility at scale, on premises and in clouds. But I want you to before we get there, want to talk about the origin story of company? Yeah. Why does it exist? How did it come to bear you mentioned? Operation is a big part of cloud to cloud is about operating model so much a company. Yes. This is the big trend. That's the big way. But how did it all get started? What's the SnapRoute story? >> Yeah, it's an interesting story. Our founders were actually operators at at Apple back in the day, and they were responsible for building out some of Apple's biggest. You know, data centers for their sort of customer facing services, like, you know, like loud iTunes, all those good things and you know they would. They were tasked with, sort of, you know, sort of modernizing the operational model with with those data centers and, you know, and then they, like many other operators, do you know, had a sense of community and worked with their peers. You know, another big organizations, even you know, other hyper scale organizations and wanted to learn from what they did on DH. What they recognised was that, you know, cos like, you know, Google and Facebook and Microsoft is urine things. They had done some incredible things and some incredible innovations around infrastructure and particularly in networking, that enabled them to Dr Thie infrastructure from A from a Devil ops perspective and make it more native. But those words that if you know, fairly tailored for there, if you know, for their organizations and so what they saw was the opportunity to say, Well, you know, there's there's many other organizations who are delivering, you know, infrastructure is a service or SAS, or you know, who are just very large enterprises who are acting as these new cloud service providers. And they would have a need to, you know, to also have, you know, tools and capabilities, particularly in the network, to enable the network to be more responsive, more to the devil apps like. And so, you know, they they they founded SnapRoute on that principle that, you know, here's the problem that we know we can solve. It's been solved, you know, some degree, but it's an architectural problem, and it's not about taking, You know, all of the, you know, the last twenty five years of networking knowledge and just incrementally doing a sort of, you know, dot upgrade and, you know, trying to sort of say, Hey, we're just add on some AP eyes and things. You really needed to start from the ground up and rethink this entirely from an architectural perspective and design the network operating system as on with Dev ups, tools and principles. So they started the company, you know, been around just very late two thousand fifteen early two thousand sixteen. >> And how much money have you read >> The last around. We are Siri's, eh? We took in twenty five million. >> And who were the venture? >> It was Lightspeed Ventures on DH Norwest. And we also had some strategic investment from Microsoft Ventures and from teams >> from great name blue chips. What was their interest? What was their thesis? Well, and you mentioned the problem. What was the core problem that you're solving that they were attracted to? Why would that why was the thirst with such big name VCs? >> Yeah, I mean, I think it was, you know, a zip said, I think it's the the opportunity to change the operational more. And I think one of the big things that was very different about our company is and, you know, we like to say, you know, we're building for effort. Operators, by operators, you know, I've found is, as I said, well, more operators from Apple, they have lived and breathed what it is to be woken up at three. A. M. On Christmas Eve toe. You know, some outage and have to, you know, try and figure that out and fight your way through a legacy kind of network and figure out what's going on. So you know, so they empathize with what that means and having that DNA and our company is incredibly meaningful in terms of how we build that you know the product on how we engage with customers. We're not just a bunch of vendors who you know we're coming from, you know, previous spender backgrounds. Although I do, you know, I bring to the table the ability to, you know, to deliver a package and you know, So there's just a cloud scale its clouds, Gail. It's it's but it's It's enabling a bridge if you like. If you look at what the hyper scales have done, what they're achieving and the operational models they have, where a if you like a bridge to enable that capability for a much broader set of operators and C. S. P s and as a service companies and dry forward a an aggressive Angela innovation agenda for companies, >> businesses. You know, we always discussing the Cuban. Everyone who watches the Kiev knows I'm always ranting about how cloud providers make their market share numbers, and lot of people include sass, right? I think everyone will be in the SAS business, so I kind of look at the SAS numbers on, say, it's really infrastructures service platform to service Amazon, Google, Microsoft and then, you know, Ali Baba in China. Others. Then you got IBM or one of it's kind of in the big kind of cluster there top. That is a whole nother set of business requirements that sass driven this cloud based. Yeah, this seems to be a really growing market. Is that what you're targeting? And the question is, how do you relate Visa? Visa Cooper? Netease trend? Because communities and these abstraction layers, you're starting to hear things like service mesh, policy based state Full application states up. Is that you trying to that trend explain. >> We're very complimentary, Teo. Those trends, we're, you know, we're not looking to replace any of that, really. And and my big philosophy is, if you're not simplifying something, then you're not really adding back here, you know, what you're doing is complicating matters or adding another layer on top. So so yeah, I mean, we are of value to those companies who are looking at hybrid approaches or have some on prime asset. Our operating system will land on a physical, bare metal switch So you know what? What we do is when you look at it, you know, service most is your message measures and all the other, You know, technologies you talked about with very, very complimentary to those approaches because we're delivering the on underlying network infrastructure on network fabric. Whatever you'd like to call it, that can be managed natively with class native tools, squeezing the alliteration there. But but, you know, it means that you don't need toe add overlays. We don't need to sort of say, Hey, look, the network is this static, archaic thing that's really fragile. And And I mean, if we touch it, it's going to break. So let's just leave it alone and let's let's put some kind of overlay over the top of it on do you know, run over the top? What we're saying is you can collapse that down. Now what you can say, what you can do is you can say, Well, let's make the network dynamic responsive. Let's build a network operating system out of micro services so you can replace parts of it. You can, you know, fix bugs. You can fix security vulnerabilities and you can do all that on the fly without having to schedule outage windows, which is, you know, for a cloud native company or a sass or infrastructure service company. I mean, that's your business. You can't take outage windows. Your business depends on being available all the time. And so we were really changing that fundamentals of a principle of networking and saying, You know, networking is now dynamic, you know, in a very, very native way, but it also integrates very closely with Dev ops. Operational model >> is a lot of innovation that network. We're seeing that clearly around the industry. No doubt everyone sees late and see that comes into multi Cloud was saying that the trend moving the data to the compute coyote again that's a network issue network is now an innovation opportunity. So I gotta ask you, where do you guys see that happening? And I want to ask you specifically talking about the cloud architects out in the marketplace in these enterprises who were trying to figure out about the architecture of clowns. So they know on premises there, moving that into a cloud operations. We see Amazon, they see Google and Microsoft has clouds that might want to engage with have cloud native presence in a hybrid and multi cloud fashion for those cloud architects. What are the things that you like to see them doing? More of that relates to your value problems. In other words, if they're using containers or they're using micro services, is this good or bad? What? What you should enterprise to be working on that ties into your value proposition. >> So I think about this the other way around, actually, if I can kind of turn that turn that question. But on his head, I think what you know, enterprises, you know, organization C, S. P s. I think what they should be doing is focusing on their business and what their business needs. They shouldn't be looking at their infrastructure architecture and saying, you know, okay, how can we, you know, build all these pieces? And then you know what can the business and do on top of that infrastructure? You wanna look at it the other way around? I need to deploy applications rapidly. I need to innovate those applications. I need to, you know, upgrade, change whatever you need to do with those applications. And I need an infrastructure that can be responsive. I need an infrastructure that can be hybrid. I need infrastructure that can be, you know, orchestrated in the hybrid manner on DH. Therefore, I want to go and look for the building blocks out there of those those architectural and infrastructure building blocks out there that can service that application in the most appropriate way to enable the velocity of my business and the innovation from my business. Because at the end of the day, I mean, you know, when we talk to customers, the most important thing T customers, you know, is the velocity of their business. It is keeping ahead in the highly competitive environment and staying so far ahead that you're not going to be disrupted. And, you know, if any element of your infrastructure is holding you back and even you know, you know the most mild way it's a problem. It's something you should address. And we now have the capability to do that for, you know, for many, many years. In fact, you know, I would claim up to today without snap route that you know, you you do not have the ability to remove the network problem. The network is always going to be a boat anchor on your business. It introduces extra cycles. It introduces big security, of underplaying >> the problems of the network and the consequences that prior to snap her out that you guys saw. >> So I take the security issue right? I mean, everybody is very concerned about security today. One of the biggest attack vectors in the security world world today is the infrastructure. It's it's it's so vulnerable. A lot of infrastructure is is built on sort of proprietary software and operating systems. You know, it's very complex. There's a lot of, you know, operations, operational, moves out and change it. So there's there's a lot of opportunity for mistakes to be made. There's a lot of opportunity for, you know, for vulnerabilities to be exposed. And so what you want to do is you want to reduce the threat surface of, you know, your your infrastructure. So one of the things that we can do it SnapRoute that was never possible before is when you look at a traditional network operating system. Andreas, A traditional. I mean, any operating system is out there, other you know, Other >> than our own. >> It's basically a monolithic Lennox blob. It is one blob of code that contains all of the features. And it could be, you know, architect in in a way that it Sze chopped up nicely. But if you're not using certain features, they're still there. And that increases the threat surface with our sat proud plant native network operating system. Because it is a micro services are key picture. If you are not using certain services or features, you can destroy and remove the containers that contain those features and reduce the threat surface of the operating system. And then beyond that, if you do become aware ofthe vulnerability or a threat that you know is somewhere in there, you can replace it in seconds on the fly without taking the infrastructure. Damn, without having to completely replace that whole blob of software causing, you know, an outage window. So that's just one example of, you know, the things we can do. But even when it comes to simple things, like, you know, adding in new services or things because we're containerized service is a ll boot together. It's no, eh? You know it doesn't. It doesn't have a one after the other. It it's all in parallel. So you know this this operating system comes up faster. It's more reliable. It eliminates the risk factors, the security, you know, the issues that you have. It provides native automation capabilities. It natively integrates with, You know, your Dev Ops tool chain. It brings networking into the cloud. Native >> really, really isn't in frustrations. Code is an operating system, so it sounds like your solution is a cloud native operating system. That's correct. That's pretty much the solution. That's it. How do customers engage with you guys? And what do you say? That cloud architect this is Don't tell me what to do. What's the playbook, right? How you guys advice? Because I see this is a new solution. Talk about the solution and your recommendation to architects as they start thinking about building that elastic in that flexible environment. >> Yeah. I mean, I think you know, Ah, big recommendation is, you know, is to embrace, you know, that all the all of the cloud native principles and most of the companies that were talking to, you know, definitely doing that and moving very quickly. But, you know, my recommendation. You know, engaging with us is you should be looking for the network to in naval, your your goals and your you know your applications rather than limiting. I mean, that's that's the big difference that, you know, the people who really see the value in what we do recognize that, you know, the network should be Andi is an asset. It should be enabling new innovation, new capabilities in the business rather than looking at the network as necessary evil where we you know, where we have to get over its limitations or it's holding us back. And so, you know, for any organization that is, you know, is looking at deploying, you know, new switching infrastructure in any way, shape or form. I think, you know, you should be looking at Well, how am I going to integrate this into a dev ops? You know, world, how may going to integrate this into a cloud native world. So as my business moves forward, I'm actually servicing the application in enabling a faster time to service for the application for the business. At the end of the day, that's that's everybody's going, >> you know, we've been seeing in reporting this consistently, and it's even more mainstream now that cloud computing has opened up the aperture of the value and the economics and also the technical innovation around application developers coding faster having the kind of resource is. But it also created a CZ creating a renaissance and networking. So the value of networking and application development that collision is coming together very quickly. So the intersection you guys play. So I'm sure this will resonate well with customers Will as they try to figure out the role the network because against security number one analytics all the things that go into what Sadiq they care about share data, shared coat all this is kind of coming together. So if someone hears this story, they'll go, OK, love this snap around store. I gotta I gotta dig in. How do they engage you? What do you guys sell to them? What's the pitch? Give the quick plug for the company real >> quick. Engaging with us is, you know, is a simple issue. No, come to www snapper out dot com. And you know, you know contacts are up there. You know, we were currently obviously we're a small company. We sell direct, more engaged with, you know, our first customers and deploying our product, you know, right now, and it's going very, very well, and, you know, it's a PSE faras. You know how you know what and when to engage us. I would say you can engage us at any stage and and value whether or not your architect ing a whole new network deploying a new data center. Obviously. Which is, you know, it is an ideal is built from the ground up, but we add value to the >> data center preexisting data saying that wants >> the modernizing data centers. I mean, very want >> to modernize my data center, my candidate. >> So one of the biggest challenges in an existing data center in when one of the biggest areas of tension is at the top of rack switch the top of racks, which is where you connect in your you know, your your application assets, your servers are connected. You're connecting into the into the, you know, first leap into the network. One of the challenges there is. You know, Dev ops engineers, They want Teo, you know, deploy containers. They want to deploy virtual machines they wantto and stuff move stuff, change stuff and they need network engineers to help them to do that. For a network engineer, the least interesting part of the infrastructure is the top Arax. Which it is a constant barrage day in, day, out of request. Hey, can I have a villain? Can have an i p address. Can we move this? And it's not interesting. It just chews up time we alleviate that tension. What we enable you to do is network engineer can you know, deploy the network, get it up and running, and then control what needs to be controlled natively from their box from debits tool chains and allow the devil ups engineers to take control as infrastructure. So the >> Taelon is taking the stress out of the top of racks. Wedge, take the drama out of this. >> Take that arm around the network. Right. >> So okay, you have the soul from a customer. What am I buying? What do you guys offering? Is that a professional services package? Is it software? Is it a sad solution? Itself is the product. >> It is software, you know. We are. We're selling a network operating system. It lands on, you know, bare metal. He liked white box switching. Ah, nde. We offer that as both perpetual licenses or as a subscription. We also office, um, you know, the value and services around that as well. You know, Andre, right now that is, you know, that is our approach to market. You know, we may expand that, you know, two other services in the future, but that is what we're selling right now. It is a network operating >> system down. Thanks for coming and sharing this story of SnapRoute. Final question for you is you've been in this century. While we've had many conversations we'd love to talk about gear, speeds and feeds. I'll see softwares eating. The world was seeing that we're seeing cloud create massive amounts. Opportunity. You're in a big wave, right? What is this wave look like for the next couple of years? How do you see this? Playing out as Cloud continues to go global and you start to Seymour networking becoming much more innovative. Part of the equation with Mohr developers coming onboard. Faster, more scale. How do you see? It's all playing out in the industry. >> Yeah. So I think the next sort of, you know, big wave of things is really around the operational. But I mean, we've we've we've concentrated for many years in the networking industry on speeds and feeds. And then it was, you know, it's all about protocols and you know how protocol stacks of building stuff. That's all noise. It's really about How do you engage with the network? How do you how do you operate your network to service your business? Quite frankly, you know, you should not even know the network is there. If we're doing a really good job of network, you shouldn't even know about it. And that's where we need to get to is an industry. And you know that's that's my belief is where, where we can take >> it. Low latent. See programmable networks. Great stuff. SnapRoute Dominic. While no one is dominant industry friend of the Cube also keep alumni CEO of Snapper Out. Hot new start up with some big backers. Interesting signal. Programmable networks software Cloud Global all kind of big Party innovation equation. Here in Silicon Valley, I'm showing for with cube conversations. Thanks for watching

from Las Vegas it's the queue covering VMworld 2018 brought to you by VMware and its ecosystem partners and we're back here at the Mandalay Bay in somewhat beautiful Las Vegas where we're doing third day of VMworld on the cube and on Peterborough and I'm joined by my two lead analysts here at Ricky bond with me Jim Camilo's who's looking at a lot of the software stuff David floor who's helping to drive a lot of our hardware's research guys you've spent an enormous amount of time talking to an enormous number of customers a lot of partners and we all participated in the Analyst Day on Monday let me give you my first impressions and I want to ask you guys some questions here you thought so I have it this is you know my third I guess VMworld in or in a row and and my impression is that this has been the most coherent of the VM worlds I've seen you can tell when a company's going through a transition because they're reaching to try to bring a story together and that sets the tone but this one hot calendar did a phenomenal job of setting up the story it makes sense it's coherent possibly because it aligns so well with what we think is going to happen in the industry so I want to ask you guys based on three days of one around and talking to customers David foyer what's been the high point what have you found is the most interesting thing well I think the most interesting thing is the excitement that there is over VMware if you if you contrast that with a two three years ago the degree of commitment of customers to viennois the degree of integration they're wanting to make the degree rate of change and ideas that have come out of VMware it's like two different companies totally different companies some of the highlights for me were the RDS the bringing from AWS to on site as well as on the AWS cloud RDS capabilities I think that's a very very interesting thing that's the relational database is services the Maria DB and all the other services that's a very exciting thing to me and a hint to me that AWS is going to have to get serious about well Moore's gone out I think it's a really interesting point that after a lot of conversations with a lot of folks saying all AWS it's all going to go up to the cloud and wondering whether that also is a one-way street for VMware Casta Moore's right but now we're seeing it's much more of a bilateral relationship it's a moving it to the right place and that's the second thing the embracing of multi-cloud by everybody one cloud is not going to do everything they're going to be SAS clouds they're going to be multiple places where people are gonna put certain workloads because that's the best strategic fit for it and the acceptance in the marketplace that that is where it's going to go I think that again is a major change so hybrid cloud and multi cloud environments and then the third thing is I think the richness of the ecosystem is amazing the the going on the floor and the number of people that have come to talk to us with new ideas really fascinating ideas is something I haven't seen at all for the last last three four years and so I'm gonna come back to you on that but it goes back to the first point that you make that yeah there is a palpable excitement here about VMware that two-three years ago the conversation was how much longer is the franchise gonna be around Jim but now it's clear yeah it's gonna be around Jim how about you yeah actually I'm like you guys I'm a newbie to VM world this is my very first remember I'm a big data analyst I'm a data science an AI guy but obviously I've been aware of VMware and I've had many contacts with them over the years my take away my prime and I like Pat Gail singers I agree with you Peter they're really coherent take and I like that phrase even though it sounds clucking impact kind of apologize they are the dial tone to the multi-cloud if the surgery really gives you a strong sense or who else can you character is in this whole market space cloud computing has essentially a multi cloud provider who provide the unifying virtualization glue to help their custom to help customers who are investing in an AWS and maybe in a bit of you know you're adopting Google and Microsoft Azure and so forth providing a virtualization layer that's the above server virtualization network virtualization VDI all the way to the edge nobody can put it all is putting it all together and quite the way that VMware is one of the my chief takeaways is similar to David's which is that in terms of the notion of a hybrid cloud VMware with its whole what's it's doing with RDS but also projects like this project dimension which is in project in progress taking essentially the entire VMware virtualization stack and putting it onto an appliance for deployment on the edges and then for them to manage it VMware of this their plans as an end-to-end managed edge cloud service and so forth Wow the blurring of public and private cloud I don't even think the term hybrid cloud applies it's just a blurry the common cloud yeah it's moving to the workload the clouds moving to the data which is exactly what we say they are halfway there in terms of that vision halfway in a sense that RDS has been announced the you know on the VMware and this project dimension they're well along with that if there was a briefings for the analyst space I'm really impressed for how they're architecting this I think they've got a shot to really dominate well I'll tell you so I would agree with you just to maybe provide a slightly different version of one of the things you said I definitely agree I think what's VMware hopes to do and I think they're not alone is to have AWS look like an appliance to their console to have as you look like an appliance of their Khan so through free em where you can get access to whatever services you need including your VMware machines your VMs inside those clouds but that increasingly their their goal is to be that control point that management point for all of these different resources that are building and it is very compelling I think that there's one area that I still think we need more from as analysts and we always got to look through no and what's yeah what was more required and I hear what you say about project dimension but I think that the edge story still requires a fair amount of work oh yeah it's a project in place but that's going to be an increasingly important locus of how architectures get laid out how people think about applications in the future how design happens how methodologies for building software work David what do you think what when you look out what what is what what is more is needed for you so really I think there are two things that give me a small concern the the edge that's a long term view so they got time to get that right but the edge view is very much an IT view top-down and they are looking to put in place everything that they think the OT people should fit in with I think that is personally not going to be a winning strategy you you have to take it from the bottom up the world is going to go towards devices very rich devices and sensors lots of software right on that device the inference work on those devices and the job of IT will be to integrate those devices it won't be those devices taking on the standards of IT it'll be IT that has to shape itself to look after all those devices there so that's a that's the main viewpoint I think that needs adjustment and it will come I'm sure over time but as you said there's a lot of computer science it's going to be an enormous amount of new partnerships are gonna be fabricate exactly to make this happen Jim what do you think yeah I agree terms of partnerships one big gap from both VMware and Dell technologies partnerships and romance and technology proposes AI now they have a project VMware call from another project called project Magna which is really AI ops in fact I published a wiki about reports this week on AI ops AI to drive IT Service Management and to and they're doing some stuff they're working on that project it's just you know the beginning stages I think what's going to happen is that vmware dell technologies they're gonna have to make strategic acquisitions of AI solution providers to build up that capability because that's going to be fundamental to their ability to manage this complex multi called fabric from end to end continuously they need that competency internally that can't be simply a partner providing that that's got to be their core competencies so you know I'm gonna push it I'll give you the contrarian point of view okay we actually had Khamsin VMware we've had a lot of conversations about this does that is that a reflection of David's point about top-down buying things and pushing it down as opposed to other conversations we've had about how the edge is going to evolve where a lot of OT guys are going to combine with business expertise and technology expertise to create specialized solutions and is and then VMware is gonna have to reach out to them and make VMware relevant to them do you think it's going to be VMware buying a bunch of stuff or an a-grade no solution or is it going to be the solutions coming from elsewhere and VM at VMware I just becoming more relevant to them now you can still be buying a bunch of stuff to get that horizontal in place but which way you think it's going to go I think it's gonna be the top-down they're gonna buy stuff because if I talk to the channel one of the channel people this morning about well you know but they've got an IOT connected bundle and so forth they announced this show you know I think they agree with me that the core AI technology needs to be built into the fundamentals like the IOT stack bundle that they then provide to the channel partners for with you know with channel specific content that they can then tweak and customize to their specific needs but you know the core requirements for a I are horizontal you know it's the ability to run neural networks to do predictive analysis anomaly detection and so forth this is all cross-cutting across all domains it has to be in the core application stack they can't be simply something they source for particular channel opportunities it has to be leveraged across you know the same core tensorflow models for anomaly detection for manufacturing for logistics for you know customer relationship management whatever it's or are you saying essentially that then VMware becomes that horizontal play even though even if the solution providers are increasingly close to the actual action where the edges III I'm gonna disagree we can gently on that but we'd still be friends [Music] no it's you know I'm I'm an OT guy of hearth I suppose and I think that that is going to be a stronger force in terms of VMware but there will be some places where you it will be top-down but other places that where it's going to be need needed to adjust but I think there's one other there very interesting area I'd like to bring up in terms of of this question of acquisition what what we heard about beforehand was excellent results and VMware has been adding a you know a billion dollars a year in terms of free cash there and they have thirteen billion in short term cash there and the the refinancing from Dell is gonna take eleven of that thirteen and put it towards the towards the the company now you can work towards deltek yes well just Dell Dell as a hold and and silver later towards those partners I I personally believe that there is such a lot of opportunity that's going to be out there if you take NSX for example it has the potential to do things in new areas they're gonna need to provide solutions in those new areas and aggressively go after those new areas and that's going to mean big investments and many other areas where I think they are going to need acquisitions to strengthen the whole story they have the whole multi-cloud story about this real-time operating system in a sexy has a network routing virtualization backplane I mean it needs to go real-time so sensitive guaranteed ladies if they need that big investments guarantee yeah they need to go there yeah so what we're agreeing on that and I get concerned that it's not going to be given the right resources you know to be able to actually go after the opportunities that they have genuinely created it's gonna mean from you see how that plays out so I think all drugs in the future I think saying though is that there is going to be a solution a set of solution players that VMware is going to have to make significant moves to make them relevant and then the question is where it's the values story what's the value proposition it's probably gonna be like all partnerships yeah some are gonna claim that they are doing it also some are gonna DM where it's gonna claim that they do more of it but at the end of the day VMware has to make themself relevant to the edge however that happens I want to pick up on NSX because I'm a pretty big believer that NSX may be the very special crown jewel and a lot of the stuff this notion of hybrid cloud whatever we call it let's just call it extended cloud let me talk of a better word like it is predicated on the idea that I also have a network that can naturally and easily not just bridge but truly multi network interoperate internet work with a lot of different cloud sources but also all different cloud locations and there's not a lot of technologies out there that are great candidates to do that and it's and I look at NSX and I'm wondering is that gonna be kind of a I want to take the metaphor too far but is that gonna be kind of a new tcp/ip for the cloud in the sense that you're still gonna run over tcp/ip and you're still gonna run over the Internet but now we're gonna get greater visibility into jobs into workloads into management infrastructures into data locations and data placement predictive movement and NSX is going to be the at the vanguard of showing how that's gonna work and the security side of that especially to be able to know what is connected to what and what shouldn't be connected to what and to be able to have that yeah they need stateful structured streaming others Kafka flink whatever they need that to be baked into the whole nsx virtualization layer that much more programmable and that provides that much better a target for applications all right last question then we got a wrap guys David as you walk out the door get in the plane what are you taking away what's your last impression my last impression is one of genuine excitement wanting to work wanting to follow up with so many of the smaller organizations the partners that have been here and who are genuinely providing in this ecosystem a very rich tapestry of of capability that's great Jim my takeaway is I want to see their roadmap for kubernetes and serverless there wasn't a hole last year they made an announcement of a serverless project I forgot what the code name is didn't hear a whole lot about it this year but they're going up the app stack they got a coop you know distribution you know they're if they need a developer story I mean developers are building functional apps and so forth you know you can and they're also containerized they need they need a developer story and they need a server list story and they need to you need to bring us up to speed on where they're going in that regard because AWS their predominant partner I mean they got lambda functions and all that stuff you know that's that's the development platform of the present and future and I'm not hearing an intersection of that story with VMware's a story yeah my last thing that I'll say is that I think that for the next five years VMware is gonna be one of the companies that shapes the future of the cloud and I don't think we would have said that a couple of names no they wouldn't I agree with you so you said yes all right so this has been the wiki bond research leadership team talking about what we've heard at VMware this year VMworld this year a lot of great conversation feel free to reach out to us and if you want to spend more time with rookie bond love to have you once again Peter burrows for David floor and Jim Kabila's thank you very much for watching the cube we'll talk to you again [Music]