>> Narrator: The Wynn resort in Las Vegas It's theCUBE. Covering .NEXT conference 2016 brought to you by Nutanix. Now here are your hosts, Dave Vellante and Stu Miniman. >> Welcome back everybody. Professor Deepak Malhotra here. He's with the Harvard Business school and author of Negotiating the Impossible: How to Break Deadlocks and Resolve Ugly Conflicts. Parenthetical without money or muscle end parenthetical. Deepak, welcome to theCUBE, great to see you. Thanks for having me here. Happy to be here. So what do you do in here? Well among the other things that I do with my time, I happen to be on the board of advisors for Nutanix. And I've been working with Nutanix for the last, a little over two years on various aspects of negotiation, deal making, training, etcetera. And so I attend a few of their conferences a few of the sessions. I talk at a few of their conferences as well. So that's what brings me here. >> So it's somewhat odd, right to have a negotiations expert come and talk to customers about negotiations. But I guess the angle would be if you're stuck in sort of a legacy world. You need to negotiate your way out is that. >> Well there's a couple of things going on there, right. So under one hand I think it shows a little bit about Nutanix's perspective. That it isn't a zero sum game. It's not we're going to train the Nutanix people so they can get an advantage over customers. I think the company really is focused on creating as much value as possible for the end user. And when you take that mind set it actually makes sense to be inclusive. And bring everybody in the ecosystem into the room. So it's not just, "Hey Professor Malhotra can you train our sales people?" It's you know we want to share your ideas with everybody. And I think that's really a good sign when a company is willing to do that. The second thing is as you just eluded to, a lot of the folks that are coming here and a lot of the people that are customers were thinking about moving in the direction of Nutanix. Or have bought into the idea. They still may need to sell it internally. They still may need to negotiate internally how do we change our organization or how do we move our organization from what its been doing to what it wants to be doing or it should be doing. And they're also many of the same skills can be useful. So why not educate them about some of the things they might not have thought about yet. >> So let's talk about your book a little bit. The premise. I guess I told you I haven't read it yet but I do have it. In the book you talked about a three thousand year old Treaty of Kadesh. And things that we can learn from three thousand years ago. Give us the basics and the premise. >> So this was. The books starts out with this story of the Treaty of Kadesh which I don't think is something that many business books start out talking about. Certainly, I hadn't seen it before I started researching it. And one of the interesting thing that happens is that there's a lesson embedded in the story of the Treaty of Kadesh that I think is as relevant today in negotiations of just about every kind in the business world and outside that, that's worth telling. And the basic story goes as follows. The Treaty of Kadesh is the most ancient peace treaty known to man kind. As far as we know it's as old a peace treaty as we have evidence of. And it was between the Egyptians and the Hittites. And these two parties were at war. And at some point they must of decided enough of this we need to put an end to this. There's too many cost internally and externally. Too many other threats. We need to find a way to resolve this kind of conflict. What often happens in these situations is that nobody wants to look weak. Nobody wants to be the one asking for peace because that might just embolden the other side. So what ends up happening is that somehow they overcome these hesitations. They reach this agreement. Now what's interesting is that we actually have access to both language's version of the treaty. So we have the Arcadian and the hieroglyphics. The hieroglyphics being the Egyptian version and the Arcadian being the one from the Hittites. And if you were to read both of these or if you were to first learn how to read these and then to read both of these. What you find is as you'd expect, they have a lot of the kinds of things that you would normally expect in a peace treaty. You know exchanging prisoners of war. Mutual assistance packs and things like this. And they're basically identical as they should be because they're the same peace treaty. But there is one difference. When you compare the two peace treaties the one difference that sort of stands out is that in the Egyptian version it says it's the Hittites who came asking for peace. And in the Hittite version it says it's the Egyptians who came asking for peace. And what it goes to show I think is that no matter how far back you go this need for every side to declare victory at the end of a negotiation at the end of a conflict. That need for every side to declare victory is as old as human beings themselves. When you understand that. I think it actually changes the way in which you try and negotiate these deals. How you think about what stands in the way of getting the deal done. Sometimes it's not the substance of the deal. You're already proposing something that's good enough. You're already have something on the table that's rich enough, valuable enough. They should say yes. But they might be other reasons they can't say yes. For example they might lose face. Or they may look bad. And when you recognize that I think you come at it a different way. >> Looking at your research. One of things you focus on is trust. And one of the challenges we have in technology is you know, people are entrenched with the way they do things. They're not likely to you know be first or go there. We've now got thousands of people using Nutanix but you know. How does Nutanix or others that are new get a proper seat at the table and be able to be part of a discussion that you know when you've got (mumbles) in there and the old ways of doing things. >> You know the way I see it. You have to get the economics right and you have to get the psychology right. The economics is you have to have a good product. It needs to be price appropriate. You need to be bringing value to the table. And be pricing based on that value proposition. So that's sort of basic business stuff. The problem is as I mentioned earlier. You may have the right product. You may have something that people, quote should be using. It is better than the alternative. But they might be these psychological hurdles that you need to get over. A prominent one being what you just eluded to which is when nobody else is doing it, nobody feels the urgency to do it. If you get the sense that you know there's not a mass of folks running after your product. They sort of feel like, well maybe that means something. Maybe it means it's not a big deal. Maybe it means it's not so urgent. Maybe it's not that good of a product. So the early hurdles that companies like these face are really big ones. You don't have a long list of customers that you can use to prove to other people that this is the way you should be going. There's always a risk that somebodies going to take a bet on this and if something goes wrong. It's sort of the old nobody lost their job buying IBM kind of mentality. And so as a negotiator and as a company that's starting out as an early stage company, especially in technology where you're doing something disruptive, you need to start thinking a little bit about how do we get them over that. How do we get them to start understanding that you know what. Here is a list of customers that are using it. And here's the testimonials, etcetera. You think about the pricing. The most common thing that happens when you walk into the room with a new disruptive technology is that the person on the other side says, "Are you crazy? "You're charging ten times what your competitor is charging. "You know you're sitting here telling me "to pay x. "If I do nothing I have to pay zero." Alright. "Nobody pays this kind of money for this kind of thing." That is a very common response sales people get when they are in an environment like this. And one of the things I advise people to do in that situation. Is to make sure they don't make the worst mistake a sales person can make in a moment where somebody says, "You're price is ten x what everybody else "is charging. "Nobody pays this much." The worst mistake a sales person can make is to apologize for the price being too high. Now they don't always do it by saying, "Oh my god I'm so sorry." But they seem apologetic. You know they're very quick to say, "Oh yeah I know it's high." >> "Let's see if we can do something." >> "I'm sure we can work something out. "But yeah you know I know it's a lot of money." The moment you go in that direction what you're basically doing is you're giving the other side a license to haggle with you. 'Cause what you're telling them is even you don't think the price is appropriate. A better response in a situation like this is for the sales person to say, "Listen I think the question you're asking me is, "how is it that despite our price being ten x "what some other people are charging, "we have a long list of people wanting to buy our product. "What kind of value must we be bringing to the table "for so many people wanting to buy this product? "Now I'm happy to talk about that value "because at the end of the day we all know nobody's "going to pay more for something than it's worth. "Nobody would do that, you're not going to do that. "So why don't we figure out what it's worth "and then you can make the right decision." And what you're doing there is you're shifting the conversion from price to value. You're shifting the frame of this conversation from how much am I having to pay and what's the cost to me to what is the value proposition. >> Stu's laughing. I mean your price is too high is the best sales objection ever. Right, you love to hear that as a sales person. Much better than your product sucks. (chuckles) Now the answer of this question is probably it depends. But when you advise your clients and your friends. When I go into a negotiation am I trying to get the best deal or am I trying to find common ground and get a win-win? >> Actually I don't think it depends. I think. (exhales loudly) Well I would. I would articulate the question slightly differently. Because in my experience it is possible to get a great deal and a great relationship. It's also possible to get neither. And so what you're trying to do is you're trying to optimize on both. What's interesting is that very often we assume it's a zero sum game enough. That the only way for me to get a good deal is for me to sacrifice the relationship in some way. That's not how it works in most sort of richer context, more complicated deal scenarios. Because what people evaluate when they walk away from the table isn't just did I get a quote, good economic deal. When people think back and say, "Do I want to work with this person again? "Do I like this person? "Did I get a good deal?" Often what they're thinking about is not so much of the substance of what they got. What's in the agreement. But the process they went through. For example. You know did the negotiation go as long as should of or did it drag on too long or end too abruptly? Was my voice heard? Did both sides move away from their opening positions? Did the person haggle with me on every little thing, even though they knew and I knew it's not a big deal to them and is a big deal to me? Those sort of process elements if you navigate the process more effectively you can often get to a point where you get the deal that you think is right for you and you get a relationship that both sides can walk away feeling good about. And from my perspective you know what does depend in, on it. It depends on the situation is what kind of feeling do you want them to have walking away. You don't always need to have them love you. But at the very least they should respect you. Right? And I think it's perfectly fair even in a very contentious negotiation to keep as one of your objectives. You know when the deal ends I want them to be able to walk away saying, "You know what, I maybe didn't agree with this person. "It didn't go exactly the way I wanted it to go. "But you know I can respect this person "for the way they handled the situation. "And if I were them I hope I would do it the same way." >> So I wonder. If I look at the society as a whole, it seems as if we kind of retreated to our sides and I find that lots of people aren't open for debate. They're intractable in what's going on. How do I get beyond that? >> How do we change society, is that the question? >> Stu: Yeah. >> How much time do we have? >> Am I wrong. (laughs) Is it only ten percent of the people that are intractable or are most people reasonable? >> So I think what happens is, there's a few interesting dynamics. Now I wouldn't have the precise numbers. What I can say is that it is certainly the case that even a minority of people being in those entrenched positions, they get a lot more of the media. They get a lot more of the attention. They tend to be louder, etcetera. And they can often drive our sense of what's actually happening. And it can drive the narrative. Now that doesn't mean there aren't real differences. Like strong differences. You know what's interesting is if you take people that are not on the extremes. You take the moderates. Sometimes the way in which we engage with people on the other side of the argument pushes them to be more extreme. See when we ourselves show up, thinking of ourselves as relatively moderate, enlightened people who have a set of point of view. But you know what I'm very open to other peoples perspective. But then we get into the conversation. And we end up challenging people in a way they don't find particularly useful. We start poking holes. We start making it's about a winning and a losing and a debate. And there's going to be at the end of the day points, score based on who wins the argument. Then people end up getting more and more entrenched. Even in ways that they otherwise wouldn't be. So the question is can we get to a point where at least those people on each side. And I find on any political issue I can find people on both sides that I think are trying to do the right thing and have perhaps limited information but they're trying to do the best they can with that information. They have good intentions and they're reasonably smart people. In my experience, you don't need two people one of whom is either evil, or crazy, or irrational to have conflict. You just need two people. You see good, smart, reasonably well-intentioned people getting into conflict all the time. Which then becomes the question of this book, which is how do we manage those situations? How do we get people to back away from these entrenched positions? How do we overcome deadlock that allows both sides to walk away feeling a little bit better about the situation? >> So examples are instructive. So let's talk about some great negotiators. Who are they? Let's start with sports. Scott Boras. You know you think of him as an agent. I mean grinding the teams, the general managers. Is he a good negotiator? >> So I don't follow many of the sports deal making and negotiations enough to be able to really elaborate on who would be a good negotiator in sports. But I can say this. That in a context where it's really just about things like price. Just about the money. And a sports agent often is, it's not really all about that but it is the most (mumbles). It is the most (mumbles) issue. You're going to go at it a certain way. And it would be similar to a negotiation in the business world where all you care about is price. You're buying or selling a house. You're buying or selling a car. And from my perspective there are people who are very good at haggling. There's people who can hold their cards to the chest and they can be aggressive when they need to be. And they can be persuasive in certain things. But when you look at negotiation as a whole. I think of haggling as a very, very thing slice of what negotiation is about. That's sort of the easy stuff. You may not be naturally good at it. But what it takes to be good at it is not so hard. We teach that on sort of day one of class. Day one of class is the price haggle. It's the you know there's two sides and you want opposite things. And how do you frame it in the right way and what kind of concession rate should you make or not make. How do you justify your proposal etcetera. We cover that on day one. And the problem is there is in our owner president program where I teach there's 15 more days left. In our MBA program there's like 27 more days left. And there the question becomes how do we get past just being a good haggler. Somebody who can just put fist to the table and say take it or leave it. And all that kind of stuff. Which will work in certain defined contexts but will not carry over to more important deals. >> You're right. That is a narrow context in sports because the agent has all the leverage of the players performed. How 'about Donald Trump? He's negotiating isn't he when he says Mexico's going to build the wall. He wrote the book, Art of the Deal. >> He did write that book. Yeah we co-authored that book actually. So is he negotiating when he says that. In the broader sense of the word negotiation which is basically how do we interact with other human beings who see things differently than we do. He absolutely is negotiating. If the question then becomes is he doing it effectively. My view would be that, that he is not. (chuckles) And I think if you actually were to look at the evidence and then stack it up. I think you would find that he's not a very effective negotiator. >> We don't have to go there. That's good. >> Deepak: That's okay I don't mind. >> We'll leave it there. But how 'about (mumbles), right. I mean you've had like an epic negotiation to bring those two. Is that an example? I mean even though it ended in tragedy on both sides is that an example of a successful negotiation? >> So it's an example of a, it is an example of a successful negotiation. And I think even more instructively it's an example of one of the biggest barriers in conflicts like this. The hardest part is often to bring your own side with you. And that is a challenge for leadership. It's not just in the bubble of negotiation. This is about leadership generally. To be able to have someone who can not only personally be willing to do the kinds of things that make the kinds of sacrifices but to be able to move a group of folks who for years, sometimes decades or centuries have been thinking differently. And to your point what often happens with these peace makers is you know the risk is you do one of these things and you're going to get killed. And usually you get killed by your own side. And exactly in the context you're talking about that's usually what happens. And so here what we see is not only an impressive set of events that led to negotiation and the negotiation itself but you see a certain amount of courage that leaders don't often enough show. And again some leaders aren't placed well. They don't have the support going in. Or they just don't have the ability to do it. But even those that do. The question is are you willing to expend the social and political capital necessary and put yourself on the line to be able to do something that you think is worth doing? >> I said I wasn't going to ask you but I am going to ask you 'cause your answer is so good. The Iran Deal. Good deal, not a good deal? You see to your point about getting killed by your own side. >> So I was not involved with the Iran deal. I do work with sometimes governments negotiating difficult conflicts and such. But I was not in any way involved with the Iran deal. What I can say is, based on the folks I've talk to leading up to the Iran deal and then after the Iran deal. It is my sense looking at what was accomplished that is actually a phenomenal deal for when it was done. Could a better deal have been done ten years earlier? Yes. One of the hardest things to negotiate against in the real world is the status quo. It's a lot easier to negotiate don't create center (mumbles) when there are none than it is to negotiate remove the center (mumbles) you have already created. So if you could go back in time which I have not met anybody yet who's able to do effectively it would be possible to get a better deal. Where things were last year and the year before I can say that pretty much everybody you talk to before the deal was announced on either side of the political spectrum, Republicans, Democrats, left, right, Hawkish, Dovish, you name it. Nobody would of expected a deal this good for the American side at the time. Now you may still not like it. You may be against any deal and that's okay. You can certainly have that perspective but if you're going to get a deal in this environment and what was being said leading up to this. I think both sides were pretty surprised and I would even say impressed. Until it came time to start talking about it publicly at which point of course you have to go back to your narrative. So you know again, I had nothing to do with it. But when you look at it, it surprised most people in terms of what it came out to be. >> So what are you working on? Next projects? Things that are exciting you these days. >> So I have sort of three areas where my attention is going. One is on ethnic conflict and armed conflict. As I was eluding to earlier I do some work with governments that are dealing with insurgency and conflict. And looking at what we know and what do we not know about resolving these kind of things. And how we can maybe push forward in that direction. So that's an area of advisory work but also research that I'm doing. Second area is I'm working with doctors. Thinking about how they can be more effective in prescribing a course of action to patients. How they can have more effective kind of conversations when a patient comes in and has a strong set of beliefs about what they should and shouldn't do. Or they're resistant to change. Or they're unwilling to do things. How can you be more effective in the time you spend with patients. And I do work on gun violence. And we've been looking at mass shootings. And we just had some research that got a lot of coverage unfortunately because of the tragedy that took place in Orlando not so long ago. Looking at whether mass shootings really have any impact on gun laws. And we find some interesting results there. So in a sense I'm sort of looking at insurgency and dealing with cancer patients and then gun violence. >> Interesting topics. >> Deepak: All of the darkest stuff we can find. >> It's a tragic but timely. And then there's another sequence there. Do gun laws have an impact on mass shooting. >> Deepak: And that's basically the next set of projects. >> Excellent. Well thank you very much. (mumbles) >> Deepak: It was great. >> Fantastic. >> Deepak: Absolutely. >> Alright keep right there everybody. Stu and I will be back with our next guest. We're live this is theCUBE SiliconANGLE's flagship production from .NEXT in Vegas. Be right back.

(upbeat music) >> Hello, and welcome to "theCUBE" conversation here in Palo Alto, California. I'm John Furrier, host of "theCUBE," got a great security conversation, Ed Casper who's the founder and CEO of Cloud Storage Security, the great Cloud background, Cloud security, Cloud storage. Welcome to the "theCUBE Conversation," Ed. Thanks for coming on. >> Thank you very much for having me. >> I got Lafomo on that background. You got the nice look there. Let's get into the storage blind spot conversation around Cloud Security. Obviously, reinforced has came up a ton, you heard a lot about encryption, automated reasoning but still ransomware was still hot. All these things are continuing to be issues on security but they're all brought on data and storage, right? So this is a big part of it. Tell us a little bit about how you guys came about the origination story. What is the company all about? >> Sure, so, we're a pandemic story. We started in February right before the pandemic really hit and we've survived and thrived because it is such a critical thing. If you look at the growth that's happening in storage right now, we saw this at reinforced. We saw even a recent AWS Storage Day. Their S3, in particular, houses over 200 trillion objects. If you look just 10 years ago, in 2012, Amazon touted how they were housing one trillion objects, so in a 10 year period, it's grown to 200 trillion and really most of that has happened in the last three or four years, so the pandemic and the shift in the ability and the technologies to process data better has really driven the need and driven the Cloud growth. >> I want to get into some of the issues around storage. Obviously, the trend on S3, look at what they've done. I mean, I saw my land at storage today. We've interviewed her. She's amazing. Just the EC2 and S3 the core pistons of AWS, obviously, the silicons getting better, the IaaS layers just getting so much more innovation. You got more performance abstraction layers at the past is emerging Cloud operations on premise now with hybrid is becoming a steady state and if you look at all the action, it's all this hyper-converged kind of conversations but it's not hyper-converged in a box, it's Cloud Storage, so there's a lot of activity around storage in the Cloud. Why is that? >> Well, because it's that companies are defined by their data and, if a company's data is growing, the company itself is growing. If it's not growing, they are stagnant and in trouble, and so, what's been happening now and you see it with the move to Cloud especially over the on-prem storage sources is people are starting to put more data to work and they're figuring out how to get the value out of it. Recent analysts made a statement that if the Fortune 1000 could just share and expose 10% more of their data, they'd have net revenue increases of 65 million. So it's just the ability to put that data to work and it's so much more capable in the Cloud than it has been on-prem to this point. >> It's interesting data portability is being discussed, data access, who gets access, do you move compute to the data? Do you move data around? And all these conversations are kind of around access and security. It's one of the big vulnerabilities around data whether it's an S3 bucket that's an manual configuration error, or if it's a tool that needs credentials. I mean, how do you manage all this stuff? This is really where a rethink kind of comes around so, can you share how you guys are surviving and thriving in that kind of crazy world that we're in? >> Yeah, absolutely. So, data has been the critical piece and moving to the Cloud has really been this notion of how do I protect my access into the Cloud? How do I protect who's got it? How do I think about the networking aspects? My east west traffic after I've blocked them from coming in but no one's thinking about the data itself and ultimately, you want to make that data very safe for the consumers of the data. They have an expectation and almost a demand that the data that they consume is safe and so, companies are starting to have to think about that. They haven't thought about it. It has been a blind spot, you mentioned that before. In regards to, I am protecting my management plane, we use posture management tools. We use automated services. If you're not automating, then you're struggling in the Cloud. But when it comes to the data, everyone thinks, "Oh, I've blocked access. I've used firewalls. I've used policies on the data," but they don't think about the data itself. It is that packet that you talked about that moves around to all the different consumers and the workflows and if you're not ensuring that that data is safe, then, you're in big trouble and we've seen it over and over again. >> I mean, it's definitely a hot category and it's changing a lot, so I love this conversation because it's a primary one, primary and secondary cover data cotton storage. It's kind of good joke there, but all kidding aside, it's a hard, you got data lineage tracing is a big issue right now. We're seeing companies come out there and kind of superability tangent there. The focus on this is huge. I'm curious, what was the origination story? What got you into the business? Was it like, were you having a problem with this? Did you see an opportunity? What was the focus when the company was founded? >> It's definitely to solve the problems that customers are facing. What's been very interesting is that they're out there needing this. They're needing to ensure their data is safe. As the whole story goes, they're putting it to work more, we're seeing this. I thought it was a really interesting series, one of your last series about data as code and you saw all the different technologies that are processing and managing that data and companies are leveraging today but still, once that data is ready and it's consumed by someone, it's causing real havoc if it's not either protected from being exposed or safe to use and consume and so that's been the biggest thing. So we saw a niche. We started with this notion of Cloud Storage being object storage, and there was nothing there protecting that. Amazon has the notion of access and that is how they protect the data today but not the packets themselves, not the underlying data and so, we created the solution to say, "Okay, we're going to ensure that that data is clean. We're also going to ensure that you have awareness of what that data is, the types of files you have out in the Cloud, wherever they may be, especially as they drift outside of the normal platforms that you're used to seeing that data in. >> It's interesting that people were storing data lakes. Oh yeah, just store a womp we might need and then became a data swamp. That's kind of like go back 67 years ago. That was the conversation. Now, the conversation is I need data. It's got to be clean. It's got to feed the machine learning. This is going to be a critical aspect of the business model for the developers who are building the apps, hence, the data has code reference which we've focused on but then you say, "Okay, great. Does this increase our surface area for potential hackers?" So there's all kinds of things that kind of open up, we start doing cool, innovative, things like that so, what are some of the areas that you see that your tech solves around some of the blind spots or with object store, the things that people are overlooking? What are some of the core things that you guys are seeing that you're solving? >> So, it's a couple of things, right now, the still the biggest thing you see in the news is configuration issues where people are losing their data or accidentally opening up to rights. That's the worst case scenario. Reads are a bad thing too but if you open up rights and we saw this with a major API vendor in the last couple of years they accidentally opened rights to their buckets. Hackers found it immediately and put malicious code into their APIs that were then downloaded and consumed by many, many of their customers so, it is happening out there. So the notion of ensuring configuration is good and proper, ensuring that data has not been augmented inappropriately and that it is safe for consumption is where we started and, we created a lightweight, highly scalable solution. At this point, we've scanned billions of files for customers and petabytes of data and we're seeing that it's such a critical piece to that to make sure that that data's safe. The big thing and you brought this up as well is the big thing is they're getting data from so many different sources now. It's not just data that they generate. You see one centralized company taking in from numerous sources, consolidating it, creating new value on top of it, and then releasing that and the question is, do you trust those sources or not? And even if you do, they may not be safe. >> We had an event around super Clouds is a topic we brought up to get bring the attention to the complexity of hybrid which is on premise, which is essentially Cloud operations. And the successful people that are doing things in the software side are essentially abstracting up the benefits of the infrastructures of service from HN AWS, right, which is great. Then they innovate on top so they have to abstract that storage is a key component of where we see the innovations going. How do you see your tech that kind of connecting with that trend that's coming which is everyone wants infrastructures code. I mean, that's not new. I mean, that's the goal and it's getting better every day but DevOps, the developers are driving the operations and security teams to like stay pace, so policy seeing a lot of policy seeing some cool things going on that's abstracting up from say storage and compute but then those are being put to use as well, so you've got this new wave coming around the corner. What's your reaction to that? What's your vision on that? How do you see that evolving? >> I think it's great, actually. I think that the biggest problem that you have to do as someone who is helping them with that process is make sure you don't slow it down. So, just like Cloud at scale, you must automate, you must provide different mechanisms to fit into workflows that allow them to do it just how they want to do it and don't slow them down. Don't hold them back and so, we've come up with different measures to provide and pretty much a fit for any workflow that any customer has come so far with. We do data this way. I want you to plug in right here. Can you do that? And so it's really about being able to plug in where you need to be, and don't slow 'em down. That's what we found so far. >> Oh yeah, I mean that exactly, you don't want to solve complexity with more complexity. That's the killer problem right now so take me through the use case. Can you just walk me through how you guys engage with customers? How they consume your service? How they deploy it? You got some deployment scenarios. Can you talk about how you guys fit in and what's different about what you guys do? >> Sure, so, we're what we're seeing is and I'll go back to this data coming from numerous sources. We see different agencies, different enterprises taking data in and maybe their solution is intelligence on top of data, so they're taking these data sets in whether it's topographical information or whether it's in investing type information. Then they process that and they scan it and they distribute it out to others. So, we see that happening as a big common piece through data ingestion pipelines, that's where these folks are getting most of their data. The other is where is the data itself, the document or the document set, the actual critical piece that gets moved around and we see that in pharmaceutical studies, we see it in mortgage industry and FinTech and healthcare and so, anywhere that, let's just take a very simple example, I have to apply for insurance. I'm going to upload my Social Security information. I'm going to upload a driver's license, whatever it happens to be. I want to one know which of my information is personally identifiable, so I want to be able to classify that data but because you're trusting or because you're taking data from untrusted sources, then you have to consider whether or not it's safe for you to use as your own folks and then also for the downstream users as well. >> It's interesting, in the security world, we hear zero trust and then we hear supply chain, software supply chains. We get to trust everybody, so you got kind of two things going on. You got the hardware kind of like all the infrastructure guys saying, "Don't trust anything 'cause we have a zero trust model," but as you start getting into the software side, it's like trust is critical like containers and Cloud native services, trust is critical. You guys are kind of on that balance where you're saying, "Hey, I want data to come in. We're going to look at it. We're going to make sure it's clean." That's the value here. Is that what I'm hearing you, you're taking it and you're saying, "Okay, we'll ingest it and during the ingestion process, we'll classify it. We'll do some things to it with our tech and put it in a position to be used properly." Is that right? >> That's exactly right. That's a great summary, but ultimately, if you're taking data in, you want to ensure it's safe for everyone else to use and there are a few ways to do it. Safety doesn't just mean whether it's clean or not. Is there malicious content or not? It means that you have complete coverage and control and awareness over all of your data and so, I know where it came from. I know whether it's clean and I know what kind of data is inside of it and we don't see, we see that the interesting aspects are we see that the cleanliness factor is so critical in the workflow, but we see the classification expand outside of that because if your data drifts outside of what your standard workflow was, that's when you have concerns, why is PII information over here? And that's what you have to stay on top of, just like AWS is control plane. You have to manage it all. You have to make sure you know what services have all of a sudden been exposed publicly or not, or maybe something's been taken over or not and you control that. You have to do that with your data as well. >> So how do you guys fit into the security posture? Say it a large company that might want to implement this right away. Sounds like it's right in line with what developers want and what people want. It's easy to implement from what I see. It's about 10, 15, 20 minutes to get up and running. It's not hard. It's not a heavy lift to get in. How do you guys fit in once you get operationalized when you're successful? >> It's a lightweight, highly scalable serverless solution, it's built on Fargate containers and it goes in very easily and then, we offer either native integrations through S3 directly, or we offer APIs and the APIs are what a lot of our customers who want inline realtime scanning leverage and we also are looking at offering the actual proxy aspects. So those folks who use the S3 APIs that our native AWS, puts and gets. We can actually leverage our put and get as an endpoint and when they retrieve the file or place the file in, we'll scan it on access as well, so, it's not just a one time data arrest. It can be a data in motion as you're retrieving the information as well >> We were talking with our friends the other day and we're talking about companies like Datadog. This is the model people want, they want to come in and developers are driving a lot of the usage and operational practice so I have to ask you, this fits kind of right in there but also, you also have the corporate governance policy police that want to make sure that things are covered so, how do you balance that? Because that's an important part of this as well. >> Yeah, we're really flexible for the different ways they want to consume and and interact with it. But then also, that is such a critical piece. So many of our customers, we probably have a 50/50 breakdown of those inside the US versus those outside the US and so, you have those in California with their information protection act. You have GDPR in Europe and you have Asia having their own policies as well and the way we solve for that is we scan close to the data and we scan in the customer's account, so we don't require them to lose chain of custody and send data outside of the accoun. That is so critical to that aspect. And then we don't ask them to transfer it outside of the region, so, that's another critical piece is data residency has to be involved as part of that compliance conversation. >> How much does Cloud enable you to do this that you couldn't really do before? I mean, this really shows the advantage of natively being in the Cloud to kind of take advantage of the IaaS to SAS components to solve these problems. Share your thoughts on how this is possible. What if there was no problem, what would you do? >> It really makes it a piece of cake. As silly as that sounds, when we deploy our solution, we provide a management console for them that runs inside their own accounts. So again, no metadata or anything has to come out of it and it's all push button click and because the Cloud makes it scalable because Cloud offers infrastructure as code, we can take advantage of that and then, when they say go protect data in the Ireland region, they push a button, we stand up a stack right there in the Ireland region and scan and protect their data right there. If they say we need to be in GovCloud and operate in GovCloud East, there you go, push the button and you can behave in GovCloud East as well. >> And with server lists and the region support and all the goodness really makes a really good opportunity to really manage these Cloud native services with the data interaction so, really good prospects. Final question for you. I mean, we love the story. I think it is going to be a really changing market in this area in a big way. I think the data storage relationship relative to higher level services will be huge as Cloud native continues to drive everything. What's the future? I mean, you guys see yourself as a all encompassing, all singing and dancing storage platform or a set of services that you're going to enable developers and drive that value. Where do you see this going? >> I think that it's a mix of both. Ultimately, you saw even on Storage Day the announcement of file cash and file cash creates a new common name space across different storage platforms and so, the notion of being able to use one area to access your data and have it come from different spots is fantastic. That's been in the on-prem world for a couple of years and it's finally making it to the Cloud. I see us following that trend in helping support. We're super laser-focused on Cloud Storage itself so, EBS volumes, we keep having customers come to us and say, "I don't want to run agents in my EC2 instances. I want you to snap and scan and I don't want to, I've got all this EFS and FSX out there that we want to scan," and so, we see that all of the Cloud Storage platforms, Amazon work docs, EFS, FSX, EBS, S3, we'll all come together and we'll provide a solution that's super simple, highly scalable that can meet all the storage needs so, that's our goal right now and where we're working towards. >> Well, Cloud Storage Security, you couldn't get a more a descriptive name of what you guys are working on and again, I've had many contacts with Andy Jassy when he was running AWS and he always loves to quote "The Innovator's Dilemma," one of his teachers at Harvard Business School and we were riffing on that the other day and I want to get your thoughts. It's not so much "The Innovator's Dilemma" anymore relative to Cloud 'cause that's kind of a done deal. It's "The Integrator's Dilemma," and so, it's the integrations are so huge now. If you don't integrate the right way, that's the new dilemma. What's your reaction to that? >> A 100% agreed. It's been super interesting. Our customers have come to us for a security solution and they don't expect us to be 'cause we don't want to be either. Our own engine vendor, we're not the ones creating the engines. We are integrating other engines in and so we can provide a multi engine scan that gives you higher efficacy. So this notion of offering simple integrations without slowing down the process, that's the key factor here is what we've been after so, we are about simplifying the Cloud experience to protecting your storage and it's been so funny because I thought customers might complain that we're not a name brand engine vendor, but they love the fact that we have multiple engines in place and we're bringing that to them this higher efficacy, multi engine scan. >> I mean the developer trends can change on a dime. You make it faster, smarter, higher velocity and more protected, that's a winning formula in the Cloud so Ed, congratulations and thanks for spending the time to riff on and talk about Cloud Storage Security and congratulations on the company's success. Thanks for coming on "theCUBE." >> My pleasure, thanks a lot, John. >> Okay. This conversation here in Palo Alto, California I'm John Furrier, host of "theCUBE." Thanks for watching.

(upbeat music) >> Welcome to this special cloud virtual event, theCUBE on cloud. This is our continuing editorial series of the most important stories in cloud. We're going to explore the cutting edge most relevant technologies and companies that will impact business and society. We have special guests from Jeff Barr, Michael Liebow, Jerry Chen, Ben Haynes, Michael skulk, Mike Feinstein from AWS all today are presenting the top startups in the AWS ecosystem. This is the AWS showcase of startups. I'm showing with Dave Vellante. Dave great to see you. >> Hey John. Great to be here. Thanks for having me. >> So awesome day today. We're going to feature a 10 grade companies amplitude, auto grid, big ID, cordial Dremio Kong, multicloud, Reltio stardog wire wheel, companies that we've talked to. We've researched. And they're going to present today from 10 for the rest of the day. What's your thoughts? >> Well, John, a lot of these companies were just sort of last decade, they really, were keyer kicker mode, experimentation mode. Now they're well on their way to hitting escape velocity which is very exciting. And they're hitting tens of millions dollars of ARR, many are planning IPO's and it's just it's really great to see what the cloud has enabled and we're going to dig into that very deeply today. So I'm super excited. >> Before we jump into the keynote (mumbles) our non Huff from AWS up on stage Jeremy is the brains behind this program that we're doing. We're going to do this quarterly. Jeremy great to see you, you're in the global startups program at AWS. Your job is to keep the crops growing, keep the startups going and keep the flow of innovation. Thanks for joining us. >> Yeah. Made it to startup showcase day. I'm super excited. And as you mentioned my team the global startup program team, we kind of provide white glove service for VC backed startups and help them with go to market activities. Co-selling with AWS and we've been looking for ways to highlight all the great work they're doing and partnering with you guys has been tremendous. You guys really know how to bring their stories to life. So super excited about all the partner sessions today. >> Well, I really appreciate the vision and working with Amazon this is like truly a bar raiser from theCUBE virtual perspective, using the virtual we can get more content, more flow and great to have you on and bring that the top hot startups around data, data ops. Certainly the most important story in tech is cloud scale with data. You you can't look around and seeing more innovation happening. So I really appreciate the work. Thanks for coming on. >> Yeah, and don't forget, we're making this a quarterly series. So the next one we've already been working on it. The next one is Wednesday, June 16th. So mark your calendars, but super excited to continue doing these showcases with you guys in the future. >> Thanks for coming on Jeremy. I really appreciate it,. Dave so I want to just quick quickly before we get Jeff up here, Jeff Barr who's a luminary guests for us this week who has been in the industry has been there from the beginning of AWS the role of data, and what's happened in cloud. And we've been watching the evolution of Amazon web services from the beginning, from the startup market to dominate in the enterprise. If you look at the top 10 enterprise companies Amazon wasn't on that list in 2010 they weren't even bringing the top 10 Andy Jassy's keynote at reinvent this past year. Highlighted that fact, I think they were number five or four as vendor in just AWS. So interesting to see that you've been reporting and doing a lot of analysis on the role of data. What's your analysis for these startups and as businesses need to embrace the new technologies and be on the right side of history not part of that old guard, incumbent failed model. >> Well, I think again, if you look back on the early days of cloud, it was really about storage and networking and compute infrastructure. And then we collected all this data and now you're seeing the next generation of innovation and value. We're going to talk to Michael Liebow about this is really if you look at all the value points in the leavers, it's all around data and data is going through a massive change in the way that we think about it, that we talk about it. And you hear that a lot. Obviously you talk about the volumes, the giant volumes but there's something else going on as AWS brings the cloud to the edge. And of course it looks at the data centers, just another edge device, data is getting highly decentralized. And what we're seeing is data getting into the hands of business owners and data product builders. I think we're going to see a new parlance emerge and that's where you're seeing the competitive advantage. And if you look at all the real winners these days in the marketplace especially in the digital with COVID, it all comes back to the data. And we're going to talk about that a lot today. >> One of the things that's coming up in all of our cube interviews, certainly we've seen, I mean we've had a great observation space across all the ecosystems, but the clear thing that's coming out of COVID is speed, agility, scale, and data. If you don't have that data you are going to be a non-player. And I think I heard some industry people talking about the future of how the stock market's going to work and that if you're not truly in market with an AI or machine learning data value play you probably will be shorted on the stock market or delisted. I think people are looking at that as a table stakes competitive advantage item, where if you don't have some sort of data competitive strategy you're going to be either delisted or sold short. And that's, I don't think delisted but the point is this table-stakes Dave. >> Well, I think too, I think the whole language the lingua franca of data is changing. We talk about data as an asset all the time, but you think about it now, what do we do with assets? We protect it, we hide it. And we kind of we don't share it. But then on the other hand, everybody talks about sharing the data and that is a huge trend in the marketplace. And so I think that everybody is really starting to rethink the whole concept of data, what it is, its value and how we think about it, talk about it, share it make it accessible, and at the same time, protect it and make it governed. And I think you're seeing, computational governance and automation really hidden. Couldn't do this without the cloud. I mean, that's the bottom line. >> Well, I'm super excited to have Jeff Barr here from AWS as our special keynote guests. I've been following Jeff's career for a long, long time. He's a luminaries, he's a technical, he's in the industry. He's part of the community, he's been there from the beginning AWS just celebrate its 15th birthday as he was blogging hard. He's been a hardcore blogger. I think Jeff, you had one of the original ping service. If I remember correctly, you were part of the web services foundational kind of present at creation. No better guests to have you Jeff thanks for coming up on our stage. >> John and Dave really happy to be here. >> So I got to ask you, you've been blogging hard for the past decade or so, going hard and your job has evolved from blogging about what's new with Amazon. A couple of building blocks a few services to last reinvent them. You must have put out I don't know how many blog posts did you put out last year at every event? I mean, it must have been a zillion. >> Not quite a zillion. I think I personally wrote somewhere between 20 and 25 including quite a few that I did in the month or so run up to reinvent and it's always intense, but it's always really, really fun. >> So I've got to ask you in the past couple of years, I mean I quoted Andy Jassy's keynote where we highlight in 2010 Amazon wasn't even on the top 10 enterprise players. Now in the top five, you've seen the evolution. What is the big takeaway from your standpoint as you look at the enterprise going from Amazon really dominating the start of a year startups today, you're in the cloud, you're born in the cloud. There's advantage to that. Now enterprises are kind of being reborn in the cloud at the same time, they're building these new use cases rejuvenating themselves and having innovation strategy. What's your takeaway? >> So I love to work with our customers and one of the things that I hear over and over again and especially the last year or two is really the value that they're placing on building a workforce that has really strong cloud skills. They're investing in education. They're focusing on this neat phrase that I learned in Australia called upskilling and saying let's take our set of employees and improve their skill base. I hear companies really saying we're going to go cloud first. We're going to be cloud native. We're going to really embrace it, adopt the full set of cloud services and APIs. And I also see that they're really looking at cloud as part of often a bigger picture. They often use the phrase digital transformation, in Amazon terms we'd say they're thinking big. They're really looking beyond where they are and who they are to what they could be and what they could grow into. Really putting a lot of energy and creativity into thinking forward in that way. >> I wonder Jeff, if you could talk about sort of how people are thinking about the future of cloud if you look at where the spending action is obviously you see it in cloud computing. We've seen that as the move to digital, serverless Lambda is huge. If you look at the data it's off the charts, machine learning and AI also up there containers and of course, automation, AWS leads in all of those. And they portend a different sort of programming model a different way of thinking about how to deploy workloads and applications maybe different than the early days of cloud. What's driving that generally and I'm interested in serverless specifically. And how do you see the next several years folding out? >> Well, they always say that the future is the hardest thing to predict but when I talked to our enterprise customers the two really big things that I see is there's this focus that says we need to really, we're not simply like hosting the website or running the MRP. I'm working with one customer in particular where they say, well, we're going to start on the factory floor all the way up to the boardroom effectively from IOT and sensors on the factory floor to feed all the data into machine learning. So they understand that the factory is running really well to actually doing planning and inventory maintenance to putting it on the website to drive the analytics, to then saying, okay, well how do we know that we're building the right product mix? How do we know that we're getting it out through the right channels? How are our customers doing? So they're really saying there's so many different services available to us in the cloud and they're relatively easy and straightforward to deploy. They really don't think in the old days as we talked about earlier that the old days where these multi-year planning and deployment cycles, now it's much more straightforward. It's like let's see what we can do today. And this week and this month, and from idea to some initial results is a much, much shorter turnaround. So they can iterate a lot more quickly which is just always known to produce better results. >> Well, Jeff and the spirit of the 15th birthday of AWS a lot of services have been built from the original three. I believe it was the core building blocks and there's been a lot of history and it's kind of like there was a key decoupling of compute from storage, those innovations what's the most important architectural change if any has happened or built upon those building blocks with AWS that you could share with companies out there as many people are coming into the cloud not just lifting and shifting and having that innovation but really building cloud native and now hybrid full cloud operations, day two operations. However you want to look at it. That's a big thing. What architecturally has changed that's been innovative from those original building blocks? >> Well, I think that the basic architecture has proven to be very, very resilient. When I wrote about the 15 year birthday of Amazon S3 a couple of weeks ago one thing that I thought was really incredible was the fact that the same APIs that you could have used 15 years ago they all still work. The put, the get, the list, the delete, the permissions management, every last one of those were chosen with extreme care. And so they all still work. So one of the things you think about when you put APIs out there is in Amazon terms we always talk about going through a one-way door and a one way door says, once you do it you're committed for the indefinite future. And so you we're very happy to do that but we take those steps with extreme care. And so those basic building blocks so the original S3 APIs, the original EC2 APIs and the model, all those things really worked. But now they're running at this just insane scale. One thing that blows me away I routinely hear my colleagues talking about petabytes and exabytes, and we throw around trillions and quadrillions like they're pennies. It's kind of amazing. Sometimes when you hear the scale of requests per day or request per month, and the orders of magnitude are you can't map them back to reality anymore. They're simply like literally astronomical. >> If I can just jump in real quick Dave before you ask Jeff, I was watching the Jeff Bezos interview in 1999 that's been going around on LinkedIn in a 60 minutes interview. The interviewer says you are reporting that you can store a gigabyte of customer data from all their purchases. What are you going to do with that? He basically nailed the answer. This is in 99. We're going to use that data to create, that was only a gig. >> Well one of the things that is interesting to me guys, is if you look at again, the early days of cloud, of course I always talked about that in small companies like ours John could have now access to information technology that only big companies could get access to. And now you've seen we just going to talk about it today. All these startups rise up and reach viability. But at the same time, Jeff you've seen big companies get the aha moment on cloud and competition drives urgency and that drives innovation. And so now you see everybody is doing cloud, it's a mandate. And so the expectation is a lot more innovation, experimentation and speed from all ends. It's really exciting to see. >> I know this sounds hackneyed and overused but it really, really still feels just like day one. We're 15 plus years into this. I still wake up every morning, like, wow what is the coolest thing that I'm going to get to learn about and write about today? We have the most amazing customers, one of the things that is great when you're so well connected to your customers, they keep telling you about their dreams, their aspirations, their use cases. And we can just take that and say we can actually build awesome things to help you address those use cases from the ground on up, from building custom hardware things like the nitro system, the graviton to the machine learning inferencing and training chips where we have such insight into customer use cases because we have these awesome customers that we can make these incredible pieces of hardware and software to really address those use cases. >> I'm glad you brought that up. This is another big change, right? You're getting the early days of cloud like, oh, Amazon they're just using off the shelf components. They're not buying these big refrigerator sized disc drives. And now you're developing all this custom Silicon and vertical integration in certain aspects of your business. And that's because workload is demanding. You've got to get more specialized in a lot of cases. >> Indeed they do. And if you watch Peter DeSantis' keynote at re-invent he talked about the fact that we're researching ways to make better cement that actually produces less carbon dioxide. So we're now literally at the from the ground on up level of construction. >> Jeff, I want to get a question from the crowd here. We got, (mumbles) who's a good friend of theCUBE cloud Arate from the beginning. He asked you, he wants to know if you'd like to share Amazon's edge aspirations. He says, he goes, I mean, roadmaps. I go, first of all, he's not going to talk about the roadmaps, but what can you share? I mean, obviously the edge is key. Outpost has been all in the news. You obviously at CloudOps is not a boundary. It's a distributed network. What's your response to-- >> Well, the funny thing is we don't generally have technology roadmaps inside the company. The roadmap is always listen really well to customers not just where they are, but the customers are just so great at saying, this is where we'd like to go. And when we hear edge, the customers don't generally come to us and say edge, they say we need as low latency as possible between where the action happens within our factory floors and our own offices and where we might be able to compute, analyze, store make decisions. And so that's resulted in things like outposts where we can put outposts in their own data center or their own field office, wavelength, where we're working with 5G telecom providers to put computing storage in the carrier hubs of the various 5G providers. Again, with reducing latency, we've been doing things like local zones, where we put zones in an increasing number of cities across the country with the goal of just reducing the average latency between the vast majority of customers and AWS resources. So instead of thinking edge, we really think in terms of how do we make sure that our customers can realize their dreams. >> Staying on the flywheel that AWS has built on ship stuff faster, make things faster, smaller, cheaper, great mission. I want to ask you about the working backwards document. I know it's been getting a lot of public awareness. I've been, that's all I've learned in interviewing Amazon folks. They always work backwards. I always mentioned the customer and all the interviews. So you've got a couple of customer references in there check the box there for you. But working backwards has become kind of a guiding principles, almost like a Harvard Business School case study approach to management. As you guys look at this working backwards and ex Amazonians have written books about it now so people can go look at, it's a really good methodology. Take us back to how you guys work back from the customers because here we're featuring 10 startups. So companies that are out there and Andy has been preaching this to customers. You should think about working backwards because it's so fast. These companies are going into this enterprise market your ecosystem of startups to provide value. What things are you seeing that customers need to think about to work backwards from their customer? How do you see that? 'Cause you've been on the community side, you see the tech side customers have to move fast and work backwards. What are the things that they need to focus on? What's your observation? >> So there's actually a brand new book called "Working Backwards," which I actually learned a lot about our own company from simply reading the book. And I think to me, a principal part of learning backward it's really about humility and being able to be a great listener. So you don't walk into a customer meeting ready to just broadcast the latest and greatest that we've been working on. You walk in and say, I'm here from AWS and I simply want to learn more about who you are, what you're doing. And most importantly, what do you want to do that we're not able to help you with right now? And then once we hear those kinds of things we don't simply write down kind of a bullet item of AWS needs to improve. It's this very active listening process. Tell me a little bit more about this challenge and if we solve it in this way or this way which one's a better fit for your needs. And then a typical AWS launch, we might talk to between 50 and 100 customers in depth to make sure that we have that detailed understanding of what they would like to do. We can't always meet all the needs of these customers but the idea is let's see what is the common base that we can address first. And then once we get that first iteration out there, let's keep listening, let's keep making it better and better and better as quickly. >> A lot of people might poopoo that John but I got to tell you, John, you will remember this the first time we ever met Andy Jassy face-to-face. I was in the room, you were on the speaker phone. We were building an app on AWS at the time. And he was asking you John, for feedback. And he was probing and he pulled out his notebook. He was writing down and he wasn't just superficial questions. He was like, well, why'd you do it that way? And he really wanted to dig. So this is cultural. >> Yeah. I mean, that's the classic Amazon. And that's the best thing about it is that you can go from zero startups zero stage startup to traction. And that was the premise of the cloud. Jeff, I want to get your thoughts and commentary on this love to get your opinion. You've seen this grow from the beginning. And I remember 'cause I've been playing with AWS since the beginning as well. And it says as an entrepreneur I remember my first EC2 instance that didn't even have custom domain support. It was the long URL. You seen the startups and now that we've been 15 years in, you see Dropbox was it just a startup back in the day. I remember these startups that when they were coming they were all born on Amazon, right? These big now unicorns, you were there when these guys were just developers and these gals. So what's it like, I mean, you see just the growth like here's a couple of people with them ideas rubbing nickels together, making magic happen who knows what's going to turn into, you've been there. What's it been like? >> It's been a really unique journey. And to me like the privilege of a lifetime, honestly I've like, you always want to be part of something amazing and you aspire to it and you study hard and you work hard and you always think, okay, somewhere in this universe something really cool is about to happen. And if you're really, really lucky and just a million great pieces of luck like lineup in series, sometimes it actually all works out and you get to be part of something like this when it does you don't always fully appreciate just how awesome it is from the inside, because you're just there just like feeding the machine and you are just doing your job just as fast as you possibly can. And in my case, it was listening to teams and writing blog posts about their launches and sharing them on social media, going out and speaking, you do it, you do it as quickly as possible. You're kind of running your whole life as you're doing that as well. And suddenly you just take a little step back and say, wow we did this kind of amazing thing, but we don't tend to like relax and say, okay, we've done it at Amazon. We get to a certain point. We recognize it. And five minutes later, we're like, okay, let's do the next amazingly good thing. But it's been this just unique privilege and something that I never thought I'd be fortunate enough to be a part of. >> Well, then the last few minutes we have Jeff I really appreciate you taking the time to spend with us for this inaugural launch of theCUBE on cloud startup showcase. We are showcasing 10 startups here from your ecosystem. And a lot of people who know AWS for the folks that don't you guys pride yourself on community and ecosystem the global startups program that Jeremy and his team are running. You guys nurture these startups. You want them to be successful. They're vectoring out into the marketplace with growth strategy, helping customers. What's your take on this ecosystem? As customers are out there listening to this what's your advice to them? How should they engage? Why is these sets of start-ups so important? >> Well, I totally love startups and I've spent time in several startups. I've spent other time consulting with them. And I think we're in this incredible time now wheres, it's so easy and straightforward to get those basic resources, to get your compute, to get your storage, to get your databases, to get your machine learning and to take that and to really focus on your customers and to build what you want. And we see this actual exponential growth. And we see these startups that find something to do. They listen to one of their customers, they build that solution. And they're just that feedback cycle gets started. It's really incredible. And I love to see the energy of these startups. I love to hear from them. And at any point if we've got an AWS powered startup and they build something awesome and want to share it with me, I'm all ears. I love to hear about them. Emails, Twitter mentions, whatever I'll just love to hear about all this energy all those great success with our startups. >> Jeff Barr, thank you for coming on. And congratulations, please pass on to Andy Jassy who's going to take over for Jeff Bezos and I saw the big news that he's picking a successor an Amazonian coming back into the fold, Adam. So congratulations on that. >> I will definitely pass on your congratulations to Andy and I worked with Adam in the past when AWS was just getting started and really looking forward to seeing him again, welcoming back and working with him. >> All right, Jeff Barr with AWS guys check out his Twitter and all the social coordinates. He is pumping out all the resources you need to know about if you're a developer or you're an enterprise looking to go to the next level, next generation, modern infrastructure. Thanks Jeff for coming on. Really appreciate it. Our next guests want to bring up stage Michael Liebow from McKinsey cube alumni, who is a great guest who is very timely in his McKinsey role with a paper he and his colleagues put out called cloud's trillion dollar prize up for grabs. Michael, thank you for coming up on stage with Dave and I. >> Hey, great to be here, John. Thank you. >> One of the things I loved about this and why I wanted you to come on was not only is the report awesome. And Dave has got a zillion questions, he want us to drill into. But in 2015, we wrote a story called Andy Jassy trillion dollar baby on Forbes, and then on medium and silken angle where we were the first ones to profile Andy Jassy and talk about this trillion dollar term. And Dave came up with the calculation and people thought we were crazy. What are you talking about trillion dollar opportunity. That was in 2015. You guys have put this together with a serious research report with methodology and you left a lot on the table. I noticed in the report you didn't even have a whole section quantified. So I think just scratching the surface trillion. I'd be a little light, Dave, so let's dig into it, Michael thanks for coming on. >> Well, and I got to say, Michael that John's a trillion dollar baby was revenue. Yours is EBITDA. So we're talking about seven to X, seven to eight X. What we were talking back then, but great job on the report. Fantastic work. >> Thank you. >> So tell us about the report gives a quick lowdown. I got some questions. You guys are unlocking the value drivers but give us a quick overview of this report that people can get for free. So everyone who's registered will get a copy but give us a quick rundown. >> Great. Well the question I think that has bothered all of us for a long time is what's the business value of cloud and how do you quantify it? How do you specify it? Because a lot of people talk around the infrastructure or technical value of cloud but that actually is a big problem because it just scratches the surface of the potential of what cloud can mean. And we focus around the fortune 500. So we had to box us in somewhat. And so focusing on the fortune 500 and fast forwarding to 2030, we put out this number that there's over a trillion dollars worth of value. And we did a lot of analysis using research from a variety of partners, using third-party research, primary research in order to come up with this view. So the business value is two X the technical value of cloud. And as you just pointed out, there is a whole unlock of additional value where organizations can pioneer on some of the newest technologies. And so AWS and others are creating platforms in order to do not just machine learning and analytics and IOT, but also for quantum or mixed reality for blockchain. And so organizations specific around the fortune 500 that aren't leveraging these capabilities today are going to get left behind. And that's the message we were trying to deliver that if you're not doing this and doing this with purpose and with great execution, that others, whether it's others in your industry or upstarts who were motioning into your industry, because as you say cloud democratizes compute, it provides these capabilities and small companies with talent. And that's what the skills can leverage these capabilities ahead of slow moving incumbents. And I think that was the critical component. So that gives you the framework. We can deep dive based on your questions. >> Well before we get into the deep dive, I want to ask you we have startups being showcased here as part of the, it will showcase, they're coming out of the ecosystem. They have a lot of certification from Amazon and they're secure, which is a big issue. Enterprises that you guys talk to McKinsey speaks directly to I call the boardroom CXOs, the top executives. Are they realizing that the scale and timing of this agility window? I mean, you want to go through these key areas that you would break out but as startups become more relevant the boardrooms that are making these big decisions realize that their businesses are up for grabs. Do they realize that all this wealth is shifting? And do they see the role of startups helping them? How did you guys come out of them and report on that piece? >> Well in terms of the whole notion, we came up with this framework which looked at the opportunity. We talked about it in terms of three dimensions, rejuvenate, innovate and pioneer. And so from the standpoint of a board they're more than focused on not just efficiency and cost reduction basically tied to nation, but innovation tied to analytics tied to machine learning, tied to IOT, tied to two key attributes of cloud speed and scale. And one of the things that we did in the paper was leverage case examples from across industry, across-region there's 17 different case examples. My three favorite is one is Moderna. So software for life couldn't have delivered the vaccine as fast as they did without cloud. My second example was Goldman Sachs got into consumer banking is the platform behind the Apple card couldn't have done it without leveraging cloud. And the third example, particularly in early days of the pandemic was Zoom that added five to 6,000 servers a night in order to scale to meet the demand. And so all three of those examples, plus the other 14 just indicate in business terms what the potential is and to convince boards and the C-suite that if you're not doing this, and we have some recommendations in terms of what CEOs should do in order to leverage this but to really take advantage of those capabilities. >> Michael, I think it's important to point out the approach at sometimes it gets a little wonky on the methodology but having done a lot of these types of studies and observed there's a lot of superficial studies out there, a lot of times people will do, they'll go I'll talk to a customer. What kind of ROI did you get? And boom, that's the value study. You took a different approach. You have benchmark data, you talked to a lot of companies. You obviously have a lot of financial data. You use some third-party data, you built models, you bounded it. And ultimately when you do these things you have to ascribe a value contribution to the cloud component because fortunate 500 companies are going to grow even if there were no cloud. And the way you did that is again, you talk to people you model things, and it's a very detailed study. And I think it's worth pointing out that this was not just hey what'd you get from going to cloud before and after. This was a very detailed deep dive with really a lot of good background work going into it. >> Yeah, we're very fortunate to have the McKinsey Global Institute which has done extensive studies in these areas. So there was a base of knowledge that we could leverage. In fact, we looked at over 700 use cases across 19 industries in order to unpack the value that cloud contributed to those use cases. And so getting down to that level of specificity really, I think helps build it from the bottom up and then using cloud measures or KPIs that indicate the value like how much faster you can deploy, how much faster you can develop. So these are things that help to kind of inform the overall model. >> Yeah. Again, having done hundreds, if not thousands of these types of things, when you start talking to people the patterns emerge, I want to ask you there's an exhibit tool in here, which is right on those use cases, retail, healthcare, high-tech oil and gas banking, and a lot of examples. And I went through them all and virtually every single one of them from a value contribution standpoint the unlocking value came down to data large data sets, document analysis, converting sentiment analysis, analytics. I mean, it really does come down to the data. And I wonder if you could comment on that and why is it that cloud is enabled that? >> Well, it goes back to scale. And I think the word that I would use would be data gravity because we're talking about massive amounts of data. So as you go through those kind of three dimensions in terms of rejuvenation one of the things you can do as you optimize and clarify and build better resiliency the thing that comes into play I think is to have clean data and data that's available in multiple places that you can create an underlying platform in order to leverage the services, the capabilities around, building out that structure. >> And then if I may, so you had this again I want to stress as EBITDA. It's not a revenue and it's the EBITDA potential as a result of leveraging cloud. And you listed a number of industries. And I wonder if you could comment on the patterns that you saw. I mean, it doesn't seem to be as simple as Negroponte bits versus Adam's in terms of your ability to unlock value. What are the patterns that you saw there and why are the ones that have so much potential why are they at the top of the list? >> Well, I mean, they're ranked based on impact. So the five greatest industries and again, aligned by the fortune 500. So it's interesting when you start to unpack it that way high-tech oil, gas, retail, healthcare, insurance and banking, right? Top. And so we did look at the different solutions that were in that, tried to decipher what was fully unlocked by cloud, what was accelerated by cloud and what was perhaps in this timeframe remaining on premise. And so we kind of step by step, expert by expert, use case by use case deciphered of the 700, how that applied. >> So how should practitioners within organizations business but how should they use this data? What would you recommend, in terms of how they think about it, how they apply it to their business, how they communicate? >> Well, I think clearly what came out was a set of best practices for what organizations that were leveraging cloud and getting the kind of business return, three things stood out, execution, experience and excellence. And so for under execution it's not just the transaction, you're not just buying cloud you're changing their operating model. And so if the organization isn't kind of retooling the model, the processes, the workflows in order to support creating the roles then they aren't going to be able, they aren't going to be successful. In terms of experience, that's all about hands-on. And so you have to dive in, you have to start you have to apply yourself, you have to gain that applied knowledge. And so if you're not gaining that experience, you're not going to move forward. And then in terms of excellence, and it was mentioned earlier by Jeff re-skilling, up-skilling, if you're not committed to your workforce and pushing certification, pushing training in order to really evolve your workforce or your ways of working you're not going to leverage cloud. So those three best practices really came up on top in terms of what a mature cloud adopter looks like. >> That's awesome. Michael, thank you for coming on. Really appreciate it. Last question I have for you as we wrap up this trillion dollar segment upon intended is the cloud mindset. You mentioned partnering and scaling up. The role of the enterprise and business is to partner with the technologists, not just the technologies but the companies talk about this cloud native mindset because it's not just lift and shift and run apps. And I have an IT optimization issue. It's about innovating next gen solutions and you're seeing it in public sector. You're seeing it in the commercial sector, all areas where the relationship with partners and companies and startups in particular, this is the startup showcase. These are startups are more relevant than ever as the tide is shifting to a new generation of companies. >> Yeah, so a lot of think about an engine. A lot of things have to work in order to produce the kind of results that we're talking about. Brad, you're more than fair share or unfair share of trillion dollars. And so CEOs need to lead this in bold fashion. Number one, they need to craft the moonshot or the Marshot. They have to set that goal, that aspiration. And it has to be a stretch goal for the organization because cloud is the only way to enable that achievement of that aspiration that's number one, number two, they really need a hardheaded economic case. It has to be defined in terms of what the expectation is going to be. So it's not loose. It's very, very well and defined. And in some respects time box what can we do here? I would say the cloud data, your organization has to move in an agile fashion training DevOps, and the fourth thing, and this is where the startups come in is the cloud platform. There has to be an underlying platform that supports those aspirations. It's an art, it's not just an architecture. It's a living, breathing live service with integrations, with standardization, with self service that enables this whole program. >> Awesome, Michael, thank you for coming on and sharing the McKinsey perspective. The report, the clouds trillion dollar prize is up for grabs. Everyone who's registered for this event will get a copy. We will appreciate it's also on the website. We'll make sure everyone gets a copy. Thanks for coming, I appreciate it. Thank you. >> Thanks, Michael. >> Okay, Dave, big discussion there. Trillion dollar baby. That's the cloud. That's Jassy. Now he's going to be the CEO of AWS. They have a new CEO they announced. So that's going to be good for Amazon's kind of got clarity on the succession to Jassy, trusted soldier. The ecosystem is big for Amazon. Unlike Microsoft, they have the different view, right? They have some apps, but they're cultivating as many startups and enterprises as possible in the cloud. And no better reason to change gears here and get a venture capitalist in here. And a friend of theCUBE, Jerry Chen let's bring them up on stage. Jerry Chen, great to see you partner at Greylock making all the big investments. Good to see you >> John hey, Dave it's great to be here with you guys. Happy marks.Can you see that? >> Hey Jerry, good to see you man >> So Jerry, our first inaugural AWS startup showcase we'll be doing these quarterly and we're going to be featuring the best of the best, you're investing in all the hot startups. We've been tracking your careers from the beginning. You're a good friend of theCUBE. Always got great commentary. Why are startups more important than ever before? Because in the old days we've talked about theCUBE before startups had to go through certain certifications and you've got tire kicking, you got to go through IT. It's like going through security at the airport, take your shoes off, put your belt on thing. I mean, all kinds of things now different. The world has changed. What's your take? >> I think startups have always been a great way for experimentation, right? It's either new technologies, new business models, new markets they can move faster, the experiment, and a lot of startups don't work, unfortunately, but a lot of them turned to be multi-billion dollar companies. I thing startup is more important because as we come out COVID and economy is recovery is a great way for individuals, engineers, for companies for different markets to try different things out. And I think startups are running multiple experiments at the same time across the globe trying to figure how to do things better, faster, cheaper. >> And McKinsey points out this use case of rejuvenate, which is essentially retool pivot essentially get your costs down or and the next innovation here where there's Tam there's trillion dollars on unlock value and where the bulk of it is is the innovation, the new use cases and existing new use cases. This is where the enterprises really have an opportunity. Could you share your thoughts as you invest in the startups to attack these new waves these new areas where it may not look the same as before, what's your assessment of this kind of innovation, these new use cases? >> I think we talked last time about kind of changing the COVID the past year and there's been acceleration of things like how we work, education, medicine all these things are going online. So I think that's very clear. The first wave of innovation is like, hey things we didn't think we could be possible, like working remotely, e-commerce everywhere, telemedicine, tele-education, that's happening. I think the second order of fact now is okay as enterprises realize that this is the new reality everything is digital, everything is in the cloud and everything's going to be more kind of electronic relation with the customers. I think that we're rethinking what does it mean to be a business? What does it mean to be a bank? What does it mean to be a car company or an energy company? What does it mean to be a retailer? Right? So I think the rethinking that brands are now global, brands are all online. And they now have relationships with the customers directly. So I think if you are a business now, you have to re experiment or rethink about your business model. If you thought you were a Nike selling shoes to the retailers, like half of Nike's revenue is now digital right all online. So instead of selling sneakers through stores they're now a direct to consumer brand. And so I think every business is going to rethink about what the AR. Airbnb is like are they in the travel business or the experience business, right? Airlines, what business are they in? >> Yeah, theCUBE we're direct to consumer virtual totally opened up our business model. Dave, the cloud premise is interesting now. I mean, let's reset this where we are, right? Andy Jassy always talks about the old guard, new guard. Okay we've been there done that, even though they still have a lot of Oracle inside AWS which we were joking the other day, but this new modern era coming out of COVID Jerry brings this up. These startups are going to be relevant take territory down in the enterprises as new things develop. What's your premise of the cloud and AWS prospect? >> Well, so Jerry, I want to to ask you. >> Jerry: Yeah. >> The other night, last Thursday, I think we were in Clubhouse. Ben Horowitz was on and Martine Casado was laying out this sort of premise about cloud startups saying basically at some point they're going to have to repatriate because of the Amazon VIG. I mean, I'm paraphrasing and I guess the premise was that there's this variable cost that grows as you scale but I kind of shook my head and I went back. You saw, I put it out on Twitter a clip that we had the a couple of years ago and I don't think, I certainly didn't see it that way. Maybe I'm getting it wrong but what's your take on that? I just don't see a snowflake ever saying, okay we're going to go build our own data center or we're going to repatriate 'cause they're going to end up like service now and have this high cost infrastructure. What do you think? >> Yeah, look, I think Martin is an old friend from VMware and he's brilliant. He has placed a lot of insights. There is some insights around, at some point a scale, use of startup can probably run things more cost-effectively in your own data center, right? But I think that's fewer companies more the vast majority, right? At some point, but number two, to your point, Dave going on premise versus your own data center are two different things. So on premise in a customer's environment versus your own data center are two different worlds. So at some point some scale, a lot of the large SaaS companies run their own data centers that makes sense, Facebook and Google they're at scale, they run their own data centers, going on premise or customer's environment like a fortune 100 bank or something like that. That's a different story. There are reasons to do that around compliance or data gravity, Dave, but Amazon's costs, I don't think is a legitimate reason. Like if price is an issue that could be solved much faster than architectural decisions or tech stacks, right? Once you're on the cloud I think the thesis, the conversation we had like a year ago was the way you build apps are very different in the cloud and the way built apps on premise, right? You have assume storage, networking and compute elasticity that's independent each other. You don't really get that in a customer's data center or their own environment even with all the new technologies. So you can't really go from cloud back to on-premise because the way you build your apps look very, very different. So I would say for sure at some scale run your own data center that's why the hyperscale guys do that. On-premise for customers, data gravity, compliance governance, great reasons to go on premise but for vast majority of startups and vast majority of customers, the network effects you get for being in the cloud, the network effects you get from having everything in this alas cloud service I think outweighs any of the costs. >> I couldn't agree more and that's where the data is, at the way I look at it is your technology spend is going to be some percentage of revenue and it's going to be generally flat over time and you're going to have to manage it whether it's in the cloud or it's on prem John. >> Yeah, we had a quote on theCUBE on the conscious that had Jerry I want to get your reaction to this. The executive said, if you don't have an AI strategy built into your value proposition you will be shorted as a stock on wall street. And I even went further. So you'll probably be delisted cause you won't be performing with a tongue in cheek comment. But the reality is that that's indicating that everyone has to have AI in their thing. Mainly as a reality, what's your take on that? I know you've got a lot of investments in this area as AI becomes beyond fashion and becomes table stakes. Where are we on that spectrum? And how does that impact business and society as that becomes a key part of the stack and application stack? >> Yeah, I think John you've seen AI machine learning turn out to be some kind of novelty thing that a bunch of CS professors working on years ago to a funnel piece of every application. So I would say the statement of the sentiment's directionally correct that 20 years ago if you didn't have a web strategy or a website as a company, your company be sure it, right? If you didn't have kind of a internet website, you weren't real company. Likewise, if you don't use AI now to power your applications or machine learning in some form or fashion for sure you'd be at a competitive disadvantage to everyone else. And just like if you're not using software intelligently or the cloud intelligently your stock as a company is going to underperform the rest of the market. And the cloud guys on the startups that we're backing are making AI so accessible and so easy for developers today that it's really easy to use some level of machine learning, any applications, if you're not doing that it's like not having a website in 1999. >> Yeah. So let's get into that whole operation side. So what would you be your advice to the enterprises that are watching and people who are making decisions on architecture and how they roll out their business model or value proposition? How should they look at AI and operations? I mean big theme is day two operations. You've got IT service management, all these things are being disrupted. What's the operational impact to this? What's your view on that? >> So I think two things, one thing that you and Dave both talked about operation is the key, I mean, operations is not just the guts of the business but the actual people running the business, right? And so we forget that one of the values are going to cloud, one of the values of giving these services is you not only have a different technology stack, all the bits, you have a different human stack meaning the people running your cloud, running your data center are now effectively outsource to Amazon, Google or Azure, right? Which I think a big part of the Amazon VIG as Dave said, is so eloquently on Twitter per se, right? You're really paying for those folks like carry pagers. Now take that to the next level. Operations is human beings, people intelligently trying to figure out how my business can run better, right? And that's either accelerate revenue or decrease costs, improve my margin. So if you want to use machine learning, I would say there's two areas to think about. One is how I think about customers, right? So we both talked about the amount of data being generated around enterprise individuals. So intelligently use machine learning how to serve my customers better, then number two AI and machine learning internally how to run my business better, right? Can I take cost out? Can I optimize supply chain? Can I use my warehouses more efficiently my logistics more efficiently? So one is how do I use AI learning to be a more familiar more customer oriented and number two, how can I take cost out be more efficient as a company, by writing AI internally from finance ops, et cetera. >> So, Jerry, I wonder if I could ask you a little different subject but a question on tactical valuations how coupled or decoupled are private company valuations from the public markets. You're seeing the public markets everybody's freaking out 'cause interest rates are going to go up. So the future value of cash flows are lower. Does that trickle in quickly into the private markets? Or is it a whole different dynamic? >> If I could weigh in poly for some private markets Dave I would have a different job than I do today. I think the reality is in the long run it doesn't matter as much as long as you're investing early. Now that's an easy answer say, boats have to fall away. Yes, interest rates will probably go up because they're hard to go lower, right? They're effectively almost zero to negative right now in most of the developed world, but at the end of the day, I'm not going to trade my Twilio shares or Salesforce shares for like a 1% yield bond, right? I'm going to hold the high growth tech stocks because regardless of what interest rates you're giving me 1%, 2%, 3%, I'm still going to beat that with a top tech performers, Snowflake, Twilio Hashi Corp, bunch of the private companies out there I think are elastic. They're going to have a great 10, 15 year run. And in the Greylock portfolio like the things we're investing in, I'm super bullish on from Roxanne to Kronos fear, to true era in the AI space. I think in the long run, next 10 years these things will outperform the market that said, right valuation prices have gone up and down and they will in our careers, they have. In the careers we've been covering tech. So I do believe that they're high now they'll come down for sure. Will they go back up again? Definitely, right? But as long as you're betting these macro waves I think we're all be good. >> Great answer as usual. Would you trade them for NFTs Jerry? >> That $69 million people piece of artwork look, I mean, I'm a longterm believer in kind of IP and property rights in the blockchain, right? And I'm waiting for theCUBE to mint this video as the NFT, when we do this guys, we'll mint this video's NFT and see how much people pay for the original Dave, John, Jerry (mumbles). >> Hey, you know what? We can probably get some good bang for that. Hey it's all about this next Jerry. Jerry, great to have you on, final question as we got this one minute left what's your advice to the people out there that either engaging with these innovative startups, we're going to feature startups every quarter from the in the Amazon ecosystem, they are going to be adding value. What's the advice to the enterprises that are engaging startups, the approach, posture, what's your advice. >> Yeah, when I talk to CIOs and large enterprises, they often are wary like, hey, when do I engage a startup? How, what businesses, and is it risky or low risk? Now I say, just like any career managing, just like any investment you're making in a big, small company you should have a budget or set of projects. And then I want to say to a CIO, Hey, every priority on your wish list, go use the startup, right? I mean, that would be 10 for 10 projects, 10 startups. Probably too much risk for a lot of tech companies. But we would say to most CIOs and executives, look, there are strategic initiatives in your business that you want to accelerate. And I would take the time to invest in one or two startups each quarter selectively, right? Use the time, focus on fewer startups, go deep with them because we can actually be game changers in terms of inflecting your business. And what I mean by that is don't pick too many startups because you can't devote the time, but don't pick zero startups because you're going to be left behind, right? It'd be shorted as a stock by the John, Dave and Jerry hedge fund apparently but pick a handful of startups in your strategic areas, in your top tier three things. These really, these could be accelerators for your career. >> I have to ask you real quick while you're here. We've got a couple minutes left on startups that are building apps. I've seen DevOps and the infrastructure as code movement has gone full mainstream. That's really what we're living right now. That kind of first-generation commercialization of DevOps. Now DevSecOps, what are the trends that you've seen that's different from say a couple of years ago now that we're in COVID around how apps are being built? Is it security? Is it the data integration? What can you share as a key app stack impact (mumbles)? >> Yeah, I think there're two things one is security is always been a top priority. I think that was the only going forward period, right? Security for sure. That's why you said that DevOps, DevSecOps like security is often overlooked but I think increasingly could be more important. The second thing is I think we talked about Dave mentioned earlier just the data around customers, the data on premise or the cloud, and there's a ton of data out there. We keep saying this over and over again like data's new oil, et cetera. It's evolving and not changing because the way we're using data finding data is changing in terms of sources of data we're using and discovering and also speed of data, right? In terms of going from Basser real-time is changing. The speed of business has changed to go faster. So I think these are all things that we're thinking about. So both security and how you use your data faster and better. >> Yeah you were in theCUBE a number of years ago and I remember either John or I asked you about you think Amazon is going to go up the stack and start developing applications and your answer was you know what I think no, I think they're going to enable a new set of disruptors to come in and disrupt the SaaS world. And I think that's largely playing out. And one of the interesting things about Adam Selipsky appointment to the CEO, he comes from Tableau. He really helped Tableau go from that sort of old guard model to an ARR model obviously executed a great exit to Salesforce. And now I see companies like Salesforce and service now and Workday is potential for your scenario to really play out. They've got in my view anyway, outdated pricing models. You look at what's how Snowflake's pricing and the consumption basis, same with Datadog same with Stripe and new startups seem to really be a leading into the consumption-based pricing model. So how do you, what are your thoughts on that? And maybe thoughts on Adam and thoughts on SaaS disruption? >> I think my thesis still holds that. I don't think Selipsky Adam is going to go into the app space aggressively. I think Amazon wants to enable next generation apps and seeing some of the new service that they're doing is they're kind of deconstructing apps, right? They're deconstructing the parts of CRM or e-commerce and they're offering them as services. So I think you're going to see Amazon continue to say, hey we're the core parts of an app like payments or custom prediction or some machine learning things around applications you want to buy bacon, they're going to turn those things to the API and sell those services, right? So you look at things like Stripe, Twilio which are two of the biggest companies out there. They're not apps themselves, they're the components of the app, right? Either e-commerce or messaging communications. So I can see Amazon going down that path. I think Adam is a great choice, right? He was a longterm early AWS exact from the early days latent to your point Dave really helped take Tableau into kind of a cloud business acquired by Salesforce work there for a few years under Benioff the guy who created quote unquote cloud and now him coming home again and back to Amazon. So I think it'll be exciting to see how Adam runs the business. >> And John I think he's the perfect choice because he's got operations chops and he knows how to... He can help the startups disrupt. >> Yeah, and he's been a trusted soldier of Jassy from the beginning, he knows the DNA. He's got some CEO outside experience. I think that was the key he knows. And he's not going to give up Amazon speed, but this is baby, right? So he's got him in charge and he's a trusted lieutenant. >> You think. Yeah, you think he's going to hold the mic? >> Yeah. We got to go. Jerry Chen thank you very much for coming on. Really appreciate it. Great to see you. Thanks for coming on our inaugural cube on cloud AWS startup event. Now for the 10 startups, enjoy the sessions at 12:30 Pacific, we're going to have the closing keynote. I'm John Ferry for Dave Vellante and our special guests, thanks for watching and enjoy the rest of the day and the 10 startups. (upbeat music)

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is a Cube conversation. >> Hi everybody, this is Dave Vellante. And as you know, I've been running a CxO series in this COVID economy. And as we go into the post-isolation world, really want to focus and expand our scope and really look at startups. And of course, we're going to look at startups, let's follow the money. And I want to start with the investor. Mark Roberge is here. He's the managing director at Stage 2 capital. He's a professor at the Harvard Business School, former CRO over at HubSpot. Mark, great to see you. Thanks for coming on. >> Yeah, you bet, Dave. Thanks for having me. >> So I love that, you know... looking at your career a little bit, on your LinkedIn and following some of your videos, I love the fact that you did, and now you teach and you're also applying it with Stage 2 Capital. Tell us a little bit more about both of your career and Stage 2. >> Yeah, I mean, a lot of it's a bit serendipitous, especially last 10 years, but I've always had this learn, do, teach framework in my, in mind as I go through the decades of my career, you know, like you're probably like 80% learning in your twenties, early thirties and you know, 20% doing. Then, you know, I think my thirties was like leading the HubSpot sales team, a lot of doing, a little bit of teaching, you know, kind of hopping into different schools, et cetera, and also doing a lot of, some writing. And now like, I'm teaching it. I think investing kind of falls into that too, you know, where you've got this amazing opportunity to meet, the next generation of, of extraordinary entrepreneurs and engage with them. So yeah, that, that has been my career. You know, Dave, I've been a, passionate entrepreneur since 22 and then, the last one I did was HubSpot and that led to just an opportunity to build out one of the first sales teams in a complete inside environment, which opened up the doors for a data driven mindset and all this innovation that led to a book that led to recruitment on HBS's standpoint, to like come and teach that stuff, which was such a humbling honor to pursue. And that led to me a meeting my co-founder, Jay Po, of Stage 2 Capital, who was a customer to essentially start the first VC fund, running back by sales and marketing leaders, which was his vision. But when he proposed it to me, addressed a pretty sizeable void, that I saw, in the entrepreneur ecosystem that I thought could make a substantial impact to the success rate of startups. >> Great, I want to talk a little bit about how you guys compete and what's different there, but you know, I've read some of your work, looked at some of your videos, and we can bring that into the conversation. But I think you've got some real forward-thinking for example, on the, you know, the best path to the upper right. The upper right, being that, that xy-axis on growth and adoption, you know, do you go for hyper-growth or do you go for adoption? How you align sales and marketing, how you compensate salespeople. I think you've got some, some leading-edge thinking on that, that I'd love for you to bring into the conversation, but let's start with Stage 2. I mean, how do you compete with the big guys? What's different about Stage 2 Capital? >> Yeah, I mean, first and foremost, we're a bunch of sales and marketing and execs. I mean, our backing is, a hundred plus CROs, VPs of marketing, CMOs from, from the public companies. I mean, Dropbox, LinkedIn, Oracle, Salesforce, SurveyMonkey, Lyft, Asana, I mean, just pick a unicorn, we probably have some representation from it. So that's, a big part of how we compete, is most of the time, when a rocket ship startup is about to build a sales team, one of our LPs gets a call. And because of that, we get a call, right. And, and so there's, we're just deep in, in helping... So first off, assess the potential and risks of a startup in their current, go to market design, and then really, you know, stepping in, not just with capital, but a lot of know-how in terms of, you know, how to best develop this go-to-market for their particular context. So that's a big part of our differentiation. I don't think we've ever lost a deal that we tried to get into, you know, for that reason, just because we come in at the right stage, that's right for our value prop. I'd say Dave, the biggest, sort of difference, in our investing theme. And this really comes out of like, post HubSpot. In addition to teaching the HBS, I did parachute into a different startup every quarter, for one day, where you can kind of like assess their go-to-market, looking for, like, what is the underlying consistency of those series A businesses that become unicorns versus those that flatline. And if I, you know, I've now written like 50 pages on it, which I, you know, we can, we can highlight to the crew, but the underlying cliffnotes is really, the avoidance of a premature focus on top line revenue growth, and an acute focus early on, on customer attention. And, I think like, for those of you, who run in that early stage venture community these days, and especially in Silicon Valley, there's this like, triple, triple, double, double notion of, like year one, triple revenue, year two, triple revenue, year three, double revenue, year four, double revenue, it's kind of evolved to be like the holy grail of what your objectives should be. And I do think like there is a fraction of companies that are ready for that and a large amount of them that, should they pursue that path, will lead to failure. And, and so, we take a heavy lens toward world-class customer retention as a prerequisite, to any sort of triple, triple, double, double blitzscaling type model. >> So, let me ask you a couple of questions there. So it sounds like your LPs are heavily, not only heavily and financially invested, but also are very active. I mean, is that a, is that a fears thing? How active are the LPs in reality? I mean, they're busy people. They're they're software operators. >> Yeah. >> Do they really get involved in businesses? >> Absolutely. I mean, half of our deals that we did in fund one came from the LPs. So we get half of our funnel, comes from LPs. Okay. So it's always like source-pick-win-support. That's like, what basically a VC does. And our LPs are involved in every piece of that. Any deal that we do, we'll bring in four or five of our LPs to help us with diligence, where they have particular expertise in. So we did an insuretech company in Q4, one of our LPs runs insurance practice at Workday. And this particular play he's selling it to big insurance companies. He was extremely helpful, to understand that domain. Post investment, we always bring in four or five LPs to go deeper than I can on a particular topic. So one of our plays is about to stand up in account based marketing, you know, capability. So we brought in the CMO, a former CMO at Rapid7 and the CMO at Unisys, both of which have, stood in, stood up like, account based marketing practices, much more deeply, than I could. You know of course, we take the time to get to know our LPs and understand both their skills, and experiences as well as their willingness to help, We have Jay Simons, who's the President of Atlassian. He doesn't have like hours every quarter, he's running a $50 billion company, right? So we have Brian Halligan, the CEO of HubSpot, right? He's running a $10 billion company now. So, we just get deal flow from them and maybe like an event once or twice a year, versus I would say like 10 to 20% of our LPs are like that. I would say 60% of them are active operators who are like, "You know what? I just miss the early days, and if I could be active with one or two companies a quarter, I would love that." And I would say like a quarter of them are like semi-retired and they're like, they're choosing between helping our company and being on the boat or the golf course. >> Is this just kind of a new model? Do you see having a different philosophy where you want to have a higher success rate? I mean, of course everybody wants to have a, you know, bat a thousand. >> Yeah. >> But I wonder if you could address that. >> Yeah. I don't think it, I'm not advocating slower growth, but just healthier growth. And it's just like an extra, it's really not different than sort of the blitzscaling oriented San Francisco VC, okay? So, you know, I would say when we were doing startups in the nineties, early 2000s before The Lean Startup, we would have this idea and build it in a room for a year and then sell it in parallel, basically sell it everywhere and Eric Ries and The Lean Startup changed all that. Like he introduced MVPs and pivots and agile development and we quickly moved to, a model of like, yeah, when you have this idea, it's not like... You're really learning, keep the team small, keep the burn low, pivot, pivot, pivot, stay agile and find product-market fit. And once you do that, scale. I would say even like, West Coast blitzscaling oriented VCs, I agree with that. My only take is... We're not being scientifically rigorous, on that transition point. Go ask like 10 VCs or 10 entrepreneurs, what's product-market fit, and you'll get 10 different answers. And you'll get answers like when you have lots of sales, I just, profoundly disagree with that. I think, revenue in sales has very little to do with product-market fit. That's like, that's like message-market fit. Like selling ice to Eskimos. If I can sell ice to Eskimos, it doesn't mean that product-market fit. The Eskimos didn't need the ice. It just means I was good at like pitching, right? You know, other folks talk about like, having a workable product in a big market. It's just too qualitative. Right? So, that's all I'm advocating is, that, I think almost all entrepreneurs and investors agree, there's this incubation, rapid learning stage. And then there's this thing called product-market fit, where we switch to rapid scale. And all I'm advocating is like more scientist science and rigor, to understanding some sequences that need to be checked off. And a little bit more science and rigor on what is the optimal pace of scale. Because when it comes to scale, like pretty much 50 out of 50 times, when I talk to a series A company, they have like 15 employees, two sales reps, they got to like 2 million in revenue. They raise an 8 million-dollar round in series A, and they hired 12 salespeople the next month. You know, and Dave, you and your brother, who runs a large sales team, can really understand how that's going to failure almost all the time. (Dave mumbles) >> Like it's just... >> Yeah it's a killer. >> To be able to like absorb 10 reps in a month, being a 50, it's just like... Who even does all those interviews? Who onboards them? Who manages them? How do we feed them with demand? Like these are some of the things I just think, warrant more data and science to drive the decisions on when and how fast to scale. >> Mark, what is the key indicator then, of product-market fit? Is it adoption? Is it renewal rates? >> Yeah. It's retention in my opinion. Right? So, so the, the very simple framework that I require is you're ready to scale when you have product-market and go to market-fit. And let's be, extremely precise, and rigorous on the definitions. So, product-market fit for me, the best metric is retention. You know, that essentially means someone not only purchased your offering, but experienced your offering. And, after that experience decided to repurchase. Whether they buy more from you or they renew or whatever it is. Now, the problem with it is, in many, like in the world we live inside's, it's like, the retention rate of the customers we acquire this quarter is not evident for a year. Right, and we don't have a year to learn. We don't have a year to wait and see. So what we have to do is come up with a leading indicator to customer retention. And that's something that I just hope we see more entrepreneurs talking about, in their product market fit journey. And more investors asking about, is what is your lead indicator to customer retention? Cause when that gets checked off, then I believe you have product-market fit, okay? So, there's some documentation on some unicorns that have flirted with this. I think Silicon Valley calls it the aha moment. That's great. Just like what. So like Slack, an example, like, the format I like to use for the lead indicator of customer retention is P percent of customers, do E event, in T time, okay? So, it basically boils it down to those three variables, P E T. So if we bring that to life and humanize it, 70% of the customers, we sign up, this is Slack, 70% of the customers who sign up, send 2000 team messages in 30 days, if that happens, we have product-market fit. I like that a lot more, than getting to a million in revenue or like having a workable product in a big market. Dropbox, 85% of customers, share one file in one hour. HubSpot, I know this was the case, 75% of customers, use five or more of the 25 features in the platform, within 60 days. Okay? P percent, do E event, in T time. So, if we can just format that, and look at that through customer cohorts, we often get visibility into, into true product market-fit within weeks, if not like a month or two. And it's scientifically, data-driven in terms of his foundation. >> Love it. And then of course, you can align sales compensation, you know, with that retention. You've talked a lot about that, in some of your work. I want to get into some of the things that stage two is doing. You invest in SaaS companies. If I understand it correctly, it's not necessarily early stage. You're looking for companies that have sort of achieved some degree of revenue and now need help. It needs some operational help and scaling. Is that correct? >> Yeah. Yeah. So it's a little bit broader in size, as any sort of like B2B software, any software company that's scaling through a sales team. I mean, look at our backers and look at my background. That's, that's what we have experience in. So not really any consumer plays. And yeah, I mean, we're not, we have a couple product LPs. We have a couple of CFO type LPs. We have a couple like talent HR LPs, but most of us are go-to-market. So we don't, you know, there's awesome seed funds out there that help people set up their product and engineering team and go from zero to one in terms of the MVP and find product-market fit. Right? We like to come in right after that. So it's usually like between the seed and the A, usually the revenue is between half a million and 1.5 million. And of course we put an extraordinary premium on customer retention, okay? Whereas I think most of our peers put an extraordinary premium on top line revenue growth. We put an extraordinary premium on retention. So if I find a $700,000 business that, you know, has whatever 50, 70 customers, you know, depending on their ticket size, it has like North of 90% local retention. That's super exciting. Even if they're only growing like 60%, it's super exciting. >> What's a typical size of investments. Do you typically take board seats or not? >> Yeah. We typically put in like between like seven hundred K, one and a half million, in the first check and then have, larger amounts for follow on. So on the A and the B. We try not to take board's seats to be honest with you, but instead the board observers. It's a little bit selfish in terms of our funds scale. Like the general counsel from other venture capitalists is of course, like, the board seat is there for proper governance in terms of like, having some control over expenditures and acquisition conversations, et cetera, or decisions. But a lot of people who have had experience with boards know that they're very like easy and time efficient when the company is going well. And there are a ton of work when the company is not going well. And it really hurts the scale, especially on a smaller fund like us. So we do like to have board observers seats, and we go to most of the board meetings so that our voice is heard. But as long as there's another fund in there that, has, world-class track record in terms of, holding proper governance at the board level, we prefer to defer to them on that. >> All right, so the COVID lock down, hit really in earnest in March, of course, we all saw the Sequoia memo, The Black Swan memo. You were, I think it HubSpot, when, you remember the Rest In Peace Good Times memo, came out very sort of negative, put up all over the industry, you know, stop spending. But there was some other good advice in there. I don't mean to sort of, go too hard on that, but, it was generally a negative sentiment. What was your advice to your portfolio companies, when COVID hit, what were you telling them? >> Yeah, I summarized this in our lead a blog article. We kicked off our blog, which is partially related to COVID in April, which has kind of summarize these tips. So yes, you are correct, Dave. I was running sales at HubSpot in '08 when we had last sort of major economic, destabilization. And I was freaking out, you know (laughs briefly) at the time we were still young, like 20, 30 reps and numbers to chase. And... I was, actually, after that year, looking back, we are very fortunate that we had a value prop that was very recession-proof. We were selling to the small business community, who at the time was cutting everything except new ways to generate sales. And we happen to have the answer to that and it happened to work, right? So it showed me that, there's different levels of being recession proof. And we accelerated the raise of our second fund for stage two with the anticipation that there would be a recession, which, you know, in the venture world, some of the best things you could do is close a fund and then go into a recession, because, there's more deals out there. The valuations are lower and it's much easier to understand, nice to have versus must have value props. So, the common theme I saw in talking to my peers who looked back in the '01 crisis, as well as the '08 crisis, a year later was not making a bolder decision to reorient their company in the current times. And usually on the go-to-market, that's two factors, the ICP who you're selling to, ideal customer profile and the CVP, what your message is, what's your customer value prop. And that was really, in addition to just stabilizing cash positions and putting some plans in there. That was the biggest thing we pushed our portfolio on was, almost like going through the exercise, like it's so hard as a human, to have put like nine months into a significant investment leading up to COVID and now the outcome of that investment is no longer relevant. And it's so hard to let that go. You know what I mean? >> Yeah. >> But you have to, you have to. And now it's everything from like, you spent two years learning how to sell to this one persona. And now that persona is like, gyms, retail and travel companies. Like you've got to let that go. (chuckle simultaneously) You know what I mean? Like, and, you know, it's just like... So that's really what we had to push folks on was just, you know, talking to founders and basically saying this weekend, get into a great headspace and like, pretend like you were parachuted into your company as a fresh CEO today. And look around and appreciate the world and what it is. What is this world? What are the buyers talking about? Which markets are hot, which markets are not, look at the assets that you have, look at your product, look at your staff, look at your partners, look at your customer base, and come up with a strategy from the ground up based on that. And forget about everything you've done in the last year. Right? And so, that's really what we pushed hard on. And in some cases, people just like jumped right on it. It was awesome. We had a residential real estate company that within two weeks, stood up a virtual open house module that sold like hotcakes. >> Yeah. >> That was fantastic execution. And we had other folks that we had to have like three meetings with to push them deep enough, to go more boldly. But that, was really the underlying pattern that I saw in past, recessions and something I pushed the portfolio on, is just being very bold on your pivots. >> Right? So I wanted to ask you how your portfolio companies are doing. I'm imagining you saw some looked at this opportunity as a tailwind. >> Yeah. >> You mentioned the virtual, open house, a saw that maybe were exposed, had, revenue exposure to hard-hit industries and others kind of in the middle. How are your portfolio companies doing? >> Yes, strong. I'm trying to figure out, like, of course I'm going to say that, but I'm trying to figure out like how to provide quant, to just demonstrate that. We were fortunate that we had no one, and this was just dumb luck. I mean, we had no one exclusively selling to like travel, or, restaurants or something. That's just bad luck if you were, and we're fortunate that we got a little lucky there, We put a big premium, obviously we had put a big premium on customer retention. And that, we always looked at that through our recession proof lens at all our investments. So I think that helped, but yeah, I mean, we've had, first off, we made one investment post COVID. That was the last investment on our first fund and that particular company, March, April, May, their results were 20% higher than any month in history. Those are the types of deals we're seeing now is like, you literally find some deals that are accelerating since COVID and you really just have to assess if it's permanent or temporary, but that one was exciting. We have a telemedicine company that's just like, really accelerating post COVID, again, luck, you know, in terms of just their alignment with the new world we're living in. And then, jeez! I mean, we've had, I think four term sheets, for markups in our portfolio since March. So I think that's a good sign. You know, we only made 11 investments and four of them, either have verbal or submitted term sheets on markups. So again, I feel like the portfolio is doing quite well, and I'm just trying to provide some quantitative measures. So it doesn't feel like a political answer. (Mark chuckles) >> Well, thank you for that, but now, how have you, or have you changed your sort of your thesis post COVID? Do you feel like your... >> Sure. >> Your approach was sort of geared towards, you know, this... >> Yeah. >> Post COVID environment? But what changes have you made. >> A little bit, like, I think in any bull market, generally speaking, there's just going to be a lot of like triple, triple, double, double blitzscaling, huge focus on top-line revenue growth. And in any down market, there's going to be a lot of focus on customer retention unit economics. Now we've always invested in the latter, so that doesn't change much. There's a couple of things that have changed. Number one, we do look for acceleration post COVID. Now, that obviously we were not, we weren't... That lens didn't exist pre-COVID, So in addition to like great retention, selling through a sales team, around the half million to a million revenue, we want to see acceleration since COVID and we'll do diligence to understand if that's a permanent, or a temporary advantage. I would say like... Markets like San Francisco, I think become more attractive in post COVID. There's just like, San Francisco has some magic happening there's some VC funds that avoid it, cause it's too expensive. There's some VC funds that only invest in San Francisco, because there's magic happening. We've always just been, you know... we have two portfolio companies there that have done well. Like we look at it and if it's too expensive, we have to avoid it. But we do agree that there's magic happening. I did look at a company last week. (chuckles inaudibly) So Dave, there are 300K in revenue, and their last valuation is 300 million. (both chuckle) >> Okay, so why is San Francisco more attractive, Mark? >> Well, I mean and those happened in Boston too. >> We looked at... (Mark speaks inaudibly) >> I thought you were going to tell me the valuations were down. (Dave speaks inaudibly) >> Here's the deal all right, sometimes they do, sometimes they don't and this is one, but in general, I think like they have come down. And honestly, the other thing that's happened is good entrepreneurs that weren't raising are now raising. Okay? So, a market like that I think becomes more attractive. The other thing that I think that happens is your sort of following strategies different. Okay so, there is some statistical evidence that, you know, obviously we're coming out of a bear market, a bullish market in, in both the public and the private equities. And there's been a lot of talk about valuations in the private sector is just outrageous. And so, you know, we're fortunate that we come in at this like post seed, pre-A, where it's not as impacted. It is, but not as or hasn't been, but because there's so many more multibillion-dollar funds that have to deploy 30 to 50 million per investment, there's a lot of heating up that's happened at that stage. Okay? And so pre COVID, we would have taken advantage of that by taking either all or some of our money off the table, in these following growth rounds. You know, as an example, we had a company that we made an investment with around 30 million evaluation and 18 months later, they had a term sheet for 500. So that's a pretty good return in 18 months. And you know, that's an expensive, you know, so that that's like, wow, you know, we probably, even though we're super bullish on the company, we may want to take off a 2X exposition... >> Yeah. >> And take advantage of the secondaries. And the other thing that happens here, as you pointed out, Dave is like, risk is not, it doesn't become de-risk with later rounds. Like these big billion dollar funds come in, they put pressure on very aggressive strategic moves that sometimes kills companies and completely outside of our control. So it's not that we're not bullish on the company, it's just that there's new sets of risks that are outside of the scope of our work. And so, so that that's probably like a less, a lesser opportunity post COVID and we have to think longer term and have more patient capital, as we navigate the next year or so of the economy. >> Yeah, so we've got to wrap, but I want to better understand the relationship between the public markets and you've seen the NASDAQ up, which is just unbelievable when you look at what's happening in main street, and the relationship between the public markets and the private markets, are you saying, they're sort of tracking, but not really identical. I mean, what's the relationship. >> Okay, there's a hundred, there's thousands of people that are better at that than me. Like the kind of like anecdotal thoughts that I, or the anecdotal narrative that I've heard in past recessions and actually saw too, was the private market, when the public market dropped, it took nine months roughly for the private market to correct. Okay, so there was a lag. And so there's, some arguments that, that would happen here, but this is just a weird situation, right? Of like the market, even though we're going through societal crazy uncertainty, turmoil and, and tremendous tragedy, the markets did drop, but they're pretty hot right now, specifically in tech. And so there's a number of schools of thoughts there that like some people claim that tech is like the utilities companies of the eighties, where it's just a necessity and it's always going to be there regardless of the economy. Some people argue that what's happened with COVID and the remote workplace have made, you know, accelerated the adoption of tech, the inevitable adoption, and others could argue that like, you know, the worst is still the come. >> Yeah. And of course, you've got The Fed injecting so much liquidity into the system, low interest rates, Mark, last question. Give me a pro tip for entrepreneurs. (Mark Sighs) >> I would say, like, we've talked a lot about, this methodology with, you know, customer retention, really focusing there, align everything there as opposed to top line revenue growth initially. I think that the extension I do at this point is, do your diligence on your investors, and what their thoughts are on your future growth plans to see if they're aligned. Cause that, that becomes like, I think a lot of entrepreneurs, when they dig into this work, they do want to operate around it. But that becomes that much harder when you have investors that think a different way. So I would just, you know, just always keep in mind that, you know, I know it's so hard to raise money, but you know, do the diligence on your investors to understand, what they'd like to see in the next two years and how it's aligned with your own vision. >> Mark is really great having you on. I'd love to have you back and as this thing progresses, and see how it all shakes out. It really a pleasure. Thanks for coming on. >> No, thanks, Dave. I appreciate you having me on. >> And thank you everybody for watching. This is Dave Vellante for The Cube. We'll see you next time. (music plays)

(upbeat music) >> Narrator: From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a Cube conversation. >> Hi, I'm Stu Miniman, and I'm talking to you out of our Boston area studio, and we have been doing a CXO leadership series, talking with leaders across the IT industry about how they're managing during this global pandemic. I'm really happy to welcome back to the program, he's a Cube alumni. He was a Racker, and he is now with Stacker. We'll get into the company in a bit, but Prashanth Chandrasekar, the CEO of Stack Overflows, thanks so much for joining. >> Thank you for having me again Stu. Really a pleasure, and always a fan of the Cube, so great to be here. >> Alright, and we note that you sporting the quarantine, you know beard, you know, grown since the last time we had you on the program. Prasthanth, you were named CEO of Stack Overflow at the end of 2019. Obviously, certain plans that you have you're a Harvard Business School alum, you've worked in, you know, the enterprise and cloud communities for a while. Take us back to, you know, what your team has been doing, really to react and lead in this global pandemic. >> Ya, no happy to, Stu, and obviously this is a very, you know, trying time for, you know, just the world in general right. So, companies small and large are having to kind of grapple with the reality, but I would say in general, I started October 1st, 2019 at, you know, at this amazing company, and it's just, been a real joy to see us really adapt very quickly based on just you know, just kind of challenging environment that we're in, and primarily if you think about Stack Overflow, you know, we were blessed that our, you know, our company has an ethos, an ethos perspective. We've been you know, highly remote in nature for years, for over a decade so you know, 80% of our team, product engineering team has been remote. 60% of our marketing team was remote, and then 40% of our company was remote all around the world. So, moving from that 40% to 100%, which we did very proactively in March, early March of 2020, has been a huge boon for our company in just our Stackers as you pointed out, they've just been very, I would say grateful that we've done that very, very quickly. Secondly, I would say the just the notion of, you know, being able to think about our business, and you know, our community, and how do we help each other. We've done a lot, you know, we meet with you know, we come together as a team, you know, three times a week, and we've already had sort of this Covid stand up as a leadership team, as a newly formed leadership team mind you, which I've just helped form over the past six months, and we've all really gone, you know, really to the extremes to make sure that our Stackers are their health and safety are taken care of. How do we serve our community in this environment? How do we make sure our customers are being, you know, really are getting the maximum value of our products, which are all focused on collaboration, so very relevant in this remote world. So, it's really been, I would say, all around, people have really rallied we had sort of a, I would say, somewhat of an advantage just having you know, adopting remote work at this point. >> But Prasthanth, maybe it makes sense if actually step back for a second. I'm sure most people are familiar with Stack Overflow, but give us, the kind of, the high level view of, you know, what the company is, and what drew you into the leadership role there. >> Yeah, no absolutely. You know I think Stack Overflow extremely well known obviously, with every developer and technologist in the world. So, in a nutshell, you know, we are the world's most trusted and largest community for developers and technologists. We have something like 120 million unique visitors that come to our websites every month, and talking 180,000 sign ups on a monthly basis. So, just say we do say a dramatic amount of impact to help ultimately, these folks solve their most complex problems on a variety of topics, whether that is cloud related topics, security related topics, full stack engineering related topics like Python or Rust, or you name it. All those, you know, those areas are covered in very much and very a lot of detail for our community we effectively share. Solutions to common questions, and code, and really be able to accelerate the development of software around the world. So, ultimately, it comes down to our mission, which our mission what we like to say is we help write the script of the future by serving developers and technologists, and so, that's our company in a nutshell. On top of that, ecosystem of communities that we've built. We have a great set of products, SaaS products that we've also built to help with real time collaboration within companies in a very, very similar format to our public community format. So, that's been very compelling. So, the two reasons why I joined the company beyond obviously the mission, number 1 is just the global impact, you know, there are only a few companies that have the level of impact that this company has around the world and helping everybody sort of accelerate their software development. Whatever apps you're building, and obviously we know, that we're sort of in this beautiful, Goldilocks zone of digital transformation, where everything is accelerating, even given the current environment. That's the first reason, just given the vast reach of this company, and then secondly, you know, is the fact that we are really trying to transform the company and accelerate the transformation into a SaaS company. So, our Stack Overflow for teams product, which is again the knowledge sharing SaaS squad that we have internally, is really a phenomenal way to share evergreen knowledge, and non-ephemeral type information within companies so that your most important questions are answered. They're answered once, and your not, you know, constantly having to, you know, tap people on the shoulder to answer a common question. So, those are the two primary reasons. One is the impact to the community, and secondly acceleration of our SaaS business. >> Excellent, Prasthanth. So wonder if you could help us drill in, and understand the business little bit. There's private repository, there's teams there. You know, it's interesting, if you look on the outside you say wait, is this kind of like a Reddit? Or when I hear you describe it, sure reminds me a little bit of say GitHub, who obviously got taken off the table for a rather large number so, I'll let you bring us inside a little bit of you know, how does the company you know, make money, and what are the plans that both, you know, support, you know, those broad communities and diverse things, but also, you know built that business. >> Ya, no absolutely, you know I think for us you know, we really believe it's a common, our mission statement like I mentioned is really our core driver for us, and so the ecosystem of communities that we've built for developers, as well as technologists, again just a very, very vast number, and we create developers right, on a daily basis through our community. So, it's very powerful in that people are learning about new technologies, or frameworks, or you know, cloud technologies through our websites, and so they are you know, that's a bit of a huge accelerant to this creation of jobs, and you know, people's capabilities. On the foundation of that, which is obviously, you know, accessible to everybody, and you know, it's free in fact, we had this ecosystem of products, and the first one in the primary Saas product is Stack Overflow for teams, which is this knowledge sharing and collaboration product that allows companies within, or teams within companies to use the same format that they absolutely love in the public community that they use to, you know, learn up on those subjects that I mentioned, but now share internal priority information to accelerate their development internally. To breakdown walls between teams, like product, and engineering, and developers, and operations, and also go to market teams, like product marketing teams, and sales teams, and so we have you know, a tremendous number of enterprises that have joined our program, over the past several quarters including Microsoft, who is a very happy customer that uses, you know, they have something like 70,000 developers and technologists, and go to market folks within Microsoft that are using our product platform to breakdown walls, and to be able to move very quickly with launching their products, and staying collaborative internally. In addition to that, we have what we call our Reach and Relevance business which is all around helping, just based on the fact that we have such massive reach in 120 million people from around the world showing up on our websites. Being able to help companies you know, showcase their capabilities and products in our platform, and also engage with the community, and for obviously the community to then learn about many of the latest and greatest of what's being launched by these phenomenal companies that are innovating very rapidly. >> Ya, so Prasthanth, we started off the conversation, you talked a little bit about the impact of the global pandemic. I'm curious, are you seeing any, you know, changes in trends? Are there new things that are trending on your site? Are there things that are either on the website, or they're coming to your team to learn more about? >> Ya, no definitely I think there are two places that I can point to. One would be on the community side we've definitely seen a spike in traffic in places like our meta-academia website, you know, as an example. Online learning became a huge topic of interest when people went remote, and obviously, you have families around the world that are trying to figure out not only how to school their kids but we have teachers all around in schools trying to figure out what are the best set of resources. So, we have, you know, all sorts of, like I said, about 40 million questions and answers across all sorts of topics, including you know, next generation E-learning sort of capabilities in our communities, and so, we've seen a spike in traffic in places like that. We've seen a spike in our medical communities, and our biology communities obviously, because of you know, people's curiosity, and these are, you know fairly advanced, you know academics, and people who are in the scientific community that spend a lot of time thinking about, you know the what's really behind Covid-19. What are the details of, you know, if you think about all sorts of topics around genetics, and obviously, the pharmaceutical implications so, we've seen a tremendous uptake in those sites, and in addition of course, overall to our overall websites, because people are spending time, you know, just at home. In addition, we've seen a very material uptake in our Stack Overflow for teams product where we know we just closed, you know our company's like largest deal in our company's history this past week for about 30,000 seats, you know, at a very large financial services institution, a global services financial institution. There's more and more companies that are thinking about business continuity. They're thinking about how do they stay, how do they collaborate across their distributed teams, their remote teams, and we have, obviously a very significant solution in that space. >> Excellent, well congratulations on that deal. It brings up, I guess, what are some of the key KPI's that you're tracking for to really assure the growth and the health of your business. >> Ya, I think both in terms of, you know , if you think about two sides of the coin right. From the community standpoint, obviously we care about our active users, and our engaged users, and the number of sign-ups, and on that front, that first part of that, you know, we've seen just a dramatic increase, you know, in all those stats, including, you know this year, just as a result of Covid, on average last year, in 2019, you know, the number of sign-ups per month was something like, 150,000 sign-ups per month, unique sign ups from around the world. People signing up for Stack Overflow accounts. This year, on average, it's gone up, and March was our highest sign-up month ever with 180,000 sign-ups for the month. So, we're seeing so that's important. In addition to sign-ups of course, when they come on to our websites we want them to get the answers to their most pressing questions, to be able to engage them with content that is useful to them. So, engagement, you know in terms of monthly engaged users very important, monthly active users is very important for us, and obviously our sign-up numbers. So, those are kind of the community oriented stats that we'd, and KPI's that we'd really track, and those look, you know look very promising, and then, finally on the business side, which is the other side of the coin, in our teams business primarily, and our Reach and Relevance business. Our teams business is all about our customers getting value from the collaboration SaaS platform that we have that they've signed up for right. So, are they using the various features? We've integrated that teams product with all the other popular tools that people use for things like real time collaborations. We integrate with Slack. We integrate with Microsoft Teams. We've integrated with, you know Okta. We've integrated with, you know Okta. We've integrated even with Enterprise, because really the idea is to be a part of that developer and technologist workflow so, folks can really look to Stackflow for Teams as the place where they get common answers, get great answers to their common questions that are constantly being asked within companies, but it's not very effective to ask the same questions again and again. So, the idea is to integrate with these tools to make sure that you are able to have an evergreen place where you can keep that knowledge. So, that's, you know we track usage of those integrations. We talk about how many of those questions and answers are being, you know, being exchanged within companies, and how much ultimately the outcome of saving time and money for our clients so that they are being very effective in their product development cycles, and people are not being tapped on the shoulder for every single item that might comes across for an individual company. So, that's really, there's an economic study that we performed with Forrester that captures a lot of this. So that's, you know, that's and then region relevance is all around engagement on our websites. Some people already looking and seeing, finding value in the content that our companies are posting, and force companies to be effectively translating their knowledge to the audience. >> Awesome. Well, Prasthanth congratulations on the progress, and definitely look forward to cracking the how the Stack Overflow Team is doing going forward. >> Thanks so much Stu, really appreciate the chat, and great to see you again as usual. >> Alright, make sure to check out theCUBE.net for all the coverage. I'm Stu Miniman. Thank you for watching. (gentle music) (gentle music) (gentle music) (gentle music) (gentle music) (gentle music)

>> Announcer: From theCUBE Studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> Hello, welcome back to theCUBE's coverage, CUBE Virtual's coverage, CUBE digital coverage, of AWS Summit, virtual online, Amazon Summit's normally in face-to-face all around the world, it's happening now online, follow the sun. Of course, we want to bring theCUBE coverage like we do at the events digitally, and we've got a great guest that usually comes on face-to-face, he's coming on virtual, Sanjay Poonen, the chief operating officer of VMware. Sanjay great to see you, thanks for coming in virtually, you look great. >> Hey, John thank you very much. Always a pleasure to talk to you. This is the new reality. We both happen to live very close to each other, me in Los Altos, you in Palo Alto, but here we are in this new mode of communication. But the good news is I think you guys at theCUBE were pioneering a lot of digital innovation, the AI platform, so hopefully it's not much of an adjustment for you guys to move digital. >> It's not really a pivot, just move the boat, put the sails up and sail into the next generation, which brings up really the conversation that we're seeing, which is this digital challenge, the virtual world, it's virtualization, Sanjay, it sounds like VMware. Virtualization spawned so much opportunity, it created Amazon, some say, I'd say. Virtualizing our world, life is now integrated, we're immersed into each other, physical and digital, you got edge computing, you got cloud native, this is now a clear path to customers that recognize with the pandemic challenges of at-scale, that they have to operate their business, reset, reinvent, and grow coming out of this pandemic. This has been a big story that we've been talking about and a lot of smart managers looking at projects saying, I'm doubling down on that, and I'm going to move the resources from this, the people and budget, to this new reality. This is a tailwind for the folks who were prepared, the ones that have the experience, the ones that did the work. theCUBE, thanks for the props, but VMware as well. Your thoughts and reaction to this new reality, because it has to be cloud native, otherwise it doesn't work, your thoughts. >> Yeah, I think, John, you're right on. We were very fortunate as a company to invent the term virtualization for an x86 architecture and the category 20 years ago when Diane founded this great company. And I would say you're right, the public cloud is the instantiation of virtualization at its sort of scale format and we're excited about this Amazon partnership, we'll talk more about that. This new world of doing everything virtual has taken the same concepts to whole new levels. We are partnering very closely with companies like Zoom, because a good part of this is being able to deliver video experiences in there, we'll talk about that if needed. Cloud native security, we announced an acquisition today in container security that's very important because we're making big moves in security, security's become very important. I would just say, John, the first thing that was very important to us as we began to shelter in place was the health of our employees. Ironically, if I go back to, in January I was in Davos, in fact some of your other folks who were on the show earlier, Matt Garman, Andy, we were all there in January. The crisis already started in China, but it wasn't on the world scene as much of a topic of discussion. Little did we know, three, four weeks later, fast forward to February things were moving so quickly. I remember a Friday late in February where we were just about to go the next week to Las Vegas for our in-person sales kickoffs. Thousands of people, we were going to do, I think, five or 6,000 people in Las Vegas and then another 3,000 in Barcelona, and then finally in Singapore. And it had not yet been categorized a pandemic. It was still under this early form of some worriable virus. We decided for the health and safety of our employees to turn the entire event that was going to happen on Monday to something virtual, and I was so proud of the VMware team to just basically pivot just over the weekend. To change our entire event, we'd been thinking about video snippets. We have to become in this sort of virtual, digital age a little bit like TV producers like yourself, turn something that's going to be one day sitting in front of an audience to something that's a lot shorter, quicker snippets, so we began that, and the next thing we began doing over the next several weeks while the shelter in place order started, was systematically, first off, tell our employees, listen, focus on your health, but if you're healthy, turn your attention to serving your customers. And we began to see, which we'll talk about hopefully in the context of the discussion, parts of our portfolio experience a tremendous amount of interest for a COVID-centered world. Our digital workplace solutions, endpoint security, SD-WAN, and that trifecta began to be something that we began to see story after story of customers, hospitals, schools, governments, retailers, pharmacies telling us, thank you, VMware, for helping us when we needed those solutions to better enable our people on the front lines. And all VMware's role, John, was to be a digital first responder to the first responder, and that gave tremendous amount of motivation to all of our employees into it. >> Yeah, and I think that's a great point. One of the things we've been talking about, and you guys have been aligned with this, you mentioned some of those points, is that as we work at home, it points out that digital and technology is now part of lifestyle. So we used to talk about consumerization of IT, or immersion with augmented reality and virtual reality, and then talk about the edge of the network as an endpoint, we are at the edge of the network, we're at home, so this highlights some of the things that are in demand, workspaces, VPN provisioning, these new tools, that some cases we've been hearing people that no one ever thought of having a forecast of 100% VPN penetration. Okay, you did the AirWatch deal way back when you first started, these are now fruits of those labors. So I got to ask you, as managers of your customer base are out there thinking, okay, I got to double down on the right growth strategy for this post-pandemic world, the smart managers are going to look at the technologies enabled for business outcome, so I have to ask you, innovation strategies are one thing, saying it, putting it place, but now more than ever, putting them in action is the mandate that we're hearing from customers. Okay I need an innovation strategy, and I got to put it into action fast. What do you say to those customers? What is VMware doing with AWS, with cloud, to make those innovation strategies not only plausible but actionable? >> That's a great question, John. We focused our energy, before even COVID started, as we prepared for this year, going into sales kickoffs and our fiscal year, around five priorities. Number one was enabling the world to be multicloud, private cloud and public cloud, and clearly our partnership here with Amazon is the best example of that and they are our preferred cloud partner. Secondly, building modern apps with microservices and cloud native, what we call app modernization. Thirdly, which is a key part to the multicloud, is building out the entire network stack, data center networking, the firewalls, the load bouncing in SD-WAN, so I'd call that cloud network. Number four, the modernization of workplace with an additional workspace solution, Workspace ONE. And five, intrinsic security from all aspects of security, network, endpoint, and cloud. So those five priorities were what we began to think through, organize our portfolio, we call them solution pillars, and for any of your viewers who're interested, there's a five-minute version of the VMware story around those five pillars that you can watch on YouTube that I did, you just search for Sanjay Poonen and five-minute story. But then COVID hit us, and we said, okay we got to take these strategies now and make them more actionable. Exactly your question, right? So a subset of that portfolio of five began to become more actionable, because it's pointless going and talking about stuff and it's like, hey, listen, guys, I'm a house on fire, I don't care about the curtains and all the wonderful art. You got to help me through this crisis. So a subset of that portfolio became kind of what was those, think about now your laptop at home, or your endpoint at home. People wanted, on top of their Zoom call, or surrounding their Zoom call, a virtual desktop managed easily, so we began to see Workspace ONE getting a lot of interest from our customers, especially the VDI part of that portfolio. Secondly, that laptop at home needed to be secured. Traditional, old, legacy AV solutions that've worked, enter Carbon Black, so Workspace ONE plus Carbon Black, one and two. Third, that laptop at home needs network acceleration, because we're dialoguing and, John, we don't want any latency. Enter SD-WAN. So the trifecta of Workspace ONE, Carbon Black and VeloCloud, that began to see even more interest and we began to hone in our portfolio around those three. So that's an example of where you have a general strategy, but then you apply it to take action in the midst of a crisis, and then I say, listen, that trifecta, let's just go and present what we can do, we call that the business continuity or business resilience part of our portfolio. We began to start talking to customers, and saying, here's our business continuity solution, here's what we could do to help you, and we targeted hospitals, schools, governments, pharmacies, retailers, the ones who're on the front line of this and said again, that line I said earlier, we want to be a digital first responder to you, you are the real first responder. Right before this call I got off a CIO call with the CIO of a major hospital in the northeast area. What gives me great joy, John, is the fact that we are serving them. Their beds are busting at the seam, in serving patients-- >> And ransomware's a huge problem you guys-- >> We're serving them. >> And great stuff there, Sanjay, I was just on a call this morning with a bunch of folks in the security industry, thought leaders, was in DC, some generals were there, some real thought leaders, trying to figure out security policy around biosecurity, COVID-19, and this invisible disruption, and they were equating it to like the World Wars. Big inflection point, and one of the generals said, in those times of crisis you need alliances. So I got to ask you, COVID-19 is impactful, it's going to have serious impact on the critical nature of it, like you said, the house is on fire, don't worry about the curtains. Alliances matter more than ever when you need to come together. You guys have an ecosystem, Amazon's got an ecosystem, this is going to be a really important test to the alliances out there. How do you view that as you look forward? You need the alliances to be successful, to compete and win in the new world as this invisible enemy, if you will, or disruptor happens, what's your thoughts? >> Yeah, I'll answer in a second, just for your viewers, I sneezed, okay? I've been on your show dozens of time, John, but in your live show, if I sneezed, you'd hear the loud noise. The good news in digital is I can mute myself when a sneeze is about to happen, and we're able to continue the conversation, so these are some side benefits of the digital part of it. But coming to your question on alliance, super important. Ecosystems are how the world run around, united we stand, divided we fall. We have made ecosystems, I've always used this phrase internally at VMware, sort of like Isaac Newton, we see clearly because we stand on the shoulders of giants. So VMware is always able to be bigger of a company if we stand on the shoulders of bigger giants. Who were those companies 20 years ago when Diane started the company? It was the hardware economy of Intel and then HP and Dell, at the time IBM, now Lenovo, Cisco, NetApp, DMC. Today, the new hardware companies Amazon, Azure, Google, whoever have you, we were very, I think, prescient, if you would, to think about that and build a strategic partnership with Amazon three or four years ago. I've mentioned on your show before, Andy's a close friend, he was a classmate over at Harvard Business School, Pat, myself, Ragoo, really got close to Andy and Matt Garman and Mike Clayville and several members of their teams, Teresa Carlson, and began to build a partnership that I think is one of the most incredible success stories of a partnership. And Dell's kind of been a really strong partner with us on private cloud, having now Amazon with public cloud has been seminal, we do regular meetings and build deep integration of, VMware Cloud and AWS is not some announcement two or three years ago. It's deep engineering between, Bask's now in a different role, but in his previous role, that and people like Mark Lohmeyer in our team. And that deep engineering allows us to know and tell customers this simple statement, which both VMware and Amazon reps tell their customers today, if you have a workload running on vSphere, and you want to move that to Amazon, the best place, the preferred place for that is VMware Cloud and Amazon. If you try to refactor that onto a native VC 2, it's a waste of time and money. So to have the entire army of VMware and Amazon telling customers that statement is a huge step, because it tells customers, we have 70 million virtual machines running on-prem. If customers are looking to move those workloads to Amazon, the best place for that VMware Cloud and AWS, and we have some credible customer case studies. Freddie Mac was at VMworld last year. IHS Markit was at VMworld last year talking about it. Those are two examples and many more started it, so we would like to have every VMware and Amazon customer that's thinking about VMware to look at this partnership as one of the best in the industry and say very similar to what Andy I think said on stage at the time of this announcement, it doesn't have to be now a trade-off between public and private cloud, you can get the best of both worlds. That's what we're trying to do here-- >> That's a great point, I want to get your thoughts on leadership, as you look at COVID-19, one of our tracks we're going to be promoting heavily on theCUBE.net and our sites, around how to manage through this crisis. Andy Jassy was quoted on the fireside chat, which is coming up here in North America, but I saw it yesterday in New Zealand time as I time shifted over there, it's a two-sided door versus a one-sided door. That was kind of his theme is you got to be able to go both ways. And I want to get your thoughts, because you might know what you're doing in certain contexts, but if you don't know where you're going, you got to adjust your tactics and strategies to match that, and there's and old expression, if you don't know where you're going, every road will take you there, okay? And so a lot of enterprise CXOs or CEOs have to start thinking about where they want to go with their business, this is the growth strategy. Then you got to understand which roads to take. Your thoughts on this? Obviously we've been thinking it's cloud native, but if I'm a decision maker, I want to make sure I have an architecture that's going to carry me forward to the future. I need to make sure that I know where I'm going, so I know what road I'm on. Versus not knowing where I'm going, and every road looks good. So your thoughts on leadership and what people should be thinking around knowing what their destination is, and then the roads to take? >> John, I think it's the most important question in this time. Great leaders are born through crisis, whether it's Winston Churchill, Charles de Gaulle, Roosevelt, any of the leaders since then, in any country, Mahatma Gandhi in India, the country I grew up, Nelson Mandela, MLK, all of these folks were born through crisis, sometimes severe crisis, they had to go to jail, they were born through wars. I would say, listen, similar to the people you talked about, yeah, there's elements of this crisis that similar to a World War, I was talking to my 80 year old father, he's doing well. I asked him, "When was the world like this?" He said, "Second World War." I don't think this crisis is going to last six years. It might be six or 12 months, but I really don't think it'll be six years. Even the health care professionals aren't. So what do we learn through this crisis? It's a test of our leadership, and leaders are made or broken during this time. I would just give a few guides to leaders, this is something tha, Andy's a great leader, Pat, myself, we all are thinking through ways by which we can exercise this. Think of Sully Sullenberger who landed that plane on the Hudson. Did he know when he flew that airbus, US Airways airbus, that few flock of birds were going to get in his engine, and that he was going to have to land this plane in the Hudson? No, but he was making decisions quickly, and what did he exude to his co-pilot and to the rest of staff, calmness and confidence and appropriate communication. And I think it's really important as leaders, first off, that we communicate, communicate, communicate, communicate to our employees. First, our obligation is first to our employees, our family first, and then of course to our company employees, all 30,000 at VMware, and I'm sure similarly Andy does it to his, whatever, 60, 70,000 at AWS. And then you want to be able to communicate to them authentically and with clarity. People are going to be reading between the lines of everything you say, so one of the things I've sought to do with my team, all the front office functions report to me, is do half an hour Zoom video conferences, in the time zone that's convenient to them, so Japan, China, India, Europe, in their time zone, so it's 10 o'clock my time because it's convenient to Japan, and it's just 10 minutes of me speaking of what I'm seeing in the world, empathizing with them but listening to them for 20 minutes. That is communication. Authentically and with clarity, and then turn your attention to your employees, because we're going stir crazy sitting at home, I get it. And we've got to abide by the ordinances with whatever country we're in, turn your attention to your customers. I've gotten to be actually more productive during this time in having more customer conference calls, video conference calls on Zoom or whatever platform with them, and I'm looking at this now as an opportunity to engage in a new way. I have to be better prepared, like I said, these are shorter conversations, they're not as long. Good news I don't have to all over the place, that's better for my family, better for the carbon emission of the world, and also probably for my life long term. And then the third thing I would say is pick one area that you can learn and improve. For me, the last few years, two, three years, it's been security. I wanted to get the company into security, as you saw today we've announced mobile, so I helped architect the acquisition of Carbon Black, very similar to kind of the moves I've made six years ago around AirWatch, very key part to all of our focus to getting more into security, and I made it a personal goal that this year, at the start of the year, before COVID, I was going to meet 1,000 CISOs, in the Fortune 1000 Global 2000. Okay, guess what, COVID happens, and quite frankly that goal's gotten a little easier, because it's much easier for me to meet a lot more people on Zoom video conferences. I could probably do five, 10 per day, and if there's 200 working days in a day, I can easily get there, if I average about five per day, and sometimes I'm meeting them in groups of 10, 20. >> So maybe we can get you on theCUBE more often too, 'cause you have access to a video camera. >> That is my growth mindset for this year. So pick a growth mindset area. Satya Nadella puts this pretty well, "Move from being a know-it-all to a learn-it-all." And that's the mindset, great company. Andy has that same philosophy for Amazon, I think the great leaders right now who are running these cloud companies have that growth mindset. Pick an area that you can grow in this time, and you will find ways to do it. You'll be able to learn online and then be able to teach in some fashion. So I think communicate effectively, authentically, turn your attention to serving your customers, and then pick some growth area that you can learn yourself, and then we will come out of this crisis collectively, individuals and as partners, like VMware and Amazon, and then collectively as a society, I believe we'll come out stronger. >> Awesome great stuff, great insight there, Sanjay. Really appreciate you sharing that leadership. Back to the more of technical questions around leadership is cloud native. It's clear that there's going to be a line in the sand, if you will, there's going to be a right side of history, people are going to have to be on the right side of history, and I believe it's cloud native. You're starting to see this emersion. You guys have some news, you just announced today, you acquired a Kubernetes security startup, around Kubernetes, obviously Kubernetes needs security, it's one of those key new enablers, disruptive enablers out there. Cloud native is a path that is a destination opportunity for people to think about, why that acquisition? Why that company? Why is VMware making this move? >> Yeah, we felt as we talked about our plans in security, backing up to things I talked about in my last few appearances on your show at VMworld, when we announced Carbon Black, was we felt the security industry was broken because there was too many point benders, and we figured there'd be three to five control points, network, endpoint, cloud, where we could play a much more pronounced role at moving a lot of these point benders, I describe this as not having to force our customers to go to a doctor and say I've got to eat 5,000 tablets to get healthy, you make it part of your diet, you make it part of the infrastructure. So how do we do that? With network security, we're off to the races, we're doing a lot more data center networking, firewall, load bouncing, SD-WAN. Really, reality is we can eat into a lot of the point benders there that I've just been, and quite frankly what's happened to us very gratifying in the network security area, you've seen the last few months, some firewall vendors are buying SD-WAN players, kind of following our strategy. That's a tremendous validation of the fact that the network security space is being disrupted. Okay, move to endpoint security, part of the reason we acquired Carbon Black was to unify the client side, Workspace ONE and Carbon Black should come together, and we're well under way in doing that, make Carbon Black agentless on the server side with vSphere, we're well on the way to that, you'll see that very soon. By the way both those things are something that the traditional endpoint players can't do. And then bring out new forms of workload. Servers that are virtualized by VMware is just one form of work. What are other workloads? AWS, the public clouds, and containers. Container's just another workload. And we've been looking at container security for a long time. What we didn't want to do was buy another static analysis player, another platform and replatform it. We felt that we could get great technology, we have incredible grandeur on container cell. It's sort of Red Hat and us, they're the only two companies who are doing Kubernetes scales. It's not any of these endpoint players who understand containers. So Kubernetes, VMware's got an incredible brand and relevance and knowledge there. The networking part of it, service mesh, which is kind of a key component also to this. We've been working with Google and others like Istio in service mesh, we got a lot of IP there that the traditional endpoint players, Symantec, McAfee, Trend, CrowdStrike, don't know either Kubernetes or service mesh well. We add now container security into this, we really distinguish ourselves further from the traditional endpoint players with bringing together, not just the endpoint platform that can do containers, but also Kubernetes service mesh. So why is that important? As people think about their future in containers, they'll want to do this at the runtime level, not at the static level. They'll want to do it at build time And they'll want to have it integrated with some of their networking capabilities like service mesh. Who better to think about that IP and that evolution than VMware, and now we bring, I think it's 12 to 14 people we're bringing in from this acquisition. Several of them in Israel, some of them here in Palo Alto, and they will build that platform into the tech that VMware has onto the Carbon Black cloud and we will deliver that this year. It's not going to be years from now. >> Did you guys talk about the-- >> Our capability, and then we can bring the best of Carbon Black, with Tanzu, service mesh, and even future innovation, like, for example, there's a big movement going around, this thing call open policy agent OPA, which is an open source effort around policy management. You should expect us to embrace that, there could be aspects of OPA that also play into the future of this container security movement, so I think this is a really great move for Patrick and his team, I'm very excited. Patrick is the CEO of Carbon Black and the leader of that security business unit, and he came to me and said, "Listen, one of the areas "we need to move in is container security "because it's the number one request I'm hearing "from our CESOs and customers." I said, "Go ahead Patrick. "Find out who are the best player you could acquire, "but you have to triangulate that strategy "with the Tanzu team and the NSX team, "and when you have a unified strategy what we should go, "we'll go an make the right acquisition." And I'm proud of what he was able to announce today. >> And I noticed you guys on the release didn't talk about the acquisition amount. Was it not material, was it a small amount? >> No, we don't disclose small, it's a tuck-in acquisition. You should think of this as really bringing us some tech and some talent, and being able to build that into the core of the platform of Carbon Black. Carbon Black was the real big move we made. Usually what we do, you saw this with AirWatch, right, anchor on a fairly big move. We paid I think 2.1 billion for Carbon Black, and then build and build and build on top of that, partner very heavily, we didn't talk about that. If there's time we could talk about it. We announced today a security alliance with top SIEM players, in what's called a sock alliance. Who's announced in there? Splunk, IBM QRadar, Google Chronicle, Sumo Logic, and Exabeam, five of the biggest SIEM players are embracing VMware in endpoint security, saying, Carbon Black is who we want to work with. Nobody else has that type of partnership, so build, partner, and then buy. But buy is always very carefully thought through, we're not one of these companies like CA of the past that just bought every company and then it becomes a graveyard of dead acquisition. Our view is we're very disciplined about how we think about acquisition. Acquisitions for us are often the last resort, because we'd prefer to build and partner. But sometimes for time-to-market reasons, we acquire, and when we acquire, it's thoughtful, it's well-organized within VMware, and we take care of our people, 'cause we want, I mean listen, why do acquisitions fail? Because the good people leave. So we're excited about this team, the team in Israel, and the team in Palo Alto, they come from Octarine. We're going to integrate them rapidly into the platform, and this is a good evidence of VMware investing more in security, and our Q3 earnings pulled, John, I said, sorry, we said that the security business was a billion dollar business at VMware already, primarily from network, but some from endpoint. This is evidence of us putting more fuel behind that fire. It's only been six, seven months and Patrick's made his first acquisition inside Carbon Black, so you're going to see us investing more in security, it's an important priority for the company, and I expect us to be a very prominent player in these three pillars, network security, endpoint security, endpoint is both client and the workload, and cloud. Network, endpoint, cloud, they are the three areas where we think there's lots of room for innovation in security. >> Well, we'll be watching, we'll be reporting and analyzing the moves. Great playbook, by the way. Love that organic partnering and then key acquisitions which you build around, it's a great playbook, I think it's very relevant for this time. The most important question I have to ask you, Sanjay, and this is a personal question, because you're the leader of VMware, I noticed that, we all know you're into music, you've been putting music online, kind of a virtual band. You've also hired a CUBE alumni, Victoria Verango from McAfee who also puts up music, you've got some musicians, but you kind of know how to do the digital moves there, so the question is, will the music at VMworld this year be virtual? >> Oh, man. Victoria is actually an even better musician than me. I'm excited about his marketing gifts, but I'm also excited to watch him. But yeah, you've heard him sing, he's got a voice that's somewhat similar to Sting, so we, just for fun, in our Diwali, which is an Indian celebration last year, Tom Corn, myself, and a wonderful lady named Divya, who's got a beautiful voice, had sung a song, which was off the soundtrack of the Bollywood movie, "Secret Superstar," and we just for fun decided to record that in our three separate homes, and put that out on YouTube. You can listen, it's just a two or three-minute run, and it kind of went a little bit viral. And I was thinking to myself, hey, if this is one way by which we can let the VMware community know that, hey, you know what, art conquers COVID-19, you can do music even socially distant, and bring out the spirit of VMware, which is community. So we might build on that idea, Victoria and I were talking about that last night and saying, hey, maybe we do a virtual music kind of concert of maybe 10 or 15 or 20 voices in the various different countries. Record piece of a song and music and put it out there. I think these are just ways by which we're having fun in a virtual setting where people get to see a different side of VMware where, and the intent here, we're all amateurs, John, we're not like great. There are going to be mistakes in this music. If you listen to that audio, it sounds a little tinny, 'cause we're recording it off our iPhone and our iPad microphone. But we'll do the best we can, the point is just to show the human spirit and to show that we care, and at the end of the day, see, the COVID-19 virus has no prejudice on color of skin, or nationality, or ethnicity. It's affecting the whole world. We all went into the tunnel at different times, we will come out of this tunnel together and we will be a stronger human fabric when we're done with this, We shall absolutely overcome. >> Sanjay, give us a quick update to end the segment on your thoughts around VMworld. It's one of the biggest events, we look forward to it. It's the only even left standing that theCUBE's been to every year of theCUBE's existence, we're looking forward to being part of theCUBE virtual. It's been announced it's virtual. What are some of the thinking going on at the highest levels within the VMware community around how you're going to handle VMworld this year? >> Listen, when we began to think about it, we had to obviously give our customers and folks enough notice, so we didn't want to just spring that sometime this summer. So we decided to think through it carefully. I asked Robin, our CMO, to talk to many of the other CMOs in the industry. Good news is all of these are friends of ours, Amazon, Microsoft, Google, Salesforce, Adobe, and even some smaller companies, IBM did theirs. And if they were in the first half of the year, they had to go virtual 'cause we're sheltered in place, and IBM did theirs, Okta did theirs, and we began to watch how they were doing this. We're kind of in the second half, because we were August, September, and we just sensed a lot of hesitancy from our customers that wanted to get on a plane to come here, and even if we got just 500, 1,000, a few thousand, it wasn't going to be the same and there would always be that sort of, even if we were getting back to that, some worry, so we figured we'd do something that might be semi-digital, and we may have some people that roam, but the bulk of it is going to be digital, and we changed the dates to be a little later. I think it's September 20th to 29th. Right now it's all public now, we announced that, and we're going to make it a great program. In some senses like we're becoming TV producer. I told our team we got to be like Disney or ESPN or whoever your favorite show is, YouTube, and produce a really good several-hour program that has got a different way in which digital content is provided, smaller snippets, very interesting speakers, great brand names, make the content clear, crisp and compelling. And if we do that, this will be, I don't know, maybe it's the new norm for some period of time, or it might be forever, I don't know. >> John: We're all learning. >> In the past we had huge conferences that were busting 50, 70, 100,000 and then after the dot-com era, those all shrunk, they're like smaller conferences, and now with advent of companies like Amazon and Salesforce, we have huge events that, like VMworld, are big events. We may move to a environment that's a lot more digital, I don't know what the future of in-presence physical conferences are, but we, like others, we're working with AWS in terms of their future with Reinvent, what Microsoft's doing with Ignite, what Google's doing with Next, what Salesforce's going to do with Dreamforce, all those four companies are good partners of ours. We'll study theirs, we'll work together as a community, the CMOs of all those companies, and we'll come together with something that's a very good digital experience for our customers, that's really what counts. Today I did a webinar with a partner. Typically when we did a briefing in our briefing center, 20 people came. There're 100 people attending this, I got a lot more participation in this QBR that I did with this SI partner, one of the top SIs in the world, in an online session with them, than would I have gotten if they'd all come to Palo Alto. That's goodness. Should we take the best of that world and some physical presence? Maybe in the future, we'll see how it goes. >> Content quality. You know, you know content. Content quality drives everything online, good engagement creates community, that's a nice flywheel. I think you guys will figure it out, you've got a lot of great minds there, and of course, theCUBE virtual will be helping out as we can, and we're rethinking things too-- >> We count on that, John-- >> We're going to be open minded to new ideas, and, hey, whatever's the best content we can deliver, whether it's CUBE, or with you guys, or whoever, we're looking forward to it. Sanjay, thanks for spending the time on this CUBE Keynote coverage of AWS Summit. Since it's digital we can do longer programs, we can do more diverse content. We got great customer practitioners coming up, talking about their journey, their innovation strategies. Sanjay Poonen, COO of VMware, thank you for taking your precious time out of your day today. >> Thank you, John, always a pleasure. >> Thank you. Okay, more CUBE, virtual CUBE digital coverage of AWS Summit 2020, theCUBE.net is we're streaming, and of course, tons of videos on innovation, DevOps, and more, scaling cloud, scaling on-premise hybrid cloud, and more. We got great interviews coming up, stay with us our all-day coverage. I'm John Furrier, thanks for watching. (upbeat music)

>> Live, from Las Vegas! It's theCube! Covering VMworld 2018. Brought to you by VMware and its ecosystem partners. >> Welcome back everyone, it's theCube's live coverage in Las Vegas for VMworld 2018, it's theCube. We got two sets, 24 interviews per day, 94 interviews total. Next three days, we're in day two of three days coverage. It's our ninth year of covering VMworld. It's been great. I'm John Furrier with Dave Vellante, next guest, Cube alumni, number one in the leading boards right now, Sanjay Poonen did a great job today on stage, keynote COO for VMware. Great to have you back. Thanks for coming on. >> John and Dave, you're always so kind to me, but I didn't realize you've been doing this nine years. >> This is our ninth year. >> That's half the life of VMware, awesome. Unreal. Congratulations. >> We know all the stories, all the hidden, nevermind, let's talk about your special day today. You had a really, so far, an amazing day, you were headlining the key note with a very special guest, and you did a great job. I want you to tell the story, who was on, what was the story about, how did this come about? Tech for good, a big theme in this conference has really been getting a lot of praise and a lot of great feedback. Take us through what happened today. >> Well listen, I think what we've been trying to do at VMware is really elevate our story and our vision. Elevate our partnerships, you've covered a lot of the narrative of what we've done with Andy Jessie. We felt this year, we usually have two 90 minute sessions, Day One, Day Two, and it's filled with content. We're technical company, product. We figured why don't we take 45 minutes out of the 180 minutes total and inspire people. With somebody who's had an impact on the world. And when we brainstormed, we had a lot of names suggested, I think there was a list of 10 or 15 and Malala stood out, she never spoke at a tech conference before. I loved her story, and we're all about education. The roots of VMware were at Stamford Campus. Diane Greene, and all of that story. You think about 130 million girls who don't go to school. We want to see more diversity in inclusion, and she'd never spoken so I was like, you know what, usually you go to these tech conferences and you've heard somebody who's spoken before. I'm like, lets invite her and see if she would come for the first time, and we didn't think she would. And we were able to score that, and I was still a little skeptical 'cause you never know is it going to work out or not. So thank you for saying it worked, I think we got a lot of good feedback. >> Well, in your first line, she was so endearing. You asked her what you thought a tech conference, you said too many acronyms. She just cracked the place up immediately. >> And then you heard my response, right? If somebody tells me like that, you tell VMotion wrong she looked at me what? >> Tell them about our story, real quick, our story I want to ask you a point in question. Her story, why her, and what motivated you to get her? >> Those stories, for any of you viewers, you should read the book "I'm Malala" but I'll give you the short version of the story. She was a nine year old in the Pashtun Area of the Swat Valley in Pakistan, and the Taliban setted a edict that girls could not go to school. Your rightful place was whatever, stay at home and become a mom with babies or whatever have you. You cannot go to school. And her father ran a school, Moster Yousafzai, wonderful man himself, an educator, a grandfather, and says know what, we're going to send you to school. Violating this order, and they gave a warning after warning and finally someone shot her in 2012, almost killed her. The bullet kind of came to her head, went down, and miraculously she escaped. Got on a sort of a hospital on a plane, was flown to London, and the world if you remember 2012, the world was following the story. She comes out of this and she's unscathed. She looks normal, she has a little bit of a thing on the right side of her face but her brains normal, everything's normal. Two years later she wins the Nobel Peace Prize. Has started the Malala Fund, and she is a force of nature, an amazing person. Tim Cook has been doing a lot with her in the Malala Fund. I think that actually caught my attention when Tim Cook was working with her, and you know whatever Apple does often gets a little bit of attention. >> Well great job selecting her. How's that relevant to what you guys are doing now, because you guys had a main theme Tech for Good? Why now, why VMware? A lot of people are looking at this, inspired by it. >> There are milestones in companies histories. We're at our 20 year birthday, and I'm sure at people's birthday they want to do big things, right? 20, 30, 40, 50, these decades are big ones and we thought, lets make this year a year to remember in various things we do. We had a 20 year anniversary celebration on campus, we invited Diane Greene back. It was a beautiful moment internally at Vmware during one of our employee meetings. It was a private moment, but just with her to thank her. And man, there were people emotional almost in tears saying thank you for starting this company. A way to give back to us, same way here. What better way to talk about the impact we're having in the community than have someone who is of this reputation. >> Well we're behind your mission 100%, anything you need. We loved the message, Tech for Good, people want to work for a mission driven company. People want to buy >> We hope so. >> from mission driven companies, that stated clear and the leadership you guys are providing is phenomenal. >> We had some rankings that came out around the same time. Fortune ranked companies who are changing the world, and VMware was ranked 17th overall, of all companies in the world and number one in the software category. So when you're trying to change the world, hopefully as you pointed out it's also an attractor of talent. You want to come here, and maybe even attractor of customers and partners. >> You know the other take-away was from the key note was how many Cricket fans there are in the VMworld Community. Of course we have a lot of folks from India, in our world but who's your favorite Cricketer? Was it Sachin Tendulkar? (laughs) >> Clearly you're reading off your notes Dave! >> Our Sonya's like our, >> Dead giveaway! >> Our Sonya's like our Cricket Geek and she's like, ask him about Sachin, no who's your favorite Cricketer, she wants to know. >> Sachin Tendulkar's way up there, Shayuda Free, the person she likes from Pakistan. I grew up playing cricket, listen I love all sports now that I'm here in this country I love football, I love basketball, I like baseball. So I'll watch all of them, but you know you kind of have those childhood memories. >> Sure >> And the childhood memories were like she talk about, India, Pakistan games. I mean this was like, L.A. Dodgers playing Giants or Red Socks, Yankee's, or Dallas Cowboys and the 49ers, or in Germany playing England or Brazil in the World Cup. Whatever your favorite country or team rivalry is, India Pakistan was all there more, but imagine like a billion people watching it. >> Yeah, well it was a nice touch on stage, and I'd say Ted Williams is my favorite cricketer, oh he plays baseball, he's a Red Sock's Player. Alright Sanjay, just cause your in the hot seat, lets get down to business here. Great moment on stage, congratulation. Okay Pat Gelsinger yesterday on the key note talked about the bridges, VMware bridging, connecting computers. One of the highlights is kind of in your wheelhouse, it's in your wheelhouse, the BYOD, Bring Your Own Device bridge. You're a big part of that. Making that work on on the mobile side. Now with Cloud this new bridge, how is that go forward because you still got to have all those table stakes, so with this new bridge of VMware's in this modern era, cloud and multicloud. Cluely validated, Andy Jassy, on stage. Doing something that Amazon's never done before, doing something on premise with VMware, is a huge deal. I mean we think it's a massive deal, we think it's super important, you guys are super committed to the relationship on premises hybrid cloud, multicloud, is validated as far as we're concerned. It's a done deal. Now ball's in your court, how are you going to bring all that mobile together, security, work space one, what's your plan? >> I would say that, listen on as I described in my story today there's two parts to the VMware story. There's a cloud foundation part which is the move the data center to the cloud in that bridge, and then there's the desk job move it to the mobile. Very briefly, yes three years of my five years were in that business, I'm deeply passionate about it. Much of my team now that I put in place there, Noah and Shankar are doing incredible jobs. We're very excited, and the opportunity's huge. I said at my key note of the seven billion people that live in the world, a billion I estimate, work for some company small or big and all of them have a phone. Likely many of those billion have a phone and a laptop, like you guys have here, right? That real estate of a billion in a half, maybe two billion devices, laptops and phones, maybe in some cases laptop, phone, and tablets. Someone's going to manage and secure, and their diverse across Apple, Google, big option for us. We're just getting started, and we're already the leader. In the data center, the cloud world, Pat, myself, Raghu, really as we sat three years ago felt like we shouldn't be a public cloud ourselves. We divested vCloud Air, as I've talked to you on your show before, Andy Jassy is a friend, dear friend and a classmate of mine from Harvard Business School. We began those discussions the three of us. Pat, Raghu, and myself with Andy and his team and as every quarter and year has gone on they become deeper and deep partnerships. Andy has told other companies that VMware Amazon is the model partnership Amazon has, as they describe who they would like to do business more with. So we're proud when they do that, when we see that happen. And we want to continue that. So when Amazon came to us and said listen I think there's an opportunity to take some of our stack and put it on premise. We kept that confidential cause we didn't want it to leak out to the world, and we said we're going to try'n annouce it at either VMworld or re:Invent. And we were successful. A part with these projects is they inevitably leak. We're really glad no press person sniffed it out. There was a lot of speculation. >> Couldn't get confirmation. >> There was a lot of speculation but no one sniffed it out and wrote a story about it, we were able to have that iPhone moment today, I'm sorry, yesterday when we unveiled it. And it's a big deal because RDS is a fast growing business for them. RDS landing on premise, they could try to do on their own but what better infrastructure to land it on than VMware. In some cases would be VMware running on VxRail which benefits Dell, our hardware partners. And we'll continue doing more, and more, and more as customers desire, so I'm excited about it. >> Andy doesn't do deals, as you know Andy well as we do. He's customer driven. Tell me about the customer demand on this because it's something we're trying to get reporting on. Obviously it makes sense, technically the way it's working. You guys and Andy, they just don't do deals out of the blue. There's customer drivers here, what are those drivers? >> Yeah, we're both listening to our customers and perhaps three, four, five years ago they were very focused on student body left, everybody goes public cloud. Like forget your on premise, evaporate, obliterate your data centers and just go completely public. That was their message. >> True, sweep the floor. >> Right, if you went to first re:Invent I was there on stage with them as an SAP employee, that's what I heard. I think you fast forward to 2014, 2015 they're beginning to realize, hey listen it's not as easy. Refactoring your apps, migrating those apps, what if we could bring the best of private cloud and public cloud together enter VMware and Amazon. He may have felt it was harder to have those cultivations of VMware or for all kinds of reasons, like we had vCloud Air and so on and so forth but once we divested that decision culminations had matured between us that door opened. And as that door opened, more culminations began. Jointly between us and with customers. We feel that there are customers who want many of those past type of services of premise. Cause you're building great things, relational database technology, AI, VI maybe. IoT type of technologies if they are landing on premise in an edge-computing kind of world, why not land on VMware because we're the king of the private cloud. We're very happy to those, we progress those discussion. I think in infrastructure software VMware and Amazon have some of the best engineers on the planet. Sometimes we've engineers who've gone between both companies. So we were able to put our engineering team's together. This is a joint engineering effort. Andy and us often talk about the fact that great innovation's built when it's not just Barny go to Marketing and Marketing press releases this. The true joint engineering at a deep level. That's what happened the last several months. >> Well I can tell you right now the commitment I've seen from an executive level and deep technology, both sides are deep and committed to this. It's go big or go home, at least from our perspective. Question I want to ask you Sanjay is you're close to the customer's of VMware. What's the growth strategy? If you zoom out, look down on stage and you got vSAN, NSX at the core, >> vSANjay (laughs) >> How can you not like a product that has my name on it? >> So you got all these things, where's the growth going to come from, the merging side, is the v going to be the stable crown jewels at NSX? How do you guys see the growth, where's it going to come from? >> Just kind of look at our last quarter. I mean if you peel back the narrative, John and Dave, two years ago we were growing single digits. Like low single digits. Two, three percent. That was, maybe the legacy loser description of VMware was the narrative everyone was talking about >> License revenue was flattish right? >> And then now all of sudden we're double digits. 12, 15 sort of in that range for both product revenue. It's harder to grow faster when you're bigger, and what's happened is that we stabilize compute with vSphere in that part and it's actually been growing a little bit because I think people in the VMware cloud provider part of our business, and the halo effect of the cloud meant that as they refresh the servers they were buying more research. That's good. The management business has started to grow again. Some cases double digits, but at least sort of single digits. NSX, the last few order grew like 30, 40%. vSAN last year was growing 100% off a smaller base, this year going 60, 70%. EUC has been growing double digits, taking a lot of share from company's like Citrix and MobileIron and others. And now, also still growing double digits at much bigger paces, and some of those businesses are well over a billion. Compute, management, end-user computing. We talked about NSX on our queue forming called being a 1.4 billion. So when you get businesses to scale, about a billion dollar type businesses and their sort of four, training five that are in that area, and they all get to grow faster than the market. That's the key, you got to get them going fast. That's how you get growth. So we focus on those on those top five businesses and then add a few more. Like VMware Cloud on AWS, right now our goal is customer logo count. Revenue will come but we talked on our earnings call about a few hundred customers of VMware Cloud and AWS. As that gets into the thousands, and there's absolutely that option, why? Because there's 500,000 customers of VMware and two million customers of Amazon, so there's got to be a lot of commonality between those two to get a few thousand. Then we'll start caring about revenue there too, but once you have logos, you have references. Containers, I'd like to see PKS have a few hundred customers and then, we put one on stage today. National Commercial Bank of Jamaica. Fantastic story of PKS. I even got my PKS socks for this interview. (John laughs) >> So that give you a sense as to how we think, there will be four, five that our businesses had scale and then a few are starting to get there, and they become business to scale. The nature of software is we'll always be doing this show because there will be new businesses to talk about. >> Yeah, hardware is easy. Software is hard, as Andy Patchenstien said on theCUBE yesterday. Congratulations Sanjay and all the success, you guys are doing great financially. Products looking really good coming out, the bloom is rising from the fruit you guys have harvested, coming together. >> John if I can say one last thing, I shared a picture of a plane today and I put two engines behind it. There's something I've learned over the last years about focus of a company, and I joked about different ways that my name's are pronounced but at the core of me there's a DNA. I said on stage I'd rather not be known as smart or stupid but having a big heart. VMware, I hope is known by our customers as having these two engines. An engine of innovation, innovating product and a variety of other things. And focused on customer obsession. We do those, the plane will go a long way. >> And it's looking good you guys, we can say we've been to Radio Event, we've been doing a lot of great stuff. Congratulations on the initiative, and a great interview with you today on doing Tech for Good and sharing your story. Getting more exposure to the kind of narratives people want to hear. More women in tech, more girls in tech, more democratization. Congratulations and thanks so much for sharing. >> Thank you John and Dave. >> Appreciate you being here. >> Sanjay Poonen, COO of VMware. Friend of theCUBE, Cube Alumni, overall great guy. Big heart and competitive too, we know that from his Twitter stream. Follow Sanjay on Twitter. You'll have a great time. I'm John Furrier with Dave Vellante, stay with us for more coverage from day two live, here in Las Vegas for VMware 2018. Stay with us. (tech music)

>> (Announcer) From Boston, Massachusetts, it's the Cube! Covering LiveWorx 18. Brought to you by PTC. >> Welcome back to the Seaport in Boston, everybody. This is day one of the LiveWorx show, PTC's big IoT user conference, but it's much, much more than that. My name's Dave Vellante, Stu Miniman. You're watching the Cube, the leader in LiveTech coverage. It's really our pleasure to have Devin Cleary here, he's the Director of Events at PTC. Dev, thanks so much for coming on The Cube, and thanks for putting together such a great show. >> Oh, thank you so much for having me. This is great. >> You're welcome. So, I say it's a user conference, but it's so much more. I mean, talk about what your intent was and what you've created, you and your team at LiveWorx. >> Absolutely. So for us, we take a step back in corporate events. And we're really trying to bring sort of a unique flair to the corporate events world. In a nutshell, we at PTC have a 25 year legacy of doing really powerful user events, and it was really an inspiration two years ago to kind of shake the mold. And again, no pun intended, be disruptive in the marketplace. So for us, we sort of coined a new term or strategy that we call Industry Inclusiveness. And this is something where we wanted to sort of break down the four walls of the company, and invite industry influencers, individuals who are leading the charge, inclusive of actual competitors, 'cause for us, it's better together. And the whole story and talk track around LiveWorx is collaboration accelerates innovation. So for us, we want to make sure we embrace a lot of different people, walks of life, and diversity, and the intent is to create a one time a week a year, successful program that focuses and profiles nine of the most disruptive technologies on the planet. So this is everything from robotics to AI, to IoT, to AR, blockchain, and so much more. And for us, this is really the essence of what LiveWorx has become, which again for us, we want everyone to know that this event is sort of the world's most respected digital transformation conference. >> So, couple things I want to point out. Well, so over 6,000 people here, the kickoff was in the theater-in-the-round I've only seen that-- We do over a hundred events every year, I've only seen it done twice, and it's worked both times. I think it's a home run when you do the theater-in-the-round. The intro was like, I tweeted out this morning, it was like an Olympic opening ceremony. I mean really, where do you get your inspiration from that? >> So, you know what, for us, I have a really amazing team that works with me and collaboratively. And for us, we really want to sort of challenge the status quo. So, we always look for things actually outside of the tech bubble, if you will. We look at music. We look at fashion. We look at art. We look at a lot of pop culture sort of references and that sort of stems our ideas of how we sort of nurture and create what we call the apex, or LiveWorx or what you saw this morning. And for us, I'm all about what I call delight moments. So these are moments that frankly are sort of above and beyond the core content of what the conference offers and just making people have a great time. Showmanship and entertainment is just as much important as the core again content that we offer at LiveWorx. >> Dev, you've got a big tent here with a lot of different topics. There's a show I go to, we talk about the random collision of unusual suspects, which this reminded me of. Can you talk a little bit about how in these diverse communities, yet we should see some overlap and some bumping together. >> Yeah. Absolutely. So, again with LiveWorx, and sort of again profiling these nine to ten most disruptive technologies out there, we're always trying to recruit people that are very diverse from various backgrounds. You know, one specific goal that we have, just from a geographic persepective is making sure that over half our audience is from international markets outside of the United States. So again, when you're bumping shoulders or walking the halls everywhere around us, you're guaranteed to hear someone that comes from a different walk of life, a different experience, a different educational background and that adds a lot of value to the overall conference. Now, again, we target everyone from administrators to engineers, developers and more because really this show runs the gamut on everything from product design and sort of the ideas of what you want to do, all the way through service, manufacturing, it is the full scope of industry 4.0. So, to your point, there's a lot of intersection and a lot of overlapping because every company, every person, every individual, wants to experience and learn how to embrace what we call disruptive tech. >> You know, again, we do a lot of shows and the vast majority, when someone like you guys brings us to a show, they want to showcase their products and basically pimp up their own stuff. You chose a different approach. First of all, thank you for that. So, this today has been all about thought leadership. Stu and I were saying it reminds us of some of the stuff we do with MIT. Where you have professors, you have thought leaders, talking about not, kind of frankly, some boring products. >> And it's not a sales pitch. >> Right, it's not a sales pitch. But, why that decision and what's your vision for where you want to take this thing? >> Yeah, so again, I would say that a lot of conferences, and this is no offense to my brothers and my sisters in the events world out there, but people are so sick and tired of going to the standard trade show. The days of pipe-and-drape and aisles of just being pitched to and receiving free stress balls, and hiring staff that might not even be employed by the company, but they just frankly look good, those days are completely over. In our audience, the technologists who really matter in this world, who are doing a lot of great work, they want that substance and that core content. So, for us, it's really a vision about that's embraced and sort of evolved into give back and let the content lead your success. And that is going to help amplify the voice and further the mission. We look at LiveWorx as a catalyst well beyond the company that employs me and the people that work for just these companies. We have a vision to make Boston an epicenter, a headquarters, a world-renown attraction for technologists world-wide knowing this city for IoT and for AR. And for us, we embrace the innovation district as that pallet, that backdrop, that environment to allow us to really accomplish that. So, LiveWorx is growing exponentially. We experienced double digit growth this year, which was amazing. Starting where I was only with this company two years ago and less than 25 hundred attendees and we're at 6,100 right now live on the show floor at LiveWorx. So the future is really bright for us, and we're embracing this notion of the convention center is only going to be constricting for so long. It's time that we also implode those four walls and we embrace the outside. And what our plans are going for, which I'm really excited to sort of announce, is we're going to be now becoming more of an industrial innovation week in Boston, and taking our plans mainstream. So, that means taking the content that we focus on, and the partners that we work with, and the industry thought leaders and now you start to actually replicate these events throughout the entire seaport. So, think of it, and again most of you know South by Southwest, I'm a big fan and an avid follower, think of it South by Southwest meets Industrial, and that is the future of this show. >> Love it, and you know, we're thrilled to be part of it. And it's palpable. You actually see now, in the seaport... You know, we were talking off camera, you can't compete with Silicon Valley or on terms with Silicon Valley does. You shouldn't even try. We're bicoastal, we have an office in Palo Alto we know it well. It's a unique vortex. But certainly, IoT, Blockchain, VR, there really is some clear innovation going on here so, if you can focus on that, you can actually really blossom an ecosystem and that's really what you're doing. >> Oh, absolutely. And, again, PTC has been headquartered here for over 25 years, they're a leader in industrial innovation. They're a company that believes in giving back. We have curated and nurtured through partnerships with Harvard Business School, with MIT Innovation Lab, etc. We have cultivated some of the greatest startups of our time right now, who are creating groundbreaking technology in IoT, in AR, that is changing the world. We're even actually doing work right now in our backyard with Boston Children's Hospital, for example. Doing incredible work with our Vuforia product in AR that's helping actually find a cure for Alzheimer's. So, again, the possibilities are endless, and the innovation is limitless. >> Well, you're the hot company right now, obviously growing very rapidly, you're kind of like the Comeback Kid. You're clearly punching above your weight. The Scott Kirsner article in the Globe was unbelieveable. >> (Devin) Thank you I know we're very... Shout out to Scott. >> And so, you got to be thrilled with that. But, what's interesting to me, Dev, is you're not... You could ride that wave, and just pump up PTC but you're doing things that will allow you to sustain this as a community member, paying it forward, you know, it's kind of a cliche, but that's what I see. Thoughts? >> A hundred percent. And, again, the way that we sort of frame LiveWorx is I want you to think of PTC as the presenting sponsor. They are an investor in the vision that this team has to carry forward the community and the movement all around industrial innovation. And again, we feel that Boston being sort of our headquarters in our backyard, it's important that we're giving back and again, furthering that opportunity to further solidify our right as a rightful heir of IoT and AR, as a city, as a community and as the state of Massachusetts. >> Dev, wondering if you could give our audience that didn't come to this event a quick flavor of what's going on, flavoring and I loved you had the Boston food trucks all right outside. They're a little warm. My friends from the west coast are like, "This isn't warm." But for Boston, it hit summer. But, give us a quick tour around what people missed. >> Yeah, so we're all about an immersive experience at LiveWorx. Again, you're going to have sort of a checklist of what you absolutely need to have at an event to sustain someone's expectations. So, the content, the networking, the value. But again, we like to take it a step further and things that I call delight moments. So, for example, this year in Extropolis, and Extropolis, for those of you at home, that is our sort of expectation shattering, ground-breaking, playground for adults in technology. So, every corner, every ounce, every inch of this show floor has something to engage, ignite the 5 senses and tell our story. And one example specifically that I love to highlight this year is I've actually created the vision with a whole slew of individuals from PTC and partners and whatnot. Something we call the X-factory. Manufacturing is one of the biggest industries in business in the world. Mostly every company at an enterprise level has some sort of manufacturing component to it. And what we wanted to do this year is create the factory of the future. Meaning, working with the leaders like McKinsey, and again HeroTech and global brands in Germany who are defining manufacturing and who founded manufacturing in our history, we have partnered with them to say, "What does that factory of the future look like? What are companies going to be doing five, ten, fifteen years from now and what can we expect?" You're getting that first at LiveWorx, which is awesome, and the whole process is "Let's not have a standard kiosk. Let's not do a laptop with a video. Let's actually build out a 20,000 square foot industrial factory with multiple stations from digital engineering to service to again, AR induced digital twins and everything else in between. And let's actually have every single attendee create, design and manufacture a smart connected product. We're working with our partner, Bell and Howell, from a shipping, service and supply chain perspective, and again, we are blowing the roof off this show on that one activation, and there's over a hundred in total throughout this entire show this week. So, that's a little bit of a flavor of LiveWorx. And beyond that, we do things, everything from a puppy daycare hour to sort of do a high tech low touch feel. We do incredible food presentations and we're going to be ending with a big bang tomorrow with our closing party called the Mix-It Six, which is one of my favorite programs the entire week. And that is actually a superhero themed event where we're actually having a guest host and a personal friend, Paul Rudd, who was the Ant Man for Marvel, he'll be hosting our event. And the whole notion around superheroes is that we tell everyone this week "Unleash your inner superhero". Take advantage of the technology that is on display, and realize how it can enable and empower you to now have superhuman powers. So, everything from AR giving you the power to see the invisible, to IoT helping you get the power to predict the future. Everything is possible and everything is creative at LiveWorx. >> Well, it's obviously working. And so, I'm sure the execs are seeing this going, "Great. Good Job. Way to go. We've got some momentum. Let's double down." But, you back up two years ago, how did you sell this to the folks? Cause we see a lot of guys like, "Alright, how many leads we going to get out. How much revenue we going to drive" How'd you get through that knothole? >> So, let's put it in this perspective. There's a lot of intrinsic and intangible ways to measure the success of a show, and the value and the impact brought to a company. One thing I would actually say, I've worked in the tech industry for over six years now, I've been in the events business for over a decade, I've worked for some of the most incredible and impressive, and media-driven startups in the world right now. PTC, though, is a very interesting ecosystem. Their executives actually embrace the notion of what I presented first and foremost, about again, industry inclusiveness as we call that term. And for us, we have a vision at PTC to be disruptive, to be ground-breaking. If we do not embrace that ourselves, as our culture and our business model, how do we hope someone else to believe in the product, and the vision and the mission that we set forth in the marketplace. >> And from that, you got a response of, "Yeah, let's do it." >> So, again, am I going to be a hundred percent honest and transparent? Was everyone embracing that a hundred percent? No. But again, I think the proof is in the pudding and I think again it's a leap of faith in saying, "Listen, take a chance. Be disruptive, and see what the product of our fruits of our labor could be." And again, here you have it three years later, triple the size of the audience, tripling the size of the success, seeing multiple customers, multiple partners multiple industry leaders now attaching themselves to this brand. So for us, LiveWorx is nothing greater than a record breaking success this year, and I'm so excited for the rest of you at home to experience on the live stream, or again check out 2019 June 10-13. >> June 10, right here. Right? >> (Devin) Right here again. >> Dev, first of all thanks so much for having The Cube here and making us a part of this awesome event and look forward to working with you in the future. Congratulations on all your success. >> Thank you so much. >> You're very welcome. By the way, check out thecube.net that's where all the videos here will be. Check out siliconangle.com all the editorial coverage. Wikibond.com is where the research is. We're a wrap here from LiveWorx day one. Dave Vellante, for Stu Miniman. Thanks so much for watching, we'll see you next time.

>> From Boston, Massachusetts, it's the Cube, covering LiveWorx 18, brought to you by PTC. (light electronic music) >> Welcome back to Boston, everybody. This is the Cube, the leader in live tech coverage. We're covering day one of the LiveWorx conference that's hosted by PTC. I'm Dave Vellante with my cohost Stu Miniman. Professor Linda A. Hill is here. She's the Wallace Brett Donham Professor of Business Administration at the Harvard Business School. Professor Hill, welcome to the Cube. Thanks so much for coming on. >> Thank you for having me. >> So, innovation, lot of misconceptions about innovation and where it stems from. People think of Steve Jobs, well, the innovation comes from a single leader and a visionary who gets us in a headlock and makes it all happen. That's not really how innovation occurs, is it? >> No, it is not, actually. Most innovation is the result of a collaboration amongst people of different expertise and different points of view, and in fact, unless you have that diversity and some conflict, you rarely see innovation. >> So this is a topic that you've researched, so this isn't just an idea that you had. You've got proof and documentation of this, so tell us a little more about the work that you do at Harvard. >> So really over 10 years ago, I began to look at the connection between leadership and innovation, because it turns out that like a lot of organizations, the academy is quite siloed, so the people studying innovation were very separate from the ones who studied leadership, and we look at the connection between the two. When you look at that, what you discover is that leading innovation is actually different from leading change. Leading change is about coming up with a vision, communicating that vision, and inspiring people to want to fulfill that vision. Leading innovation is not about that. It's really more about how do you create a space in which people will be willing and able to do the kind of collaborative work required for innovation to happen? >> Sometimes I get confused, maybe you can help me, between invention and innovation. How should we think about those two dimensions? >> Innovation and invention. The way I think about it is an innovation is something that's both an invention, i.e. new, plus useful. So it can be an innovation or it can be creative, but unless it's useful and addresses an opportunity or a challenge that an organization faces, for me, that's not an innovation. So you need both, and that is really the paradox. How do you unleash people's talents and passions so you get the innovation or the invention or the new, and then how do you actually combine that, or harness all of those different ideas so that you get something that is useful, that actually solves a problem that the collective needs solved? >> So there's an outcome that involves changing something, adoption, as part of that innovation. >> For instance, one of the things that we're doing a lot right now is we're working with organizations, incumbents, I guess you'd call them, that have put together these innovation labs to create digital assets. And the problem is that those digital assets get created, they're new, if you will, but unless the core business will adopt them and use them, they get implemented, they're not going to be useful. So we're trying to understand, how do you take what gets created in those innovation labs, those assets, if you will, and make sure that the organization takes them in and scales them so that you can actually solve a business problem? >> Professor Hill, a fascinating topic I love digging into here. Because you see so many times, startups are often people that get frustrated inside a large company. I've worked for some very large companies, so which have had labs, or research division, and even when you carve aside time for innovation, you do programs on that, there's the corporate antibodies that fight against that. Maybe talk a little bit about that dynamic. Can large companies truly innovate? >> Yes, large companies can truly innovate. We do see it happening, it is not easy by any means, and I think part of the dilemma for why we don't see more innovation is actually our mindset about what leadership is about and who can innovate. So if I could combine a couple of things you asked, invention, often when we talk to people about what is innovation, they think about technology, and they think about new, and if I'm not a technologist and I'm not creative, then I can't play the game. But what we see in organizations, big ones that can innovate, is they don't separate out the innovators from the executors. They tell everybody, guess what, your job no matter who you are, of course you need to deal with making sure we get done what we said we'd deliver, but if we're going to delight our customers or we're ever going to really get them to be sticky with us, you also need to think about not just what should you be doing, but what could you be doing. In the literature, in the research, that's called how do you close an opportunity gap and not just a performance gap? In the organizations we look at that are innovative, that can innovate time and again, they have a very democratic notion: everybody has a role to play. So our work, Collective Genius, is called Collective Genius because what we saw in Pixar was the touchstone for that work, is that they believe everybody has a slice of genius. They're not equally big or whatever, but everybody has a contribution to make, and you need to use yours to come up with what's new and useful. A lot of that will be incremental, but some of it will be breakthrough. So I think what we see with these innovation labs and the startups, if you will, is that often people do go to start them up, of course they eventually have to grow their business, so a part of what I find myself doing now is helping startups that have to scale, figure out how to maintain that culture, those capabilities, that allowed them to be successful in the first place, and that's tough one for startups, right? >> Yeah, I think Pixar's only about a 1,500 person company and they all have creativity in wat they do. I'm wondering if there's some basic training that's missing. I studied engineering and I didn't get design training in my undergraduate studies. It wasn't until I was out in the workforce that I learned about that. What kind of mindset and training do you have to do to make sure the people are open to this? >> One of the things that I did related to this is about five years ago, I told our dean of Harvard Business School that I needed to join the board of an organization called Arts Center. I don't know if you were aware of Arts Center in Pasadena. It's the number one school of industrial design in the U.S., and people don't know about it 'cause I always laugh at them. The man who designed the Apple store is a graduate there. The man who designed Tesla car and et cetera, so they're not so good at it, but one of the things that we've all come to understand is design thinking, lean startup, these are all tools that can help you be better at innovation, but unless you create an environment around that, people are going to be willing to use those tools and make the missteps, the failures that might come with it, know how to collaborate together, even when they're a large organization, I mean it's easier when you're smaller. But unless you know how to do all that, those tools, the lean startup or digital or design thinking or whatever, ' cause I'm working with a lot of the people who do that, and deep respect for them, nothing gets done. In the end, we are human, we all need to know first off that it's worthwhile to take the risk to get done whatever it is you want to get done, so what's the purpose of the work, how's it going to change the world? The second thing is we need to share a set of values about learning because we have to understand, as you well know, you cannot plan your way to an innovation, you have to act your way. And with the startup, you act as fast as you can, right, so somebody will give you enough money before you run out of money. Same similar process you have to do in a large company, an incumbent, but of course it's more complicated. The other thing that makes it more complicated is companies are global, and the other part of it that makes it more complicated that I'm seeing like in personalized medicine: you need to build an ecosystem of different kinds, of nanotechnologists, biotechnologists, different expertise to come together. All of this, frankly, you don't learn any of it in school. I remember learning that you can't teach anyone how to lead. You actually have to help people learn how to lead themselves and technologists will frequently say to me, i don't know why, you're a leadership professor? Well, this is a technical problem. We just haven't figured out the platform right, and once we get it right, all will be. No, once you get it right, humans are still going to resist change and not know how to necessarily learn together to get this done. >> I wonder if, are there any speacial leadership skills we need for digital transformation? Really kind of the overarching theme of the show here, help connect the dots for us. >> So the leading change piece is about having a vision, communicating it, and inspiring people. What it really does turn out when we look at exceptional leaders of innovation, and all of us would agree that they've done wonderful things time and again, not just once, they understand that is collective. They spend time building a culture and capabilities that really will support people collaborating together. The first one they build is, how do we know how to create a marketplace of ideas through debate and discourse? Yeah, you can brainstorm, but eventually, we have to abrade and have conflict. They know how to have healthy debates in which people are taught terms of skills, basic stuff, not just listening and inquiring, but how to actively advocate in a constructive way for your point of view, these leaders have to learn how to amplify difference, whereas many leaders learn how to minimize it. And as the founder of Pixar once said, you can never have too many cooks in the kitchen. Many people believe you can. It's like today, you need as much talent as you can get. Your job as a leader, what are the skills you need to get those top cooks to be able to cook a meal together, not to reduce the amount of diversity. You got to be prepared for the healthy fight. >> You've pointed this out in some of your talks is that you've got to have that debate. >> Yes, you have to. >> That friction, to create innovation, but at the same time it has to be productive. I know it can be toxic to an organization, maybe talk about that a little. >> I think one of the challenges is what skills do people need to learn? One is, how do you deal with conflict when people are very talented and passionate? I think many people avoid conflict or don't know how to engage that constructively, just truly don't, and they avoid it. I find that many times organizations aren't doing what they need to do because the leadrr is uncomfortable. The other thing, and I'm going to stereotype horribly here, but I'm an introvert, that book quiet is wonderful, but one of the challenges you have if you're more introverted or if you're more technical and you tend to look at things from a technical point of view, in some ways is that you often find the people with that kind of, that's what drives them, there's a right answer, there's a rational answer we need to get through or get to, as opposed to understanding that really innovative ideas are often the combination of ideas that look like they're in conflict initially, and by definition, you need to have the naive eye and the expert working together to come up with that innovative solution, so for someone who's a technologist to think they should listen to someone who's naive about a technical problem, just the very basic mindset you have about who's going to have the idea. So that's a tricky one, it's a mindset, it's not even just a skill level, it's more, who do you think actually is valuable? Where is that slice that you need at this moment going to come from? It may not be from that expert, it may be from the one who had no point of view. I heard a story that I was collecting my data, and apparently, Steve Jobs went to see Ed Land. We're here in Boston over Polaroid, which is one of our most innovative companies, right, in the history. And he said, what do I need to learn from you? And what Land said to him is, whenever my scientist and technologist get stuck, I have some of the art students or the humanities students come in and spend time in the lab. They will ask the stupid question because they don't know it's stupid. The expert's not going to ask the stupid question, particularly the tech expert, not going to ask it. They will ask the question that gets the first principles. I think, but I wouldn't want to be held to this, the person who was telling me the story, that's partly how they came up with the instant camera. Some naive person said, why do I have to wait? Why can't I have it now? And of course, silly so-and-so, you don't know it takes this, that, and the others. Then someone else thought, why does she have to wait? I think it was really a she who asked the question, the person telling me this, and they came up with a different way. Who said it has to be done in a darkroom in that way? I think that there's certain things about our mindset independently of our skill, that get in the way of our actually hearing all the different voices we need to hear to get that abrasion going in the right way. >> Listening to those Columbo questions, you say, can sometime lead to an outcome that is radically different. There's a lot of conversation in our industry, the technology industry, about, we call it the cordially shock clock, the companies are on a cordially reporting mechanism or requirement from the SEC. A lot of complaints about that, but at the same time, it feels like at least in the tech business, that U.S. companies tend to be more innovative. But again, you hear a lot of complaints about, well, they can't think for the long term. Can you help us square that circle? >> It's funny, so one thing is you rarely ever get innovation without constraint. If you actually talk to people who are trying to innovate, there needs to be the boundaries around it in which they're doing the constraint. To be completely free rarely leads to, it is the constraint. Now we did do a study of boards to try to understand when is a board facilitating innovation and when is a board interfering with it? We interviewed CEOs and lead directors of a number of companies and wrote an article about that last year, and what we did find is many boards actually are seen as being inhibitors. They don't help management make the right decision. Then of course the board would say now management's the one that's too conservative, but this question about how the board, with guidance, and all of these issues have come up when you're looking at research analysts and who you play to, and I've been on corporate boards. One thing is that the CEO needs to know that the board is actually going to be supportive of his or her choices relative to how you communicate why you're making the choices you're making. So there is pressure, and I think it's real. We can't tell CEOs, no, you don't need to care about it, 'cause guess what, they do get in trouble if they don't. On the other hand, if they don't know how to make the argument for investing in terms of helping the company grow, so in the long run, innovation is not innovation for innovation's sake, it's to meet customer needs so you can grow, so you need to have a narrative that makes sense and be able to talk with people, the different stakeholders, about why you're making certain choices. I must say that I think that many times companies may be making the right choice for the long haul, and get punished in the short run, for sure that happens, but I also think that there are those companies that get a way with a lot of investment in the long haul, partly because they do, over time, deliver, and there is evidence that they're making the right choices or have built a culture where people think what they're saying might actually happen or be delivered. What's happening right now because of the convergence of industries, is I think a lot of CEOS, it's a frightening time, it is difficult to sustain success these days, because what you have to do is innovate at low cost. Going back to some other piece about boards, one of the things we've found is so many board members define innovation as being technology. Technology has a very important enabling role to play in otherwise, but they have such a narrow definition of it in a way that again, they create a culture to let the people in the innovation lab innovate, but not one where everybody understands that all of us, together, need to innovate in ways that will also prepare us to execute better. They don't see the whole culture transformation, digital transformation often requires cultural transformation for you to be able to get this stuff done, and that's what takes a long time. Takes a long time to get rid of your legacy systems and put in these new, or get that balance right, but what takes even longer is getting the culture to be receptive to using that new data capability they have and working in different ways and collaborating when they've been very siloed and they're paid to be very siloed. I think that unless you show, as a CEO, that you are actually putting all of those building blocks in place, and that's what you're about, you understand it's a transformation at that level, you're just talking to the analysts about, we're going to do x, and there's no evidence about your culture or anything else going on, how you're going to lead to attract and retain the kind of talent you need, no one's buying that, I think that that's the problem. There's not a whole story that they're telling about how this goes together and they're going to move forward on it. >> To your other point, is there data to suggest, can you quantify the relationship between diversity and innovation? >> There are some data about that, I don't have it. I find it's very funny, as you can see, I'm an African-American woman. My work is on leadership globalization and innovation. I do a lot of work on how you deliver global strategies. I often find when I'm working with senior teams, they'll ask me, would you help us with our inclusion effort? And I think it's partly because of who I am and diversity comes up in our work, and if you actually build the environments for talking about, they tend to be more inclusive about diversity of thought. Not demographic diversity, those can be separate as we well know because we know Silicon Valley is not a place where you see a lot of demographic diversity, but you might see diversity of thought. I haven't asked, it's interesting, I have had some invitations by governments, too. Japan, which has womenomics, which is a part of their policy If they need to get more women in the economy, frankly, otherwise they can't grow as an economy. It turns out that the innovation story is the business case that many businesses or business people find one that they can buy into, doesn't feel like you're doing it 'cause it's the right thing, or not that you shouldn't do the right thing, but helping them understand how you really, really make sure that the minority voice is heard, and I mean minority of thought, independent of demographic, but if you create an environment as a leader where you actually run your team so that people do feel they can speak up, as you all know. It's so often, I'll talk to people afterwards and they'll say, I didn't say what I really thought about those ideas because I didn't want to be punished or I didn't want to step in that person's territory. People are making decisions based on varying complete information everyone knows. What often happens is it gets escalated up. We had this one senior team complaining, everything is so slow here, a very big bank, not the one I'm on the board of, another very big bank we're working with. Everything's so slow, people won't do anything. So when we actually ask people, what's happening? Why aren't you making decisions? First off, decisions making rights are very fuzzy in this organization, except for at the very top, so what they say is all decisions, actually, they're made on the 34th floor. We escalate 'cause if you make a decision, they're going to turn it over anyway, so we've backed off, or we don't say what we think 'cause I don't want them to say what they think about my ideas 'cause we actually have very separate business units here. >> We might get shot. >> You might get shot. That's the reality that many people live in, so we're not surprised to see that not very many organizations can innovate time and again when we think about the reality of what our contexts are. The good news for us is that in part, millennials won't tolerate some of these environments in the same way, which is going to be a good thing. I think they're marvelous to work with, I'm not one of them obviously, but I think a lot of what they're requesting, the transparency, the understanding the connections between what they do and are they having impact, the desire to be developed and be learning, and wanting to be an organization they're not ashamed of but in fact they're very proud to be a part of what's happening there, I think that that requires businesses and leaders to behave differently. One of the businesses we studied, if the millennial wants to know who's on the front line, he or she is making a difference. They had to do finance differently to be able to show, to draw the cause and effect between what that person was doing every day and how it impacted the client's work. That ended up being a really interesting task. Or a supply chain leader, who really needed them to think very differently about supply chain so they could innovate. What he ended up doing is, instead of thinking about our customers being the pharmaceutical company, the CBS or the big hospital chain or whatever it is, think about the end customer. What would we have to do with supply chain to ensure that that end patient took his or her pill on time and got better? And when they shifted the whole meaning of the work to that individual patient in his or her home, he was able, over time, to get the whole supply chain group organization to understand, we're not doing what we need to do if we're really going to reduce diabetes in the world because the biggest problem we have is not when they go and get their medication, it's whether they actually use it properly when they're there. So when you switched it to that being the purpose of the work, the mindset that everyone had to have, that's what we're delivering on. Everyone said, oh, this is completely appropriate, we needed digital, we need different kind of data to know what's going on there. >> Don't get me started on human health. Professor Hill, for an introvert, you're quite a storyteller, and we appreciate you sharing your examples and your knowledge. Thanks so much for coming on the Cube. It was great to meet you. >> Been my pleasure, glad to know you, thank you. >> Keep it right there, everybody, Stu and I will be back right after this short break. You're watching the Cube from LiveWorx in Boston. We'll be right back. (light electronic music)

>> Announcer: From the VMware Campus in Palo Alto, California It's the CUBE. Covering Women Transforming Technology >> I'm Lisa Martin with the CUBE and we are on the ground in Palo Alto at VMware headquarters with the third annual Women Transforming Technology event. Excited to be speaking with Kathy Chou, the VP of R&D Operations and Central Services from VMware. Kathy, nice to meet you. >> Nice to meet you, as well. >> So, third annual Women Transforming Technology event. Sold out within hours. It was standing room only in the keynote this morning. We got to hear from Laila Ali. So inspiring. What a strong female, who used the word purpose a lot during her talk this morning. You're a mom of four boys. You've been a female in tech for a long time, now. What is it that has kept you in tech and pursuing a career in technology as a leader? >> Well, I have been in tech for over 25 years. And it has been an absolute amazing journey. From early career to mid career to now, I'm going to say mid-to-late career, it's just a passion that's I've had. When I was a young girl, I was just good at math and science. And I pursued that passion and ended up with a mechanical engineering degree. And there are many steps along the way where I was getting discouraged. "Why do you want to do this tech thing? "You should maybe drop out, do something else." But I'm so glad I stuck with it. And really, as you mentioned, the four boys. I want to be an example for my sons because I want them to understand there can be women with all sorts of talents. And if they happen to find someone who is technical and wants to do something in this world or do something in hi-tech or management or whatever that is, that they support them in every way, shape, or form. >> How have you gotten the coveted or sought-after work-life balance? What are some of you tips and tricks we can learn from? >> Well, first of all, I call it work-life integration. Because it's really not a balance. You've got to integrate it. And one of the things I've also ... First thing, I've chosen companies that really believe in that. VMware is a company that really believes in this bringing your authentic self to work and making sure that you can integrate your work with your life. And you need to have that balance. In fact, I do a career journey. And when I talk about my career journey, there's above line, below line. And above the line is the work stuff, and below the line is the life stuff. And you need to make sure that they're equally full. Because I believe that if you have a very, very full and busy life outside of work, it'll actually make you a better employee. So I encourage my folks, as a leader now, I'm finally a leader and I manage a team, that if folks have to go and do something in the middle of the day, doctor's appointment, do something with the kid, go do it. Because as long as you get your job done, you can integrate both work and life. >> Lisa: I love that. I think you're absolutely right, that it isn't about ... It's integration. They have to work together. So, from your career in mechanical engineering, what were some of the things that ... Were you just sort of born with an innate, "I'm really interested in this," in terms of keeping your head down and focused and getting into a fairly male-dominated industry and field? Was it just sort of that innate, that you were born with, "Hey I like this. "Yeah, I'm in a male-dominated field, but I don't care?" >> Yeah, it kind of was. Because, you know, my love ... So I had two focus areas in mechanical engineering. One was material science. I just loved material science. And so I ended up working for my first job out of Stanford was Instron Corporation which was a materials testing firm. My other love was robotics. So, I had actually worked for GM on the production line and helped program some of those early robots. And so, I was able to combine those two passions when I ended up going to Instron and developed their robotics line. Now, here's the thing. As I'm going through all of this, am I looking around and realizing, "My goodness, there are no other females here?" That was the case. But my passion for learning new things, and doing something, and making a difference seemed to outstrip the fact that there weren't females. And now that, as I'm getting, again, more advanced in my career, I'm realizing that I have a duty to play as a role-model to say "Hey, you can do it. "You can have a family. "You can have a great job. "You can have a great life outside of work. "You know, as long as you integrate all of those things." So I think with that perseverance, that's how you can get through. >> And I think that there is such a need for those role models because like we were talking about Laila Ali this morning who clearing was born with this natural confidence, which not a lot of women are, >> Kathy: Yes. >> Not a lot of people are, in general. So, I think it's really important that you've recognized you're in this position to be a mentor. >> Kathy: Mm hmm. >> What are some of the ... How do you advise, either women that are in their early stage careers or even those maybe in the middle of their careers that are pondering, "Hey, I don't see any "or a lot of strong female leaders "in the executive suite. "Should I stay here?" You had that internally, but what is your advise to women who might be at that crossroads. >> Yeah. I think the first and most important thing is that it takes courage to stay the course. I know that sounds a little odd, but don't care about what you see around yourself, right? Just know about what do you love? What is your passion? And, you know, I always say that there is something I call the sweet spot. It's where your passion meets your talent. And if you're in a place like that, you're in a very special place. Because that means it's a strength of yours that you also love. And if you do that, it doesn't matter who else is around you. You know, one thing Laila said that I really loved and I really, really believe in myself is preparation. You have to be prepared so as long as you are prepared that's what gives you the confidence. We don't ... Okay, maybe she was born confident. She came out of the womb confident. I certainly wasn't. I was someone who grew up with ... I really lacked a lot self confidence. I was painfully shy. I had trouble speaking in front of people. I worked very, very hard. I was prepared to get over that fear. You know, I put myself ... She mentioned this thing about being uncomfortable. And I think I put myself in a lot of uncomfortable situations as well. I was really resonating with what she said. Speaking in front of large audiences. In fact, I used to memorize a lot of my speeches and then I remember I would forget it in the middle of it and- (gasp) I would be horrified. But you know what? You do a few of those things, you get better and better at it and if you just get out of that comfort zone and you have those little butterflies. I always say if you have those little butterflies, you're stretching your learning and that's what helps you achieve. >> I couldn't agree more. I think that, you know, I think that I always say, "Get comfortably uncomfortable." >> Kathy: Yeah. >> No matter what you're doing. If it's above the line or below the line as you were saying before. But you're right, she talked about preparation, being prepared and we talk a lot about imposter syndrome. >> Kathy: Mm hmm. >> Often times at Women and Technology events, just because it comes up, it's something I didn't even know what it was until a few years ago. And I think just simply finding out that this is a legitimate issue that many people face of any industry, gender, you name it. That alone, knowing that that was legitimate, was, "Okay, I'm not alone here." But if you can go, "Let me prepare and get prepared for what I need to do." That preparation part is, I think, a huge key that, if more people understand that just work and be prepared, you're not alone in feeling that. Sort of maybe setting the level setting there. I think that can go a long way to helping those women in any stage of their career just get that little bit more courage that you said. >> Yes. >> That you need to get out of that comfort zone. And I agree I think goals that make you a little nervous, are good goals to have. >> Totally agree. I have some tips on how to get out of that comfort zone, Or get out of your comfort zone. So, I find, okay, there's always the smartest-person-in-the-room thing you hear about, and, forget about that, okay? Ask questions. You always here this: There's no such thing as a dumb question. And there really is no such thing. I know how many times someone has asked a question say, "I asked that question." >> Lisa: Absolutely. >> And actually it's a brilliant way to be heard. Because a lot of times, a lot of women ... Actually, it doesn't matter. A woman, unrepresented minority, it could be a white male who's shy, right? In an inclusive environment, if you don't speak up, you're not heard. And a lot of the brilliant things that people have, are those questions that people have. Because if they don't understand something, I'm sure there's someone else who doesn't either. And so if you just ask some questions, you'll find that you'll get that courage to ask a few more. And then eventually you get to the point where you actually can advocate. >> I agree. You have to be willing to try and I love that. So, the theme of this event, Inclusion in Action. >> Kathy: Yes. >> I'd love to get your perspective on how do you see inclusion in action here at VMware in engineering, for example in R&D. >> Yes. First of all, I'm on the Diversity and Inclusion Council. So I represent R&D. Yes, I just had a meeting with Betsy Sutter. We had our Diversity and Inclusion Council for VMware so I was representing R&D. So it's something that is very, very important to us. One thing I will say that I've learned at this conference is it's not about the stats. It's not about the fact that you have meetings or goals. It's something you must internalize. It's something, as a leader, I think it's my job and duty to exude it, you know, through example, through being inclusive, to making sure, like I was at an event the other day here at VMware I was talking about I was at the Watermark Conference, and I was basically doing a replay of what I did at the Watermark Conference. And in there, I saw three men. And I said to myself, "You know what? "We need more men at this event." And so, even at this conference today, I want to see more men. It's all about inclusion, right? And I think people sometimes forget that, even though it says Women Transforming Technology, men, women, whatever your sexual orientation, whatever that is, we all care about how women can transform technology. You don't have to be a woman to do that. >> Right. Well one of the things that came out today was the great news about this massive investment that VMware is doing. 15 million to create this lab at Stanford. >> Kathy: Yeah. >> This innovation lab. And we were talking with Betsy earlier. And actually, in the press release, it cited that McKinsey report that states that, companies that have a more diverse executive team, >> Yes. no stats or anything, more diverse, are 21 percent more profitable. And it just seems like a no brainer. Every company wants to be profitable, right? Except for an NPO. So, if all you need to do is to increase that thought diversity alone and you're more profitable, why is this so difficult for so many other organizations to culturally adopt that mindset? >> Yeah. What I find fascinating is that diversity and inclusion is obviously a very hot topic in Silicon Valley, right? Every company is either fearing having their numbers publicly outputted or their working on these things. And yet we're doing a lot of things, but the needle isn't moving, right? So, I think it was mentioned today, by a professor from Stanford. She was saying there's not a silver bullet. Some of these things will take a long time. One of the things that we had talked about was this pipeline of, it doesn't matter again, young women, under-represented minorities, whatever you say in the STEM fields. We need to encourage more of that, okay? And so, what's interesting is there's more, well certainly more females than males that are graduating these days, yet, when you start off in a hi-tech company, you will see quite a bit of balance between male and female, I'll just use that as an example. It's even worse as far as under-represented minorities. But as you move up the chain, what happens is the numbers just fall off. And, one of the root causes that I see as an issue, is that when these women look up at the top and say, "I don't see women." Or if I am a person of color, "I don't see a person of color in this leadership position. "Why should I continue?" And then you see just a lot of attrition happening at those levels. And so, what it takes is every single one of us internalizing how important this is. And I think when that happens, when it's not a, "Oh, it's a project." Or, "Oh, it's an initiative." Or, "Oh, it's a goal." And this, by the way, may take a decade or more. But once we all internalize this, I think that's when the needle's going to move. >> Yeah, we talked a lot earlier about accelerating this. Because you're right, the attrition rates are incredibly high, much higher for women leaving technology than leaving other industries. And a lot of women are looking for those role models, like somebody like you for example. But, I think the more awareness, the more consistent awareness we can get ... And also the fact that, you know, in the last six months we've had the Me Too Movement explode onto the scene, getting this unlikely alliance with Hollywood, Time's Up, Brotopia coming out a couple of months ago, and was something that I actually put off reading because I thought, "I don't think I want to know", and I thought, "Actually, yes I do." Because there's no reason that these things should continue. >> Right. >> But, to your point, it's not just about getting more women involved. It's really about integrating and including everybody. >> Kathy: Absolutely. >> To move the needle, but much faster. Half of 2018 is almost over. There were no big females onstage for CES five months ago. And there's really no reason for that. So the more we can all come together and just identify role models and examples and share the different things that we've been through, the more I think we can impact this acceleration of this movement. >> Totally agree. I actually have a thought that you just triggered around perhaps accelerating this in the best way we can. Knowing, again, there's no silver bullet. But I was at my business school reunion and I was shocked to see that 80 percent of my business school graduates were not working. And what happened is many of these women had taken jobs in consulting firms, investment banking firms, that weren't that friendly. And when they started to have children, they stopped out. And they didn't want to compromise their family. Who does? Nobody wants to do that. But when they wanted to come back, they found that they had either gotten off, they call it the mommy track, right? The train left the station, they couldn't make it back on. Or they weren't willing to take a lower job. And so, because of that, many of them ended up not working. And, you know, that's sad. Because these are really, really smart, brilliant ... >> Lisa: These are Harvard graduates, right? >> They are. Harvard Business School graduates that were not working. And so, like you said, it requires everyone to understand, right? It's the employers, a lot of these men, need to understand that women, if they want ... And by the way, it's not even women these days. It's young men who want to be with their families, as well. Paternity leaves, time off with the kids, those sorts of things. If you allow those people that freedom. You know, when I was young, I felt like I went through this by myself. So I had three kids five and under. My career was not progressing. I was just doing lateral moves and I didn't feel like I was successful in anything. Not successful in my job, not successful at home. And then I had no friends, 'cause I was too busy and work and home. But if I had more of a support network at the time, fortunately I didn't drop out. I could have. I think many people do. So, if we can provide more support at that really important time when they're raising their families, people can see that, "Hey, I can have a great family life and also a great work life." >> So key, just for support alone. And that's one of the things that I think is really exciting about Women Transforming Technology. It's this consortium of organizations and industry and academia and non-profits, coming together to identify and tackle these issues that we're facing. 'Cause the issues that women are facing are issues that corporations, profitable corporations, are facing. But to connect on these challenge points, provide that support and that network, and also, to your point, maybe even providing an unlikely mentor to somebody who might have in your position where, "I don't think I'm being successful anywhere." But you stuck with it, and you might have at times gone, "I don't know why I'm sticking with this." But you had some intestinal fortitude to do that. More of those supportive and mentoring voices and people, the more we can elevate them, and show them to other people who might be struggling, the better we're going to be able to move this needle. >> Completely agree. And you know what? They always say "it takes a village," right? It takes a village to raise a family. It takes a village to work and do what you need to do and make a change in the world, and we all need to do this together. And, by the way, there's nothing more inclusive than that, is there? >> Lisa: Right. >> We all have to deal with this. It doesn't matter your sexual orientation, your age, your gender, your ethnicity, doesn't matter. We all share in this common bond, right, around how do we integrate our work and our life. >> Kathy, brilliantly said. Thank you so much for stopping by the CUBE and sharing your experiences and your wisdom. I, for one, was very inspired. So thank you for your time. >> Thank you, I was inspired as well. I really appreciate it. >> Oh, thank you. Thank you for watching the CUBE. We are on the ground at VMware for the Women Transforming Technology event. Thanks for watching. (music)

>> Announcer: From Copenhagen, Denmark, it's theCUBE. Covering KubeCon and CloudNativeCon Europe 2018. Brought to you by the Cloud Native Computing Foundation and its ecosystem partners. >> Hello and welcome back to the live CUBE coverage here in Copenhagen, Denmark, for KubeCon 2018, Kubernetes European conference. This is theCUBE, I'm John Furrier, my co-host Lauren Cooney here with Adrian Cockcroft who is the Vice President of Cloud Architecture and Strategy for Amazon Web Services, AWS. CUBE alumni, great to see you, a legend in the industry, great to have you on board today. Thanks for coming on. >> Thanks very much. >> Quick update, Amazon, we were at AWS Summit recently, I was at re:Invent last year, it gets bigger and bigger just continue to grow. Congratulations on successful great earnings. You guys posted last week, just continuing to show the scale and leverage that the cloud has. So, again, nothing really new here, cloud is winning and the model of choice. So you guys are doing a great job, so congratulations. Open source, you're handling a lot of that now. This community here, is all about driving cloud standards. >> Adrian: Yeah. >> Your guys position on that is? Standards are great, you do what customers want, as Andy Jassy always says, what's the update? I mean, what's new since Austin last year? >> Yeah, well, it's been great to be back on had a great video of us talking at Austin, it's been very helpful to get the message out of what we're doing in containers and what the open source team that I lead has been up to. It's been very nice. Since then we've done quite a lot. We were talking about doing things then, which we've now actually done and delivered on. We're getting closer to getting our Kubernetes service out, EKS. We hired Bob Wise, he started with us in January, he's the general manager of EKS. Some of you may know Bob has been working with Kubernetes since the early days. He was on the CNCF board before he joined us. He's working very hard, they have a team cranking away on all the things we need to do to get the EKS service out. So that's been major focus, just get it out. We have a lot of people signed up for the preview. Huge interest, we're onboarding a lot of people every week, and we're getting good feedback from people. We have demos of it in the booth here this week. >> So you guys are very customer-centric, following you guys closely as you know. What's the feedback that you're hearing and what are you guys ingesting from an intelligence standpoint from the field. Obviously, a new constituent, not new, but a major constituent is open source communities, as well as paying enterprise customers? What's the feedback? What are you hearing? I would say beyond tire kicking, there's general interest in what Kubernetes has enabled. What's Amazon's view of that? >> Yeah, well, open source in general is always getting a larger slice of what people want to do. Generally, people are trying to get off of their enterprise solutions and evolving into an open source space and then you kind of evolve from that into buying it as a service. So that's kind of the evolution from one trend, custom or enterprise software, to open source to as a service. And we're standing up all of these tools as a service to make them easier to consume for people. Just, everybody's happy to do that. What I'm hearing from customers is that that's what they're looking for. They want it to be easy to use, they want it to scale, they want it to be reliable and work, and that's what we're good at doing. And then they want to track the latest moves in the industry and run with the latest technologies and that's what Kubernetes and the CNCF is doing, gathering together a lot of technologies. Building the community around it, just able to move faster than we'd move on our own. We're leveraging all of those things into what we're doing. >> And the status of EKS right now is in preview? And the estimated timetable for GA? >> In the next few months. >> Next few months. >> You know, get it out then right now it's running in Oregon, in our Oregon data center, so the previews are all happening there. That gets us our initial thing and then everyone go okay, we want to in our other regions, so we have to do that. So another service we have is Fargate, which is basically say just here's a container, I want to run it, you don't have to declare a node or an instance to run it first. We launched that at re:Invent, that's already in production obviously, we just rolled that out to four regions. That's in Virginia, Oregon, Dublin and Ohio right now. A huge interest in Fargate, it lets you simplify your deployments a little bit. We just posted a new blog post that we have an open source blog, you can find if you want to keep up with what's going on with the open source team at AWS. Just another post this morning and it's a first pass at getting Fargate to work with Kubernetes using Virtual Kubelet which is a project that was kicked off by, it's an experimental project, not part of the core Kubernetes system. But it's running on the side. It's something that Microsoft came up with a little while ago. So we now have, we're working with them. We did a pull request, they accepted it, so that team and AWS and a few other customers and other people in the community, working together to provide you a way to start up Fargate as the underlying layer for provisioning containers underneath Kubernetes as the API for doing you know the management of that. >> So who do you work with mostly when you're working in open source? Who do you partner with? What communities are you engaging with in particular? >> It's all over. >> All over? >> Wherever the communities are we're engaging with them. >> Lauren: Okay, any particular ones that stand out? >> Other than CNCF, we have a lot of engagement with Apache Hadoop ecosystem. A lot of work in data science, there's many, many projects in that space. In AI and machine learning, we've sponsored, we've spend a lot of time working with Apache MXNet, we were also working off with TensorFlow by Torch and Caffe and there's a lot, those are all open source frameworks so there's lots of contributions there. In the serverless arena, we have our own SAM service application model. We've been open sourcing more of that recently ourselves and we're working with various other people. Across these different groups there's different conferences you go to, there's different things we do. We just sponsored Rails Conference. My team sponsors and manages most of the open source conference events we go to now. We just did RAILCON, we're doing a Rust conference, soon I think, there's Python conferences. I forget when all these are. There's a massive calendar of conferences that we're supporting. >> Make sure you email us that that list, we're interested actually in looking at what the news and action is. >> So the language ones, AltCon's our flagship one, we'll be top-level sponsor there. When we get to the U.S., CubeCon in Seattle, it's right there, it's two weeks after re:Invent. It's going to be much easier to manage. When we go to re:Invent it's like everyone just wants to take that week off, right. We got a week for everyone to recover and then it's in the hometown. >> You still have that look in your eyes when we interviewed you in Austin you came down, we both were pretty exhausted after re:Invent. >> Yeah, so we announced a bunch of things on Wednesday and Thursday and I had to turn it into a keynote by Tuesday and get everyone to agree. That's what was going on, that was very compressed. We have more time and all of the engineering teams that really want to be at an event like this, were right in the hometown for a lot. >> What's it like workin' at Amazon, I got to ask you it since you brought it up. I mean and you guys run hard at Amazon, you're releasing stuff with a pace that's unbelievable. I mean, I get blown away every year. Almost seems like, inhuman that that you guys can run at that pace. And earnings, obviously, the business results speak for themselves, what's it like there? I mean, you put your running shoes on, you run a marathon every day. >> It's lots of small teams working relatively independently and that scales and that's something other engineering organizations have trouble with. They build hierarchies that slow down. We have a really good engineering culture where every time you start a new team, it runs at its own speed. We've shown that as we add more and more resources, more teams, they are just executing. In fact, their accelerated, they're building on top of other things. We get to build higher and higher level abstractions to layer into. Just getting easier and easier to build things. We're accelerating our pace of innovation there's no slowing down. >> I was telling Jassy they're going to write a Harvard Business School case study on a lot of the management practices, but certainly the impact on the business side with the model that you guys do. But I got to ask you, on the momentum side, super impressed with SageMaker. I predicted on theCUBE at AWS Summit that that will be the fastest growing service. It will overtake Aurora, I think that is currently on stage, presented as the fastest growing service. SageMaker is really popular. Updates there, its role in the community. Obviously, Kubernete's a good fit for orchestrating things. We heard about CubeFlow, is an interesting model. What's going on with SageMaker how is it interplaying with Kubernetes? >> People that want to run, if you're running on-premise, cluster of GPU enabled machines then CubeFlow is a great way of doing that. You're on TensorFlow, that manages your cluster, you run CubeFlow on top. SageMaker is running at very low scale and like a lot of things we do at AWS, what you need to run an individual cluster for any one customer is different from running a multi-tenant service. SageMaker sits on top of ECS and it's now one of the largest generators of traffic to ECS which is Amazon's horizontally scaled, multi-tenant, cluster management system, which is now doing hundreds of millions of container launches a week. That is continuing to grow. We see Kubernetes as it's a more portable abstraction. It has some more, different layers of API's and a big community around it. But for the heavy lifting of running tens of thousands of containers in for a single application, we're still at the level where ECS does that every day and Kubernetes that's kind of the extreme case, where a few people are pushing it. It'll gradually grow scale. >> It's evolution. >> There's an evolution here. But the interesting things are, we're starting to get some convergence on some of the interfaces. Like the interfacing at CNA, CNA is the way you do networking on containers and there is one way of doing that, that is shared by everybody through CNA. EKS uses it, BCS uses it and Kubernetes uses it. >> And the impact of customers is what for that? What's the impact? >> It means the networking structures you want to set up will be the same. And the capabilities and the interfaces. But what happens on AWS is because it has a direct plug-in, you can hook it up to our accelerated networking infrastructure. So, AWS's instances right now, we've offloaded most of the network traffic processing. You're running 25 gigabits of traffic, that's quite a lot of work even for a big CPU, but it's handled by the the Nitro plug-in architecture we have, this in our latest instance type. So if you talked a bit about that at re:Invent but what you're getting is enormous, complete hypervisor offload at the core machine level. You get to use that accelerated networking. You're plugging into that interface. But that, if you want to have a huge number of containers on a machine and you're not really trying to drive very high throughput, then you can use Calico and we support that as well. So, multiple different ways but all through the same thing, the same plug-ins on both. >> System portability. You mentioned some stats, what's the numbers you mentioned? How many containers you're launching a week, hundreds of thousands? On ECS, our container platform that's been out for a few years, so hundreds of millions a week. It's really growing very fast. The containers are taking off everywhere. >> Microservices growth is, again that's the architecture. As architecture is a big part of the conversation what's your dialogue with customers? Because the modern software architecture in cloud, looks a lot different than what it was in the three layered approach that used to be the web stack. >> Yeah, and I think to add to that, you know we were just talking to folks about how in large enterprise organizations, you're still finding groups that do waterfall development. How are you working to kind of bring these customers and these developers into the future, per se? >> Yeah, that's actually, I spend about half my time managing the open source team and recruiting. The other half is talking to customers about this topic. I spend my time traveling around the world, talking at summits and events like this and meeting with customers. There's lots of different problems slowing people down. I think you see three phases of adoption of cloud, in general. One is just speed. I want to get something done quickly, I have a business need, I want to do it. I want machines in minutes instead of months, right, and that speeds everything up so you get something done quickly. The second phase is where you're starting to do stuff at scale and that's where you need cloud native. You really need to have elastic services, you can scale down as well as up, otherwise, you just end up with a lot of idle machines that cost you too much and it's not giving you the flexibility. The third phase we're getting into is complete data center shutdown. If you look at investing in a new data center or data center refresh or just opening an AWS account, it really doesn't make sense nowadays. We're seeing lots of large enterprises either considering it or well into it. Some are a long way into this. When you shut down the data center all of the backend core infrastructure starts coming out. So we're starting to see sort of mainframe replacement and the really critical business systems being replaced. Those are the interesting conversations, that's one of the areas that I'm particularly interested in right now and it's leading into this other buzzword, if you like, called chaos engineering. Which is sort of the, think of it as the availability model for cloud native and microservices. We're just starting a working group at CNCF around chaos engineering, is being started this week. So you can get a bit involved in how we can build some standards. >> That's going to be at Stanford? >> It's here, I mean it's a working group. >> Okay, online. >> The CNCF working group, they are wherever the people are, right. >> So, what is that conversation when you talk about that mainframe kind of conversation or shut down data centers to the cloud. What is the key thing that you promote, up front, that needs to get done by the by the customer? I mean, obviously you have the pillars, the key pillars, but you think about microservices it's a global platform, it's not a lift and shift situation, kind of is, it shut down, but I mean not at that scale. But, security, identity, authentication, there's no perimeter so you know microservices, potentially going to scale. What are the things that you promote upfront, that they have to do up front. What are the up front, table stake decisions? >> For management level, the real problem is people problems. And it's a technology problem somewhere down in the weeds. Really, if you don't get the people structures right then you'll spend forever going through these migrations. So if you sort of bite the bullet and do the reorganization that's needed first and get the right people in the right place, then you move much faster through it. I say a lot of the time, we're way upstream of picking a technology, it's much more about understanding the sort of DevOps, Agile and the organizational structures for these more cellular based organizations, you know, AWS is a great example of that. Netflix are another good example of that. Capital One is becoming a good example of that too. In banking, they're going much faster because they've already gone through that. >> So they're taking the Amazon model, small teams. Is that your general recommendation? What's your general recommendation? >> Well, this is the whole point of microservices, is that they're built by these small teams. It's called Conway's law, which says that the code will end up looking like the team, the org structure that built it. So, if you set up a lots of small teams, you will end up with microservices. That's just the way it works, right. If you try to take your existing siloed architecture with your long waterfall things, it's very hard not to build a monolith. Getting the org structure done first is right. Then we get into kind of the landing zone thing. You could spend years just debating what your architecture should be and some people have and then every year they come back, and it's changing faster than they can decide what to do. That's another kind of like analysis paralysis mode you see some larger enterprises in. I always think just do it. What's the standard best practice, layout my accounts like this, my networks like this, my structures we call it landing zone. We get somebody up to speed incredibly quickly and it's the beaten path. We're starting to build automation around these on boarding things, we're just getting stuff going. >> That's great. >> Yeah, and then going back to the sort of chaos engineering kind of idea, one of the first things I should think you should put into this infrastructure is the disaster recovery automation. Because if that gets there before the apps do, then the apps learn to live with the chaos monkeys and things like that. Really, one of the first apps we installed at Netflix was Chaos Monkey. It wasn't added later, it was there when you arrived. Your app had to survive the chaos that was in the system. So, think of that as, it used to be disaster recovery was incredibly expensive, hard to build, custom and very difficult to test. People very rarely run through their disaster recovery testing data center fail over, but if you build it in on day one, you can build it automated. I think Kubernetes is particularly interesting because the API's to do that automation are there. So we're looking at automating injecting failure at the Kubernetes level and also injecting into the underlying machines that are running Good Maze, like attacking the control plane to make sure that the control plane recovery works. I think there's a lot we can do there to automate it and make it into a low-cost, productized, safe, reliable thing, that you do a lot. Rather than being something that everyone's scared of doing that. >> Or they bolted on after they make decisions and the retrofit, pre-existing conditions into a disaster recovery. Which is chaotic in and of itself. >> So, get the org chart right and then actually get the disaster recovery patterns. If you need something highly available, do that first, before the apps turn up. >> Adrian, thanks for coming on, chaos engineering, congratulations and again, we know you know a little about Netflix, you know that environment, and been big Amazon customer. Congratulations on your success, looking forward to keeping in touch. Thanks for coming on and sharing the AWS perspective on theCUBE. I'm John Furrier, Lauren Cooney live in Denmark for KubeCon 2018 part of the CNC at the Cloud Native Compute Foundation. We'll back with more live coverage, stay with us. We'll be right back. (upbeat music)

(upbeat music) >> Hello there and welcome to a special Cube conversation here at The Cube's Palo Alto studios, I'm John Furrier. Join with me for this special Cube Conference, Stu Miniman with Wikibon and The Cube co-host as well just up at Amazon Web Services Summit. Stu, great to see you again. Our next guest is Ben Golub, who's the executive chairman and interim CEO of Storj, pronounced storage. So it's a really hot cryptocurrency, blockchain based storage solution. I should say decentralized storage, not necessarily cryptocurrency, but tokens are involved, encryption. Great to see you. >> Great to see you, it's good to be back. >> Formerly Docker CEO and now advising at Mayfield Fund as a venture partner and also interim CEO of a hot-- >> Yeah really exciting company. And I'm really excited to talk to you about it today. >> So let's just jump into it. So obviously the ICO craze is awesome and we've always speculated that the blockchain and the decentralized applications are coming is going to be the real action. But yet it's going to create efficiencies where there's inefficiencies. >> Sure. >> Venture capital is one of them and that's why the ICO craze is going. People are raising a boatload of money that they probably wouldn't have gotten that amount. >> Wouldn't have gotten, yeah no dilution, things like that. It's interesting yeah. >> So give us an update on Storj or storage. How much in ICO did they raised, whitepapers out there? It's peer to peer, give a quick, take a minute to explain what the company's doing. >> Yeah well I guess that I should probably start by saying that I think that blockchain is bigger than just cryptocurrency, and decentralized is bigger than blockchain, and Storj is primarily a decentralized storage company. So we're about decentralized apps and the whole thing would absolutely work even if we were just using dollars. But I think it does make it a whole lot more exciting. And so the company, kind of unique in the crypto space in that we actually had a running service that was providing real value, before we did the large token sale. And the token sale raised about $30 million. Fortunately they took about 10 of that in Ethereum and Bitcoin which rose up. So there's a good deal more than that in the bank account right now. >> John: Hopefully they converted to fiat currency. >> And then they converted to fiat along the way. >> It's at an all-time high of $20,000 right now. It's like $7,000, something like that. >> Yeah, so you know, didn't sell everything at the peak, but didn't sell at the-- >> Yeah, so we've been having many blockchain and crypto or token-based economic kind of things. But the real question is what's happening? Now we know the action's been on the infrastructure side. We look at all the top hedge funds, Polychain, amongst others. They love these deals because it's infrastructure. Is that where the action is and how are you guys looking at that because at the same time, there's a wave of decentralized applications also known as Dapps coming on. So there's a relationship going on between how fast the infrastructure can go, and then how applications are going to work with either on chain or off chain dynamics. >> Sure, sure. So maybe it would be helpful to give you a sense of what it is that we do. 'Cause I think that if you do that, then I think it makes sense in the context of decentralized infrastructure, decentralized apps, but also actually traditional infrastructure as well. I've always been searching for a company that I could describe at Thanksgiving. I've never succeeded, so I always end up saying that I'm in computers, and fixing somebody's printer. (laughing) But I guess if I were to describe Storj at Thanksgiving, I'd say it's basically the Airbnb of storage, or the Airbnb of disc drives. So Airbnb, people have lots of condos or vacation properties that aren't being used all the time, and so Airbnb brings them together with people who want to rent those, and they're the largest hotel company in the world, without owning a single property. And we're kind of doing the same thing with Storj, in that there is, first of all, this explosion in the amount of data that's getting created. It would fill a stack of CD-ROMs to Mars and back this year. Yet the price of cloud storage hasn't come down. And 90% of all the disc drives that are out there are only about 10% utilized. So seems like a problem that needs a solution. And that's what we've done. We've basically brought together a very large network of individuals and companies that have spare storage capacity and matched them up with people who need storage. The really cool aspect, there are many cool aspects about it, but one of them is that basically if you want to store on the Storj network, we take your file, you encrypt it, so we never hold the keys. You encrypt it, it's all scrambled up, we break it up into between 20 and 80 pieces, and we spread those out across 150,000 or so nodes that we have in our network. So it's super cheap, but it's also super secure. Great performance because the data's way out at the edge. And super available because there's no storm or power outage or idiot tripping over a power cord that can take out your storage. >> So, Ben, you touched on, first question I was going to ask, of course, trust and security. Storage I absolutely have to worry about, so it sounds like that's at the core, but there's a number of dynamics going on in the industry. Object storage was great, let's spread it out, let's make it more decentralized, but most of the core storage industry is speeds and feeds and latency's super important, and even when you start getting to distributed architecture, I worry about that latency. So what are kind of the use cases, what are some of the key customer issues? Is price a big piece of it? Or what solutions does Storj solve that others can't? >> I always said when I was at Cluster, which was a storage company that there were four things that mattered in storage. There's certainly price; there was security; as in I don't want anybody to be able to access it; there's availability, I never want to drop or lose files; and finally there's performance, how fast I can get it. And so for a huge range of use cases that involve files, basically everything that object storage is kind of used for today, the design of our system is actually much better because we've encrypted it locally and then spread it out, you really can't attack it. First of all, you'd have to figure out... So a would-be attacker who wanted to find one of your files in the storage network would have to figure out which of the 80 or the 20 nodes out of 150,000 it's located on. If they found one of those, and they got the small portion of the file that's there, they wouldn't be able to do anything with it 'cause it's encrypted. Even if they were somehow able to decrypt it by stealing the key from you, not from us... >> So encryption and immutability... >> And immutability, right. So you get all of that. So for the security piece, it's great. For the availability piece, I never lose a file. It's really, really good, because if you just look at the math, the chances that somehow... You can basically lose 10 out of 20 nodes and still be able to recover your files. And all of our nodes are run by different people, different power supply. >> So let's take a step back. How many nodes are on the network now, you said? >> 150,000 now, run by 70,000 farmers, is what we call them. They're not miners, 'cause they're not just solving that problem, they're just producing something of value. 70,000 farmers, and then we have on the network right now, over 50 petabytes of data, which is a really large amount, and yet, we don't run a single data center. >> Have you guys raised any venture at all, or is it all ICO proceeds? >> There was a small seed round that was done, before the ICO craze. But other than that, it's all-- >> And how many people are working on the company? >> 25. >> So you guys are a classic startup. The working product, how does that look now? Is it on the blockchain, is it off the chain, how's it working, Bitcoin? >> So I've described to you what the product does. So far nothing I've described to you involves blockchain. The way the economics work is that as a user, somebody who wants to store on our network, we quote a price in dollars. You can either pay us in dollars or in the Storj token, and as a farmer, you get compensated with a Storj token. And that's done, of course, using blockchain we're actually part of Ethereum. >> Is that ERC-20 token? >> ERC-20 token, yeah. There are also interesting things that we are working on using blockchain for things like you just mentioned, data integrity, so I can make sure that if I'm doing a snapshot of a database, and I want to make sure that it's exactly what it is, nobody can tamper with it, et cetera, then that's a perfect use of blockchain. But using blockchain for the stuff I was talking about before, like figuring out where the shards are and making sure that they're uptime and reliable, that's actually stuff where blockchain isn't the best answer. >> Ben, tell us a little bit about the customers that you find there, 'cause storage administrators, that role's been changing a lot, but the typical storage administrator, if you tell them, "Oh yeah, I'm doing some distributed thing, "somewhere else, and paying in crypto-currency," they'd be like, are you kidding me? I want this thing that I can lock and hold and guard with a gun. >> This is like anything else, there's an adoption curve, and right now it's clearly very much early adopters. And actually similarly to Docker and similar to the cloud in general, it's developers who are leading the way. Developers are saying, oh, wow, I can write to the storage network in the same way that I would have written to S3, only it's cheaper, for many use cases, more performing, and not centralized, so I'm not trusting one cloud provider. So for certain use cases, this is fantastic. >> Are there certain cloud native apps that you're finding have strong affinity here? >> Yeah, so basically what we have affinity with right now, and let's be clear, this is early days. I wouldn't recommend that people store their most sensitive data on this, but-- >> Not Oracle certified yet, is what you're saying? >> We're not Oracle certified, no. (laughing) Basically anything involving a large file that you're not writing to very frequently, but you're reading a lot, or that's getting read by lots of people around the world, we're a really good solution. It's one of the things I think I mentioned to you. So we've got 150,000 nodes. They're located in I think it's now 180 countries, and all over the U.S. So if you want to get your data close to the edge, the people who are consuming your data are really close to the edge, this is actually really good. And because it's spread across so many, you get the benefit of parallelism, so it's super fast, in addition to being super safe and super secure. >> How does it work for the farmers? Because we have video files, so we would love to spread our video files on the Storj network. So let's just say... >> I'd do a special deal for you, too, you know. >> Of course, yeah, get a little token action going on both sides, Cube coins. But the availability thing is concerning. Whose computers is it being stored on? Is it extra capacity? Is it servers? Is it people's home computers? What's the, is it that kind of model? >> Sure, so basically yeah, we, just as Airbnb measures reputation, we measure reputation, too. And so if you don't have a good reputation, certain characteristics, we won't send data to you. What it basically means is you've got to have dedicated hardware and a dedicated connection. So we do have people who are running things in their home, but it's not a laptop, it's not on your phone. But if you have a disc drive that's connected with reasonably high capacity and reasonably well connected, then you'll establish good reputation. But what we are seeing is we are seeing a lot of universities, a lot of small businesses, some data center operators who have spare capacity or just want to use us as like, be both a farmer and a user. So backup and get stuff on their capacity as a good idea. And interestingly enough, we also are getting a lot of people who were Bitcoin miners and bought equipment, which is good quality equipment, but there's such an arms race in doing that. >> So they abandoned, because it was too hard for them to get coins. >> It's too hard to make money, right, and very expensive, specialized equipment, and in our case, basically general high quality equipment works well. >> What's the profit model? How do the farmers make money? Take our Cube videos, as an example, so I'm paying you guys, and you're distributing those tokens? >> You're paying us and you're paying us either in dollars or tokens. And then farmers get compensated in tokens. Right now, about 60 cents on every dollar goes to farmers. And farmers get more storage based off of their reputation. We charge people based on both how much you're storing as well as how much bandwidth egress that you're doing, and we compensate farmers exactly the same way. >> It's handled through a consensus protocol that you guys have? >> Yeah, yeah, so the payment and assessing reputation we actually use good distributed blockchain as well there, right, so you're not counting on Storj to be in the middle there. Now, with the remaining 40 cents, which I think is actually the really interesting part, we keep some of that, we put some back into the network, but what I'm really excited about is that this is now a way for us to economically empower demand partners as well. The first thing we announced was FileZilla, but we have lots of other open source projects waiting in the wings, and we're happy to share with them. So as opposed to centralized cloud, where it's really hard to make money as an open source company, we're not an open source project in our case, right? We're happy if you're sending us users and data, to give you a really meaningful percentage. >> Any kind of freemium model you guys are playing with? I can imagine this being pretty interesting, because S3 democratized and lowered the cost barrier, obviously with cloud. >> S3 has been great for many things. >> How low are you in terms of the disruption? You guys are probably going to have to come in and undercut S3, is that the strategy? Or is that the price value? >> I think what I learned from my time in storage, is price is important but you have to be really safe and available and reliable, 'cause people's data is really important. But we looked across a pretty broad set of use cases, in comparing us to the traditional cloud providers we're probably a third. And we could go lower. What I think is really interesting in our case is that the economics just work really well. So from our perspective, if you're a farmer, you've already got, it's spare capacity, you don't need any more electricity to run this thing, you've got bandwidth, right? You don't need to hire any more people. So it's almost pure margin for a farmer, which is great for them. And so we can give economic value to farmers, we can give economic value to our customers, we can give economic value to partners. >> Any kind of economic models you can share in terms of what someone would make? Let's just say that I had this big music library that's not being used anymore, and I had a-- >> Well, as a customer of course, if you've got data that you want to store on our network, you'll save a lot of money, and it's probably a third of what you might pay. >> But is there any kind of, if I'm a farmer, I want to join the network? >> But if you're a farmer. >> How much am I going to make? >> It really depends on how much you're storing and how good your connection is, but as a farmer, I think you can make decent money. This could probably be I don't know off the top of my head, $20, $30 a month per drive, which isn't bad, and certainly much easier than making money-- >> So it kind of depends like the Airbnb model, depends how well you're using-- >> How well you're used. So some people earn less, some people earn more. And again, for most of the farmers, this is pure margin. >> Great, we got a couple back to back rooms, Stu. We should get some drives up there and get on board. We could pay for the cameras. >> And look, I think for videos, you guys would actually be a perfect use case with a lot of the stuff that's going to be coming out later this year. You get both storage and CDN like things for free, in the sense that because-- >> I'm really glad you brought that up, 'cause I want to ask you about Videocoin, 'cause Halsey Minor has Videocoin, another ICO, he raised $50 million. We covered that on Silicon Angle. But he's trying to democratize Acromi. Is that similar to what you guys are doing? >> I guess you could say yeah, we're further democratizing object storage, democratizing S3, but I think we can also democratize Acromi, we can democratize Isilon, there's certain other really exciting things that are-- >> What other services, you mentioned CDN, so it's not just storing the information, but that global dispersion, what does that enable? >> It used to be that people had a really big difference between archival which is slow, hard to get at, and CDN, right? And but actually, given the way that we're doing this thing, we can be pretty seamless. Pay archival for stuff that's staying in archival, but go up market if you're going to be having a lot of people read it. >> So I got to ask you about the, obviously, security. You're looking at it for additional services around redundancy, I can see that being a nice headroom for you. On a personal note, you've been involved in a lot of industry companies that have done very well, entrepreneurial success. >> Ben: Why am I doing this? (laughing) >> I can tell you're having fun. How could you not have fun, it's a whole 'nother generation of innovation, disruption coming, a whole 'nother price point. So what's it like, are you having fun? And if you could talk to your 22-year-old self right now, 'cause I wish I was 22 right now in this market-- >> Are you saying I'm not 22? >> How do you explain this? And when you go to parties, even in the Valley, and people say, "Man, you're crazy, it's a fricken' "scam out there," how do you explain to 'em this revolution? Because this is like a special, unique wave. How would you talk about that? >> Actually I describe it the same way to people in the Valley the same way that I described at the beginning, which is that blockchain is bigger than cryptocurrency, and decentralized is much bigger than blockchain. And Storj is first and foremost decentralized. It's about decentralized computing, decentralized storage, supporting decentralized apps, keeping the internet from ending up in the hands of just three people, three companies, which I think is really important. But also I feel very good that, to the extent that Storj does touch on cryptocurrency, that we've done it the right way. We had the service working first before we did the token sale. We raised what now appears to be a modest amount in the token sale, tried to be very transparent and at the forefront. >> You probably could've gotten more if you wanted to. >> Probably, right? But we were trying to be forefront in terms of governance and transparency, and I think that it'll probably be a good thing, just as it was kind of a good thing that the bubble burst in the late '90s and you got rid of a lot of such not great companies and not such great operators. I think that the current corrections, or whatever, in the crypto market I think will-- >> Like pets.com is gone, but DogeCoin still exists. (laughing) >> So I'm sure that somebody has a crypto base pets.com or webvan lurking in the wings somewhere. Kodak just did it. >> I got to ask you, you're super smart. You went to some really good schools, I think Princeton, Harvard Business School. So you got a good education, so I got to get your take on the whole token economics vision. 'Cause this is, if you look at outside the tech trends, there's actually new economic models that are coming out. Have you looked at token economics? New liquidity on the one side, you've got sovereignty, you've got consensus. These are not just tech issues, these are society issues. What's your vision around that? How are you viewing it? What's the upside? How is this shaping the future? >> Yeah, I think if you're a token network, you sort of have to have some central bank chops as well, right? And we actually have a central banker. >> John: So you have a chief economic officer? >> So we don't, no, we have an advisor-- >> John: Public policy. >> I actually had a degree in public policy at one point. But we need to think about the token supply in the same way you'd think about the money supply. We're backed by something real, so it's sort of like having currencies backed by gold. We need to make sure that the market grows and the network grows. And my fundamental belief is that the more the network grows, the more people use it, the more value that we're able to provide, that'll be good for token economics in the long run. In the short run, though, what we've done, is again, we price based off of dollars, and we compensate farmers based off the token based off of the spot price. So for farmers, we've tried to remove any need to worry about volatility or things like that. >> So I want your reaction-- >> Or the price. >> I've said on The Cube multiple times that in the old days of venture startups, the CTO was everything. You had to have a great CTO or VP of engineering and great senior executive team on the entrepreneurial team. Now it's almost like the chief economic officer is a critical piece, 'cause you've got public policy intersecting with economics. You've got new kinds of math that's not technical algorithm but it's kind of business algorithms. >> It is, business algorithms. Just like any economy, the money supply matters. And people's trust in that money matters. And the supply matters. All that stuff like that, and stability matters. So I think absolutely this new breed of network based token companies will have to worry about that, and probably should think about a chief economics officer, but it doesn't mean that you don't also have to have a great CTO and great technology, 'cause that's how you make the network valuable and grow. And one of the reasons that gave me both excitement and comfort about going to Storj is that the economic model works, fundamentally, even if the crypto's not there. >> John: 'Cause technology is decentralized. >> Decentralized storage makes sense even if you're buying and selling it with dollars or pounds or rubles, or whatever. >> Ben, great to see you, thanks for coming in and sharing the Ben Golub School of Economics, Public Policy for Tokens. You can give a class at Stanford on that soon, although that's the competition's school. >> Maybe, yes. Slightly different. We still like them. >> Great to see you, congratulations. Storj, pronounced storage. Great, successful ICO, hot startup, really, an example of the infrastructure opportunities of a new decentralized infrastructure that can be and will soon, we think, it will be critical infrastructure in a whole new way. Great to see you. >> Ben: Really good to see you, great to be back with you. >> It's the Cube Conversation, I'm John Furrier, Stu Miniman, thanks for watching. (upbeat music)

>> Narrator: Live from Las Vegas it's theCube covering AWS reInvent 2017 presented by AWS, Intel and our ecosystem of partners. >> Hello and welcome to theCube's exclusive coverage here in Las Vegas for AWS, Amazon Web Services reinvent 2017, 45,000 people. It's theCube's fifth year in covering AWS, five years ago I think 7,000 people attended, this year close to 45,000, developers and industry participants. And of course this is theCube I'm John Furrier with my co-host Keith Townsend and we're excited to have Cube alumni Sanjay Poonen who's the chief operating officer for VMware. Sanjay great to see you, of course a good friend with Andy Jassy, you went to Harvard Business School together, both Mavericks, welcome to theCube. >> Thank you and you know what I loved about the keynote this morning? Andy and I both love music. And he had all these musical stuff man. He had Tom Petty, he had Eric Clapton. I an not sure I like all of his picks but at least those two, loved it man. >> The music thing really speaks to the artists, artists inside of this industry. >> Yes. >> And we were talking on theCube earlier that, we're in a time now where and I think Tom Siebel said it when he was on, that there's going to be a mass, just extinction of companies that don't make it on the digital transformation and he cited some. You're at VMware you guys are transforming and continue to do well, you've a relationship with Amazon Web Services, talk about the challenge that's in front of business executives right now around this transformation because possibly looking at extinction for some big brands potentially big companies in IT. >> It's interesting that Tom Siebel would say that in terms of where Siebel ended up and where salespersons now I respect him, he's obviously doing good things at C3. But listen that's I think what every company has got to ask itself, how do you build longevity? How do you make yourself sustainable? Next year will be our 20 year anniversary of VMware's founding. The story could have been written about VMware that you were the last good company and then you were a legacy company because you were relevant to yesterday's part of the world which was the data center. And I think the key thing that kept us awake the last two or three years was how do you make them relevant to the other side of history which is the public cloud? What we've really been able to do over the last two or three years is build a story of the company that's not just relevant to the data center and private cloud, which is not going away guys as you know but build a bridge into the public cloud and this partnership has been a key part of that and then of course the third part of that is our end user computing story. So I think cloud mobile security have become the pillars of the new VMware and we're very excited about that and this show, I mean if you combine the momentum of this show and VMworld, collectively at VMworld we have probably about 70, 80,000 people who come to VMworld and Vforums, there's 45,000 people here with all the other summits, there's probably have another 40,000 people, this is collectively about a 100, 150,000 people are coming to the largest infrastructure shows on the planet great momentum. >> And as an infrastructure show that's turning into a developer show line get your thoughts and I want to just clarify something 'cause we pointed this out at VMworld this year because it's pretty obvious what happened. The announcement that you guys did that Ragu and your team did with Ragu with AWS was instrumental. The proof was at VMworld where you saw clarity in the messaging. Everyone can see what's going on. I now know what's happening, my operations are gonna be secure, I can run VSphere on the cloud or on Prem, everything could be called what it is. But the reality was is that you guys have the operators, IT operations and Amazon has a robust cloud native developer community, not that they're conflicting in any way, they're coming together so it was a smart move so I got to ask you, as you guys continue your relationship with AWS, how are you guys tying the new ops role, ops teams with the dev teams because with IoT, this is where it's coming together you can see it right there? Your thoughts? >> I mean listen, the partnership is going great. I just saw Andy Jassy after his exec summit session, gave him a hug. We're very excited about it and I think of any of the technology vendors he mentioned on stage, we were on several slides there, mentioned a few times. I think we're probably one of the top tech partners of his and reality is, there's two aspects to the story. One is the developer and operations come together which you, you eloquently articulated. The other aspect is, we're the king of the private cloud and they're the king of the public cloud, when you can bring these together, you don't have to make it a choice between one or the other, we want to make sure that the private cloud is maximized to its full extent and then you build a bridge into the public cloud. I think those two factors, bringing developer and operations together and marrying the private and public cloud, what we call hybrid cloud computing, a term we coined and now of course many others-- >> I think-- >> On top of the term. Well whoever did. >> I think HP might have coined it. >> But nonetheless, we feel very good about the future about developer and operations and hybrid cloud computing being a good part of the world's future. >> Sanjay, I actually interviewed you 2016 VMworld and you said something very interesting that now I look back on it I'm like, "Oh of course." Which is that, you gave your developers the tools they needed to do their jobs which at the time included AWS before the announcement of VMware and AWS partnership. AWS doesn't change their data center for anyone so the value that obviously you guys are bringing to them and their customers speaks volumes. AWS has also said, Andy on stage says, he tries to go out and talk to customers every week. I joked that before the start of this that every LinkedIn request I get, you're already a connection of that LinkedIn request. How important is it for you to talk to your internal staff as well as your external customers to get the pulse of this operations and developer movement going and infused into the culture of VMware. >> Well Keith I appreciate the kind words. When we decided who to partner with and how to partner with them, when we had made the announcement last year, we went and talked to our customers. We're very customer and client focused as are they. And we began to hear a very proportional to the market share stats, AWS most prominently and every one of our customers were telling us the same thing that both Andy and us were asking which is "Why couldn't you get the best of both worlds? "You're making a choice." Now we had a little bit of an impediment in the sense that we had tried to build a public cloud with vCloud air but once we made the decision that we were getting out of that business, divested it, took care of those clients, the door really opened up and we started to test pulse with a couple of customers under NDA. What if you were to imagine a partnership between us and Amazon, what would you think? And man, I can tell you, a couple of these customers some of who are on stage at the time of the announcement, fell off their chair. This would be huge. This is going to be like a, one customer said it's gonna be like a Berlin Wall moment, the US and the Soviet Union getting together. I mean the momentum building up to it. So now what we've got to do, it's been a year later, we've shipped, released, the momentum still is pretty high there, we've gotta now start to really make this actionable, get customers excited. Most of my meetings here have been with customers. System integrators that came from one of the largest SIs in the world. They're seeing this as a big part of the momentum. Our booth here is pretty crowded. We've got to make sure now that the customers can start realizing the value of VMware and AWS as a build. The other thing that as you mentioned that both sides did very explicitly in the design of this was to ensure that each other's engineering teams were closely embedded. So it's almost like having an engineering team of VMware embedded inside Amazon and an engineering team of Amazon embedded inside VMware. That's how closely we work together. Never done before in the history of both companies. I don't think they've ever done it with anybody else, certainly the level of trying. That represents the trust we had with each other. >> Sanjay, I gotta ask you, we were talking with some folks last night, I was saying that you were coming on theCube and I said, "What should I ask Sanjay? "I want to get him a zinger, "I want to get him off as messaging." Hard to do but we'll try. They said, "Ask him about security." So I gotta ask you, because security has been Amazon's kryptonite for many years. They've done the work in the public sector, they've done the work in the cloud with security and it's paying off for them. Security still needs to get solved. It's a solvable problem. What is your stance on security now that you got the private and hybrid going on with the public? Anything change? I know you got the AirWatch, you're proud of that but what else is going on? >> I think quietly, VMware has become one of the prominent brands that have been talked about in security. We had a CIO survey that I saw recently in network security where increasingly, customers are talking about VMware because of NSX. When I go to the AirWatch conference I look at the business cards of people and they're all in the security domain of endpoint security. What we're finding is that, security requires a new view of it where, it can't be 6000 vendors. It feels like a strip mall where every little shop has got its boutique little thing that you ought to buy and when you buy a car you expect a lot of the things to be solved in the core aspects of the car as opposed to buying a lot of add-ons. So our point of view first off is that security needs to baked into the infrastructure, and we're gonna do that. With products like NSX that bake it into the data center, with products like AirWatch and Workspace ONE that bake it into the endpoint and with products like App Defence that even take it deeper into the core of the hypervisor. Given that we've begun to also really focus our education of customers on higher level terms, I was talking to a CIO yesterday who was educating his board on what are some of the key things in cyber security they need to worry about. And the CIO said this to me, the magic word that he is training all of his board members on, is segmentation. Micro segmentation segmentation is a very simple concept that NSX sort of pioneered. We'll finding that now to become very relevant. Same-- >> So that's paying off? >> Paying up big time. WannaCry and Petya taught us that, patching probably is a very important aspect of what people need to do. Encryption, you could argue a lot of what happened in the Equifax may have been mitigated if the data been encrypted. Identity, multi-factor authentication. We're seeing a couple of these key things being hygiene that we can educate people better on in security, it really is becoming a key part to our stories now. >> And you consider yourself top-tier security provider-- >> We are part of an ecosystem but our point of view in security now is very well informed in helping people on the data center to the endpoint to the cloud and helping them with some of these key areas. And because we're so customer focused, we don't come in at this from the way a traditional security players providing access to and we don't necessarily have a brand there but increasingly we're finding with the success of NSX, Workspace ONE and the introduction of new products like App Defense, we're building a point of security that's highly differentiated and unique. >> Sanjay big acquisition in SD-WAN space. Tell us how does that high stress security player and this acquisition in SD-WAN, the edge, the cloud plays into VMware which is traditionally a data center company, SD-wAN, help us understand that acquisition. >> Good question. >> As we saw the data center and the cloud starting to develop that people understand pretty well. We began to also hear and see another aspect of what people were starting to see happen which was the edge and increasingly IoT is one driver of that. And our customers started to say to us, "Listen if you're driving NSX and its success "in the data center, wouldn't it be good "to also have a software-defined wide area network strategy "that allows us to take that benefit of networking, "software-defined networking to the branch, to the edge?" So increasingly we had a choice. Do we build that ourselves on top of NSX and build out an SD-WAN capability which we could have done or do we go and look at our customers? For example we went and talked to telcos like AT&T and they said the best solution out there is a company that can develop cloud. We start to talk to customers who were using them and we analyzed the space and we felt it would be much faster for us to buy rather than build a story of a software-defined networking story that goes from the data center to the branch. And VeloCloud was well-regarded, I would view this, it's early and we haven't closed the acquisition as yet but once we close this, this has all the potential to have the type of transformative effect like in AirWatch or in nai-si-ra-hat in a different way at the edge. And we think the idea of edge core which is the data center and cloud become very key aspects of where infrastructure play. And it becomes a partnership opportunity. VeloCloud will become a partnership opportunity with the telcos, with the AWSs of the world and with the traditional enterprises. >> So bring it all together for us. Data center, NSX, Edge SD-WAN, AirWatch capability, IOT, how does all of that connect together? >> You should look at IoT and Edge being kind of related topics. Data center and the core being related topics, cloud being a third and then of course the end-user landscape and the endpoint being where it is, those would be the four areas. Data center being the core of where VMware started, that's always gonna be and our stick there so to speak is that we're gonna take what was done in hardware and do it in software significantly cheaper, less complex and make a lot of money there. But then we will help people bridge into the cloud and bridge into the edge, that's the core part of our strategy. Data center first, cloud, edge. And then the end user world sits on top of all of that because every device today is either a phone, a tablet or a laptop and there's no vendor that can manage the heterogeneous landscape today of Apple devices, Google devices, Apple being iOS and Mac, Android, Chrome in the case of Google, or Windows 10 in the case of Microsoft. That heterogeneous landscape, managing and securing that which is what AirWatch and Workspace ONE does is uniquely ours. So we think this proposition of data center, cloud, edge and end-user computing, huge opportunity for VMware. >> Can we expect to see NSX as the core of that? >> Absolutely. NSX becomes to us as important as ESX was, in fact that's kind of why we like the name. It becomes the backbone and platform for everything we do that connects the data center to the cloud, it's a key part of BMC for example. It connects the data center to the edge hence what we've done with SD-WAN and it's also a key part to what connects to the end user world. When you connect network security with what we're doing with AirWatch which we announced two years ago, you get magic. We think NSX becomes a fundamental and we're only in the first or second or third inning of software-defined networking. We have a few thousand customers okay of NSX, that's a fraction of the 500,000 customers of VMware. We think we can take that in and the networking market is an 80 billion dollar market ripe for a lot of innovation. >> Sanjay, I want to get your perspective on the industry landscape. Amazon announcing results, I laid it out on my Forbes story and in Silicon Angle all the coverage, go check it out but basically is, Amazon is going so fast the developers are voting with their workloads so their cloud thing is the elastic cloud, they check, they're winning and winning. You guys own the enterprised data center operating model which is private cloud I buy that but it's all still one cloud IoT, I like that. The question is how do you explain it to the people that don't know what's going on? Share your color on what's happening here because this is a historic moment. It's a renaissance-- >> I think listen, when I'm describing this to my wife or to my mother or somebody who's not and say "There's a world of tech companies "that applies to the consumer." In fact when I look at my ticker list, I divide them on consumer and enterprise. These are companies like Apple and Google and Facebook. They may have aspirations in enterprise but they're primarily consumer companies and those are actually what most people can relate to and those are now some of the biggest market cap companies in the world. When you look at the enterprise, typically you can divide them into applications companies, companies like Salesforce, SAP and parts of Oracle and others, Workday and then companies in infrastructure which is where companies like VMware and AWS and so on fit. I think what's happening is, there's a significant shift because of the cloud to a whole new avenue of spending where every company has to think about themselves as a technology company. And the same thing's happening with mobile devices. Cloud mobile security ties many of those conversations together. And there are companies that are innovators and there companies that you described earlier John at the start of this show that's going to become extinct. >> My thesis is this, I want to get your reaction to this. I believe a software renaissance is coming and it's gonna be operated differently and you guys are already kind of telegraphing your move so if that's the case, then a whole new guard is gonna be developing, he calls it the new garden. Old guard he refers to kind of the older guards. My criticism of him was is that he put a Gartner slide up there, that is as says old guard as you get. Andy's promoting this whole new guard thing yet he puts up the Gartner Magic Quadrant for infrastructure as a service, that's irrelevant to his entire presentation, hold on, the question is about you know I'm a Gardner-- >> Before I defend him. >> They're all guard, don't defend him too fast. I know the buyers see if they trust Gartner, maybe not. The point is, what are the new metrics? We need new metrics because the cloud is horizontally scalable. It's integrated. You got software driving decision making, it's not about a category, it's about a fabric. >> I'm not here to... I'm a friend of Andy, I love what he talked about and I'm not here to defend or criticize Gartner but what I liked about his presentation was, he showed the Gartner slide probably about 20 minutes into the presentation. He started off by his metrics of revenue and number of customers. >> I get that, show momentum, Gartner gives you like the number one-- >> But the number of customers is what counts the most. The most important metric is adoption and last year he said there was about a million customers this year he said several million. And if it's true that both startups and enterprises are adopting this, adopting, I don't mean just buying, there is momentum here. Irrespective, the analysts talking about this should be, hopefully-- >> Alright so I buy the customer and I've said that on theCube before, of course and Microsoft could say, "We listen to customers too and we have a zillion customers "running Office 365." Is that really cloud or fake cloud? >> At the end of the day, at the end of the day, it's not a winner take all market to one player. I think all of these companies will be successful. They have different strategies. Microsoft's strategy is driven from Office 365 and some of what they can do in Windows into Azure. These folks have come up from the bottom up. Oracle's trying to come at it from a different angle, Google's trying to come at a different angle and the good news is, all of these companies have deep pockets and will invest. Amazon does have a head start. They are number one in the market. >> Let me rephrase it. Modern applications could be, I'll by the customer workload argument if it's defined as a modern app. Because Oracle could say I got a zillion customers too and they win on that, those numbers are pretty strong so is Microsoft. But to me the cloud is showing a new model. >> Absolutely. >> So what is in your mind good metric to saying that's a modern app, that is not. >> I think when you can look at the modern companies like the Airbnb, the Pinterest, the Slacks and whoever. Some of them are going to make a decision to do their own infrastructure. Facebook does not put their IaaS on top of AWS or Azure or Google, they built their own data is because they can afford to do and want to do it. That's their competitive advantage. But for companies who can't, if they are building their apps on these platforms that's one element. And then the traditional enterprises, they think about their evolution. If they're starting to adopt these platforms not just to migrate old applications to new ones where VMware fits in, all building new cloud native applications on there, I think that momentum is clear. When was the last time you saw a company go from zero to 18 billion in 10 years, 10, 12 years that he's been around? Or VMware or Salesforce go from zero to eight billion in the last 18 years? This phenomenon of companies like Salesforce, VMware and AWS-- >> It's all the scale guys, you gotta get to scale, you gotta have value. >> This is unprecedented in the last five to 10 years, unprecedented. These companies I believe are going to be the companies of the tech future. I'm not saying that the old guard, but if they don't change, they won't be the companies that people talk about. The phenomenon of AWS just going from zero to 18 is, I personally think-- >> And growing 40% on that baseline. >> Andy's probably one of the greatest leaders of our modern time for his role in making that happen but I think these are the companies that we watch carefully. The companies that are growing rapidly, that our customers are adopting them in the hundreds of thousands if not millions, there's true momentum there. >> So Sanjay, data has gravity, data is also the new oil. We look at what Andy has in his arsenal, all of the date of that's in S3 that he can run, all his MI and AI services against, that's some great honey for this audience. When I look at VMware, there's not much of a data strategy, there's a security the data in transit but there's not a data strategy. What does VMware's data strategy to help customers take math without oil? >> We've talked about it in terms of our data analytics what we're doing machine learning and AI. We felt this year given so much of what we had to announce around security software-defined networking, the branch, the edge, putting more of that into VMworld which is usually our big event where we announce this stuff would have just crowded our people. But we began to lay the seeds of what you'll start to hear a lot more in 2018. Not trying to make a spoiler alert for but we acquired this company Wavefront that does, next-generation cloud native metrics and analytics. Think of it as like, you did that with AppDynamics in the old world, you're doing this with Wavefront in the new world of cloud native. We have really rethought through how, all the data we collect, whether it's on the data center or in the endpoint could be mined and become a telemetry that we actually use. We bought another company Apteligent, formerly called Criticism, that's allowing us to do that type of analytics on the endpoint. You're gonna see a couple of these moves that are the breadcrumbs of what we'll start announcing a lot more of a comprehensive analytics strategy in 2018, which I think we're very exciting. I think the other thing we've been cautious to do is not AI wash, there's a lot of cloud washing and machine learning washing that happened to companies-- >> They're stopping a wave on-- >> Now it's authentic, now I think it's out there when, when Andy talks about all they're doing in AI and machine learning, there's an authenticity to it. We want to be in the same way, have a measured, careful strategy and you will absolutely hear from us a lot more. Thank you for bringing it up because it's something that's on our radar. >> Sanjay we gotta go but thanks for coming and stopping by theCube. I know you're super busy and great to drop in and see you. >> Always a pleasure and thanks-- >> Congratulations-- >> And Keith good to talk to you again. >> Congratulations, all the success you're having with the show. >> We're doing our work, getting the reports out there, reporting here on theCube, we have two sets, 45,000 people, exclusive coverage on siliconangle.com, more data coming, every day, we have another whole day tomorrow, big night tonight, the Pub Crawl, meetings, VCs, I'll be out there, we'll be out there, grinding it out, ear to the ground, go get those stories and bring it to you. It's theCube live coverage from AWS reInvent 2017, we're back with more after this short break.

>> Announcer: Live from Los Angeles it's The Cube covering Open Source Summit North America 2017. Brought to you by the Linux Foundation and Red Hat. >> Hey, welcome back everyone. We're here live in L.A. for the Linux Foundation Open Source Summit North America. I'm John Furrier, your host, with Stu Miniman, my co-host. Our next guest Jim Zemlin, Executive Director of the Linux Foundation, runs the whole show. Welcome back to The Cube, great to see you. >> Thank you, thank you. Runs the whole show is a little bit of an overstatement. >> Well, certainly great keynote up there, I mean, a lot of things coming together. Just some structural things. Let's get the update on what's going on structurally with the Linux Foundation, one, and then two, the keynote today, this morning, really kind of laid out the state of the union, if you will, and all cylinders are pumping, no doubt, on open source. So give the quick update on kind of what's going on with the Linux Foundation and then let's get in some of the trends inside the open source movement. >> Yeah, I mean, our organization has grown quite a bit in the last few years as evident by all the people who are here at this event. But our focus is really on the projects that are important to, you know, the stability, security, and growth of the global internet and of large-scale systems. And when you look at Linux or Node.js or things like our networking projects which are powering the production networks for 3 1/2 billion people, what we're really focused on is making sure those projects are healthy, making sure that they have great developers who write incredible code, that it's used to power things like China Mobile's network or AT&T's production network. And then, those firms are employing the developers who then write more code, you get more solutions, products, services based on Linux or whatever. More reinvestment, lather, rinse, repeat. It's that cycle we're trying to promote. >> So before we get into some of the stats, structurally, I know this show, we've Cube comments out there, clarify the structure. How the shows are rolling out, how are you guys putting together the big-tent events, and how developers can get involved in the specific events across, but now there's a ton of projects. But just at a high level, what's the structure? >> Yeah, so, you know, and I'll throw out a few stats. We have about 25,000 developers that attend all of our events which are all over the world. But we have our Open Source Summit which is really sort of a summit to come together and talk about these big-picture issues around sustainability to allow for cross-project collaboration. We have project-specific events so the CloudNativeCon, KubeCon event which is coming up in Austin which is going to be blow-out, you know, I'm expecting thousands of people. I think probably three, 4,000 people. >> And even more platinum sponsors than I've ever seen on any project before so huge demand. >> It's crazy, yeah. Yeah, you know, get it while it's good, right? All these things kind of go up and down but they're on the upswing. So we have project-specific and then in the networking sector, we have have the Open Networking Summit which is sort of similar to the Open Source Summit but much more focused on networking technology, SDN, and NFD, and that is going to be in L.A. next year and we'll have a U.S. event and then a European and an Asian. >> And this show's purpose is what? How would you position the Open Source Summit? >> The Open Source Summit is where all the projects come together and do cross-pollination. I mean, the idea here is that if you're just always in your silo, you can't actually appreciate what someone else is doing that may improve your project. >> And Jim, there's a couple of events that came together to make this 'cause it was LinuxCon, ContainerCon, and MesosCon is also co-resident so. >> Exactly, so we just decided after a while that all these events could come together and again, this cross-pollination of ideas. >> And they kind of did, they're just different hotels in Seattle last time. >> Yeah, exactly. That's enough, it's just going to be Open Source-- >> It's a big-tent event. >> It's a big-tent event and it really reflects how open source has gone mainstream in a way that I don't think any of us would've predicted even maybe five, six years ago. >> It's pretty massive. Just to quote some stats. 23 million plus open source developers, what you shared onstage there, want to get to your keynote. 41 billion lines of code. 1,000 plus new projects a day. 10,000 new versions pushed per day. 64 million repos on GitHub. Just amazing growth so this kind of points to obviously the rising tide is floating all boats. I made a comment, I tweeted, in the spirit of the joke of standing on the shoulders of giants before you, it's like, what shoulders are we standing on now? Because there's so many projects. Is there going to be like a legacy like the dual-star, badge values, been around for a while? You mentioned old news and you bring up Linus onstage. I mean, some projects are older, more mature, Bruce Wayne, Tier One, meat and potatoes, some got a little bit more flair and fashion to it, if you will. So you got new dynamics going on. Share your thoughts on this. >> Yeah, I mean, it's like the shoulders you're standing on are almost like stage-diving, right? Where it's just lots of people's shoulders that you're really bouncing around on. But the idea here, and what we really focus on, is what are the most important projects in the world and how do we make sure we sustain those projects. So those are the ones that you're going to generally see focused on here. Like, you know, if you've got two people contributing to one small repo for a very small project, that's probably not something that's going to be super high-profile here. But what we're trying to do is bring together sort of the big projects and also the key contributors. You know, if you look at the distribution of contribution, and this is the thing, I think, if you're a developer listening to something like this, someone who gives just one commit to a project to solve some kind of problem they might have, that's the vast majority of people. Somebody who does maybe five to 10 commits, you know, a little bit less, quite a bit less. The vast majority of code, people who give 25 or more commits to a project, small group of folks, they're here. >> I know Stu wants to ask a question, one final question on the growth 'cause this kind of reminds me of sports as we're like the ESPN of tech here for the community. If you look at the growth, you put a slide in there by SourceClear that show the projection, by 2026, at 400 million libraries, putting it today around, I think, 64 million. This is going to be like an owners meeting. It's kind of like they get together, this event because you are going to have so many projects 'cause this is kind of the vibe you got going on in here. The scale is massive, this is going to be almost like the owners meeting, the teams. Expansion's going to be coming, you have to deal with that, that's challenging. >> We're ready to grow, I mean, we've been working on systems and staffing and processes to help scale with that. You know, we take seriously that that code runs modern society. It keeps us private or doesn't as we saw with the Equifax hack which was a CVE in an open source project and we want to be ready to up our game. Let's say we could have secure coding class at this very event for the greatest developers who are working on our most important projects in the world. Would that make all of our lives better? Yes, absolutely. >> Yes, absolutely would. Yeah and you want to enable that, that's where you're going. >> That's exactly where we're going. >> Jim, the quote that jumped out at me that you gave in the keynote was, projects with sustainable ecosystems are the ones that matter. How do we balance all this? I heard in, you know, Linus's Q and A it was, look, individual's important but companies are important. You put up a slide and said, there's thousands and thousands of projects, sometimes we're going to get some really awesome stuff from three people contributing code versus the massive ecosystem with all the platinum providers so, it's always in technology, it's an and and it's very nuanced but how do we get our arms around this? How do we know where to focus? >> It's worth going back in time to understand where the future is going and study innovation theory, you know, Eric von Hippel at MIT, or Karim Lakhani at Harvard Business School. And you look at the framework, which is, you have corporations who underwrite a lot of development by hiring developers who have an equal importance in this and then users of that software. So those are your main constituents and sometimes they're the same people, right, or the same things. They're not mutually exclusive, they're actually self-reinforcing if you get the formula right and you make sure that the project is in good shape so that it gives confidence to industry or society that, hey, we can count on that. I think Heartbleed and OpenSSL maybe rattled people's cages like, hey, can we count on, not just this project, but can we count on open source period? So we spent a ton of time working with that project to provide them millions in resources, audited their code, expanded their testing, and we learned a hell of a lot about how to support these communities in the most important developer projects in the world and create that positive feedback loop, that's what we're doing. >> Yeah and Jim, it's, as an analyst, one of the things we're always asked is, right, how do I choose the right technology? Whereas companies now are contributing here so it's not just I'm putting dollars in, I'm putting manpower into this. And the foundations sometimes get a lot of lung from people, saying it's like, oh well, people throw money and what do they get out of it? I liked what I heard today, you talking about this cycle, and maybe talk to our audience a little bit about CHAOSS which I though was a nice, tongue-in-cheek acronym to say how you're actually going to bring order to the chaos that we see in the open source world. >> I'm going to come to this but I want to answer one quick question about the roles of organizations like ours. We are the roadies, the supporting cast, and the plumbers and the janitors of the system that keep things going but the real rock stars are the developers. If you think about it, Linux is worth $10 billion. An average kernel developer makes probably, let's say $150,000 a year, by the way, they make more than your average developer because they're in such high demand. The role of organizations like ours is such a tiny fraction financially of what is really fueling this model but it's an important one. What we ask ourselves all the time is, why do you need us? Who cares, right? Like, throw your code up on GitHub, you don't need the Linux Foundation, right? Why do we even exist? And the answer is to do things like this Community Health Analytics for Open Source Software, to provide the infrastructure for sustainability. Sustainability is something that we need to measure, right? How many developers are contributing to a project? Are they from a diverse community so that if one group goes away, there'll be somebody else there to do that work? How much test coverage do they have? Are there code quality metrics that we could look at? Do they have security practices like a responsible disclosure policy, a security mailing list? Have they recently fuzzed their code? Are they a community that's welcoming for people of different backgrounds? And so on and so forth. If you don't have a healthy project, you kind of don't want to bet your company on this project by using it in a production system, right? But here's the interesting thing, how many people are using that code in production also is a metric for health, right? Because that's where the reinvestment is going to come in the form of developers who are working on it. >> There's a difference between being proactive and jamming something down someone's throat. So you're taking an approach, if I get this right, to be kind of the same open source ethos, use some KPIs, key performance indicators, to give them a sense of success. But it's not an edict saying-- >> No, no, it can't be an edict. What you want to do is preserve the organic innovation that goes on in open source and get projects to go, and you'll notice that curve of sort of value to volume goes up and to the left, we could've written it to the right but, you know, the whole copyleft thing we love. How do you get that organic innovation to kind of go from this small project up and to the left? How do you capture that? Well, give tools to everyone so that they can better self-analyze. >> John: You get exponential growth with that. >> Exactly. >> If you try to control, it's linear but you bring it to the community, you get exponential growth. >> Exactly, so we studied a ton of innovation theory, we looked at how we could build frameworks to facilitate this kind of form of mass innovation and so that's where tools like CHAOSS which is being worked on by Red Hat and a lot of companies who want to figure out which project should I work on? How can I spot that one earlier? And we're excited about it. >> You know, I always joke, being the old guy that I am, in the late '80s, early '90s, '80s particularly when I was coding. We did everything, we wrote all the code. You bring up an interesting stat and you put the finger on, at least for me, and I think this is where a lot of us old timers who had to do all the libraries from scratch. You mentioned the code sandwich, the code club, the club sandwich, how code's being made and the interesting thing, as you point out, 90% of most great software is done with open source where the 10% innovation is done with original code or original content, if you will, and that that is the norm. So open source is now called the code sandwich because you can put your differentiation and that's a good use of time. >> That's the meat, right. >> That's the meat, it's not a wish sandwich to use the old Blues Brothers example but I mean look, the thing is is that that's dynamic is real, the code is leverageable, and that this is the dynamic so where'd the number come from? Because that seems really high to me but I love it. >> So that number came from a combination of Sonatype, SourceClear, and other organizations that monitor commercial reuse of software on a global basis. So these are the folks who are actually working with commercial industry to look at the makeup of their code, basically. You don't have to go far to look at a Node.js developer, they're using Node.js, they're taking packages out of NPM, and they're writing, they're cut and paste masters, but they write this critical component that's the meat of their application, it's what they do. >> But that's the innovation fabric that's happening. >> It also is a requirement because let's look at a modern, luxury vehicle today. It has 100 million lines of code in it. That's more than an F-35, like, fighter jet. That's an unbelievable amount of code. Toyota, who we work with, and you know, our AGL, our Automotive Grade Linux, is in their Camry. They couldn't write that code on their own. It's just too much. And this is how we get to autonomous vehicle control and things like that. >> I know you got a tight schedule, I want to make one more comment, get your reaction to it. I made a tweet and said, it's open bar in open source and with a reference to all the goodness being donated by companies, Google TensorFlow, there's a lot of other things coming in, these libraries. A lot of people are bringing really, really big IP to the table, IoT, and I kind of made an open remark 'cause a lot of the young kids, they think this is normal, like, well it's going to get better. Keep on drinking that open source. Is this normal? Is it going to be more like this in the future? Because you have essentially real intellectual property, like say from Google, being given to the open source communities as a gift for innovation. I mean, that is just unprecedented greatness. >> The reason for that is they're not doing it necessarily altruistically although I think you can take it that way, they're doing it in a way that betters themselves and others at the same time. I mean, it is a form of collective capitalism where they've realized, my value's over here, it is better for me to collaborate on underlying infrastructure software that my customers don't care about that's not critical to my system but I absolutely have to have and I'm going to focus on data or I'm going to focus on much higher-level innovation. And what that's doing is creating this hockey stick of innovation where, as we share more and more and more infrastructure software, and as that keeps moving up and up the stack, we all benefit. >> So in the theory of the management, bring up management theory, their theory, I'd love to get your thoughts on, is that they're betting on scale rather than trying to go for profits in the short-term, they'd much rather share intellectual property on the back-end value of scale and scale's the new competitive advantage. >> Exactly, take Kubernetes as an example. The fact that, today, and just even a couple years ago this wasn't known, we didn't quite know where this was going to be, but today you can take Node.js, build a container, you know, take an application, throw it into a container, and use Kubernetes to run it on Azure, Amazon, Google, or in a private cloud. That definition, the ability to do that, unlocks this massive developer productivity which creates more value which is more business opportunity for all these guys. You know, they're not doing it 'cause they're nice people, they're doing it 'cause they're unlocking market potential. >> And they're the real rock stars. Jim you're doing a great job. Congratulations on your success. You got a lot of growth in front of you, a lot of challenges and opportunities certainly with that and of course, the tech athletes out there doing the coding, they're the real rock stars, they're the real athletes. Of course, we get more on The Cube, thanks for your support with The Cube as well, appreciate that. >> Jim: Thank you, thanks for everything. >> Alright, this is live coverage from Open Source Summit North America in Los Angeles, California. I'm John Furrier, Stu Miniman, we'll be back with more live coverage after this short break.