(light music) >> Hi everybody. Welcome to this Cube Conversation. I'm really pleased to announce a collaboration with Rob Strechay. He's a guest cube analyst, and we'll be working together to extract the signal from the noise. Rob is a long-time product pro, working at a number of firms including AWS, HP, HPE, NetApp, Snowplow. I did a stint as an analyst at Enterprise Strategy Group. Rob, good to see you. Thanks for coming into our Marlboro Studios. >> Well, thank you for having me. It's always great to be here. >> I'm really excited about working with you. We've known each other for a long time. You've been in the Cube a bunch. You know, you're in between gigs, and I think we can have a lot of fun together. Covering events, covering trends. So. let's get into it. What's happening out there? We're sort of exited the isolation economy. Things were booming. Now, everybody's tapping the brakes. From your standpoint, what are you seeing out there? >> Yeah. I'm seeing that people are really looking how to get more out of their data. How they're bringing things together, how they're looking at the costs of Cloud, and understanding how are they building out their SaaS applications. And understanding that when they go in and actually start to use Cloud, it's not only just using the base services anymore. They're looking at, how do I use these platforms as a service? Some are easier than others, and they're trying to understand, how do I get more value out of that relationship with the Cloud? They're also consolidating the number of Clouds that they have, I would say to try to better optimize their spend, and getting better pricing for that matter. >> Are you seeing people unhook Clouds, or just reduce maybe certain Cloud activities and going maybe instead of 60/40 going 90/10? >> Correct. It's more like the 90/10 type of rule where they're starting to say, Hey I'm not going to get rid of Azure or AWS or Google. I'm going to move a portion of this over that I was using on this one service. Maybe I got a great two-year contract to start with on this platform as a service or a database as a service. I'm going to unhook from that and maybe go with an independent. Maybe with something like a Snowflake or a Databricks on top of another Cloud, so that I can consolidate down. But it also gives them more flexibility as well. >> In our last breaking analysis, Rob, we identified six factors that were reducing Cloud consumption. There were factors and customer tactics. And I want to get your take on this. So, some of the factors really, you got fewer mortgage originations. FinTech, obviously big Cloud user. Crypto, not as much activity there. Lower ad spending means less Cloud. And then one of 'em, which you kind of disagreed with was less, less analytics, you know, fewer... Less frequency of calculations. I'll come back to that. But then optimizing compute using Graviton or AMD instances moving to cheaper storage tiers. That of course makes sense. And then optimize pricing plans. Maybe going from On Demand, you know, to, you know, instead of pay by the drink, buy in volume. Okay. So, first of all, do those make sense to you with the exception? We'll come back and talk about the analytics piece. Is that what you're seeing from customers? >> Yeah, I think so. I think that was pretty much dead on with what I'm seeing from customers and the ones that I go out and talk to. A lot of times they're trying to really monetize their, you know, understand how their business utilizes these Clouds. And, where their spend is going in those Clouds. Can they use, you know, lower tiers of storage? Do they really need the best processors? Do they need to be using Intel or can they get away with AMD or Graviton 2 or 3? Or do they need to move in? And, I think when you look at all of these Clouds, they always have pricing curves that are arcs from the newest to the oldest stuff. And you can play games with that. And understanding how you can actually lower your costs by looking at maybe some of the older generation. Maybe your application was written 10 years ago. You don't necessarily have to be on the best, newest processor for that application per se. >> So last, I want to come back to this whole analytics piece. Last June, I think it was June, Dev Ittycheria, who's the-- I call him Dev. Spelled Dev, pronounced Dave. (chuckles softly) Same pronunciation, different spelling. Dev Ittycheria, CEO of Mongo, on the earnings call. He was getting, you know, hit. Things were starting to get a little less visible in terms of, you know, the outlook. And people were pushing him like... Because you're in the Cloud, is it easier to dial down? And he said, because we're the document database, we support transaction applications. We're less discretionary than say, analytics. Well on the Snowflake earnings call, that same month or the month after, they were all over Slootman and Scarpelli. Oh, the Mongo CEO said that they're less discretionary than analytics. And Snowflake was an interesting comment. They basically said, look, we're the Cloud. You can dial it up, you can dial it down, but the area under the curve over a period of time is going to be the same, because they get their customers to commit. What do you say? You disagreed with the notion that people are running their calculations less frequently. Is that because they're trying to do a better job of targeting customers in near real time? What are you seeing out there? >> Yeah, I think they're moving away from using people and more expensive marketing. Or, they're trying to figure out what's my Google ad spend, what's my Meta ad spend? And what they're trying to do is optimize that spend. So, what is the return on advertising, or the ROAS as they would say. And what they're looking to do is understand, okay, I have to collect these analytics that better understand where are these people coming from? How do they get to my site, to my store, to my whatever? And when they're using it, how do they they better move through that? What you're also seeing is that analytics is not only just for kind of the retail or financial services or things like that, but then they're also, you know, using that to make offers in those categories. When you move back to more, you know, take other companies that are building products and SaaS delivered products. They may actually go and use this analytics for making the product better. And one of the big reasons for that is maybe they're dialing back how many product managers they have. And they're looking to be more data driven about how they actually go and build the product out or enhance the product. So maybe they're, you know, an online video service and they want to understand why people are either using or not using the whiteboard inside the product. And they're collecting a lot of that product analytics in a big way so that they can go through that. And they're doing it in a constant manner. This first party type tracking within applications is growing rapidly by customers. >> So, let's talk about who wins in that. So, obviously the Cloud guys, AWS, Google and Azure. I want to come back and unpack that a little bit. Databricks and Snowflake, we reported on our last breaking analysis, it kind of on a collision course. You know, a couple years ago we were thinking, okay, AWS, Snowflake and Databricks, like perfect sandwich. And then of course they started to become more competitive. My sense is they still, you know, compliment each other in the field, right? But, you know, publicly, they've got bigger aspirations, they get big TAMs that they're going after. But it's interesting, the data shows that-- So, Snowflake was off the charts in terms of spending momentum and our EPR surveys. Our partner down in New York, they kind of came into line. They're both growing in terms of market presence. Databricks couldn't get to IPO. So, we don't have as much, you know, visibility on their financials. You know, Snowflake obviously highly transparent cause they're a public company. And then you got AWS, Google and Azure. And it seems like AWS appears to be more partner friendly. Microsoft, you know, depends on what market you're in. And Google wants to sell BigQuery. >> Yeah. >> So, what are you seeing in the public Cloud from a data platform perspective? >> Yeah. I think that was pretty astute in what you were talking about there, because I think of the three, Google is definitely I think a little bit behind in how they go to market with their partners. Azure's done a fantastic job of partnering with these companies to understand and even though they may have Synapse as their go-to and where they want people to go to do AI and ML. What they're looking at is, Hey, we're going to also be friendly with Snowflake. We're also going to be friendly with a Databricks. And I think that, Amazon has always been there because that's where the market has been for these developers. So, many, like Databricks' and the Snowflake's have gone there first because, you know, Databricks' case, they built out on top of S3 first. And going and using somebody's object layer other than AWS, was not as simple as you would think it would be. Moving between those. >> So, one of the financial meetups I said meetup, but the... It was either the CEO or the CFO. It was either Slootman or Scarpelli talking at, I don't know, Merrill Lynch or one of the other financial conferences said, I think it was probably their Q3 call. Snowflake said 80% of our business goes through Amazon. And he said to this audience, the next day we got a call from Microsoft. Hey, we got to do more. And, we know just from reading the financial statements that Snowflake is getting concessions from Amazon, they're buying in volume, they're renegotiating their contracts. Amazon gets it. You know, lower the price, people buy more. Long term, we're all going to make more money. Microsoft obviously wants to get into that game with Snowflake. They understand the momentum. They said Google, not so much. And I've had customers tell me that they wanted to use Google's AI with Snowflake, but they can't, they got to go to to BigQuery. So, honestly, I haven't like vetted that so. But, I think it's true. But nonetheless, it seems like Google's a little less friendly with the data platform providers. What do you think? >> Yeah, I would say so. I think this is a place that Google looks and wants to own. Is that now, are they doing the right things long term? I mean again, you know, you look at Google Analytics being you know, basically outlawed in five countries in the EU because of GDPR concerns, and compliance and governance of data. And I think people are looking at Google and BigQuery in general and saying, is it the best place for me to go? Is it going to be in the right places where I need it? Still, it's still one of the largest used databases out there just because it underpins a number of the Google services. So you almost get, like you were saying, forced into BigQuery sometimes, if you want to use the tech on top. >> You do strategy. >> Yeah. >> Right? You do strategy, you do messaging. Is it the right call by Google? I mean, it's not a-- I criticize Google sometimes. But, I'm not sure it's the wrong call to say, Hey, this is our ace in the hole. >> Yeah. >> We got to get people into BigQuery. Cause, first of all, BigQuery is a solid product. I mean it's Cloud native and it's, you know, by all, it gets high marks. So, why give the competition an advantage? Let's try to force people essentially into what is we think a great product and it is a great product. The flip side of that is, they're giving up some potential partner TAM and not treating the ecosystem as well as one of their major competitors. What do you do if you're in that position? >> Yeah, I think that that's a fantastic question. And the question I pose back to the companies I've worked with and worked for is, are you really looking to have vendor lock-in as your key differentiator to your service? And I think when you start to look at these companies that are moving away from BigQuery, moving to even, Databricks on top of GCS in Google, they're looking to say, okay, I can go there if I have to evacuate from GCP and go to another Cloud, I can stay on Databricks as a platform, for instance. So I think it's, people are looking at what platform as a service, database as a service they go and use. Because from a strategic perspective, they don't want that vendor locking. >> That's where Supercloud becomes interesting, right? Because, if I can run on Snowflake or Databricks, you know, across Clouds. Even Oracle, you know, they're getting into business with Microsoft. Let's talk about some of the Cloud players. So, the big three have reported. >> Right. >> We saw AWSs Cloud growth decelerated down to 20%, which is I think the lowest growth rate since they started to disclose public numbers. And they said they exited, sorry, they said January they grew at 15%. >> Yeah. >> Year on year. Now, they had some pretty tough compares. But nonetheless, 15%, wow. Azure, kind of mid thirties, and then Google, we had kind of low thirties. But, well behind in terms of size. And Google's losing probably almost $3 billion annually. But, that's not necessarily a bad thing by advocating and investing. What's happening with the Cloud? Is AWS just running into the law, large numbers? Do you think we can actually see a re-acceleration like we have in the past with AWS Cloud? Azure, we predicted is going to be 75% of AWS IAS revenues. You know, we try to estimate IAS. >> Yeah. >> Even though they don't share that with us. That's a huge milestone. You'd think-- There's some people who have, I think, Bob Evans predicted a while ago that Microsoft would surpass AWS in terms of size. You know, what do you think? >> Yeah, I think that Azure's going to keep to-- Keep growing at a pretty good clip. I think that for Azure, they still have really great account control, even though people like to hate Microsoft. The Microsoft sellers that are out there making those companies successful day after day have really done a good job of being in those accounts and helping people. I was recently over in the UK. And the UK market between AWS and Azure is pretty amazing, how much Azure there is. And it's growing within Europe in general. In the states, it's, you know, I think it's growing well. I think it's still growing, probably not as fast as it is outside the U.S. But, you go down to someplace like Australia, it's also Azure. You hear about Azure all the time. >> Why? Is that just because of the Microsoft's software state? It's just so convenient. >> I think it has to do with, you know, and you can go with the reasoning they don't break out, you know, Office 365 and all of that out of their numbers is because they have-- They're in all of these accounts because the office suite is so pervasive in there. So, they always have reasons to go back in and, oh by the way, you're on these old SQL licenses. Let us move you up here and we'll be able to-- We'll support you on the old version, you know, with security and all of these things. And be able to move you forward. So, they have a lot of, I guess you could say, levers to stay in those accounts and be interesting. At least as part of the Cloud estate. I think Amazon, you know, is hitting, you know, the large number. Laws of large numbers. But I think that they're also going through, and I think this was seen in the layoffs that they were making, that they're looking to understand and have profitability in more of those services that they have. You know, over 350 odd services that they have. And you know, as somebody who went there and helped to start yet a new one, while I was there. And finally, it went to beta back in September, you start to look at the fact that, that number of services, people, their own sellers don't even know all of their services. It's impossible to comprehend and sell that many things. So, I think what they're going through is really looking to rationalize a lot of what they're doing from a services perspective going forward. They're looking to focus on more profitable services and bringing those in. Because right now it's built like a layer cake where you have, you know, S3 EBS and EC2 on the bottom of the layer cake. And then maybe you have, you're using IAM, the authorization and authentication in there and you have all these different services. And then they call it EMR on top. And so, EMR has to pay for that entire layer cake just to go and compete against somebody like Mongo or something like that. So, you start to unwind the costs of that. Whereas Azure, went and they build basically ground up services for the most part. And Google kind of falls somewhere in between in how they build their-- They're a sort of layer cake type effect, but not as many layers I guess you could say. >> I feel like, you know, Amazon's trying to be a platform for the ecosystem. Yes, they have their own products and they're going to sell. And that's going to drive their profitability cause they don't have to split the pie. But, they're taking a piece of-- They're spinning the meter, as Ziyas Caravalo likes to say on every time Snowflake or Databricks or Mongo or Atlas is, you know, running on their system. They take a piece of the action. Now, Microsoft does that as well. But, you look at Microsoft and security, head-to-head competitors, for example, with a CrowdStrike or an Okta in identity. Whereas, it seems like at least for now, AWS is a more friendly place for the ecosystem. At the same time, you do a lot of business in Microsoft. >> Yeah. And I think that a lot of companies have always feared that Amazon would just throw, you know, bodies at it. And I think that people have come to the realization that a two pizza team, as Amazon would call it, is eight people. I think that's, you know, two slices per person. I'm a little bit fat, so I don't know if that's enough. But, you start to look at it and go, okay, if they're going to start out with eight engineers, if I'm a startup and they're part of my ecosystem, do I really fear them or should I really embrace them and try to partner closer with them? And I think the smart people and the smart companies are partnering with them because they're realizing, Amazon, unless they can see it to, you know, a hundred million, $500 million market, they're not going to throw eight to 16 people at a problem. I think when, you know, you could say, you could look at the elastic with OpenSearch and what they did there. And the licensing terms and the battle they went through. But they knew that Elastic had a huge market. Also, you had a number of ecosystem companies building on top of now OpenSearch, that are now domain on top of Amazon as well. So, I think Amazon's being pretty strategic in how they're doing it. I think some of the-- It'll be interesting. I think this year is a payout year for the cuts that they're making to some of the services internally to kind of, you know, how do we take the fat off some of those services that-- You know, you look at Alexa. I don't know how much revenue Alexa really generates for them. But it's a means to an end for a number of different other services and partners. >> What do you make of this ChatGPT? I mean, Microsoft obviously is playing that card. You want to, you want ChatGPT in the Cloud, come to Azure. Seems like AWS has to respond. And we know Google is, you know, sharpening its knives to come up with its response. >> Yeah, I mean Google just went and talked about Bard for the first time this week and they're in private preview or I guess they call it beta, but. Right at the moment to select, select AI users, which I have no idea what that means. But that's a very interesting way that they're marketing it out there. But, I think that Amazon will have to respond. I think they'll be more measured than say, what Google's doing with Bard and just throwing it out there to, hey, we're going into beta now. I think they'll look at it and see where do we go and how do we actually integrate this in? Because they do have a lot of components of AI and ML underneath the hood that other services use. And I think that, you know, they've learned from that. And I think that they've already done a good job. Especially for media and entertainment when you start to look at some of the ways that they use it for helping do graphics and helping to do drones. I think part of their buy of iRobot was the fact that iRobot was a big user of RoboMaker, which is using different models to train those robots to go around objects and things like that, so. >> Quick touch on Kubernetes, the whole DevOps World we just covered. The Cloud Native Foundation Security, CNCF. The security conference up in Seattle last week. First time they spun that out kind of like reinforced, you know, AWS spins out, reinforced from reinvent. Amsterdam's coming up soon, the CubeCon. What should we expect? What's hot in Cubeland? >> Yeah, I think, you know, Kubes, you're going to be looking at how OpenShift keeps growing and I think to that respect you get to see the momentum with people like Red Hat. You see others coming up and realizing how OpenShift has gone to market as being, like you were saying, partnering with those Clouds and really making it simple. I think the simplicity and the manageability of Kubernetes is going to be at the forefront. I think a lot of the investment is still going into, how do I bring observability and DevOps and AIOps and MLOps all together. And I think that's going to be a big place where people are going to be looking to see what comes out of CubeCon in Amsterdam. I think it's that manageability ease of use. >> Well Rob, I look forward to working with you on behalf of the whole Cube team. We're going to do more of these and go out to some shows extract the signal from the noise. Really appreciate you coming into our studio. >> Well, thank you for having me on. Really appreciate it. >> You're really welcome. All right, keep it right there, or thanks for watching. This is Dave Vellante for the Cube. And we'll see you next time. (light music)

>> Narrator: From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> Hey welcome back everybody, Jeff Frick here with theCUBE we're in our Palo Alto studio, it's still 2020, we're still gettin' through the COVID crisis and we're still reaching out to our community really to talk to leaders who have lead through difficult times, led through transitions, and really go out to the experts and get some advice from people who have been around the block a few times, and I'm really, really excited to have one of my all time favorite business executives joining us, I haven't talked to him in years and years and almost decades, David Pottruck is joining us, he is formerly the CEO of Schwab, how he kind of made his name, now he's an author, he's teaching at the Wharton School, he's a New York Times best selling author and he's also the chairman of Red Eagle Ventures, David, great to see you. >> Thanks, Jeff, it's good to be with you today. >> Absolutely, so before we get in, just to check in, how are you doing, how are you gettin' through 2020, I can't believe we're already on the backside of this crazy year. >> Well, it's been a pretty challenging year as you know, and we've seen companies learn to operate in a virtual world. Zoom has been one of the huge beneficiaries, but technology companies in general, the whole FAANG group of Facebook, Amazon, Netflix and such, they've all benefited from people getting more virtual, and one of the non profits I'm involved with sends out videos to schools on social and emotional learning and that's seen a big uptick. So, the world is changing, and changing in very substantial ways, and I don't think we'll ever go back to the way it was in total, we will go back to having face to face meetings, of course, but I do think that operating virtually and doing more things remotely, remote business meetings over zoom are going to be a fixed part of the future, >> Right, right. >> At least in my opinion. >> So, the reason I wanted to reach out to you is you've managed through some crazy transitions and some crazy disruptions back in the day and for a lot of the young people that don't remember, there was a time before we did everything online. There was a time where you had a broker and you called him on the phone and you paid a pretty big price based on a percentage of the transactions. You were at Schwab in the late 90s when this new thing called the internet came along, and these new things called internet only businesses to compete with you, I wonder if you can kind of take us back as you started to see some of these new kinds of threats, coming not necessarily from people that you recognize from up and down the street, but people who are coming over horizons that you've never ever seen before. And how did you start to get a feel for hmm, the landscapes a changin'. >> You know it's really funny to look back that there actually was a day when something called the internet didn't exist. And, there was no connectivity, there was no internet. We were, of course, at that time a telephone based brokerage firm, what used to be called discount brokers. We don't use that phrase very much anymore at Schwab, but, we were a telephone based discount broker, and the internet popped up and started becoming commercialized, and some online only brokerage firms popped up. And these firms didn't have call centers, they didn't have branch offices, if you wanted to do a trade you did it over your computer, online, and the pricing was dramatically less. To give you some idea, to buy 100 shares of IBM, Merrill Lynch would have charged you $250, for that one trade, Schwab would have charged you $80 and E-Trade would have charged you $25. So, we were much cheaper than Merrill Lynch, but E-Trade was much cheaper than us. So, we were, at the time, we were worried about is there enough security on the internet, can we do trades. We have a reputation to protect, a brand new company they don't have a reputation to protect, we have customer security, we have a reputation to protect. Well, we started doing online trades, and the way we did it was we gave all of our customers a 20% discount on our normal pricing, so instead of charging 80-something dollars, you paid something like $60. So, it was a nice discount, customers liked it, they were doing online trades, and we're seeing that is just taking off, it's getting huge, and we're getting great press, the analysts love it, Wall Street loves it, we're a public company and it's going great, but of course at the same time I'm getting, a basket full of letters and emails from our customers saying "why can't you do trades for $25 like E-Trade? Why are they able to do an online trade for $25 and you're charging $65? I thought you stood for value, I thought you guys wanted to be the best value for the money." So, I'm in this dilemma where Wall Street doesn't see these letters, they don't get reported, I see them, and there dozens and then hundreds, and then thousands. >> Wow. >> We had millions of customers, so to get a thousand letters or emails in a month that's very possible. And so I go to Chuck with this and I said you know, I think we need to make a change because no great company was built on the back of unhappy customers. >> Right, right. But you know, it's so funny, not funny, I'm sure it was a huge challenge in the moment, but you know, Clayton Christensen's another one of my favorite business leaders and why I like him so much, and rest in peace he passed earlier this year, is his very simple statement in "The Innovator's Dilemma" that smart people making sound business decisions based on their customer feedback will always miss discontinuous change. You were right in the middle of this thing and you had to get discontinuous change and it's funny, you've mentioned quite a bit in some of your other conversations about looking for faint signals, well this was not a faint signal, this was pretty much, sounds like came up and banged you over the head. So, how do you make and convince the rest of the people of the team that this is kind of a short-term pain but it's a long-term gain, really thinking about this long-term relationship with our customers, even though it's going to cost us on a per transaction basis in the short-term. >> Well, I had our financial staff run some models, and show me what would be the impact if we reduced our pricing from 60 something dollars a trade to $29 a trade, and the assumption of more and more trades moving to the internet. We also had a model into that the fact that people trade a little more when prices go down, costs go down cause I don't have the cost of someone answering the telephone, so there were some benefits, and I had to run the math to understand how long would it take us to go through the trough to get to the other side. A big important part of this is modeling the numbers. You don't just make this decision as a public company and just hope for the best >> Jeff: Right. >> You need to model it out, you need to run math and say how long will it take, what do we have to assume, what do we need to do, what costs do we need to cut, how are we going to protect ourselves as best as we can? And we knew that the math said that our profitability will go down 25% when we make this change of internet pricing, and we expected that Wall Street would be so upset, because they didn't see this coming, no analyst saw this coming cause they don't know about complaint letters I'm getting, so, analysts would be upset and the stock would go down 40%, going to your board and telling them you want approval for a 25% reduction in profits and a 40% reduction in your stock price is not what you want to do as a CEO, you don't want to go to your board with that and when they ask you, well how sure are you that we're going to climb out of this, you say it's going to take 18 months, what if it takes three years, you know, I was, I didn't see the choice we had, honestly, in my heart, you don't build a great company with an increasing number of unhappy customers. I didn't think we had a choice, and Clayton Christensen was one of the consultants that I used to help me think all this through because it was really hard to make this change, Jeff, because we were doing so well. >> Right. >> Ostensibly, we were killing it. >> Right, so it's interesting, I wonder if you could contrast it to what's happening say now with COVID, right, it was this, didn't sneak up on anyone, it was a really kind of a light switch moment in mid-March where suddenly everyone has to work from home, all your digital transformation initiatives are now put on fast forward, but we still have this situation where there's a variety of potential outcomes and timing that's really hard to gauge, so when you're thinking about managing through change within perfect information and you almost have kind of will we go back to normal, will we stay where we are or some spectrum in between, how do you help people think about how they should come up with contingency plans and think about managing through a number of options with imperfect information and really kind of no clear line, you said you had an 18 month ROI that the analytics point to, we're not really sure how long this thing is going to go and what it's going to look like when we get to the other side. >> Well, I think there's two issues there, one of them is how we get through this pandemic period. Until we get to, there's three things we need, we need inexpensive testing that is not done by a professional that we can do at home to see if we're safe. That's number one. Number two, we need a treatment that helps us get through this and get to the other side without dying, we need the fatality rate to even drop further. And number three we need a vaccine. So those are the three things that we need, that the world is working on all three of those, and my guess is that in the first half of 2021 we will have all three of those, we'll have all three of those and this will be a thing, basically, a thing of the past. >> Jeff: Right. >> So, but I don't think the world goes back, to exactly the way it was. People have learned they can have very effective meetings without everybody flying to Chicago, or New York, or Las Angeles, they can do it over Zoom, that doesn't mean meetings go away, but I think they're going to go down in numbers and more online things are going to happen. More people are going to be working from home at least part of the week. It's going to be different. >> Yeah. >> Those CEO's who sit in a somewhat of an ivory tower and get numbers fed to them from their financial staff, and they're not out talking to customers directly, people look at that as anecdotal information, I think it's more important than that, I think you need to see the passion behind the voice and the eyeballs of some of your best customers to understand what's going on with them, and a lot of CEO's don't actually do that. >> Right. You've made a really interesting comment in another interview that you did earlier, and you talked about the high gain questions. And one of the challenges of all CEO's is nobody wants to be the one that tells his CEO bad news, whether that be someone on your staff, whether that be some lower level person who's on the front lines and really knows there's some broken things, or whether it's a good customer as you said and kind of a social setting, how you doin', oh we love you, blah blah blah. But as a CEO you really have stressed that that is really some important hard to find, and hard to filter information up to the executive suite, so what were some of the tips and tricks you used to make sure that people either A. weren't afraid to tell you bad news, and B. that you could kind of go out and sniff it out a little bit more creatively than just kind of waiting for it to come through in the weekly reports. >> Well, obviously, you know, I think all kinds of executives get out and they talk to their customers on a regular basis, they're out and they're talking to them, the problem with those kind of discussions are no one wants to be disrespectful, people want to be nice in those meetings by and large, and you ask questions "how are we doing" "oh you guys are doing great", meanwhile the guy who tells you you're doing great is also looking at some newer technology that might replace you. (laughs) So that kind of question doesn't get you very far. So what we used to do, to be quite specific, is that we used to do a monthly luncheon where I had 12 of my mostly top executives but some people a level or two down, 12 Schwab people with 24 customers. And so they were tables of six, two of us, four customers, and we had a theme that we would talk through and the themes were always around things of, if you had to pick out three things we don't do well, what would they be? Give the customer permission to be comfortable being critical. What are the three things that you've heard about our customers, our competitors doing, that are better than us? What are the things that we need to change to make you even more delighted? You need to ask those kinds of high gain questions where there's no polite answer, the customer is permitted and given the opportunity to answer in a truthful and critical fashion. >> That's a great lesson, as you said give them permission and give them the format and the forum to say some of those things so that you get some of that information. Another great leadership principle that you shared many times, I want to dig into a little bit is kind of motivation verses inspiration. And that those are often confused, but very different concepts in the way that you lead people. I wonder if you can dig in a little bit on your philosophy on those two things. >> Sure, you know it's funny, those terms motivation and inspiration are used almost interchangeably as if they're the same thing. And they're not. Motivation is fundamental in business, and it's the exchange of behaviors for rewards. I was a psychology major in college, this was one of the things we learned about the exchange of behaviors for rewards and that's motivation. Inspiration on the other hand, is the effort to make people want to do something for, not for rewards that are tangible, but to be part of something great. We want you to be part of a movement, we want you to be part of something special, something that's going to change the world for the better and trying to get your employees to buy into this notion that we are on a mission and that mission is to make the world a somewhat better place, it doesn't mean we don't make money, of course we make money, but we're also out for more than a financial bottom line, we're out for a bottom line that's great for customers and maybe pretty great for employees as well. >> So it's interesting, cause you've seen 'em right, you've been in finance for ever, it's always about the shareholders, you've talked about the stock price a number of times in terms of a measure, but it seems more purposed led or purpose forward organizations now are more appealing to the younger generation, I think the search for a little bit more meaning in our day to day job and what that company is all about seems to have elevated over the last several years and taken a higher role in what they used to call triple line accounting, is it not only your shareholders who always are at the top of the list and have been traditionally, but your customers, your employee, and more and more your community and even the environment. Have you seen the swing towards, it's not just about shareholder value? >> Well, not on Wall Street. (laughs) I think, Wall Street is about money, and the people who go to work on Wall Street, and the way Wall Street operates, it's measured in dollars and cents and share price and profits and distributions to private equity partners and so forth, it's a numbers game and it is a profit game on Wall Street, we should be honest about that, it is what it is. >> Jeff: Sure. >> And, I have yet to see the Wall Street firm that is talking about triple bottom lines cause that just doesn't happen very much on Wall Street, it doesn't happen from my perspective, it almost doesn't happen at all. But there are other companies where they do talk about a more triple bottom line, and I think as a leader if you want to be that kind of company and you want to be that kind of leader you have to be comfortable talking about that, and not feel embarrassed by it, not feel that oh, that's too airy fairy, that's too goody two shoes. If you really believe that our goal is to have a triple bottom line, profitability, great for employees, and great for customers and the world at large, then as a leader you need to talk about that. You need to be willing to stand up and have those kinds of conversations and let yourself be challenged by perhaps the press, employees, shareholders, who think that that's not a good strategy. I believe that in many cases that's a great strategy because on a long-term basis you don't want every employee in your company, and all of your senior executives to basically be up for sale, that if a bigger job comes in with a bigger compensation, they're out the door. You're looking for loyalty, you're looking for buy in, for participation, for wanting to give every bit of themselves for the mission of the company. And as the CEO, if you want to take that path, you got to be willing to put yourself out there and talk about it and suffer the slings and arrows from those who don't believe that that's the best path for the company. >> Right, right. Well and that's another thing that you've talked about quite often, is really that the company feeds off the passion of the CEO, and the CEO has to have that passion because they're lookin', they're watchin', they're lookin' at your moves, they're lookin' at what you say, they're lookin' at your body language, they're lookin' at everything that you do. And I think within the context of these transitions and these difficult times, you have another great line that you've used a number of times, which is: "You need to have a perception of momentum." I love that line, so everyone needs to think that we're on the right path, we're not there yet, I feel it, he looks like he feels it, he looks like he's confident, so now I'm confident and I'm going to jump in and help be part of this change process. You've seen that time and time. >> Well, momentum is a tricky thing, you can have momentum and not have the perception of momentum. Because if you're doing a turn around, what often happens is in the early stages of the turn around, the numbers start to change but they're small, and you really haven't seen, it's not as steep. The turn around doesn't go steep, the turn around goes and builds slowly. And, what you need to be measuring in the beginning, are kind of the inputs and behaviors rather than the outputs, sales and profits. Those take longer. But you need to build belief, you need to build buy in, because it can take a long time before things start getting better and you don't want your best people to wonder whether this is the right move, should I be looking for another job, so, you have to build the perception of momentum even as you're building the reality of momentum. >> Right, right. So another thing we cover a lot of tech conferences, obviously, Cloud and AI, machine learning are hot things. But, you know, it always goes back to the big three. It's the technology, okay, but it's also people, and more importantly I think that gets left out is process. So, when you're thinking about, you know you're management is, and again, especially through a transition or a difficult time or some unknown and choppy waters, how do you think about those three, prioritizing those three and organizing those three between people, process and technology? >> Okay, well, you know always looking for technology that can be implemented to give you productivity, better customer service, you need to be monitoring what you're competitors are doing, and be looking out, sometimes at the bleeding edge, where you don't need to implement those kinds of changes right away, but you need to know where you want to go down the road, so you have some sense of that. As far as process goes, your processes are both a strength and a weakness because the strength of how well you run your processes today is also how hard they're going to be to change tomorrow. You know, companies are built for predictability, reliability, risk minimization, and all of your processes are built for those things. But those are also the things that are the opposite of big breakthrough changes. So you need to be thinking about, all right, are we strengthening our processes but also, if we have a change coming that's going to require a change of some of those processes, how is that going to get in our way and how are we going to get past that? >> Jeff: Right. >> I've left people for the last because to me that's the heart and soul of a successful executive. One person never gets everything done, it's all about the quality of your team. You've got to be a recruiter, you've got to be always on the look out for new talent that can help your company, and you've got to be thinking about how you're going to recruit that talent. You have to be a magnet for talent. When I sit on boards and I talk to the CEOs, I ask them, what are you doing to be a magnet for talent? What does that mean? What are you doing for great people to want to work for you? For you, and your company, what are you doing, how are you reinvesting in people, how are you putting time and energy in their professional development, in their growth? How are you getting to know them? How are you understanding their ambitions, their hopes and desires for the future? How much time and effort do you spend on that? And that's all part of having people not leave, everyone, in a way you can look at the world and think everyone is for sale. But you want people that are not for sale, that are committed to you and committed to the mission and in today's world where everything seems so fluid, I know my ideas about this probably seem very old and perhaps out of date, but I still believe in them with all my heart, that you want people that are committed to you and what we are accomplishing together. And you have to be reinforcing that with your words, and even more importantly with your actions. >> Yeah, I think it goes back to your inspiration, people are much more motivated by inspiration than just collecting a paycheck or getting a compensation back for what they're doing, which is a great segue to the last topic I wanted to cover with you, and I remember this, we had dinner, I think it was 1996 at the Wharton's Zweig Series, and you were such a phenomenal speaker, and I remember asking you the question and I remember your answer, and I've repeated it ad nauseam for the last 20 years. I said, "David, you're such a great speaker, why, how?" And you were so matter of fact in that you just said "hey, it's an important part of my job, I treat it as a skill, I hired a coach, I practiced like I would do any other skill", and why that's such a powerful story is you clearly are in a position of power, you could clearly have a crazy ego that got in the way of such a matter of fact accomplishment of these tasks and all the PR people I talk to and they hear this story "oh my gosh, we got to get him talking to my executives" because so many people let ego get in the way of what is really an important task for a CEO and a leader which is communication and you recognize that early on and really went after it to make sure that you were very good at this very important task. >> Well, what happened to me, I got lucky, I got lucky. When I got promoted to be the CEO of Schwab, I knew I was going to have to do a lot more public speaking and I already thought I was pretty good at being a public speaker, but I thought I needed to fine tune my messaging, I needed to get it better. So, I looked around and I got some referrals and I hired a guy that I thought was going to be a speech writer for me, that would help craft the message. And, we had our first meeting, and we're talking about an upcoming speech and he says to me things like, "Well, Dave, I want to know more about your life. Tell me how you grew up, tell me what you're proudest moments were, I want to learn about you." And I said to him, "Terry, I'm not looking for a biographer, I want a speech writer, I need a guy that can help me craft my message." And he said, "Well, Dave, that's not how I do things. I need to know who you are, I need to know what your passions are and where they come from so that we can give a message that has more than just words it has meaning, it has your passion built into it, that's what we need to do." And that's what Terry taught me, was that it's not just the words, it's also the passion, energy, and meaning and connection behind the words. And I want to mention one other thing that I think is very important. When people talk about being really good communicators, they often talk about speaking. They don't focus on listening. And listening is a tremendously important skill. So for example, you give a speech, you're the CEO or Senior Executive, you give a speech, do you stay there and do you do a Q+A session? The Q+A session can even be more important than the speech sometimes, because all the employees know that the speech is something that was pre-arranged, it's not on the cuff, it's something that's been thought about and prepared. But the questions and answers are authentic and in the moment. People are clamoring for authentic leadership. That Q+A session, where you're listening for the question and maybe the question behind the question. So you're not just trying to get through them as fast as you can, but you're trying to really answer and listen for the question and the question behind the question. And then answer those from the heart with passion, and that's how you will score the most points with your audience. >> That's great. And then who knows what comes from it, in getting ready for this I came across your blog post talking about Gopi Kallayil a mutual friend at Wharton who reached out to you after that same dinner, and you were happy enough, or you were kind enough to respond and grow a friendship and a relationship that again is lasted for decades. So that's such an important message to listen, as somebody said right, "God gave you two ears and one mouth should try to use them in that ratio." (laughs) Well David, thank you so much for taking some time, again I think these are really trying times in leadership, I think it's really an opportunity for great leaders to shine and those that don't there's really no place to hide. So I really appreciate you sharing your insight and taking a few minutes with us. >> Thanks, Jeff, I hope all the people that follow you and listen to your broadcasts learn something today and come away with some benefit from this time we've spent together. >> Undoubtedly, undoubtedly. Well, thanks again. All right, he's Dave Pottruck, I'm Jeff Frick, you're watching theCUBE, thanks for watching and we'll see you next time. (upbeat music)