(funky music) >> Announcer: From our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBE Conversation. >> Everyone, welcome to this special CUBE Conversation here in Palo Alto, California with CUBE Studios. I'm John Furrier, your host of this CUBE Conversation with Dheeraj Pandey, CEO of Nutanix. CUBE alumni, very special part of our community. Great to see you again, thanks for coming in. We're previewing your big show coming up, Nutanix NEXT in Europe. Thanks for joining me. >> It's an honor. >> It's always great to get you. I saw your interview on Bloomberg with Emily Chang. Kind of short interview, but still, you're putting the message out there. You've been talking software. We covered your show here in North America. Clearly moving to the subscription model, and I want to get into that conversation. I think there's some notable things to talk about now that we're in this cloud 2.0 era, as we're calling it, kind of a goof on web 2.0. But cloud 2.0 is a whole shift happening, and you've been on it for a while. But you got the event coming up in Europe, Nutanix NEXT. What's the focus? Give a quick plug for that event. Let's talk about that. >> Yeah, in fact, the reiteration of the message is a key part of any of our user conferences. We have 14,000 customers around the world now, across 150 countries. We've done almost more than $5 billion worth of just software business in the last six, seven years of selling. It's a billion six run rate. There's a lot going on in the business, but we need to take a step back and in our user conference talk about the vision. So what's the vision of Nutanix? And the best part is that it hasn't changed. It's basically one of those timeless things that hopefully will withstand the test of time in the future as well. Make computing invisible anywhere. People scratch their heads. What does computing mean? What does invisible mean? What does anywhere mean? And that's where we'll actually go to these user conferences, talk about what is computing for us. Is it just infrastructure? Is it infrastructure and platform? Now that we're getting into desktop delivery, is it also about business users and applications? The same thing about invisible, what's invisible? For us, it's always been a special word. It's a very esoteric word. If you think about the B2B world, it doesn't talk about the word invisible a lot. But for us it's a very profound word. It's about autonomous software. It's about continuous, virtues of continuous delivery, continuous consumption, continuous mobility. That's how you make things invisible. And subscription is a big part of that continuous delivery message and continuous consumption message. >> So the event is October 9th, around the first week of October. You got some time there, but getting geared up for that. I wanted to ask you what you've learned from the North America conference and going into the European conference. It's ultimately the same message, same vision, with a tweak, you got some time under your belt since then. The subscription model business, which you were talking in your Bloomberg interview, is in play. It is not a new thing. It's been in operation for a while. Could you talk about that specifically? Because I think most people would say, hey, hardware to software, hard to do. Software subscription, hard to maintain and grow. Where are you on that transition? Explain and clarify your mix of business, hardware, software. Where are you in the progress of that transformation? >> Well, you know, I have been a big student of history, and I can't think of a company that's gone from hardware to software and software subscription in such a short span. Actually, I don't know of any company. If you know of one, please let me know. But why? The why of subscription is to be frictionless. Hybrid is impossible without having the same kind of consumption model, both on-prem and off-prem. And if we didn't go through that, we would be hypocritical as a company to talk about cloud and hybrid itself. The next 10 years for this company is about hybrid, and doing it as if private and public are one in the same is basically the essence of Nutanix's architecture. >> Well, I can think of some hardware-software dynamics that, again, might not match your criteria, but some might say Apple. Is it a software or hardware company? Hardware drives the ecosystem, they commoditize it. Peloton bicycle is a bike, but it's mainly a software business and in-person business. So there's different models. Oracle has hardware, they have software. It doesn't always relate to the enterprise. What's the argument to say, hey, why don't you just create your own box and kick ass with that box, or is it just different dynamics? What's that? >> Well, there's a tension in the system. People want to buy experiences as opposed to buying things. They don't want to integrate things, like, oh, I need to actually now get a hardware vendor to behave as a software vendor when it comes to support issues and such. And at the same time, you want to be flexible and portable. How do you really work with the customer with their relationships that they have with their hardware vendors? So the word anywhere in our vision is exactly that. It's like, okay, we can work on multiple servers, multiple hypervisors, and multiple clouds. At the end of the day, the customer experience is king. And that's one thing that the last 10 years has taught us, John, if anything, is don't sell things to people. You know, Kubernetes is a thing. Cloud is a thing. Can you really go sell experiences? The biggest lesson in the last year for us has been integrate better. Not just with partners, but also within your own products. And now if you can do that well, customers will buy from you. >> I think you just kind of clarified where I was thinking out loud, because if you think about Apple, the hardware is part of the experience. So they have to have it. >> Mm-hmm. >> You don't have to have the hardware to create those experiences. Is that right? >> Absolutely, which is why it's now 2% of our business, and yet we are saying that we take the burden of responsibility of supporting it, integrating with it. One of the biggest issues with cloud is operations. What is operations? It's day two patching. How do you do day two patching? Intel is coming up with microcode upgrades every quarter now because of security reasons. If we are not doing an awesome job of one-click upgrade of firmware and microcode and BIOS, we don't belong in the hybrid cloud world. I think that's the level of mundaneness that we've gotten to with our software that makes us such a high NPS company with our customers. >> I want to just drill in on the notion of a thing versus experience. You mentioned Kubernetes is a thing. I would say Hadoop was a thing. But Hadoop was a great example. It was hard to do. Kubernetes, jury's still out. People love them. Kubernetes, we'll see how that goes. If it can be abstracted away, it's not a thing anymore. We'll see. But Hadoop was a great example. Unbelievable technology direction, big data, all the goodness of object storage and unstructured data. We knew that. Just hard to work with. Setting up clusters, managing clusters. And it ended up being the death of the sector, in my opinion. What is an experience? Define what does that mean. Is it frictionless only? Is there a trust equation? Just unpack your vision on what that means. A thing, which could be a box with software on it, and experience, which is something different. >> Yeah, I mean, now you start to unpeel the word experience. It's really about being frictionless, trusted, and invisible. If you can really do these things well, around the word, define frictionless. Well, it has to be consumer-grade. It has to be web scalable, 'cause customers are looking for the Amazon architecture inside, and aren't just going and renting it from Amazon, but also saying, can I get the same experience inside? So you've got to make it web scale. You've got to make it consumer-grade. Because our operators and users, talk about Hadoop, I mean, they struggled with the experience of Hadoop itself because it was a thing, it was a technology, as opposed to being something that was consumer-grade itself. And then finally, security. Trust is very important. We must secure always on resilient. The word resilience is very important. In fact, that's one of the things we'll actually talk about at our conference, is resilience. What does it mean, not just for Nutanix stock, to be where it is today from where it was six months ago. And that's what I'm most proud of, is you go through these transitions, you actually talk about resilience of software, resilience of systems, resilience of customer support, and resilience of companies. >> So you mentioned hybrid cloud. We were talking before we came on camera about hybrid cloud. But software's a two-way relationship. Talk about what you mean by that, and then I want to ask you a follow-up question of where hardware may or may be an opportunity or a problem in that construct. >> Yeah, I mean, look, in the world of hybrid, what's really important is delivering an experience that's really without silos. Ideally, on-prem infrastructure is an availability zone. How do you make it look like an availability zone that can stand up shoulder-to-shoulder with a public cloud availability zone? That's where you sell an experience. That's how you talk about a management plane where you can actually have a single pane of glass that really delivers a cloud experience both ways. >> You're kind of a contrarian. I always love interviewing you because you seem to be on the next wave before any realizes it. Right now everyone's trying to go on-premise and you're moving from on-premise to the cloud. Not you guys moving, but your whole vision is. You've been there, done that on premises. Now you've got to be where the customers are, which is where they need to be, which is the cloud. I heard you say that. It's interesting, you're going the other way, right? >> Mm-hmm. But you could look at the infrastructure and say, hey, there's a lot of hardware inside these clouds that have a lot of hardware-specific features like hardware assist that software or network latency might not be able to deliver. Is that a missed opportunity for you guys, or does your software leverage these trends? And even on premises, there's hardware offload-like features coming. How do you reconcile that? Because I would just argue inside of the company, say, hey, Dheeraj, let's not go all in on software. We can maximize this new technology, this thing, for our software. How do you-- >> Look, I think if you look at our features, like security, the way we use TPM, which is a piece of assist that you get from Intel's motherboards for doing key encryption management. What does it mean to really do encryption at scale using Intel's vectored instructions? How do you do RDMA? How do you look at InfiniBand? How do you look at Optane drives? We've been really good at that lowest level, but making sure that it's actually selling a solution that can then go drive SAP HANA and Oracle databases and GPU for graphics and desktops. So as a company, we don't talk about those things because they are the how of the business. You don't talk about the how. You'd rather talk about the why and the what, actually. >> So from a business strategy standpoint, I just want to get this clear because there's downfalls for getting into the hardware business. You know them. Inventory, all these hardware cycles are moving fast. You mentioned Intel shipping microcode for security reasons. So you're basically saying you'd rather optimize for decoupling hardware from the software and ride the innovation of the hardware guys, like Nvidia and Intel and others. >> Absolutely, and do it faster than anybody else, but more integrated than anybody else. You know, all together now is kind of our message for .NEXT. How do you bring it all together? Because the world is struggling with things, and that's the opportunity for Nutanix. >> Well, I would say making compute invisible is a great tagline. I would add storage and networking to that too. >> Yeah, computing, by the way. >> Computing. >> I said computing. >> Okay, computing. >> 'Cause computing is compute storage networking. Computing is infrastructure, platform, and apps. It's a very clever word, and it's a very profound word as well. >> Well, let's just throw Kubernetes in there too and move up the stack, because ultimately, we're writing a lot of stories on covering this editorially, is that the world's flipped upside down. It used to be the infrastructure. We're calling this cloud 2.0, like I said earlier. The world used to be the infrastructure enabled what the apps could do, and they were limited to the resources they had. Now the apps are in charge. They're dictating terms below the software line, if you want to call it the app line. So the apps are in charge now. Whoever can serve up the best infrastructure capability, which changes the entire computing industry because now the suppliers who can deliver that elastic or flexible capacity or resource, wins. >> Absolutely. >> And that's ultimately a complete shift. >> You know, I tell people, John, about the strategy of Nutanix because we have some apps now. Frame is an app for us. Beam is an app. Calm is an app. These are apps, they're drawn on the platform, which is the core platform of Nutanix, the core hyper-convergence innovation that we did. If you go back to the '90s, who was to say that Windows really fueled Office or Office fueled Windows? They had to work in conjunction, because without one, there would be no, the other, actually. So without Office there would be no Windows. Without Windows there would be no Office. How platforms and apps work with each other synergistically is at the core of delivering that experience. >> I want to add just you're a student of history. As an entrepreneur, you've been there through the many waves and you also invest a lot, and I want to ask you this question. It used to be that platforms was the holy grail. You'd go to a VC and say, hey, I'm building a platform. Big time investment. An entrepreneur will come back: I got a tool. You're a feature. You're a feature, not a platform. Platforms was the elite engineering position to come in to look for the big money. How would you define platforms now? Because with cloud, if apps are in charge, and there's potential features that are coming around the corner that no one's yet invented, what is this platform 2.0 world look like if you were coming out of grad school or you were a young engineer or a young entrepreneur? How do you think about that right now? >> Well, the biggest thing is around extensibility and openness. You know, we were talking about openness before, but the idea of APIs, where API is the new graphically why, because the developer is the builder. And how do you really go sell to them and still deliver a great experience? And not just from the point of view of, well, I've given you the best APIs, but the best SDKs. What does it mean to give them a development kit that gets them up and running in no time? And maybe even a graphical Kickstarter. We're working with our partners a lot, where it's not just about delivering APIs or raw APIs because they're not as consumable, but to deliver SDKs and to deliver graphical structural kits to them so that they can be up and running, building applications in two months rather than two years. I think that's at the core of what our platform is. >> And data and having an operating system thinking seems to be another common pattern. Understand the subsystems of data. Running and assembling things together. >> I think what is Nutanix, I mean, if people ask me what is Nutanix, I start with data. Data is the core of the company. We've done data for virtualization. We're now doing data for applications with Nutanix Files. We have object store data. We are doing Era, which is database as a service. Without data, we'd be dead as a company. That's how important it is. Now, how do you meld that with design and delivery is basically where the three Ds come together: data-- >> I wrote a blog post. Dave Vellante always laughs when I bring this up because he always references it too. In 2007 I said, data is the new development kit. 'Cause back then, development kits existed. SDKs, software development kits. MSDN was Microsoft's thing. You remember those glory days, Dheeraj, I know. But the thesis was, if data does actually come in, it's actually an input into the software. This is what I think you guys are doing that is clever that's not well understood, is data is an input, like a software library almost. A module, but it's dynamic and it's always changing. And writing software for that is a nouveau kind of thing. This is new. >> Yeah, I know, and delivered to the developer, because right now data and hardware data is sitting in silos which are mainframe-like systems. How do you deliver it where they can spin it up on their own? Making sure that we democratize data is the biggest challenge in most companies. >> We're in a new era, I think you just pointed that out, and we talk about it at CUBE all the time. We don't really talk about up-front. It used to be UI was the thing, user interface, ease of use. I think now the new table stake feature in all companies is if you can't show value instantly in any solution that has a thing or things in it, then it's pretty much not going to happen. I mean, this is the new expectation that becomes the experience for-- >> Yeah, I mean, millennials are the new developers, and they need to actually see instant gratification, many of these-- >> Well, cost too. I don't want to spend a million dollars to find out it didn't work. I want to maybe spend something variable. >> And look, agility, the cliched word, and I don't want to talk about agility per se, but at the end of the day it's all about, can we provide that experience where you don't have to really learn something over 18 months and provide it in the next three hours. >> Great conversation here with Dheeraj Pandey, CEO of Nutanix, about his vision. I always loved your software vision. You guys have smart engineers there. Let's talk about your company. I think a lot of people at your conference and your community and others want to know, is how you're doing and how the company's doing. Because I think you guys are in the midst of a major transition we talked about earlier, hardware to software, software to subscription, recurring revenue. I mean, it's pretty much a disruptive enabler for you guys at one level as an opportunity. It's changing how you do accounting. It's having product management. Your customers are going to consume it differently. It's been a big challenge. And stock's taken a little bit of a hit, but you're kind of playing the long game. Talk about the growth strategy as you guys go forward. This has been a struggle. There's been some personnel changes in the company. What's going on? Give us the straight scoop. >> Yeah, in fact the biggest thing is about the transformation for this coming decade. And there's fundamental things that need to change for the world of cloud. Otherwise, you're basically just talking the word rather than walking the walk itself. So this last quarter I was very pleased to announce that we finally showed the first strong point of this whole transformation. There's a really good data point coming out that the company is growing back again. We beat street estimates on pretty much every metric. Billings, revenue, gross margin. And we also guided above street estimates for billings, revenue, and gross margin, and I think that's probably one of the biggest things I'm proud of in the last six, nine months of this subscription transition. We're also telling the street about how to look at us from software and support billings point of view as opposed to looking at overall billings and revenue. If you take a step back into the company, I talk about this in our earnings call, 'til three years ago, we were a commercial company, also doing federal and some international. And the last three years we proved to ourselves and to the community that we can do enterprise, you know, high-end customers, upmarket, and also do a very good job of international. Now, the next three years is really about saying, can we do both enterprise and commercial together? All together now, which is also our, coincidentally, our .NEXT message, is the proof that we actually have to go and show that we can do federal, enterprise, and commercial to really build a very large business from it. >> Well, federal's got certification levels. We know that's different depending upon which agency you're talking to. Commercial, a little bit different ball game. SaaS becomes important, cloud becomes important. The big trend is on-premise hardware. Outposts for AWS, Azure Stack for Microsoft. How do you fit into that? Because you, again, you said you're both ways. >> Mm-hmm. >> So are you worried about that? Is that a headwind, tailwind for you? What's the impact for this now fashionable on-premises shift? Which I think is just a temporary thing as cloud continues to grow. But I still argue with Michael Dell about this. I think cloud is going to be a bigger TAM. Even though there's a huge total addressable market on enterprise, that's like saying there's a great TAM for horses and buggies when cars are coming out. It's different world between public cloud and on-premises. How does that impact Nutanix, this on-premise-- >> Well, remember I said about the word anywhere in our vision? Make computing invisible anywhere? With software you can actually reduce the tension between public and private. It's not this or that. It's this and that. Our software running on Outpost is a reality. It's not like we're saying, Outpost is one thing and Nutanix is another. And that's the value of software. It's so fungible, it's so portable, that you don't have to take sides between-- >> Are you guys at ISV inside Amazon Marketplace? >> No, but again, it's still a thing. Marketplace is still not where it should be, and it's hard to search and discover things from there. So we are saying, let's do it right. Remember, we were not the first hyper-convergence company. Right? We were probably the ninth one, like the way Google was as a search engine, actually. But we did it right, because the experience mattered. You know that search box that did everything? That's what Nutanix's overall experience is today. We will do the public cloud right with our software so that we can use the customer's credits with Amazon-- >> But you're still selling direct. And your partners. >> Well, everything is coming through partners, so at the end of the day we have to do an even better job of that, like what we're doing at HPE now. I think being able to go and find that common ground with partners is what commercial is all about. Commercial is a lot about distribution. As a company, we've done a really good job of enterprise and federal. But doing it with partners-- >> What are the biggest impact areas for your business and business model, elements with software transition that you're scaling up on the subscription side? What are the biggest areas? >> Well, one is just communication, 'cause obviously a lot is changing. At a private company, things change, nobody cares. The board just needs to know about it. But at a public company, we have investors in the public market. And many of them are in the nosebleeding section, actually, of this arena. So really, you're sitting in the arena, being the man in the arena, or the woman in the arena. How do you really take this message to the bleachers section is probably the biggest one, actually. >> Well, I think one of the things I've always speculated on, you look at the growth of, just pick some stocks that we all know. VMware, Microsoft. You look at the demarcation point where, right when the stock was low to high was the shift to cloud and software. With VMware, it was they had a failing strategy and they kill it and they do a deal with Amazon. Game has changed, now they're all in the software-defined data center. Microsoft, Satya Nadella comes in, boom, they're in cloud. Real commitment. And with Microsoft specifically, that was a real management commitment. They were committed to software. They were committed to the cloud business model, and took whatever medicine they needed to take. >> That's it. That's it, you take short-term pain for long-term gain, and look, anything that becomes large over time, to me it's all about long-term greed, and I use this word a lot. I want all our employees and our customers and our investors to really think about the word. There's greed, but it's long-term greed, and that's how most companies have become large over time. So I think for us to have done this right, to say, look, we are set for the next 10 years, was very important. >> It's interesting. Everyone wants to be like Jeff Bezos. Everyone wants to be like you guys now, because long-term greed or long-term thinking is the new fashion. It's the new standard and tack. >> Yeah, I mean, look the CEOs, the top 200 CEOs, came out and talked about, are we taking good care of main street, or are we just focused on this hamster wheel of three months reporting to Wall Street alone? And I think consensus is emerging that you got to take care of main street. You and I were talking about, that I look at investors as customers, and I look at customers as investors. Which is really kind of a contrarian way of thinking about it. >> It's interesting. We live in the world, we've seen many waves. I think the wave we're on now from an entrepreneurial and venture creation standpoint, whether you're public or private, is the long game is the new 3D chess. It's where the masters are playing their best game. You look at the results of the best companies. I just bought the book about Uber from Mike Isaac from the New York Times. Short-term thinking, win at all costs, that's not the 3D chess game that's going on with entrepreneurs these days. All the investment thesis is stay long-term. And certainly now, with this perceived bubble popping, or this downturn that may or may not happen, long-term game is more important than ever. Your thoughts on it? >> I think the word authenticity has never been more important, not just in the Valley, but around the world, actually. What you're seeing with all this Me Too movement and a lot of skeletons in the cupboard out there, I think at the end of the day, the word authentic cannot be artificially created. It has to come from within. What you talk about, Satya... I look at Shantanu Narayen, the Adobe CEO, and they're authentic CEOs. I mean, I look at Dara now, at Uber, he's talking about bringing authenticity to Uber. I think there's no shortcuts to success in this world. >> I think Adobe's a great example. What they've done has been amazing. I know you're on the board there, so congratulations. Final word, I'll let you get your plug in for the event and your customer base. Talk to your customers and investors out there that might watch this. From your state of mind, what's the state of the union for Nutanix? Speak directly to your customers and investors right now. >> Well, the tagline for .NEXT Copenhagen is all together now. We're bringing clouds together. We're bringing app infrastructure and data together. I think it's a really large opportunity for us to go sell an experience to our customers, rather than selling things. All these buzzwords that come up in technology, as a company, we've done a really good job of integrating them, and the next decade is about integrating the public cloud and the private cloud. And I look at investors and customers alike. I talk about long-term greed with them. Providing an experience to them is the core of our journey. >> Thanks for your insight, Dheeraj. This was a CUBE Conversation here in Palo Alto. I'm John Furrier, thanks for watching. (funky music)