>> Announcer: Live from Las Vegas, it's theCUBE, covering AWS Reinvent 2017, presented by AWS, intel, and our ecosystem of partners. >> Welcome back everyone, live here in Las Vegas. We're at AWS Reinvent. Day one coverage of three days of theCUBE, I'm John Furrier, the host this week. >> We've got two sets, our fifth year covering Reinvent. It's been great to watch. Every year we try to get in the VC panels. We just had Jerry Chen on from Greylock. We've got two more awesome friends of theCUBE in the community here. We've got Sunil Dhaliwal who is the founder of Amplify Ventures and Nick Sturiale with Ignition Partners. Guys, great to see you. >> Great to see you, John. >> Good to see you, John. >> Boy what a lineup it's been over the past three years, four years with Amazon, just watching them tear. Now it's all steamed ahead. Microsoft is totally gearing up. You can see them playing, what they're doing, they're pedaling as fast as they can. Google Play and the (mumbles) we're gonna compete on TensorFlow and other, little goodness, a lot more to go. You got Alibaba Cloud. Intel behind us is making (mumbles) chips. Good market on paper. >> Yeah. >> But we're seeing startups kind of get bought, not for what they wanted. Didn't go public. Skyhigh from Greylock. You see Barracuda going private. A lot of money to be made. Maybe the investment thesis of 200 million dollar fundings, that's over, is it over? Get a little bit of cash and get the critical mass and... >> Well, here's a question. Do you invest in these companies thinking every one of them is going to go public? Or do you think that a good number of them are gonna get acquired? And I think the investors that have done this for a while, and Nick's done this for what, like 45 years? >> I started when I was two, so. >> I've done this like two years less than you have, so I don't pretend I'm dramatically younger. But the reality is, these companies get acquired. And pretending that you're gonna pile into a company late and expect every single thing to go public I think is kind of crazy. And the people that are getting caught in that trap, I think they're gonna be in for a rude awakening. But look, you've got a billion six outcome for Barracuda, right? >> John: That was pretty damn good. >> And you know Skyhigh number hasn't been printed, but it wasn't a small one. Like, those are good outcomes. Those are good venture returns, if you were smart about where you got in. >> So I have a slightly different perspective, which is the real issue is that so much money moved into the late stage, and these companies thought that growth would always be linear even asymptotic. And so what happens is that their growth rate slows down and the cost of growth goes up, and suddenly the company's not quite as hot as it was a year ago, and so now the options for what they do have shrunk dramatically, and so you get exits like you just mentioned. And so part of the problem is is that entrepreneurs and investors really have to have a sober view of what is a business model that's durable over time and which ones really are gonna start to leak in their later phases. >> Well it's kind of a planted question for you guys, because you're early stage in Amplify. I've been following you guys, do a great job. You guys do a range of early, end growth. >> Mostly early though. >> The days of just laying back and kicking your feet up and throwing cash at stuff is over. You actually gotta do the work. It sounds like old school VCs. Greg Sands and I talk about this all the time. You gotta go in and be venturing. You gotta actually make it work. >> And that sucks, I was just told I put my feet up, I put some money in and then I get a distribution check at the end of it. >> That's what everyone thinks you guys do. What do you guys do every day? Take us through your day. >> It looks a lot like that except... >> It's so easy to be a VC, all you do is okay, yes, no, okay that's good. >> We got a dartboard. >> All you gotta do is bet on the good ones. >> Yeah. >> That's so easy. >> So there are what, 14,000 startups in the bay area, how many of them are worthwhile you think? >> It's a lot of work. Well old school, let's go back to the old school tactics, because you're seeing a couple things going on. You guys essentially pointing it out, you gotta do the work and pick the winners. But now that the business models are changing, right? You're seeing Amazon just ignoring conventional wisdom, and they're winning. The game is changing a bit in the business model side. How are you guys looking at that as you make investments? So you got the classic venture, bet on a good team, do all that stuff. What do you guys look at now in the marketplace for fit, scale, longevity, durability? >> I mean the stuff we care about the most is are you going after a big problem? Because I think a lot of the stuff we see, even with your great teams and great technologies, but you step back and you actually think, you know, that isn't a company, that's a product, or that's not even a product, that's a feature. And I think that's the natural outgrowth of what happens when you got 14,000 startups in the bay area, is there aren't 14,000 products that are companies worth having. What you have is, probably 12,000 features, 1500 products, and then like 500 real companies. And that's probably the biggest filter that you gotta apply on the way in, and it's maybe the hardest one to solve for, which is, roll this out seven years, nine years, because that's really what you're talking about when you're talking about building a public durable company is, what does this market look like way down the road? And is that a thing that can stand alone? And that's really, I think, the difference between the companies and the investors that do really well and the ones that can kind of squeeze by, knocking out a couple interesting outcomes. >> My favorite thing is that when you say we just pick the winners, is that nobody knows who the winner is a priori. If you knew that, that market would be gone already. And most successful companies that you read about, and they talk about the (mumbles) investors that were in it early, that's all BS. It's a million good things happen along the way, serendipity, a ton of hard work on the management team and the employees. So this idea that things are preordained is just silly. And I would tell you that you look at most really successful companies today, their business model is completely different than the one that the venture person backed. >> I mean it's always the classic, because I remember when I first started an entrepreneur in the 90s, the question was what's your exit strategy? It was a legitimate question at that time, and it was kind of a peg mark, okay, when I build a growing company and have an exit. Now the exits are, as you mentioned, buyers. And that's not necessarily a bad thing. If Microsoft's in a race to fill in their white spaces, man, I would crop up and get the crops growing, right? So you can say, okay, Microsoft. So you guys gotta kind of do a little bit of homework there, do some relationship work, and you guys are close to Microsoft, so. >> Yes. >> I mean, is that kind of the new playbook? >> Yes. >> How should entrepreneurs posture to this? I mean obviously they're gonna try to build a durable venture, but they don't want to be zig-zagging too much or pivoting. >> No. >> I mean Nick made the point earlier, which I think is absolutely the one to focus on, which is when you raise a ton of capital your options start to shrink. The more money you raise at the higher and higher price, there's somebody you gotta serve who's thinking about the even bigger pot of gold at the end of the rainbow. And honestly, when we look at, I'll take one company in our portfolio for example, and I think the Splunk story is right up there with it, If you look at Datadog, Datadog's huge here at this show. There's purple shirts everywhere and a massive booth, and they've been here for five years running or four years running. That business has barely touched the last round of capital they raised, let alone the round of capital before that. The capital efficiency of that business, not only is it gonna make it a great outcome, but it's gonna give them tons of options of things that they can do. And, you know, they'll get to make every single decision they make, whether it's going to new product or whatever, position of strength. And not a lot of companies do that. >> So Splunk started in 2004. Guess how much total the company raised before it went public? >> How much? >> Forty million. Guess how much it spent up to the time it went public? >> John: How much? >> John: Twenty five. >> So it went public... >> So very capital efficient? >> John: Think about that. >> Yes, and it's worth 9 billion now. So you had several hundred millionaires created out of Splunk, and I would submit to you if Splunk was started today, the investor community would have killed it. >> John: Why? >> Because 18 Brinks trucks would have backed up and dumped a billion dollars on top of it, and buried it in too much money without allowing the company to get the time to become a fully viable system. >> Sunil: Yeah. >> So the too much cash can create toxicity for the startup? >> Money rarely makes the company. Money rarely makes the company. >> Lew Cirne was on earlier, founder of New Relic. Another capital efficient company. >> Great company. >> Went public all time high. Love that guy. He's such a strong, he wrote some code last week. He said, if you can help your partners be successful, in referring to Amazon. >> Man: Amazon. >> Then you can be a great ecosystem partner. So the question now is that's not a bad deal for a company to jump into the Cloud game and be a really good partner and build a kick-ass product. >> Yes. >> And look like a feature maybe on paper, and then sequence to an opportunity. Thoughts on that? It's certainly lucrative if you can get the flywheel going. Right? >> So you don't want to build a company whose basic thesis is helping Amazon or Azure or Google. That is a dead company. If, however, you pull revenue for one of those three in a way that's interesting to them, they will support you all day long. We have two companies in particular, Icertis and KenSci that are pulling a lot of revenue for Azure right now. And Microsoft gives them extraordinary support. >> That's the nuance right there. That's the nuance. Pulling revenue, value, creation. >> Yes. >> Well, they've created Amazon and Microsoft and Google, to a degree, as they get going. They've created a really interesting model, which is unlike your traditional ecosystem, hub-and-spoke model, where someone's gonna capture (mumbles) control of the sale, etc., etc. The smart thing that Amazon's done is they say, you use whatever you want, we're gonna bill you for the primitives until the cows come home, and as long as you're not standing in between Amazon and their primitives revenue, you're gonna do great. >> All right, final question for you guys. First of all, great conversation on the capital markets, certainly it's crazy. We always try to cover it, but here's a thought exercise. Last night we were at the analyst summit. We were talking to some analysts, and the question was, the airplane's going down, and you're in a board meeting, I gotta pick a parachute. There are only three parachutes, Amazon, Microsoft, and Google, which one do you grab? You got 10 seconds. >> To sell to or? >> No, just grab a parachute, and you hope that it opens and you live. Pick a parachute. >> Amazon, >> I'm going with Amazon. This one isn't hard. >> Microsoft and Google. The only person who's gonna grab the Microsoft parachute is the guy who's been with Microsoft for 30 years and knows they're not gonna let him down. If you're a forward-facing company you're going with Amazon, and if you're nuts, you're gonna grab Google right now. No offense to my friends at Google. >> So we're sitting here at Reinvent, so I feel like that's a trick question. (laughing) >> Well, that's good. If you're in the Microsoft ecosystem, they do take care of their own. >> They do. >> Their DNA is tuned to ISVs, they're very good at it. >> and that's their track record. Well, the one guys says, well it depends. By the time you argue with the parachute the planes (mumbles). But it does depend on your business. >> Sunil: Yes. >> Nick: Yes. >> But it is hard not to look at this show and say this is what electricity was in 1920. >> Final question, obviously Amazon is looking at all steam ahead, business models are changing, you're starting to see the top of the stack develop nicely, moving up the stacks seems to be the trend. You got this decentralized market up there. Bitcoin hit 10,000. A lot of smart alpha geeks, including some of the guys here at theCUBE team, is looking at ways to kind of leverage this decentralization trend in a way that's productive. Yet there's a lot of scams out there with these ICOs. Decentralization good or just another infrastructure dynamic? Thoughts on this whole decentralized token economics wave? Also the FCC has regulations now in it. Is it disrupting VC? Your thoughts, Nick. >> Do remember what H.L. Mencken said? "A fool and his money are soon parted." so I think anyone who sits there and says I understand completely what an ICO is and what I'm buying and doesn't view it as something that'll be a tax deduction for next year, I think is gonna be in for a bumpy ride. >> Get out your Gartner Hype Cycle. And if you don't know what it is, go look it up, and there's a spot right now of where we are in the hype cycle, and I think the movement my finger tells you where we are, but this is coming, but this comes afterwards. >> I heard this argument, the web is just for kids. No one will ever use the web. Browsers is a toy. >> A K memory is all you'll ever need. >> Yeah, but guess what, guess what, 2001 happened before we got to 2017, so let's never forget where we are at that kind of hype. >> ICOs are like subprime mortgages, and I speak Spanish and I can't even read the thing. That is what an ICO is. >> So certainly hyped up. Winter's coming, we'll see. All right, we got the VCs here, Nick and Sunil. We got Amplify and Ignition Partners here in theCUBE. More live coverage day one after this short break.

(gentle upbeat music) >> Welcome back everyone, to "theCUBE"'s live stage performance here in Palo Alto, California at "theCUBE" Studios. I'm John Furrier with Dave Vellante, kicking off our first inaugural Supercloud event. It's an editorial event, we wanted to bring together the best in the business, the smartest, the biggest, the up-and-coming startups, venture capitalists, everybody, to weigh in on this new Supercloud trend, this structural change in the cloud computing business. We're about to run the Ecosystem Speaks, which is a bunch of pre-recorded companies that wanted to get their voices on the record, so stay tuned for the rest of the day. We'll be replaying all that content and they're going to be having some really good commentary and hear what they have to say. I had a chance to interview and so did Dave. Dave, this is our closing segment where we kind of unpack everything or kind of digest and report. So much to kind of digest from the conversations today, a wide range of commentary from Supercloud operating system to developers who are in charge to maybe it's an ops problem or maybe Oracle's a Supercloud. I mean, that was debated. So so much discussion, lot to unpack. What was your favorite moments? >> Well, before I get to that, I think, I go back to something that happened at re:Invent last year. Nick Sturiale came up, Steve Mullaney from Aviatrix; we're going to hear from him shortly in the Ecosystem Speaks. Nick Sturiale's VC said "it's happening"! And what he was talking about is this ecosystem is exploding. They're building infrastructure or capabilities on top of the CapEx infrastructure. So, I think it is happening. I think we confirmed today that Supercloud is a thing. It's a very immature thing. And I think the other thing, John is that, it seems to me that the further you go up the stack, the weaker the business case gets for doing Supercloud. We heard from Marianna Tessel, it's like, "Eh, you know, we can- it was easier to just do it all on one cloud." This is a point that, Adrian Cockcroft just made on the panel and so I think that when you break out the pieces of the stack, I think very clearly the infrastructure layer, what we heard from Confluent and HashiCorp, and certainly VMware, there's a real problem there. There's a real need at the infrastructure layer and then even at the data layer, I think Benoit Dageville did a great job of- You know, I was peppering him with all my questions, which I basically was going through, the Supercloud definition and they ticked the box on pretty much every one of 'em as did, by the way Ali Ghodsi you know, the big difference there is the philosophy of Republicans and Democrats- got open versus closed, not to apply that to either one side, but you know what I mean! >> And the similarities are probably greater than differences. >> Berkely, I would probably put them on the- >> Yeah, we'll put them on the Democrat side we'll make Snowflake the Republicans. But so- but as we say there's a lot of similarities as well in terms of what their objectives are. So, I mean, I thought it was a great program and a really good start to, you know, an industry- You brought up the point about the industry consortium, asked Kit Colbert- >> Yep. >> If he thought that was something that was viable and what'd they say? That hyperscale should lead it? >> Yeah, they said hyperscale should lead it and there also should be an industry consortium to get the voices out there. And I think VMware is very humble in how they're putting out their white paper because I think they know that they can't do it all and that they do not have a great track record relative to cloud. And I think, but they have a great track record of loyal installed base ops people using VMware vSphere all the time. >> Yeah. >> So I think they need a catapult moment where they can catapult to the cloud native which they've been working on for years under Raghu and the team. So the question on VMware is in the light of Broadcom, okay, acquisition of VMware, this is an opportunity or it might not be an opportunity or it might be a spin-out or something, I just think VMware's got way too much engineering culture to be ignored, Dave. And I think- well, I'm going to watch this very closely because they can pull off some sort of rallying moment. I think they could. And then you hear the upstarts like Platform9, Rafay Systems and others they're all like, "Yes, we need to unify behind something. There needs to be some sort of standard". You know, we heard the argument of you know, more standards bodies type thing. So, it's interesting, maybe "theCUBE" could be that but we're going to certainly keep the conversation going. >> I thought one of the most memorable statements was Vittorio who said we- for VMware, we want our cake, we want to eat it too and we want to lose weight. So they have a lot of that aspirations there! (John laughs) >> And then I thought, Adrian Cockcroft said you know, the devs, they want to get married. They were marrying everybody, and then the ops team, they have to deal with the divorce. >> Yeah. >> And I thought that was poignant. It's like, they want consistency, they want standards, they got to be able to scale And Lori MacVittie, I'm not sure you agree with this, I'd have to think about it, but she was basically saying, all we've talked about is devs devs devs for the last 10 years, going forward we're going to be talking about ops. >> Yeah, and I think one of the things I learned from this day and looking back, and some kind of- I've been sauteing through all the interviews. If you zoom out, for me it was the epiphany of developers are still in charge. And I've said, you know, the developers are doing great, it's an ops security thing. Not sure I see that the way I was seeing before. I think what I learned was the refactoring pattern that's emerging, In Sik Rhee brought this up from Vertex Ventures with Marianna Tessel, it's a nuanced point but I think he's right on which is the pattern that's emerging is developers want ease-of-use tooling, they're driving the change and I think the developers in the devs ops ethos- it's never going to be separate. It's going to be DevOps. That means developers are driving operations and then security. So what I learned was it's not ops teams leveling up, it's devs redefining what ops is. >> Mm. And I think that to me is where Supercloud's going to be interesting- >> Forcing that. >> Yeah. >> Forcing the change because the structural change is open sources thriving, devs are still in charge and they still want more developers, Vittorio "we need more developers", right? So the developers are in charge and that's clear. Now, if that happens- if you believe that to be true the domino effect of that is going to be amazing because then everyone who gets on the wrong side of history, on the ops and security side, is going to be fighting a trend that may not be fight-able, you know, it might be inevitable. And so the winners are the ones that are refactoring their business like Snowflake. Snowflake is a data warehouse that had nothing to do with Amazon at first. It was the developers who said "I'm going to refactor data warehouse on AWS". That is a developer-driven refactorization and a business model. So I think that's the pattern I'm seeing is that this concept refactoring, patterns and the developer trajectory is critical. >> I thought there was another great comment. Maribel Lopez, her Lord of the Rings comment: "there will be no one ring to rule them all". Now at the same time, Kit Colbert, you know what we asked him straight out, "are you the- do you want to be the, the Supercloud OS?" and he basically said, "yeah, we do". Now, of course they're confined to their world, which is a pretty substantial world. I think, John, the reason why Maribel is so correct is security. I think security's a really hard problem to solve. You've got cloud as the first layer of defense and now you've got multiple clouds, multiple layers of defense, multiple shared responsibility models. You've got different tools for XDR, for identity, for governance, for privacy all within those different clouds. I mean, that really is a confusing picture. And I think the hardest- one of the hardest parts of Supercloud to solve. >> Yeah, and I thought the security founder Gee Rittenhouse, Piyush Sharrma from Accurics, which sold to Tenable, and Tony Kueh, former head of product at VMware. >> Right. >> Who's now an investor kind of looking for his next gig or what he is going to do next. He's obviously been extremely successful. They brought up the, the OS factor. Another point that they made I thought was interesting is that a lot of the things to do to solve the complexity is not doable. >> Yeah. >> It's too much work. So managed services might field the bit. So, and Chris Hoff mentioned on the Clouderati segment that the higher level services being a managed service and differentiating around the service could be the key competitive advantage for whoever does it. >> I think the other thing is Chris Hoff said "yeah, well, Web 3, metaverse, you know, DAO, Superclouds" you know, "Stupercloud" he called it and this bring up- It resonates because one of the criticisms that Charles Fitzgerald laid on us was, well, it doesn't help to throw out another term. I actually think it does help. And I think the reason it does help is because it's getting people to think. When you ask people about Supercloud, they automatically- it resonates with them. They play back what they think is the future of cloud. So Supercloud really talks to the future of cloud. There's a lot of aspects to it that need to be further defined, further thought out and we're getting to the point now where we- we can start- begin to say, okay that is Supercloud or that isn't Supercloud. >> I think that's really right on. I think Supercloud at the end of the day, for me from the simplest way to describe it is making sure that the developer experience is so good that the operations just happen. And Marianna Tessel said, she's investing in making their developer experience high velocity, very easy. So if you do that, you have to run on premise and on the cloud. So hybrid really is where Supercloud is going right now. It's not multi-cloud. Multi-cloud was- that was debunked on this session today. I thought that was clear. >> Yeah. Yeah, I mean I think- >> It's not about multi-cloud. It's about operationally seamless operations across environments, public cloud to on-premise, basically. >> I think we got consensus across the board that multi-cloud, you know, is a symptom Chuck Whitten's thing of multi-cloud by default versus multi- multi-cloud has not been a strategy, Kit Colbert said, up until the last couple of years. Yeah, because people said, "oh we got all these multiple clouds, what do we do with it?" and we got this mess that we have to solve. Whereas, I think Supercloud is something that is a strategy and then the other nuance that I keep bringing up is it's industries that are- as part of their digital transformation, are building clouds. Now, whether or not they become superclouds, I'm not convinced. I mean, what Goldman Sachs is doing, you know, with AWS, what Walmart's doing with Azure connecting their on-prem tools to those public clouds, you know, is that a supercloud? I mean, we're going to have to go back and really look at that definition. Or is it just kind of a SAS that spans on-prem and cloud. So, as I said, the further you go up the stack, the business case seems to wane a little bit but there's no question in my mind that from an infrastructure standpoint, to your point about operations, there's a real requirement for super- what we call Supercloud. >> Well, we're going to keep the conversation going, Dave. I want to put a shout out to our founding supporters of this initiative. Again, we put this together really fast kind of like a pilot series, an inaugural event. We want to have a face-to-face event as an industry event. Want to thank the founding supporters. These are the people who donated their time, their resource to contribute content, ideas and some cash, not everyone has committed some financial contribution but we want to recognize the names here. VMware, Intuit, Red Hat, Snowflake, Aisera, Alteryx, Confluent, Couchbase, Nutanix, Rafay Systems, Skyhigh Security, Aviatrix, Zscaler, Platform9, HashiCorp, F5 and all the media partners. Without their support, this wouldn't have happened. And there are more people that wanted to weigh in. There was more demand than we could pull off. We'll certainly continue the Supercloud conversation series here on "theCUBE" and we'll add more people in. And now, after this session, the Ecosystem Speaks session, we're going to run all the videos of the big name companies. We have the Nutanix CEOs weighing in, Aviatrix to name a few. >> Yeah. Let me, let me chime in, I mean you got Couchbase talking about Edge, Platform 9's going to be on, you know, everybody, you know Insig was poopoo-ing Oracle, but you know, Oracle and Azure, what they did, two technical guys, developers are coming on, we dig into what they did. Howie Xu from Zscaler, Paula Hansen is going to talk about going to market in the multi-cloud world. You mentioned Rajiv, the CEO of Nutanix, Ramesh is going to talk about multi-cloud infrastructure. So that's going to run now for, you know, quite some time here and some of the pre-record so super excited about that and I just want to thank the crew. I hope guys, I hope you have a list of credits there's too many of you to mention, but you know, awesome jobs really appreciate the work that you did in a very short amount of time. >> Well, I'm excited. I learned a lot and my takeaway was that Supercloud's a thing, there's a kind of sense that people want to talk about it and have real conversations, not BS or FUD. They want to have real substantive conversations and we're going to enable that on "theCUBE". Dave, final thoughts for you. >> Well, I mean, as I say, we put this together very quickly. It was really a phenomenal, you know, enlightening experience. I think it confirmed a lot of the concepts and the premises that we've put forth, that David Floyer helped evolve, that a lot of these analysts have helped evolve, that even Charles Fitzgerald with his antagonism helped to really sharpen our knives. So, you know, thank you Charles. And- >> I like his blog, by the I'm a reader- >> Yeah, absolutely. And it was great to be back in Palo Alto. It was my first time back since pre-COVID, so, you know, great job. >> All right. I want to thank all the crew and everyone. Thanks for watching this first, inaugural Supercloud event. We are definitely going to be doing more of these. So stay tuned, maybe face-to-face in person. I'm John Furrier with Dave Vellante now for the Ecosystem chiming in, and they're going to speak and share their thoughts here with "theCUBE" our first live stage performance event in our studio. Thanks for watching. (gentle upbeat music)