>> [Announcer] From San Francisco, it's theCUBE. Covering Radio 2018, brought to you by VMware. (upbeat music) >> Hello everyone welcome back, this is theCUBE's exclusive coverage here at VMware's Radio 2018, this is their seminal, big-tent event for their top engineers, smartest people come together present their reports, their projects, and come together as a community and share great content and agenda. As Steve Herrod former CTO says, this is like a sales kickoff for engineers, it's motivated and they flex their muscles, technically, stretch their minds. I'm here with Pat Gelsinger, the CEO VMware, great to see you, welcome back to theCUBE. >> Hey thank you very much, it's fun to be here at Radio. >> So this is nerd central, this is >> Absolutely, this is like geek city baby. >> Dave and I always complement you on your business acumen obviously doing great as a CEO, the numbers, business performance, world class organization, check, best place to work, one of the best places to work for, check. But you're kind of a geek at heart, you like to get down and dirty, technical, this is your event. You gettin' down with the folks? >> Yeah it's fun, I was just at our sales, we have a top sales people, our sales club, so we did it in Abu Dhabi this year, so I was just over there a couple of week ago for that so hobnobbing with the sales guys which is super important, right? Their motivation, their creme de la creme of the year, but to me this one is better, right? Just 'cause now the tech guys comin' together 'cause most companies don't do anything like this, right? So it really is a unique piece of the VMware culture where the tech guys get together and they just geek out for a couple of days and to be awarded best of Radio, it's like, oh man you're a god inside of VMware. >> It's like the Sundance Film Festival, Cannes Film Festival, the Oscars, it's a huge accomplishment and knowing people internally. >> Yeah and some of Ray's numbers this morning as he showed in the keynote, I mean it's competitive to get your paper shown here is competitive, right? So there's a set of judges that are picking the papers that are here out of this we already have over 200 invention disclosures that have come out of just the preparation for the conference and we haven't even gotten started yet, and now the keynotes this morning and poster sessions all week long, and letting the engineers just really vibrate off of each others' ideas and challenge them and all of our PEs and fellows roaming around here they're sort of like the big guys on campus, but hey the young Turks are coming up and they're challenging them on ideas it really is a delightful few days. >> I love your perspective, I wanna get your reaction 'cause one, not only do you have a storied history working at Intel, really a great innovative founders of Silicon Valley with HPs of the world, and now you're the chief of VMware a modern era's here, you talk about this all the time publicly about the business context and at the events, but it's different Google had pioneered this notion of 20% of your time you could work on side project, more of an academic culture Google has, I mean I love that it's cool, but VMware has a unique culture and I want you to talk about that dynamic because you have to be versatile now, agile more than ever, you have to be faster time to market, and it's always been hard for companies to crack the code on knocking down the big ideas, solving the hardest problems but yet making it practical at the same time. What's your reaction to how you guys are doing it, >> what's different? Share some color. >> In some ways and I think some of the panel, we had a panel session this morning, Steve did one session, but we had of the original engineers in the company, the five of the original engineers, right were here and they were saying it was sort of like we're doing research in a business who had business objectives, right? Solving problems that had never been solved before, Sort of the VMware culture is if it's not a hard problem, it's not worth it, right? And our objective isn't to be 2x or 10% better, but to be 10x better, right? And when you're doin' those kind of things you can't always put that on a schedule, right? The problem is solved when it's solved, right? And I was just meeting with one of my teams last night and this is, well alright that looked pretty good but I don't think you've met the minimum viable product yet so let's put it in an open beta for six months before we actually call it GA 'cause I don't think you're done >> solving the hard problem yet, right? >> So you're squinting through and looking at the projects from that? >> Yeah right, is it ready? And have we really delivered something that customers can say, "Yeah here's the value proposition you promised, here's what you're delivering me, it is a quality product," right? Which is something that's deep in that history of VMware right in many cases, and I love one of the statistics this morning, they said the early core dumps of ESX, right they found that over 2/3 of them were a result of memory parody errors, not of ESX failures of any sense, so meaning that the hardware was less reliable than the software was, that's all we sort of this magic that we say, we're out to produce world class infrastructure software that's better than the hardware ever could have been and for a hardware guy that's sort >> So that was your problem, originally I think it was on your watch actually the first core dump. Throwback Thursday would they do core dumps from like 10 years ago look at a simpler core, >> look at x say "Hey look at the core dump, Hey look at cool that is." (laughing) >> If I see the Biaz prompt oh my gosh where did that come from? >> Let's get some vinyl records and look at some core dumps from 1992. >> So Pat, now this is important because I think this is a killer point, when you look at innovation VMware has to meet the challenge of being on that next wave and you've said on theCUBE many times, if you're not on that next wave you're driftwood. A lot of companies who try to do R&D end up solving hard problems to attract the top talent, but they end up getting so focused on the problem they end up in a cul-de-sac on the wrong wave, they miss the next wave. >> [Pat] Yeah. >> How do you manage that? 'Cause this is your sticking point is to make sure you don't miss the next wave, you transition properly, how do you avoid that problem of getting so focused on the intoxicating aspect of solving problem and being in a cul-de-sac no market wave missed? >> Yeah and it's hard right? In that sense and I'll say there's, we sort of look at it from three different dimensions, one is, hey you gotta keep this bubbling cauldron of ideas and that's why we're here at Radio, right? Just these people working on ideas, right? You have some really cool stuff and every once in a while you're telling the engineers, "Well that's good but you haven't solved the hardest piece of that problem yet and so on." Then you have to be able to take it from that bubbling cauldron to, I'll say, an incubation product, right? 'Cause VMware yeah we do R&D, we do core research as well, but fundamentally we've been able to create markets based on our products and really scale them, right? The embarrassing truth of any enterprise software company is for every dollar of R&D you spend, you spend two dollars of sales and marketing, so we can't under invest in those products that we've picked that now are scaling into the market, we have to put the >> dedicated sales >> [John] Get the leverage >> out of it >> The SEs et cetera, that's really frightening. When I'm done innovating a new idea maybe I've dumped 10 million or 15 million into the core idea, okay, now I got to go spend twice that amount on >> Good marketing. >> Marketing of it and boy it's expensive to bring things into the enterprise and if the product isn't robust and solid and really compelling, then it might be three or four x, so you're now rewarded with your R&D investment to go spend on sales and marketing now, so yeah we've really taken and we have a very BCG matrix kind of view of how we take products from incubation into early market success and then into scale and finally cash cow and retirement and that process is one you have to be equally disciplined about. The third piece of it is you have to be able to declare failure and for failures, it's how do you harvest technologies and learning, but be able to look at something vCloud Air and say, "Okay we weren't successful" and now go build a multi cloud, an Amazon partnership coming out of it, we have to be able to make those shifts right and be able to declare failure, be able to move our customers forward, and then move on to the next big thing >> [John] I mean the math works >> 'Cause you're not gonna get 'em all right. >> So to your point, the math works when you can abandon quickly >> [Pat] Yeah. >> That's where the winners are 'cause then you can move the probability of success somewhere else. >> Yeah and if you can't declare failure, right, and view that in the positive and proud way. One of the failures of vCloud Air became the success of our hybrid cloud service capability now, right a lot of this ability to move workloads between public clouds was a direct harvesting of our vCloud Air failure, we're able to take that technology forward and that's now one of the pillars of how we're differentiate and our Amazon service, OBH partnership, IBM, are building on those hybrid cloud capabilities. >> Pat we've been watching you that's one of the things I will say that you're really amazing at, you're good at, you're the captain, you've got your hand on the wheel, you gotta know when to say, "Hey, close that hatch, or we're going to sink," you gotta, or I'm not that there, knowing when to make the calls. So I gotta ask you, when you look at the marketplace now, you have the option to build, the option to buy, and you have to kinda also balance those three areas, you've got Ray, you've got Rajiv, and you've got the Corp Dev guys, they have to work together and sometimes, hey let's go buy that hot start up or no I have it internally, and sometimes it might be in a core competency area. Talk about as the CEO, you've got your hand on the wheel, okay, you're steering the ship, you're setting the direction, the team's workin' hard, how do you make those calls buy build, and when it's in the core area as the market's shifting, what's that look like for you? What your view as you look forward? >> Yeah there's clearly and we think about the case let's take two examples of our buy. AirWatch, hey we saw that we had nothing in mobility and if we're gonna be in end-user computing we must have mobility in the family, so we really in some degree, we didn't have a choice, we had to go buy if we're gonna be in that space and it became foundational for us in that area. You might have argued, hey we should have done that five years sooner, but we didn't, we had to make a buy decision and then we went out and shopped, literally MobileIron or AirWatch? We looked at those and bake those off until almost the last day, alright? And I went into that expecting we were gonna buy MobileIron, right? >> [John] Really? What was the tipping point? >> Right, well, I became a Silicon Valley company, I thought their technology was a little bit better, I thought the AirWatch guys were a little bit too much market and focused on winning the early market, I didn't know if the product had the quality of a VMware product, so I really was handicapping the MobileIron one and the team came out unanimously with my agreement that AirWatch was the right thing, right? In the case of Nicira, one of the other foundational acquisitions that we did, we had a lot of the distributive virtual switch technology we had already innovated, but we hadn't put a control plane, a scale control plane against and that's Nicira did, so there it was really bringing those pieces together which really has become, I'll say, a marquee aspect of our acquisition, in many cases we're in the space >> You feel good about that, how much you paid for that. >> Oh yeah, I mean at the time people said, "1.2 billion for less than 10 million of revenue, what are you guys stupid?" Now everybody says, "Wow you're brilliant." >> So they didn't look at the underlying technology. >> Absolutely >> Leverage you were getting. >> Four years of hard work, core technology, right, and boom, we're unquestionably the leader in software defined networking now as a result of making a pretty bold bet at the time. Obviously organic innovation is the best because it sort of fits in your stream, you don't have to go, you know, change gooey practices or test release practices, it's already part of you as well. But sometimes, hey, I get to look over 10 startups and pick the winner. I may not be able to fund 10 startups internally and pick the winner, but I can look out over, you pay a premium, and one of the unique things about VMware is that over the 60 or so 70 acquisitions I think we've done now, as a company we have a highly successful track record. >> Is that because of the architectural decisions? It's not just bolt on a business unit and say stand alone and produce cash you guys are thinking strategically around how it fits architecturally, is that the difference? >> I'd say it boils down to a handful of things. That's absolutely one of 'em. We're looking deep at technology, how does it fit our technology, can we bring it in? Second we look at the culture of the company, right? We've said no to some acquisitions just 'cause we've decided that culture won't fit our culture or we're not gonna be able to mold it into our culture as well. Number three, we protect this thing, we run a process by which, hey if this is the acquired company, right, and here's the CEO of this startup company, he has passion, he is the commander of his universe, and tomorrow some low-level legal person can say, "No you can't do that," right, yesterday he was enjoying (laughing). Do we protect them? Do we turn their passion and get them to believe that their passion, remember, they're, yeah they wanna be successful, but they wanna turn their passion and objective into a big industry-changing event. And is that passion better executed inside of the platform of VMware? So we protect them, that low-level legal person can't say no or that finance person, we run a special board process around 'em to protect 'em. >> You don't want people handcuffed. >> Yeah, absolutely, we want them to be unleashed, that they have more power not less after they become part of this company that the platform for their vision and passion becomes bigger as part of ours so we protect 'em like crazy in that process. >> And you do that here at Radio as well. You wanna unleash the ground swell, get the grass roots movement going, let the sparks of innovation kinda fly out there. >> Yeah and our success rate is close to 90% on acquisitions and the industry average is below 50% so I think we've really mastered organic and inorganic innovation as good as any company has in the industry. >> Yeah I will say that's the totally true. And also Vsam became a project that came out of Radio that's been highly successful. >> [Pat] Yeah totally organic in that one. >> So you guys think strategically, it's not just bolting on revenue, although that could help if you can find it, there's not much out there for you guys. (both men laughing) Let's talk about some of the hot trends here at Radio. One of the things we're seeing, obviously with tie-in of the competitive, but also the comradery, a lot of, it's interesting to see how competitive it is, but also again VMware's got a hard core engineering culture, but also a hardcore community culture that shines through, it's obvious, so props to the folks running Radio and then the process. But when you look at the trends, what's trending up is the blockchain. We talked to some of your folks there you guys are looking at this, this is really strategic aspect, you talked with Dave about it briefly at Dell Technologies World, what's your view on blockchain? Obviously, you look at infrastructure, blockchain jumps out at you, your reaction to the hype and allusions and reality of blockchain crypto currency, not so much the ICO's, I think that's just a funding dynamic, lot of project-based stuff, but really there's some infrastructuring dynamics, your thoughts on blockchain as an infrastructure enabler for future wave? >> Yeah you know a couple of comments and one is, I think blockchain as a algorithmic breakthrough is on par with public private key encryption, alright? It's just sort of opened up the world of general purpose cryptography, and I think this idea of an immutable distributive ledger, right, sort of busts apart the database and I don't have to bring things together now the databases spreads, right, across it, immutability, right, transactability, et cetera, takes a lot of the acid characteristics of core databases and now does it in the fully distributive way, very powerful and I think it's gonna change supply chains, change financial systems, it's gonna have very broad implications so overall we're in, we believe very much in the importance of that. >> Real quick, to interrupt you real quick, >> 'cause I wanna get this thought in because you brought up general purpose, one of the things we've been kind of talking off camera, most of our team members is, blockchain looks a lot like maybe processors, general purpose processors, opening up an PC revolution, in the sense of general purpose computing. Blockchain seems to have that same dynamic, potentially, not as a direct metaphor, but if you can open up a new dynamic, that could explode new business models yet to be foreseen. >> Oh yeah, yeah, yeah absolutely. If we could take the cost of transactions down by an order of magnitude, right? If you could increase the reliability of a supply chain, right? If you could right in fact guarantee the source of origin of any product against the ultimate place of consumption, these are industry-changing type of capabilities, so we do see it quite significantly that way. But then as VMware looks at it, if there's not a hard problem to solve, then we shouldn't be in this space. So our team, one of the core problems of blockchain, right >> [John] Slow. >> Is the exponential compute requirements of higher order blockchains, so our team has solved that problem we've done some algorithmic breakthroughs that we believe allow blockchain to scale, a close to linear scale as opposed to exponential scale, wow that's game-changing for, we're also solving the auditability problem, immutable, anonymous, immutable is great, but a lot of things need to audited, right? So how can you bring some of those core concepts into blockchain? So those are some of the hard problems that we're solving, sort of back to the 10x culture, solve hard problems in fundamental ways and that's what we think that we can bring to the blockchain universe. >> Well Pat, I think it's amazing that you're here at the event, I know that you love, look forward to this as well, but to have the CEO come in at the Radio event and really lead the troops by example is awesome. We've got VMworld coming up around the corner, give us some teasers, what's happening? I know you're gonna get in trouble from Robin Matlock, (Pat laughing) but come on tell us what's coming at VMworld. >> (laughes) Well you know we have, of course we have a lot of key products, updates and other things that are coming out. I hope to broaden at VMworld this year, the view of the cloud, right? And you say, "Broaden the view of the cloud, what are you talking about Pat?" Well you're gonna have to come to VMware to get the full story, but I do think that we've thought about the hybrid cloud world largely in this idea of public and private in the past, right? But we see that the vision that we're pursuing is one much larger than that where, right, it's public, private, telco, and edge, right? And the confluence of those four worlds, we believe is something that VMware is uniquely positioned to be able to bring right to the marketplace and the implications of that so, I'm quite excited as I broaden our general view >> of the cloud as we come up on VMworld. >> And one of the exciting things it's our ninth year at VMworld, we've been every year one since theCUBE's existed and thank you for your support. >> Ah that's great. >> But I gotta say, one of the things we can do is look at the tape as they say, you said in 2011 or 2012, hybrid cloud and I kind of was like, Pat come on, hybrid cloud. >> Now everybody's talking about it. >> I think that's what it is. >> Yeah. >> But 2012? How many years ago was that? >> I think 2012 I think is when we first started to use that word. >> Yeah you put the stake in the ground, >> again, you saw that as a wave and a lot's been changed and you look back since 2012 you make the right calls, you feel good about where you're at? Things you could do over? What would you do given from a progress standpoint? What's changed radically in your mind? 'Cause we're still talking about private cloud, what, I mean obviously service mesh is around the corner other cool stuff's happening. >> Yeah you know, clearly I think when we think about the STBC, hey we called it right, we're executing better than anybody else. So you can sort of say check, right? Virtual storage, check. We talk about what we've done at NuComputing, transformed their workplace, check. We're unquestionably the industry leader in that area. I think this idea of hybrid cloud it's taken us too hard, too long too hard to realize that the multicloud vision, so that's the one I'd say, okay we haven't delivered as rapidly or as effectively as we needed to, it's now really starting to materialize, but it's taken me a couple, three years longer than it should have to get there and we comment on the vCloud Air and a little bit of the miss that we had there and that delayed our schedule, also some of the Amazon aspects sent us sideways a little bit, but hey I think we're on a very good path now but then to broaden it, to what we're doing in telco, what we're doing in edge, okay this gets to be really really powerful. >> Pat, great for you success. Thanks for coming by theCUBE here at Radio 2018 this is where all the R&D, it's where the ideas are booming I'm John Furrier with Pat Gelsinger, here in San Francisco for Radio 2018, we'll be back with more coverage after this break, thanks for watching. (upbeat music)