(upbeat music) >> Hey, welcome back everybody. Jeff Frick here with the CUBE's 2018, a new year. I think this is actually my first interview of the year. I'm pretty excited. I have a CUBE conversation here in the Palo Alto studios to talk about a pretty interesting topic. It's been growing over time but it's getting more and more sophisticated and a much bigger reach. And that's dynamic pricing. It's not just stick the sticker on the item like it used to be back in the day. And that's the price and it's much more complicated. Much more sophisticated. And we're excited to have Alex Shartsis. He's the CEO of Perfect Price. Alex, good to see ya. >> Thanks for having me. >> So, dynamic pricing, right. We've saw it. I guess probably the airlines are maybe the first ones to do it. Or you know, Priceline.com was kind of the first one to talk about. You know, hotels have rooms they can't get rid of. But it's moved a lot further down the path than that. I mean now the Giants I think have have flex pricing. Whether it's the Dodgers on a Friday night or it's Toronto on a Tuesday. >> Yeah, I think it's kind of just a really interesting subject, cause everybody's experienced it, right? I mean, you may not know you've experienced it. But everybody. Whether you've taken an Uber, taken a flight, stayed in a hotel. Even at this point going to an A's game or a Giants game. You've been dynamically priced. And I think what people don't realize is a lot of times they benefit from it. You're able to get that flight for a little bit less. You're able to get the Uber for a little bit less, especially than a taxi. And yeah sometimes there's surge pricing. There's last minute fares. There's things that are more expensive but it's something that every consumer has dealt with. And I think a lot of us think about pricing from a consumer standpoint cause we're all consumers. But from a business standpoint there's nothing more impactful than dynamic pricing. >> Yea, and pricing in and of itself is such a complicated issue. You go through some of the stuff on your website. You know are you coming at it from a cost point of view? Is it a cost plus kind of a model? Or is it a value model? So there's a lot of factors, right? There is no kind of perfect price. You don't want a price at the top of the market. You know, then you're giving up some volume. So what are some of the factors when you talk to people as the pricing evolution is happening from kind of what they used to do to what they're trying to do now with dynamic pricing and how you can help them? >> Yeah, so I think if you think about sort of pricing evolving from. Cost plus was kind of the beginning. Like I bought the potato from the farmer for five bucks a pound. And I'm going to sell it for 10 bucks a pound. That covers my cost of shipping it. Having a stall at the Bazaar, whatever. I think, you know today, a lot of companies still do that. Which still shocks me. But there's you know, there became this sort of in the middle of the last century. Which is kind of weird to say. Value based pricing became a thing. So it wasn't that I would sell them for 10 bucks a pound cause it was just double what I paid for them. It's people are willing to pay 10 bucks a pound and then if I try and sell them for 12 nobody buys them. Or a lot fewer people buy them and if I sell them for seven I run out. And I could have made a lot more money. So what value based pricing was is really like what is my customer willing to pay? And the Bazaar was a great place. You have a conversation. You know, Alex, how much do you really need this potato? How much do you really want this thing? Oh, you're like wearing a nice suit. I think I'm going to charge you more for this. And that obviously went away when the department store was invented. And people would walk around and see a tag on the item. And so what we do and I think what our customers are really benefiting from is this notion of really accurately figuring out what that. Not only the value the customer's getting but also factoring in all the other business related costs and fixed costs and things like that. That should or should not be part of that equation. So that the company can sometimes sell maybe at a loss on that one unit. But you know, in the case of a travel business like an airline or hotel. Loss is a very subjective thing. And you're able to make money by lowering the price for a certain segment. Or for a certain time or for a certain origin, destination. Whatever that combination is. And increase your overall profitability by doing so. Plus bring in some customers that wouldn't have been able to buy from you before. >> So, that's an interesting point of view right. Cause always what are you optimizing for? Are you optimizing for the single transaction? Or are you optimizing for the bucket of transactions? And then that can get you to very different places. So as you seen it kind of evolve what are some of the key factors that tell one of your customers you've got a great opportunity to increase profitability. Increase revenue, increase client satisfaction. Again, what are you measuring? What are you optimizing for by incorporating a dynamic pricing and how did it get started? >> Right, those are great questions. So we went into this thinking there are a lot of businesses that are stuck in cost plus pricing. And they would benefit the most from dynamic pricing. Or from using AI to price things because they're doing such a bad job of it today. And it turns out they liked doing a bad job of it for whatever reason. And we have now been successful at convincing them that maybe there's a better way to do it. But the companies that already have a lot of people and a lot invested in pricing in some fashion. Some companies call it revenue management. Those companies are the ones that really benefit and the reason is they've already seen an impact. So one of the key things for us as you. One of the first questions we ask people is why are we talking about pricing? Did you do something? Did something change in your business? Did you notice it had an impact? And everyone of our customers has been able to say yes to that. Somebody made a mistake and they changed the price and they saw a huge swing in their business. And they realize maybe we should think about it this time. >> It's usually some kind of mistake that undercuts. >> Not usually but more than once it has happened. And sometimes it's like we should do software here or not. And not let people fat finger things in. But for the more sophisticated companies. They've already seen. Some of the companies we've worked with have had pricing teams since the 70's. And so they are constantly improving and they see using AI to do dynamic pricing is the next evolution. And they don't want to get left behind. They know know it's a core of their business. And just as Enterprise Software is moving to the Cloud. Machine learning people are starting to use or have been using the graphics core for a while. You can't ignore that trend if it's a core to their business. >> So that's interesting so and we didn't really kind of talk about the impact of AI. And just really AI. Or intelligence to do a better job of optimization because as you said if you've already invested in pricing it's a complicated thing. There's so many factors and another thing about. Kind of Amazon and the Amazon pricing strategy. Or the vendors within Amazon even. And then how do you factor in convenience? How do you factor in prime? I mean there's these other things that have absolutely nothing to do with the physical price that can enable you. You know as you said, get more revenue. Get more profitability in these factors. So now we have AI. We have these crazy big machines. We have Cloud computing and big data. Huge disrupter to this marketplace and then really new opportunities to bring a lot more power to bare I would imagine. >> So I think Amazon is a great example. Cause people have really experienced dynamic pricing with Amazon. Just cause you put something in your cart the next day it changes by five cents. And Amazon's January pricing is really interesting because Bezos is being very vocal about being consumer centric. And so they're looking at what the market is doing and what things are priced elsewhere. And they're always trying to be competitive and give you value because they recognize. You said earlier. What are you trying to optimize for? Is it revenue, is is profit? There are other things you can optimize for that actually improve both of those numbers. Like how frequently you come back to that as a customer. Do I go to Amazon or do I look at Target or Walmart first. That is a huge impact in Amazon's profitability. And you may do that because of price that one time or over your experience with Amazon as a retailer. So I think what's interesting about AI is that it enables us to go. Just like the ad industry did. Went from having a lot of humans. Trying to solve a problem that really wasn't solvable by humans. So taking a lot of shortcuts. Doing what they could. It actually solves a problem. So if you think about the ad industry. If you're spending 10 million dollars on ads which I'm sure some of your listeners would be. And you're running a campaign. You probably have an agency. They probably have 10 people managing your campaign. They're looking at the 30 or 40 creatives. They have a 1,000 publishers it's running on. But pretty soon the numbers get big. I'm not going to do it right now on camera. But you multiply it out. You're talking about billions. >> And they're all multi varied right. So there's all the different. >> Right, well is the purple creative doing well on the female focus websites for 20 to 30. But not for 40 to 50 and at some point you can't keep track of all the permutation. And one of the weird twists I learned working in that industry is that. When you get down to people who actually click and convert. That's a very small number. So you might have millions or tens of millions of impressions. But you might only have a thousand or two thousand customers that ended up out of it. So you're trying to back out. Okay, that was a customer. Where did they start? And that becomes a very, very thin line to draw. And 10 years ago that was all people. You know, you had your agency. You had literally thousands of people that we traffic those campaigns. And today 78% of those ads are served by AI. Those decisions aren't made by humans anymore. And I think if you think about dynamic pricing for businesses that are very large and have really complex businesses. Like rental car companies, hotels, airlines. Transportation trucking where you're dealing with thousands of different factors. Why would you trust that to people if you don't have to? >> Yeah, as long as you have the data right. And the sophistication gets pretty interesting. You guys have a better appeal to people that already understand the value of dynamic pricing. Which you're really offering them is a new way to do it. An AI based way to do it. A Cloud based way to do it. >> The one place where we found a lot of interest that haven't had sophisticated solutions in the past. The companies that don't have a lot of direct competition. Cause a lot of, at least in travel, a huge part of the revenue manager function is what are the Jones' doing? Right, find the Hilton. What's the Marriot around the corner selling their rooms for? And for better or for worse I think there's a place for it. But it don't think it's quite the same place it's just easy for a human to go to your boss and say well boss. The Marriot around the corner is at 250 a night so we're at 260 cause I think our rooms are nicer. And yet in your data is actually the optimal price. If you look at your data. You can actually get to that price. Maybe you set some rules or you put some limits on the AI. So if the Marriot is at 300 you're not at a 1,000. Maybe you should be, right. You should maybe think about that a little bit if that's what the AI is thinking. But if you don't have that crutch. If you don't have a direct competitor around the corner from you. Then it becomes really hard. And that's why Uber started doing this in the first place. Because they knew taxi pricing was wrong. But to Travis and Ryan and the people who started Uber. The key part of it. The value proposition was always being able to get a car. And so the only way you could do that is basically by pressing people out of the market when you don't have enough cars. And then that one person who really needs to go to the hospital. Or is in DC and needs to go to a New Year's party. Whatever it is. They can pay the $200 to get to that thing they really need to cause there still is a car as opposed to not having a car. >> So you bring up a whole other kind of layer of complexity and that's the third party provider. And it just fascinates me that everyday it seems like there's a new Trivago or Kayak. Or God knows how many other kind of secondary marketplaces there are. So how does that factor in when you not only are worrying about your own pricing? Vis-a-vis your competition around the street or kind of your classic set of competitors. But now you've got this whole other layer of distribution that's kind of outside of your direct control with a whole different type of a pricing structure I would imagine. In terms of supporting. Are you seeing that expand to other places or is travel such a unique thing because of the perishability of the assets? >> So I think it will expand to other places. We think transportation in general, also trucking. I mean everything that has these sort of high operating leverage models. Where you have a lot of vehicles or distribution centers or things. The more accurately you fit your pricing to your demand the more money you'll make. The better run your business will be. The more time you save. It has a lot of implications. One of the things that's really interesting about the different channels is traditionally they have played a roll. You know you think about Nordstrom Rack or TJ Max or Priceline. Hotwire, right. You as the Hilton don't want to ruin your brand by renting your rooms for 50 bucks a night even though you know they're going to be empty. So you give them to Hotwire or you give them to Priceline. That always going to play a roll. A lot of these other places are drawing from the same inventory. So it's just yet another front door for you as a hotel or airline or a rental car company to get business from. What's interesting is because of software. Because of legal agreements and also because of software. There isn't a lot of variation in price. Even though every travel site says cheapest prices or best price guaranteed or whatever. They're all getting their pricing data from the same place. It is the same price. And so it's sort of. Unless it is run in inventory. Unless it is Hotwire where it's opaque. Where you don't know what you're getting. If you're getting a room at a Hilton. You could pretty positive that where ever you book that room Hilton's going to be the same price. >> So it's just pure marketing when they're trying to compete. Because ultimately the system kicks out what that third party available price is or is that even dynamically? >> Well, if you think about. I worked in the travel industry for a while so I don't want to share things that I shouldn't share but if you just think about. If you were the company that powered all these different sites. And had your own big consumer facing website. Would you be okay if Hilton rented its rooms for 50 or a 100 bucks less on its website? Then it lets you rent them for it. >> Probably not. >> Alex: Probably not. (laughing) >> So before we run out of time. So what are the key kind of attributes to the business that really lend itself to having an opportunity to increase profitability and revenue with dynamic pricing? >> So the biggest one is that you've seen. You've had some experience. It could be how ever trivial. And you've seen an impact. Pricing did impact your business. The second one is having a significant number of things that you sell. So if your ring and you sell doorbells and you have one product. Dynamically pricing the product is going to cause a lot more problems than it solves. But if you're a rental car company with thousands of cars. An hotel company with thousands of rooms. Anything where's there's either a lot of variation over a small number of products or a large number of products with a lot of variation. And finally to us it seems like there's this. That you're already a data focused company. Other people have written about this but you know that there's value in their data. You haven't figured out how to get it out of there yet. Or maybe you're doing some things with it. But you are committed to running your business more efficiently. I guess the marketers would call it a psycho graphic profile but that kind of attitude. You know not being content with. Hey, we've done this for four years this way and its worked great. But really wanted to leverage your data and knowing that there is enough data there. Those are the three things that really give us. >> And we don't really worry about price protection I guess. Nobody goes back once they buy their item their like. This is what I wanted. This is perfect. So and I just wondered too. What industries are people not thinking about maybe that you're starting to see get more involved in dynamic pricing. I mean obviously we know travel and those types. You've mentioned cars a number of times. Talked about kind of some of the crazy stuff that goes on Amazon. But is there other kind of ones that people might never think about? >> I mean I think the two big ones are the transportation trucking industry. There a ton of permutation there and they kind of got left out and went web 1.0. And so I think there's a lot to be done there. The other one is event ticketing. You mentioned the A's and the Giants but they're kind of the exceptions. I think there's a lot of ink that's been spilled over price gouging and scalpers and things like that. And I think that if that is you take a hard look at pricing their products more effectively. Everybody would be better off. Consumers and the promoters and the venues themselves. >> Yes, in the Boss' Letter he likes to talk a lot about the concert industry. Alright well Alex Shartsis. CEO of Perfect Price. Thanks for taking a few minutes our of your day and sharing the story. >> Thank you. >> Alrighty, he's Alex. I'm Jeff you're watching the CUBE from our Palo Alto studios. Happy New Year everybody. See you next time. (upbeat music) Welcome back everybody Jeff Frick here with the CUBE. It's 2018, a new year. I think this is actually my first interview of the year. I'm pretty excited to have a CUBE conversation here in the Palo Alto studios to talk about a pretty interesting topic. It's been growing over time but it's getting more and more Sophisticated in a much bigger region. That's dynamic pricing. It's not just stick the sticker on the item like it used to be back in the day. And that's the price and it's much more complicated. Much more sophisticated and we're excited to have Alex Shartsis. He is the CEO of Perfect Price. Alex, good to see you. >> Thanks for having me. So dynamic pricing, right. We've saw it I guess probably the airlines maybe the first ones to do it. Or Priceline.com was kind of the first one to talk about. Hotels have rooms they can't get rid of. But it's moved a lot further down the path in that. I mean now even the Giants I think have flex pricing whether its the Dodgers on a Friday night. Or it's Toronto on a Tuesday. >> Yeah, I think it's king of a really interesting subject cause everybody has experienced it, right. I mean you may not know you've experienced it but everybody whether you've taken an Uber or taken a flight. Stayed in a hotel. Even at this point gone to an A's game or Giant's game. You've been dynamically priced. And what I think that people don't realize is a lot of times they benefit from it. They're able to get that flight for a little bit less. You're able to get the Uber for a little bit less especially than a taxi. And yeah, sometimes there's surge pricing.

Upbeat music plays >> Voice Over: TheCUBE presents Ignite 22, brought to you by Palo Alto Networks. >> Good morning everyone. Welcome to theCUBE. Lisa Martin here with Dave Vellante. We are live at Palo Alto Networks Ignite. This is the 10th annual Ignite. There's about 3,000 people here, excited to really see where this powerhouse organization is taking security. Dave, it's great to be here. Our first time covering Ignite. People are ready to be back. They.. and security is top. It's a board level conversation. >> It is the other Ignite, I like to call it cuz of course there's another big company has a conference name Ignite, so I'm really excited to be here. Palo Alto Networks, a company we've covered for a number of years, as we just wrote in our recent breaking analysis, we've called them the gold standard but it's not just our opinion, we've backed it up with data. The company's on track. We think to do close to 7 billion in revenue by 2023. That's double it's 2020 revenue. You can measure it with execution, market cap M and A prowess. I'm super excited to have the CEO here. >> We have the CEO here, Nikesh Arora joins us from Palo Alto Networks. Nikesh, great to have you on theCube. Thank you for joining us. >> Well thank you very much for having me Lisa and Dave >> Lisa: It was great to see your keynote this morning. You said that, you know fundamentally security is a data problem. Well these days every company has to be a data company. Grocery stores, gas stations, car dealers. How is Palo Alto networks making customers, these data companies, more secure? >> Well Lisa, you know, (coughs) I've only done cybersecurity for about four, four and a half years so when I came to the industry I was amazed to see how security is so reactive as opposed to proactive. We should be able to stop bad threats, right? as they're happening. But I think a lot of threats get through because we don't have the right infrastructure and the right tooling and right products in there. So I think we've been working hard for the last four and a half years to turn it around so we can have consistent data flow across an enterprise and then mine that data for threats and anomalous behavior and try and protect our customers. >> You know the problem, I wrote this, this weekend, the problem in cybersecurity is well understood, you put up that Optiv graph and it's like 8,000 companies >> Yes >> and I think you mentioned your keynote on average, you know 30 to 40 tools, maybe 50, at least 20, >> Yes. >> from the folks that I talked to. So, okay, great, but actually solving that problem is not trivial. To be a consolidator, I mean, everybody wants to consolidate tools. So in your three to four years and security as you well know, it's, you can't fake security. It's a really, really challenging topic. So when you joined Palo Alto Networks and you heard that strategy, I know you guys have been thinking about this for some time, what did you see as the challenges to actually executing on that and how is it that you've been able to sort of get through that knot hole. >> So Dave, you know, it's interesting if you look at the history of cybersecurity, I call them the flavor of the decade, a flare, you know a new threat vector gets created, very large market gets created, a solution comes through, people flock, you get four or five companies will chase that opportunity, and then they become leaders in that space whether it's firewalls or endpoints or identity. And then people stick to their swim lane. The problem is that's a very product centric approach to security. It's not a customer-centric approach. The customer wants a more secure enterprise. They don't want to solve 20 different solutions.. problems with 20 different point solutions. But that's kind of how the industry's grown up, and it's been impossible for a large security company in one category, to actually have a substantive presence in the next category. Now what we've been able to do in the last four and a half years is, you know, from our firewall base we had resources, we had intellectual capability from a security perspective and we had cash. So we used that to pay off our technical debt. We acquired a bunch of companies, we created capability. In the last three years, four years we've created three incremental businesses which are all on track to hit a billion dollars the next 12 to 18 months. >> Yeah, so it's interesting on Twitter last night we had a little conversation about acquirers and who was a good, who was not so good. It was, there was Oracle, they came up actually very high, they'd done pretty, pretty good Job, VMware was on the list, IBM, Cisco, ServiceNow. And if you look at IBM and Cisco's strategy, they tend to be very services heavy, >> Mm >> right? How is it that you have been able to, you mentioned get rid of your technical debt, you invested in that. I wonder if you could, was it the, the Cloud, even though a lot of the Cloud was your own Cloud, was that a difference in terms of your ability to integrate? Because so many companies have tried it in the past. Oracle I think has done a good job, but it took 'em 10 to 12 years, you know, to, to get there. What was the sort of secret sauce? Is it culture, is it just great engineering? >> Dave it's a.. thank you for that. I think, look, it's, it's a mix of everything. First and foremost, you know, there are certain categories we didn't play in so there was nothing to integrate. We built a capability in a category in automation. We didn't have a product, we acquired a company. It's a net new capability in instant response. We didn't have a capability. It was net new capability. So there was, there was, other than integrating culturally and into the organization into our core to market processes there was no technical integration needed. Most of our technical integration was needed in our Cloud platform, which we bought five or six companies, we integrated then we just bought one recently called cyber security as well, which is going to get integrated in the Cloud platform. >> Dave: Yeah. >> And the thing is like, the Cloud platform is net new in the industry. We.. nobody's created a Cloud security platform yet, so we're working hard to create it because we don't want to replicate the mistakes of the past, that were made in enterprise security, in Cloud security. So it's a combination of cultural integration it's a combination of technical integration. The two things we do differently I think, than most people in the industry is look, we have no pride of, you know of innovations. Like, if somebody else has done it, we respect it and we'll acquire it, but we always want to acquire number one or number two in their category. I don't want number three or four. There's three or four for a reason and there still leaves one or two out there to compete with. So we've always acquired one or two, one. And the second thing, which is as important is most of these companies are in the early stage of development. So it's very important for the founding team to be around. So we spend a lot of time making sure they stick around. We actually make our people work for them. My principle is, listen, if they beat us in the open market with all our resources and our people, then they deserve to run this as opposed to us. So most of our new product categories are run by founders of companies required. >> So a little bit of Jack Welch, a little bit of Franks Lubens is a, you know always deference to the founders. But go ahead Lisa. >> Speaking of cultural transformation, you were mentioning your keynote this morning, there's been a significant workforce transformation at Palo Alto Networks. >> Yeah >> Talk a little bit about that, cause that's a big challenge, for many organizations to achieve. Sounds like you've done it pretty well. >> Well you know, my old boss, Eric Schmidt, used to say, 'revenue solves all known problems'. Which kind of, you know, it is a part joking, part true, but you know as Dave mentioned, we've doubled or two and a half time the revenues in the last four and a half years. That allows you to grow, that allows you to increase headcount. So we've gone from four and a half thousand people to 14,000 people. Good news is that's 9,500 people are net new to the company. So you can hire a whole new set of people who have new skills, new capabilities and there's some attrition four and a half thousand, some part of that turns over in four and a half years, so we effectively have 80% net new people, and the people we have, who are there from before, are amazing because they've built a phenomenal firewall business. So it's kind of been right sized across the board. It's very hard to do this if you're not growing. So you got to focus on growing. >> Dave: It's like winning in sports. So speaking of firewalls, I got to ask you does self-driving cars need brakes? So if I got a shout out to my friend Zeus Cararvela so like that's his line about why you need firewalls, right? >> Nikesh: Yes. >> I mean you mentioned it in your keynote today. You said it's the number one question that you get. >> and I don't get it why P industry observers don't go back and say that's, this is ridiculous. The network traffic is doubling or tripling. (clears throat) In fact, I gave an interesting example. We shut down our data centers, as I said, we are all on Google Cloud and Amazon Cloud and then, you know our internal team comes in, we'd want a bigger firewall. I'm like, why do you want a bigger firewall? We shut down our data centers as well. The traffic coming in and out of our campus is doubled. We need a bigger firewall. So you still need a firewall even if you're in the Cloud. >> So I'm going to come back to >> Nikesh: (coughs) >> the M and A strategy. My question is, can you be both best of breed and develop a comprehensive suite number.. part one and part one A of that is do you even have to, because generally sweets win out over best of breed. But what, how do you, how do you respond? >> Well, you know, this is this age old debate and people get trapped in that, I think in my mind, and let me try and expand the analogy which I tried to do up in my keynote. You know, let's assume that Oracle, Microsoft, Dynamics and Salesforce did not exist, okay? And you were running a large company of 50,000 people and your job was to manage the customer process which easier to understand than security. And I said, okay, guess what? I have a quoting system and a lead system but the lead system doesn't talk to my coding system. So I get leads, but I don't know who those customers. And I write codes for a whole new set of customers and I have a customer database. Then when they come as purchase orders, I have a new database with all the customers who've bought something from me, and then when I go get them licensing I have a new database and when I go have customer support, I have a fifth database and there are customers in all five databases. You'll say Nikesh you're crazy, you should have one customer database, otherwise you're never going to be able to make this work. But security is the same problem. >> Dave: Mm I should.. I need consistency in data from suit to nuts. If it's in Cloud, if you're writing code, I need to understand the security flaws before they go into deployment, before they go into production. We for somehow ridiculously have bought security like IT. Now the difference between IT and security is, IT is required to talk to each other, so a Dell server and HP server work very similarly but a Palo Alto firewall and a Checkpoint firewall Fortnight firewall work formally differently. And then how that transitions into endpoints is a whole different ball game. So you need consistency in data, as Lisa was saying earlier, it's a data problem. You need consistency as you traverse to the enterprise. And that's why that's the number one need. Now, when you say best of breed, (coughs) best of breed, if it's fine, if it's a specific problem that you're trying to solve. But if you're trying to make sure that's the data flow that happens, you need both best of breed, you know, technology that stops things and need integration on data. So what we are trying to do is we're trying to give people best to breed solutions in the categories they want because otherwise they won't buy us. But we're also trying to make sure we stitch the data. >> But that definition of best of breed is a little bit of nuance than different in security is what I'm hearing because that consistency >> Nikesh: (coughs) Yes, >> across products. What about across Cloud? You mentioned Google and Amazon. >> Yeah so that's great question. >> Dave: Are you building the security super Cloud, I call it, above the Cloud? >> It's, it's not, it's, less so a super Cloud, It's more like Switzerland and I used to work at Google for 10 years, not a secret. And we used to sell advertising and we decided to go into pub into display ads or publishing, right. Now we had no publishing platform so we had to be good at everybody else's publishing platform >> Dave: Mm >> but we never were able to search ads for everybody else because we only focus on our own platform. So part of it is when the Cloud guys they're busy solving security for their Cloud. Google is not doing anything about Amazon Cloud or Microsoft Cloud, Microsoft's Azure, right? AWS is not doing anything about Google Cloud or Azure. So what we do is we don't have a Cloud. Our job in providing Cloud securities, be Switzerland make sure it works consistently across every Cloud. Now if you try to replicate what we offer Prisma Cloud, by using AWS, Azure and GCP, you'd have to first of all, have three panes of glass for all three of them. But even within them they have four panes of glass for the capabilities we offer. So you could end up with 12 different interfaces to manage a development process, we give you one. Now you tell me which is better. >> Dave: Sounds like a super Cloud to me Lisa (laughing) >> He's big on super Cloud >> Uber Cloud, there you >> Hey I like that, Uber Cloud. Well, so I want to understand Nikesh, what's realistic. You mentioned in your keynote Dave, brought it up that the average organization has 30 to 50 tools, security tools. >> Nikesh: Yes, yes >> On their network. What is realistic for from a consolidation perspective where Palo Alto can come in and say, let me make this consistent and simple for you. >> Well, I'll give you your own example, right? (clears throat) We're probably sub 10 substantively, right? There may be small things here and there we do. But on a substantive protecting the enterprise perspective you be should be down to eight or 10 vendors, and that is not perfect but it's a lot better than 50, >> Lisa: Right? >> because don't forget 50 tools means you have to have capability to understand what those 50 tools are doing. You have to have the capability to upgrade them on a constant basis, learn about their new capabilities. And I just can't imagine why customers have two sets of firewalls right. Now you got to learn both the files on how to deploy both them. That's silly because that's why we need 7 million more people. You need people to understand, so all these tools, who work for companies. If you had less tools, we need less people. >> Do you think, you know I wrote about this as well, that the security industry is anomalous and that the leader has, you know, single digit, low single digit >> Yes >> market shares. Do you think that you can change that? >> Well, you know, when I started that was exactly the observation I had Dave, which you highlighted in your article. We were the largest by revenue, by small margin. And we were one and half percent of the industry. Now we're closer to three, three to four percent and we're still at, you know, like you said, going to be around $7 billion. So I see a path for us to double from here and then double from there, and hopefully as we keep doubling and some point in time, you know, I'd like to get to double digits to start with. >> One of the things that I think has to happen is this has to grow dramatically, the ecosystem. I wonder if you could talk about the ecosystem and your strategy there. >> Well, you know, it's a matter of perspective. I think we have to get more penetrated in our largest customers. So we have, you know, 1800 of the top 2000 customers in the world are Palo Alto customers. But we're not fully penetrated with all our capabilities and the same customers set, so yes the ecosystem needs to grow, but the pandemic has taught us the ecosystem can grow wherever they are without having to come to Vegas. Which I don't think is a bad thing to be honest. So the ecosystem is growing. You are seeing new players come to the ecosystem. Five years ago you didn't see a lot of systems integrators and security. You didn't see security offshoots of telecom companies. You didn't see the Optivs, the WWTs, the (indistinct) of the world (coughs) make a concerted shift towards consolidation or services and all that is happening >> Dave: Mm >> as we speak today in the audience you will find people from Google, Amazon Microsoft are sitting in the audience. People from telecom companies are sitting in the audience. These people weren't there five years ago. So you are seeing >> Dave: Mm >> the ecosystem's adapting. They're, they want to be front and center of solving the customer's problem around security and they want to consolidate capability, they need. They don't want to go work with a hundred vendors because you know, it's like, it's hard. >> And the global system integrators are key. I always say they like to eat at the trough and there's a lot of money in security. >> Yes. >> Dave: (laughs) >> Well speaking of the ecosystem, you had Thomas Curry and Google Cloud CEO in your fireside chat in the keynote. Talk a little bit about how Google Cloud plus Palo Alto Networks, the Zero Trust Partnership and what it's enable customers to achieve. >> Lisa, that's a great question. (clears his throat) Thank you for bringing it up. Look, you know the, one of the most fundamental shifts that is happening is obviously the shift to the Cloud. Now when that shift fully, sort of, takes shape you will realize if your network has changed and you're delivering everything to the Cloud you need to go figure out how to bring the traffic to the Cloud. You don't have to bring it back to your data center you can bring it straight to the Cloud. So in that context, you know we use Google Cloud and Amazon Cloud, to be able to carry our traffic. We're going from a product company to a services company in addition, right? Cuz when we go from firewalls to SASE we're not carrying your traffic. When we carry our traffic, we need to make sure we have underlying capability which is world class. We think GCP and AWS and Azure run some of the biggest and best networks in the world. So our partnership with Google is such that we use their public Cloud, we sit on top of their Cloud, they give us increased enhanced functionality so that our customers SASE traffic gets delivered in priority anywhere in the world. They give us tooling to make sure that there's high reliability. So you know, we partner, they have Beyond Corp which is their version of Zero Trust which allows you to take unmanaged devices with browsers. We have SASE, which allows you to have managed devices. So the combination gives our collective customers the ability for Zero Trust. >> Do you feel like there has to be more collaboration within the ecosystem, the security, you know, landscape even amongst competitors? I mean I think about Google acquires Mandiant. You guys have Unit 42. Should and will, like, Wendy Whitmore and maybe they already are, Kevin Mandia talk more and share more data. If security's a data problem is all this data >> Nikesh: Yeah look I think the industry shares threat data, both in private organizations as well as public and private context, so that's not a problem. You know the challenge with too much collaboration in security is you never know. Like you know, the moment you start sharing your stuff at third parties, you go out of Secure Zone. >> Lisa: Mm >> Our biggest challenge is, you know, I can't trust a third party competitor partner product. I have to treat it with as much suspicion as anything else out there because the only way I can deliver Zero Trust is to not trust anything. So collaboration in Zero Trust are a bit of odds with each other. >> Sounds like another problem you can solve >> (laughs) >> Nikesh last question for you. >> Yes >> Favorite customer or example that you think really articulates the value of what Palo Alto was delivering? >> Look you know, it's a great question, Lisa. I had this seminal conversation with a customer and I explained all those things we were talking about and the customer said to me, great, okay so what do I need to do? I said, fun, you got to trust me because you know, we are on a journey, because in the past, customers have had to take the onus on themselves of integrating everything because they weren't sure a small startup will be independent, be bought by another cybersecurity company or a large cybersecurity company won't get gobbled up and split into pieces by private equity because every one of the cybersecurity companies have had a shelf life. So you know, our aspiration is to be the evergreen cybersecurity company. We will always be around and we will always tackle innovation and be on the front line. So the customer understood what we're doing. Over the last three years we've been working on a transformation journey with them. We're trying to bring them, or we have brought them along the path of Zero Trust and we're trying to work with them to deliver this notion of reducing their meantime to remediate from days to minutes. Now that's an outcome based approach that's a partnership based approach and we'd like, love to have more and more customers of that kind. I think we weren't ready to be honest as a company four and a half years ago, but I think today we're ready. Hence my keynote was called The Perfect Storm. I think we're at the right time in the industry with the right capabilities and the right ecosystem to be able to deliver what the industry needs. >> The perfect storm, partners, customers, investors, employees. Nikesh, it's been such a pleasure having you on theCUBE. Thank you for coming to talk to Dave and me right after your keynote. We appreciate that and we look forward to two days of great coverage from your executives, your customers, and your partners. Thank you. >> Well, thank you for having me, Lisa and Dave and thank you >> Dave: Pleasure >> for what you guys do for our industry. >> Our pleasure. For Nikesh Arora and Dave Vellante, I'm Lisa Martin, you're watching theCUBE live at MGM Grand Hotel in Las Vegas, Palo Alto Ignite 22. Stick around Dave and I will be joined by our next guest in just a minute. (cheerful music plays out)

>>It's the queue covering the virtual vertical Big Data Conference 2020. Brought to you by vertical. >>Hello, everybody. Welcome to the new Normal. You're watching the Cube, and it's remote coverage of the vertical big data event on digital or gone Virtual. My name is Dave Volante, and I'm here with Colin Mahoney, who's a senior vice president at Micro Focus and the GM of Vertical Colin. Well, strange times, but the show goes on. Great to see you again. >>Good to see you too, Dave. Yeah, strange times indeed. Obviously, Safety first of everyone that we made >>a >>decision to go Virtual. I think it was absolutely the right all made it in advance of how things have transpired, but we're making the best of it and appreciate your time here, going virtual with us. >>Well, Joe and we're super excited to be here. As you know, the Cube has been at every single BDC since its inception. It's a great event. You just you just presented the key note to your to your audience, You know, it was remote. You didn't have that that live vibe. And you have a lot of fans in the vertical community But could you feel the love? >>Yeah, you know, it's >>it's hard to >>feel the love virtually, but I'll tell you what. The silver lining in all this is the reach that we have for this event now is much broader than it would have been a Z you know, you know, we brought this event back. It's been a few years since we've done it. We're super excited to do it, obviously, you know, in Boston, where it was supposed to be on location, but there wouldn't have been as many people that could participate. So the silver lining in all of this is that I think there's there's a lot of love out there we're getting, too. I have a lot of participants who otherwise would not have been able to participate in this. Both live as well. It's a lot of these assets that we're gonna have available. So, um, you know, it's out there. We've got an amazing customers and of practitioners with vertical. We've got so many have been with us for a long time. We've of course, have a lot of new customers as well that we're welcoming, so it's exciting. >>Well, it's been a while. Since you've had the BDC event, a lot of transpired. You're now part of micro focus, but I know you and I know the vertical team you guys have have not stopped. You've kept the innovation going. We've been following the announcements, but but bridge the gap between the last time. You know, we had coverage of this event and where we are today. A lot has changed. >>Oh, yeah, a lot. A lot has changed. I mean, you know, it's it's the software industry, right? So nothing stays the same. We constantly have Teoh keep going. Probably the only thing that stays the same is the name Vertical. Um and, uh, you know, you're not spending 10 which is just a phenomenal released for us. So, you know, overall, the the organization continues to grow. The dedication and commitment to this great form of vertical continues every single release we do as you know, and this hasn't changed. It's always about performance and scale and adding a whole bunch of new capabilities on that front. But it's also about are our main road map and direction that we're going towards. And I think one of the things have been great about it is that we've stayed true that from day one we haven't tried to deviate too much and get into things that are barred to outside your box. But we've really done, I think, a great job of extending vertical into places where people need a lot of help. And with vertical 10 we know we're going to talk more about that. But we've done a lot of that. It's super exciting for our customers, and all of this, of course, is driven by our customers. But back to the big data conference. You know, everybody has been saying this for years. It was one of the best conferences we've been to just so really it's. It's developers giving tech talks, its customers giving talks. And we have more customers that wanted to give talks than we had slots to fill this year at the event, which is another benefit, a little bit of going virtually accommodate a little bit more about obviously still a tight schedule. But it really was an opportunity for our community to come together and talk about not just America, but how to deal with data, you know, we know the volumes are slowing down. We know the complexity isn't slowing down. The things that people want to do with AI and machine learning are moving forward in a rapid pace as well. There's a lot talk about and share, and that's really huge part of what we try to do with it. >>Well, let's get into some of that. Um, your customers are making bets. Micro focus is actually making a bet on one vertical. I wanna get your perspective on one of the waves that you're riding and where are you placing your bets? >>Yeah, No, it's great. So, you know, I think that one of the waves that we've been writing for a long time, obviously Vertical started out as a sequel platform for analytics as a sequel, database engine, relational engine. But we always knew that was just sort of takes that we wanted to do. People were going to trust us to put enormous amounts of data in our platform and what we owe everyone else's lots of analytics to take advantage of that data in the lots of tools and capabilities to shape that data to get into the right format. The operational reporting but also in this day and age for machine learning and from some pretty advanced regressions and other techniques of things. So a huge part of vertical 10 is just doubling down on that commitment to what we call in database machine learning and ai. Um, And to do that, you know, we know that we're not going to come up with the world's best algorithms. Nor is that our focus to do. Our advantage is we have this massively parallel platform to ingest store, manage and analyze the data. So we made some announcements about incorporating PM ML models into the product. We continue to deepen our python integration. Building off of a new open source project we started with uber has been a great customer and partner on This is one of our great talks here at the event. So you know, we're continuing to do that, and it turns out that when it comes to anything analytics machine learning, certainly so much of what you have to do is actually prepare the big shape the data get the data in the right format, apply the model, fit the model test a model operationalized model and is a great platform to do that. So that's a huge bet that were, um, continuing to ride on, taking advantage of and then some of the other things that we've just been seeing. You continue. I'll take object. Storage is an example on, I think Hadoop and what would you point through ultimately was a huge part of this, but there's just a massive disruption going on in the world around object storage. You know, we've made several bets on S three early we created America Yang mode, which separates computing story. And so for us that separation is not just about being able to take care of your take advantage of cloud economics as we do, or the economics of object storage. It's also about being able to truly isolate workloads and start to set the sort of platform to be able to do very autonomous things in the databases in the database could actually start self analysing without impacting many operational workloads, and so that continues with our partnership with pure storage. On premise, we just announced that we're supporting beyond Google Cloud now. In addition to Amazon, we supported on we've got a CFS now being supported by are you on mode. So we continue to ride on that mega trend as well. Just the clouds in general. Whether it's a public cloud, it's a private cloud on premise. Giving our customers the flexibility and choice to run wherever it makes sense for them is something that we are very committed to. From a flexibility standpoint. There's a lot of lock in products out there. There's a lot of cloud only products now more than ever. We're hearing our customers that they want that flexibility to be able to run anywhere. They want the ease of use and simplicity of native cloud experiences, which we're giving them as well. >>I want to stay in that architectural component for a minute. Talk about separating compute from storage is not just about economics. I mean apart Is that you, you know, green, really scale compute separate from storage as opposed to in chunks. It's more efficient, but you're saying there's other advantages to operational and workload. Specificity. Um, what is unique about vertical In this regard, however, many others separate compute from storage? What's different about vertical? >>Yeah, I think you know, there's a lot of differences about how we do it. It's one thing if you're a cloud native company, you do it and you have a shared catalog. That's key value store that all of your customers are using and are on the same one. Frankly, it's probably more of a security concern than anything. But it's another thing. When you give that capability to each customer on their own, they're fully protected. They're not sharing it with any other customers. And that's something that we hear a lot of insights from our customers. They want to be able to separate compute and storage. But they want to be able to do this in their own environment so that they know that in their data catalog there's no one else is. You share in that catalog, there's no single point of failure. So, um, that's one huge advantage that we have. And frankly, I think it just comes from being a company that's operating on premise and, uh, up in the cloud. I think another huge advantages for us is we don't know what object storage platform is gonna win, nor do we necessarily have. We designed the young vote so that it's an sdk. We started with us three, but it could be anything. It's DFS. That's three. Who knows what what object storage formats were going to be there and then finally, beyond just the object storage. We're really one of the only database companies that actually allows our customers to natively operate on data in very different formats, like parquet and or if you're familiar with those in the Hadoop community. So we not only embrace this kind of object storage disruption, but we really embrace the different data formats. And what that means is our customers that have data pipelines that you know, fully automated, putting this information in different places. They don't have to completely reload everything to take advantage of the Arctic analytics. We can go where the data is connected into it, and we offer them a lot of different ways to take advantage of those analytics. So there are a couple of unique differences with verdict, and again, I think are really advance. You know, in many ways, by not being a cloud native platform is that we're very good at operating in different environments with different formats that changing formats over time. And I don't think a lot of the other companies out there that I think many, particularly many of the SAS companies were scrambling. They even have challenges moving from saying Amazon environment to a Microsoft azure environment with their office because they've got so much unique Band Aid. Excuse me in the background. Just holding the system up that is native to any of those. >>Good. I'm gonna summarize. I'm hearing from you your Ferrari of databases that we've always known. Your your object store agnostic? Um, it's any. It's the cloud experience that you can bring on Prem to virtually any cloud. All the popular clouds hybrid. You know, aws, azure, now Google or on Prem and in a variety of different data formats. And that is, I think, you know, you need the combination of those I think is unique in the marketplace. Um, before we get into the news, I want to ask you about data silos and data silos. You mentioned H DFs where you and I met back in the early days of big data. You know, in some respects, you know, Hadoop help break down the silos with distributing the date and leave it in place, and in other respects, they created Data Lakes, which became silos. And so we have. Yet all these other sales people are trying to get to, Ah, digital transformation meeting, putting data at their core virtually obviously, and leave it in place. What's your thoughts on that in terms of data being a silo buster Buster, How does verdict of way there? >>Yeah, so And you're absolutely right, I think if even if you look at his due for all the new data that gets into the do. In many ways, it's created yet another large island of data that many organizations are struggling with because it's separate from their core traditional data warehouse. It's separate from some of the operational systems that they have, and so there might be a lot of data in there, but they're still struggling with How do I break it out of that large silo and or combine it again? I think some some of the things that verdict it doesn't part of the announcement just attend his migration tools to make it really easy. If you do want to move it from one platform to another inter vertical, but you don't have to move it, you can actually take advantage of a lot of the data where it resides with vertical, especially in the Hadoop brown with our external table storage with our building or compartment natively. So we're very pragmatic about how our customers go about this. Very few customers, Many of them tried it with Hadoop and realize that didn't work. But very few customers want a wholesale. Just say we're going to throw everything out. We're gonna get rid of our data warehouse. We're gonna hit the pause button and we're going to go from there. Just it's not possible to do that. So we've spent a lot of time investing in the product, really work with them to go where the data is and then seamlessly migrate. And when it makes sense to migrate, you mentioned the performance of America. Um, and you talked about it is the variety. It definitely is. And one other thing that we're really proud of this is that it actually is not a gas guzzler. Easy either One of the things that we're seeing, a lot of the other cloud databases pound for pound you get on the 10th the hardware vertical running up there. You get over 10 x performance. We're seeing that a lot, so it's Ah, it's not just about the performance, but it's about the efficiency as well. And I think that efficiency is really important when it comes to silos. Because there's there's just only so much horsepower out there. And it's easier for companies to play tricks and lots of servers environment when they start up for so many organizations and cloud and frankly, looking at the bills they're getting from these cloud workloads that are running. They really conscious of that. >>Yeah. The big, big energy companies love the gas guzzlers. A lot of a lot of cloud. Cute. But let's get into the news. Uh, 10 dot io you shared with your the audience in your keynote. One of the one of the highlights of data. What do we need to know? >>Yeah, so, you know, again doubling down on these mega trends, I'll start with Machine Learning and ai. We've done a lot of work to integrate so that you can take native PM ml models, bring them into vertical, run them massively parallel and help shape you know your data and prepare it. Do all the work that we know is required true machine learning. And for all the hype that there is around it, this is really you know, people want to do a lot of unsupervised machine learning, whether it's for healthcare fraud, detection, financial services. So we've doubled down on that. We now also support things like Tensorflow and, you know, as I mentioned, we're not going to come up with the best algorithms. Our job is really to ensure that those algorithms that people coming up with could be incorporated, that we can run them against massive data sets super efficiently. So that's that's number one number two on object storage. We continue to support Mawr object storage platforms for ya mode in the cloud we're expanding to Google G CPI, Google's cloud beyond just Amazon on premise or in the cloud. Now we're also supporting HD fs with beyond. Of course, we continue to have a great relationship with our partners, your storage on premise. Well, what we continue to invest in the eon mode, especially. I'm not gonna go through all the different things here, but it's not just sort of Hey, you support this and then you move on. There's so many different things that we learn about AP I calls and how to save our customers money and tricks on performance and things on the third areas. We definitely continue to build on that flexibility of deployment, which is related to young vote with. Some are described, but it's also about simplicity. It's also about some of the migration tools that we've announced to make it easy to go from one platform to another. We have a great road map on these abuse on security, on performance and scale. I mean, for us. Those are the things that we're working on every single release. We probably don't talk about them as much as we need to, but obviously they're critically important. And so we constantly look at every component in this product, you know, Version 10 is. It is a huge release for any product, especially an analytic database platform. And so there's We're just constantly revisiting you know, some of the code base and figuring out how we can do it in new and better ways. And that's a big part of 10 as well. >>I'm glad you brought up the machine Intelligence, the machine Learning and AI piece because we would agree that it is really one of the things we've noticed is that you know the new innovation cocktail. It's not being driven by Moore's law anymore. It's really a combination of you. You've collected all this data over the last 10 years through Hadoop and other data stores, object stores, etcetera. And now you're applying machine intelligence to that. And then you've got the cloud for scale. And of course, we talked about you bringing the cloud experience, whether it's on Prem or hybrid etcetera. The reason why I think this is important I wanted to get your take on this is because you do see a lot of emerging analytic databases. Cloud Native. Yes, they do suck up, you know, a lot of compute. Yeah, but they also had a lot of value. And I really wanted to understand how you guys play in that new trend, that sort of cloud database, high performance, bringing in machine learning and AI and ML tools and then driving, you know, turning data into insights and from what I'm hearing is you played directly in that and your differentiation is a lot of the things that we talk about including the ability to do that on from and in the cloud and across clouds. >>Yeah, I mean, I think that's a great point. We were a great cloud database. We run very well upon three major clouds, and you could argue some of the other plants as well in other parts of the world. Um, if you talk to our customers and we have hundreds of customers who are running vertical in the cloud, the experience is very good. I think it would always be better. We've invested a lot in taking advantage of the native cloud ecosystem, so that provisioning and managing vertical is seamless when you're in that environment will continue to do that. But vertical excuse me as a cloud platform is phenomenal. And, um, you know, there's a There's a lot of confusion out there, you know? I think there's a lot of marketing dollars spent that won't name many of the companies here. You know who they are, You know, the cloud Native Data Warehouse and it's true, you know their their software as a service. But if you talk to a lot of our customers, they're getting very good and very similar. experiences with Bernie comic. We stopped short of saying where software is a service because ultimately our customers have that control of flexibility there. They're putting verdict on whichever cloud they want to run it on, managing it. Stay tuned on that. I think you'll you'll hear from or more from us about, you know, that going going even further. But, um, you know, we do really well in the cloud, and I think he on so much of yang. And, you know, this has really been a sort of 2.5 years and never for us. But so much of eon is was designed around. The cloud was designed around Cloud Data Lakes s three, separation of compute and storage on. And if you look at the work that we're doing around container ization and a lot of these other elements, it just takes that to the next level. And, um, there's a lot of great work, so I think we're gonna get continue to get better at cloud. But I would argue that we're already and have been for some time very good at being a cloud analytic data platform. >>Well, since you open the door I got to ask you. So it's e. I hear you from a performance and architectural perspective, but you're also alluding two. I think something else. I don't know what you can share with us. You said stay tuned on that. But I think you're talking about Optionality, maybe different consumption models. That am I getting that right and you share >>your difficult in that right? And actually, I'm glad you wrote something. I think a huge part of Cloud is also has nothing to do with the technology. I think it's how you and seeing the product. Some companies want to rent the product and they want to rent it for a certain period of time. And so we allow our customers to do that. We have incredibly flexible models of how you provision and purchase our product, and I think that helps a lot. You know, I am opening the door Ah, a little bit. But look, we have customers that ask us that we're in offer them or, you know, we can offer them platforms, brawl in. We've had customers come to us and say please take over systems, um, and offer something as a distribution as I said, though I think one thing that we've been really good at is focusing on on what is our core and where we really offer offer value. But I can tell you that, um, we introduced something called the Verdict Advisor Tool this year. One of the things that the Advisor Tool does is it collects information from our customer environments on premise or the cloud, and we run through our own machine learning. We analyze the customer's environment and we make some recommendations automatically. And a lot of our customers have said to us, You know, it's funny. We've tried managed service, tried SAS off, and you guys blow them away in terms of your ability to help us, like automatically managed the verdict, environment and the system. Why don't you guys just take this product and converted into a SAS offering, so I won't go much further than that? But you can imagine that there's a lot of innovation and a lot of thoughts going into how we can do that. But there's no reason that we have to wait and do that today and being able to offer our customers on premise customers that same sort of experience from a managed capability is something that we spend a lot of time thinking about as well. So again, just back to the automation that ease of use, the going above and beyond. Its really excited to have an analytic platform because we can do so much automation off ourselves. And just like we're doing with Perfect Advisor Tool, we're leveraging our own Kool Aid or Champagne Dawn. However you want to say Teoh, in fact, tune up and solve, um, some optimization for our customers automatically, and I think you're going to see that continue. And I think that could work really well in a bunch of different wallets. >>Welcome. Just on a personal note, I've always enjoyed our conversations. I've learned a lot from you over the years. I'm bummed that we can't hang out in Boston, but hopefully soon, uh, this will blow over. I loved last summer when we got together. We had the verdict throwback. We had Stone Breaker, Palmer, Lynch and Mahoney. We did a great series, and that was a lot of fun. So it's really it's a pleasure. And thanks so much. Stay safe out there and, uh, we'll talk to you soon. >>Yeah, you too did stay safe. I really appreciate it up. Unity and, you know, this is what it's all about. It's Ah, it's a lot of fun. I know we're going to see each other in person soon, and it's the people in the community that really make this happen. So looking forward to that, but I really appreciate it. >>Alright. And thank you, everybody for watching. This is the Cube coverage of the verdict. Big data conference gone, virtual going digital. I'm Dave Volante. We'll be right back right after this short break. >>Yeah.

>> From Boston, Massachusets, it's The Cube. Covering Actifio 2019: Data Driven, Brought to you by Actifio. >> Welcome back to Boston, everybody. We're here at the Intercontinental Hotel at Actifio's Data Driven conference, day one. You're watching The Cube. The leader in on-the-ground tech coverage. My name is is Dave Valante, Stu Minamin is here, so is John Ferrer, my friend Frank Gens is here, he's the Senior Vice President and Chief Analyst at IDC and Head Dot Connector. Frank, welcome to The Cube. >> Well thank you Dave. >> First time. >> First time. >> Newbie. >> Yep. >> You're going to crush it, I know. >> Be gentle. >> You know, you're awesome, I've watched you over the many years, of course, you know, you seem to get competitive, and it's like who gets the best rating? Frank always had the best ratings at the Directions conference. He's blushing but I could- >> I don't know if that's true but I'll accept it. >> I could never beat him, no matter how hard I tried. But you are a phenomenal speaker, you gave a great conversation this morning. I'm sure you drew a lot from your Directions talk, but every year you lay down this, you know, sort of, mini manifesto. You describe it as, you connect the dots, IDC, thousands of analysts. And it's your job to say okay, what does this all mean? Not in the micro, let's up-level a little bit. So, what's happening? You talked today, You know you gave your version of the wave slides. So, where are we in the waves? We are exiting the experimentation phase, and coming in to a new phase that multiplied innovation. I saw AI on there, block-chain, some other technologies. Where are we today? >> Yeah, well I think having mental models of the6 industry or any complex system is pretty important. I mean I've made a career dumbing-down a complex industry into something simple enough that I can understand, so we've done it again now with what we call the third platform. So, ten years ago seeing the whole raft of new technologies at the time were coming in that would become the foundation for the next thirty years of tech, so, that's an old story now. Cloud, mobile, social, big data, obviously IOT technologies coming in, block-chain, and so forth. So we call this general era the third platform, but we noticed a few years ago, well, we're at the threshold of kind of a major scale-up of innovation in this third platform that's very different from the last ten or twelve years, which we called the experimentation stage. Where people were using this stuff, using the cloud, using mobile, big data, to create cool things, but they were doing it in kind of a isolated way. Kind of the traditional, well I'm going to invent something and I may have a few friends help me, whereas, the promise of the cloud has been , well, if you have a lot of developers out on the cloud, that form a community, an ecosystem, think of GitHub, you know, any of the big code repositories, or the ability to have shared service as often Amazon, Cloud, or IBM, or Google, or Microsoft, the promise is there to actually bring to life what Bill Joy said, you know, in the nineties. Which was no matter how smart you are, most of the smart people in the world work for someone else. So the questions always been, well, how do I tap into all those other smart people who don't work for me? So we can feel that where we are in the industry right now is the business model of multiplied innovation or if you prefer, a network of collaborative innovation, being able to build something interesting quickly, using a lot of innovation from other people, and then adding your special sauce. But that's going to take the scale of innovation just up a couple of orders of magnitude. And the pace, of course, that goes with that, is people are innovating much more rapid clip now. So really, the full promise of a cloud-native innovation model, so we kind of feel like we're right here, which means there's lots of big changes around the technologies, around kind of the world of developers and apps, AI is changing, and of course, the industry structure itself. You know the power positions, you know, a lot of vendors have spent a lot of energy trying to protect the power positions of the last thirty years. >> Yeah so we're getting into some of that. So, but you know, everybody talks about digital transformation, and they kind of roll their eyes, like it's a big buzzword, but it's real. It's dataware at a data-driven conference. And data, you know, being at the heart of businesses means that you're seeing businesses transition industries, or traverse industries, you know, Amazon getting into groceries, Apple getting into content, Amazon as well, etcetera, etcetera, etcetera, so, my question is, what's a tech company? I mean, you know, Bennyhoff says that, you know, every company's a sass company, and you're certainly seeing that, and it's got to be great for your business. >> Yeah, yeah absolutely >> Quantifying all those markets, but I mean, the market that you quantify is just it's every company now. Banks, insurance companies, grocers, you know? Everybody is a tech company. >> I think, yeah, that's a hundred percent right. It is that this is the biggest revolution in the economy, you know, for many many decades. Or you might say centuries even. Is yeah, whoever put it, was it Mark Andreson or whoever used to talk about software leading the world, we're in the middle of that. Only, software now is being delivered in the form of digital or cloud services so, you know, every company is a tech company. And of course it really raises the question, well what are tech companies? You know, they need to kind of think back about where does our value add? But it is great. It's when we look at the world of clouds, one of the first things we observed in 2007, 2008 was, well, clouds wasn't just about S3 storage clouds, or salesforce.com's softwares and service. It's a model that can be applied to any industry, any company, any offering. And of course we've seen all these startups whether it's Uber or Netflix or whoever it is, basically digital innovation in every single industry, transforming that industry. So, to me that's the exciting part is if that model of transforming industries through the use of software, through digital technology. In that kind of experimentation stage it was mainly a startup story. All those unicorns. To me the multiplied innovation chapter, it's about- (audio cuts out) finally, you know, the cities, the Procter & Gambles, the Walmarts, the John Deere's, they're finally saying hey, this cloud platform and digital innovation, if we can do that in our industry. >> Yeah, so intrapreneurship is actually, you know, starting to- >> Yeah. >> So you and I have seen a lot of psychos, we watched the you know, the mainframe wave get crushed by the micro-processor based revolution, IDC at the time spent a lot of time looking at that. >> Vacuum tubes. >> Water coolant is back. So but the industry has marched to the cadence of Moore's Law forever. Even Thomas Friedman when he talks about, you know, his stuff and he throws in Moore's Law. But no longer Moore's Law the sort of engine of innovation. There's other factors. So what's the innovation cocktail looking forward over the next ten years? You've talked about cloud, you know, we've talked about AI, what's that, you know, sandwich, the innovation sandwich look like? >> Yeah so to me I think it is the harnessing of all this flood of technologies, again, that are mainly coming off the cloud, and that parade is not stopping. Quantum, you know, lots of other technologies are coming down the pipe. But to me, you know, it is the mixture of number one the cloud, public cloud stacks being able to travel anywhere in the world. So take the cloud on the road. So it's even, I would say, not even just scale, I think of, that's almost like a mount of compute power. Which could happen inside multiple hyperscale data centers. I'm also thinking about scale in terms of the horizontal. >> Bringing that model anywhere. >> Take me out to the edge. >> Wherever your data lives. >> Take me to a Carnival cruise ship, you know, take me to, you know, an apple-powered autonomous car, or take me to a hospital or a retail store. So the public cloud stacks where all the innovation is basically happening in the industry. Jail-breaking that out so it can come, you know it's through Amazon, AWS Outpost, or Ajerstack, or Google Anthos, this movement of the cloud guys, to say we'll take public cloud innovation wherever you need it. That to me is a big part of the cocktail because that's you know, basically the public clouds have been the epicenter of most tech innovation the last three or four years, so, that's very important. I think, you know just quickly, the other piece of the puzzle is the revolution that's happening in the modularity of apps. So the micro services revolution. So, the building of new apps and the refactoring of old apps using containers, using servos technologies, you know, API lifecycle management technologies, and of course, agile development methods. Kind of getting to this kind of iterative sped up deployment model, where people might've deployed new code four times a year, they're now deploying it four times a minute. >> Yeah right. >> So to me that's- and kind of aligned with that is what I was mentioning before, that if you can apply that, kind of, rapid scale, massive volume innovation model and bring others into the party, so now you're part of a cloud-connected community of innovators. And again, that could be around a Github, or could be around a Google or Amazon, or it could be around, you know, Walmart. In a retail world. Or an Amazon in retail. Or it could be around a Proctor & Gamble, or around a Disney, digital entertainment, you know, where they're creating ecosystems of innovators, and so to me, bringing people, you know, so it's not just these technologies that enable rapid, high-volume modular innovation, but it's saying okay now plugging lots of people's brains together is just going to, I think that, here's the- >> And all the data that throws off obviously. >> Throws a ton of data, but, to me the number we use it kind of is the punchline for, well where does multiplied innovation lead? A distributed cloud, this revolution in distributing modular massive scale development, that we think the next five years, we'll see as many new apps developed and deploye6d as we saw developed and deployed in the last forty years. So five years, the next five years, versus the last forty years, and so to me that's, that is the revolution. Because, you know, when that happens that means we're going to start seeing that long tail of used cases that people could never get to, you know, all the highly verticalized used cases are going to be filled, you know we're going to finally a lot of white space has been white for decades, is going to start getting a lot of cool colors and a lot of solutions delivered to them. >> Let's talk about some of the macro stuff, I don't know the exact numbers, but it's probably three trillion, maybe it's four trillion now, big market. You talked today about the market's going two x GDP. >> Yeah. >> For the tech market, that is. Why is it that the tech market is able to grow at a rate faster than GDP? And is there a relationship between GDP and tech growth? >> Yeah, well, I think, we are still, while, you know, we've been in tech, talk about those apps developed the last forty years, we've both been there, so- >> And that includes the iPhone apps, too, so that's actually a pretty impressive number when you think about the last ten years being included in that number. >> Absolutely, but if you think about it, we are still kind of teenagers when you think about that Andreson idea of software eating the world. You know, we're just kind of on the early appetizer, you know, the sorbet is coming to clear our palates before we go to the next course. But we're not even close to the main course. And so I think when you look at the kind of, the percentage of companies and industry process that is digital, that has been highly digitized. We're still early days, so to me, I think that's why. That the kind of the steady state of how much of an industry is kind of process and data flow is based on software. I'll just make up a number, you know, we may be a third of the way to whatever the steady state is. We've got two-thirds of the way to go. So to me, that supports growth of IT investment rising at double the rate of overall. Because it's sucking in and absorbing and transforming big pieces of the existing economy, >> So given the size of the market, given that all companies are tech companies. What are your thoughts on the narrative right now? You're hearing a lot of pressure from, you know, public policy to break up big tech. And we saw, you know you and I were there when Microsoft, and I would argue, they were, you know, breaking the law. Okay, the Department of Justice did the right thing, and they put handcuffs on them. >> Yeah. >> But they never really, you know, went after the whole breakup scenario, and you hear a lot of that, a lot of the vitriol. Do you think that makes sense? To break up big tech and what would the result be? >> You don't think I'm going to step on those land mines, do you? >> Okay well I've got an opinion. >> Alright I'll give you mine then. Alright, since- >> I mean, I'll lay it out there, I just think if you break up big tech the little techs are going to get bigger. It's going to be like AT&T all over again. The other thing I would add is if you want to go after China for, you know, IP theft, okay fine, but why would you attack the AI leaders? Now, if they're breaking the law, that should not be allowed. I'm not for you know, monopolistic, you know, illegal behavior. What are your thoughts? >> Alright, you've convinced me to answer this question. >> We're having a conversation- >> Nothing like a little competitive juice going. You're totally wrong. >> Lay it out for me. >> No, I think, but this has been a recurring pattern, as you were saying, it even goes back further to you know, AT&T and people wanting to connect other people to the chiraphone, and it goes IBM mainframes, opening up to peripherals. Right, it goes back to it. Exactly. It goes back to the wheel. But it's yeah, to me it's a valid question to ask. And I think, you know, part of the story I was telling, that multiplied innovation story, and Bill Joy, Joy's Law is really about platform. Right? And so when you get aggregated portfolio of technical capabilities that allow innovation to happen. Right, so the great thing is, you know, you typically see concentration, consolidation around those platforms. But of course they give life to a lot of competition and growth on top of them. So that to me is the, that's the conundrum, because if you attack the platform, you may send us back into this kind of disaggregated, less creative- so that's the art, is to take the scalpel and figure out well, where are the appropriate boundaries for, you know, putting those walls, where if you're in this part of the industry, you can't be in this. So, to me I think one, at least reasonable way to think about it is, so for example, if you are a major cloud platform player, right, you're providing all of the AI services, the cloud services, the compute services, the block-chain services, that a lot of the sass world is using. That, somebody could argue, well, if you get too strong in the sass world, you then could be in a position to give yourself favorable position from the platform. Because everyone in the sass world is depending on the platform. So somebody might say you can't be in. You know, if you're in the sass position you'll have to separate that from the platform business. But I think to me, so that's a logical way to do it, but I think you also have to ask, well, are people actually abusing? Right, so I- >> I think it's a really good question. >> I don't think it's fair to just say well, theoretically it could be abused. If the abuse is not happening, I don't think you, it's appropriate to prophylactically, it's like go after a crime before it's committed. So I think, the other thing that is happening is, often these monopolies or power positions have been about economic power, pricing power, I think there's another dynamic happening because consumer date, people's data, the Facebook phenomenon, the Twitter and the rest, there's a lot of stuff that's not necessarily about pricing, but that's about kind of social norms and privacy that I think are at work and that we haven't really seen as big a factor, I mean obviously we've had privacy regulation is Europe with GDPR and the rest, obviously in check, but part of that's because of the social platforms, so that's another vector that is coming in. >> Well, you would like to see the government actually say okay, this is the framework, or this is what we think the law should be. I mean, part of it is okay, Facebook they have incentive to appropriate our data and they get, okay, and maybe they're not taking enough responsibility for. But I to date have not seen the evidence as we did with, you know, Microsoft wiping out, you know, Lotus, and Novel, and Word Perfect through bundling and what it did to Netscape with bundling the browser and the price practices that- I don't see that, today, maybe I'm just missing it, but- >> Yeah I think that's going to be all around, you know, online advertising, and all that, to me that's kind of the market- >> Yeah, so Google, some of the Google stuff, that's probably legit, and that's fine, they should stop that. >> But to me the bigger issue is more around privacy.6 You know, it's a social norm, it's societal, it's not an economic factor I think around Facebook and the social platforms, and I think, I don't know what the right answer is, but I think certainly government it's legitimate for those questions to be asked. >> Well maybe GDPR becomes that framework, so, they're trying to give us the hook but, I'm having too much fun. So we're going to- I don't know how closely you follow Facebook, I mean they're obviously big tech, so Facebook has this whole crypto-play, seems like they're using it for driving an ecosystem and making money. As opposed to dealing with the privacy issue. I'd like to see more on the latter than the former, perhaps, but, any thoughts on Facebook and what's going on there with their crypto-play? >> Yeah I don't study them all that much so, I am fascinated when Mark Zuckerberg was saying well now our key business now is about privacy, which I find interesting. It doesn't feel that way necessarily, as a consumer and an observer, but- >> Well you're on Facebook, I'm on Facebook, >> Yeah yeah. >> Okay so how about big IPOs, we're in the tenth year now of this huge, you know, tail-wind for tech. Obviously you have guys like Uber, Lyft going IPO,6 losing tons of money. Stocks actually haven't done that well which is kind of interesting. You saw Zoom, you know, go public, doing very well. Slack is about to go public. So there's really a rush to IPO. Your thoughts on that? Is this sustainable? Or are we kind of coming to the end here? >> Yeah so, I think in part, you know, predicting the stock market waves is a very tough thing to do, but I think one kind of secular trend is going to be relevant for these tech IPOs is what I was mentioning earlier, is that we've now had a ten, twelve year run of basically startups coming in and reinventing industries while the incumbents in the industries are basically sitting on their hands, or sleeping. So to me the next ten years, those startups are going to, not that, I mean we've seen that large companies waking up doesn't necessarily always lead to success but it feels to me like it's going to be a more competitive environment for all those startups Because the incumbents, not all of them, and maybe not even most of them, but some decent portion of them are going to wind up becoming digital giants in their own industry. So to me I think that's a different world the next ten years than the last ten. I do think one important thing, and I think around acquisitions MNA, and we saw it just the last few weeks with Google Looker and we saw Tab Low with Salesforce, is if that, the mega-cloud world of Microsoft, Ajer, and Amazon, Google. That world is clearly consolidating. There's room for three or four global players and that game is almost over. But there's another power position on top of that, which is around where did all the app, business app guys, all the suite guys, SAP, Oracle, Salesforce, Adobe, Microsoft, you name it. Where did they go? And so we see, we think- >> Service Now, now kind of getting big. >> Absolutely, so we're entering a intensive period, and I think again, the Tab Low and Looker is just an example where those companies are all stepping on the gas to become better platforms. So apps as platforms, or app portfolio as platforms, so, much more of a data play, analytics play, buying other pieces of the app portfolio, that they may not have. And basically scaling up to become the business process platforms and ecosystems there. So I think we are just at the beginning of that, so look for a lot of sass companies. >> And I wonder if Amazon could become a platform for developers to actually disrupt those traditional sass guys. It's not obvious to me how those guys get disrupted, and I'm thinking, everybody says oh is Amazon going to get into the app space? Maybe some day if they happen to do a cam expans6ion, But it seems to me that they become a platform fo6r new apps you know, your apps explosion.6 At the edge, obviously, you know, local. >> Well there's no question. I think those appcentric apps is what I'd call that competition up there and versus kind of a mega cloud. There's no question the mega cloud guys. They've already started launching like call center, contact center software, they're creeping up into that world of business apps so I don't think they're going to stop and so I think that that is a reasonable place to look is will they just start trying to create and effect suites and platforms around sass of their own. >> Startups, ecosystems like you were saying. Alright, I got to give you some rapid fire questions here, so, when do you think, or do you think, no, I'm going to say when you think, that owning and driving your own car will become the exception, rather than the norm? Buy into the autonomous vehicles hype? Or- >> I think, to me, that's a ten-year type of horizon. >> Okay, ten plus, alright. When will machines be able to make better diagnosis than than doctors? >> Well, you could argue that in some fields we're almost there, or we're there. So it's all about the scope of issue, right? So if it's reading a radiology, you know, film or image, to look for something right there, we're almost there. But for complex cancers or whatever that's going to take- >> One more dot connecting question. >> Yeah yeah. >> So do you think large retail stores will essentially disappear? >> Oh boy that's a- they certainly won't disappear, but I think they can so witness Apple and Amazon even trying to come in, so it feels that the mix is certainly shifting, right? So it feels to me that the model of retail presence, I think that will still be important. Touch, feel, look, socialize. But it feels like the days of, you know, ten thousand or five thousand store chains, it feels like that's declining in a big way. >> How about big banks? You think they'll lose control of the payment systems? >> I think they're already starting to, yeah, so, I would say that is, and they're trying to get in to compete, so I think that is on its way, no question. I think that horse is out of the barn. >> So cloud, AI, new apps, new innovation cocktails, software eating the world, everybody is a tech company. Frank Gens, great to have you. >> Dave, always great to see you. >> Alright, keep it right there buddy. You're watching The Cube, from Actifio: Data Driven nineteen. We'll be right back right after this short break. (bouncy electronic music)

>> Live from San Francisco, it's theCUBE, covering DockerCon 18. Brought to you by Docker and it's ecosystem partners. >> Welcome back to theCUBE's coverage of DockerCon 2018 in beautiful San Francisco. It's a stunning day here. We're at Moscone West, I'm Lisa Martin with John Troyer. Very honored to welcome to theCUBE, for the first time, the CEO of Docker Inc., Steve Singh. Welcome, Steve. >> Hi Lisa, very nice to meet you. John, how are you? >> So the general session this morning, standing room only between five and six thousand people. I gotta say a couple things that jumped out at me. One, coolest stage entrance I've ever seen with this great, if you haven't seen it from the livestream, this, like, 3D Golden Gate Bridge and I loved that and I loved the demo of Docker Desktop that your kids did, fueled by Mountain Dew, which actually single handedly got me through college here in San Francisco. So, the momentum that you guys, it was kicking off with a bang. >> Yeah, I, look, I've got a great team and one of the things we wanted to communicate this morning is that you're seeing a massive transformation in the world of software. And this transformation is enabling every company in the world to think about their business in a new light. To think about how their business meets customer needs in a way that's much more personal, in a way that delivers more value. And this is the beauty of where Docker is, right, we have a chance to help literally every company in the world. And that's the part, honestly, that gets me excited, is, like, how do you help other people go create amazing businesses? And so this is, I couldn't be more happy to be at Docker. >> Steve, keying on that, one of the customers on stage today, McKesson. >> Yeah. >> And I loved Rashmi Kumar came out and talked about future-proofing for applications, their infrastructure, their applications in partnership with Docker. >> Yeah. And that implies a certain amount of trust that they have in Docker and Docker's technology platform and in partnering with you. You come from a, so you've been at Docker for about a year now, right? Came in as CEO. Docker is still a small company, a couple hundred folks but punching way above its weight with a huge community impact. How do you, and, you know, you've worked with the biggest companies in the world, how do you come in and establish that trust and help reassure them that you're gonna be a good partner for them and, kinda, what are you seeing with your customers? >> It's a great question, John, and look, there's maybe two or three pieces of how we think about that. The first thing, trust is very human, right? You've gotta know that you're walking into a situation as a vendor and as a customer but really as partners. And you're trying to solve a problem together. Because the reality is, this transformation that companies are going through is the first time in 40 years that this kind of transformation has happened. Second is, the technology stack is still in the early stages. Now, it's incredible and it enables amazing things, but it's still in the early stages. So both of us have to walk into the relationship knowing that, you know what, sometimes it won't go perfect, but guess what? We're gonna be, you know, if it doesn't go perfect we're gonna honor everything we ever committed to you and the same thing on the customer's side. They look at it and say, "I may have actually described my needs differently than what they actually are." And that's what a real partnership is. That's number one. Number two is, trust is driven by culture. And one of the things that I love about Docker is that we see our place in the world but we wanna make sure the customer always has choice. We wanna make sure that if we do a great job the customer will choose to work with us. If we don't, they should have the choice to go somewhere else. And that's what our platform enables, is the choice to be able to work with anybody you'd like to work with, whether you're the developer or you're an operator or you're an IT, I'm sorry, an architect, or the executive. The other piece around this is that part of the value of Docker is it's not just the 400 people of our company, right? There's 5,000 members of our community that are adding value to our community. One of the things that I wanna make sure we do for our community is help them not just innovate on this incredible platform but how do we help them take their innovations to market? And so that's part of the ethos of our company. >> One of the things that you talked about this morning that I thought was really compelling was, you said software innovation used to be, for the last 40 years, it's been driven by tech companies. That's changing. You talked about distributed innovation and distributed consumption. How is Docker helping to, culturally, I don't wanna say instill, but helping to influence, maybe, organizations to be able to distribute innovation and be able to share bi-directionally? >> Yeah, so, a great question, Lisa. So, first of all, is there's a cultural change within companies. When you think about the next generation or the next 40 years being, software being driven from non-technology companies. First of all, we're seeing that. Second is that it requires a cultural change within the business but that change is critical 'cause in the absence of becoming more of a software company your business is gonna be under threat, right? From the competing business. Look at what Netflix has done in media compared to every other media company. That same example applies in every single industry. Now, the way that we help enable that software transformation is to provide a platform that is so easy to use that it doesn't require a lot of training. Now this is complicated platforms, so, yes you have to be a fantastic developer or an IT professional but our job is to take complicated technology like container management software, orchestration layers like Swarm or Kubernetes, service mesh, storage networking, all of those, and make it so simple and easy to use that your IT department can say, "I can use this platform to effectively future-proof your company," right? So, how do you have a platform that you can build every application on, take all of you legacy applications on, run it, and then run it anywhere you like. >> I think that's been one of the through lines for Docker since the very beginning, that developer experience, right? >> Yes. >> And what's been interesting in Docker's development was, I think for both inside and outside, is kind of, what is Docker Inc, and the project versus the company, what is it selling, what's the commercial aspect here? I think, I kind of think back to my experience at BMWare, where there was an enterprise side and then a huge install base of workstation folks. And it's even stronger with Docker because actually now with Docker Desktop as an application development environment or a, you know, I don't wanna, not quite development environment but, you know, the one you announced today with Docker Desktop. That's an even more valuable through line into the Enterprise Edition. >> Yeah. >> But I don't, so, I guess where I'm heading, Steve, is, can you talk a little bit about the commercial situation? Docker EE as the flagship platform. >> Yeah, of course. >> And, kind of, where we are in the maturity journey with customers right now, it's real and important. >> Absolutely John, but you're bringing up a great point within this. Look, we're both, we're a enterprise software company and we're this incredible community where innovation is being brought in by every member of the community. And there's nothing in the world that says you can't do both. This idea that you're one company versus another, this is nonsense, alright? It's a very narrow view of the world. In fact, I would argue that, more and more, companies have to think about that they have multiple people that they serve. Multiple constituents that they serve. In our case we serve the Enterprise IT organization and we also serve developers. And developers are a critical part, not just of our community, that is the life of every company going forward. Which is why we're so excited about this. That's the life of every company. So, Docker Desktop, the reason we're so excited about it is, first of all, it is the easiest way to engage with Docker, to build applications. And then we feel like there's a lot more innovation that we can actually deliver within Docker Desktop. Alright, so a million new developers joined on Docker Desktop this year. In fact, we're growing about seven or eight percent month over month on that. And so you should expect over the next year another million will be on Docker Desktop. But it's incumbent upon us to say, the only way that we continue to earn the trust of that portion of our constituents, that of the developer community, is to make sure we're innovative, to make sure we're open to allow others to innovate on top of us. >> I'd love to, kind of, explore on audience a little bit. So, in terms of innovation, you know, we know that the companies that have the ability to aggressively innovate, and to do that they have to have the budget, are the ones that stay relevant and that are the most competitive. But I think I saw some stats and I think Scott Johnson said that close to 90 percent of IT budgets are spent keeping the lights on. So you have very little dollars to actually drive innovation. So when you're talking with customers, and you said you just met with 25 of Docker Inc's biggest customers just this morning, are you talking to both the developer guys and girls as well as the C suite? >> Yeah. >> What is, how are you connecting and then, maybe, is it a conversation to enable the developers to be able to sell the value up the stack or is it vice versa? >> A couple of things here, so, first of all, John, I didn't answer part of your question which is the growth in our Enterprise customer base. We've literally doubled it year over year, right? So, more than 500 Global 10,000 companies that are using Docker to run their applications and to manage their applications. The way that we engage with our customers is literally across the entire constituents of that organization, right? A developer by themselves, as genius as that group of people are, you can't deliver the application. And delivering the application is just as important as building it. And so the IT organization, the ops organization is critical. And then there's gotta be an overriding objective. What is it we're trying to do? How do we transform ourselves into a software company? You think about, think about just for example, Tesla, right? When you have a company, and I realize Tesla's stock goes up and down, they're always in the news, but when you have a company that's worth more than some of the biggest automotive companies in the world, you have to ask yourself why. Well, part of the reason why isn't just the fact that we've got an electric vehicle that's better for the environment. Part of it is, it's really as much a software company as it is a automotive company. They have incredible amounts of data about how we use our cars, where we go, and in fact the Tesla cars are actually interconnected. And so, that brings a perspective in how you build cars and how they're gonna be used and how they're gonna be consumed that's radically different than if you're just an auto manufacturer. Now, look, Ford and GM and Volvo are all really smart, great companies and they're quickly moving through to themselves being software companies. >> Steve, can you talk a little bit about ecosystems? Microsoft, on stage this morning, a long partnership with them but also here at the show, right, enterprise folks, Dell and Accenture and I'm just looking down the list as well as Google and Amazon, right? So, you need to be partnering with a lot of folks to make all this work. How are you approaching that? >> John, part of the reason for that is, let's start with a simple premise, is something this large, alright, you can't possibly innovate fast enough on your own, alright? There's seven billion amazing people on this planet. The only way you can really drive mass scale global innovation, is you have to be open, right? I'm literally a guy that was born in a mud house in India, so I certainly appreciate the opportunity to participate in the rest of the world's economy. So we have to be open to say, anybody that wants to contribute, can. Now, obviously we think that contribution has to be within an ethos, right? If your definition of contribution is how do you help your own business, that's not good enough. You have to look at this and say, there has to be choice, in our view, choice, security and agility. So, how do we deliver those values or that ethos to our customers? And if you're willing to do that, man we want to partner with everybody in this space. >> Yeah, I, sometimes I despair of the tech press, although I consume a lot of it and if I never have to read another Swarm versus Kubernetes article again I would be happy. But Kubernetes' all over the keynote and it seems like Docker you all have embraced it and in fact are supporting it in very innovative ways with the cloud providers. In terms of ecosystem can you talk a little bit about-- >> Yeah, well, part of the value of Docker is we simplify very complex things and make it available to our customers to consume with little training, little understanding of the underlying deep technology. And the other part is that it comes back to this idea that innovation will happen everywhere. Why should we view the world as it's our solution or, you know, nobody's? That's nonsense, right? Kubernetes is a fantastic orchestrational entity. Why shouldn't it be integrated into the Docker container platform? And so, as we did that, guess what happened? Our customers, all they saw was, instead of conflict they saw the opportunity to work together. In fact it's been amazing for the growth in our business, that's why ewe doubled year over year. >> Now, collaboration is essential and we were talking with Scott Johnson a little bit earlier today about the internal collaboration but also the external collaboration with customers. You talked about partnerships, I think that the MTA program, the Modernization of Traditional Apps launched about a year ago with Avanade, Cisco, HPE and Microsoft. Tell us a little bit about that, probably around the same time that you came to the helm. You're seeing, you know, customers like Visa, PayPal as part of this program, be able to transform and go to the container journey. >> Yeah, and Lisa, this speaks to an observation you made a few minutes ago about the fact that, you know, 85, 90% of IT budgets are fixed before you even walk into the year. So, look, the Docker platform can be used for any kind of application. Legacy apps, next generation apps that run in the data center, next generation apps that run on Edge devices. But if you accept that 90% of the apps that sit within a company are all legacy apps, well, guess what, that's where their cost is. And then if you marry that to the fact that every CIO has this problem that I don't have a lot of money that's free in my budget. Well, how do we help solve that? And the way we chose to solve it is this Docker MTA solution. Modernizing Traditional Apps. Take your traditional apps, run 'em on the Docker platform, run 'em on any infrastructure you like, cut your app and infrastructure management costs in half. Now, then take that savings and then apply it towards innovation. This is why it resonates with CIO's. I mean, as much as they may love Docker and they may love us, they have a business to serve and they're very, very practical in how they think about, you know, going about their business. >> So with that approach, thanks John, how receptive were those enterprise CIO's to going, "You're right, we've gotta start with our enterprise apps." They don't have the luxury of time, of ripping out old infrastructure and building them on containers or microservices architectures. And these are often mission-critical applications. Was that an easy sell, was that, tell me about that. >> (laughs) Well, nothing's easy but the reality is, is that it, they got it quickly, right? Because it speaks directly to their paying point. And what I'm very proud of with my team is not only were we able to deliver a great product for MTA but we're also helping our customers actually make sure they can migrate these apps over. But what's been really a positive, you know, kind of a signal we've seen, that's still the early stages, is that as our customers are moving their legacy apps to Docker and running 'em on new infrastructure, sometimes public cloud, and cutting costs, they're starting to take that cost savings and actually applying it to their next generation apps. So they're not using Docker for new apps. And so that is, that's the benefit of when you really try to solve the problem the way the customer wants to consume it. >> So, Steve, the user conference, very energizing, right. >> Yeah. >> Already the energy's been good here, you've been doing trainings and certifications, there's people behind us, everyone's talking, so that kind of in some ways sets the tone for the year, so as you and your team go back to the office after this week, you know, what are you looking to do and what can we expect out of Docker? >> I'll just speak to two things. First of all, there's so much innovation we still have to deliver. If anything, you know, I would say my team will tell me I might be pushing a little hard. But you know what, this is the fun, you only have x number of years in life and you should make the most of it. So we're really excited about new apps, we're excited about SecurEdge apps. We're excited about, I don't know if you saw the demo this morning, of Armada, which allows you to run any app on any operating system, on any infrastructure, all from a single pane of glass. Our customers love that and they're very excited about that. That said, you know, this is a, it's a big test. We have a huge opportunity to welcome a lot of other companies, so when you walk around and see 5,000 people that see amazing opportunity, not just for Docker, for themselves, right? That's the secret part of Docker that I love. We're creating jobs that didn't exist before, right? I mean, you see kids coming out of college now getting Docker skills and they're using that to grow their IT profession. In fact, I was just at i.c.stars, this is an amazing organization in Chicago that helps individuals who've been displaced in the workforce learn the IT skills required to come back to the workforce and really help run internal IT organizations. Guess what they're learning? They're learning Docker. So that's, these are the kind of things that get us excited. >> And that's essential for enterprise organizations who, that's one of the challenges they face, was, you know, modernizing the data center, which they have to do, but then it requires new skill sets, maybe upskilling, so it's exciting to hear that you're seeing this investment in people that have an opportunity, the proclivity to actually learn this technology. >> Yeah, this is, we are happy because we help customers but we also create amazing new jobs that, you know, are, certainly our community can still benefit from. >> So, last question, the three themes that came out of your session and really the general session this morning was, you talked about someone's choice, agility and security. Are those the three pillars that you believe Docker, upon which Docker sits as really competitive differentiators? >> Amen, amen, number one, but it's also our values, right? This is rooted in our values and when a company performs best is when their values show up in their products. Because then you're never lost, you'll always know what you're focused on. And you know, when I ran Concur, we had this vision, north star, called The Perfect Trip. And our objective was to always go create a delightful business trip experience. And for Docker I wanna make sure that we have a north star. And our north star is our values and they have to translate directly to what actually helps the customer. >> Love that, the north star. Well, hopefully theCUBE is the north star of modern tech media. Steve, thanks so much for stopping by. >> Thank you, it's wonderful to meet you. It was great to meet you as well and congratulations on the big success. >> Thank you. >> We look forward to hearing-- >> Thank you Lisa, thank you John. >> What's coming out in the next year. >> Thank you. >> And we wanna thank you for watching theCUBE, I'm Lisa Martin with John Troyer today live from San Francisco DockerCon 2018. Stick around, we'll be back after a short break. (upbeat music)