>> Announcer: Live from Las Vegas, it's the CUBE, covering Dell EMC World 2017. Brought to you by Dell EMC. (upbeat music) >> Welcome back to Las Vegas, the CUBE's coverage of Dell EMC World. I'm your host, Rebecca Knight, along with my cohost, Keith Townsend. We're joined by Rodney Rogers, he's the CEO of Virtustream. Thanks so much for joining us, Rodney. >> Oh, awesome to be here, always is. >> CUBE veteran, a CUBE guy. >> A CUBE veteran. I was that top 16 thing that you guys-- >> Oh right. >> You know March Madness? >> Yeah. >> CUBE Madness. >> Yeah CUBE Madness, that was awesome. >> I think I made it to the elite, I think I might have made it to the Elite Eight. >> Who knocked you out? >> I know I was Sweet 16. >> Who knocked you out? >> I can't say that man. That still hurts too much. >> Oh, sorry, okay, I didn't mean to bring it up. I didn't mean to bring it up. But before the cameras were rolling, you were talking about how you accomplished the improbable by running these mission critical apps in the cloud. It was a mission impossible to run mission critical. How did you do it? >> Yeah, so when we started Virtustream in early 2009, AWS' EC2 was just coming into mainstream of I.T. awareness I would say. We took a look at what they did. They kind of made a market for creating ubiquitous access to the developers to develop cloud-native apps to run distributive scale type of applications. We were venture-backed, we were a startup, started from scratch. When you're an entrepreneur, you kind of need to build what you know and sell it to who you know. We were enterprise application guys. So we said we'd love to take this unique innovation and apply it to the types of application landscapes that we've grown up knowing and managing and implementing, and things of that nature. And so we specifically purpose-built software to run a cloud infrastructure as a service that focused on solving the engineering problem of IO-intensive scale-up applications. And what you have with those types of applications is IO-centricity as opposed to compute or distributive points of failure, distributive points of computing challenges that the general purpose public clouds are very well suited for. And so we kind of invented this software, we kind of melt the cloud into its molecular components so we could control the individual attributes. And it allows us to run public cloud economics because we're not bound by instant sizes, things of that nature. But it allows us to control throughput in a more acute manner to service the application environment. And that makes us the only guys that provide actually an application latency SLA for the apps to run on our cloud. And that's really critical if you go to a Fortune 500 CI and say put your mission critical, your spinal fluid apps, your order-to-cash apps, in production in a multi-tenant cloud, they've got to be sure that there's not going to be resource contention that'll actually affect and bring that business down. So yeah, we were kind of viewed a bit like we were crazy back then. And we stayed very determined. We were probably the least cool guys in the cloud. Nobody cared what we were doing five years ago. Now as you read in the press, everybody's pivoting towards enterprise. That's where the big adoption cycle is. And we are so confident in our IP and in our first move or position for this type of marketplace. We have an architecture that's purpose-built, software that's purpose-built, particularly for these types of apps. So we're quite excited about where it is today. >> Rodney, I want to get back to that, talking about how you were the least cool guys. But one of your claims to fame is that you helped realize two back-to-back unicorns. These are startups that start from scratch, that are then valued at over a billion dollars. >> Rodney: Yeah. >> What is your secret sauce? How are you able to see so far ahead? >> You know I think kind of, it sounds very basic, but one of the things you see in a venture-backed technology community a lot is product-centric initiatives, so building products for the sake of the product. We really focused on where the market demand was, right. So we saw emerging space in cloud automation. We didn't see that automation servicing what large enterprises spent 60 to 70 percent of their I.T. budgets on. So were just like the big legacy OEM guys that have dedicated hosts. We were kind of more servicing that. And we were like look, you know, last thing in the world needs is a subscale AWS. That'll be venture capital suicide. Let's go prosecute this opportunity and bring this automation, and compete more with the guys who can't compete with us. And so, I think we were back in four or five years ago there's been a lot of religious wars around cloud. It was public versus private. There's API standards, are you going to adopt AWS, there's OpenStack, build your own, things of that nature. And we were, there were many cloud purists. They said, if you can't re-architect, rebuild your app to run in the cloud then don't run it in the cloud, but rebuild and re-architect the app. You're talking about an SAP system at a Fortune 50 company, they've literally spend hundreds of millions of dollars, if not billions of dollars, that's not going to get rewritten, at least not in my business lifetime. >> Yeah, right. (laughing) >> It probably will eventually. And it'll morph into various SAS models. But there's a core part of the applications today, running any business, especially large enterprises, very well suited for what we do. So if there's a secret there, we stay. It wasn't a sexy thing. My co-founder, Kevin Reid, and I, we're kind of the apps antithesis of the Silicon Valley hipster. We were East Coast middle-aged guys (laughing) that focused on enterprise. It couldn't have been less interesting, I think, but we saw a prosecutable opportunity, we brought on some really smart people that wrote software. Cloud infrastructure as a service, you think storage network. It's not really about that, it's about the software that controls it, runs it, drives your feature sets. So we furiously wrote code. We were told we were going to fail everyday. And I'd go on to Twitter and read, 2010, 11, 12. We had no chance of competing with the scale guys. But we did, we created a software reason to exist. We got those economics, we run a much more utilized hardware state than anybody in the industry, much higher memory page utilization so we use that to compete with the procurement scale but we found a prosecutable margin, we're patient and we never pivoted. In a lot of the Silicon Valley language, pivot's an over-aggrandized word. When you pivot, you've generally made a mistake. We never pivoted. >> Let's talk about that focus. You guys were laser-focused on SAP. You say it's not sexy. I have SAP roots, so-- >> Rebecca: He's a geek, he's a geek. >> Yeah, I'm a geek. >> Yeah, he find a lot of, yeah. >> I think you're sexy. (laughing) >> So you guys did some amazing things with automating deployment of SAP. I would call you a COE, cloud of excellence for SAP. So talk about the maturity of moving from focused on SAP to what we hear today about Virtustream being for enterprise applications, not just SAP. Where's the secret sauce or the new advantages that customers can realize? >> So, we started with SAP because again, building what we knew. My co-founders and I had grown up around that ecosystem, so they knew the application very well. So there are two levels to our IP, one is the infrastructure automation, and that's actually agnostic to the app. We run thousands of apps. When you go run an SAP environment in the cloud, maybe 50, 60% of workloads are actually SAP. The rest are all the workloads for the supporting apps that satellite around an interface. The interface management gets quite tricky, you know, things of that nature. Ultimately, the second layer of automation is application control automation that we built. That is very application-specific. So there's a part of our core capability that can run any app, and we do very well with those apps that have that IO-centric challenge, just a different engineering problem. High IO apps place great degrees of memory burden on the underlying infrastructure, versus compute burden for scale-wide apps, generally. What we've now done is we've kind of built the foundation of the business along a horizontal line, we're kind of associated with SAP. >> Right. >> Because of heritage, and then for the application control that we've built, we've now expanded that to a number of different applications. And this week at Dell EMC World, we announced the healthcare vertical, we've gotten big into the federal and public sector, so we wanted to build a foundation using a horizontal technology, and now to really scale this, we're going to develop very specific vertical solutions. >> That's great, well Rodney, thanks so much. We're going to see you tomorrow night at the Gwen Stefani concert, you'll be dancing-- >> Absolutely, I wouldn't miss it. >> We'll both see you, I will say hollaback girl. >> Hollaback girl. >> We'll do a little-- >> We'll be on the tables. >> I will mime it. >> Awesome, awesome. >> Rodney, thanks so much for joining us. >> Pleasure to be here. >> Rebecca: Great to have you on the show. >> Awesome, thank you guys. >> I'm Rebecca Knight, for Keith Townsend. We will have more from Dell EMC World 2017 after this. (upbeat music)

>> Announcer: Live from Las Vegas, it's The CUBE, covering VMworld 2017, brought to you by VMware and its ecosystem partners. >> Hey welcome back everyone, we're live here in Las Vegas. Behind me is the VM Village, this is The CUBE on the ground live at VMworld, I'm John Furrier, with Dave Vellante. Excited to have Sanjay Poonen, Cube VIP new badge that's going out. Five or more times you get a special badge on the website Chief Operating Officer, Chief Customer Operations as well at VMware, Sanjay. >> I think I won one of your hoop madness what do you call those Cube >> John: Yeah, that's right. You did get one of those. >> One of them, so add that to the smallest. >> Came in second to the bot, next year you won. We're going to have to check the algorithm on it that's before we had machine learning, so... Sanjay, great to see you. >> Always a pleasure, John and Dave, thank you for having me here. >> So, you know, in fairness to the VMware management team I got to say, great content program. Usually you can see, kind of, maybe some things that are kind of a little futuristic on the spot big time, on the content. True private cloud, data that Wikibon reported on, you guys are right in line with that. Hybrid-cloud is where its going from multi-cloud. You talk multi-cloud, the Kubernetes orchestration vision for Cloud Native, and even you were doing some interviewing on stage. >> Trying to be Anderson Cooper. >> So, tell us, what's your perspective because you got to balance here you got the reality of the Amazon relationship front and center, delivered big time there, shipping, western region, VMware on-prem, and on-cloud and this new cloud native vector of orchestration and simplicity. >> Yeah, I think, at least from our perspective as I describe in sort of that one chart where I try to put it in Sesame Street simple terms as I like to describe. VMware is one of the most fundamental companies that had a incredible impact in the data center, taking more costs and complexity. We are the defacto backbone of almost everybody's data center, but as the data center moves to the cloud you got to ask yourself, what's the relevance, and we've now shown, same way with the desktop going to mobile, and that's the end-user stuff that we've talked about the last few shows. But let's focus on that cloud part. We really felt as people extended to the public cloud we had to change our strategy to not seek to be a public cloud ourselves, and that's the reason we divested VCloud Air, and focused on significant things we could do with the leading public cloud vendors. As you know, Andy Jassy is a classmate of mine, Pat, Raghu, myself, began the discussions with Andy two years ago, and we announced the deal last year in October. This year having him on stage was, for me, personally a dream come true, and really nice to see that announcement, but we wanted to make sure we were also relevant to some of the other clouds. So earlier this year, in February, we announced Horizon Cloud, the VDI product manager. Today, we announced Kubernetes VMware, Pivotal and Google Form in Kubernetes, IBM Cloud. So all of the top four clouds, AWS, Azure, Google, and IBM have something going with VMware being with Pivotal. That's a big statement to our multi-cloud vision. >> And what a changeover from just two years ago when the ecosystem was, kind of, like a deer in the headlights, not knowing which way to zig or zag, do they cross the street. Where are we going with this? Now the clarity's very clear, cloud, and IoT, and edge with Amazon right there, a lot of the workloads there with multi-cloud. So the question I got to have you is that, as we just talked to the Google guys, is VMware turning into an arms dealer? Because that's a nice position to be at, because you're now driving VMware into multiple clouds. >> I think, you know, when I was on your show last time I described this continent called VMware, and then bridges into them. (John laughs) Let me try another and see if this works. That was good, but it had its 12-month shelf life. Think about the top four public clouds as sort of Mount Rushmore type figures. Each at different heights, AWS, Azure, Google, IBM Cloud, in market share they're the top four. If you want to build a house on top of Mount Rushmore, okay, it could work, but you're going to have to build it on top of one president's head. The moment you want to build it, you need some concrete infrastructure that fills in all the holes between them. That's VMware. It's the infrastructure platform that can sit on top of those varied disparate levels of Mount Rushmore, and make yourself relevant from on. So that's why we fell, whether you want to call that a quintessential platform, an arms provider, whatever it is, for the 4,400 cloud providers, plus the top four or five public cloud players today, VMware has to be relevant. We weren't two or three years ago. Now, for the top three, we're very relevant. >> I call it a binding agent. You're the binding agent across clouds, that's what you're really trying to become. But I wonder if, you know, you're talking about the clarity. I mean, VMware, things are good right now. Two years ago, was looking kind of hmmm, maybe not so good, with license growth down, and now it's up, stock prices double digits, >> Stock prices almost highest >> Okay, so I want to understand the factors behind that. You mentioned the clarity around vCloud Air and the AWS agreement, clearly. The second I want to attest is, the customer reality of cloud, that I can't just ship my business to the cloud, ship my data to the cloud. I got to bring the cloud model to the data. Did that in your conversation with customers, those two factors lead to customers being more comfortable, signing longer term agreements with you guys. Is that a bit part of the tailwind? I wonder if you could discuss that. >> Yeah, Dave I think that's absolutely right. One of the things I've learned in my 25 years of IT is, you want to keep being strategic to your customers. You never want to be in a place where you're in a cul-de-sac. And I started to sense, right, not definitively, but perhaps two years ago, there was a little it of that cul-de-sac perception as our license revenue was growing, particularly on this cloud strategy. Are you trying to be a public cloud, are you not, what's your stance versus AWS as one example, and with vCloud Air, there was a little bit of that hesitation. And if you asked our sales teams, the clarifying of our cloud strategy, which last year was okay but didn't have the substance or the punch. Now you've got an AWS coming on stage, and the other cloud providers where we have substance. I think that clarifying the cloud strategy game the ability for customers to say, even while they were waiting for AWS to be shipped, the last year, three or four quarters are spending of on-premise VMware stuff has gone up, 'cause they see us as strategic. The second aspect I think is our products are now a lot more mature than they were before outside of B sphere. VMware cloud foundation, which consists of storage, networking, VSAN, NSX, and you've talked to those people on your stage, workspace one, end user computing. These have really, really helped, and I think the third factor is, we've really focused on building a very strong team, from Pat, myself, to Raghu, Rajeev, Ray, Mauricio, Robin, I think it's a world-class infrastructure, so we just added Claire Dixon as our Chief Comms Officer on eBay. This is for us now, and everyone in the rest of the organization, we want to continue building a world-class sort of warrior-style strength in numbers. >> Quick follow-up if I may, just a little Jim Kramer moment. And the financial's looking good, you just raised four billion of cheap debt, right the operating cash flow, three billion dollars, and the nice thing about the clarity around vCloud Air is, the capital expenditure, it's just a very capital-efficient model that you guys have now, and I've been saying, you can't say it, but to me the stock's undervalued. When you do the ratios and the multiples on those factors, it looks like a cheap stock to me. >> John: I would love to see you buy it because we have to disclose it, the big position in VMware. >> No, no, no. >> We don't have any stock >> I wish we did. >> We just want to keep growing and the market will fairly value us over time. >> Yeah, it will. >> Well you guys had a good team at VMware, so let's just go back and unpack that. So there was a transformation. Peter Burrows was talking about IBM over the years, had a massive transformation, so really kind of a critical moment for VMware as you're pointing out. We had this great discipline, great technology, great community folks, still there now, as you mentioned, but that transition from saying, we got to post a position, are we in cloud or not, let's make a decision and move on, and as Dave said, it's good economics behind not having a cloud, but I saw a slide that said VMware Cloud, you can still have a cloud strategy using Amazon. Okay, I get that. So the question for you is this. This is the debate that we've been having. Just like in the cryptocurrency market, you're seeing native tokens in cryptography, and then secondary tokens, just one went crazy today. With cloud, we see native cloud, and then new clouds that are going to be specialty clouds. You're seeing a huge increase the long-tail power law of cloud providers that are sitting on other clouds. We think this is a trend. How does VMware help those potential ascensior clouds, the Deloitte clouds, the farming drone cloud that's going to have unique applications? So if applications become clouds, how does VMware help that? >> That's a really good question. So first off, we have 4,400 cloud providers that built their stacks on VMware. And it could be some of these sourced. Probably the best example are companies like Rackspace, OVH, T-Systems. And we're going to continue to empower them, and I think many of them that are in country-specific areas, France, Germany, China, Asia, have laws that require data to be there, and I think they quite frankly have a long existence, and some of them like Rackspace have adapted their model to be partnering with AWS, so we're going to continue to help them, and that's our VMware cloud provider program, that's going to be great. The other phenomenon we see happening is these mini data centers starting to form at what's called the edge. So edge computing is really almost like this mobile device becoming bigger and bigger, it becomes like a refrigerator, it becomes like a mini data center, and it's not sitting in the cloud, it's actually sitting in a branch someplace or somewhere external. VMware Stack could actually become the software that powers that whole thing. So if you believe that basically cloud providers are going to be three or four or five big public clouds, a bunch of cloud providers are country-specific, or vertical-specific, again in these edge computings, VMware becomes quintessentially important to all of those, and we become, whether you call it a platform, a glue, or whatever have you, and our goal is to make sure we're pervasive in all of those. I think it's going to, world is go, going to go from mobile cloud to cloud edge, I mean the whole word of cloud and edge computing is the future. >> So you believe that there potentially could be another second coming of more CSPs exploding big time. >> Especially with edge computing, and country-specific rules. There's some countries that just won't do business with a US public cloud because of whatever reason. >> Well, many of those 4,400 would say, hey, we have to have a niche so we can compete with AWS, so we don't get AWS-ized. So what's your message to those guys now that you're sort of partnered up with AWS? >> Listen, OVH is a good example. Virtuastream's another, I'll give you two good examples. OVH, we sold vCloud Air to them. We are helping those customers be successful. I go to some of those calls jointly with them, they are based in France expending some of their presence to the US, and have got some very specific IP that makes their data centers efficient. We want to help then be successful. Some of the technology that we've built in vCloud Air, we're now licensing to them so we can them be successful. Virtustream, you know Rodney Rogers being on your show. Mission-critical apps is tough for some of the public clouds to get right. They've perfected the art, and I've known them from my SAP days. So there's going to be some of these other clouds that are going to be enormously successful in their niche, and their niche are going to get bigger and bigger. We want to make sure every one of them are successful. And I think there's a big opportunity for multiple vendors to be successful. It won't be just the top three or four public clouds. There will be some boutique usage by country or some horizontal or vertical use case. >> Good for an arms dealer. Well this is my whole point, this is what we've been getting at. We're kind of riffing in real time, little competitive strategy, we got the Harvard MBA and I'm the Babson guy, we'll arm wrestle it out here, maybe do some car karaoke together. But this brings up the question, and I've been saying for a long time on The Cube, and Dave and I have been talking about, we see a long tail, torso neck expanding, where right now it's a knife-edge, long tail, top native clouds and then nobody else. So I think we're going to see this expand out where specialty clouds are going to come out for your reasons. So that is going to open up the door, and those guys they're not going to want their own cloud. >> Sanjay: I agree. >> And that's a channel, an app, who knows? >> You look at an example, one, two other examples of specialty clouds, these are SAS vendors. If you look at two vertical companies, Viva and Guidewire. These are SAS companies that are in the life sciences and insurance space. They've been enormously successful in a space that you're probably maybe a Zapier Salesforce would have done, but they have been focused in a vertical market, insurance and life sciences. And I think there's going to be many providers the same way at the IS level or the PAS level, to also be successful and we welcome, this is going to be a large multi-cloud world. >> Edge cloud. You guys talking about the edge before. Pat had the slide of the pendulum swinging. >> Sanjay: Exactly. >> What is that edge cloud do to the existing business? Is it disruptive or is it evolutionary in your opinion? >> It's disruptive in the sense that, if you've taken a hardware-centric view of that, I think you're going to be disrupted. You take things like software-defined WAN, software-defined networking. So I think the beauty of software is that we're not depending on the size of the hardware that sits underneath it, whether it's a big data center or small edge of the cloud. We're building this to be an all-form factors, and I agree with Marc Andreessen in the sense the software's eating up the world. So given the fact that VMware >> And the edge. >> Yeah, our premise is if there's more computing that's moving to the edge, more software define happening at the edge, we should benefit from that. The hardware vendors will have to adapt, and that's good. But software becomes quintessential. Now I think the edge is showing a little bit of, like, you know, Peter Levine had a story about how cloud computing might be extinct if edge computing takes off. Because what's happening is this machine starts to get bigger and bigger and sits in a branch or in some local place, and it's away from the cloud. So I think it actually is a beautiful world where if you're willing to adapt quickly, which software lets you do, adapt quickly, I think there's a bright future as world moves cloud, mobile, and edge. >> Great stuff, Sanjay, and I was referencing car karaoke, you have on your Twitter >> Oh the carpool karaoke. >> The carpool karaoke. >> It was a fun little thing. Maybe we could do it together, three of us some time. (John laughs) >> I don't do karaoke. Final... >> Just sing, man Just be out there doing your thing. >> I embarrass myself on The Cube enough, I don't need karaoke to help there. >> David: I'm in. (laughs) >> All right, I'll do it. All right, final question for you. >> That's a deal. Let's do it. >> Final question, Michael Dell and we're talking, the world's upside down right now, the computer industry has been thrown up in the air, it's going to be upside down, reconfiguration. You've been in the business for a long time, you've seen many waves. Actually the waves now are pretty clear. What's the fallout going to be from this for customers, for the vendors, for how people buy and build relationships in this new world? >> I think there's a couple of fundamental principles. I talked about one, software, let's not repeat that. I think ecosystems rule. It's really important that you don't look at yourself as having to own the full stack, you know VMware's chosen to be hardware-dependent. Yes, we're owned by Dell, but you've seen us announce a HP partnership here, right? You've seen us do deals with Fujitsu. We had AWS Cloud and Google Cloud. So when you view the world, I love this line by Isaac Newton, he said, "I see clearly because I stand on the shoulders of giants." And to me, that's a very informed strategy to actually guide our ecosystem strategy. Who are the giants in our space? It's the companies that are relevant, with the biggest market caps. Apple, Google, Microsoft, you know, AWS is part of Amazon, and then you know, HP, EMC, Dell, so and so, we list them, by my SAP. If we're relevant to all of them, I'd love to see the momentum of VMworld and the momentum to reinvent start coalescing. Collectively there's probably a hundred thousand people who come to all of our VMware vForums. Andy Jassy told me he expects 40,000 at re:Invent, and maybe across all of his AWS summits, he has a hundred thousand. I was sharing with him an idea. Why don't we have these two amoebas of growing conferences start to coalesce where we mingle, maybe 20% goes to both conferences, but we'll come to your show and be the best software vendor, that hijacks your show, so to speak, (John laughs) I didn't use that word. But we become the best vendor, and we'll roll out the red carpet to you. Now we've got a collection of 200,000, we couldn't have done that on our own. That's an example of AWS and VMware partnering. Now it doesn't have to be exclusively AWS, we could do it with another partner too. Microsoft doesn't show up at the AWS re:Invent conference, we do. Similarly we could maybe do something very specific with Azure and VDI at the Microsoft event, or Kubernetes and Google. So for VMware, our strategy needs to be highly relevant to the power players in the ecosystem, and the guiding our software-defined strategy to make that work, and I think if we do that, you know, you could see this be a 10 billion and bigger company. >> Well it says it's not a zero sum game, >> Sanjay: No, everybody wins. >> And if you can stay in the game, everybody wins, right. >> And I think in the software-defined infrastructure space, we like our odds. We feel we could be the leading player in that software-defined area. >> And it changes and reimagines that relationship between how people consume or procure technology, because the cloud's a mosaic, as Sam Ramji was telling me earlier. >> Oh you had Sam on your show? Wonderful. >> I had him on earlier, and he sees the cloud as a mosaic. >> He's a fantastic thought leader in open source, we were deeply grateful to have him at our event today. >> Andy Jassy, your classmate and friend, collaborator, he was onstage, great performance that he gave. Really talking to your crowd, saying, "We got your back," basically. Not a barney deals, not a optical deal, we are in on it, we're investing, and we got your back. That's interesting. >> We want to be with all of the key leaders that are driving significant parts of the ecosystem, we want to be friends, our tent is large. If everybody. Provided there's, like you said, not a barney announcement, so provided there's value to the customer. If there is, our tent is large, right? We will have point competitors, you know, here and there, and you know me, I'm very competitive. >> John: (laughs) No! >> I've not named competitors too much in this show. >> Really, really. >> But, if anything now, my mind's a lot more focused on the ecosystem, and I want to make this tent large for as many, many players to come here and have a big presence at VMworld. >> And the ecosystem is reforming around this new cloud reality, and the edge is going to change that shape even further. >> Competing on value, competing in a new ecosystem requires a new way to think about relationships. >> If I could give you one other example, then. In the world of mobile, who would have thought that the most important company to mobile security and enterprise to Apple is VMware now, thanks to AirWatch, or to Samsung, whatever it might be, right. This is the world we live in, and we have to constantly adapt ourselves. So maybe next year we'll be talking about IoT or something different, and their ecosystem. >> Sanjay Poonen, COO of VMware, good friend inside The Cube, always candid. Thanks for sharing your commentary and color on the industry, VMware and your personal perspective. I'm John Furrier, Cube coverage live in Las Vegas, here on the ground floor in the VM Village. We'll be right back with more live coverage after this short break.

>> Voiceover: Live from Orlando, Florida. It's The Cube. Covering Sapphire Now. Headlining sponsored by SAP Hana Cloud, the leader in platform-as-a-service. With support from Console Inc., the Cloud Internet company. Now, here's your host John Furrier. >> Hey, welcome back, everyone. We are here live inside The Cube and we are at Sapphire Now, the SiliconeAngle's flagship program. We go out to the events, instruct (indistinct) Want to give a shout out to our sponsors. SAP Hana Cloud Platform, Console Inc., Virtustream, and EMC and Capgemini. Thanks for your support. We really appreciate it and it allows us to get these great events and provide all this great coverage. Over 35 video interviews already up on Youtube, more coming today. Our next guest is Michael Hoch who's a senior vice president of global system immigration at Virtustream. Now an EMC company sold for 1.2 billion dollars. Originally start out in the SAP ecosystem, created so much value over a billion dollars and then exit to sold to EMC. Welcome to The Cube. >> Thank you very much for having me. I'm glad to be here. >> I really love the Virtustream story because to me, we've been watching the progression of Virtustream from the beginning and it really to me, shows the value of the possibility of what's going on in this ecosystem. You sold for 1.2 billion dollars and that's now come, it's out there, it's established. Cat's floating, whatnot. (Michael laughs) But it really shows that you guys started out with an SAP and then pivoted or navigated out to a business model with the Cloud. Probably a lot of value. This is a lesson for the ecosystem because this is an example where SAP didn't have functionality. What you guys were doing, really was an operating model that was underserved. Very underserved. >> Share the story of how it relates to today's ecosystem. >> Sure. So when Virtustream was founded, Cloud was sort of an anathema for the enterprise. Right? That was the time where AWS was starting to shoot off. Microsoft was just dipping their toes in the water. And what Rodney Rogers and Kevin Reed saw is the opportunity was if you could put SAP and large enterprise mission critical applications on the Cloud, that's something that could have tremendous value in the future. At the time, everybody was skeptical. Security concerns. Availability concerns. Management concerns. >> "It'll never work." >> It'll never work. >> They said that about Amazon web services too. >> A few years earlier, that would never work and now they're what? 10 billion or something. So they focused on that market segment for two reasons. One, there was a huge value if it could work and two, they knew SAP. They came from a joint which they sold eventually to Capgemini. They knew SAP and system integration. White Glove Service was critical for enterprise applications to run in the Cloud. So the company was built with a White Glove Service that we started. As well as our technology, the extreme platform, that was really designed to host IO intensive stateful apps. From there, we grew, we did well, we plowed our way through the VC era. The reason why--- >> Wow, big word. Plow. (laughs) It was a sog. >> Yeah, I had been there for over five years and there were some days but in the end, where we got to over 200 SAP production customers, EMC very interested because of the technology, as well as the White Glove Service. And that's where we, about two years ago, started opening up to SI partners. Now, we were proving that this could work. We were winning customers against them and giving in a small way, the types of hand holding that they do on day to day basis. So we started partnering with some SIs to show that they could run it as well. >> Explain that. Take a minute to explain >> Sure. the relationship that Virtustream, now EMC Virtustream, has with SIs and how they engage with you and the value that you provide. >> Sure. Sure. So, we work with SIs in a couple of different ways. So, SIs are known for high touch, high management application services generally. When it came to where's it going to be hosted? Some SIs are asset light and they say, "Well, here's your respects, go buy data centers, go buy your own servers, whatever. Once you got the hardware provisioned, we'll come in and do the application work." Other SIs built their own data centers. Capgemini runs their own data centers and they had their application management work. So you had asset heavy, asset light. In the Cloud world, we were able to come in easily to those asset light situations and now through our software can help those asset heavy companies to build a full Cloud model to support it. In an asset light model, we would provide up to the IAS, maybe OS management and the SI would handle basis, data baseboard, all of the work that they're very good at. We did what we were really good at. >> Yeah, and this a big trend. We put this up yesterday on The Cube. This asset light and if you can take a minute to describe that is the new normal for operations management on the Cloud. Because you don't want to have heavy assets, you want to be more elastic, more agile if you will. >> Agile and responsive and it ties very well into the current trend of enterprises saying, "How much of my data center do I need to keep?". We're in a hybrid world. We're going to be in a hybrid world for the next several years. So there's going to be a large portion of on premise and a large portion of off premise. How do you build a hybrid environment that's scalable where you can pay for what use in the Cloud while still making use of whatever asset you have? So, the SIs look a lot like IT. >> So if everything's asset light or no asset, say we're using the Uber for example, it backs me out to do self-driving cars. (Michael laughs) As reported today in Pittsburgh. You need a data center somewhere. I mean someone's got to have a data center. So there's no diminishing return, there's no race to zero on this asset light. Someone needs to carry the assets. >> Someone needs to carry the assets and that's where Virtustream stepped in. Five or six years ago, someone's going to need to own this but we're going to need to own it at a higher degree of efficiency and still the scalability and security. >> So, this is the issue, right? >> Yeah. >> If you're going to use data driven, you need to have a data center. But here's where I want to get your thoughts on and this ties to the global channel, A-K-A the big system integrators who are doing a lot of stuff. They're have to be nimble to customer needs so they don't have and tell me if I've got this right? They don't have the luxury to provision up a data center at the scale that need in order to get table stakes and start doing business? And that it's easier to go to say Virtustream and other Clouds possibly to get the critical mass of resource to start doing business and being agile do up in software. Did I get that right? >> Well, if we're talking about the systems integrators in particular, they have some solution already. Most of the large ones, already either have their own data centers or co-location relationships but they're very manage hosting focused. What they're trying to get to is an agile responsive way to deliver what they've already been delivering. And that's where the partnership with Capgemini, for example. Our extreme software and their data centers, they're able to use our IAS as burst capabilities or to reach regions that they can't today. That really gets them into a position of looking like a Cloud provider, even though, they're owning their own data centers. They can use us, our IAS, for regions that they're not in or to extend. But they're able to get to that very responsive manner. What Virtustream was built from from the ground up. What we've been doing for the last six and half years. They're adding to their coasting capabilities. You'll see that >> You're accelerating there with other SIs as well. >> with pre-existing stuff. Giving them the ability to go out and do some of the agile dull. >> Don't lose your current customer, put 'em in a modern world. 'Cause this is another interesting trend. You've got ISVs looking like service providers. All the ISVs want to move to a Cloud enabled something. Maybe not full sass but something and then you've got service providers that need to look more like ISVs, software solution driven. >> So everything's flipping around? So the vector's are reversing on all aspects. >> On all aspects. But either way you look at it, they still want to have a consumption based infrastructure behind it. So whether you're asset heavy where you want to convert your data center to do that or you're asset light and you need to access one like Virtustream, it's really the way that it's already tipping in the industry, it's just going to continue over the next three years. >> What's the biggest challenge for developers out there? And the ecosystem partners that you're working with? I know you mentioned your story about Virtustream, schlogging through the VC and being agile, and that's the ups and downs of entrepreneurship. When we've started companies together. I've done companies. It's the same way, highs and lows. But that culture's moving their world (laughs) It's still turbulent to these guys. It is an up and down for these guys. It's a slog at some level because they got to be agile and that's very startup-like. >> To start up, they have to be agile and what I see, even the global SIs, you're talking about billion dollar companies, multi billion dollar companies. They're getting pressured by their customers to say I want an all in one solution and I want to pay for what I use. And their business models aren't necessarily ready for that so they're having to really rethink of they're delivering, how they're innovating, and what they're bringing to their customers. Because if they don't do it that customer is going to go to somebody who does. >> Yeah, I mean the enterprise has to become more entrepreneurial. That is the only way in my opinion that you're going to see the innovation surge and that's not necessarily be entrepreneur, just be entrepreneurial. >> Right (laughs) >> It's a mindset. >> Mindset. >> And you can learn that. You got to get tough skin. >> Tough skin and taking advantage of changing business conditions, ramping down when it's a good >> Iterating. slow seizing. Iterating. This why everybody comes to Cloud. Agility being number one. They say we want to respond to changing business conditions. You're business also has to respond, it can't just be your IT. >> Alright, the age of Cloud, Michael thanks so much. Give you the final word. What's on your plans for this year? What do you got going on? What's the big highlight for Virtustream? >> Sure. So, we've been doing SAP for six years or so, we're branching out into other enterprise applications. You'll be seeing us expand our catalog. We've always been a heterogeneous Cloud but you'll see a more aggressive move into that. And you'll see the scale. We're going to be opening up new locations globally. Thanks to our parent's company EMC. >> Big, big, deep pockets. >> Big deep pockets. >> I bet to so no one gets--- >> Our customers are global. We need to get our offering out in the global market. >> Well, congratulations on the success and the acquisition and certainly being a private company. Dell Technologies, a combination of EMC and Dell, will give you a lot of room to maneuver under public scrutiny. >> I'll come back in the Fall and talk about that. (light laughter) >> Thanks so much. >> This is The Cube. Live in Orlando for SAP Sapphire. I'm John Furrier. You're watching The Cube.

it's the cube covering vmworld 2015 brought to you by VMware and its ecosystem sponsors and now your host dave vellante welcome back to vmworld 2015 we're here at moscone north this is the cube the cube goes out we extract the signal from the noise Brian Gracie and I are really thrilled we have a jay patel here is the senior vice president of product development for VMware cloud services the future I love it yeah great to see you thanks for coming on the cube appreciated thanks so big event here we saw Monday the announcement of you know the hybrid cloud the strategy you laying out a lot of vision it's a lot of products that you can get today a lot that you know have a little road map to them but huge crowd would think the number is Robin told us yesterday 23,000 absolutely great energy so congratulations how do you feel feel great he'll be tired to feel great the excitement the momentum it's really great conversation with customers partners it's been a good VMO how have you spent your time here you do in customer meetings presentations no it's a lot of press interviews for presentations a lot of service provider meetings I'm also responsible with bill for the vCloud air network business mm-hmm it's refreshing to see that we've kind of struck the right balance between having our own service but also enabling our service provider community so so what so talk about the scope of your responsibility so I work for Bill father's I'm part of the vcard survey because air our cloud services be you we have two roles we are a proud provide ourselves which is vCloud air with products or presence in the North America amia Japan and the latest edition big Australia so in this case we're standing up a VMware operated cloud and we're running that we also provide all our IP that we build for a cloud we make that available to our service provider partners we have 4,000 service provider partners who leverage VMware technology to run a VMware power cloud so for us success is delivering on both fronts VMV cloud air as a business but also VMware power cloud and owning the public cloud market with vmware technology that's really my juicy responsible for for strategy the auto service you want P&L absolutely so with Bill I'm responsible for running the service ov powder and then my partner Jeff waters works for bill is responsible to be cloudier network where we take my software and monetize that to the ricotta and not work to help them power their car as well okay so you made native announcements this week maybe you could take us through those and in fact you know what why don't we back up can you kind of give us the journey of we caught the offering yeah absolutely so we caught there a two-year-old service when we first started you know North America predominantly with three data centers we extended to five we added our FedRAMP certified data centers so on one scale we started to provide the geographic reach we opened our UK data center than Germany joint venture with Softbank and then a joint venture with Telstra for Australia in Japan so we've got the geographic reach we were able to kind of serve directly 1880 some odd percent of the core cloud market so let's hear one cloud markets in the regions there we're going native in those market as a service provider we also then took our technology which is vcd which is we cloud director and we're just rolling out an announcement of our 80 product this quarter which is our cloudstack our on-demand platform our cloud platform make that available to our service provider partners and with the rest of the partners there 99 percent coverage of the global cloud market today so VMware today are pretty proud to say you can get a VMware cloud service anywhere in the world ninety-nine percent come so what about the reactions to what was announced this week you know I think from the tech weenies in us we love the remotion across on frame and public cloud that that applause of having the vm move from on prem live into a week where a couple of customers say you know what I've been asking that for three years it's good to see you finally delivering on that a hard technology problem but that was probably the most sexy announcement if you will from a technology perspective on the second side it's all about containers in in that example I'll ask Pat because I asked him to square the circle for me I don't if you heard this question whereas you would always here for instance joe tucci and paul gill senior talk about the advantage that the hyper scalars had because of homogeneity right yet you've said your strategy is to manage heterogeneous cloud environment so how do we do that and Pat's point was well for certain things we have to have homogeneity and I'm presuming that demo is one where you've got to have homogeneity to me the world is going to be about what I call compatibility right how do I make sure that I have a compatible cloud and it's going to be infrastructure compatibility and then more importantly application compatible if I cannot make my application workload portables how I'm going to move the workload to where I needed to run so that big technical challenges are making the workload portable at the infrastructure level because of the hypervisor and some of the work we've done on NSX etc we're making the infrastructure programmable and abstracting away the workload from the infrastructure we're decoupling the binding of the application and the infrastructure from the physical infrastructure and then the next step is how do I make it easily available on any cloud which is the work we're sorry important when you announced the offering four years ago you made a big deal that look we are going to share the IP with our ecosystem you really laid down that commit we got a lot of questions about it absolutely probably got some heat too but but how has that worked out how is it at all you know give us a passing grade I think we could do better then I'll be honest where we've done a great job as we've invested in the people we come up with something called a V cloud technology kit we've taken our best practices and how to build it we release vcd 80 which is a capability but our customers one that we motion capably tomorrow so that lag between us having something we demo to getting the hands of service provider we need a string that time so the work we need to put in place is really delivering and agility and the speed by which they can absorb this technology and stand up in their own cloud environment the area we've done better is we've made made possible new program called an MSP program I managed services provider program where smaller cloud provider doesn't want to stand up their own card can resell a week loud air service so it's it's I would say a good passing rate more work to be done yeah you know one of the big themes this week is one cloud it's any application anybody in one cloud that one cloud for you is not only you know vCloud air it's the vCloud air work helped us understand how big is the vCloud air network not just the number of partners because everybody's got lots of partners but you know put it in proportion how we know roughly how big vCloud air is that the VMware runs what is what is that partner network look like is it is it the typical 8020 model where eighty percent of that business is what does it look like how big is that so so I don't have the exact numbers to share but if I were to do a back of the napkin I'm going to speculate right I would say the vCloud air network plus B cloud air together it's probably bigger or as big as a or someone like the in a public cloud market it's a significant public cloud presence if we're not number two or number three from overall public cloud market spin so let's assume it's a 50 billion dollar market span I would say let's say you know Amazon's thirty percent of it the next twenty percent of it is a week loud air network+ vCloud air it's of that size and scale representative it's a major provider so in the mix today vCloud air is growing fast and it's a big portion but the numbers will always be I believe we cut our network will be a bigger portion than vCloud air at any given time but the whole pillars need to grow in paralyzer market is exploding am I correct that the differentiation really is kind of what you talked about monday is the ability to take that huge install base right that you have and enable it to do what the vision of the promise of the hybrid cloud has always been I mean it nobody else really does that I mean amazon refuses to do that right microsoft kind of has trying to do that you know so maybe can do that at some point and that's really your wheelhouse can you talk about the difference yes so what when we first started our first customers would kick our tires right and they would use it for dev tests and they say you know this stuff looks pretty good they said what if I take some of my vm that are not protected and protect them in avocado and we started to see dr really take off for that was kind of a killer use case now I T is being asked to really look at not building out any more data center spaces they're saying guys we cannot afford to build infrastructure and a natural choice for IT as they're starting to come into the age of cloud is who's the best choice i'm already using vmware on prem the starting to think about a data center extension use case or data center replacement use case they're looking at vcloud as a strategic loud so the exciting news for this week has been the number of customers saying in the next two years I want to be out of the data center business you're on my destination cloud let's solve those hybrid use cases to move data between VMs between the clouds is really what we're seeing the most exciting part so it's that ease of moving workloads is really exciting with so it's SiliconANGLE Wikibon we have some experience we have a you know the crowd chat relationship crowd chat forum is an app that's like it we used to run it and you know Nicole oh that's it by our own servers and it was a nightmare so we decided to go to the club we went to Amazon and our developers you know took some time to get it up there was painful right but once it was up and running it worked well so we have some experience with the various clouds and one of the things we found cuz people always does for SiliconANGLE and the Cuban is hey we should run in our cloud and when we go to investigate we find that certain things aren't there you know things like elastic Beanstalk aren't mature or you know other little things are just in beta etc I wonder if you could give us an indication of how mature any cloud air is from that standpoint you know and how you can you know expect what gives you confidence that you can compete with that pace that Amazon you know we often get dinged in terms of the breadth of capably amazon offer it is pretty impressive the rate at which they're innovating very impressive when you go back to the enterprise workloads and look at the customer use cases they probably 10 or 15 services that are critical the two big gaps we had was we didn't have a database service RDS we didn't have an RDS competitor out there we just announced sequel air this week we didn't have a good object service if you're starting to build something natively in the cloud in an object service the video start to bridge these key gaps with doing that today and Gartner has a metric whether measure the ayahs capability of each of the vendors I'm happy to say that if we were to benchmark today were ahead of Google right behind a jour to be capable wise a complete I aspect in in the what some people would call the pass piece of that that database as a service is part of the interpreters a service is that right so we're starting to add these application services it's my background come from Oracle Iran Oracle's middleware business we're starting to build both organically our services but more importantly vmware is a partner friendly company our customers want their best to breed on vs to work in the cloud so the service is like Jenkins for continuous integration as a service they want to use perforce if that's the source code management system to be available as a repository of recovery so our strategy is to enable our isp ecosystem make them available so you won't see everything coming from the VMware factory but the ecosystem will deliver best of class solutions and services on Macleod air both those are the mounts work is an interesting you know workload I mean you have demand from customers that mean certainly have a working order we were one of the first to say virtualize Oracle with VMware oh damn the torpedoes and work there were a lot of interest there unfortunately Oracle has the licensing practices it forces them and more in a dedicated environment so we can support Oracle but unfortunately because of the right system restriction we have to set them in a dedicated cloud you need specialized hardware to run oracle now that now they may relax that over time I mean it's been their practice in the past to do that all right i mean so you would expect it as there are customers today use two things either leave the data on Prem and take the web tier in the front end and then connect back to to database like Oracle sometimes they're just moving out at Oracle using a my sequel cluster to run their web scale websites open that's the choice though that larry has to make it a point of which the customer says okay if you want to lock me into the hole or call approach at the risk of losing my database business and then if that happens then Oracle will loosen up on those recover that's how that work will behave the customers will drive them you're ready to catch him with what do you what do you think so so if i looked back at amazon web services two years in only a couple of services a handful of them you guys are two years in you know handful of services but if i look at who their customers say it's it's directly focused on developers i mean they're going after developers the number of services they come out i mean it's 10 15 20 30 a year how do you who is your customer what's your developer story because right now i mean if i'm talking about moving VMS there's not a developer on the planet who cares about moving in vm how do you talk to a developer and get them to come to your so let's address both sides so we definitely our IT focus and we have an inside-out strategy when its IT driven it's about moving workloads from on-prem to cloud when you have a developer conversations about building that new applications the application environment in the enterprise is not just about green field but off for an application extension I want to add a mobile front end to my enterprise application in front of my sa fie my ERP system etc we've announced mobile backend service for example as a service on top of each other so we're starting to provide those selective use cases where our customers our enterprise IT developers if you will that's our target it's the enterprise IT developer who's looking to put a mobile front end was looking to build a digital experience that's integrated back into the into the use case and you saw the hybrid extension use case and we talked about is really what's driving this so developer story driven by a customer demand around mobile as a spearhead and building the rich set of service so we've been talking about this a little bit this week and we had a good discussion with Pat about it he's like look is the the the are the operations guys you know or the developers really want to become operations guys it's really a lot of your guys are really ops dev right supporting the developer community that's what you're trying to do is enable suppose it's both providing them the frameworks and the tools so in the new develop and it's not about building an application ground up its composing applications taking services and putting them together and we're offering those services but also giving them the tool chain to build new application than an agile way so I guess it has to be both right because you're trying to expand your tan absolutely new areas how do you how do you take advantage of all the assets in the Federation I mean we had rodney rogers on from virtustream he was talking about you know going after SI p and maybe you you don't need just one cloud you can use multiple you announced an object service but it's not based on emc we have an object service with emc as well right both why we have the clout you know the cloud foundry service you know I can I can install it but I can't get it why isn't the Federation stuff tighter why isn't it going faster I mean it is in the Federation you will see this accelerate and I think we if you look at the last year in terms of where progress has been made EMC object service available today our data protection built on albemarle so very strong leverage around that in the pillow case most of our customers use paths for private cloud that's been the design center we have a pws enterprises you the multi-tenant cloud that tends to be more a trial code so we're really about the enterprise customer and the enterprise customers saying hey give me a dedicated pass on frame or ricotta we support that well they're not asking for our multi-tenant kind of engine yard or Uhuru coo that's not our base that tends to be the smaller developer where again focused on the enterprise mark so what's a typical customer scenario like you guys you get a hardcore VMware customer and you start talking to them about the opportunities for hybrid cloud I'll give you three or four different one is to give you the breadth of them right the simple use case if it's an IT operations driven one it's driven around data center migration it's around data sent extension we have the likes of large University that that's looking to complete shut down our data center and move into that so that's kind of a data center use case we have Columbia sports or we're looking at how harley-davidson harley-davidson has the entire dealer network the point of sale system running on vCloud air we have likes of betfair they built an application is more cloud native that dynamically when you were betting and you're right at the last minute you need a spike up capacity their application seamlessly spawns into week our air takes capacity and delivers that that's a cloud native application that's built around that so we see the spread breath off from everything from data center use cases extension capacity on demand use cases all the way to dev test use cases dr to really cloud native applications in that span the spectrum with mobile being the newest addition we have farmers who starting to build a mobile app you so the my vmware ab that you're using today for vmworld that's running on vCloud air using our mbaise service so we're starting to get covered an entire spectrum of enterprise use cases today yeah I've and I you know just just as a piece of i mean i would i would say the ability for you guys to tell that story right now it comes across as being vmware centrum you know very vm sin infrastructure centric you're allowing the rest of the cloud industry to sort of define for you what that is so if that's really your story if your customers are saying look I have a ton of applications you may want to extend them to mobile but I want to want to move them for data center and that's a huge space you know we are forecast even out until 2016 only say that public cloud becomes a third there's a huge amount of enterprise applications that need to go somewhere you know move forward somehow and they need to know what how to help with that so I leave you with that if you have s ap as a workload and you can move the workload on frame or cloud and then extend the workload with mobile any great SI p to Salesforce this is direction where we're going you saw the keynote it had mobile front and center it showed a demo of a mobile app that's been this is clearly move VMware moving from infrastructure to application services extending the reach beyond just infrastructure capacity building that new digital application at Sunday's experience at Sanjay's background so AJ what last question what keeps you up at night not not personal stuff but business you know what keeps me up at night is really how do we scale this business even faster how do i meet the demand my challenges that moved from getting customers to scaling the service fast enough to support the customer the conversation had with some of my customers today they would want to move thousands of vm in the next six months how do we ramp up so quickly how do we support them how do we advise them how do we get this scale going so the challenge is going to be how do we scale quickly I mean that is the floodgates are starting to open up more critical you got demand on the one hand I'm competition the other you've got the scale and you of course you know you don't have that lock in at the top end of the apps layer so you know that game well absolutely she's got skill so his delivery is awesome a great conversation really appreciate you coming so much appreciate you meeting you thank you so much I keep rising everybody will be back to wrap vmworld 2015 right after this you