>>Hello everyone and welcome back to Motor City, Michigan. We're live from the Cube and my name is Savannah Peterson. Joined this afternoon with my co-host John Ferer. John, how you doing? Doing >>Great. This next segment's gonna be awesome about application modernization, scaling pluses. This is what's gonna, how are the next generation software revolution? It's gonna be >>Fun. You know, it's kind of been a theme of our day today is scale. And when we think about the complex orchestration platform that is Kubernetes, everyone wants to scale faster, quicker, more efficiently, and our guests are here to tell us all about that. Please welcome to Char and Andy, thank you so much for being here with us. You were on the Red Hat OpenShift team. Yeah. I suspect most of our audience is familiar, but just in case, let's give 'em a quick one-liner pitch so everyone's on the same page. Tell us about OpenShift. >>I, I'll take that one. OpenShift is our ES platform is our ES distribution. You can consume it as a self-managed platform or you can consume it as a managed service on on public clouds. And so we just call it all OpenShift. So it's basically Kubernetes, but you know, with a CNCF ecosystem around it to make things more easier. So maybe there's two >>Lights. So what does being at coupon mean for you? How does it feel to be here? What's your initial takes? >>Exciting. I'm having a fantastic time. I haven't been to coupon since San Diego, so it's great to be back in person and see old friends, make new friends, have hallway conversations. It's, it's great as an engineer trying to work in this ecosystem, just being able to, to be in the same place with these folks. >>And you gotta ask, before we came on camera, you're like, this is like my sixth co con. We were like, we're seven, you know, But that's a lot of co coupons. It >>Is, yes. I mean, so what, >>Yes. >>Take us status >>For sure. Where we are now. Compare and contrast co. Your first co con, just scope it out. What's the magnitude of change? If you had to put a pin on that, because there's a lot of new people coming in, they might not have seen where it's come from and how we got here is maybe not how we're gonna get to the next >>Level. I've seen it grow tremendously since the first one I went to, which I think was Austin several years ago. And what's great is seeing lots of new people interested in contributing and also seeing end users who are trying to figure out the best way to take advantage of this great ecosystem that we have. >>Awesome. And the project management side, you get the keys to the Kingdom with Red Hat OpenShift, which has been successful. Congratulations by the way. Thank you. We watched that grow and really position right on the wave. It's going great. What's the update on on the product? Kind of, you're in a good, good position right now. Yeah, >>No, we we're feeling good about it. It's all about our customers. Obviously the fact that, you know, we have thousands of customers using OpenShift as the cloud native platform, the container platform. We're very excited. The great thing about them is that, I mean you can go to like OpenShift Commons is kind of a user group that we run on the first day, like on Tuesday we ran. I mean you should see the number of just case studies that our customers went through there, you know? And it is fantastic to see that. I mean it's across so many different industries, across so many different use cases, which is very exciting. >>One of the things we've been reporting here in the Qla scene before, but here more important is just that if you take digital transformation to the, to its conclusion, the IT department and developers, they're not a department to serve the business. They are the business. Yes. That means that the developers are deciding things. Yeah. And running the business. Prove their code. Yeah. Okay. If that's, if that takes place, you gonna have scale. And we also said on many cubes, certainly at Red Hat Summit and other ones, the clouds are distributed computer, it's distributed computing. So you guys are focusing on this project, Andy, that you're working on kcp. >>Yes. >>Which is, I won't platform Kubernetes platform for >>Control >>Planes. Control planes. Yes. Take us through, what's the focus on why is that important and why is that relate to the mission of developers being in charge and large scale? >>Sure. So a lot of times when people are interested in developing on Kubernetes and running workloads, they need a cluster of course. And those are not cheap. It takes time, it takes money, it takes resources to get them. And so we're trying to make that faster and easier for, for end users and everybody involved. So with kcp, we've been able to take what looks like one normal Kubernetes and partition it. And so everybody gets a slice of it. You're an administrator in your little slice and you don't have to ask for permission to install new APIs and they don't conflict with anybody else's APIs. So we're really just trying to make it super fast and make it super flexible. So everybody is their own admin. >>So the developer basically looks at it as a resource blob. They can do whatever they want, but it's shared and provisioned. >>Yes. One option. It's like, it's like they have their own cluster, but you don't have to go through the process of actually provisioning a full >>Cluster. And what's the alternative? What's the what's, what's the, what's the benefit and what was the alternative to >>This? So the alternative, you spin up a full cluster, which you know, maybe that's three control plane nodes, you've got multiple workers, you've got a bunch of virtual machines or bare metal, or maybe you take, >>How much time does that take? Just ballpark. >>Anywhere from five minutes to an hour you can use cloud services. Yeah. Gke, E Ks and so on. >>Keep banging away. You're configuring. Yeah. >>Those are faster. Yeah. But it's still like, you still have to wait for that to happen and it costs money to do all of that too. >>Absolutely. And it's complex. Why do something that's been done, if there's a tool that can get you a couple steps down the path, which makes a ton of sense. Something that we think a lot when we're talking about scale. You mentioned earlier, Tohar, when we were chatting before the cams were alive, scale means a lot of different things. Can you dig in there a little bit? >>Yeah, I >>Mean, so when, when >>We talk about scale, >>We are talking about from a user perspective, we are talking about, you know, there are more users, there are more applications, there are more workloads, there are more services being run on Kubernetes now, right? So, and OpenShift. So, so that's one dimension of this scale. The other dimension of the scale is how do you manage all the underlying infrastructure, the clusters, the name spaces, and all the observability data, et cetera. So that's at least two levels of scale. And then obviously there's a third level of scale, which is, you know, there is scale across not just different clouds, but also from cloud to the edge. So there is that dimension of scale. So there are several dimensions of this scale. And the one that again, we are focused on here really is about, you know, this, the first one that I talk about is a user. And when I say user, it could be a developer, it could be an application architect, or it could be an application owner who wants to develop Kubernetes applications for Kubernetes and wants to publish those APIs, if you will, and make it discoverable and then somebody consumes it. So that's the scale we are talking about >>Here. What are some of the enterprise, you guys have a lot of customers, we've talked to you guys before many, many times and other subjects, Red Hat, I mean you guys have all the customers. Yeah. Enterprise, they've been there, done that. And you know, they're, they're savvy. Yeah. But the cloud is a whole nother ballgame. What are they thinking about? What's the psychology of the customer right now? Because now they have a lot of choices. Okay, we get it, we're gonna re-platform refactor apps, we'll keep some legacy on premises for whatever reasons. But cloud pretty much is gonna be the game. What's the mindset right now of the customer base? Where are they in their, in their psych? Not the executive, but more of the the operators or the developers? >>Yeah, so I mean, first of all, different customers are at different levels of maturity, I would say in this. They're all on a journey how I like to describe it. And in this journey, I mean, I see a customers who are really tip of the sphere. You know, they have containerized everything. They're cloud native, you know, they use best of tools, I mean automation, you know, complete automation, you know, quick deployment of applications and all, and life cycle of applications, et cetera. So that, that's kind of one end of this spectrum >>Advanced. Then >>The advances, you know, and, and I, you know, I don't, I don't have any specific numbers here, but I'd say there are quite a few of them. And we see that. And then there is kind of the middle who are, I would say, who are familiar with containers. They know what app modernization, what a cloud application means. They might have tried a few. So they are in the journey. They are kind of, they want to get there. They have some other kind of other issues, organizational or talent and so, so on and so forth. Kinds of issues to get there. And then there are definitely the quota, what I would call the lag arts still. And there's lots of them. But I think, you know, Covid has certainly accelerated a lot of that. I hear that. And there is definitely, you know, more, the psychology is definitely more towards what I would say public cloud. But I think where we are early also in the other trend that I see is kind of okay, public cloud great, right? So people are going there, but then there is the so-called edge also. Yeah. That is for various regions. You, you gotta have a kind of a regional presence, a edge presence. And that's kind of the next kind of thing taking off here. And we can talk more >>About it. Yeah, let's talk about that a little bit because I, as you know, as we know, we're very excited about Edge here at the Cube. Yeah. What types of trends are you seeing? Is that space emerges a little bit more firmly? >>Yeah, so I mean it's, I mean, so we, when we talk about Edge, you're talking about, you could talk about Edge as a, as a retail, I mean locations, right? >>Could be so many things edges everywhere. Everywhere, right? It's all around us. Quite literally. Even on the >>Scale. Exactly. In space too. You could, I mean, in fact you mentioned space. I was, I was going to >>Kinda, it's this world, >>My space actually Kubernetes and OpenShift running in space, believe it or not, you know, So, so that's the edge, right? So we have Industrial Edge, we have Telco Edge, we have a 5g, then we have, you know, automotive edge now and, and, and retail edge and, and more, right? So, and space, you know, So it's very exciting there. So the reason I tag back to that question that you asked earlier is that that's where customers are. So cloud is one thing, but now they gotta also think about how do I, whatever I do in the cloud, how do I bring it to the edge? Because that's where my end users are, my customers are, and my data is, right? So that's the, >>And I think Kubernetes has brought that attention to the laggards. We had the Laed Martin on yesterday, which is an incredible real example of Kubernetes at the edge. It's just incredible story. We covered it also wrote a story about it. So compelling. Cuz it makes it real. Yes. And Kubernetes is real. So then the question is developer productivity, okay, Things are starting to settle in. We've got KCP scaling clusters, things are happening. What about the tool chains? And how do I develop now I got scale of development, more code coming in. I mean, we are speculating that in the future there's so much code in open source that no one has to write code anymore. Yeah. At some point it's like this gluing things together. So the developers need to be productive. How are we gonna scale the developer equation and eliminate the, the complexity of tool chains and environments. Web assembly is super hyped up at this show. I don't know why, but sounds good. No one, no one can tell me why, but I can kind of connect the dots. But this is a big thing. >>Yeah. And it's fitting that you ask about like no code. So we've been working with our friends at Cross Plain and have integrated with kcp the ability to no code, take a whole bunch of configuration and say, I want a database. I want to be a, a provider of databases. I'm in an IT department, there's a bunch of developers, they don't wanna have to write code to create databases. So I can just take, take my configuration and make it available to them. And through some super cool new easy to use tools that we have as a developer, you can just say, please give me a database and you don't have to write any code. I don't have to write any code to maintain that database. I'm actually using community tooling out there to get that spun up. So there's a lot of opportunities out there. So >>That's ease of use check. What about a large enterprise that's got multiple tool chains and you start having security issues. Does that disrupt the tool chain capability? Like there's all those now weird examples emerging, not weird, but like real plumbing challenges. How do you guys see that evolving with Red >>Hat and Yeah, I mean, I mean, talking about that, right? The software, secure software supply chain is a huge concern for everyone after, especially some of the things that have happened in the past few >>Years. Massive team here at the show. Yeah. And just within the community, we're all a little more aware, I think, even than we were before. >>Before. Yeah. Yeah. And, and I think the, so to step back, I mean from, so, so it's not just even about, you know, run time vulnerability scanning, Oh, that's important, but that's not enough, right? So we are talking about, okay, how did that container, or how did that workload get there? What is that workload? What's the prominence of this workload? How did it get created? What is in it? You know, and what, what are, how do I make, make sure that there are no unsafe attack s there. And so that's the software supply chain. And where Red Hat is very heavily invested. And as you know, with re we kind of have roots in secure operating system. And rel one of the reasons why Rel, which is the foundation of everything we do at Red Hat, is because of security. So an OpenShift has always been secure out of the box with things like scc, rollbacks access control, we, which we added very early in the product. >>And now if you kind of bring that forward, you know, now we are talking about the complete software supply chain security. And this is really about right how from the moment the, the, the developer rights code and checks it into a gateway repository from there on, how do you build it? How do you secure it at each step of the process, how do you sign it? And we are investing and contributing to the community with things like cosign and six store, which is six store project. And so that secures the supply chain. And then you can use things like algo cd and then finally we can do it, deploy it onto the cluster itself. And then we have things like acs, which can do vulnerability scanning, which is a container security platform. >>I wanna thank you guys for coming on. I know Savannah's probably got a last question, but my last question is, could you guys each take a minute to answer why has Kubernetes been so successful today? What, what was the magic of Kubernetes that made it successful? Was it because no one forced it? Yes. Was it lightweight? Was it good timing, right place at the right time community? What's the main reason that Kubernetes is enabling all this, all this shift and goodness that's coming together, kind of defacto unifies people, the stacks, almost middleware markets coming around. Again, not to use that term middleware, but it feels like it's just about to explode. Yeah. Why is this so successful? I, >>I think, I mean, the shortest answer that I can give there really is, you know, as you heard the term, I think Satya Nala from Microsoft has used it. I don't know if he was the original person who pointed, but every company wants to be a software company or is a software company now. And that means that they want to develop stuff fast. They want to develop stuff at scale and develop at, in a cloud native way, right? You know, with the cloud. So that's, and, and Kubernetes came at the right time to address the cloud problem, especially across not just one public cloud or two public clouds, but across a whole bunch of public clouds and infrastructure as, and what we call the hybrid clouds. I think the ES is really exploded because of hybrid cloud, the need for hybrid cloud. >>And what's your take on the, the magic Kubernetes? What made it, what's making it so successful? >>I would agree also that it came about at the right time, but I would add that it has great extensibility and as developers we take it advantage of that every single day. And I think that the, the patterns that we use for developing are very consistent. And I think that consistency that came with Kubernetes, just, you have so many people who are familiar with it and so they can follow the same patterns, implement things similarly, and it's just a good fit for the way that we want to get our software out there and have, and have things operate. >>Keep it simple, stupid almost is that acronym, but the consistency and the de facto alignment Yes. Behind it just created a community. So, so then the question is, are the developers now setting the standards? That seems like that's the new way, right? I mean, >>I'd like to think so. >>So I mean hybrid, you, you're touching everything at scale and you also have mini shift as well, right? Which is taking a super macro micro shift. You ma micro shift. Oh yeah, yeah, exactly. It is a micro shift. That is, that is fantastic. There isn't a base you don't cover. You've spoken a lot about community and both of you have, and serving the community as well as your engagement with them from a, I mean, it's given that you're both leaders stepping back, how, how Community First is Red Hat and OpenShift as an organization when it comes to building the next products and, and developing. >>I'll take and, and I'm sure Andy is actually the community, so I'm sure he'll want to a lot of it. But I mean, right from the start, we have roots in open source. I'll keep it, you know, and, and, and certainly with es we were one of the original contributors to Kubernetes other than Google. So in some ways we think about as co-creators of es, they love that. And then, yeah, then we have added a lot of things in conjunction with the, I I talk about like SCC for Secure, which has become part security right now, which the community, we added things like our back and other what we thought were enterprise features needed because we actually wanted to build a product out of it and sell it to customers where our customers are enterprises. So we have worked with the community. Sometimes we have been ahead of the community and we have convinced the community. Sometimes the community has been ahead of us for other reasons. So it's been a great collaboration, which is I think the right thing to do. But Andy, as I said, >>Is the community well set too? Are well said. >>Yes, I agree with all of that. I spend most of my days thinking about how to interact with the community and engage with them. So the work that we're doing on kcp, we want it to be a community project and we want to involve as many people as we can. So it is a heavy focus for me and my team. And yeah, we we do >>It all the time. How's it going? How's the project going? You feel good >>About it? I do. It is, it started as an experiment or set of prototypes and has grown leaps and bounds from it's roots and it's, it's fantastic. Yeah. >>Controlled planes are hot data planes control planes. >>I >>Know, I love it. Making things work together horizontally scalable. Yeah. Sounds like cloud cloud native. >>Yeah. I mean, just to add to it, there are a couple of talks that on KCP at Con that our colleagues s Stephan Schemanski has, and I, I, I would urge people who have listening, if they have, just Google it, if you will, and you'll get them. And those are really awesome talks to get more about >>It. Oh yeah, no, and you can tell on GitHub that KCP really is a community project and how many people are participating. It's always fun to watch the action live to. Sure. Andy, thank you so much for being here with us, John. Wonderful questions this afternoon. And thank all of you for tuning in and listening to us here on the Cube Live from Detroit. I'm Savannah Peterson. Look forward to seeing you again very soon.

(bright upbeat music) >> Hello, everyone, and welcome to this #CUBEConversation here in Palo Alto, California. I'm John Furrier, host of "theCUBE." We have the co-founder and CTO of Armis here, Nadir Izrael. Thanks for coming on. Appreciate it. Armis is hot company, RSA, we just happened. Last week, a lot of action going on. Thanks for coming on. >> Thank you for having me. Sure. >> I love CTOs and co-founders. One, you have the entrepreneurial DNA, also technical in a space with cyber security, that is the hottest most important area. It's always been important, but now more than ever, as the service areas are everywhere, tons of attacks, global threats. You got national security at every level, and you got personal liberties for privacy, and other things going on for average citizens. So, important topic. Talk about Armis? Why did you guys start this company? What was the motivation? Give a quick commercial what you guys do, and then we'll get into some of the questions around, who you guys are targeting. >> Sure, so yeah, I couldn't agree more about the importance of cybersecurity, especially I think in these days. And given some of the geopolitical changes happening right now, more than ever, I would say that if we go back 6.5 years or so, when Armis was founded, we at the time talked to dozens of different CIOs, CSOs, it managers. And every single one of them told us the same thing. And this was at least to me surprising at the time. We have no idea what we have. We have no idea what the assets that are connected to our network, or our environment are. At the time, when we started Armis, we thought this was simply, let's call it the other devices. IOT, OT, all kinds of different buzzwords that were kind of flying around at the time, and really that's, what we should focus on. But with time, what we understood, it's actually a problem of scale. Organizations are growing massively. The diversity of different assets they have to deal with is incredible. And if 6.5 or 7 years ago, it was all about just growth of actual physical devices, these days it's virtual, it's containerized, it's cloud-based. It's actually quite insane. And organizations find themselves really quickly dealing with billions of assets within their environment, but no real way to see, account for them, and be able to manage them. That's what Armis is here to solve. It's here to bring back visibility and order into the mix. It's here to bring a complete map of everything within the organization, and the ability to manage different security processes on top of that. And it couldn't have come, I think at a better time for organizations, because the ability to manage these days, the attack surface of an organization, understand where are different weak spots, what way to invest in? They start and end with a complete asset map, and that's really what we're here to solve. >> As I look at your story and understand what you guys are doing, certainly, a lot of great momentum at RSA. But also digging under the hood, you guys really crack the code with on the scale side as well. And also it's lockstep with the environment. If you look at the trends that we've been covering on "theCUBE," system on chip, you're seeing a lot of Silicon action going on, on all the hyperscalers. You're starting to see, again, you mentioned IOT devices and OT, IP enabled processors. I mean, that's basically you can run multi-threaded applications on a light bulb, basically. So, you have these new things going on that are just popping in into the environment. Just people are hanging them on the network. So, anything on the network is risk and that's happening massively, so I see that. But also you guys have this contextualization capability, scope the problem statement for us? How hard is it to do this? Because you got tons of challenges. What's the scale of the problem that you guys have been solving? 'Cause it's not easy. I mean, it's not network management, not just doing auto discovery, there's a lot of secret sauce there, scope the problem? >> Okay, so first of all, just to get a measure of how difficult this is, organizations have been trying to solve this for the better part of the last two decades. I think even when the problem was way smaller, they've still been struggling with being able to do this. It's an age old problem, that for the most part, I got to say that when I describe the problem the way that I did, usually, what the reaction from clients are, "Yes, I'd love for you to solve that." "I just heard this pitch from like five other vendors and I've yet to solve this problem. So, how do you do it?" So, as I kind of scope this, it's also a measure of just basically, how do you go about solving a complex situation where, to kind of list out some of the bold claims here in what I said. Number one, it's the ability to just fingerprint and be able to understand what your assets are. Secondly, being able to do it with very dirty data, if you will. I would say, in many cases, solutions that exist today, basically tell clients, or tell the users, were as good as the data that you provide us. And because the data isn't very good, the results aren't very good. Armis aspires to do something more than that. It aspires to create a logically perfect map of your assets despite being hindered by incomplete and basically wrong data, many times. And third, the ability to infer things about the environment where no source data even exists. So, to all of that, really Armis' approach is pretty straightforward, and it relies on something that we call our collective intelligence. We basically use the power and scale of these masses to our advantage, and not just as a shortcoming. What I mean by that, is Armis today tracks overall, over 2 billion assets worldwide. That's an astounding number. And it thanks to the size of some of the organization that we work with. Armis proudly serves today, for instance, over 35 of Fortune 100. Some of those environments, let me tell you, are huge. So, what Armis basically does, is really simple. It uses thousands, tens of thousands, hundreds of thousands sometimes, of instances of the same device and same assets to basically figure out what it is. Figure out how to fingerprint it best. Figure out how to marry conflicting data sources about it and figure out what's the right host name? What's the right IP address? What are all the different details that you should know about it? And be able to basically find the most minimalist fingerprints for different attributes of an asset in a changing environment. It's something that works really, really well. It's something that we honestly, may have applied to this problem, but it's not something that we fully invented. It's been used effectively to solve other problems as well. For instance, if you think about any kind of mapping software. And I use that analogy a lot. But if you think about mapping software, I happened to work for Google in the past, and specifically on Google Map. So, I know quite a bit about how to solve similar problems. But I can tell you that you think about something like a mapping software, it takes very dirty, incomplete data from lots of different sources, and creates not a pixel perfect map, but a logically perfect map for the use cases you need it to be. And that's exactly what Armis strives to do. Build the Google Maps, if you will, of your organization, or the kind of real time map of everything, and be able to supply that or project that for different business processes. >> Yeah, I love the approach, and I love that search analogy. Discover is a big part of mapping as you know, and reasoning in there with the metadata you have and the dirty data is critical. And by the way, we love bold statements on "theCUBE," because as long as you can back 'em up, then we'll dig into that. But let's back up some of those bold claims. Okay, you have a lot of devices, you've got the collective intelligence. How do you manage the real time nature of devices changing in real time? 'Cause if you do fingerprint on it, and you got some characteristics of the assets in the map, what happens in real time? How fast are you guys managing that? What's the process for that? >> So, very quickly, I think another quick analogy I like to use, because I think it orients people around kind of how Armis operates, is imagine that Armis is kind of like a Shazam for assets. We take different attributes coming from your environment, and we match it up, that collective intelligence to figure out what that asset is. So, we recognize an asset based off of its behavioral fingerprint, or based off of different attributes, figure out what it is. Now, if you take something that recognizes tunes on the radio or anything like that, it's built pretty similarly. Once you have access to different sources. Once we see real environments that introduce new devices or new assets, Armis is immediately learning. It's immediately taking those different queues, those different attributes and learning from them. And to your point, even if something changes its behavioral fingerprint. For instance, it gets updated, a new patch rolls out, something that changes a meaningful aspect of how that asset operates, Armis sees so many environments, and so much these days that it reacts in almost real time to the introduction of these new things. A patch rolls out, it starts changing multiple devices and multiple different environments around the world, Armis is already learning and adapting this model for the new type of asset and device out there. It works very quickly, and it's part of the effectiveness of being able to operate at the scale that we do. >> Well, Nadir, you guys got a great opportunity there at Armis. And as co-founder, you must be pretty pumped, actually working hard, stay up to date, and got a great, great opportunity there. How was RSA this year? And what's your take on the landscape? Because you're kind of in this, I call the new category of lockstep with an environment. Obviously, there's no perimeter, everyone knows that. Service area is the whole internet, basically, distributed computing paradigms and understanding things like discovery and mapping data that you guys are doing. And it's a data problem as well. It's a lot of problems that you guys are solving. But the industry's got some old beggars, as I still hear endpoint protection, zero trust. I hear trust, if you're talking about supply chain, software supply chain, S bombs, you mentioned in a previous interview. You got software supply chain issues with open source, 'cause everything's open source now on infrastructure, so that's happening. How do you manage all that? I mean, is it zero trust or is it trust? 'Cause as you hear, I hear you talking about Armis, it's like, you got to have trusted components in there and you got to trust the data. So, that's not zero trust, that's trust. So, where zero trust and trust solve? What's your take on that? How do you resolve? What's your reaction to that? >> Usually, I wait for someone else to bring up the zero trust buzzword before I touch on that. So, because to your point, it's such an overused buzzword. But let me try and tackle that for a second. First of all, I think that Armis treats assets in a way as, let's call it the vessels of everything. And what I mean by that, is that at a very atomic aspect, assets are the atoms of the environment. They're the vessels of everything. They're the vessels of vulnerabilities. There's the vessels of actual attacks. Like something, some asset needs to exist for something to happen. And every aspect of trust or zero trust, or anything like that applies to basically assets. Now, to your point, Armis, ironically, or like a lot of security tools, I think it assists greatly or even manages a zero trust policy within the environment. It provides the asset intelligence into the mix of how to manage an effective zero trust policy. But in essence, you need to trust Armis, right? I mean, Armis is a critical function now within your environment. And there has to be a degree of trust, but I would say, trust but verified. And that's something that I think the security industry as a whole is evolving into quite a bit, especially post events like solar, winds, or other things that happened in recent years. Armis is a SaaS platform. And in being a SaaS platform, there is an inherent aspect of trust and risk that you take on as a security organization. I think anyone who says differently, is either lying or mistaken. I mean, there are no foolproof, a 100% systems out there. But to mitigate some of that risk, we adhere to a very strict risk in security policy on our end. What that means, is we're incredibly transparent about every aspect of our own environment. We publish to our clients our latest penetration test reports. We publish our security controls and policies. We're very transparent about the different aspects we're involve in our own environment. We give our clients access to our own internal security organization, our own CSO, to be able to provide them with all the security controls they need. And we take a very least privileged approach in how we deploy Armis within an environment. No need for extra permissions. Everything read-only unless there is an explicit reason to do else... I think differently within the environment. And something that we take very seriously, is also anything that we deploy within the environment, should be walled off, except for whatever lease privilege that we need. On top of that, I'd add one more thing that adds, I think a lot of peace of mind to our clients. We are FeRAMP ready, and soon to be certified, We work with DOD clients within the U.S kind of DOD apparatus. And I think that this gives a lot of peace of mind to our clients, even commercial clients, because they know that we need to adhere to hundreds of different security controls that are monitored and government by U.S federal agencies. And that I think gives a lot of extra security measures, a lot of knowledge that this risk is being mitigated and controlled, and governed by different agencies. >> Good stuff there. Also at RSA, you kind of saw people come back together face-to-face, which is great. A lot of kind of similar, everyone kind of knows each other in the security business, but it's getting bigger. What was the big takeaways from you for the folks watching here that didn't get to go to RSA this year? What was the most important stories that came out of RSA this year? Just generally across the industry, from your perspective that people should pay attention to? >> First of all, I think that people were just really happy to get back together. I think it was a really fun RSA. I think that people had a lot of energy and excitement, and they love just walking around. I am obviously, somewhat biased here, but I will say, I've heard from other people too, that our event there, and the formal party that was there was by far the kind of the the talk of the show. And we were fortunate to do that with Sentinel One. with Torque who are both great partners of ours, and, of course, Insight partners. I think a lot of the themes that have come up during RSA, are really around some of the things that we already talked about, visibility as a driver for business processes. The understanding of where do assets and tax surfaces, and things like that play in. But also, I think that everything was, in light of macroeconomics and geopolitics that are kind of happening in the background, that no one can really avoid that. On the one hand, if we look at macroeconomics, obviously, markets are going through quite a shake up right now. And especially, when you talk about tech, the one thing that was really, really evident though, is it's cybersecurity is, I think market-wise just faring way better than others because the demand is absolutely there. I think that no one has slowed down one bit on buying and arming themselves, I'd say, with defensive solutions for cybersecurity. And the reason, is that the threats are there. I mean, we're all very, very much aware of that. And even in situations where companies are spending less on other things, they're definitely spending on cybersecurity, because the toll on the industry is going up significantly year by year, which really ties into also the geopolitics. One of the themes that I've heard significantly, is all the buzz around different initiatives coming from both U.S federal agencies, as well as different governing bodies around anything, from things like shields up in critical infrastructure, all the way to different governance aspects of the TSA. Or even the SCC on different companies with regards to what are they doing on cyber? If some of the initiatives coming from the SCC on public companies come out the way that they are right now, cyber security companies will elevate... Well, sorry, companies in general, would actually elevate cyber security to board level discussions on a regular basis. And everyone wants to be ready to answer effectively, different questions there. And then on top of all of that, I think we're all very aware of, I think, and not to be too doom and gloom here, but the geopolitical aspect of things. It's very clear that we could be facing a very significant and very different cyber warfare aspect than anything that we've seen before in the coming months and years. I think that one of the things you could hear a lot of companies and clients talk about, is the fact that it used to be that you could say, "Look, if a nation state is out to get me, then a nation state is out to get me, and they're going to get me. And I am out to protect myself from common criminals, or cybersecurity criminals, or things like that." But it's no longer the case. I mean, you very well might be attacked by a nation state, and it's no longer something that you can afford to just say, "Yeah, we'll just deal with that if that happens." I think some of the attacks on critical infrastructure in particular have proven to us all, that this is a very, very important topic to deal with. And companies are paying a lot of attention to what can give them visibility and control over their extended attack surface, and anything in between. >> Well, we've been certainly ringing the bell for years. I've been a hawk on this for many, many years, saying we're at cyber war, well below everyone else. So, we've been pounding our fist on the table saying, it's not just a national security issue. Finally, they're waking up and kind of figuring out countermeasures. But private companies don't have their own, they should have their own militia basically. So, what's the role of government and all this? So, all this is about competency and actually understanding what's going on. So, the whole red line, lowering that red line, the adversaries have been operating onside our infrastructure for years. So, the industrial IOT side has been aware of this for years, now it's being streamed, right? So, what do we do? Is the government going to come in and help, and bring some cyber militia to companies to protect their business? I mean, if troops dropped on our shores, I'm sure the government would react, right? So, where is that red line, Nadir? Where do you see the gap being filled? Certainly, people will defend their companies, they have assets obviously. And then, you critical infrastructure on the industrial side is super important, that's the national security issue. What do we do? What's the action here? >> That is such a difficult question. Such a good question I think to tackle, I think, there are similarities and there are differences, right? On the one hand, we do and should expect the government to do more. I think it should do more in policy making. I mean, really, really work to streamline and work much faster on that. And it would do good to all of us because I think that ultimately, policy can mean that the third party vendors that we use are more secure, and in turn, our own organizations are more secure in how they operate. But also, they hold our organizations accountable. And in doing so, consumers who use different services feel safer as well because basically, companies are mandated to protect data, to protect themselves, and do everything else. On the other hand, I'd say that government's support on this is difficult. I think the better way to look at this, is imagine for a second, no troops landing on our kind of shores, if you will. But imagine instead, a situation where Americans are spread all over the world and expect the government to protect them in any country, or in any situation they're at. I think that depicts maybe a little better, how infrastructure looks like today. If you look at multinational companies, they have offices everywhere. They have assets spread out everywhere. They have people working from everywhere around the world. It's become an attack surface, that I think you said this earlier, or in a different interview as well. There's no more perimeter to speak of. There are no more borders to this virtual country, if you will. And so, on the one hand, we do expect our government to do a lot. But on the other hand, we also need to take responsibility as companies, and as vendors, and as suppliers of services, we need to take accountability and take responsibility for the assets that we deploy and put in place. And we should have a very security conscious mind in doing this. >> Yeah. >> So, I think tricky government policy aspect to tackle. I think the government should be doing more, but on the other hand, we should absolutely be pointing internally at where can we do better as companies? >> And the asset understanding the context of what's critical asset too, can impact how you protect it, defend it, and ensure it, or manage it. I mean, this is what people want. It's a data problem in flight, at rest, and in action. So, Armis, you guys are doing a great job there. Congratulations, Nadir on the venture, on your success. I love the product, love the approach. I think it scales nicely with the industry where it's going. So, especially with the intelligent edge booming, and it's just so much happening, you guys are in the middle of it. Thanks for coming on "theCUBE." Appreciate it. >> Thank you so much. As I like to say, it takes a village, and there's so many people in the company who make this happen. I'm just the one who gets to take credit for it. So, I appreciate the time today and the conversation. And thank you for having me. >> Well, we'll check in with you. You guys are right there with us, and we'll be in covering you guys pretty deeply. Thanks for coming on. Appreciate it. Okay, it's #CUBEConversation here in Palo Alto. I'm John Furrier. Thanks for watching. Clear. (bright upbeat music)

>>Hi, everybody. Welcome back to Caesars in Las Vegas. My name is Dave ante. We're here with the chairman and CEO of snowflake, Frank Luman. Good to see you again, Frank. Thanks for coming on. Yeah, >>You, you as well, Dave. Good to be with you. >>No, it's, it's awesome to be, obviously everybody's excited to be back. You mentioned that in your, in your keynote, the most amazing thing to me is the progression of what we're seeing here in the ecosystem and of your data cloud. Um, you wrote a book, the rise of the data cloud, and it was very cogent. You talked about network effects, but now you've executed on that. I call it the super cloud. You have AWS, you know, I use that term, AWS. You're building on top of that. And now you have customers building on top of your cloud. So there's these layers of value that's unique in the industry. Was this by design >>Or, well, you know, when you, uh, are a data clouding, you have data, people wanna do things, you know, with that data, they don't want to just, you know, run data operations, populate dashboards, you know, run reports pretty soon. They want to build applications and after they build applications, they wanna build businesses on it. So it goes on and on and on. So it, it drives your development to enable more and more functionality on that data cloud. Didn't start out that way. You know, we were very, very much focused on data operations, then it becomes application development and then it becomes, Hey, we're developing whole businesses on this platform. So similar to what happened to Facebook in many, in many ways, you know, >>There was some confusion I think, and there still is in the community of, particularly on wall street, about your quarter, your con the consumption model I loved on the earnings call. One of the analysts asked Mike, you know, do you ever consider going to a subscription model? And Mike got cut him off, then let finish. No, that would really defeat the purpose. Um, and so there's also a narrative around, well, maybe snowflake, consumption's easier to dial down. Maybe it's more discretionary, but I, I, I would say this, that if you're building apps on top of snowflake and you're actually monetizing, which is a big theme here, now, your revenue is aligned, you know, with those cloud costs. And so unless you're selling it for more, you know, than it costs more than, than you're selling it for, you're gonna dial that up. And that is the future of, I see this ecosystem in your company. Is that, is that fair? You buy that. >>Yeah, it, it is fair. Obviously the public cloud runs on a consumption model. So, you know, you start looking all the layers of the stack, um, you know, snowflake, you know, we have to be a consumption model because we run on top of other people's, uh, consumption models. Otherwise you don't have alignment. I mean, we have conversations, uh, with people that build on snowflake, um, you know, they have trouble, you know, with their financial model because they're not running a consumption model. So it's like square pack around hole. So we all have to align ourselves. So that's when they pay a dollar, you know, a portion goes to, let's say, AWS portion goes to the snowflake of that dollar. And the portion goes to whatever the uplift is, application value, data value, whatever it is to that goes on top of that. So the whole dollar, you know, gets allocated depending on whose value at it. Um, we're talking about. >>Yeah, but you sell value. Um, so you're not a SaaS company. Uh, at least I don't look at you that that way I I've always felt like the SAS pricing model is flawed because it's not aligned with customers. Right. If you, if you get stuck with orphaned licenses too bad, you know, pay us. >>Yeah. We're, we're, we're obviously a SaaS model in the sense that it is software as a service, but it's not a SaaS model in the sense that we don't sell use rights. Right. And that's the big difference. I mean, when you buy, you know, so many users from, you know, Salesforce and ServiceNow or whoever you have just purchased the right, you know, for so many users to use that software for this period of time, and the revenue gets recognized, you know, radically, you know, one month at a time, the same amount. Now we're not that different because we still do a contract the exact same way as SA vendor does it, but we don't recognize the revenue radically. We recognize the revenue based on the consumption, but over the term of the contract, we recognize the entire amount. It just is not neatly organized in these monthly buckets. >>You know? So what happens if they underspend one quarter, they have to catch up by the end of the, the term, is that how it works or is that a negotiation or it's >>The, the, the spending is a totally, totally separate from the consumption itself, you know, because you know how they pay for the contract. Let's say they do a three year contract. Um, you know, they, they will probably pay for that, you know, on an annual basis, you know, that three year contract. Um, but it's how they recognize their expenses for snowflake and how we recognize the revenue is based on what they actually consume. But it's not like you're on demand where you can just decide to not use it. And then I don't have any cost, but over the three year period, you know, all of that, you know, uh, needs to get consumed or they expire. And that's the same way with Amazon. If I don't consume what I buy from Amazon, I still gotta pay for it. You know, so, >>Well, you're right. Well, I guess you could buy by the drink, but it's way, way more expensive and nobody really correct. Does that, so, yep. Okay. Phase one, better simpler, you know, cloud enterprise data warehouse, phase two, you introduced the, the data cloud and, and now we're seeing the rise of the data cloud. What, what does phase three look like >>Now? Phase, phase three is all about applications. Um, and we've just learned, uh, you know, from the beginning that people were trying to do this, but we weren't instrumental at all to do it. So people would ODBC, you know, JDBC drivers just uses as database, right? So the entire application would happen outside, you know, snowflake, we're just a database. You connect to the database, you know, you read or right data, you know, you do data, data manipulations. And then the application, uh, processing all happens outside of snowflake. Now there's issues with that because we start to exfil trade data, meaning that we started to take data out of snowflake and, and put it, uh, in other places. Now there's risk for that. There's operational risk, there's governance, exposure, security issues, you know, all this kind of stuff. And the other problem is, you know, data gets Reed. >>It proliferates. And then, you know, data science tests are like, well, I, I need that data to stay in one place. That's the whole idea behind the data cloud. You know, we have very big infrastructure clouds. We have very big application clouds and then data, you know, sort of became the victim there and became more proliferated and more segment. And it's ever been. So all we do is just send data to the work all day. And we said, no, we're gonna enable the work to get to the data. And the data that stays in more in place, we don't have latency issue. We don't have data quality issues. We don't have lineage issues. So, you know, people have responded very, very well to the data cloud idea, like, yeah, you know, as an enterprise or an institution, you know, I'm the epicenter of my own data cloud because it's not just my own data. >>It's also my ecosystem. It's the people that I have data networking relationships with, you know, for example, you know, take, you know, uh, an investment bank, you know, in, in, in, in New York city, they send data to fidelity. They send data to BlackRock. They send data to, you know, bank of New York, all the regulatory clearing houses, all on and on and on, you know, every night they're running thousands, tens of thousands, you know, of jobs pushing that data, you know, out there. It just, and they they're all on snowflake already. So it doesn't have to be this way. Right. So, >>Yes. So I, I asked the guys before, you know, last week, Hey, what, what would you ask Frank? Now? You might remember you came on, uh, our program during COVID and I was asking you how you're dealing with it, turn off the news. And it was, that was cool. And I asked you at the time, you know, were you ever, you go on Preem and you said, look, I'll never say never, but it defeats the purpose. And you said, we're not gonna do a halfway house. Actually, you were more declarative. We're not doing a halfway house, one foot in one foot out. And then the guy said, well, what about that Dell deal? And that pure deal that you just did. And I, I think I know the answer, but I want to hear from you did a customer come to you and say, get you in the headlock and say, you gotta do this. >>Or it did happen that way. Uh, it, uh, it started with a conversation, um, you know, via with, uh, with Michael Dell. Um, it was supposed to be just a friendly chat, you know, Hey, how's it going? And I mean, obviously Dell is the owner of data, the main, or our first company, you know? Um, but it's, it, wasn't easy for, for Dell and snowflake to have a conversation because they're the epitome of the on-premise company and we're the epitome of a cloud company. And it's like, how, what do we have in common here? Right. What can we talk about? But, you know, Michael's a very smart, uh, engaging guy, you know, always looking for, for opportunity. And of course they decided we're gonna hook up our CTOs, our product teams and, you know, explore, you know, somebody's, uh, ideas and, you know, yeah. We had some, you know, starts and restarts and all of that because it's just naturally, you know, uh, not an easy thing to conceive of, but, you know, in the end it was like, you know what? >>It makes a lot of sense. You know, we can virtualize, you know, Dell object storage, you know, as if it's, you know, an S three storage, you know, from Amazon and then, you know, snowflake in its analytical processing. We'll just reference that data because to us, it just looks like a file that's sitting on, on S3. And we have, we have such a thing it's called an external table, right. That's, that's how we basically, it projects, you know, a snowflake, uh, semantic and structural model, you know, on an external object. And we process against it exactly the same way as if it was an internal, uh, table. So we just extended that, um, you know, with, um, with our storage partners, like Dell and pure storage, um, for it to happen, you know, across a network to an on-prem place. So it's very elegant and it, it, um, it becomes an, an enterprise architecture rather than just a cloud architecture. And I'm, I just don't know what will come of it. And, but I've already talked to customers who have to have data on premises just can't go anywhere because they process against it, you know, where it originates, but there are analytical processes that wanna reference attributes of that data. Well, this is what we'll do that. >>Yeah. I'm, it is interesting. I'm gonna ask Dell if I were them, I'd be talking to you about, Hey, I'm gonna try to separate compute from storage on prem and maybe do some of the, the work there. I don't even know if it's technically feasible. It's, I'll ask OI. But, um, but, but, but to me, that's an example of your extending your ecosystem. Um, so you're talking now about applications and that's an example of increasing your Tam. I don't know if you ever get to the edge, you know, we'll see, we're not quite quite there yet, but, um, but as you've said before, there's no lack of market for you. >>Yeah. I mean, obviously snowflake it it's, it's Genesis was reinventing database management in, in a cloud computing environment, which is so different from a, a machine environment or a cluster environment. So that's why, you know, we're, we're, we're not a, a fit for a machine centric, uh, environment sort of defeats the purpose of, you know, how we were built. We, we are truly a native solution. Most products, uh, in the clouds are actually not cloud native. You know, they, they originated the machine environments and you still see that, you know, almost everything you see in the cloud by the way is not cloud native, our generation of applications. They only run the cloud. They can only run the cloud. They are cloud native. They don't know anything else, >>You know? Yeah, you're right. A lot of companies would just wrap something in wrap their stack in Kubernetes and throw it into the cloud and say, we're in the cloud too. And you basically get, you just shifted. It >>Didn't make sense. Oh. They throw it in the container and run it. Right. Yeah. >>So, okay. That's cool. But what does that get you that doesn't change your operational model? Um, so coming back to software development and what you're doing in, in that regard, it seems one of the things we said about Supercloud is in order to have a Supercloud, you gotta have an ecosystem, you gotta have optionality. Hence you're doing things like Apache iceberg, you know, you said today, well, we're not sure where it's gonna go, but we offering options. Uh, but, but my, my question is, um, as it pertains to software developments specifically, how do you, so one of the things we said, sorry, I've lost my train there. One of the things we said is you have to have a super PAs in order to have a super cloud ecosystem, PAs layer. That's essentially what you've introduced here. Is it not a platform for our application development? >>Yeah. I mean, what happens today? I mean, how do you enable a developer, you know, on snowflake, without the developer, you know, reading the, the files out of snowflake, you know, processing, you know, against that data, wherever they are, and then putting the results set, God knows where, right. And that's what happens today. It's the wild west it's completely UN uncovered, right? And that's the reason why lots of enterprises will not allow Python anything anywhere near, you know, their enterprise data. We just know that, uh, we also know it from streamlet, um, or the acquisition, um, large acquisition that we made this year because they said, look, you know, we're, we have a lot of demand, you know, uh, in the Python community, but that's the wild west. That's not the enterprise grade high trust, uh, you know, corporate environment. They are strictly segregated, uh, today. >>Now do some, do these, do these things sometimes dribble up in the enterprise? Yes, they do. And it's actually intolerable the risk that enterprises, you know, take, you know, with things being UN uncovered. I mean the whole snowflake strategy and promises that you're in snowflake, it is a, an absolute enterprise grade environment experience. And it's really hard to do. It takes enormous investment. Uh, but that is what you buy from us. Just having Python is not particularly hard. You know, we can do that in a week. This has taken us years to get it to this level, you know, of, of, you know, governance, security and, and, you know, having all the risks around exfiltration and so on, really understood and dealt with. That's also why these things run in private previews and public previews for so long because we have to squeeze out, you know, everything that may not have been, you know, understood or foreseen, you know, >>So there are trade offs of, of going into this snowflake cloud, you get all this great functionality. Some people might think it's a walled garden. How, how would you respond to that? >>Yeah. And it's true when you have a, you know, a snowflake object, like a snowflake, uh, table only snowflake, you know, runs that table. And, um, you know, that, that is, you know, it's very high function. It's very sort of analogous to what apple did, you know, they have very high functioning, but you do have to accept the fact that it's, that it's not, uh, you know, other, other things in apple cannot, you know, get that these objects. So this is the reason why we introduce an open file format, you know, like, like iceberg, uh, because what iceberg effectively does is it allows any tool, uh, you know, to access that particular object. We do it in such a way that a lot of the functionality of snowflake, you know, will address the iceberg format, which is great because it's, you're gonna get much more function out of our, you know, iceberg implementation than you would get from iceberg on its own. So we do it in a very high value addeds, uh, you know, manner, but other tools can still access the same object in a read to write, uh, manner. So it, it really sort of delivers the original, uh, promise of the data lake, which is just like, Hey, I have all these objects tools come and go. I can use what I want. Um, so you get, you get the best of both worlds for the most part. >>Have you reminds me a little bit of VMware? I mean, VMware's a software mainframe, it's just better than >>Doing >>It on your own. Yep. Um, one of the other hallmarks of a cloud company, and you guys clearly are a cloud company is startups and innovation. Um, now of course you see that in, in the, in the ecosystem, uh, and maybe that's the answer to my question, but you guys are kind of whale hunters, <laugh> your customers are, tend to be bigger. Uh, is the, is the innovation now the extension of that, the ecosystem is that by design. >>Oh, um, you know, we have a enormous, uh, ISV following and, um, we're gonna have a whole separate conference like this, by the way, just for, yeah. >>For developers. I hope you guys will up there too. Yeah. Um, you know, the, the reason that, that the ISV strategy is very important for, you know, for, for, for, for many reasons, but, you know, ISVs are the people that are really going to unlock a lot of the value and a lot of the promise of data, right? Because you, you can never do that on your own. And the problem has been that for ISVs, it is so expensive and so difficult to build a product that can be used because the entire enterprise platform infrastructure needs to be built by somebody, you know, I mean, are you really gonna run infrastructure, database, operations, security, compliance, scalability, economics. How do you do that as a software company where really you only have your, your domain expertise that you want to deliver on a platform. You don't wanna do all these things. >>First of all, you don't know how to do it, how to do it well. Um, so it is much easier, much faster when there is already platform to actually build done in the world of clout that just doesn't, you know, exist. And then beyond that, you know, okay, fine building. It is sort of step one. Now I gotta sell it. I gotta market it. So how do I do that? Well, in the snowflake community, you have already market <laugh>, there's thousands and thousands of customers that are also on self lake. Okay. So their, their ability to consume that service that you just built, you know, they can search it, they can try it, they can test it and decide whether they want to consume it. And then, you know, we can monetize it. So all they have to do is cash the check. So the net effecti of it is we drastically lowered the barriers to entry into the world, you know, of software, you know, two men or two women in a dog, and a handful of files can build something that then can be sold, sort of to, for software developers. >>I wrote a piece 2012 after the first reinvent. And I, you know, and I, and I put a big gorilla on the front page and I said, how do you compete with Amazon gorilla? And then one of my answers was you build data ecosystems and you verticalize, and that's, that's what you're doing >>Here. Yeah. There certain verticals that are farther along than others, uh, obviously, but for example, in financial, uh, which is our largest vertical, I mean, the, the data ecosystem is really developing hardcore now. And that's, that's because they so rely on those relationships between all the big financial institutions and entities, regulatory, you know, clearing houses, investment bankers, uh, retail banks, all this kind of stuff. Um, so they're like, it becomes a no brainer. The network affects kick in so strongly because they're like, well, this is really the only way to do it. I mean, if you and I work in different companies and we do, and we want to create a secure, compliant data network and connection between us, I mean, it would take forever to get our lawyers to agree that yeah, it's okay. <laugh> right now, it's like a matter of minutes to set it up. If we're both on snowflake, >>It's like procurement, do they, do you have an MSA yeah. Check? And it just sail right through versus back and forth and endless negotiations >>Today. Data networking is becoming core ecosystem in the world of computing. You know, >>I mean, you talked about the network effects in rise of the data cloud and correct. Again, you know, you, weren't the first to come up with that notion, but you are applying it here. Um, I wanna switch topics a little bit. I, when I read your press releases, I laugh every time. Cause this says no HQ, Bozeman. And so where, where do you, I think I know where you land on, on hybrid work and remote work, but what are your thoughts on that? You, you see Elon the other day said you can't work for us unless you come to the office. Where, where do you stand? >>Yeah. Well, the, well, the, the first aspect is, uh, we really wanted to, uh, separate from the idea of a headquarters location, because I feel it's very antiquated. You know, we have many different hubs. There's not one place in the world where all the important people are and where we make all the important positions, that whole way of thinking, uh, you know, it is obsolete. I mean, I am where I need to be. And it it's many different places. It's not like I, I sit in this incredible place, you know, and that's, you know, that's where I sit and everybody comes to me. No, we are constantly moving around and we have engineering hubs. You know, we have your regional, uh, you know, headquarters for, for sales. Obviously we have in Malaysia, we have in Europe, you know? And, um, so I wanted to get rid of this headquarters designation. >>And, you know, the, the, the other issue obviously is that, you know, we were obviously in California, but you know, California is, is no longer, uh, the dominant place of where we are resident. I mean, 40% of our engineering people are now in be Washington. You know, we have hundreds of people in Poland where people, you know, we are gonna have very stressed location in Toronto. Um, yeah. Obviously our customers are, are everywhere, right? So this idea that, you know, everything is happening in, in one state is just, um, you know, not, not correct. So we wanted to go to no headquarters. Of course the SCC doesn't let you do that. Um, because they want, they want you to have a street address where the government can send you a mail and then it becomes, the question is, well, what's an acceptable location. Well, it has to be a place where the CEO and the CFO have residency by hooker, by crook. >>That happened to be in Bozeman Montana because Mike and I are both, it was not by design. We just did that because we were, uh, required to, you know, you know, comply with government, uh, requirements, which of course we do, but that's why it, it says what it says now on, on the topic of, you know, where did we work? Um, we are super situational about it. It's not like, Hey, um, you know, everybody in the office or, or everybody is remote, we're not categorical about it. Depends on the function, depends on the location. Um, but everybody is tethered to an office. Okay. In words, everybody has a relationship with an office. There's, there's almost nobody, there are a few exceptions of people that are completely remote. Uh, but you know, if you get hired on with snowflake, you will always have an office affiliation and you can be called into the office by your manager. But for purpose, you know, a meeting, a training, an event, you don't get called in just to hang out. And like, the office is no longer your home away from home. Right. And we're now into hotel, right? So you don't have a fixed place, you know? So >>You talked in your keynote a lot about last question. I let you go customer alignment, obviously a big deal. I have been watching, you know, we go to a lot of events, you'll see a technology company tell a story, you know, about their widget or whatever it was their box. And then you'll see an outcome and you look at it and you shake your head and say, well, that the difference between this and that is the square root of zero, right. When you talk about customer alignment today, we're talking about monetizing data. Um, so that's a whole different conversation. Um, and I, I wonder if you could sort of close on how that's different. Um, I mean, at ServiceNow, you transformed it. You know, I get that, you know, data, the domain was okay, tape, blow it out, but this is a, feels like a whole new vector or wave of growth. >>Yeah. You know, monetizing, uh, data becomes sort of a, you know, a byproduct of having a data cloud you all of a sudden, you know, become aware of the fact that, Hey, Hey, I have data and be that data might actually be quite valuable to parties. And then C you know, it's really easy to then, you know, uh, sell that and, and monetize that. Cause if it was hard, forget it, you know, I don't have time for it. Right. But if it's relatively, if it's compliant, it's relatively effortless, it's pure profit. Um, I just want to reference one attribute, two attributes of what you have, by the way, you know, uh, hedge funds have been into this sort of thing, you know, for a long time, because they procure data from hundreds and hundreds of sources, right. Because they're, they are the original data scientists. >>Um, but the, the bigger thing with data is that a lot of, you know, digital transformation is, is, is finally becoming real. You know, for years it was arm waving and conceptual and abstract, but it's becoming real. I mean, how do we, how do we run a supply chain? You know, how do we run, you know, healthcare, um, all these things are become are, and how do we run cyber security? They're being redefined as data problems and data challenges. And they have data solutions. So that's right. Data strategies are insanely important because, you know, if, if the solution is through data, then you need to have, you know, a data strategy, you know, and in our world, that means you have a data cloud and you have all the enablement that allows you to do that. But, you know, hospitals, you know, are, are saying, you know, data science is gonna have a bigger impact on healthcare than life science, you know, in the coming, whatever, you know, 10, 20 years, how do you enable that? >>Right. I, I have conversations with, with, with hospital executives are like, I got generations of data, you know, clinical diagnostic, demographic, genomic. And then I, I am envisioning these predictive outcomes over here. I wanna be able to predict, you know, once somebody's gonna get what disease and you know, what I have to do about it, um, how do I do that? <laugh> right. The day you go from, uh, you know, I have a lot of data too. I have these outcomes and then do me a miracle in the middle, in the middle of somewhere. Well, that's where we come in. We're gonna organize ourselves and then unpack thats, you know, and then we, we work, we through training models, you know, we can start delivering some of these insights, but the, the promise is extraordinary. We can change whole industries like pharma and, and, and healthcare. Um, you know, 30 effects of data, the economics will change. And you know, the societal outcomes, you know, um, quality of life disease, longevity of life is quite extraordinary. Supply chain management. That's all around us right >>Now. Well, there's a lot of, you know, high growth companies that were kind of COVID companies, valuations shot up. And now they're trying to figure out what to do. You've been pretty clear because of what you just talked about, the opportunities enormous. You're not slowing down, you're amping it up, you know, pun intended. So Frank Luman, thanks so much for coming on the cube. Really appreciate your time. >>My pleasure. >>All right. And thank you for watching. Keep it right there for more coverage from the snowflake summit, 2022, you're watching the cube.

>> Data is at the heart of transformation and the change every company needs to succeed, but it takes more than new technology. It's about teams, talent and cultural change. Empowering everyone on the front lines to make decisions all at the speed of digital. The transformation starts with you. It's time to lead the way it's time for Thought leaders. >> Welcome to "Thought Leaders" a digital event brought to you by ThoughtSpot. My name is Dave Vellante. The purpose of this day is to bring industry leaders and experts together to really try and understand the important issues around digital transformation. We have an amazing lineup of speakers and our goal is to provide you with some best practices that you can bring back and apply to your organization. Look, data is plentiful, but insights are not. ThoughtSpot is disrupting analytics by using search and machine intelligence to simplify data analysis and really empower anyone with fast access to relevant data. But in the last 150 days, we've had more questions than answers. Creating an organization that puts data and insights at their core requires not only modern technology, but leadership, a mindset and a culture that people often refer to as data-driven. What does that mean? How can we equip our teams with data and fast access to quality information that can turn insights into action. And today we're going to hear from experienced leaders who are transforming their organizations with data, insights and creating digital first cultures. But before we introduce our speakers, I'm joined today by two of my co-hosts from ThoughtSpot first chief data strategy officer at the ThoughtSpot is Cindi Howson. Cindi is an analytics and BI expert with 20 plus years experience and the author of "Successful Business Intelligence "Unlock the Value of BI & Big Data." Cindi was previously the lead analyst at Gartner for the data and analytics magic quadrant. And early last year, she joined ThoughtSpot to help CDOs and their teams understand how best to leverage analytics and AI for digital transformation. Cindi, great to see you welcome to the show. >> Thank you, Dave. Nice to join you virtually. >> Now our second cohost and friend of the cube is ThoughtSpot CEO Sudheesh Nair Hello, Sudheesh how are you doing today? >> I'm well Dave, it's good to talk to you again. >> It's great to see you thanks so much for being here. Now Sudheesh please share with us why this discussion is so important to your customers and of course, to our audience and what they're going to learn today. (upbeat music) >> Thanks, Dave. I wish you were there to introduce me into every room and that I walk into because you have such an amazing way of doing it. Makes me feel all so good. Look, since we have all been cooped up in our homes, I know that the vendors like us, we have amped up our sort of effort to reach out to you with invites for events like this. So we are getting very more invites for events like this than ever before. So when we started planning for this, we had three clear goals that we wanted to accomplish. And our first one that when you finish this and walk away, we want to make sure that you don't feel like it was a waste of time. We want to make sure that we value your time and this is going to be useful. Number two, we want to put you in touch with industry leaders and thought leaders, generally good people that you want to hang around with long after this event is over. And number three, as we plan through this, we are living through these difficult times. We want an event to be this event, to be more of an uplifting and inspiring event too. Now, the challenge is how do you do that with the team being change agents because change and as much as we romanticize it, it is not one of those uplifting things that everyone wants to do, or like to do. The way I think of it sort of like a, if you've ever done bungee jumping and it's like standing on the edges waiting to make that one more step, all you have to do is take that one step and gravity will do the rest, but that is the hardest step to take. Change requires a lot of courage. And when we are talking about data and analytics, which is already like such a hard topic, not necessarily an uplifting and positive conversation in most businesses, it is somewhat scary. Change becomes all the more difficult. Ultimately change requires courage. Courage to first of all challenge the status quo. People sometimes are afraid to challenge the status quo because they are thinking that maybe I don't have the power to make the change that the company needs. Sometimes they feel like I don't have the skills. Sometimes they may feel that I'm probably not the right person do it. Or sometimes the lack of courage manifest itself as the inability to sort of break the silos that are formed within the organizations, when it comes to data and insights that you talked about. There are people in the company who are going to hog the data because they know how to manage the data, how to inquire and extract. They know how to speak data. They have the skills to do that. But they are not the group of people who have sort of the knowledge, the experience of the business to ask the right questions off the data. So there is the silo of people with the answers, and there is a silo of people with the questions. And there is gap. This sort of silos are standing in the way of making that necessary change that we all know the business needs. And the last change to sort of bring an external force sometimes. It could be a tool. It could be a platform, it could be a person, it could be a process, but sometimes no matter how big the company is or how small the company is, you may need to bring some external stimuli to start the domino of the positive changes that are necessary. The group of people that we are brought in, the four people, including Cindi, that you will hear from today are really good at practically telling you how to make that step, how to step off that edge, how to dress the rope, that you will be safe and you're going to have fun. You will have that exhilarating feeling of jumping, for a bungee jump. All four of them are exceptional, but my honor is to introduce Michelle and she's our first speaker. Michelle, I am very happy after watching her presentation and reading our bio, that there are no country vital worldwide competition for cool patterns, because she will beat all of us because when her children were small, they were probably into Harry Potter and Disney. She was managing a business and leading change there. And then as her kids grew up and got to that age where they like football and NFL, guess what? She's the CIO of NFL. What a cool mom? I am extremely excited to see what she's going to talk about. I've seen the slides, tons of amazing pictures. I'm looking to see the context behind it. I'm very thrilled to make the acquaintance of Michelle and looking forward to her talk next. Welcome Michelle, it's over to you. (upbeat music) >> I'm delighted to be with you all today to talk about thought leadership. And I'm so excited that you asked me to join you because today I get to be a quarterback. I always wanted to be one. And I thought this is about as close as I'm ever going to get. So I want to talk to you about quarterbacking, our digital revolution using insights data. And of course, as you said, leadership, first a little bit about myself, a little background, as I said, I always wanted to play football. And this is something that I wanted to do since I was a child. But when I grew up, girls didn't get to play football. I'm so happy that that's changing and girls are now doing all kinds of things that they didn't get to do before. Just this past weekend on an NFL field, we had a female coach on two sidelines and a female official on the field. I'm a lifelong fan and student of the game of football. I grew up in the South. You can tell from the accent. And in the South football is like a religion and you pick sides. I chose Auburn university working in the athletic department. So I'm Testament to you can start the journey can be long. It took me many, many years to make it into professional sports. I graduated in 1987 and my little brother, well, not actually not so little. He played offensive line for the Alabama Crimson Tide. And for those of you who know SCC football, you know this is a really big rivalry. And when you choose sides, your family is divided. So it's kind of fun for me to always tell the story that my dad knew his kid would make it to the NFL. He just bet on the wrong one. My career has been about bringing people together for memorable moments at some of America's most iconic brands, delivering memories and amazing experiences that delight from Universal Studios, Disney to my current position as CIO of the NFL. In this job I'm very privileged to have the opportunity to work with the team that gets to bring America's game to millions of people around the world. Often I'm asked to talk about how to create amazing experiences for fans, guests, or customers. But today I really wanted to focus on something different and talk to you about being behind the scenes and backstage because behind every event, every game, every awesome moment is execution, precise, repeatable execution. And most of my career has been behind the scenes doing just that assembling teams to execute these plans. And the key way that companies operate at these exceptional levels is making good decisions, the right decisions at the right time and based upon data so that you can translate the data into intelligence and be a data-driven culture. Using data and intelligence is an important way that world-class companies do differentiate themselves. And it's the lifeblood of collaboration and innovation. Teams that are working on delivering these kinds of world casts experiences are often seeking out and leveraging next-generation technologies and finding new ways to work. I've been fortunate to work across three decades of emerging experiences, which each required emerging technologies to execute a little bit first about Disney in the 90s, I was at Disney leading a project called destination Disney, which it's a data project. It was a data project, but it was CRM before CRM was even cool. And then certainly before anything like a data-driven culture was ever brought up, but way back then we were creating a digital backbone that enabled many technologies for the things that you see today, like the magic band, Disney's magical express. My career at Disney began in finance, but Disney was very good about rotating you around. And it was during one of these rotations that I became very passionate about data. I kind of became a pain in the butt to the IT team asking for data more and more data. And I learned that all of that valuable data was locked up in our systems. All of our point of sales systems, our reservation systems, our operation systems. And so I became a shadow IT person in marketing, ultimately leading to moving into IT. And I haven't looked back since. In the early two thousands, I was at universal studios theme park as their CIO preparing for and launching "The Wizarding World of Harry Potter" bringing one of history's most memorable characters to life required many new technologies and a lot of data. Our data and technologies were embedded into the rides and attractions. I mean, how do you really think a wan selects you at a wan shop. As today at the NFL? I am constantly challenged to do leading edge technologies, using things like sensors, AI, machine learning, and all new communication strategies and using data to drive everything from player performance, contracts, to where we build new stadiums and hold events with this year being the most challenging yet rewarding year in my career at the NFL. In the middle of a global pandemic, the way we are executing on our season is leveraging data from contract tracing devices joined with testing data, talk about data, actually enabling your business without it w wouldn't be having a season right now. I'm also on the board of directors of two public companies where data and collaboration are paramount. First RingCentral, it's a cloud based unified communications platform and collaboration with video message and phone all in one solution in the cloud and Quotient technologies whose product is actually data. The tagline at Quotient is the result in knowing I think that's really important because not all of us are data companies where your product is actually data, but we should operate more like your product is data. I'd also like to talk to you about four areas of things to think about as thought leaders in your companies. First just hit on it is change how to be a champion and a driver of change. Second, how do you use data to drive performance for your company and measure performance of your company? Third, how companies now require intense collaboration to operate. And finally, how much of this is accomplished through solid data driven decisions. First let's hit on change. I mean, it's evident today more than ever, that we are in an environment of extreme change. I mean, we've all been at this for years and as technologists we've known it, believed it, lived it and thankfully for the most part, knock on what we were prepared for it. But this year everyone's cheese was moved. All the people in the back rooms, IT, data architects and others were suddenly called to the forefront because a global pandemic has turned out to be the thing that is driving intense change in how people work and analyze their business. On March 13th, we closed our office at the NFL in the middle of preparing for one of our biggest events, our kickoff event, the 2020 draft. We went from planning a large event in Las Vegas under the bright lights, red carpet stage to smaller events in club facilities. And then ultimately to one where everyone coaches GM's prospects and even our commissioner were at home in their basements. And we only had a few weeks to figure it out. I found myself for the first time being in the live broadcast event space, talking about bungee jumping. This is really what it felt like. It was one in which no one felt comfortable because it had not been done before. But leading through this, I stepped up, but it was very scary. It was certainly very risky, but it ended up being all so rewarding when we did it. And as a result of this, some things will change forever. Second, managing performance. I mean, data should inform how you're doing and how to get your company to perform at it's level. Highest level. As an example, the NFL has always measured performance, obviously, and it is one of the purest examples of how performance directly impacts outcome. I mean, you can see performance on the field. You can see points being scored in stats, and you immediately know that impact those with the best stats usually when the games. The NFL has always recorded stats since the beginning of time here at the NFL a little this year is our 101 year and athletes ultimate success as a player has also always been greatly impacted by his stats. But what has changed for us is both how much more we can measure and the immediacy with which it can be measured. And I'm sure in your business it's the same. The amount of data you must have has got to have quadrupled and how fast you need it and how quickly you need to analyze it is so important. And it's very important to break the silos between the keys, to the data and the use of the data. Our next generation stats platform is taking data to a next level. It's powered by Amazon web services. And we gathered this data real-time from sensors that are on players' bodies. We gather it in real time, analyze it, display it online and on broadcast. And of course it's used to prepare week to week in addition to what is a normal coaching plan would be. We can now analyze, visualize route patterns, speed match-ups, et cetera. So much faster than ever before. We're continuing to roll out sensors too that will gather more and more information about a player's performance as it relates to their health and safety. The third trend is really, I think it's a big part of what we're feeling today and that is intense collaboration. And just for sort of historical purposes, it's important to think about for those of you that are IT professionals and developers, more than 10 years ago, agile practices began sweeping companies where small teams would work together rapidly in a very flexible, adaptive, and innovative way. And it proved to be transformational. However, today, of course, that is no longer just small teams, the next big wave of change. And we've seen it through this pandemic is that it's the whole enterprise that must collaborate and be agile. If I look back on my career, when I was at Disney, we owned everything 100%. We made a decision, we implemented it. We were a collaborative culture, but it was much easier to push change because you own the whole decision. If there was buy-in from the top down, you've got the people from the bottom up to do it and you executed. At Universal we were a joint venture. Our attractions and entertainment was licensed. Our hotels were owned and managed by other third parties. So influence and collaboration and how to share across companies became very important. And now here I am at the NFL and even the bigger ecosystem, we have 32 clubs that are all separate businesses. 31 different stadiums that are owned by a variety of people. We have licensees, we have sponsors, we have broadcast partners. So it seems that as my career has evolved, centralized control has gotten less and less and has been replaced by intense collaboration, not only within your own company, but across companies. The ability to work in a collaborative way across businesses and even other companies that has been a big key to my success in my career. I believe this whole vertical integration and big top-down decision-making is going by the wayside in favor of ecosystems that require cooperation yet competition to co-exist. I mean, the NFL is a great example of what we call co-op petition, which is cooperation and competition. We're in competition with each other, but we cooperate to make the company the best it can be. And at the heart of these items really are data driven decisions and culture. Data on its own isn't good enough. You must be able to turn it to insights. Partnerships between technology teams who usually hold the keys to the raw data and business units who have the knowledge to build the right decision models is key. If you're not already involved in this linkage, you should be. Data mining isn't new for sure. The availability of data is quadrupling and it's everywhere. How do you know what to even look at? How do you know where to begin? How do you know what questions to ask it's by using the tools that are available for visualization and analytics and knitting together strategies of the company. So it begins with first of all, making sure you do understand the strategy of the company. So in closing, just to wrap up a bit, many of you joined today, looking for thought leadership on how to be a change agent, a change champion, and how to lead through transformation. Some final thoughts are be brave and drive. Don't do the ride along program. It's very important to drive. Driving can be high risk, but it's also high reward. Embracing the uncertainty of what will happen is how you become brave. Get more and more comfortable with uncertainty, be calm and let data be your map on your journey. Thanks. >> Michelle, tank you so much. So you and I share a love of data and a love of football. You said you want to be the quarterback. I'm more an old line person. (Michelle and Cindi laughing) >> Well, then I can do my job without you. >> Great. And I'm getting the feeling now, Sudheesh is talking about bungee jumping. My vote is when we're past this pandemic, we both take them to the Delaware water gap and we do the cliff jumping. >> That sounds good, I'll watch. >> Yeah, you'll watch, okay. So Michelle, you have so many stakeholders when you're trying to prioritize the different voices. You have the players, you have the owners, you have the league, as you mentioned, the broadcasters, your partners here and football mamas like myself. How do you prioritize when there's so many different stakeholders that you need to satisfy? >> I think balancing across stakeholders starts with, aligning on a mission. And if you spend a lot of time understanding where everyone's coming from, and you can find the common thread that ties them all together, you sort of do get them to naturally prioritize their work. And I think that's very important. So for us, at the NFL and even at Disney, it was our core values and our core purpose, is so well known and when anything challenges that we're able to sort of lay that out. But as a change agent, you have to be very empathetic. And I would say empathy is probably your strongest skill if you're a change agent. And that means listening to every single stakeholder, even when they're yelling at you, even when they're telling you your technology doesn't work and you know that it's user error, or even when someone is just emotional about what's happening to them and that they're not comfortable with it. So I think being empathetic and having a mission and understanding it is sort of how I prioritize and balance. >> Yeah, empathy, a very popular word this year. I can imagine those coaches and owners yelling. So, thank you for your leadership here. So Michelle, I look forward to discussing this more with our other customers and disruptors joining us in a little bit. (upbeat music) So we're going to take a hard pivot now and go from football to Chernobyl. Chernobyl what went wrong? 1986, as the reactors were melting down, they had the data to say, this is going to be catastrophic. And yet the culture said, "no, we're perfect, hide it. "Don't dare tell anyone." Which meant they went ahead and had celebrations in Kiev. Even though that increased the exposure, the additional thousands getting cancer and 20,000 years before the ground around there can even be inhabited again, this is how powerful and detrimental a negative culture, a culture that is unable to confront the brutal facts that hides data. This is what we have to contend with. And this is why I want you to focus on having, fostering a data-driven culture. I don't want you to be a laggard. I want you to be a leader in using data to drive your digital transformation. So I'll talk about culture and technology. Is it really two sides of the same coin, real-world impacts and then some best practices you can use to and innovate your culture. Now, oftentimes I would talk about culture and I talk about technology. And recently a CDO said to me, "Cindi, I actually think this is two sides "of the same coin. "One reflects the other." What do you think? Let me walk you through this. So let's take a laggard. What does the technology look like? Is it based on 1990s BI and reporting largely parametrized reports, on premises data, warehouses, or not even that operational reports at best one enterprise data warehouse, very slow moving and collaboration is only email. What does that culture tell you? Maybe there's a lack of leadership to change, to do the hard work that Sudheesh referred to, or is there also a culture of fear, afraid of failure, resistance to change complacency. And sometimes that complacency it's not because people are lazy. It's because they've been so beaten down every time a new idea is presented. It's like, no we're measured on least cost to serve. So politics and distrust, whether it's between business and IT or individual stakeholders is the norm. So data is hoarded. Let's contrast that with a leader, a data and analytics leader, what is their technology look like? Augmented analytics search and AI driven insights, not on premises, but in the cloud and maybe multiple clouds. And the data is not in one place, but it's in a data Lake and in a data warehouse, a logical data warehouse. The collaboration is being a newer methods, whether it's Slack or teams allowing for that real time decisioning or investigating a particular data point. So what is the culture in the leaders? It's transparent and trust. There is a trust that data will not be used to punish that there is an ability to confront the bad news. It's innovation, valuing innovation in pursuit of the company goals, whether it's the best fan experience and player safety in the NFL or best serving your customers. It's innovative and collaborative. There's none of this. Oh, well, I didn't invent that. I'm not going to look at that. There's still pride of ownership, but it's collaborating to get to a better place faster. And people feel empowered to present new ideas to fail fast, and they're energized knowing that they're using the best technology and innovating at the pace that business requires. So data is democratized. And democratized, not just for power users or analysts, but really at the point of impact what we like to call the new decision-makers or really the frontline workers. So Harvard business review partnered with us to develop this study to say, just how important is this? We've been working at BI and analytics as an industry for more than 20 years. Why is it not at the front lines? Whether it's a doctor, a nurse, a coach, a supply chain manager, a warehouse manager, a financial services advisor. Everyone said that if our 87% said, they would be more successful if frontline workers were empowered with data driven insights, but they recognize they need new technology to be able to do that. It's not about learning hard tools. The sad reality, only 20% of organizations are actually doing this. These are the data-driven leaders. So this is the culture in technology. How did we get here? It's because state-of-the-art keeps changing. So the first-generation BI and analytics platforms were deployed on premises on small datasets, really just taking data out of ERP systems that were also on premises. And state-of-the-art was maybe getting a management report, an operational report. Over time visual-based data discovery vendors disrupted these traditional BI vendors, empowering now analysts to create visualizations with the flexibility on a desktop, sometimes larger data, sometimes coming from a data warehouse. The current state of the art though, Gartner calls it augmented analytics at ThoughtSpot, we call it search and AI driven analytics. And this was pioneered for large scale datasets, whether it's on premises or leveraging the cloud data warehouses. And I think this is an important point. Oftentimes you, the data and analytics leaders will look at these two components separately, but you have to look at the BI and analytics tier in lockstep with your data architectures to really get to the granular insights and to leverage the capabilities of AI. Now, if you've never seen ThoughtSpot, I'll just show you what this looks like. Instead of somebody hard coding, a report it's typing in search keywords and very robust keywords contains rank top bottom, getting to a visual visualization that then can be pinned to an existing Pin board that might also contain insights generated by an AI engine. So it's easy enough for that new decision maker, the business user, the non analyst to create themselves. Modernizing the data and analytics portfolio is hard because the pace of change has accelerated. You use to be able to create an investment place a bet for maybe 10 years, a few years ago, that time horizon was five years, now it's maybe three years and the time to maturity has also accelerated. So you have these different components, the search and AI tier, the data science tier, data preparation and virtualization. But I would also say equally important is the cloud data warehouse and pay attention to how well these analytics tools can unlock the value in these cloud data warehouses. So ThoughtSpot was the first to market with search and AI driven insights. Competitors have followed suit, but be careful if you look at products like power BI or SAP analytics cloud, they might demo well, but do they let you get to all the data without moving it in products like Snowflake, Amazon Redshift, or Azure synapse or Google big query, they do not. They require you to move it into a smaller in memory engine. So it's important how well these new products inter operate. the pace of change, its acceleration Gartner recently predicted that by 2022, 65% of analytical queries will be generated using search or NLP or even AI. And that is roughly three times the prediction they had just a couple years ago. So let's talk about the real world impact of culture. And if you read any of my books or used any of the maturity models out there, whether the Gartner IT score that I worked on, or the data warehousing Institute also has the money surety model. We talk about these five pillars to really become data-driven. As Michelle, I spoke about it's focusing on the business outcomes, leveraging all the data, including new data sources, it's the talent, the people, the technology, and also the processes. And often when I would talk about the people and the talent, I would lump the culture as part of that. But in the last year, as I've traveled the world and done these digital events for Thought leaders, you have told me now culture is absolutely so important. And so we've pulled it out as a separate pillar. And in fact, in polls that we've done in these events, look at how much more important culture is as a barrier to becoming data-driven it's three times as important as any of these other pillars. That's how critical it is. And let's take an example of where you can have great data, but if you don't have the right culture, there's devastating impacts. And I will say, I have been a loyal customer of Wells Fargo for more than 20 years. But look at what happened in the face of negative news with data, it said, "hey, we're not doing good cross selling, "customers do not have both a checking account "and a credit card and a savings account and a mortgage." They opened fake accounts facing billions in fines, change in leadership that even the CEO attributed to a toxic sales culture, and they're trying to fix this. But even recently there's been additional employee backlash saying the culture has not changed. Let's contrast that with some positive examples, Medtronic, a worldwide company in 150 countries around the world. They may not be a household name to you, but if you have a loved one or yourself, you have a pacemaker, spinal implant diabetes, you know this brand. And at the start of COVID when they knew their business would be slowing down, because hospitals would only be able to take care of COVID patients. They took the bold move of making their IP for ventilators publicly available. That is the power of a positive culture. Or Verizon, a major telecom organization looking at late payments of their customers. And even though the U.S federal government said, "well, you can't turn them off. They said, "we'll extend that even beyond "the mandated guidelines." And facing a slow down in the business because of the tough economy, they said, you know what? "We will spend the time up skilling our people, "giving them the time to learn more "about the future of work, the skills and data "and analytics," for 20,000 of their employees, rather than furloughing them. That is the power of a positive culture. So how can you transform your culture to the best in class? I'll give you three suggestions, bring in a change agent, identify the relevance, or I like to call it WIFM and organize for collaboration. So the CDO, whatever your title is, chief analytics officer, chief digital officer, you are the most important change agent. And this is where you will hear that oftentimes a change agent has to come from outside the organization. So this is where, for example, in Europe, you have the CDO of Just Eat a takeout food delivery organization coming from the airline industry or in Australia, National Australian bank, taking a CDO within the same sector from TD bank going to NAB. So these change agents come in disrupt. It's a hard job. As one of you said to me, it often feels like Sisyphus. I make one step forward and I get knocked down again. I get pushed back. It is not for the faint of heart, but it's the most important part of your job. The other thing I'll talk about is WIFM. What is in it for me? And this is really about understanding the motivation, the relevance that data has for everyone on the frontline, as well as those analysts, as well as the executives. So if we're talking about players in the NFL, they want to perform better and they want to stay safe. That is why data matters to them. If we're talking about financial services, this may be a wealth management advisor. Okay we could say commissions, but it's really helping people have their dreams come true, whether it's putting their children through college or being able to retire without having to work multiple jobs still into your 70s or 80s for the teachers, teachers, you ask them about data. They'll say we don't, we don't need that. I care about the student. So if you can use data to help a student perform better, that is WIFM. And sometimes we spend so much time talking the technology, we forget what is the value we're trying to deliver with it. And we forget the impact on the people that it does require change. In fact, the Harvard business review study found that 44% said lack of change management is the biggest barrier to leveraging both new technology, but also being empowered to act on those data-driven insights. The third point organize for collaboration. This does require diversity of thought, but also bringing the technology, the data and the business people together. Now there's not a single one size fits all model for data and analytics. At one point in time, even having a BICC, a BI competency center was considered state-of-the-art. Now for the biggest impact what I recommend is that you have a federated model centralized for economies of scale. That could be the common data, but then in bed, these evangelists, these analysts of the future within every business unit, every functional domain. And as you see this top bar, all models are possible, but the hybrid model has the most impact, the most leaders. So as we look ahead to the months ahead, to the year ahead an exciting time, because data is helping organizations better navigate a tough economy, lock in the customer loyalty. And I look forward to seeing how you foster that culture that's collaborative with empathy and bring the best of technology, leveraging the cloud, all your data. So thank you for joining us at Thought Leaders. And next I'm pleased to introduce our first change agent, Tom Mazzaferro chief data officer of Western union. And before joining Western union, Tom made his Mark at HSBC and JPMorgan Chase spearheading digital innovation in technology, operations, risk compliance, and retail banking. Tom, thank you so much for joining us today. (upbeat music) >> Very happy to be here and looking forward to talking to all of you today. So as we look to move organizations to a data-driven, capability into the future, there is a lot that needs to be done on the data side, but also how does data connect and enable different business teams and technology teams into the future. As you look across, our data ecosystems and our platforms and how we modernize that to the cloud in the future, it all needs to basically work together, right? To really be able to drive and over the shift from a data standpoint, into the future, that includes being able to have the right information with the right quality of data, at the right time to drive informed business decisions, to drive the business forward. As part of that, we actually have partnered with ThoughtSpot, to actually bring in the technology to help us drive that as part of that partnership. And it's how we've looked to integrate it into our overall business as a whole we've looked at how do we make sure that our business and our professional lives right, are enabled in the same ways as our personal lives. So for example, in your personal lives, when you want to go and find something out, what do you do? You go onto google.com or you go on to Bing we go onto Yahoo and you search for what you want search to find and answer. ThoughtSpot for us as the same thing, but in the business world. So using ThoughtSpot and other AI capability it's allowed us to actually, enable our overall business teams in our company to actually have our information at our fingertips. So rather than having to go and talk to someone or an engineer to go pull information or pull data, we actually can have the end-users or the business executives, right. Search for what they need, what they want at the exact time that action need it to go and drive the business forward. This is truly one of those transformational things that we've put in place. On top of that, we are on the journey to modernize our larger ecosystem as a whole. That includes modernizing our underlying data warehouses, our technology, or our Eloqua environments. And as we move that, we've actually picked two of our cloud providers going to AWS and GCP. We've also adopted Snowflake to really drive and to organize our information and our data then drive these new solutions and capabilities forward. So they portion of us though is culture. So how do we engage with the business teams and bring the IT teams together to really drive these holistic end to end solutions and capabilities to really support the actual business into the future? That's one of the keys here, as we look to modernize and to really enhance our organizations to become data-driven, this is the key. If you can really start to provide answers to business questions before they're even being asked and to predict based upon different economic trends or different trends in your business, what does this is maybe be made and actually provide those answers to the business teams before they're even asking for it, that is really becoming a data-driven organization. And as part of that, it's really then enables the business to act quickly and take advantage of opportunities as they come in based upon, industries based upon markets, based upon products, solutions, or partnerships into the future. These are really some of the keys that become crucial as you move forward, right, into this new age, especially with COVID. With COVID now taking place across the world, right? Many of these markets, many of these digital transformations are accelerating and are changing rapidly to accommodate and to support customers in these very difficult times, as part of that, you need to make sure you have the right underlying foundation ecosystems and solutions to really drive those capabilities and those solutions forward. As we go through this journey, both of my career, but also each of your careers into the future, right? It also needs to evolve, right? Technology has changed so drastically in the last 10 years, and that change is only accelerating. So as part of that, you have to make sure that you stay up to speed, up to date with new technology changes both on the platform standpoint tools, but also what do our customers want? What do our customers need and how do we then service them with our information, with our data, with our platform and with our products and our services to meet those needs and to really support and service those customers into the future. This is all around becoming a more data organization such as how do you use your data to support the current business lines, but how do you actually use your information, your data to actually put a better support your customers, better support your business, better support your employees, your operations teams, and so forth, and really creating that full integration in that ecosystem is really when you start to get large dividends from this investments into the future. But that being said, hope you enjoy the segment on how to become and how to drive it data driven organization. And, looking forward to talking to you again soon. Thank you. >> Tom that was great thanks so much. Now I'm going to have to brag on you for a second as a change agent you've come in disrupted and how long have you been at Western union? >> Only nine months, so just started this year, but, doing some great opportunities and great changes. And we have a lot more to go, but, we're really driving things forward in partnership with our business teams and our colleagues to support those customers going forward. >> Tom, thank you so much. That was wonderful. And now I'm excited to introduce you to Gustavo Canton, a change agent that I've had the pleasure of working with meeting in Europe, and he is a serial change agent, most recently with Schneider electric, but even going back to Sam's clubs, Gustavo welcome. (upbeat music) >> So, hey everyone, my name is Gustavo Canton and thank you so much, Cindi, for the intro, as you mentioned, doing transformations is high effort, high reward situation. I have empowered many transformations and I have led many transformations. And what I can tell you is that it's really hard to predict the future, but if you have a North star and where you're going, the one thing that I want you to take away from this discussion today is that you need to be bold to evolve. And so in today, I'm going to be talking about culture and data, and I'm going to break this down in four areas. How do we get started barriers or opportunities as I see it, the value of AI, and also, how do you communicate, especially now in the workforce of today with so many different generations, you need to make sure that you are communicating in ways that are non-traditional sometimes. And so how do we get started? So I think the answer to that is you have to start for you yourself as a leader and stay tuned. And by that, I mean, you need to understand not only what is happening in your function or your field, but you have to be varying into what is happening in society, socioeconomically speaking wellbeing. The common example is a great example. And for me personally, it's an opportunity because the one core value that I have is well-being, I believe that for human potential, for customers and communities to grow wellbeing should be at the center of every decision. And as somebody mentioned is great to be, stay in tune and have the skillset and the courage. But for me personally, to be honest, to have this courage is not about not being afraid. You're always afraid when you're making big changes when you're swimming upstream, but what gives me the courage is the empathy part. Like I think empathy is a huge component because every time I go into an organization or a function, I try to listen very attentively to the needs of the business and what the leaders are trying to do. What I do it thinking about the mission of how do I make change for the bigger, workforce? for the bigger good. Despite this fact that this might have a perhaps implication on my own self-interest in my career, right? Because you have to have that courage sometimes to make choices that I know we'll see in politically speaking, what are the right thing to do? And you have to push through it. And you have to push through it. So the bottom line for me is that I don't think they're transforming fast enough. And the reality is I speak with a lot of leaders and we have seen stories in the past. And what they show is that if you look at the four main barriers that are basically keeping us behind budget, inability to act cultural issues, politics, and lack of alignment, those are the top four. But the interesting thing is that as Cindi has mentioned, these topics culture is actually gaining, gaining more and more traction. And in 2018, there was a story from HBR and it was about 45%. I believe today it's about 55%, 60% of respondents say that this is the main area that we need to focus on. So again, for all those leaders and all the executives who understand and are aware that we need to transform, commit to the transformation and set a state, deadline to say, "hey, in two years, we're going to make this happen. "What do we need to do to empower and enable "this change engines to make it happen?" You need to make the tough choices. And so to me, when I speak about being bold is about making the right choices now. So I'll give you samples of some of the roadblocks that I went through as I think transformation most recently, as Cindi mentioned in Schneider. There are three main areas, legacy mindset. And what that means is that we've been doing this in a specific way for a long time and here is how we have been successful what was working the past is not going to work now. The opportunity there is that there is a lot of leaders who have a digital mindset and there're up and coming leaders that are not yet fully developed. We need to mentor those leaders and take bets on some of these talent, including young talent. We cannot be thinking in the past and just wait for people, three to five years for them to develop because the world is going to in a way that is super fast. The second area, and this is specifically to implementation of AI is very interesting to me because just example that I have with ThoughtSpot, right, we went to implementation and a lot of the way is the IT team function of the leaders look at technology, they look at it from the prism of the prior all success criteria for the traditional Bi's. And that's not going to work. Again the opportunity here is that you need to really find what successful look like. In my case, I want the user experience of our workforce to be the same as user experience you have at home is a very simple concept. And so we need to think about how do we gain the user experience with this augmented analytics tools and then work backwards to have the right talent processes and technology to enable that. And finally, with COVID a lot of pressuring organizations, and companies to do more with less. And the solution that most leaders I see are taking is to just minimize costs, sometimes in cut budget, we have to do the opposite. We have to actually invest some growth areas, but do it by business question. Don't do it by function. If you actually invest in these kind of solutions, if you actually invest on developing your talent, your leadership to see more digitally, if you actually invest on fixing your data platform, it's not just an incremental cost. It's actually this investment is going to offset all those hidden costs and inefficiencies that you have on your system, because people are doing a lot of work and working very hard, but it's not efficiency, and it's not working in the way that you might want to work. So there is a lot of opportunity there. And you just to put into some perspective, there have studies in the past about, how do we kind of measure the impact of data. And obviously this is going to vary by your organization maturity, is going to, there's going to be a lot of factors. I've been in companies who have very clean, good data to work with. And I think with companies that we have to start basically from scratch. So it all depends on your maturity level, but in this study, what I think is interesting is they try to put attack line or attack price to what is the cost of incomplete data. So in this case, it's about 10 times as much to complete a unit of work when you have data that is flawed as opposed to have perfect data. So let me put that just in perspective, just as an example, right? Imagine you are trying to do something and you have to do 100 things in a project, and each time you do something, it's going to cost you a dollar. So if you have perfect data, the total cost of that project might be $100. But now let's say you have any percent perfect data and 20% flawed data by using this assumption that flawed data is 10 times as costly as perfect data. Your total costs now becomes $280 as opposed to $100. This is just for you to really think about as a CIO CTO, CHRO CEO, are we really paying attention and really closing the gaps that we have on our data infrastructure. If we don't do that, it's hard sometimes to see the snowball effect or to measure the overall impact. But as you can tell the price that goes up very, very quickly. So now, if I were to say, how do I communicate this? Or how do I break through some of these challenges or some of these various, right. I think the key is I am in analytics. I know statistics obviously, and love modeling and data and optimization theory and all that stuff. That's what I came to analytics. But now as a leader and as a change agent, I need to speak about value. And in this case, for example, for Schneider, there was this tagline called free up your energy. So the number one thing that they were asking from the analytics team was actually efficiency, which to me was very interesting. But once I understood that I understood what kind of language to use, how to connect it to the overall strategy and basically how to bring in the, the right leaders, because you need to focus on the leaders that you're going to make the most progress. Again, low effort, high value. You need to make sure you centralize all the data as you can. You need to bring in some kind of augmented analytics solution. And finally you need to make it super simple for the, in this case, I was working with the HR teams in other areas, so they can have access to one portal. They don't have to be confused in looking for 10 different places to find information. I think if you can actually have those four foundational pillars, obviously under the guise of having a data-driven culture, that's when you can actually make the impact. So in our case, it was about three years total transformation, but it was two years for this component of augmented analytics. It took about two years to talk to IT get leadership support, find the budgeting, get everybody on board, make sure the safe criteria was correct. And we call this initiative, the people analytics portal, it was actually launched in July of this year. And we were very excited and the audience was very excited to do this. In this case, we did our pilot in North America for many, many manufacturers. But one thing that is really important is as you bring along your audience on this, you're going from Excel, in some cases or Tableau to other tools like, ThoughtSpot, you need to really explain them what is the difference and how these tools can truly replace, some of the spreadsheets or some of the views that you might have on these other kind of tools. Again, Tableau, I think it's a really good tool. There are other many tools that you might have in your toolkit. But in my case, personally, I feel that you need to have one portal going back to Cindi's point. I really truly enable the end user. And I feel that this is the right solution for us, right? And I will show you some of the findings that we had in the pilot in the last two months. So this was a huge victory, and I will tell you why, because it took a lot of effort for us to get to the station. Like I said, it's been years for us to kind of lay the foundation, get the leadership, and shaping culture so people can understand why you truly need to invest on (indistinct) analytics. And so what I'm showing here is an example of how do we use basically, a tool to capture in video the qualitative findings that we had, plus the quantitative insights that we have. So in this case, our preliminary results based on our ambition for three main metrics, hours saved user experience and adoption. So for hours saved or a mission was to have 10 hours per week per employee save on average user experience, or ambition was 4.5. And adoption, 80%. In just two months, two months and a half of the pilot, we were able to achieve five hours per week per employee savings. Our user experience for 4.3 out of five and adoption of 60%. Really, really amazing work. But again, it takes a lot of collaboration for us to get to the stage from IT, legal, communications, obviously the operations teams and the users in HR safety and other areas that might be, basically stakeholders in this whole process. So just to summarize this kind of effort takes a lot of energy. You are a change agent. You need to have a courage to make the decision and understand that I feel that in this day and age, with all this disruption happening, we don't have a choice. We have to take the risk, right? And in this case, I feel a lot of satisfaction in how we were able to gain all these very source for this organization. And that gave me the confidence to know that the work has been done and we are now in a different stage for the organization. And so for me, it to say, thank you for everybody who has believed, obviously in our vision, everybody who has believe in the word that we were trying to do and to make the life of four workforce or customers or in community better. As you can tell, there is a lot of effort. There is a lot of collaboration that is needed to do something like this. In the end, I feel very satisfied. With the accomplishments of this transformation, and I just want to tell for you, if you are going right now in a moment that you feel that you have to swim upstream what would mentors, what would people in this industry that can help you out and guide you on this kind of a transformation is not easy to do is high effort, but is well worth it. And with that said, I hope you are well, and it's been a pleasure talking to you. Talk to you soon, take care. >> Thank you, Gustavo, that was amazing. All right, let's go to the panel. (air whooshing) >> Okay, now we're going to go into the panel and bring Cindi, Michelle, Tom, and Gustavo back and have an open discussion. And I think we can all agree how valuable it is to hear from practitioners. And I want to thank the panel for sharing their knowledge with the community. And one common challenge that I heard you all talk about was bringing your leadership and your teams along on the journey with you. We talk about this all the time, and it is critical to have support from the top. Why? Because it directs the middle and then it enables bottoms up innovation effects from the cultural transformation that you guys all talked about. It seems like another common theme we heard is that you all prioritize database decision-making in your organizations and you combine two of your most valuable assets to do that and create leverage, employees on the front lines. And of course the data. And as you rightly pointed out, Tom, the pandemic has accelerated the need for really leaning into this. The old saying, if it ain't broke don't fix it. Well COVID is broken everything. And it's great to hear from our experts, how to move forward. So let's get right into it. So Gustavo, let's start with you if I'm an aspiring change agent and let's say I'm a budding data leader. What do I need to start doing? What habits do I need to create for long lasting success? >> I think curiosity is very important. You need to be, like I say, in tune to what is happening, not only in your specific field, like I have a passion for analytics, I can do this for 50 years plus, but I think you need to understand wellbeing other areas across not only a specific business, as you know I come from, Sam's club Walmart, retail, I mean energy management technology. So you have to try to push yourself and basically go out of your comfort zone. I mean, if you are staying in your comfort zone and you want to use lean continuous improvement, that's just going to take you so far. What you have to do is, and that's what I try to do is I try to go into areas, businesses, and transformation that make me stretch and develop as a leader. That's what I'm looking to do so I can help transform the functions organizations and do the change management, change of mindset required for these kinds of efforts. >> Michelle, you're at the intersection of tech and sports and what a great combination, but they're both typically male oriented fields. I mean, we've talked a little bit about how that's changing, but two questions. Tell us how you found your voice and talk about why diversity matters so much more than ever now. >> No, I found my voice really as a young girl, and I think I had such amazing support from men in my life. And I think the support and sponsorship as well as sort of mentorship along the way, I've had amazing male mentors who have helped me understand that my voice is just as important as anyone else's. I mean, I have often heard, and I think it's been written about that a woman has to believe they'll 100% master topic before they'll talk about it where a man can feel much less mastery and go on and on. So I was that way as well. And I learned just by watching and being open, to have my voice. And honestly at times demand a seat at the table, which can be very uncomfortable. And you really do need those types of, support networks within an organization. And diversity of course is important and it has always been. But I think if anything, we're seeing in this country right now is that diversity among all types of categories is front and center. And we're realizing that we don't all think alike. We've always known this, but we're now talking about things that we never really talked about before. And we can't let this moment go unchecked and on, and not change how we operate. So having diverse voices within your company and in the field of tech and sports, I am often the first and only I'm was the first, CIO at the NFL, the first female senior executive. It was fun to be the first, but it's also, very challenging. And my responsibility is to just make sure that, I don't leave anyone behind and make sure that I leave it good for the next generation. >> Well, thank you for that. That is inspiring. And Cindi, you love data and the data's pretty clear that diversity is a good business, but I wonder if you can add your perspectives to this conversation? >> Yeah, so Michelle has a new fan here because she has found her voice. I'm still working on finding mine. And it's interesting because I was raised by my dad, a single dad. So he did teach me how to work in a predominantly male environment, but why I think diversity matters more now than ever before. And this is by gender, by race, by age, by just different ways of working in thinking is because as we automate things with AI, if we do not have diverse teams looking at the data and the models and how they're applied, we risk having bias at scale. So this is why I think I don't care what type of minority you are finding your voice, having a seat at the table and just believing in the impact of your work has never been more important. And as Michelle said more possible. >> Great perspectives, thank you. Tom I want to go to you. I mean, I feel like everybody in our businesses in some way, shape or form become a COVID expert, but what's been the impact of the pandemic on your organization's digital transformation plans? >> We've seen a massive growth actually in a digital business over the last, 12 months, really, even in celebration, right? Once COVID hit, we really saw that in the 200 countries and territories that we operate in today and service our customers, today, that there's been a huge need, right? To send money, to support family, to support, friends and support loved ones across the world. And as part of that we are very, honored to get to support those customers that we, across all the centers today. But as part of that acceleration we need to make sure that we had the right architecture and the right platforms to basically scale, right, to basically support and provide the right kind of security for our customers going forward. So as part of that, we did do some pivots and we did accelerate some of our plans on digital to help support that overall growth coming in and to support our customers going forward, because there were these times during this pandemic, right? This is the most important time. And we need to support those that we love and those that we care about and doing that it's one of those ways is actually by sending money to them, support them financially. And that's where, really our part of that our services come into play that we really support those families. So it was really a great opportunity for us to really support and really bring some of our products to this level and supporting our business going forward. >> Awesome, thank you. Now I want to come back to Gustavo, Tom I'd love for you to chime in too. Did you guys ever think like you were, you were pushing the envelope too much in doing things with data or the technology that was just maybe too bold, maybe you felt like at some point it was failing or you're pushing your people too hard. Can you share that experience and how you got through it? >> Yeah, the way I look at it is, again, whenever I go to an organization, I ask the question, hey, how fast you would like transform. And, based on the agreements from the leadership and the vision that we want to take place, I take decisions. And I collaborate in a specific way now, in the case of COVID, for example, right. It forces us to remove silos and collaborate in a faster way. So to me, it was an opportunity to actually integrate with other areas and drive decisions faster, but make no mistake about it. When you are doing a transformation, you are obviously trying to do things faster than sometimes people are comfortable doing, and you need to be okay with that. Sometimes you need to be okay with tension, or you need to be okay debating points or making repetitive business cases until people connect with the decision because you understand, and you are seeing that, "hey, the CEO is making a one two year, efficiency goal. "The only way for us to really do more with less "is for us to continue this path. "We cannot just stay with the status quo. "We need to find a way to accelerate the transformation." That's the way I see it. >> How about you Tom, we were talking earlier with Sudheesh and Cindi, about that bungee jumping moment. What could you share? >> Yeah, I think you hit upon it, right now, the pace of change with the slowest pace that you see for the rest of your career. So as part of that, right, that's what I tell my team is that you need to be, you need to feel comfortable being uncomfortable. I mean, that we have to be able to basically scale, right, expand and support that the ever-changing needs in the marketplace and industry our customers today, and that pace of change that's happening, right. And what customers are asking for and the competition in the marketplace, it's only going to accelerate. So as part of that, as you look at what, how you're operating today in your current business model, right. Things are only going to get faster. So you have to plan into a line into drive the agile transformation so that you can scale even faster in the future. So as part of that, that's what we're putting in place here, right, is how do we create that underlying framework and foundation that allows the organization to basically continue to scale and evolve into the future? >> Yeah, we're definitely out of our comfort zones, but we're getting comfortable with it. So, Cindi, last question, you've worked with hundreds of organizations, and I got to believe that, some of the advice you gave when you were at Gartner, which is pre COVID, maybe sometimes clients didn't always act on it. They're not on my watch for whatever variety of reasons, but it's being forced on them now. But knowing what you know now that we're all in this isolation economy, how would you say that advice has changed? Has it changed? What's your number one action and recommendation today? >> Yeah, well, first off, Tom just freaked me out. What do you mean? This is the slowest ever even six months ago I was saying the pace of change in data and analytics is frenetic. So, but I think you're right, Tom, the business and the technology together is forcing this change. Now, Dave, to answer your question, I would say the one bit of advice, maybe I was a little more, very aware of the power and politics and how to bring people along in a way that they are comfortable. And now I think it's, you know what you can't get comfortable. In fact, we know that the organizations that were already in the cloud have been able to respond and pivot faster. So if you really want to survive as Tom and Gustavo said, get used to being uncomfortable, the power and politics are going to happen. Break the rules, get used to that and be bold. Do not be afraid to tell somebody they're wrong and they're not moving fast enough. I do think you have to do that with empathy, as Michelle said, and Gustavo, I think that's one of the key words today besides the bungee jumping. So I want to know where's the dish going to go bungee jumping. >> Guys fantastic discussion, really. Thanks again to all the panelists and the guests. It was really a pleasure speaking with you today. Really virtually all of the leaders that I've spoken to in the Cube program. Recently, they tell me that the pandemic is accelerating so many things, whether it's new ways to work, we heard about new security models and obviously the need for cloud. I mean, all of these things are driving true enterprise wide digital transformation, not just, as I said before, lip service. Sometimes we minimize the importance and the challenge of building culture and in making this transformation possible. But when it's done, right, the right culture is going to deliver tremendous results. Yeah, what does that mean getting it right? Everybody's trying to get it right. My biggest takeaway today is it means making data part of the DNA of your organization. And that means making it accessible to the people in your organization that are empowered to make decisions, decisions that can drive new revenue, cut costs, speed access to critical care, whatever the mission is of your organization. Data can create insights and informed decisions that drive value. Okay. Let's bring back Sudheesh and wrap things up. Sudheesh, please bring us home. >> Thank you. Thank you, Dave. Thank you, the Cube team, and thank goes to all of our customers and partners who joined us and thanks to all of you for spending the time with us. I want to do three quick things and then close it off. The first thing is I want to summarize the key takeaways that I had from all four of our distinguished speakers. First, Michelle, I will simply put it. She said it really well. That is be brave and drive. Don't go for a drive along. That is such an important point. Oftentimes, you know that I think that you have to do to make the positive change that you want to see happen but you wait for someone else to do it, not just, why not you? Why don't you be the one making that change happen? That's the thing that I've picked up from Michelle's talk. Cindi talked about finding the importance of finding your voice. Taking that chair, whether it's available or not, and making sure that your ideas, your voices are heard, and if it requires some force, then apply that force. Make sure your ideas are heard. Gustavo talked about the importance of building consensus, not going at things all alone sometimes building the importance of building the quorum. And that is critical because if you want the changes to last, you want to make sure that the organization is fully behind it. Tom, instead of a single takeaway, what I was inspired by is the fact that a company that is 170 years old, 170 years old, 200 companies and 200 countries they're operating in. And they were able to make the change that is necessary through this difficult time. So in a matter of months, if they could do it, anyone could. The second thing I want to do is to leave you with a takeaway that is I would like you to go to topspot.com/nfl because our team has made an app for NFL on Snowflake. I think you will find this interesting now that you are inspired and excited because of Michelle's talk. And the last thing is please go to thoughtspot.com/beyond our global user conference is happening in this December. We would love to have you join us. It's again, virtual, you can join from anywhere. We are expecting anywhere from five to 10,000 people, and we would love to have you join and see what we've been up to since last year. We have a lot of amazing things in store for you, our customers, our partners, our collaborators, they will be coming and sharing. We'll be sharing things that we've have been working to release something that will come out next year. And also some of the crazy ideas our engineers have been cooking up. All of those things will be available for you at the Thought Spot Beyond. Thank you. Thank you so much.

[Music] from the cube studios in Palo Alto in Boston it's the cube covering the IBM think brought to you by IBM welcome back to the cubes coverage of IBM think 2020 the digital version of IBM think Bill Smith is here he's the general manager of IBM Global Financing bill thanks for coming on thank you very much for having me up I'm looking forward to it yeah me too so you know I remember the days of the the glory days of IBM you know leasing I used to run the leasing program for a couple of years at IDC and it was just it was an awesome time but things have changed a lot I mean iBM has really transformed its financing army what do we need to know about today's IBM Global Financing well some things are still saying but as you said a lot is different we constantly are celebrating our 40th anniversary this year a big part of our business is now software and services financing a lot of project man Singh we still do a lot of hardware business but it's a much much smaller portion of our thirty billion dollar asset base so it's a great business it was a great business back then when you were involved in it the very profitable and and interesting business today as it was then as I said big difference though a lot of software and services yeah well I've of course I would have mentioned that most if not all mainframes are still leased but now you've expanded it to many many more areas what can you tell us about you know some of the financial metrics you know what's the profile of the business look like yeah sure it's a it's a big business it looks a lot like a bank and we're around 30 billion in asset we do business and you know 40 plus countries around the world 26% return on equity most of the portfolio's very high percentage of that portfolio is investment rate so a couple other key metrics is we we actually issue our own debt we became an SCC registrant a couple years ago we have a you know many debt holders we only have one owner and one equity owner and that's IBM it's a very good business but 2% of IBM's revenue but about 10% of IBM's from yeah well so now this is an important aspect that I want to join to it when people you know look at the IBM balance sheet they'll you know go out or whatever Yahoo Finance and say oh my gosh look at all this debt must be you know I know of course the redhead acquisition is part of that but you're carrying a lot of the debt as part of the financing operation but people need to understand it's a very profitable and very high quality debt and if we could just address that one of the big benefits to becoming an SCC registrant is the amount of transparency that we were able to provide the investors so unlike other captive financing companies they just get rolled in to different units or parts of the books you know we actually report in the segment reporting every quarter we certify just like they you know public company would we're still a wholly owned subsidiary but the level of transparency is really great for the investors which is why you know debt holders were able to Willington by our paper it's still a very client based business we do very specialized structures we only do business and NIT as I told the board many times I'd be on board many times we don't do planes trains and automobiles we only do we only do I see and and really you know 99 percent of our businesses is IBM only so you talked about branching into software and services I'm interested in how the the client base has has transformed as a result of that sure you know there's a lot of digital transformations going on there's still a lot of ERP implementations around the world very large project so we we described it as project financing so if client will come to us and say bill we'd like to match the benefit of this very large GBS or services engagement that the IBM team is leading we like to match the benefit when we have the cash outlay so we'll put a structure together that will delay the payment for when those benefits begin to come online for the enterprise and then match payment with when benefits are actually received it's proven to be a very very effective financing instrument for us but highly effective economic instruments for the clients also gives if I'm you know contracting with IBM services you've got a major incentive for the services organization to deliver value as soon as possible and that aligns everybody doesn't it it absolutely does you know we have a lot of business partners where they'll do similar structures as well so other integrators you know if the redhead acquisition and and clients moving to a hybrid cloud model sometimes there's a migration that will take place between the traditional legacy systems and when they move that cloud well that bubble of been we take Dera so will will finance that migration effort for the client and again to match their cash outlays with when they receive the benefit that I've left from that cloud migration in the day there were tons of leasing companies who would take the risk and predict the residual values and then they'd take the paper and and and then it was just an awesome business and of course the government provided some incentives to do that with the investment tax credit what about things like refurbished equipment is that's still something that you do today or is that a thing of the mainframe pass that's great yeah that's a great question you know it's a it's still a really important and a sustainable business for us we we take equipment back that comes off of a lease or sometimes alone but typically a lease and we will refurbish that or reman factor that equipment and then put it back into market oftentimes it goes into our services organization for them to use with their clients the global technology services typically you know we will we will matram a fact or a remarket about 29,000 IT devices a week 16,000 tons of idea quipment around the in a year around the world so these remanufacturing refurbishing centers so it's a even though the hardware business has come down in its percentage of IBM's business compared to software and services it's still a very very big business as you can see by the the size of the number of equipment and the tonnage what about some of the initiatives that are so you mentioned you know the digital transformation a lot going on with cloud machine intelligence I mean those big projects you know some of them are still multi-year you know seven weeks people say oh there's no more multi-year projects but digital transformations are multi-year projects even though you might take them in chunks but I'm going to capitalize those can I finance them as well what role does does IBM finance play in that you absolutely can and and that is a big big part of our business today though the the client will they look I've got a very large digital transformation project going to take place in four countries we are looking for an opportunity to match those cash outlays with when those countries come online or when we begin to receive the benefits we also want you've been and some of the software that goes with this digital transformation and we also want to spin and the IT infrastructure that's required so we may put those services software and hardware on a different financial instruments but it looks like you know one total bill for the client and it and its global it's a global footprint so we're able to handle the different currencies around the world and and again most importantly match those cash outlays with when the benefits are received so bill you know as long as I've been in this business the IT investments from a CFOs perspective have always been viewed as a higher risk granted higher reward but but you know the the CFOs would say okay you're gonna have to have a little higher IRR for this one because you know the business moves so fast technology changes so quickly how are you seeing the CIO - CFO conversation evolve what's your advice to see iPods in terms of how they talk to two CFO's that's another really good question so I was just on with actually new client this morning one was the F of the other one was a treasurer and they were asking my opinion about this financial instrument and and and getting some advice actually the conversation went look it's not really cost the debt issue the cost of money is always part of the economic decision but oftentimes those clients use financing instrument as a way to manage the asset manage the asset throughout the life the project they also want to focus on the delivery the quality of the delivery I think that takes place during these very very large project financing engagements so the CFO specifically said look I really like business case it's quite clear when we're gonna receive these benefit what I'd like to know Bill is how do you view the risk of the implementation and you know we were able to share with them the risk work that we do with with GBS team our level of confidence that it will be done on time and on budget and the skill level of the of the partner team that's been assigned so it actually has allowed us to have a different conversation with different group or senior level at the account CFO Treasury sometimes the controller you play an important role in de-risking the the business case and as well I mean I would imagine right now in there you know these on certain times that you know IBM Global Financing can provide liquidity to businesses who need it that you you know are confident you know are stable business but might need some help you know getting through this pandemic we can and as you said the what makes us a little different is you know we make credit decisions on what we call arm's length credit visions you know for a standalone albeit at the financing company so we're very very focused on maintaining the right investment grade of the portfolio we're going to make really really good prudent risk decisions you know that being said we have some fabulous IBM clients that have been clients for a long time we work very closely with them understanding their financial structures what's what's important to them and they're very transparent with us about you know with financial challenges they have so we'll continue to provide that liquidity we are going to be very prudent but we'll certainly help those really good clients well last question it's kind of where do you see this going what's your kind of vision for IBM global global finance and give us a little glimpse of the future sure you know I think you'll see us continue to migrate in the direction of the IBM company moves the IBM company is aggressively moving towards a hybrid cloud model we'll continue to provide those migration services will continue to do you know some short-term financing a part of the business we didn't talk about was the commercial financing we provide short-term working capital through IBM 6000 isness partners so to help them with their free cash flow running their businesses you know that's a pretty big business for us we'll do about you know 14 billion or so in financing to that commercial financing business so I'll see that continue as well and then finally I'm sure you'll see us continue to grow the software and services financing as well and we'll stay with the very very high anything rate for whatever is left of IBM's Hardware portfolio point you made about the partner financing is huge like you said it helps them bridge their free cash flow it makes IBM a more attractive partner for through those resellers and partners it does and we've been in that business for a very very long time oftentimes we are one of the you know largest predators for those partners so the liquidity that we provide Danville allow them to run their businesses day to day with that short term working capital is something that we're very committed to you over the long term for IBM product and services so IBM Global Financing a very important and strategic part of IBM's business a differentiator a very few companies actually can provide that type of service to their clients and so bill really appreciate you coming to the Kuban and sharing that with with our audience great to have you back yeah very much Brad you've been a real pleasure - our pleasure as well thank you for watching everybody this is Dave Volante for the cube our continuous coverage of IBM think 2020 we'll be right back right after this short break you're watching the cube [Music] you

>> Narrator: From Miami Beach, Florida, it's theCUBE, covering Acronis Global Cyber Summit 2019. Brought to you by Acronis. >> Okay, welcome back everyone. It's theCUBE's two day coverage of Acronis' Global Cyber Summit 2019, here in Miami Beach, at the Fontainebleau Hotel. I'm John Furrier, host of theCUBE. We're with Katya Fisher, Partner Chief and Chief Privacy Officer at Greenspoon Marder. Legal advice is right here on theCUBE, ask her anything. We're going to do a session here. Thanks for coming on, appreciate it. >> Thank you very much, I'm going to have to do the little disclaimer that all lawyers do, which is, nothing here is to be construed as advice. It's just opinions and information only. >> I didn't mean to set you up like that. All kidding aside, you closed for the panel here for Acronis' conference. Obviously, cyber protection's their gig. Data protection, cyber protection. Makes sense, I think that category is evolving from a niche, typical enterprise niche, to a much more holistic view as data becomes you know, critical in the security piece of it. What was on the, what were you guys talking about in the panel? >> Well, so, the first issue that you have to understand is that cyber protection is something that has now become critical for pretty much every individual on the planet, as well as governments. So something that we talked about on the panel today was how governments are actually dealing with incoming cyber threats. Because now, they have to take a look at it from the perspective of, first of all, how they themselves are going to become technologically savvy enough to protect themselves, and to protect their data, but also, in terms of regulation and how to protect citizens. So, that was what the panel discussion was about today. >> On the regulatory front, we've been covering on SiliconANGLE, our journalism site, the innovation balance, is regulatory action helpful or hurtful to innovation? Where is the balance? What is the education needed? What's your thoughts on this, where are we? I mean early stages, where's the progress? What needs to get done? What's your view on the current situation? >> So, I'm an attorney, so my views are perhaps a bit more conservative than some of the technologists you might speak with and some of my clients as well. I think that regulation is, as a general matter, it can be a good thing. And it can be quite necessary. The issues that we see right now, with regard to regulation, I think one of the hottest issues today is with respect to data laws and data privacy laws. And that's obviously something that I think everyone is familiar with. I mean take a look at, in the United States alone. We've seen the city of Baltimore dealing with breaches. We've seen other parts of the government, from the Federal level all the way down to municipalities, dealing with breaches in cyber attacks. We've seen data breaches from banks, Capital One, right? I believe Dunkin' Donuts suffered a breach. Equifax, and then at the same time we've also seen individuals up in arms over companies like 23andMe and Facebook, and how data is used and processed. So data seems to be a very very hot button issue today across the board. So something that we're really thinking about now is, first of all, with respect to the regulatory climate, how to deal with it, not only in the United States, but on a global level, because, when we talk about technology and the internet right, we're in an era of globalization. We're in an era where a lot of these things go across boarders and therefore we have to be mindful of the regulatory regimes in other places. So, I'll give you an example. You might be familiar with the GDPR. So the GDPR is in the European Union. It's been in effect now for the last year and a half, but it affects all my U.S. clients. We still have to take a look at the GDPR because at the end of the day my clients, my firm, might be dealing with foreign companies, foreign individuals, companies that have some sort of nexus in the European Union, et cetera. So because of that, even though the GDPR is a set of regulations specific to the European Union, it becomes extremely important in the context of the United States and globally. At the same time, the GDPR has certain issues that then end up conflicting often times with some of the regulations that we have here in the United States. So, for example, the right to be forgotten is perhaps the most famous clause or part of the GDPR and the right to be forgotten is this concept in the GDPR that an individual can have information erased about him or her in order to protect his or her privacy. The problem is that from a technical's perspective, first of all, it's an issue because it becomes very very difficult to figure out where data is stored, if you're using third-party processors, et cetera. But from a regulatory perspective, the conflict comes in when you take a look at certain U.S. laws. So take a look for example at banking regulations in the United States. Banks have to hold some types of data for seven years and other types of data they can never delete. Right? Lawyers. I am licensed by the New York State Bar Association. Lawyers have their own rules and regulations with regard to how they store data and how they store information. HIPAA, medical records. So, you see these conflicts and there are ways to deal with them appropriately, but it becomes some food for thought. >> So it's complicated. >> It's really complicated >> There's a lot of conflicts. >> Yeah. >> First of all, I talked to a storage guy. He's like data? I don't even know which drive that's on. Storage is not elevated up to the level of state-of-the-art, from a tracking standpoint. So, it's just on the business logic is complicated. I can't imagine that. So, I guess my question to you is that, are you finding that the jurisdictional issue, is it the biggest problem, in terms of crossport and the business side or is the technical underpinnings, that with GDPR's the problem or both? What's your-- >> I mean it's both, right? They're a lot of issues. You're right, it's very complicated. I mean, in the United States we don't have some sort of overarching federal law. There's no cyber protection law in the United States. There's no overarching data protection law. So, even in the U.S. alone, because of federalism, we have HIPAA and we have COPPA which protects children and we have other types of acts, but then we also have state regulations. So, in California you have the California Privacy Act. In New York you have certain regulations with regard to cyber security and you have to deal with this patchwork. So, that becomes something that adds a new layer of complexity and a new layer of issues, as we take a look, even within the U.S. alone, as to how to deal with all of this. And then we start looking at the GDPR and all of this. From a technical perspective. I'm not a technologist, but. >> Katya, let me ask you a question on the (mumbles) and business front. (mumbles) I think one of the things. I'm saying it might or may not be an issue, but I want to get your legal weigh-in on this. >> Katya: Sure. >> It used to be when you started a company, you go to Delaware, very friendly, domicile in Delaware, do some formation there, whether you're a C corp or whatever, that's where we tend to go, raise some money, get some preferred stock, you're in business. >> Is there a shift in where companies with domicile, their entity, or restructure their companies around this complexity? Because, there's two schools of thought. This brute force act, everything coming at you, or you restructure your corporate formation to handle some of the nuances, whether it's I have a Cayman or a Bermuda... whatever's going on in the regulatory regime, whether it's innovative or not. Are people thinking like that? Or, what's your take on it? What's some of the data you're seeing from the field around, restructuring around the problem? >> So, with respect to restructuring, specifically around data laws and data protection laws, I'm not seeing too much of that, simple because of the fact that regulations like the GDPR are just so all-encompassing. With respect to companies setting up in Delaware as opposed to other jurisdictions, those are usually based on two issues, right, two core ones, if I can condense it. One has to do with the court system and how favorable a court system is to the corporation, and the second is taxes. So, a lot of times when you see companies that are doing all of this restructuring, where they're setting up in offshore zones, or et cetera, it's usually because of some sort of a tax benefit. It might be because of the fact that, I don't know, for example, intellectual property. If you have a company that's been licensing IP to the United States, there's a 30% withholding tax when royalties are paid back overseas. So a lot of times when you're looking at an international structuring, you're trying to figure out a jurisdiction that might have a tax treaty with the United States, that will create some sort of an opportunity to get rid of that 30% withholding. So, that's where things usually come into play with regard to taxes and IP. I haven't seen yet, on the side of looking for courts that are more favorable to companies, with respect to data privacy and data protection. I just haven't seen that happen yet because I think that it's too soon. >> How do companies defend themselves against claims that come out of these new relations? I mean GDPR, I've called it the shitstorm when it came out. I never was a big fan of it. It just didn't. I mean, I get the concept, but I kind of understood the technical issues, but let's just say that you're a small growing business and you don't have the army of lawyers or if someone makes a claim on you, I have to defend it. How are companies defending themselves? Do they just shut down? Do they hire you guys? I mean, obviously lawyers need to be involved. But, at some point there's a line of where having a U.S. company and someone consumes my media in Germany and it says, hey I'm a German citizen. You American company, delete my records. How does that work? Do I have to be responsible for that? I mean, what's? >> So, it's really case-by-case basis. First of all, obviously, with regard to what I was talking about earlier, with respect to the fact that there are certain regulations in the U.S. that conflict with GDPR and the right to be forgotten. If you can actually assert a defense and sort of a good reason for why you have to maintain that information, that's step one. Step two is, if it's some complaint that you received, is to delete the person's information. There's an easier way to do it. >> Yeah, just do what they want. >> Just comply with what they want. If somebody wants to be off of a mailing list, take them off the mailing list. The third is, putting in best practices. So, I'm sure a lot of things that people see online, it's always great to go ahead and obtain legal counsel, even if you're consulting with a lawyer just for an hour or two, just to really understand your particular situation. But, take a look at privacy policies online. Take a look at the fact that cookies now have a pop-up whenever you go to a website. I'm sure you've noticed this, right? >> John: Yeah. So, there are little things like this. Think about the fact that there are, what is known as clickwrap agreements. So, usually you have to consent. You have to check a box or uncheck a box with respect to reading privacy policies, being approved for having your email address and contact information somewhere. So, use some common sense. >> So, basically don't ignore the prompt. >> Don't ignore the problem. >> Don't ignore it. Don't stick your head in the sand. It'll bite you. >> Correct. And the thing is, to be honest, for most people, for most small companies, it's not that difficult to comply. When we start talking about mid-size and large businesses, the next level, the next step, obviously beyond hiring attorneys and the like, is try to comply with standards and certifications. For example, there's what is known as ISO standards. Your company can go through the ISO 27001 certification process. I think it costs around approximately $20,000. But, it's an opportunity to go ahead, go through that process, understand how compliant you are, and because you have the certification, you're then able to go to your customers and say, hey, we've been through this, we're certified. >> Yeah. Well, I want to get, Katya, your thoughts, as we wrap up on this segment, around Crypto and Blockchain. Obviously, we're bullish on Blockchain. We think this is a supply chain. (mumbles) Blockchain can be a good force, although some think there's some work needs to be done on the whole energy side of it, which is, we would agree. But, still. I'm not going to make that be a wet blanket of excitement. But cryptocurrency has been fraudulent. It's been. The SCC's been cracking down in the U.S., in the news. Lieber's falling apart, although, I called that separately, but, (laughing) it had nothing to do with that Lieber. It was more of Facebook, but. Telegram. We were talking about that, others. People are getting handcuffed on this stuff. They're really kind of clamping down. But, overseas in Asia, it's still an unregulated, seems to be (mumbles) kind of market. Your advice to clients was to shy away, be careful? >> My advice to clients is as follows. First of all, Blockchain and cryptocurrency are not the same thing. Right? Cryptocurrency is a use case coming out of Blockchain technology. I think that in the United States, the best way to think about it is to understand that the term cryptocurrency, from a regulatory perspective, is actually a misnomer. It's not a currency. It's property. Right? It's an asset. It's digital assets. So, if you think about it the same way that we think of shares in a company, it's actually much easier to become compliant, because, then you can understand that it's going to be subject to U.S. securities laws, just like other securities. It's going to be taxed, just like securities are taxed, which means that it's going to be subject to long and short-term capitol gain, and it's also going to be subject to the other regulatory restrictions that are adherent to securities, both on the federal and state level. >> It's interesting that you mentioned security. The word security. If you look back at the ICO craze, internet coin offerings, crypto offerings, whatever you call it, The people who got whacked the most were the ones that went out as a utility tokens. Not to get nerdy on this, but utility and security are two types of tokens. The ones that went out and raised money as the utility token had no product, raised money using the utility that doesn't exist. That's essentially a security. And, so, no wonder why they're getting slapped. >> They're securities. Look, Bitcoin, different story, because Bitcoin is the closest to being I guess, what we could consider to be truly decentralized, right? And the regulatory climate around Bitcoin is a little bit different from what I'm talking about, with respects to securities laws. Although, from a tax perspective, it's the same. It's taxed as property. It's not taxed the way that foreign currency is taxed. But ultimately, yeah. You had a lot of cowboys who went out, and made a lot of money, and were just breaking the law, and now everyone is shocked when they see what's going on with this cease-and-desist order from the SCC against Telegram, and these other issues. But, none of it is particularly surprising because at the end of the day we have regulations in place, we have a regulatory regime, and most people just chose to ignore it. >> It's interesting how fast the SCC modernized their thinking around this. They really. From a speed standpoint, all government agencies tend to be glacier speed kind of movement. They were pretty fast. I mean, they kind of huddled on this for a couple months and came out with direction. They've been proactive. I got to say. I was usually skeptical of most government organization. I don't think they well inform. In this case, I think the SCC did a good job. >> So, I think that the issue is as follows. You know, Crypto is a very very very small portion of what the SCC deals with, so, they actually paid an inordinate amount of attention to this, and, I think that they did it for a couple of reasons. One is because, you asked me in the beginning of this interview about regulations versus innovation. And, I don't think anyone wants to stifle innovation in America. It's a very interesting technology. It's very interesting ideas, right? No one wants that to go away and no one wants people to stop experimenting and stop dreaming bigger. At the same time, the other issue that we've seen now, especially, not only with the SCC, but with the IRS now getting involved, is the fact that even though this is something very very small, they are very concerned about where the technology could go in the future. The IRS is extremely concerned about erosion of the tax space. So, because of that, it makes a lot of sense for them to pay attention to this very very early on, nip this in the bud, and help guide it back into the right direction. >> I think that's a good balance. Great point. Innovation doesn't want to be stifled at all, absolutely. What's new and exciting for you? Share some personal or business updates in your world. What's going on? What's getting you excited these days, in the field? >> What's getting me excited these days? Well, I have to tell you that one thing that actually has gotten me excited these days is the fact that the Blockchain and cryptocurrency industries have grown up, substantially. And, now we're able to take a look at those industries in tandem with the tech industry at large, because they seem to sort of be going off in a different direction, and now we're taking a look at it, and now you can really see sort of where the areas that things are going to get exciting. I look at my clients and I see the things that they're doing and I'm always excited for them, and I'm always interested to see what new things that they'll innovate, because, again, I'm not a technologist. So, for me, that's a lot of fun. And, in addition to that, I think that other areas are extremely exciting as well. I'm a big fan of Acronis. I'm a big fan of cyber protection issues, data protection, data regulation. I think something that's really interesting in the world of data regulation, that actually has come out of the Blockchain community, in a way, is the notion of data as a personal right, as personal property. So, one of the big things is the idea that now that we've seen these massive data breaches with Facebook and 23andME, and the way that big government, big companies, are using individuals' datas, the idea that if data were to be personal property, it would be used very very differently. And technologists who are using Blockchain technology say that Blockchain technology might actually be able to make that happen. Because if you could have a decentralized Facebook, let's say, people could own their own data and then use that data as they want to and be compensated for it. So, that's really interesting, right-- Yeah, but, if you're just going to use the product, they might as well own their data, right? >> Katya: Exactly. >> Katya, thanks for coming on theCUBE. Thanks for the insight. Great, compelling narrative. Thanks for sharing. >> Sure, thank you very much. >> Appreciate it. I'm John Furrier here on theCUBE, Miami Beach, at the Fontainebleau hotel for Acronis' Global Cyber Summit 2019. We'll be back with more coverage after this short break.

>> Live from Seattle, Washington, it's theCUBE, covering KubeCon and CloudNativeCon, North America 2018. Brought to you by Red Hat, the cloud native computing foundation, and its ecosystem partners. >> Hello and welcome back to theCUBE's live coverage day three here, theCUBE covering KubeCon and CloudNativeCon 2018 in Seattle. I'm John Furrier, with Stu Miniman, and Justin Warren here to break down the action. Justin Warren, as you know, is Guest Analyst for us at many events, Chief Analyst at PivotNine, coming all back over here again, to break it down. So we're going to dissect what's going on here at KubeCon, CloudNativeCon. This is, some say, me, the last stand to stop Amazon. Justin, good to see you. >> Good to see you as well, man. Stu, my first question is, as the show winds down, day three, a lot of people have left, all the big execs are gone, it's kind of last day, people coming together, party was last night, so we kind of see all the action, we kind of fished this pond dry, in theCUBE here, the last couple of days. The themes are starting to emerge. What are you seeing, what's your thoughts? >> Yeah, I mean, first of all, John, 8,000 people, this is, you know, geeks that are really excited, and I mean that in the best of ways, of course. There's actually, there were people here before the show started, doing lightning talks and full day sessions. Tomorrow, there's an operative session that another 250 or 300 people will be doing Friday, so, you know, and people want to just suck the marrow out of the bone that is everything going on here, just get every ounce of knowledge here, and they are deep into this session, so, this is a great community. The question I want to ask you guys is you were at Amazon re:Invent two weeks ago. We've watched that show. I want the compare and contrast of this ecosystem and show, not just compare it to like, say, open stack, which we've been teasing apart all week, and I think there are some things we need to worry about, but a lot of good differences. But compare against the big one in the room, which is Amazon, and a big difference is Amazon is here, and they have a seat at the table, because they have to, and customers will force them there, but you know, should this worry Amazon, and how does this ecosystem compare with the Amazon ecosystem. The big thing for me is, I understand how people make money in the ecosystem of Amazon. I'm still trying to figure that out here. >> Yeah, eh, it is a different ecosystem. It does have a bit of a vibe of it could be the new re:Invent. We've had conversations over the last couple of days about-- >> Or is this the independent cloud, >> Exactly. >> You know, open ecosystem. >> It is the independent show that we've been waiting for, that we've wanted since COMDEX and Interop kind of went away, and it's all been vendor shows, and now we have an independent show where all the vendors can come and have kind of a neutral meeting place, and we can all gather together and have some common ground, which is like, that's what Kubernetes is. I've been saying over the last couple of days, Kubernetes is like the ethernet of cloud, so it's something which is an agreed standard and we can all collaborate on, and then, you never bet against ethernet. So know you can build all these other things on top of that platform, yeah. >> Just a quick note on that, right, that's Interop, and networking was at the core of that. It was basically everybody, oh, it's the chance of if we give true interoperability, maybe we can do multi-vendor and it won't all be Cisco, who dominated that market. Amazon's the same. >> Stu, this is to me, ethernet's a great example. I say TCPIP as well. Both are enabling technologies that are standardized, or actually started as de facto standards. They weren't necessarily bona fide standards. They emerged when people rallied around them. Those de facto standards, emerge and become a catalyst point for people to build on top of and around. Remember, there's still a lower level below the stack on ethernet. So you had, you know, physical data link layer in the OSI model, the grandfather of all stacks. That really changed, I think, 20 years of growth and innovation. I think Kubernetes is, exactly right, Justin, it's exactly your point. I see that as well, that it's not so much Kubernetes is going to be the be all end all. It's what it enables, and I think the innovations on top of Kubernetes, and underneath Kubernetes, take the holy trinity, I've been saying this on theCUBE now for the past year, the holy trinity of infrastructure and IT is storage compute networking, and those things are now being repurposed in a way that is highly scalable, dynamic, and resourceful for a lot of things. AI is a great example, everyone talks about AI, but storage policy, the knobs in Kubernetes can manage, and Google saying the guys of Kubernetes. That's one of the most underutilized aspects of Kubernetes, is the networking guys managing the knobs from below, and then app guys with servers messing maybe on the top. This is just an absolute growth engine, and the comparison to Amazon is similar, because Andy Jassy talks about builders, the right tool for the job. This is essentially the same mantra. I mean, this is tools, platforms. >> It's very similar, but with one very important difference, and around the money side of things. You don't have this massive behemoth which is going to come in, and one year you're on the keynote, and the next year we just announced a product, which completely killed your business. It's open source. That's not really going to happen. So you've got that common core of things, where there's no real competitive advantage on this stuff. So that's, you know, Linux, where's the competitive advantage on a kernel? There isn't one. So open source makes great sense for that kind of core of things that you then build upon, and then all the money is in all the innovation, all the value add that goes on top of that, and that makes a huge amount of sense to have an open source show for that. >> And I think, Stu, one of the things that we always talk about, networking in cloud, I think the concept of cloud is going to be old hat. You heard it here first on theCUBE. Because cloud is Amazon, cloud is a set of resources. When we start thinking about IoT at the edge, when you talk about moving compute to the edge, you're going to start to see mesh networks, peer to peer, and add a new kind of platform configurations that isn't necessarily cloud. It's a new thing. It's a platform, open platform, and there's going to be some incentives that are going to be designed for startups, that's economically beneficial to the new kinds of things, versus the economic incentives that Amazon might not have, to do things. So I think we're going to see emergence of new stuff. I would still say that cloud is a state of mind, it's not a location. And we here, it's CloudNativeCon. It's not just KubeCon. It's about doing things in a cloud native way, and that, like you say, it doesn't matter where it is or how it communicates together, but it's the way you operate it, it's the way it actually works in practice. It's not so much of, oh, we're going to build it here and we're going to put it in that cloud, or that cloud, or that cloud. >> And I think we've had some real clarity as to what that future of multi cloud looks like, 'cause it's not one massive cloud everywhere, it's not, oh, my applications spanning all over the place. It's we're working to solve that really tough problem of distributed architectures, and giving us ways that I shouldn't have to think about where I am spinning that up, or if I need to change vendor, not necessarily portability, you still do have some lock in, because Kubernetes is not the full stack, it's a piece of the overall platform, and while there's 75 different versions here that are all compliant, I should be able to move between them, but the devil's in the details, and there's lots of stuff that goes on top. >> Let's talk about multi cloud for a second. 'Cause you mentioned COMDEX, you talked about ethernet. At that time, during those big revolutions, the word multi-vendor was a big buzz word. Multi-vendor was like the basis of COMDEX. We all got to play together. Multi-vendor meant choice. Today, multi cloud is just a modern version of multi-vendor. >> Exactly, it's multi-vendor, and that's what enterprises want. Enterprises are a bit wary now. We hear lots of conversation about lock in, and that comes up a lot, and it's a real thing. Enterprises are concerned, they don't want to bet on one company, and then find out that actually, it's technology, it changes, things need to be moved around. We don't want to wake up in five, six years, and then suddenly find, oh my god, I can't change anything because I'm locked into this one vendor. >> So, Justin, they say they want multi-vendor. When it came to networking, I spent years working on interoperability, and plug tests, and all these things, and at the end of the day, it was way better to get my standards plus with a single vendor than it was to try to loop them together, and then, oh, when I changed something, so hopefully the difference here is actually, we have loosely coupled services, we have APIs, so can we actually do multi-vendor, multi-cloud that doesn't stress out my team, and have, every time I want to make a change, or they make a change, it moves. The new cloud world should be, things change, you know, it changes upstream, and downstream, I get to use them. So, once again, we talk about the shiny nirvana of, oh, you know, it's serverless, and the old trinity of computer storage. I don't even need to worry about that, 'cause it'll just work, but wait, if something goes wrong, I've been talking to a bunch of vendors here, that actually, how do I get observability, and manageability, to be able to drill down, because things could still go wrong. >> Well, you heard Bloomberg, we had an end user come on, it's a very interesting point, and Dan Khan, from the executive director, well, Bloomberg's kind of a different case, but look at what Bloomberg does. The guy said to us, "I actually don't want to buy "these products and services. "I just want to pay them money "to be available to support me "when I need support." 'Cause Bloomberg has fully integrated all their support internally. I think that's a trend that we're going to see in the enterprise, where CIOs start building teams, real software chops. It might not be as big as Bloomberg, but the notion of, we're going to run our own stuff. We'll use management services where appropriate, but we're going to have a core software build strategy, and I can't wait. An SLA of four hour response time. I need like, minutes. >> And that's how, I think, where we don't have the answers yet. There are still a lot of questions that enterprises are trying to work out about how do I actually do that. So you mentioned Bloomberg, and I interviewed them a few months ago, wrote something in Forbes about them. They are a special case in that they have chosen that we're going to invest in this technology so that we have people on staff, in our company, who understand Kubernetes. Now, that's not a choice that every enterprise is going to make, but they decided that actually, this technology, this software is so important to our business, to where we get all the value for our business that we need to invest in that technology. And I think a lot of enterprises are realizing that, actually, outsourcing everything to one vendor, and then giving all of your innovation engine to someone else, and they're realizing that was a mistake. Now, they're trying to figure out, okay, what do we bring in house, what do we do ourselves, what do we get vendors to do, which technologies do we use for what particular value creation, and that complexity, that decision making process, that's what we haven't quite worked out yet, and that's where I think there's a lot of value in the ecosystem, with service providers who can provide advice on here is how you should do it, based on what you need to do. >> That's a great point. Stu, I want you to comment on that. Let's refine this for a second, 'cause the people who actually spend the money, or the people re-imagining IT infrastructure, IT applications. The CIO, I've interviewed the VP of Advanced Technology at Proctor and Gamble, and he told me, when he came in, he came from Coca Cola, he's been an old IT guy, he says, look, we outsourced everything to the point where we're anemic. We got a couple of storage guys, they're pushing buttons, they're jumping on, calling the vendors, they outsource everything. He says they had no ability to create a competitive advantage for the business, and what they moved quickly to was to bring talent in to be builders, to be in house. So now you have that trend happening in the modern CIO, CXO kind of roles. Now you have to say, okay, I got teams here. How do I get the investments deployed, how do I go to this ecosystem here with all these tools, all these capabilities, how do I invest, how do I build out. >> Look, I think Kelsey Hightower had a great point when we interviewed him this week. It is a huge opportunity for managed services, because like we talked about, the Amazon, or even the ecosystem, how do I keep up with all of this, and the answer is, you don't. You need to be able to have people, whether it's system integrators, or partners that are going to help that. You know, look, Amazon gets criticized for not being deeper in open source. Well, they use a lot of open source and they deliver those services, and they make it easy. Frictionless is something we talked about for many years as being the thing. The enterprise wants to be able to spend money and just go do it, because they don't have a team to pitch these. Even somebody like Bloomberg, or some of these really big companies I love, talking, you've got Apple, and Nordstrom, and some really interesting, oh, by the way, and they're all hiring. Whether or not they're actually using Kubernetes, they cannot confirm or deny, but you know, we know how that goes. >> Hold on, first, let's unpack the end user piece here, okay? Amazon is pushing 5,000 reference-able customers. Okay, it's not about the Amazon question. End users here, how many reference-able customers are here? What are they actually, Uber's here, they're hiring. They might have some Kubernetes stuff in the background. Sure, they probably do. But actually, what does the end user adoption really look like? I mean... >> It's still early, but again, a difference between this show and Amazon re:Invent. How many end customers have a booth at re:Invent? Compared to here, where we have people, end customers who are here mostly to try to hire talent. They have booths. >> Kudos to the CNCF. They've got 80 end users participating. There are a lot of users here. This is not the vendor fest that we see at some shows when they get big. I hear they're not seeking the vendors. The vendors that I talked to were happy because they are the users here, and they're excited. Before we go, John, there's a couple kinks in the armors and things we need to worry about. The two, if I look at service meshes, and I look at serverless as a huge threat. One of the things I wanted to look at coming in was I'd heard a lot of talk about Knative, and I think Knative is great, but it is not, you know, Lambda is the defacto standard, just like S3 was before. Lambda is this, and Knative has absolutely nothing to do with Lambda and does not connect with it. It is the difference between serverless and functions, and so, all the AWS functions and all the Azure functions have nothing to do with Knative. For the people that looked at OpenWhisk and all these other options, Knative seems a good way to pull, they've done a re-spin of what's happening there, and it's moving things down the line. Once again, as Kelsey said, if we look at serverless as a spectrum, which many of the hardcore serverless people will debate and argue, and be like, that's not real, serverless, well, just like we said, there is only one real cloud, and it was Amazon. We know that's not the case. It will be a spectrum, we want to meet customers where they are. So, Knative, good news, but the elephant in the room is that AWS and Azure are where all of the serverless really happens, and therefore, there is a big air gap between them. Justin, service mesh is something I know you've been looking at. Give it to us the good, bad, and the ugly. >> Service mesh is really, really early. So, we're at that part where there's a diversity of innovation going on. There's about 12, or at least 12 different companies here at the show, who are all doing something with service mesh. They're all trying to sell you a different solution. This is what happens with technology. A new technology gets created, and we have this flurry of all these startups, who are all trying different things. And this is the destructive force of capitalism. Not all of them are going to succeed, but we have to have them all out there in the market, because at the moment, it's too early to figure out, okay, well, it's definitely going to be that one. If we knew that one, then I'd be putting all of my money behind that one company today. >> Last year, Justin, all the talk was about SDO. I've heard a lot of talk about SDO, but it hasn't all been good. >> No, that's the thing. So we've had a year now, and last year was definitely, hey, SDO is like, the service mesh. Like, not so much. Envoy seems to be the common ground that people are actively using. That's what most people are building on top of. So it looks like Envoy's going to be that underlayer of everything else. But in terms of how you actually use service mesh, it's still very early, and people are trying to figure out how to do I use this quite complex technology in practice? And as people use it more, as we get more adoption, then we'll start to see that one or two of the methods and the approaches will win out over all of the others, and that's where we can expect to see, well, I have an anointed winner. That will then win out, because it's useful, because it's functional, because end users want to do it that way. >> And Envoy, by the way, had traction. They had a sold out EnvoyCon. On the first day, 350 people, Lyft is driving that, and they're just heads down, solving problems. I think that seems to be the formula for some of the successful products, where you take away all the window dressing and the hype. It comes down to who's solving what problems. >> And that's the thing with open source. You can't just throw a whole bunch of marketing dollars at it to make it succeed. If end users don't like the code, and they don't use it, then it won't work. >> John, I want you to give us the word on the open source business model. We watched in the last year, Red Hat bought CoreOS for 250 million, then they were acquired by IBM for 34 billion, pending final, and all that stuff and everything, and then, reading through the VMware, SCC filing $550 million for Heptio. You know, big, big dollars, so, is open source just getting a lot of customers, and they get acquired by the big guys? What's the take? >> I think it's interesting. First of all, Red Hat might not like what I'm about to say, but I'll just say it. I think there was a steal with CoreOS. If you look at what Heptio got for valuation, CoreOS was an absolute steal. The team was phenomenal, they were doing some amazing work. At that time of the acquisition, the debate of how to make money dominated versus just getting behind the technology, and I think CoreOS was a fantastic team, and they had the right tracking. You can see what's happening now with now part of the Red Hat. So, Red Hat got a massive lift on that, so I think, kudos to Red Hat for taking that up the table at that time. Great acquisition, I think that helped them propel, and now show that to IBM that there's real value there. Now, I think open source as a business model is interesting because it's changing, right? You now have a new generation of builders and developers coming in. Open source has to evolve, and I think the CNCF I think is a cutting edge experiment or Petri dish of how to stay true to open source principles, and still nurture and enable a downstream impact for the commercialization. I think it's an opportunity, but it's also one of their biggest challenges, because if this is COMDEX, COMDEX is an open source. It's hawking wares, right? So it's a different business model. So, this is going to be a very interesting test in the industry to see how the current open source momentum, which is looking really strong right now, how that can interplay with commercialization, because certainly, the money's there, the value's there, and if we can get these value spots identified, the white spaces for startups, and let the big guys also play as well, it's going to be a very interesting landscape, it's certainly dynamic. I don't have the answers, but my gut's telling me that a whole new level of sets of services and platforms are going to be composed around these services, and I think it's all going to be driven by open source, that's clear. How it shapes out, valuations and the talent buys, the momentum, market buy, we'll be watching, I don't know. >> Yeah, it's exciting times. We're here at the beginnings of what I hope is going to be this massive new ecosystem, and we get to watch it grow, we get to watch it change. It's a great place to be. >> All I can say, Stu, is I wish I was 25 years old again, right now, because for young entrepreneurs, and young tech folks, this is probably one of the most exciting times, because you have real computer science, and dormant computer science, now re-energized with cloud computing scale. It's just like-- >> John, they don't appreciate what they had, you know. They don't know what it was like to have a computer that wasn't actually connected to things, let alone what we had. >> I used to build my own graphics libraries, I used to walk to school in bare feet in the snow. It's so hard. It's so easy now. >> Creating ones and zeroes-- >> Where's my token ring? >> Creating ones and zeroes by banging rocks together. >> It's so easy now. You guys got it made. You have no idea. Great stuff, Stu, this is great analysis, and I think, again, KubeCon is the beginning, with Cloud Native, this is just a small signal, I think. I think there's going to be a COMDEX moment soon, unless this thing just blows up, which I don't think is going to happen. >> I mean, look, last thing, John, I want to big thank to the Linux Foundation, CNCF, for working with us. We've been neighbors in the early days, great partnership, this community. They've got a great media section. All of friends over here, that are creating a lot of con, working really hard. The amount of work that goes through, and as we had the people from CNCF talking. They've got a core team, but it's people that volunteer, and we were a community too, and all our sponsors, John. >> Yeah, thanks to the community, and again, one more final point is that, this market, Justin, as you know, we all cover it, is in a learning mode. There's a lot of education oriented stuff that people are interested in. You've got Alex Williams over at New Stack, DevOps.com, TFiR over there, everyone's up in media out there. There is a thirst for content, there's a thirst for community learning. The sessions are packed. I mean, the hallways are interesting. You see people huddling, and I overhear the conversations. They're not talking about what party to go to, they're talking about how to implement a Kubernetes cluster, so this, really people working on and off the court here, so to speak. So, it's been great coverage. So, day three, breaking it down. I'm John Furrier, Justin Warren, Stu Miniman, back with more coverage, day three, after the short break. (techno music)

(Upbeat music) >> From the Hard Rock hotel in Las Vegas, its theCUBE! Covering the Hosho Con 2018, brought to you by Hosho. >> Okay, welcome back every one, this is theCUBE's exclusive coverage here live in Las Vegas for Hosho Con, the first inaugural event where security and block chain conferences is happening, it's the first of its kind where practitioners and experts get together to talk about the future, and solve some of the problems in massive growth coming they got a lot of them. Its good new and bad news but I guess the most important thing is security again, the first time ever security conference has been dedicated to all the top shelf conversations that need to be had and the news here are covering. Our next guest Greg Pinn who's the head of strategy and products for iComply Investor Services. Great to have you thanks for joining us. >> Very nice to be here >> So, we were just talking before we came on camera about you know all the kind of new things that are emerging with compliance and all these kind of in between your toes details and nuances and trip wires that have been solved in the traditional commercial world, that have gotten quite boring if you will, boring's good, boring means it works. It's a system. But the new model with Block Chain and Token Economics is, whole new models. >> Yeah I think what's so exciting about this is that in the Fiat world, from the traditional financial market, everyone is so entrenched in what they've been doing for 20, 30, 40 years. And the costs are enormous. And Block Chain, Crypto coming in now is like we don't have to do it that way. We have to do compliance. Compliance matters, it's important and it's your legal obligation. But you don't have to do it in the same sort of very expensive, very human way that people have been doing it in the past. >> And Cloud Computing, DevOps model of software proved that automations a wonderful thing >> Right >> So now you have automation and you have potentially AI opportunities to automate things. >> And what we've seen is huge increases in technology, in around machine learning and clustering of data, to eliminate a lot of the human process of doing AML, KYC verification, and that's driving down costs significantly. We can take advantage of that in the Crypto Space because we don't have thousands of people and millions of millions of dollars of infrastructure that we've built up, we're starting fresh, we can learn from the past and throw away all the stuff that doesn't work, or isn't needed anymore. >> Alright let's talk about the emerging state of regulation in the Block Chain community and industry. Where are we? What's the current state of the union? If you had to describe the progress bar you know with zero meaning negative to ten being it's working, where are we? What is the state of >> I think if you'd asked me a year ago I think negative would've been the answer. A year ago there was still a big fight in Crypto about do we even want to be part of Compliance, we don't want to have any involvement in that. Because it was still that sort of, Crypto goes beyond global borders, it goes beyond any of that. What's happened now is people have realized, it doesn't matter if you're dealing in Crypto Currency or traditional currency, or donkeys or mules or computers or whatever, if you're trading goods for value, that falls under Regulatory Landscape and that's what we're hearing from the SCC, from FinCEN, from all the regulators. It's not the form it's the function. So if you've got a security token, that's a security, whether you want it to be or not. You can call it whatever you want, but you're still going to be regulated just like a security. >> And I think most entrepreneurs welcome clarity. People want clarity, they don't want to have to be zigging when they should be zagging. And this is where we see domicile problem. Today it's Malta, tomorrow it's Bermuda. Where is it? I mean no one knows it's a moving train, the big countries have to get this right. >> A hundred percent. And beyond that what we're seeing, what's very, very frustrating for a market as global as this is it's not just country-level jurisdiction, the US you've got State-level jurisdiction as well. Makes it very, very hard when you're running a global business if you're an exchange, if you're any sort of global, with a global client reach. Managing that regulation is very, very difficult. >> You know I interviewed Grant Fondo who's with Goodwin Law Firm, Goodwin Proctor they call it Goodwin now, he's a regulatory guy, and they've been very on the right side of this whole SCC thing in the US. But it points to the issue at hand which is there's a set of people in the communities, that are there to be service providers. Law Firms, Tax, Accounting, Compliance. Then you got technology regulation. Not just financial you have GDPR, it's a nightmare! So okay, do we even need GDPR with Block Chain? So again you have this framework of this growth of internet society, now overlaid to a technical shift. That's going to impact not only technology standards and regulations but the business side of it where you have these needed service providers. Which is automated? Which isn't automated? What's your take on all of this? >> I agree with you a hundred percent, and I think what's helpful is to take a step back and realize while compliance is expensive and a pain and a distraction for a lot of businesses. The end of the day it saves people's lives. And this is what, just like if someone was shooting a gun as you were running down the street, in your house, you're going to call the police, that is what financial institutions are doing to save these industries and individuals that are impacted by this. A lot of it from a Crypto Currency perspective, we have a responsibility because so much of what the average person perception is, is Ross Ulbricht and Silk Road. And we have to dig our way out of that sort of mentality of Crypto being used for negative things. And so that makes it even more important that we are ultra, ultra compliant and what's great about this is there's a lot great opportunities for new vendors to come into the space and harness what existed whether that's harnessing data, different data channels, different IDDent verification channels and creating integrated solutions that enable businesses to just pull this in as a service. It shouldn't be your business, if you're in exchange, compliance is something you have to do. It should not become your business. >> Yeah I totally agree, and it becomes table stakes not a differentiator. >> Exactly >> That's the big thing I learned this week it's people saying security's a differentiator, compliance is a, nah, nah, I have standards. Alright so I got to ask you about the, you know I always had been on the biased side of entrepreneurship which is when you hear regulations and you go whoa, that's going to really stunt the growth of organic innovation. >> Right. But in this case the regulatory peace has been a driver for innovation. Can you share some opinions and commentary on that because I think there's a big disconnect. And I used to be the one saying regulation sucks, let the entrepreneurs do their thing. But now more than ever there's a dynamic, can you just share your thoughts on this? >> Yeah, I mean regulators are not here to drive innovation. That's not what their job is. What's been so interesting about this is that because of regulations coming to Crypto along with these other things, it's allowing businesses to solve the problem of compliance in very exciting, interesting ways. And it's driving a lot of technologies around machine learning, what people like IBM Watson are doing around machine learning is becoming very, very powerful in compliance to reduce that cost. The cost is enormous. An average financial institution is spending 15 percent. Upwards of 15 percent of their revenue per year on compliance. So anything they can do to reduce that is huge. >> Huge numbers >> And we don't want Crypto to get to that point. >> Yeah and I would also love to get the percentage of how much fraud is being eaten into the equation too. I'm sure there's a big number there. Okay so on the compliance side, what are the hard problems that the industry is solving, trying to solve? Could you stack rank the >> I think number one: complexity. Complexity is the biggest. Because you're talking about verifying against sanctions, verifying against politically exposed persons, law enforcement lists, different geographical distributions, doing address verification, Block Chain forensics. The list just stacks and stacks and stacks on the complexity >> It's a huge list. >> It's a huge list >> And it's not easy either. These are hard problems. >> Right, these are very, very difficult problems and there's no one expert for all of these things. And so it's a matter of bringing those things together, and figuring out how can you combine the different levels of expertise into a single platform? And that's where we're going. We're going to that point where it's a single shop, you want to release an ICO? You're an exchange and you need to do compliance? All of that should be able to be handled as a single interface where it takes it off of your hands. The liability is still with the issuer. It's still with the exchange, they can't step away from their regulatory liability, but there's a lot that they can do to ease that burden. And to also just ignore and down-risk people that just don't matter. So many people are in Crypto, not the people here, but there's so many people in Crypto, you buy one tenth of a Bitcoin, you buy a couple of Ether, and you're like okay that was fine. Do we really need to focus our time on those people? Probably not. And a lot of the >> There's a lot big money moving from big players acting in concert. >> And that's where we need to be focused. Is the big money, we need to be focused on where terrorists are acting within Block Chain. That's not to say that Block Chain and Crypto is a terrorist vehicle. But we can't ignore the reality. >> And I think the other thing too is also the adversary side of it is interesting because if you look at what's happening with all these hacks, you're talking about billions of dollars in the hands now of these groups that are highly funded, highly coordinated, funded basically underbelly companies. They get their hands on a quantum computer, I was just talking to another guy earlier today he's like if you don't have a sixteen character password, you're toast. And now it's twenty four so, at what point do they have the resources as the fly wheel of profit rolls in on the hacks. >> You know, one of the interesting things we talk about a lot is we have to rely on the larger community. We can't, I can't, you can't solve all of the problems. Quantum computing's a great example. That's where we look for things like two-factor authentication and other technologies that are coming out to solve those problems. And we need to, as a community, acknowledge That these are real problems and we've identified potential solutions. Whether that's in academia, whether it's in something like a foundation like the Ethereum Foundation, or in the private sector. And it's a combination of those things that are really driving a lot of it's innovation. >> Alright so what's the agenda for the industry if you had to have a list this long, how do you see this playing out tactically over the next twelve months or so as people start to get clarity. Certainly SCC is really being proactive not trying to step on everybody at the same time put some guard rails down and bumpers to let people kind of bounce around within some frame work. >> I think the SCC has taken a very cautious approach. We've seen cease and desist letters, we've seen notifications we haven't seen enormous finds like we see in Fiat. Look at HSBC, look at Deutsche Bank, billions of dollars in fines from the SCC. We're not seeing that I think the SCC understands that we're all sort of moving together. At the same time their responsibility is to protect the investor. And to make sure that people aren't being >> Duped. >> Duped. I was trying to find an appropriate term. >> Suckered >> Suckered, duped. And we've seen that a lot in ICOs but we're not seeing it, the headlines are so often wrong. You see this is an ICO scam. Often it's not a scam, it's just the project failed. Like lots of businesses fail. That doesn't mean it's a scam, it means it was a business fail. >> Well if institutional investors have the maturity to handle they can deal with failures, but not the average individual investor. >> Right, which is why in the US we have the credit investor, where you have to be wealthy enough to be able to sustain the loss. They don't have that anywhere else. So globally the SCC care and the other financial intelligence units globally are monitoring this so we make that we're protecting the investor. To get back to your question, where do I see this going? I think we're going to need to fast track our way towards a more compliant regime. And this I see as being a step-wise approach. Starting with sanctions making sure everyone is screened against the sanction list. Then we're going to start getting more into politically exposed persons, more adverse media, more enhanced due diligence. Where we really have that suite of products and identify the risk based on the type of business and the type of relationship. And that's where we need to get fast. And I don't think the SCC is going to say yeah be there by 2024, it's going to be be there by next year. I was talking to Hartej, he was one of the co founders of Hosho and we were talking on TheCUBE about self-regulation and some self-policing. I think this was self-governed, certainly in the short term. And we were talking about the hallway conversations and this is one of the things that he's been hearing. So the question for you Greg is: What hallway conversations have you overheard, that you kind of wanted to jump into or you found interesting. And what hallway conversations that you've been involved in here. >> I think the most interesting, I mentioned this on a panel and got into a great conversation afterwards, about the importance of the Crypto community reaching out to the traditional financial services community. Because it's almost like looking across the aisle, and saying look we're trying to solve real business problems, we're trying to create great innovative things, you don't have to be scared. And I was speaking at a traditional financial conference last week and there it was all people like this Crypto is scary and it's I don't understand it. >> You see Warren Buffett and Bill Gates poopooing it and freak out. >> But we have an obligation then, we can't wait for them to realize what needs to be done. We need to go to them and say, look we're not scary, look let's sit down. If you can get a seat at a table with a head of compliance at a top tier bank, sit down with them and say let me explain what my Crypto ATM is doing and why it's not a vehicle for money laundering, and how it can be used safely. Those sorts of things are so critical and as a community for us to reach across the aisle, and bring those people over. >> Yeah bridge the cultures. >> Exactly. Because it's night and day cultures but I think there's a lot more in common. >> And both need each other. >> Exactly. >> Alright so great job, thanks for coming on and sharing your insights. >> Thank you so much. >> If you have a quick plug on what you're working on, give the plug for the company. >> Sure, so iComply Investor Services is here to help people who want to issue ICOs, do that in a very compliant way. Because you shouldn't have to worry about all of your compliance and KYC and Block Chain Forensics and all that, you should be worried about raising money for your company and building a product. >> Alright final question since I got you here 'cause this is on my mind. Security token, has got traction, people like it 'cause no problem being security. What are they putting against that these days, what trend are you seeing in the security token? Are they doing equity? I'm hearing from hedge funds and other investors they'll want a little bit of equity preferred and or common, plus the token. Or should the token be equity conversion? What is some of the strings you're seeing? >> You know I think it' really just a matter of do you want paper or do you want a token? Just like a stock certificate is worth nothing without the legal framework behind it. A security token is the same way. So we're seeing where some people are wanting to do equity, where some of their investors want the traditional certificate. And some are fine with the token. We're seeing people do hybrid tokens where it morphs from security to utility or back. Where they're doing very creative things. It's what's so great about the Ethereum Network and the Smart Contracts, is there are all of these great options. The hard part then is, how do you fit those options into regular framework. >> And defending that against being a security, and this is interesting because if it converts to a utility, isn't that what security is? >> So that's the question. >> Then an IPO is an, again this is new territory. >> Right, and very exciting territory. It's an exciting time to be involved in this industry. >> In fact I just had an AE3B Election on tokens, first time ever. >> Yeah it's an amazing state that we're in. Where serious investors are saying yeah token's great for me. Give me the RC20 I'll stick it in my MetaMask Wallet, it's unbelievable where we are. And only more exciting things to come. >> Greg Pinn, thanks for coming on and sharing your insights. TheCUBE covers live here in Las Vegas, Hoshocon, the first security conference in the industry of its kind where everyone's getting together talking about security. Not a big ICO thing, in fact it's all technical, all business all people shaping the industry, it's a community it's TheCUBE coverage here in Las Vegas. Stay with us for more after this short break. (Upbeat music)

>> From the Hard Rock Hotel in Las Vegas, it's theCUBE, covering HoshoCon 2018. Brought to you by Hosho. >> Okay, welcome back everyone, we're here live with theCUBE in Las Vegas, for the first security conference. It's an inaugural event. It's called HoshoCon. This is where security experts are gathering to discuss the future. I'm John Furrier, host of theCUBE. With Joe Kelly, he's the co-founder and CEO of Unchained Capital. We were just talking about the old days, and big day, yeah? Joe good to see you, thanks for coming on theCUBE. >> Good to see you too John, thanks for being here. >> So, take a minute to explain what Unchained Capital is. We heard some people talking this morning, earlier, about your business model, love it. Take a minute to explain what your business model is, what you're doing that's different. >> Sure, so, Unchained Capital, we're really a financial services company, I'd say. Kind of in this new era where we have this challenge of users have crypto currency, they want custody of their assets themselves, they want to maintain some of the grave sovereignty over and control over their money. Not just give it, relinquish it wholly to a bank or someone else. So it's an interesting time to start a business like ours. Our first product is loans. We give out dollar loans, in U.S. dollars, to individuals or businesses who provide crypto currency as collateral. So right now, we accept Bitcoin, or Ethereum as that collateral. And we do accept it in a fully custodial manner today. When you get a loan from us you are sending us your Bitcoin, you're trusting us to keep it safe, and we do. But we also have some more multi-signature models that we'll be releasing soon, that we work with, for instance, Hosho here on getting our smart contract, and Ethereum honored it for doing such a thing with Ethereum. But we're really trying to find ways to bridge that gap of user don't have to quite give up everything , we don't have to have full control, we can still as a lender, safely extend money and know that we can. >> So you've got a lot of couple things going on. >> Yeah. >> You've been topical here at this conference, been hearing in the hallway, there's been sessions on it around custody, >> Yeah. >> So that's one big issue that everyone's talking about, but it's also now your lending. So, this collateral, that's services, financial services, so it's a little bit fin-tech meets cyber security needs. >> Yeah. >> You're in the middle of two cross-hairs. >> Yeah. (John laughs) >> How are you guys doing this? >> I mean, I think, as far we were talking about earlier, my co-founder and I kind of cut our teeth in the big data technology space, and learned a lot through that. And learned a lot especially about how easy it is to get caught up in either a hype, or a market cycle, where you don't pay as close attention as you should to customers, and what they need. We went through a pivot in that business, which was good, the right thing to do, but we wanted to start this company consciously in a way that we didn't have to pivot. So there always has been this kind of focus on the customer, the end user, and what they want. >> Hey, building a sustainable business. >> Building a sustainable business. >> With paying customers, what a great idea. >> Yeah, who would've thought. (both laughing) >> Well turns out it was a good call because with the whole bubble burst thing, you know in February really, I think February to me was the month where you saw the decline, the security token, Rightfully so is the discussion for all the utility all the stuff regulating now, so a little bit of a dark time for us, but, the winners coming out of this will be the durable real builders. >> I think so, yeah. You know we didn't, we chose not to do token sale last year, to our, maybe in the long run it could be a bad idea but we still feel pretty good about it. >> It's a good cause. >> Yeah. >> SCC reported today, I saw it today, SCC is actually having some ICO's give money back on violations. >> As they should, yeah. >> So, you would have been properly optimizing your time on other non-company building activities? >> Yeah. >> Yeah, running around Asia managing token prices >> Now, it's a shame, its like these small teams run out like 12 or 20 people almost running public companies, in terms of the demand and opinions and-- >> Yeah, and they're young, they got keep their eye on the ball, which is the value proposition evolution and also security. >> Yeah. >> Alright, so talk about how, what you're doing here? Why're you here at HOSHOCon, I see they're a supplier, a partner with you guys. >> Yeah. >> But what's, what's the story here for you guys? >> So we got to know Hosho earlier this year, we spent about six months developing a theorem smart contract. So a theorem, it doesn't have a native multi-signature mechanism, there's no way that within the protocol you can speak to the protocol in a way that says, you need multiple signatures to make this transaction valid. Unlike BitCoin that has that multi-signature spelled out. So, and we, with the way we store the currency, we store it all cold storage, we store it with multiple hardware devices, and in so, we believe the only way to do that, or the only way to store cryptocurrency is with that, and with multi-signature enabled. So, to try to-- >> To minimize the risk on the custody side. >> To minimize the risk of, yeah, on the custody side. Also, you minimize risk of theft, you also create some resiliency in the sense of maybe a key is lost, like you got some back up keys to it. So, really important to get to that multisig status but as you maybe saw last year, with hacks like there's a parody multisig wall that was hacked to the tune of some hundreds of millions of dollars. There's several of these multisig contracts people developed that were really sophisticated pieces of software allowed ownership to be transferred or things to change, within the contract that, in our opinions kind of, didn't need to be there, and put the contract at risk. And so we worked on this very simple, bare bones, smart contract that does multisig as closely as, it's already spelled out in Bitcoin. And worked with Hosho on at that, it's been since honored it twice. Both times, passed with flying colors. No issues, not a single discrepancy. >> You did the work up front? >> Did the work up front, yeah. >> That's critical. >> Really smart team of folks that put that together and so yeah we're very security conscious company. We like being present, contributing to conversations like those that are here. >> It's funny, we were talking earlier in some interviews it's like, security is a differentiated of some of these exchanges. (Joe laughs) >> We got better security >> Cheap table steaks. I mean, differentiate? That's like standard. Alright, so talk about how someone uses your service because I think this is fascinating. A lot people are holding crypto, they may or may not want to sell it. There's also fluctuation risks. >> Yeah. >> So how does this system work? I give you my crypto and you lend me money? >> Yup. >> Is it that simple? >> Yeah, so you first sign up to our website. We lend mostly in the U.S., a few international jurisdictions, but as long as you're in a jurisdiction we can lend, you finish out your profile with us. We do do a KYC email check on all folks and then you put in a loan application. And within that loan application, we can either lend you at a 35% loan to value or a 50% loan to value. You have a slightly better interest rate on the lower LTV. What that means is, if you'd like a $100,000 loan, say, you need to provide maybe $200,000 of that collateral up front, in the form of Bitcoin or Ethereum. We can fund loans and you can go from basically a new account and application to a funded loan, in like four hours even. You have that time from the client signing up to us, wiring the money and so that, that, can be a pretty fast process. Which is really unlike any other loan products. Even if you get a unsecured loan on a website, like an Earnest.com or some of these, it can take you many days, a week or more sometimes to close the loan. >> So you're taking a big risk with this, you guys do? >> Well you could say that. I mean, I mentioned that-- >> It all depends on the fluctuation, right? >> 50% on LTV. We do do margin calls, so if there's a 25% price drop, we'll issue a margin call. It means, with the client is required to post more collateral or else we can declare the loan in default. Luckily we've had no defaults, we've never had to force a liquidation over anybody-- >> So explain a margin call real slowly, so okay, it drops below a certain point percent. Let's say 25? You do a margin call, they don't come up with more collateral, to refuel essentially the collateral. You can default, which means you take ownership of the crypto? >> Yup, in that case we would take ownership of the crypto currency. We would sell what portion of it, was need to pay off the principal of interest, and then they get the remainder. But ya, thankfully nobodies ever fully bailed on us in that way. >> Ya, not yet, not yet. Well so for me this is a great service. So, great for people who get some hands on some, some fiat, some cash. Now, on the backhand, I'm only imagining just my brain spins around, you got a lot of hedging going on, you got have math, a lot of math behind it. Maybe, it's big data. How are you managing the back end, because now in your risk profile, so you the margin call, you got some mechanisms, which is great. What's going on in the background? You crunching on some cloud computing, Amazon computing, going OK, where are we with our positions? There must be some math involved. What's going on behind the curtain? Can you tell us a little bit? >> I think you'd be surprised, I think that, we've been able to manage pretty well, with just more puristic and common sense around a lot of this stuff. I think what we did up front before we even, gave our first loan, did a lot of research on historical volatility with Bitcoin. Looking at, ok, what are the most significant drops within a day, or a week long period and, based on that analysis that's where we did come up with this sort of 50% LTV ceiling for us. That says, really? You know, 9.9999 or 99.99% of the time, you will never see anything that big within a day. Maybe a week, there's been a couple of weeks where Bitcoin will go down 50%, in that period but that's, that evolves on like a human reactionalary kind of time scale. Not something that you're-- >> Well today the stock market dropped 800 points today and Bitcoin didn't move. So that's good that there's no corelation. >> Yeah. >> But the point is, you're measuring it. So, is there, the question next question I have for you, as I'm thinking about myself if I was a customer. If I was a customer, do you provide like some sort of total cost of ownership calculative, that I would have to know, okay, 'cause I want to plan, I don't want to be defaulted. Right, so I should have a good understanding of how to manage it so I give you guys some crypto, for the loan. >> Yeah. >> I got to have some reserves. You guys see a formula for that, is there benchmarks or is it more of ad hoc general. >> Yeah, it's definitely, I mean it's a case by case basis but with every client. We recommend not of course leverage all your crypto currency, you want to leave some in reserve for margin call and it just depends on personal situation and how much-- >> And the margin call too, if they give the money back, that's fine too right? So either pay back the loan-- >> Yeah, exactly. Or pay down the principal, which you can do partial payment, we have no prepayment penalty. So pay down some principal, or yeah, post more collateral. Just some way to get that ratio back. >> Got it, cool, how's business going? >> Good, yeah. We think it's been a great year for us, the first half was pretty bananas honestly, just with the kind of bull run and taxis and stuff like that. Summers been a little slower, but we're still full of-- >> Tax season, yeah roll your eyes. Hey, welcome to the tax bill. >> Yeah! >> Trading all that crypto. >> Yeah. >> People had a wake up call. >> Well, it's arguably what killed all the volumes. It's finally when people realized, oh my gosh, you know, I can't 1031 moving forward, I have to pay taxes every time I trade all client for another all client. I think that really dampened volume this year. >> Alright, so I got to ask you, what's going on here, in this event thats folks that didn't make it, what is some of the conversations, a lot of diverse, smart people here. Kind of core kernel industry security, but it's not just security nerds, it's total laid out players on the security side to business we had Andre on talking about custody. You've got you're business here, financial services chain. What's some of the hallway conversations that you're over hearing and that you're been involved in? >> Let's see. I mean, almost just been in, you characterized it pretty fairly I think, there's real engineers here. People that kind of get into base with over the pros and cons of the different programming language, or implementation for smart contracts. So, it's kind of, a definitely more nerdy conference. I haven't heard of one, like ICO I should buy into or anything like that. >> Thank God! >> Pretty nice. >> That's refreshing. >> Yeah. >> I mean an ICO converse, a little bit over, a little long on the tooth there, don't you think? >> It's a converse we deserve. (John chuckles) That's just a tagline. >> Yeah. >> Alright, so what are you seeing as the major trend that's going to bring back, not bring back, but establish more of a mainstream culture with crypto, because you're actually getting into the level of services that certainly for the early adopters and insiders that are been there from the beginning, or involved now making money and having crypto, to Joe Sixpack, out there, who's really, he's interested in, it's really the younger generation love this/ You can't pull a 16 year old away from. >> Right. >> Learning how to mine, getting involved and pretty much anyone under 30, pretty much, is on the crypto band wagon. >> Yeah. >> It's a revolutionary, kind of cultural shift. >> Especially in our customer base, very well over represented there. >> So, how does it get more mainstream? >> I mean I think speaking somewhat biasedly, you know, part of our view is that, we're a company that's here to make crypto currency more valuable in the long run, to it's holders. Not necessarily, doesn't have to be in dollar terms be more pricier, but the idea that before us, before other people doing these kind of loan business, there's really nothing else you could really do with your Bitcoin. You could buy it, you could hold it. And then go sell it later, or you can give it to someone else, kind of trade it for fact or feeling here and there. You could trade it for other off coin. >> Convoluted process though. >> Yeah, all these things. And there, don't have much to do with your daily life. Except for, if you buy a car maybe, and that person will accept Bitcoin, and things like that. But, our clients are buying homes, they're investing in real estate, they're investing in businesses, and paying off credit card debt. Things like this, so. >> What are some of the sample loan sizes? What's the average coming in? >> Well average is $120,000. >> What's the largest? >> Largest is over a million. Yeah. >> Where you guys getting the cash from? >> We have some investors, including some small credit funds, and institutions, high net worth individuals that have pledged to back loans from us. >> So financial pros would get the collateral gain? >> Yeah, totally, you really got to be comfortable with Bitcoin as an asset to then be comfortable with the kind of rates we're talking about here. 'Cause many traditional lenders, they want 20%, 30%, I don't care, it's the riskiest asset there is. Like, they just don't get it. >> So you're building a company, you're a company builder, pragmatic, which is good, but also you got to manage the waves that you're on. Which is high growth and potentially, so you're managing growth. Funding, vision, what's, how is the execution plan, what's the tactical execution plan for you guys? >> I mean, it's interesting. I think, we're talking about getting back to the big data conversation, we really started that, it's a joke that, but smartest thing we do was start that company at the time we did. That, no matter what kind of happened or steps that missed execution, we were on kind of that wave. So, in some ways that formed our philosophy here. But, so you start a business at the right time, and a good space, don't let valuable long term business and let's focus on clients. For us that meant, grow the value of, and the utility of crypto currency is that people are already holding. So, make crypto currency really into the most useful assets in the world. As they should be. They're software, we know they can do more things then what they have done for us necessarily in the last 10 years. So, going forward, I mentioned the loan products we have, we have some storage in custodial technologies we've got, that we will be releasing soon. Things that help you keep crypto currency safe, while consuming products like a loan from us, so. >> And you're based in Austin? >> Yeah, based in Austin. >> How many people on the team? >> 16. >> So a small team. >> Yeah, growing. >> Great, congratulations. >> Thanks John. >> And if I need a loan, I'll come knocking on the door. >> Give us a call >> Regrowning capital. Cube's growing like crazy, going international. >> I like it. >> Going crypto. Joe Kelly, co-founder and CEO of Unchained Capital, check him out. This is theCUBE, bringing you live coverage here at HOSHOCON in Las Vegas. The first security watching conference in the world. We'll be back with more after this short break. (digital music)

>> Live from Washington DC, it's theCUBE. Covering AWS Public Sector Summit 2018. Brought to you by Amazon Web Services and its ecosystem partners. >> Hello everyone, welcome back. It's theCUBE's exclusive coverage. We're here in Washington, D.C. for live coverage of theCUBE here at Amazon Web Services, AWS Public Sector Summit. This is the re-invent for the global public sector. Technically they do a summit but it's really more of a very focused celebration and informational sessions with customers from Amazon Web Services, GovCloud, and also international, except China, different world. John Furrier, Dave Vellante here for our third year covering AWS Public Sector Summit and again our next guest is Max Peterson, the Vice President of International Sales Worldwide for public sector data, Max, good to see you, thanks for coming back. >> It's good to see you again, John, thank you. >> So, we saw you at dinner last night, great VIP Teresa Carlson dinner last night, it's a who's who in Washington, D.C., but also international global public sector. >> Absolutely. >> And so, I want to get your thoughts on this, because AWS is not just in D.C. for GovCloud, there's a global framework here. What's goin' on, what's your take on how this cloud is disrupting the digital nations, and obviously here at home in D.C.? >> Well, John, so first of all, I love your description of this as a celebration, because really that's one of the things that we do, is we celebrate customer success, and so when you look at AWS around the world, we've got customers that are delivering solutions for citizens, new solutions for healthcare, a great solution to education all around the world. In Europe, we serve all those customers from London, Ireland, Germany, Frankfurt, Paris, all open regions, and we're bringing two new regions that we've announced, in the Middle East, which is an exciting part of the Europe, Middle East, and Africa business, and then also up in the Nordics, with Sweden. >> Yeah, so I want to ask you about EMEA, Europe, Middle East and Africa, it's the acronym for essentially international. Huge growth, obviously Europe is a mature set of countries, and it has its own set of issues, but in the Middle East and outside of Europe there's a huge growing middle class of digital culture. >> Yes. >> You're seeing everything from cryptocurrency booming, blockchain, you're seeing kind of the financial industries changing, obviously mobile impact, you got a new revolution going on with digital. You guys have to kind of thread the needle on that. What are you guys doing to support those regions? Obviously, you got to invest, got GDP always in the headlines >> Right. >> Recently, that's Europe's issue, and globally, but you got Europe, and you got outside of Europe. Two different growth strategies, how is AWS investing, what are some of the things you guys are doing? >> Sure, let me try and get all of those questions >> (laughs) Just start them one at a time >> That was very good, yeah. So, let's do the invest and grow piece. Digital skills are critical, and that's one of the challenges with the overall digital transformation, and, by the way, that's not just EMEA, that's all around the world, right? Including the U.S., and so we're doing a lot of things to try to address the digital skills requirement, a program that we've got called AWS Educate just yesterday announced the Cloud Academy Course. So, career colleges, technical colleges will be able to teach a two-year course specifically on cloud, right? For traditional university education, we provide this thing called AWS Educate. We, in the UK, we started a program over 18 months ago called Restart, where we focus on military leavers, spouses, and disadvantaged youth through the prince's trust, and we're training a thousand people a year on AWS cloud computing and digital skills. Taking them, in this case, out of military, or from less advantaged backgrounds and bringin' 'em into tech. And then, finally in April of this year, at our Brussels public sector summit, a celebration of customers in EMEA, we announced that we're going to be training 100,000 people across Europe, Middle East and Africa, with a combination of all of these programs, so skills is absolutely top in terms of getting people on to the cloud, right, and having them be digitally savvy, but the other part that you talked about is really the generational and cultural changes. People expect service when they touch a button on the phone. And that's not how most governments work, it's not how a lot of educational institutions work, and so we're helping them. And so, literally now, across the region, we've got governments that are delivering online citizen services at the touch of a button. Big organizations, like the UK Home Office, like the Department for Wealth and Pensions, like the Ministry of Justice. And then, I think the other thing that you asked about was GDPR. >> Yeah. (laughs) >> Am I covering all the bases? >> You're doing good Max. >> You keep it rollin'. >> You're a clipping machine, here. >> So, GDPR might be thought of as a European phenomenon, but my personal opinion is that's going to set the direction for personal data privacy around the world, and we're seeing the implementation happen in Europe, but we're seeing also customers in the Middle East, in Asia, down in Latin America going, "Hey, that's a good example." And I think you'll see people adopt it, much like people have adopted the NIST definition of cloud computing. Why re-invent it? If there's something that's good, let's adopt it and go, and Amazon understood that that was coming, although some people act like it's a surprise. >> Yeah. >> Did your e-mail box get flooded with e-mail? >> Oh, Gosh. >> God, tons Well the day >> Day before. >> Yes! >> (laughs) >> Yes, day before! Acting like this was, like a surprise. It started two years before, so Amazon actually started our planning so that when the day arrived for it to be effective, AWS services were GDPR compliant so that customers could build GDPR compliant solutions on top of the cloud. >> So, I mean generally I know there's a lot of detail there, but what does that mean, GDPR compliant? 'Cause I like having my data in the cloud with GDPR, 'cause I can push a lot of the compliance onto my cloud provider, so what does that really mean, Max? >> Yeah, well fundamentally, GDPR gives people control of their information. An example is the right to be forgotten, right? Many companies, good companies were already doing that. This makes it a requirement across the entire EU, right? And so, what it means to be compliant is that companies, governments, people need to have a data architecture. They really have to understand where their data is, what information they're collecting, and they have to make the systems follow the rules for privacy protection. >> So how does AWS specifically help me as a customer? >> Right, so our customers around Europe, in fact, around the world build their solutions on top of Amazon. The Amazon services do things that are required by GDPR like encryption, alright? And so, you're supposed to encrypt and protect private data. In Amazon, all you do is click a button, and no matter where you store it, it's encrypted and protected. So a lot of organizations struggled to implement some of these basic protections. Amazon's done it forever, and under GDPR, we've organized those so that all of our services act the same. >> Max, this brings up security questions, 'cause, you know obviously we hear a lot of people use the cloud, as an example, for getting things stood up quickly, >> Yep. >> Whether it's an application in the past, and then say a data warehouse, you got redshifts, and kinesis, and at one point was the fastest growing service, as Andy Jassy said, now that's been replaced by a bunch of other stuff. You got SageMaker around the corner, >> SageMaker's awesome. >> So you got that ability, but also data is not just a data warehouse question. It's really a central value proposition, whether you're talking about in the cloud or IOT, so data becomes the center of the value proposition. How are you guys ensuring security? What are some of the conversations, because it certainly differs on a country by country basis. You got multiple regions developing, established and developing new ones for AWS. How do you look at that? How do you talk to customers and say, "Okay, here's our strategy, and here's what we're doing to secure your data, here's how you can go faster (laughs), keep innovating, because you know they don't want to go slower, because it's complicated. To do a GDPR overhaul, for some customers, is a huge task. How do you guys make it faster, while securing the data? >> Yeah, so first of all, your observation about data, having gravity, is absolutely true. What we've struggled with, with government customers, with healthcare and commercial enterprise, is people have their data locked up in little silos. So the first thing that people are doing on the cloud, is they're taking all that and putting it into a data warehouse, a data repository. Last night we heard from NASA, and from Blue Origin about the explosion in data, and in fact, what they said, and we believe, is that you're going to start bringing your compute to the data because the amount of information that you've got, when you've got billions of sensors, IOT, billions of these devices that are sending information or receiving information, you have to have a cloud strategy to store all that information. And then secondly, you have to have a cloud compute strategy to actually make use of that information. You can't download it anymore. If you're going to operate in real time, you've got to run that machine learning, right, in real time, against the data that's coming in, and then you've got to be able to provide the information back to an application or to people that makes use of it. So you just can't do it in-house anymore. >> You mentioned the talk last night as part of the Earth and Science Program, which you guys did, which by the way, I thought was fabulous. For the folks watching, they had a special inaugural event, before this event around earth and space, Blue Origin was there, Jet Propulsion Lab, much of the NASA guys, a lot of customers. But the interesting thing he said also, was is that they look at the data as a key part, and then he called himself a CTO, Chief Toy Officer. And he goes, "you got to play with the toys before they become too old," but that was a methodology that he was talking about how they get involved in using the tooling. Tooling becomes super important. You guys have a set of services, AWS, Amazon Web Services, which essentially are tools. >> Yeah. >> Collectively tools, you know global, you end up generalizing it, but this is important because now you can mix and match. Talk about how that's changed the customer mindset and how they roll out technology because they got to play, they got to experiment, as Andy Jassy would say, but also, also put the tools into production. How is it changing the face of your customer base? >> Sure, well, one of the things that customers love, is the selection of tools, but one of the most important things we actually do with customers, is help them to solve their problems. We have a professional service organization, we have what we call Envision Engineering, which is a specialized team that goes in and develops prototypes with customers, so that they understand how they can use these different tools to actually get their work done. One quick example: in the UK, the NHS had to implement a new program for people calling in to understand health benefits. And they could've done this in a very traditional fashion, it would've taken months and months to set up the call center and get everything rolling. Fortunately, they worked with one of our partners, and they understood that they could use new speech and language processing tools like Lex, and Amazon's in-the-cloud call center tools, like Connect. In two weeks, they were able to develop the application that handled 42% of the inbound call volume entirely automated, with speech and text processing, so that the other 52% could go to live operators where they had a more complex problem. That was prototyped in two weeks, it was implemented in three more weeks, a total of five weeks from concept to operation of a call center receiving thousands and thousands of inbound calls on the cloud. >> Max, can you paint a picture of the EMEA customer base, how it sort of compares to the US, the profile? I mean, obviously here, in the United States, you got a healthy mix of customers. You got startups, you're announcing enterprises, you got IOT use cases. I imagine a lot of diversity in EMEA, but how does it compare with the US, how would you describe it? Paint a picture for us. >> Yeah sure, candidly, we see the same exact patterns all around the world. Customers are in different stages of readiness, but across Europe, we have central governments that are bringing online, mission systems to the cloud. I mentioned Home Office, I mentioned DWP, I mentioned Her Majesty Revenue and Customs, HMRC. They're bringing real mission systems to the cloud now because they laid the right foundations, right? They've got a cloud native policy, and that's what directs government, that says stop building legacy systems and start building for the future by using the cloud. Educational institutions across the board are using AWS. Science and research, like the European Space Agency is using AWS, so we see, really, just the same pattern going on. Some areas of the world are newer to the cloud, so in the Middle East, we're seeing that sort of startup phase, where startup companies are gettin' onto the cloud. Some of 'em are very big. Careem is a billion dollar startup running on AWS, right. But we're helping startups just do the basics on the cloud. In Bahrain, which is a small country in the Middle East, they realized the transformative opportunity with cloud computing, and they decided to take the lead. They worked with AWS, they produced a national cloud policy, their CIO said we will move to the cloud, and that's key. Leadership is absolutely key. And then they put in place a framework, and they very systematically identified those applications that were ready, and they moved those first. Then they tackled the ones that weren't quite ready, and they moved those. They moved 450 applications in a matter of three months, to the cloud, but it was by having a focused program, top-level leadership, the right policy, and then we provided technical resources to help them do it. >> Max, I want to get one last question before the time comes up, but I want to put you on the spot here. >> Oh good. >> In the United States, Amazon Web Services public sector has really kind of changed the game. You saw the CIA deal that you guys did years ago, the Department of Defense is all in the news, obviously it's changing the ecosystem. How is that dynamic happening in Europe? You said the patterns are the same. Take a minute to just quickly describe, what's going on in the ecosystem? What's the partner profile look like? You've got a great partner ecosystem, and there are different partners. You mentioned Bahrain, Digital Nation, changing the game. You guys seem to attract kind of a new guard, a new kind of thinking, partners. What is the ecosystem partnerships look like for you guys, internationally, and is there the same dynamic going on that's happening in the US with the CIA, and DOD leaders around changing the narrative, changing the game, with technology? >> Sure, good questions. We wouldn't be able to deliver the solutions that we deliver to customers without our partner ecosystem. And sometimes, they're small, born in the cloud partners, the same sort of phenomenon that we have in the US. The example with the National Health Service was delivered by a expert consulting partner called Arcus Global, about a hundred person strong consulting organization that just knows cloud and makes it their business. And we see those throughout Europe, Middle East, and into Africa. We have our large global partners, Capgemini, Accenture, and then I think the other thing that's really important, is the regional partners. So what's happening is we're seeing those regional partners, partners like Everee, or Dee-Ecto, or SCC. We're seeing them now realize that their customers want to be agile, they want to be innovative, they want to be fast, and it doesn't hurt that they're going to save some money. And so we're seeing them change their business model, to adopt cloud computing, and that's the tipping point. When that middle, that trusted middle of partners, starts to adopt cloud and help the customers, that's when it really swings the other direction. >> It's great growth, and new growth brings new partners, new profiles, new brands, new names, and specialty is key. Max, thanks for coming on the CUBE. Really appreciate you taking the time. International, we're riding the wave of home sector with CUBE here in the US, soon we'll see you in some international summits. >> I'm looking forward, >> Alright. >> John, Dave, it was awesome to talk to you. >> Thanks Max. >> Alright, we are here live in Washington, D.C., for Amazon Web Services, AWS, Public Sector Summit 2018, we are in Washington, I'm John Furrier, Dave Vellante, and also Stu Miniman is here, the whole CUBE team is here, unpacking the phenomenon that is AWS, rocking the government and digital nations around the world. We're back with more, after this short break. (upbeat techno music)

>> Announcer: Live from Las Vegas, it's The Cube covering IBM Think 2018. Brought to you by IBM. >> Hello and welcome to The Cube here in IBM Think 2018, I'm John Furrier. It's The Cube, our flagship program, we go out to the events and extract the signal in the noise. We're the number one live event coverage. We're here with The Cube with IBM Think 2018. Our next guess is Jesse Lund who's the vice president of IBM Blockchain. He's in the financial services side. Into blockchain, into crypto, into token economics, seeing the future, how money flows, Jesse great to have you on The Cube, thanks for joining me. >> Yeah, thanks for having me. It's great to be here. >> We were talking before on camera about blockchain, and we love blockchain, IBM certainly put it out there as part of the innovation sandwich. Blockchain, data, AI, kind of making that innovation, but it's really what it enables, and I want to talk to you about. You are involved in payments. We've been saying on The Cube that the killer app is money in this market. >> I agree, yeah. >> You agree, and you talk about it. This is a new market, so a stack is kind of developing. You got blockchain, then you got crypto which as protocols and you got infrastructure, then you got decentralized applications which you could call ICOs up top, certainly a little bit scammy and bubbly, but that's as arbitraging and optimizing the capital markets, you could argue that. But so this is a really big dynamic. Your thoughts on this trend. >> Sure, well so I joined IBM from 18 years at Wells Fargo. I spent really the majority of my career in financial services and when blockchain came along, I sort of immediately saw the impact, the potential for, I'll call it positive disruption, disruption in the positive sense. Transformational paradigm shift kind of stuff in terms of how money moves around the world and how we classify assets and how we transfer ownership of assets, I mean that's just, it's, the possibilities are limitless. And you're right, IBM is the place where I think blockchain has started as a mainstream focus for enterprises around building private networks, but that's really just the beginning. What we talked about earlier was it gets really interesting when data and money are connected together and they move at high velocities together. >> Let's get into that. I mean first let's just address the IBM thing. They got to put a stake in the ground, blockchain, it's a safe harbor to say supply chain stuff because that's their business, they've been building technologies for supply chains for companies, that's what enterprises do, that's IBM. But the game is where the money is and that's where the businesses are going to be transformed. We're talking about disrupting structural industries. This is where the money power comes in. Money's flowing, I mean if you want to move money from China, go to bitcoin. If you want to move it from anywhere, this is what's happening. >> Yeah, so think about bitcoin. It's kind of what started it all. It's a little bit of a bad word in banks and in regulated financial circles, but let's face it, the only real mainstream blockchain application today is still bitcoin, but you know we're only three years in to the blockchain industry, right? I mean think about when we were three years in to the internet industry, where we were still talking about which browser is going to win and then it went on to which application server's going to win, and it wasn't til a decade later we were really focused on what are the applications, the killer apps that are enabled by an interconnected world and that's exactly what's happening now. Other industries have already been completely disrupted. Look at retail, it's just, it's banking's turn. It's financial services turn. >> One of the founders, the co-founders of Ethereum, Anthony Diiorio, who I interviewed a couple weeks ago at the Bahamas, he said "While it is the new browser," to your points, browser wars, if you think about the payment, wallets are now becoming part of the mechanism for money transfer. If you don't have a wallet, if you want to send me some Ripple, you want to send me some Ethereum, I need a wallet. This is a no brainer, right? I mean if you want to leverage any money, that's one thing. The second thing I want to get your thoughts on besides the wallets, the fiat conversion, right? These are two threshold conversations that are going on. Your thoughts, wallet and conversion to fiat. >> Well I mean I think wallets are really important because this whole thing is based on key management, this whole concept is based on cryptography. It only works on a public, private key notion and you got to keep that private key private, but you got to keep it, right? You got to keep it safe and you got to keep it, it's like your wallet. You've got a wallet, you've got cash in your wallet, you lose your wallet, you lose your cash. It's the same kind of analogy, so wallets are really important and you're going to want to turn to providers who have made their business in encryption, who have made their business in security, I mean-- >> And cold storage, old school is kind of coming back, people are taking their keys and they're spreading them across multiple lock boxes, multiple states. People are getting broken into their house or their PCs are getting broken into. >> Right, yeah. >> I mean security, going old school. >> And why not? I mean, it works. >> Because if someone knows you got 100 million dollars in your house, they're going to get it if you don't lock it. Okay back to the reality of the money transfer. We were talking before you came on, I've been saying on The Cube, token economics really is where the action is, at least in my opinion. I want to get your thoughts because really the business model innovation is on the table because whoever can innovate the business model has more of a chance to disrupt an existing industry. This is where tokenization becomes part of the money piece of it, so how do you convert that value into capture? Is that token? Is that where you see it? What's your thoughts? >> Yeah so well first of all, I mean if you think of tokens as another form of currency, and by the way, I think we have to be careful about what we say, cryptocurrencies, the industry talks about thousands of cryptocurrencies out there where there's really not. There's maybe dozens and they're all derivatives of just a few models, bitcoin being one prominent model and there's a lot of offshoots off of that. But the rest of what we call cryptocurrencies are really tokens that represent primarily securities, which is why the SCC's getting involved. But the really interesting thing about this is these tokens move at high velocity because they're digital and so, but these digital things represent a claim on real world value, and that's where it becomes really interesting. IBM's built and launched as kind of its first foray into the solution space of financial services where IBM is an investor in this technology, a cross-border payment solution that inherently re-engineers this whole correspondent banking, this international wire process, and where FX, foreign exchange, becomes a real time capability in a series of operations that execute as an atomic unit. That's novel today. When you want to send money from here to somewhere else in the world, you go to your bank, your bank sends an instruction to another bank, and they respond and say "Yeah you know it's okay "because the person you're sending it to is not a terrorist, "is not on a some sort of sanctions list," great, now the bank has to actually go settle and it settles through another network, so the novelty is why can't the messages and the data and the value itself, the digital asset, why can't they exist and move together at the same time? That's what we've really built. But as we've built and deployed that and are getting banks and non-bank financial institutions to sign up for it because the cost of moving money goes way, way, way down and the user experience goes way, way, way up because instead of taking two or three days and you don't know how much it's going to cost until it gets there, it takes 10 or 15 seconds and you know before you even press send how much it's going to cost to get there. It all boils down to this notion of digital assets, that's what it all comes down to, is the way to settle value with finality in real time is for one party to exchange a digital asset with another party. Today, initially, the only form of negotiable digital assets are cryptocurrencies which has banks a little scared, but as we start talking through what we've learned in the enterprise blockchain space, we realized that we can tokenize all sorts of other asset classes, commodities, securities, and even fiat currencies where central banks or commercial banks can issue a token that represents a claim on deposits held at some financial institution and that's, that's a-- >> So you see tokenization as a big deal. >> It's a huge deal. I mean it's everything, I think it's-- >> It's the economic value of the ... >> I think it's the tipping point for blockchain. The irony is it goes back to bitcoin kind of started this all. You know we said "Well we like the idea of the technology "underneath bitcoin, but we want to focus on blockchain," I mean forget for a second blockchain is actually terminology that's invented by the bitcoin primer that was published nine years ago by Satoshi, so yeah it's their, whoever they are, it's their terminology, and it's kind of coming back full circle where you're seeing the convergence of all of these cool optimization capabilities, you know, immutability and workflow optimization, supply chain management-- >> And there's a lot of work to be done on performance and whatnot, but the concept of decentralized immutability data is fine, store the data. Now there's, it's got to get fixed, but I think that what that enables and I think you agree that tokenization's critical. So for a company that wants to token their business or raise money via tokens or get involved in this new economic value creation, innovation trend, how do they do it? And by the way are there tools available? You mentioned banking, and the banking business got to where it was because you had to build the picks and shovels to make it happen, you had to do a swift and you had to have this stuff go on. Now developers don't necessarily have the tools, so there's a picks and shovel market and there's also the real innovation. >> Yeah and that's I think the value contribution that IBM brings. I mean we bring 107 years of credibility in developing and operating mission critical, transactional, and financial systems, and I could do just an ad for a second, that's what the IBM blockchain platform is all about and as the industry evolves, as our platform offering evolves, what we want to be able to bring to small business, medium sized businesses, large businesses is the ability to develop solutions using our toolkit. >> So Jesse I want you to put your financial hat on and at the same time put your payments hat on and your token economics hat on, three hats. Hey I want to tokenize my business, I really want to get in. So we have an innovative team, we're seeing new business model formulas and logic that we want to disrupt, what do I do? I got an existing, growing business that I know has assets and I'm not a startup, but I'm not trying to pivot like Kodak, so I'm not dying, throwing the hail Mary, or I'm not a startup and got to build a whole product. I'm a real business, I'm growing, and I see tokenization as a way for me to be successful. What do I do? What's your advice? >> Well I think you look at it from all potential angles. If you look at any business, they're always looking to improve the bottom line by shrinking costs, right? They're also looking to improve the bottom line by increasing the top side, increasing revenue, and I think as a mid-sized business or a growing business, you have the opportunity to use tokenization, to use blockchain and digital currencies to do both of those things. You have the ability to accelerate the adoption of whatever your good or service or product is by if it's tokenizable, and most things are whether it's a utility, access to some service you provide, or whether it's an asset, some widget that you sell, you enable primary and secondary markets by creating a digital asset that can be bought by anybody anywhere around the world. I mean that's one way to do it and so I think getting people to realize the potential there-- >> You got programs, they call up IBM or get some developers, make it happen. Okay so killer apps money, that's going to be a 30 plus year trend and certainly this highlights that, but the other thing that's happened, it's coming out of either, in the open source community as well as cloud, the notion of marketplaces and communities so marketplaces and communities become a very important role in the token economics piece. What's your thoughts and opinion on that narrative? >> Well again for me, it goes back, I always go back to digital assets. We in the U.S. and around the world, when we start talking about financial instruments, we classify assets differently, but when it comes to an ecosystem and a community that becomes inherently peer to peer and inherently democratic, it's about an asset class agnostic distributed exchange where I can sell you my security token in exchange for your fiat token, or I can sell you my commodity token or utility token for the same. I think the ecosystem gets built automatically by way of new assets coming to a common network or interoperable set of networks, and that's what's missing today by the way, same in capital markets, right? The holy grail in the capital market space today is how do I shrink the time between trade and settlement? There's this whole t plus three and we're spending billions of dollars to go to t plus two, we gain a day, so the trade day and the settlement date are two days apart. I mean you just think about kind of the absurdity of that. If you just say well if the security that you're buying is a digital asset, and the money that you're buying it with is a digital asset, and they both exist on either the same network or an interoperable network, the transfer of ownership and the transfer of value happen together as two operations or a single operation in one atomic transaction, you've solved the problem. >> Speed of light can make it happen. >> Right, delivery versus payment, that's what the capital markets industry is trying to optimize for, right? Because it improves the balance sheet of all sorts of finance-- >> You had a phrase you mentioned before we came on camera, something about money, the future of money. What was that phrase? >> Programmable money? >> Programmable money. >> Yeah, right, right. >> I want you to take a minute to explain. Love this concept, Miko Matsumura, thought leader friend of ours, has a vision called open source money which is more of an open source, this hey money's flowing, it's open, it's out there, but you have a different perspective which I like too which is programmable money. What does that mean? Describe the concept and take a minute to unpack that. >> The concept of programmable money comes out of a paper that I jointly authored with Jed McCaleb who is the founder of Stellar and was the co-founder of Ripple and is a really smart guy so I feel like I have a small brain when I'm around him but we really wrote it in the context of central banking and the ultimate issuer of an asset because central banks are the issuers of currencies. Right now the primary dealers, if you will, for currencies are commercial banks and so that whole commercial, central, fractional reserve banking model has been replicated from the western world to everywhere else in the world and you can't get access to central bank money as they say. But if the central banks were to issue digital currencies which is essentially a token of fiat currency, so you own the token, you own a claim of fiat deposits held on the balance sheet of the central bank, now you have the ability to move that around. You can actually program the movement of money because it's a digital thing, it's a digital asset that's as good as cash and if you are working with a central bank who's issuing it, not only is it electronic money, it's actually legal tender because if the central bank issues it, it becomes legal tender which means everybody who accepts it has to accept that form of payment. That's pretty profound if we can get to that point and we're working with-- >> And software's a big driver in that because you need software to manage digital assets. >> Oh yeah, absolutely. >> The software's driving it. Bill Tai is an investor, I interviewed him, and he had an interesting topic and I made a highlight of it. He said after World War II, we talked about the oil situation when the dala was pegged to OPEC, that was essentially tokenizing oil. Then okay that's good, so that was their ICO. >> Right, right, yeah, essentially. >> That's what you're saying, you can actually put fiat to the digital token and take advantage of the efficiencies of digital. >> Right, yeah, okay-- >> Taking down all the structural inefficiencies that were built prior to digital. Is that ... >> It is. You fast forward a little bit and think where that takes us. It's no secret that the U.S. dollar is the trade currency of the world, and I want to be careful what I say because, you know, I'm an American patriot here but there are other large G20 nations who wouldn't mind dethroning the U.S. dollar as the trade currency of the world and so as you see central banks starting to get involved in the issuance of digital currency, you create a situation where all of a sudden well maybe oil could be traded heresy in other currencies besides the U.S. dollar which is all it's traded in today. Goes back to your ecosystem question. >> This is a great point. We could riff on this stuff, let's riff on this. The UK just signed a deal with Coinbase, this is a major signal. >> Sign, yeah. >> You got a legitimate country saying we're going to give a license to Coinbase, now they have Brexit to deal with so they're looking at it as an opportunity. Outside of the UK coming in and doing that deal with Coinbase, it's on the web, look up Coinbase in the UK, you'll see the deal. You have other companies trying to jockey for who's going to be the Wall Street for crypto? Meaning I want to convert crypto to fiat, where do I go? Do I go to Estonia? Do I go to Dubai? Bahrain? Armenia? China? There is no place yet. Your thoughts, what's going to happen? What shoe will drop first? Is there a domino effect? >> Yeah, well there's a couple things as it relates to the UK and kind of the extension to Coinbase of access to the national payment system which is really what enables them to then convert fiat to crypto and back. That's pretty interesting. Going back to the programmable money thing, though. If you have a central bank issued token, you've essentially extended the real time gross settlement system which has been only accessible by commercial banks to anybody that holds that token, right? It's a trend, I think the UK sees it coming, I think the Federal Reserve sees it coming. It's going to happen. >> Is it winner take all or winner take most? >> I think it creates a much more purely efficient market. It's a democratic system so I don't think there is going to be a new Wall Street, I think it's going to be-- >> John: Decentralized. >> Exactly, I mean that's the beauty of it. It's scary though for establishments like Wall Street to look at this and it-- >> I mean are the banks scared? You're dealing with the banks right now. >> Yes, they're scared. I mean I've actually read a recent article that Bank of America, the headline was "Bank of America's afraid of digital currency." You've seen Jamie Dimon who came out with a kind of a hard stance against bitcoin and has since kind of backed away from that. >> Of course you probably bought in when it dropped and now it's back up again. >> Well I think part of the bank was actually facilitating their clients and trading bitcoin so that might've been it. There's a natural reaction to it, especially if you're part of the mainstream establishment. >> There's no proof of that, I'm just saying we're posting on Reddit and whatnot. >> No we're just joking around. Jamie's a, he's a good guy, right? >> Can I get your thoughts on digital nations? We've been talking about this. Just a few years ago, smart cities, IoT was kind of the narrative, oh be a smart city, control the traffic lights, and instrument the physical goods and services. Now with crypto and blockchain front and center conversation is digital nations with sovereignty around their cash. This is kind of your point earlier. How are you seeing that? What's your view? Are you seeing that trend? Are there dots connecting for you? Because again, people are jockeying for a position on the global digital backbone to be a major part of the money flow, the fiat conversion, what is the goods and services? Who's going to clear the values? All digital, it's a perfect storm. >> Well I think there's always going to be the need for trusted entities to be the issuers of these assets because it all comes down to trust at the end of the day. The thing with bitcoin is that it's purely autonomous and people are a little bit skeptical of it because they're like, "Well who's controlling "the monetary policy?" and the answer is the market, you know, the users of the network are controlling it and that's why you see such volatility, right? Because the traders love it, they can go in and trade the up trends and the down trends. As long as there's volatility, traders are making money. I think there is still going to be a place for central authorities to add value, but that's going to be the pressure, is for them to prove that they're adding value not, you know, bureaucracy masquerading as process. >> I was reading an article that Telegram, which is doing a huge ICO, just got shut down by the Russian government, they went to turn over their keys, their private keys of their users. Say goodbye to the-- >> Jesse: I didn't read that, that's crazy. >> It's really crazy, so that's going to put a damper on their ICO but regulatory and then government issues around countries becomes a big deal. In your experience as Wells Fargo, at a bank, looking forward in the new digital world, is it one of those situations where path of least resistance, the countries that go more friendly get around that in a sovereignty where you domicile, where you start your company, where you do your banking. I mean I could start a company in Gibraltar and bank in Switzerland. >> Well transparency is part of the benefit or the downside of this, right? I think there may be advantages that pop up but I think they will equalize over time. I've been around the world now for IBM talking to 20 plus central banks, and I had a really interesting conversation with one of them recently in Asia. We're in the room with deputy director level people who are responsible for things like the NA money laundering policy and the economics and monetary policy and things like that and one person said, "You know, we're really torn "between two equally unacceptable decisions. "One is to ignore cryptocurrencies altogether, "and the other end of the spectrum is "to make them illegal, to ban them." I thought it was poignant that they see those as unacceptable, they have to do something in the middle. >> Do they weigh or ban? I mean look, the banning's happening. >> But okay so you saw that Trump used the executive order to prevent Americans from using or trading in the Venezuelan crypto that was issued on Ethereum, right? I saw that Venezuelan thing as a publicity stunt more than anything, an active of global defiance. So there's precedent now for, and the Russia thing with Telegram-- >> The United States of America has to step up its game because look at it, we have a lot of, I mean I remember back in the crypto days when I was just getting into the business, late 80s, early 90s, you couldn't even do it in the U.S., you go to Canada, that's why Canada's got a lot of innovation up there. We're risking our country, and I had one guy tell me in Puerto Rico, he's from South Africa, and he shouldn't be throwing any stones either but his point was, he says, "America's becoming Europe. "There's a shrinking middle class "while other emerging markets have a growing middle class," so the global impact of blockchain, cryptocurrency, and these applications are significant and have to be factored into policy decision making for governments. The U.S. can't just think about itself anymore in a vacuum. >> Right, not anymore. >> Because there's implications otherwise the U.S. will turn into Europe, regulated, all these rules, byzantine stuff. It's a real problem. Your thoughts on that. >> It is. It's cliche, but we live and work in a global economy. The flow of information globally in real time has been around now for a while and it's about time it came to money. The internet of money is a term I've heard. It's just, it's unavoidable. >> Jesse Lund here inside The Cube. Great guest, great conversation. >> Yeah, thanks. >> How do people get ahold of you on IBM's, you mentioned you got some great stuff going on, you've written a paper, you've got a lot of content, where does someone go to discover some of the stuff that you're working on they could get involved with you guys? >> Yeah well I mean the best place to go is IBM.com/blockchain, that'll tell you a lot about what we're doing and the different industry-- >> And the programmable money paper you wrote, is that there? >> It's out there as well, there's a link to that. >> On IBM.com? >> You can get me directly on LinkedIn, I try to be pretty responsive with that because I really enjoy the dialogue. This is a revolution of the peoples, man, it's all over the world, so it's great, it's great to be a part of it. >> And people tokenizing their business, there's real opportunities to change the game to bring consensus, data driven, new kind of supply chain whatever to the markets you're in, great opp-, and you need banking. >> Yeah of course. >> You need to have money. Money, marketplaces, and communities, that's my mantra. >> I subscribe to it. >> Thanks for coming on. >> Thank you, thanks for having me. >> Jesse Lund. I'm John Furrier here at IBM Think 2018. Cube coverage continues after this short break. (upbeat music)

>> Voiceover: Live from Las Vegas it's The Cube, covering NAB 2017, brought to you by HGST. (lively music) >> Good morning, welcome to The Cube I'm Lisa Martin, and we are live at day three of the NAB Show in Las Vegas. Very excited to introduce you to our first guest this morning, Michael Harbin, the VP of Pac-12 Networks. Good morning Michael, welcome to the cube. >> Good morning, how are you today? >> Very good, very energized. >> Oh good (laughter) >> Day three. So Michael, tell us about Pac-12 Networks, The content arm of the Pac-12 Conference. >> Sure, we have a six regional sports networks in the western US, and then one national feed, we also have digital properties and some over-the-top services on Twitter and Facebook Live, so we're involved as we can be in all forms of distribution. We're located in San Francisco, the conference itself is over 100 years old; it was 100 last year. The networks launched four years ago, this will be our fifth season coming up in August. We're very proud, very happy of our distribution, and our student athletes, and our partnership schools, and it's a great place. >> So you are the first and only sports media company that is owned by its 12 universities. >> That's right, so the SEC is partnered with ESPN, and the Big 10 Networks are partnered with Fox, so we're on our own, we stand on our own, and we do the best we can with what we have. >> Give us an idea of the genesis of the network. >> It started with the new commissioner, Larry Scott on the Pac-12 side, he came in and had a vision for helping the Pac-12 realize what it could be, as opposed to... Being on the West Coast has its disadvantages; our audience size isn't that big, our games start when the East Coast is going to sleep sometimes, so he wanted to get rid of an East Coast bias that existed in collegiate sports, and really make Pac-12 what it should be. We have the best geography, we have the best schools, we have land in... Tech and entrainment, so we have a lot going for us, and I think he brought those things to the forefront, and helped position Pac-12 in a much stronger position than it had been. In the world of liscencing content, we leapfrogged at the time the rest of the conferences in our deal with ESPN and Fox for our football and basketball games. With the games that weren't sold to Fox and ESPN, commissioner Scott thought to create a media company that we would own and control, and that would distribute the rest of our collegiate and athletic events that we have that are controlled by the Pac-12. >> So you mentioned basketball, football, you do big events, but you also do small events. Give us an idea of what it's like to produce a big event in the fall; a big football event, versus some of the smaller Olympic sports like field hockey? >> Sure. We have our three seasons; fall, winter, and spring, so obviously winter, the mostly indoor sports, but in the fall we kickoff big with our football season, and there's 12 or 13 weeks, and we have a championship game in early December which is a big event. That's one of the reasons the Pac-10 went to the Pac-12; the NCA says if you have 12 football teams, you can have a championship game. >> Okay. >> If you have less than 12, whoever has the best record is the winner, so we added two schools, and we have a champ game; those media rights were sold to Fox and ESPN, so it was a nice deal for us. So we start off with football; those are more traditional productions that everybody's used to. Big 53-foot truck pulls up, we do our production compliment with seven, eight or nine cameras depending on the game, depending on the market, depending on the week, the time of broadcast. We usually get- we choose our games after Fox and ESPN chooses theirs, so sometimes we get good games, sometimes we don't. They're all good; they're all Pac-12 games, so they're all good. But those are very traditional productions that are done in very traditional methodologies that everyone would see. As we start getting into basketball, those two are typical productions, but the volume of basketball games is such that we found a new way to do those games a little bit less expensively than the others. >> So less resources? >> Yeah. And then of course the spring sports where you're into baseball and softball, track and field. Track and field is a very expensive sport to produce because there's a lot going on at any one time. In that way, we've gotten away from video as a means of transmission and done IP transmission, which saved us a lot of money, and as we've got that IP path between our schools and ourselves, we've learned to do new things with it. We're doing content sharing back and forth, advanced production techniques, multiple camera paths that we normally wouldn't have on a production of that size. All of our shows, no matter where they are or what sport they are are produced in surround sound 5.0, so we think we lend a lot to the smaller sports that get smaller audiences, but we think we put a lot of production value to them to do the athletes and the sport justice. >> Talk to us about the underlying technologies that are necessary to support going from video to IP so that you can really open up the types of content and where it's distributed. >> Right, so one of the difficulties- we have around 100 venues in the 12 schools that we have to be able to broadcast from. Depends on the university; at Standford, those soccer and lacrosse fields could be way out. They call the campus 'the farm' for a reason. There's a lot of acreage there to cover. And some of our venues aren't even on campus. UCLA football is at the Rose Bowl, USC is at the Coliseum, so we had to find a way to get away from video which is just a single path and costs a lot. We needed more bidirectional service, we needed something that was secure and had really low latency so that when we did our productions we did the coaches interviews afterwards, it's basically like a phone call. We also provided internet services to the production, which everybody needs internet connectivity. The Chyron people, whomever. The crew itself, just for checking in and their report times and things like that, and we also provide four-digit extension dialing for our in-house phone systems. It's a very efficient and cost-effective way for us to do our production out there, and provide this suite of services that if I was just using a video circuit, I wouldn't have access to unless I paid extra for it. >> So presumably, creating a ton of content, how do you maintain all this content and be able to retrieve things, be able to livestream, have things on demand, that's that underlying archival storage strategy? >> So we produce 850 events throughout a year, and that's just to give you an idea, I think Big 10 and SCC are around 400, 450. We have a lot of volume going on, and we do a very good job, I think, of archiving that, logging those games, adding metadata, as much metadata as we possibly can to it. Including repurposing the closed caption files, we attach that as data, we get articles, stills, whatever we can gather about that particular game, we add it as metadata, and then we archive that. We keep it on very fast, short-term storage in our building on spinning disk, and after it ages, after about the second season, we push it into Amazon Cloud. It goes right into Glacier if it's that old, but immediately when we do a game, we push it up to S3 in Amazon, where we share and monetize our content at that point, and then from there it just goes to Glacier, so we have, we think, a very efficient workflow, it's highly automated, we have a great media management department that does a terrific job with very few people, very scarce resources, they do what I think is one of the best jobs in the industry in terms of saving that content in an effort to monetize it in the future. So if you can find it and search through it and get clips from it, it's going to be that much more valuable for us. >> So one of the prevailing things that we've been hearing all week, and not just here, is the democratization of content. The audience, we're very much empowered, right? As a viewer of anything we want; we're binge-watching, we're streaming, we're time-shifting, we're sharing it on social media. What is the process that Pac-12 Networks goes through to understand your audience as well as you can to deliver them the experience that you think they want? >> We have the data that comes back from our TV Everywhere product, there are OTT platforms that we can gather up and sift through. We've undertaken a fan engagement project to work with our universities about the type of people and who attend their football games, or their sporting events, and a way of better understanding who our audience is and tailoring our program to that. Understanding who they are, what their preferences are, it will help us, I think, to fine-tune the kind of content we put in front of them. Everybody loves a winning team, and you have no problem filling seats or getting an audience when your team is winning, so we understand that; we just want to be better during those times where the team might not be undefeated, so we'd like to get people in there anyway. It's a challenge for us, it really is. >> What about this concept of original content? You're now producing original content. There are three shows? >> Yes. We have some anthology shows; The Drive, and All Access during football and basketball season that give a behind-the-scenes look akin to the HBO shows on the professional side that look at professional sports. We go behind the scenes, and the stories for some of our athletes and some of our teams are quite compelling, and it makes good television. That gets also supported by our shoulder programming for our live events; pre and post-game SportsCenter-type shows that we do, and we try to do live halftimes that are topical for every one of our sports events that are played, so that's a lot of volume, a lot of churn that goes through a small studio in a small facility. We think it helps the live events look better, I mean, live events are what people are tuning in to watch. You can't fast-forward through a sporting event which advertisers just love, you kind of have to consume it in the moment, unless you can keep yourself away from the internet or your phone for a few hours until you get a chance to watch the game. We think being in live sports is a really special place to be, because you can't fast-forward through it. Any support that we give those live events, that's really what the other original content is geared to, is to build interest in those teams and those events, and attract people to them. >> So you have this concept of TV everywhere. Original content, traditional content, how is the cloud helping the Pac-12 Network to really collaborate across all the content, all of the connected fans and wherever they are? >> Sure. Just to make a distinction, we have the TV Everywhere which is the authenticated platforms that our cable providers use, and we have our own digital properties as well that still need to be authenticated, and then there's the over the top platforms like Facebook Live that are everything but the 850 events that go on the air. So behind the scenes, sideline reporters in the locker rooms, whatever else we could produce, pep rallies, that we think could be compelling content for Facebook Live we do. On Twitter, we've licensed out the 851st event and beyond, so we do some very limited productions, but still quality, that gets distributed on Twitter. So that's kind of this thing. TV Everywhere is basically the high-end product, and then these kind of ancillary second-screen experience, whatever you want to call them that don't need to be authenticated, that anybody can pick up and watch. That's how we make that distinction. I'm sorry, what was the second part of that question? >> How does cloud help collaboration? >> So we were really early adopters of producing those streams ourselves, so with Elemental Technologies who is a wonderful vendor and partner of ours, they're now owned by AWS, I point over there, they're somewhere in the building. >> (laughs) >> We're a big early adopter of their technology, we've really tried to strive for a business partnership with our vendors, rather than just a check-writer, check-casher relationship, which doesn't do us well, we don't think. We developed this relationship with them, and they helped us deliver our mezzanine streams to Occami and distribute from there, but we do that encoding in-house on their equipment. Eventually I think we'll move that to the cloud and get it all virtualized, but for right now we run their servers in our house, and they understand that we would like to get it out as quickly as we can as some point, but we're working on emptying our CER as fast we can; I don't want any blinking lights in my CER if I could get there someday, but that's a dream. >> So last question, we just have about thirty seconds left, you're in San Fancisco, >> Yep. >> With a really cool opportunity; sports entertainment technology. When you're looking for young talent who could potentially be swayed by the big Googles of the world and Facebook, what is really unique and cool about working with Pac-12 Network? >> For us, it's a two-edged sword. We love being in San Francisco; it gives us access to young people, a new way of thinking, different technology companies that are more IP/IT centric than TV centric. So we think that gives us a real advantage. The other edge of the sword is that we lose a lot of network engineering especially, systems engineers to the tech companies; they would prefer to work at Uber or LinkedIn, something like that. TV's kind of a dying tech, you have to jazz it up a little bit to gain their interest. >> But it's evolving based on what you're talking about-- It is. It's very much that skillset for being an old-time TV engineer is becoming less and less important than network engineering or systems engineering skillsets; that's what we really look for. If somebody has a Cisco certification, he gets our- or she gets our interest, rather than just 'I've worked in television for 20 years,' because we know which direction we're going in. >> One of the things that you articulate as we wrap things up here is that every company this day and age is a tech company, so we wish you the best of luck. You've said you've been at this show for 30 years >> 30 years. >> I can't even imaging all the things that you've seen. Michael Harbin, thank you so much for joining us on The Cube. >> Thank you very much, it was a pleasure being here. >> We want to thank you for watching, we are live from NAB in Las Vegas. I'm Lisa Martin, stick around, we'll be right back. (techno music)