(upbeat music) >> Narrator: From our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBE conversation. >> Hello and welcome to theCUBE studios in Palo Alto, California for another CUBE conversation, where we go in-depth with thought leaders driving innovation across the tech industry. I'm today's host, Peter Burris. Every business is talking about cloud transformation as a consequence of their effort to do a better job with digital business transformation. But cloud transformation too often is associated with just thinking about moving applications and data to some as yet undefined location. Whatever approach enterprises take, they will absolutely have to touch upon a couple of crucial steps along the way. At the center of those steps will be how do we think about the network transformation that's going to be required to achieve and attain our cloud objectives? How do we do it? Well to have that conversation, we're here today with Jay Chaudhry who's a CEO of Zscaler. Jay, welcome to theCUBE, welcome back to theCUBE. >> Thank you. >> So before we get into this very important conversation, give us an update on Zscaler. >> So Zscaler was designed as a cloud security platform for the world of cloud and mobility. When applications are in the cloud, users are everywhere, the traditional security that builds a castle and moat model no longer works. So I start with clean slate, 11 years ago to start this company. Today, some of the largest companies in the world are protected by Zscaler. We went public last year, on NASDAQ, the sales have done very well, our customers are very happy our employees are very happy, so we are having fun building this lasting company and making cloud and internet a safe place to do business. >> Now that's great. Now let's talk about that, 'cause you're talking to a lot of customers, about making the internet a safe place to do business. >> Yep. >> What are you encountering as you discuss their challenges? >> So with the mobility, with the desire to do digital transformation, CIOs and CTOs and CISOs, are trying to figure out, how do I get there? The biggest thing that's holding them back, is security. It's a new thing for them. If my data is sitting in the cloud somewhere, who is protecting it? How do my users access it while the bad guys don't? So security ends up being at the center of the whole discussion. In fact a few years ago, CISOs would talk to me and say, "Security is not getting enough attention, "it's being ignored." Now the same CISOs are complaining a little bit that I'm being asked to present to the board every quarter. >> Right >> So it's a good thing but the CISOs have a challenge of figuring out what solutions work for the cloud, what do not, because quite often, when the market changes, the incumbents, the legacy vendors, kind of whitewash the solutions overnight and everyone becomes a cloud security provider. >> We get a lot of marketing responses, I think one of the centerpieces of this whole thing is, digital business really places an emphasis on the value of data as an asset. >> Yep. >> And how it changes the way you engage your customers, how it changes the way they think about operations, how it impacts the way you govern the overall business. >> Yep. >> When data emerges as the asset, we move away from a focus especially in the security world, from securing devices to securing the new classes of data. >> Yep. >> Is that kind of solution direction that you're seeing companies taking, is how do I think about up leveling beyond perimeter to actually building security. >> Yeah. >> Embedded deep within my workings? >> To really understand how security came about. Earlier on it used to be, I protect my device with antivirus software, then we built networks and we expected users to be on the network and applications and data to be sitting in my data center on my network. So the easiest way to secure your enterprise was, to secure the network. >> Mm. By building a moat around your data center. That's why we call it network security, securing your network, it made sense for years but now, with applications sitting in Azure or AWS Office 365, Workday, the like. And the users being everywhere, at airport, coffee shops, at home and wherever. How do you protect the network? The users aren't even on your network and applications aren't even on your network. So the notion of network security is becoming irrelevant. At the end of the day, the sole purpose of IT is, that a user should be able to access an application, no matter where the application is and no matter where the user is. So all this network and security and all, are a byproduct of that. So when I start Zscaler, I said, what needs to be protected? Data. Where is data? Data is generally sitting with the application, behind the application. So rather than building this moat, rather than doing this network security, rather than trying to build an appliance and try to move it to the cloud, let's take a look at it totally different. Assume that we need a policy engine, a business policy engine that sits in, 100s of locations around the globe, a user connects to the policy engine, the policy engine looks and says, should this user have access to this application or not? Based on that, we connect a user to an application, internal or external, no matter where the user is coming from. So that's the approach that's needed and that's the approach Zscaler pioneered and that's why the biggest of the big companies from GE, to Siemens, to DHL, they all are becoming Zscaler customers. So we are helping them transform from this old world where network is a hub-and-spoke network, security is this castle and moat to the new world, where a user can go directly to the application over any network. And network is important, it's an important transport but it doesn't need to be secure. Security is about, securing the right user to a right application, irrespective of the location of the user or the application. >> So I want to build on this because, what a lot of companies are starting to recognize is that, they want to get their application and the services provided by the application and the data proximate to the commercial activity that generates, you know, that pays the rent so to speak. >> Yep, yep. >> And that means, an increase in distribution of function offer. >> Of course. >> So the notion of the cloud as a place where we're going to centralize things, is giving way to a notion of the cloud as a technique for further distributing. >> Yes. >> And that means ultimately that, the services that we're going to provide have to have security embedded in them, in policy so that the data, the security and all those services are moving to where they're required. >> Yes, so in my view, cloud was never meant to say, things must be centralized. Actually a data centers were highly centralized. >> Right. >> The cloud notion should be, it's a responsibility of the cloud provider to make sure that data and application can be pushed where there needs to be. So when Microsoft is offering Office 365, your emails aren't sitting at one place, it's Microsoft's job to make sure if your employees are in Singapore, some of these things move to Singapore so you can have faster access to it. So that's the application side or for the data side of it. A company like Zscaler, we sit between the user and the application as a check post. In fact, think of us as an international airport. >> mm >> When you go in and out, you need to make sure that, the person is authorized to do so and isn't carrying any guns and weapons that could cause damage to somebody out there. So a user going to Salesforce or user going to Office 365 or a user going to application Azure, they simply connect with us, the business defines a policy, says, this person is okay to go here and based on then, we are connecting those people securely. Now if you're in London, you want to go through Zscaler's check post in London, if you're in Tokyo, you want to go through a check post in Tokyo because you want the shortest path. The old approach where we built a hub-and-spoke network, you brought people back to the data center. >> Back to the hub. >> To a hub, to go out. It's very painful. Imagine flying from San Fran to Chicago, via Houston? It's very painful and that's what gets done in the old world of security appliances because you can build only so many moats and that's what Zscaler is making redundant or irrelevant. So with a 100 plus locations around the globe with multi-tenant technology, you fly to Paris tomorrow, as soon as you connect to the internet from your hotel or the airport, we automatically redirect your traffic through our Paris data center. Your policy and security magically shows up, gets enforced, you're getting localized content, you're getting amazing response time without having to do anything. >> You're getting the same services that you get anywhere else 'cause it's policy driven with a common infrastructure for ensuring that-- >> And-- >> The issue of distribution is not the determining consideration. >> So it is the heavy lifting we did. >> Right. >> To make sure your policy can automatically show up where it is. And to do that, you're to build some serious technology. The old technology was, policy needs to be pushed once in a while, let's do a batch push. That's what traditional security appliances like firewalls do, they're single tenant, we came with a concept policy on demand per user, it works beautifully and then logs. Any time you go through any check post, the logs are created just like when I go in a building, they have me sign that say Jay went to see Peter at this time, same colored logs are created and they must be secured. So, you may be going to our 50 data centers but your logs are created in 50 locations but in line in real time, without ever writing the disk locally, they get sent to one central logging cluster and they're available within seconds. That's really an example of a purpose-built security cloud as compared to what we are calling imitation clouds. >> Mm >> Where people take a stack of appliances, stick them as virtual machines in Google or AWS cloud and they become a cloud service. I was talking to a customer the other day, he said hey, here was a network security vendor making a pitch and he said, "I thought of it, "as if someone is trying to build a Netflix service "using a bunch of DVD appliances." >> Mm-hmm >> All right so, to do security right, one has to build it for the world of cloud, it's multi-tenant, it's distributed, have you seen it before? Think of Salesforce.com, think of Workday, these were young companies a few years ago like Siebel used to dominate CRM. >> Right. >> PeopleSoft used to dominate HR, what happened to them? Well the world moved to its cloud, the world move to SAS service and these companies tried to use that legacy technology, tried to move to the cloud, it just doesn't work and that's why all these investors and customers love Zscaler's platform. We like to call it born in the cloud for the cloud platform. >> One of the things you didn't mention is that, when you're not doing that huge amount of backhaul traffic, your costs are going to go down pretty dramatically. So if I kind of summarize what you've talked about, we're going to go through, we're in the midst of a cloud transformation. >> Mm-hmm >> We have to rethink applications in the context of improve security, bake it right in which is going to lead to a rethinking of network and finally a rethinking of security. >> That's correct. When your network changes from hub-and-spoke to direct to cloud, you can't have a direct path without security so it drives security transformation. So that's where a security platform like Zscaler comes in. So your traffic from any of your say, X 100 branches or from your mobile device or from your laptop, it simply goes through Zscaler to get the same policy, same protection. So Zscaler gets viewed as an enabler of cloud transformation because without us, you can't transform the network and then security has to be done right. >> Right, so you've had a lot of conversations with customers, give us some sense of what kinds of how it's changing the way they work, how it's changing their operations, how it's changing their cost profiles. >> You know three, four or five years ago, we had to do a fair amount of evangelism but when you're the pioneers, you expect to do that. Like three years ago, three CIOs will tell me, "I like cloud, I'm moving in that direction." Three will say, "I'm thinking about it." And remaining four will say, "Mm-hmm I don't think cloud will happen." Today, all of them want to embrace cloud because they've seen the benefits of it. It's making business more agile, more competitive. Now they're figuring out, how do we do security right, how do I do this transformation without, if I may say, messing it up? >> Mm-hmm >> And that's where, it all starts with thought leader, visionary customers. When I saw GE, Larry Biagini, a global CTO or global CISO driving cloud eight, nine years ago, seeing Siemens saying, I need to make my business more competitive and these are the type of leaders who actually help drive adoption because when they do this stuff, others followed. >> Yeah the recode system responds. >> Exactly, exactly >> Jay Chaudhry, talking about cloud transformation and the crucial role that security is going to play in that transformation. Thanks very much for being on theCUBE. >> Peter, thank you, I appreciate the opportunity. >> And once again we've been speaking with Jay Chaudhry who's the CEO of Zscaler. Thanks for joining us for another CUBE conversation, I'm Peter Burris, see you next time. (upbeat music)

>> Live, from Toronto, Canada, it's theCUBE! Covering Global Cloud and Blockchain Summit 2018, brought to you by theCUBE. >> So, welcome to the Global Cloud and Blockchain Summit. I'm about to hand you over to John Furrier, who is the Co-Founder and Co-CEO of SiliconANGLE Media and Executive Editor at theCUBE, he's about to do a Fireside Chat with Al and Mathew, I'll let him introduce you to them as well. He's also involved in a major blockchain project himself, so he's going to get into that with those guys as well. So, and tomorrow we start at nine, in the meantime, enjoy the evening, enjoy the food, enjoy the chat, and I'll let you go. >> Okay. Hello? Thank you Ruth, appreciate it, thanks everyone for being part of this panel, Fireside Chat, want to make it loose, but high impact for you guys, I know, having some cocktails, having a good time. If there's any questions during, then at the end we'll pass the mic around, but. We want to have a conversation, kind of like we always do down in the lobby bar, just talking about crypto and cloud, and we ended up talking about cloud computing and crypto a lot because those are two areas that are kind of converging, and the purpose of this event. So we really wanted to share some thoughts around those two massively growing markets, one is already growing, it's continuing to be great: the cloud, and blockchain certainly is changing everything. These two important topics, we want to flesh them out, Al Burgio is the Serial Entrepreneur/Founder of DigitalBits, he's founded companies both in cloud and blockchain, so he brings a great perspective. And Matt Roszak, leading crypto investor, entrepreneur and advocate, well known in the crypto space for goin' way back, I think you gave a couple bitcoins to some very famous people early on, we'll get into that a little bit later. So guys, thanks for being part of the panel and Fireside. First question is: we know how big the money is, I mean the money is crypto is is flowin' around the world, and cloud computing we've seen specifically, and certainly in coverage now with Amazon's success, Amazon Web Services, and Microsoft and others. Trillions of dollars being disrupted in the traditional kind of the enterprise, data center area, and blockchain is doing that too, so we want to get into that. But first, before we get into it, I want you guys to take a minute to explain for the folks, just to set the context, the kinds of projects you're working on. Now Al, you have DigitalBits, Matt you're investing and you're finding a lot of interesting token dynamics. So just take a minute. Al, start. >> (mic off) So-- Everybody hear me okay? Alright, perfect. Well thanks for that lovely intro. Yes, my name is Al Burgio, I'm, I've founded a few companies, as John mentioned. Before the cloud there was internet, (light laugh) and so it started for me in the late '90s in the e-commerce era. But more recently I pioneered what's known as Interconnection 2.0, and I did that with the company called Console, for those that may know PCCW, recently it was acquired by PCCW. And with that we disrupted the way networks at the core of the internet were connected together More recently I've founded the DigitalBits project, and now DigitalBits blockchain network, and with that, you can kind of think of that as the trading and transaction layer for the points economy and other digital assets, and you can do a lot of really interesting thing with that, it's really about bringing blockchain to the masses. >> Matt, what're you workin' on? >> So, Matthew Roszak, Co-Founder and Chairman of Bloq. Bloq is a enterprise software company, we do two things, the premise is the tokenization of things, so we think the money identity, new layers of the internet are going to be tokenized. And so, we go to market in two ways, one is through Bloq Enterprise, and these are all the software layers you need to to connect to tokenized networks, so think a wallet, a node, a router, etc. And then Bloq Labs we build, and partner with, some of the leading tokenize networks and applications, so we build a connective tissue and then we actually build these new networks. I started this space as an investor over five/six years ago, investing in some of the best entrepreneurs and technologists in the space build a great network. But I love building companies, and so my Co-Founder and I, Jeff Garzik, built Bloq two and a half years ago. And then lastly, also serve of Chairman of the Chamber of Digital Commerce, so, so if you believe in these new tokenized money layers, identity layers, etc, regulation comes into play. Certainly today from an institutional adoption level, and so if you care about this space, you need to spend time to kind of help that dialogue improve; this technology moves way faster than folks in DC and elsewhere, so. >> And the project that we're workin' on at SiliconANGLE, is we've tokenized our media platform, and we're opening it up to a token model, and have kind of changed the game. So all three of us have projects, want to put those in context, we build everything on Amazon Web Services, so, the view of the cloud, we also cover it. The cloud computing market is booming, we see that Amazon Web Services numbers empower the earnings for Amazon's company, obviously Apple's trillion dollar evaluation those are clear case studies; but blockchain could potentially disrupt it all, and Al, I want to get your thoughts, because even today in the news at Microsoft Azure, which is their big cloud provider, announced blockchain as a service. And folks that are in either the data center business or in cloud know the shift that's happening in the IT world, but no ones really connected the dots on where blockchain intersects, and also, is it an opportunity for the cloud guys, what's the landscape look like, so. What's your thoughts on that, how are they connected, what does it mean, how does a cloud company maintain their relevance and competitiveness with blockchain? >> Well, just pointing on the fact that, you know, today we had that new Microsoft, the Azure cloud, their support and evangelism for blockchain. You know, a company, I think it's very important that this isn't an ICO, two kids in a garage saying their doing something blockchain this is a massive, multi-billion dollar company; and making a decision like that is not trivial, it's many, many departments, a lot of resources, before such a thing's announced. So, that's, not only is it validation, but it's a leading indicator as to this trend, that this is clearly something that's important. And a lot of people, if you're not paying attention, you need to be paying attention, including if you're in the cloud industry, 'cause many companies obviously do compete with, with Microsoft and AWS, so. It may be still early, but it's not that early, in light of the news that we saw today. With that, I would say that, a lot of the parallels I like to kind of, if I was an infrastructure provider I'd look at this from the standpoint of the emergence of Linux when it first came on the scene. What was important for companies like Red Hat to be successful, they had competition at the time, and you had shortages of Linux, let's say engineers, and what have you. And so, a company like Red Hat built a business around that, and they did that by how they kind of surfaced and validated themselves to the enterprise of that era, was partnering with hardware companies, so, it was Intel, IBM, and then Dell, HP, and they all followed, and then all of a sudden, which version of Linux do you want to use? It's Red Hat, you're paying for that support, you're paying Red Hat. And, you know, then they had their hockey stick moment. Today, you know, it's not about hardware companies per se, it's about the cloud, right? So cloud is the new hardware per se, and many enterprises obviously are looking at cloud computing companies and cloud computing providers, infrastructure providers, as the company that they need to support them with the infrastructure that they use, or sorry the technologies that they use, right? Because they're not necessarily supporting these things and making sure that they're always on within the basement of that enterprise, they're depending, or outsourcing, to depending on these managed IT providers. This was very important that whatever technologies they're using in the lab, that ultimately their infrastructure partners are able to support the implementation, the integration, the ongoing support of these technologies. So if you think of blockchain like an operating system or a database technology, or whatever you want to call it, it's important that you're able to really identify these key trends, and be able to support your customer and what they're going to need, and ultimately for them, they can't have a clog in their digital supply chain, right? So, it's clearly emerging. Microsoft is validating that today, you know, clearly they have the data, that they're seeing for their existing enterprise customers, and they don't want to lose them. >> Yeah, but remember when cloud came out; you and I have talked about this many times Al that it wasn't easy to use, I remember when Amazon Web Services came out, it was just basically, it was hard to command line, basically you had to use it, so, it became easier now, it's so easy and consumable. Blockchain, similar growing pains, but, we don't want to judge it too early with the opportunity that it has, it's going to get easier, what're your thoughts? And it has to scale by the way, Amazon, at a large scale. >> Yeah, I mean-- >> So blockchain has to scale and be easier, your thoughts? >> Another kind of way to think of it is, to not necessarily think of cloud computing, but the evolution the internet went, you know, in Internet 1.0, you know, we went through this dial-up modem era, things were very raw back then; great visions we had of the future, like, it's going to be amazing for video one day! But, not during dial-up modem era, and eventually, you know, it eventually happened. And user interfaces improved, and tool sets improved and so forth. You know, fast forward to today, we have all of that innovation to leverage, so things will move a lot faster with blockchain, it did start very raw, but it's, it's moving much faster than anything we've seen definitely in the '90s and in the last decade, so. It's just, you know, it's a matter of moments, not years. >> And I think Al brings up a great point on leverage, because Amazon leverages infrastructure to a point where it's larger than Google, Azure, and IBM's public cloud combined, and so yeah, massive leverage there. And so, when these big cloud providers provide this blockchain as a service, it is instrumented and built on top of their existing infrastructure, not necessarily on blockchain infrastructure. So, it's an interesting dynamic where they're putting it on top of existing infrastructure that's there, but what's being build right now is the decentralized Amazon Web Services. So you have every layer of Amazon being re-imagined, like, and incentivized so you have distributed compute and access and storage and database. And so, what will be interesting to see is that, given this massive opportunity, will Amazon and some of these other incumbent cloud providers become the provisioning networks of the future? Of all this new decentralized resources that get, again, if you want storage, you have to start having smarts to say: if I'm going to go to Sia or Filecoin or Genaro or Storj, compute, etc; you have to start being a provisioning layer on top of that to kind of, you know, make that blockchain essentially work. So, it'll be interesting to see the transition 'cause today the lightweight versions to say yeah, I have a blockchain as a service strategy, and that's like, well done, and check the box. Now, the question is how far in this new world will they go down? And, as it gets more decentralized, as universities and governments, corporations, plug their access utility into these networks, and to see how that changes. That is much bigger than the Amazon of today. >> I think that's an interesting point, I want to just drill down on that if you don't mind, 'cause I think that's a fundamental observation that every layer's going to be decentralized. The questions I think I'm asking and I'm seeing is: How does it all work together? And then what's the priorities? And the old model was easy; got to get the infrastructure, got to get servers, (laughs lightly) and you know, work your way up to the top of the stack. What cloud brings also is that: a software developer can whip up an application, maybe a dApp on a test network and go viral, and the next thing you know they have a great opportunity, and then they got to build down. So the question is: What are you seeing in terms of priorities on stacks, portions of the stack that are being decentralized and tokenized, do you see patterns, trends, as an investor, is there a hotter (laughs) area than others, how do you look at that? >> Well, I think it's, it's in motion right now it's, like I said, every layer of AWS is getting thought through in how to create these digital cooperatives, I have excess storage, I'm going to contribute it to this network, and I'm going to get paid in tokens when a user uses that storage network, and pays for it in those native tokens and so that, coupled with all the other layers, is happening. From a user perspective, we may not want to be going to pick a database provider, a storage, a compute, etc, we're likely going to say: I want a provisioning layer, and provision this and execute this, much like if we, you know, there'll be new provisioning layers for moving money, I don't care if routes through Lightning or Litecoin or Doge or whatever, as long as the value gets across the pond or the app gets provisioned appropriately based on you know, time, security, and cost, and whatever other tendance are important, that's all I care about, but; given the depth and the market for all that, I think it'll be interesting to see how these are developed with the provisioning layers, and I would think Amazon or Azure, the future of that is, is more provisioning than actually going and doing all that at the end of the day. >> That's great. I want to get your thoughts guys on innovation. My good friend Andy Kessler wrote an op-ed in today's Wall Street Journal around, an article around the government, the US government getting involved. You know, there's Twitter, Facebook, the big platforms, in terms of how they're handling their media, but it brings up a good point that with more regulation, there's less innovation. You mentioned some things outside the United States, it's a global cloud, cloud's operating globally with regions, it's a global fabric. Startups are really hot in this area so; how do you view the ecosystems of startups, in terms of being innovative, things happening that you think that're good, and things that aren't good, obviously I'm not a big of the government getting involved, and managing startups, the ecosystems but, blockchain has a lot of alpha entrepreneurs jumping in, you've looked at all the top ventures, the legit ventures, they're all alpha entrepreneurs, multi-time serial entrepreneurs, they see the opportunity and they go for it. Is the startup environment good, is there enough innovation opportunities, what're you thoughts on the opportunity to be innovative? >> Yeah, Al and I were just talking about this before the panel here, and were talking about our travels in Asia, and when we go there it is 10, 100 X of energy and get-it factor, and capital, and the markets are just wildly more vibrant than you know, going to some typical markets here in San Fran and New York in North America, and, so it's interesting to see that when you heat map the world, what's really happening. And you know, people are always saying: oh well this, this FinTech, or InsurTech, or whatever tech, is going to make a dent in Silicon Valley or Wall Street. This technology, this new frontier, is definitely going to do that. I think some of that will get put into more focus based on regulation, and there's two things that will happen; there's obviously a lot of whippersnapper countries that are promoting a safe place to innovate with crypto, I think Malta, Gibraltar, Barbados, etc, and there were-- >> Even Bermuda's getting in on the mix now. >> Yeah! I mean so there's no shortage of that, and so, and obviously this ecosystem outpaces the pace of regulation and then we'll see like the US doing something, or you know, other fast followers to try and catch up, and say hey, we're going to do the cryptocurrency act of 2022, miners get free power, tax-free, you know crypto trading, you know just try and play catch up. 'Cause it's kind of hard in the last year or 18 months we've seen this ecosystem go from this groundswell to this now institutional discussion; and how do you back end the the banking, the custody, all these form factors that are still relatively absent. And so, you know, we're right in the middle of it. >> It's a whole new way, you got to follow the money, right? Al, you and I talked about this; capital markets, you know entrepreneurs need to raise money and that's a good thing, you need to get capital to do stuff. >> Yeah, this is a new phenomenon that the world has never experienced before, it's awesomeness when it comes to capital formation; you know, without capital formation there is no innovation. And so the fact that more capital can be raised, it's the ultimate crowd sourcing in such an efficient period of time, capital being able, the ability to track capital from various different corners of the world, and deploy that capital to try to fuel innovation. Of course, you know, not all startups or what have you succeed, but that was true yesterday, right? You know, 90% of startups fail, but they all will give it some meaningful amounts of checks, people were employed and innovation was tried; and every once in a while something emerges that's amazing. If you can do that faster, right, when you have the opportunity to produce more and more innovation. And, of course with something so new as cryptocurrency, things like ICOs and what have you, people may kind of refer to it as the wild wild West, it's not, it's an evolution. And you have-- >> It's still the wild west though, you got to admit. (laughs) >> Well, it is but, we're getting better at it, right? As a world, this isn't the Silicon Valley community getting better at venture capital or some other part of the United States or Canada getting better at venture capital; this is the world as a whole getting better at capital formation. >> Yeah, that's a great point. >> In the new way of capital formation. >> And I wanted to just get an observation on that. I moved to Silicon Valley 20 years ago, and I love it there, for venture capital and new startups, it's the best place in the world. And I've seen people try to replicate Silicon Valley, we're the Silicon Valley of Canada, we're the Silicon Valley of the East or Europe, and it's always been hard to replicate, because it was a venture model, and you needed venture capitalists and you need money, you need a community, the culture, the failure, the starting over, and just, you know, gettin' back on the horse kind of thing. Crypto is the first time that I've seen the replica of that Silicon Valley dynamic, in a new way, because the money's flowing, (laughs) and there's community involved in crypto, crypto has a big community aspect to it. Do you guys see that as well? I mean I'm seeing, outside the United States, a lot of activity. Is that something that you're seeing? >> So, the first time we saw, well, last time we saw everybody trying to replicate Silicon Valley was first internet, you know, there was Silicon Swamp, there was Silicon Alley, there was silicon this-- >> Prairie. >> Every city was >> Silicon Beach. >> A silicon version of something, and then the capital evaporated, right? We had a mass correction happen. What wasn't being disrupted was value exchange, right, and so this is being created now, it is now possible for this to happen, and it's happening, we're seeing amazing things, Matt said, you know, in Asia. It's a truly awesome force, if anybody has an opportunity to go, they should go, it's unbelievable to experience it, and it really opens your eyes. >> And you've lived through a lot of investments during those .com days and through history now, you've seen a lot of different things. Your observations with the current state of the capital formation, startup landscapes, the global ecosystem around crypto and how it's different from say venture or classic rolling up companies and those kinds of things? >> Yeah, you hear a lot of this, you know, we're in a bubble, it's speculative, etc. And I think that when you look back at history of infrastructure, whether it's railroads, telephony, internet, and now crypto and blockchain, it's interesting, like, if you said: it would take this amount of money to innovate and come out the other end of internet with this kind of infrastructure, these kinds of applications, with these kinds of lessons learned, nobody would sign up for that number, right? It needs this fear, and greed, and all the other effervescence of markets to kind of come out the other end and have innovation. I think we're going through a very similar dynamic here with crypto and blockchain where you know, everything's getting tokenized, everything's getting decentralized. We're talking about fundamental things like money, you know, it's not like we're talking about pet food and women's shoes and airline tickets, we are talking about money, identity, things that will enable like other curves to really come into focus like in and out of things and the kind of compounding of intersections when some of these things get right is pretty extraordinary. And so, but I like what Al said in terms of capital formation and that friction to get from, you know, idea to capital to building, is getting compressed Yes, there will be edge cases of people taking advantage of that, but at the other end of this flow will be some amazing innovation. >> What do you guys think about the, if you had to answer the question with one answer, of what is the high order bit of why blockchain's so important? For me, I see it, from my standpoint, I'll just start, I see it making inefficient things more efficient for any use case, and that's being re-imagined, which is everything from IOT or whatever. Efficiency is a big thing, at least I see that. What do you guys see as a high order bit in terms of you know, the one thing that you'd say blockchain really impacts the world in terms of you know, impact, financial, etc? >> Well, I think with decentralization and all these things that we're seeing it's kind of evened the playing field. It's allowing for participation where parts of the world were unable to participate. And it's doing a whole lot of things in that area. And that's truly awesome, to really grow the economy, grow the global market, and the number of participants in that market in all areas. That's the ultimate trend at what's happening here. >> And your information? >> Absolutely, and I think there's two things, there's this blockchain dialogue, and then there's this crypto decentralization, tokenization dialogue, and on the blockchain side you have lots of companies engaging in blockchain and trying to figure out how it applies to their business, and you hear everything from McKinsey and Goldman saying financial services will save 100 billion dollars in operating expenses by applying blockchain technology, and that's great. That is probably low in terms of what they'll save, it's, to me, is just not the point of the technology, I think that when you kind of distill that down to say hey, for a group of folks to use this technology as a shared services thing to lower opex a trading settlement and decrease that, that's great, that is a step stone to creating these tokenized economies, these digital cooperatives. Meaning you contribute something and then you get something back, and it's measured in the value that this token is, like a barometric kind of value of how healthy that ecosystem is. And so, regulated public enterprises, and EC consortiums around insurance and financial services and banking, that is all fantastic, and that gets them in the pool, gets them exercising on what blockchain is, what it isn't, how they apply it, but it's, at the end of the day for them it's cost reduction The minute there's growth or IP, or disruption on the table, they're all going back to their boardrooms to say: hey let's do this, this, or that, but, if there's a way, my favorite class in college was industrial organization, and it sounds weird but, it was, it kind of told ya like how to dissect an industry, you know, what makes them competitive, who the market leaders are, and then, if you overlay like blockchain networks with tokens, with incentives, interesting things could happen, right? And so that future is going to be real interesting to see how market leaders think about how to tokenize their network, how to be, how to say: no I don't want to own this whole industrial network, I have to engage with some other participants and make sure everybody is incentivized to climb on board. So that I think is going to be more of the interesting part than just blockchain-ifying a workflow. >> Well let's just quickly drill down on that, token economics, what you're getting to. So let's assume blockchain just happens, as evolution of technology, let's just assume for a second that it's going to happen in a big way, it's private, public, hybrid chains, with all that good stuff happening, but the token economics is where the business value starts to be extracted, so the question for you is: How do you describe that to someone to look for, what are the key elements of token economics? When does it matter, when is it in play, and how should they be thinking about it? >> Yeah, I mean token economic design and getting a flywheel going to create a network and network effects is really important. You could have great technology, but Al could be a better marketer, and he gets tokens adopted better, and his network will do better because, you know, he was better able to get people to adopt and market a particular, you know, layer application. And so, it's really important to think about how you get that flywheel going, and how you get that kindling going on a particularly new ecosystem, and get users adoption and growth. That is really hard to do these days because some people don't even know what Bitcoin is, let alone to say I'm going to tokenize this layer, and every time you contribute, every time you take an action, you're going to get rewarded for it, and you're share the value of this network. >> Can you give me a good example of what's happening today that you can point to and say: that's a great example of token economics? >> Well, you see, I mean the most basic one is shared file storage, right? You know, it's like the Filecoin, Sia, Genaro model where, you know, you contribute you know, the unused storage in your laptop or your university data center or a corporate data center, and you say I'm going to contribute this, and when it's used I get these tokens and, you know at the end of the day or week or year you see what these tokens are worth, and was that worth your contribution? And so as these markets develop, and as utility develops, we'll see what that holds. >> Al, you got an example you could share? DigitalBits is a good use case obviously. >> Actually, I'm not going to use DigitalBits (John laughs) just to be neutral. This is one that Matt will know very well, definitely better than I, but one that I've-- the simpler something is, the easier it is for people to understand, and its like oh that makes sense, you know. You know, Binance is one that's very simple, you know it's a payment token, if you pay with some other currency, you pay, you know, Pricex, if you pay in the next few years with their token, you'll get the service at a discount. And in addition to that, they're using a percentage of profits, I think it's every quarter, to buy back up to, ultimately up to, 50% of tokens that are in circulation. So, you know, it's driving value, and driving return, in essence, if I can use that word. So for a user it's simple to understand, for someone that likes to speculate it's easy for someone to understand in terms of how the whole model works, so it's not some insanely complicated mathematical equation, that we can yes we can trust the math. And so in some cases, some adoption is going to just be, you know, attract participants based on simplicity. In other cases the math is important, and people will care about that, so, you know not all things are necessarily equal, and not necessarily one method is right, but there are some simple examples out there that that have proven to be successful. >> That's awesome, one last question, before we open it up if anyone has any questions. If anyone has any questions, if they want to come up, grab the microphone, and ask the three of us if you've got anything on your mind. And while you're thinking about that I'll get the final question for these guys is: A lot of people ask me hey, I want to be on the right side of history, what side of the street should I be on when the reality comes down that decentralization, blockchain, token economics, decentralized applications, becomes the norm, and that re-imagining actually happens? I don't want to be on the wrong side of history. What should I be doing, how should I be thinking differently, who should I be following, what should I be paying attention to? How do you answer that question? >> I think, at the basic level, you know, turn off your phone, lock your door, and study this technology for a day, it's the best advice I could give. Two: buy some crypto. Once you kind of have crypto on your phone, in your wallet, something changes in your brain, I think you just feel like you-- >> You check the prices every day. (all laugh) >> You lose a lot of sleep. And then after that, you know, I think you start engaging in this space in a very different way. So I think starting small, starting basic, is an important tenet. And then, what's amazing about this space is that it attracts the best and brightest out of industry, and law, and government, and technology, and you name it, and I'm always fascinated the people that show up and they're like yeah, I'm in a 20 year, you know, veteran in this space and I want to get into blockchain, it just attracts some of the best and brightest. And, I think we're going to see a lot of experience coming into the space, you know, this has been a, what I'd say a bottoms up groundswell of crypto and blockchain and the evolution of the space. And I think we're starting to see more some more mature folks come in the space to to add some history and perspective and helpin' the build out of this, and to build a lot of these networks. I think that the kind of intersection of both is going to be very healthy for the space. >> Al, your thoughts? >> Definitely agree with Matt. Definitely to lock yourself up and just try to absorb information, everyone has access to the internet, there's plenty of information. If you don't like to read go watch a few YouTube videos, just people explaining the stuff, it's really fascinating, the various different use cases and so forth. You definitely have to buy some, and, you know, whether it's five dollars worth, just go through the whole experience of being able to trade something of value that a few years ago didn't exist, and be able to trade it for something else of value is a pretty phenomenal experience. Then trying to go buy something with it, it's even more of a fascinating experience, I just bought something that used, again, something that didn't exist a few years ago. But, what I would add to that as well, you really have to get out there; if you keep surrounding yourself with people saying aw, this is, eh, whatever, >> It's never going to work. >> It's crazy, it's for criminals, and all that fun stuff. You're going to be last place. So coming to conferences, obviously future's conference you're going to meet a lot of interesting, great people, and that consistent experience, you'll learn something every time. You know, at the end of the day, I remember, I'm sure all three of us remember, with the birth of the internet there was many people that said you know the internet thing, it's crap, it's for kids, you know. And we had first movers, we had willing followers, and then the unwilling followed, you don't want to end up being-- >> The unwilling followers. >> Yeah, the unwilling. >> Alright. Does anyone have any questions they'd like to ask? Come on up. Yeah. We're recording, so we want to get it on film. >> So I have two questions. The first one is for you, Al: Two years ago I interviewed with IIX before it was Console, and I want to know why you didn't hire me? (Sparse laughs) No I'm kidding! That was a joke. Actually, I thought each of you brought up some good points, minus you Al. (chuckles) I'm just kidding. But what I really wanted to ask you guys is: so you talk a lot about this, the tokenized economy and kind of the roadmap and the things to get there, you talk about sediment layer, right, Fiat to crypto, sediment layer, your identity protocols, your dApps, X, Y, Z, right? The whole web 3.0 stack, I want each of you, or I want at least input from both of you or all of you, what are the hurdles to getting to a full adoption of web 3.0 stack, and make a bold prediction on the timing before we have a full web 3.0 stack that we use every day. >> That is a awesome question actually, timelines. You could be, being in technology, being in venture, you could be right, and you could be off by three, five, seven, 10 years, and be so wrong, right? And then at your retirement dinner you could say: I was right, but Tommy wasn't right. So, this is really hard technology, in terms of building systems that are distributed, creating the economic models, the incentive models, it takes a lot to go right in the intersection of all this. But it's not a question like is this happening? No, this is happening, this is like, it's in motion. The timelines are going to be a little elusive, I'm way more pragmatic, I was one of the early guys in the early internet, and you know everything was going to be .com and awesome and fantastic. But the timelines were a little elusive then, right? You know, it's like when was, people are thinking of today's Amazon was going to be the 2005 Amazon, you know, it's like, that took about another decade to get there, right? And people could easily just buy stuff and a drone or a UPS guy would just deliver it, and so, similar things apply today. And you know at the same time we all have a super computer in our pocket, and so it's a lot different. At the same time we're dealing with trusted mediums right? The medium of money, the medium of identity, all these different things they're, they're things that you know if I say download Instagram, and let's share cat pictures or whatever, it's not a big deal, our trust is really low for that, let's do it. For money, it's a different mental state, it's a different dynamic, especially if you're an individual, a government, or an enterprise, you go through a whole different adoption curve on that, so, you know, it is at grand scale five to 10 years, right? In any meaningful way. And so we still have a lot of work to do. >> My answer to that question, it's a good one, your question was a good one, my answer's a little bit weird because it's multi-generational. The first generation pivot was when the internet was born was because of standards, right? The government had investment. The OSI model, open system interconnect, actually never happened, the seven layers didn't get standardized, only a few key ones did; that created a lot of great things. And then when the we came out, that was very interesting protocol development there, the TCP/IP stuff, I mean HTP stuff. I don't see the standardization happening, because cloud flipped the stack model upside down because Amazon and these guys let the software developers drive the value. It used to be infrastructure drove the value of what software could do, then software became so proliferated that that drove the value of the infrastructure, so the whole cloud computing equation is making the infrastructure programmable for the first time, not the other way around, so. The cloud phenomenon's all about software driving the value, and that's happening, so. It's interesting because with blockchain you can almost do levels of services in a cloud-like way with crypto, I mean with blockchain and token economics, and have a partial stack. So think that this whole web 3.0 might be something that no one's every seen before. So, that's kind of my answer, I don't really know if that's going to be right or not, but just looking at the future, connecting the dots, it's probably not going to look like what we've seen before, and if the cloud's an indicator it's probably going to be some weird looking stack where certain sections are working, and then evolution might fill in the other ones, so. I mean, that's my take, I mean, but standards will play a role, the communities will have to get involved around certain things, and I think that's a timeless concept. >> Timing. >> Oh, timing. I think it's going to be pretty quick, I think if you look at the years it took for internet, and then the web, everything's being compressed down, but I think it's going to be much shorter. If it was a 20 year cycle in the past, that gets shortened down to 15 with the internet, and this could be five years. So five to 10 years, that could be the impact in my mind. The question I always ask is: what year will banks no longer be involved in anything? Is that 20 years or 10 years? (laughs) Exactly, so, yeah, follow the money. >> So I would say that in terms of trying to keep your finger on the pulse with things and how you kind of things, see things evolve; things are definitely moving a lot faster, you know in the past you would probably say seven to 10, I'm not sure if I would say five, sorry five to 10, it definitely feels to me that it's five max til we could start to see some of these key things fall into place, so. >> So could you answer the first question? >> What was the first question? >> Why didn't you hire me? (audience cringes) >> We've met before? Sorry. (all laugh) >> I have a question, this is Dave Vellante, Co-Host of theCUBE. And I want to pick up on something John you just said, and Matt you were talking about Goldman Sachs and Morgan Stanley, it's not about them saving hundreds of millions of dollars, it's really about them transforming business, so. And John, you just asked the question about banks, I want to actually get your answer to this: Will traditional banks, in your opinion, lose control of payment systems? Not withstanding your bias. (laughter) >> Yeah, I am definitely biased on this. But, I mean, I've been in front of the C-suite of banks, credit card companies, etc, and I said, you know, in about a decade, the center of what you do and how you make money is going to be zero. And, 'cause there'll be networks, and ways to transmit money that'll be by far cheaper, or will be subsidized by other networks, meaning, and those networks are Apple, Amazon, Alibaba, you know, Tencent, whatever networks that're out there, that're engaging in collaboration and commerce and everything else, they will give away payments as just a courtesy, like people give away messaging or email or something, as a courtesy to that network, and will harden that network, and it'll be built and based on blockchain technology and cryptocurrencies, so they don't necessarily have to worry about, you know, kind of subtle payments. But these new networks will start to encroach on banks, the banks are not worried about other banks today, the banks should be worried about these new networks that're being developed. >> How many people still have a home phone line? >> That was elegant, I like that. >> You know, I mean there's a generation of people that still like going to banks, they'll keep them in business for a while. But I think that comes to an end. >> I mean, when we covered a lot of the big data market when it started, the argument was mobile will kill the banks outlets, and now with ATMs there's more bank, more baking branches than ever before, so I think the services piece is interesting. >> And also, if you look at even the cloud basis, the software as a service, SaaS space, a decade, decade and a half ago, you would ask SAP, Oracle, what have you, what's your cloud strategy? And they'd be like cloud? That's just more efficient delivery model, not interested. 90 some billion dollars of M and A later, SAP, Oracle, etc, are cloud companies, right? And so, if banks kind of get into that same mode to say well, yeah, we need to play catch up and buy digital currency exchanges and multi-currency wallets, and this infrastructure and plumbing to be relevant in the next world, that would be interesting. But I think technology companies have as much an advantage to do that as as financial services companies, so it'll be interesting to see who kind of goes into that, goes into the crypto ecosystem to make that their own. >> It's interesting. We were talking before we came on and the OSS market, operational support systems is booming, and that's traditionally been these big operational outsource companies would manage big projects, but, if you look at in the first half of 2018, there's been a greater than 20 billion dollar commercial exits of companies through private equity merchants, IPOs, around OSS, and that's where we see operational things happening, CoreOS, Alfresco, MuleSoft, Pivotal went public, Magneto, GitHub, Treasure Data, Fastly, Elastic, DataStax, they're all in the pipeline. These are all companies that aren't cloud, they're like running stuff in cloud, so, this could be a tell sign that potentially the the blockchain operating market is going to be potentially a big one. >> Yeah, and then even look at BitMate, the world's largest miner in crypto. So, they did about a billion dollars in profit last year, did about a billion dollars in profit just in the first quarter going public, just raised a billion dollars last month, at a reportedly 50 to 70 billion dollar evaluation in Hong Kong in the next month, and the amount of money they'll raise will eclipse what Facebook raised. And so I think the institutional, the hardware, the cloud computing, the whole ecosystem starts to like resonate and think about this space a lot differently, and we need these milestones, we need these, whether they're room huddles or data points to kind of like think about how this is going to affect your business and what you do tomorrow morning. >> Any more questions from the crowd? Audience? Okay, great, well thanks for attending, appreciate you guys watching and listening, and guys thanks for the conversation; cloud and blockchain convergence. Collision course, or is it going to happen nicely, Al? >> Yeah, I think it's going to be a convergence, I don't see it necessarily as a collision course. >> And a lot of money to be made on this opportunity these days, and cloud convergence with blockchain. >> I concur with Al, I think there's going to be convergence, I think us most smarter players will engage and figure out their models in this new crypto and tokenized era. >> Thanks so much guys, appreciate it, give these guys a round of applause. (audience applause) Thank you very much. (bubbly music)

(soft click) >> Hey, welcome back everybody Jeff Frick here with theCUBE. We're at Data Privacy Day 2018 here at downtown San Francisco, the LinkedIn headquarters, gracious enough to hose this event. Bigger than last year, last year we were here for the first time at Twitter. And really the momentum continues to grow 'cause there's some big regulations coming down the pike that are really going to be into place. And have significant financial penalties, if you don't get your act together. So, we're excited to have the new Russell Schrader, the Executive Director of the National Cyber Security Alliance Organization behind this event. Russ, great to see you. >> Thank you very much for coming today, it was a great event. >> Absolutely, so, you've been on the job, this job, you said like less than two weeks. >> It's true. >> What do you think? I mean then they throw you right into the big event. >> Well, I've known the organization, I've known the event. But the staff really has done an outstanding job. They made it so easy for me, everything that they've done has just been terrific. They lined up fantastic speakers, they picked cutting edge topics, they put together a really well paced program, and it was just a terrific day for all of us to get in, really have some good discussions. >> You're off to a great start. (chuckles) >> Thank you. (both laugh) >> So you said you're familiar with your orginazation. You know, why are you here? Why did you take advantage of this opportunity? What do you kind of see as the role of this organization? And where do you see the opportunities to really make some significant impact going forward? >> Sure, the National Cyber Security Alliance is a who's who in the organization. People who really care about cyber security. Who see it as part of their social obligation. And it was a wonderful group that I'd worked with before. When I was at Visa and I see now, coming in as Executive Director, to really take it to the next level. We really are pushing, I think, on four separate areas that I think there's a lot of opportunity for it. Doing more cooperate work. Serving more consumers, more consumer education, more consumer awareness. I think working with educating staffers on the hill and in regulatory agencies in D.C. on changes and technological changes. And the cutting edge stuff. But in also, I think working academia, sort of getting involved and getting some of the scholarly, the cutting edge, the new ideas. And just preparing for what's going to happen in the next few years. >> Right, that's interesting 'cause you guys are National Cyber Security, security is often used as a reason to have less privacy. Right? It's often the excuse that the government, big brother, would used to say, you know, "We need to know what you're up to, we've got red light cameras all over the place to make sure you're not running red lights." So, it's an interesting relationship between privacy, security, and then what we're hearing more and more, really, a better linchpin to drive all this, which is, identity. So I wonder if you can share your kind of perspective on kind of the security versus privacy. Kind of trade off and debate. Or am I completely off base and they really need to run in parallel? >> Well, they do intersect a whole lot. People have talked about them being two sides of the same coin. Another speaker today said that security is a science but privacy is an art. As part of it is, you know, security is, the keeping the data in one place, the same way in as when you put it out. Sort of an integrity piece. You know, it isn't being misused, it's not being manipulated in a way and it's just not being changed. So that's a security piece. The privacy piece is people choosing what is used with that data. You know, is it to help me with an app? Is it to give me more information? Is it to give me games to play and things like that? So and that leads into a lot of different advantages in the web and on the internet. Now, identity since you put in a trifecta of big terms. >> Everything's got to be in threes, right? >> And there's three reasons for that. I think that, you know, the identity part is part of who are you. Now on the internet you can be a lot of people, right? The old cartoon was, you know, on the internet no one knows you're a dog. Well, on the internet, you can be a dog, you can be, you know, the person who you are at school, you can be the person who you are among your friends, you can be the person who you are at work. And those different selves, those different identities, are the internet of me. And we just need to make sure that you are curating your identities and sharing the information that you feel comfortable with. And that making sure that those are reaching the right people and not the wrong people. >> Right. So, there's an interesting kind of conundrum, we cover a lot of big data shows. And, you know, and there is kind of a fiduciary moral and now legal responsibility as you're collecting this data to drive some algorithm, some application that you know what you're using it for. And it's a good use of that. And you have a implicit agreement with the people providing you the data. But one the interesting things that comes up is then there's this thing where you've got that data and there's an application down the road that was not part of the original agreement. That no one even had an idea whatever happened. How does that fit in? Because as more and more of this data's getting stored. And there's actually a lot of value that can be unlocked, applying it in different ways, different applications. But, that wasn't the explicit reason that I gave it to you. >> Right, right. And that's really tricky because people have to be really vigilant. There is that education piece. That is the personal responsible piece to do business with companies and with apps that you feel comfortable with. But, you still have to trust but verify. And you do want to look into your phone, look into your PC, look into your other device. And figure out where things have changed, where things are moving. That's one of the great things about being in the Bay area today is innovation. But innovation, you just want to make sure that you are participating in it and you're in the part of innovation that's best for you. >> Okay, so, you mentioned academe, which is great, we do a lot of stuff at Stanford, we do a lot of stuff at MIT. So, as you look at kind of the academic opportunities. Kind of, where is some of the cutting edge research? Where are some of the academe focus areas that are helping advance the science of proxy? >> Well, you named two of the most forward thinking ones right there. So, I'll add to that just because we're talking about Stanford, we have to talk about Berkeley. >> Jeff: Yes. >> Right and Berkeley does have the whole group in privacy and law. On the east coast, in addition to MIT, you see George Washington is doing some things. George Mason is doing some things. And so you want to reach out to different areas. Cornell is doing things as well. So, we want to be able to figure out, where are the best ideas coming from? There are conferences already there. And maybe we can convene some papers, convene some people. And source out and give a little bit of more push and publish to people who otherwise wouldn't be getting the kind of publicity and encourage the kind of research. In privacy and in cyber security. Because there is the business and the consumer educational component. Not just, you know, the tech component to the academic work. >> So, before I let you go, last question. Where do you see is the biggest opportunity? Where's the biggest, either gap that needs to be filled, you know, kind of positive that's filling in negative, or an untapped positive that we've just barely scraped the surface of? >> Well, I think it's all about the consumer, to a large extent, to large one. You've got to figure out, how do you make your life easier. Right? Go back to the iPad introduction, nobody knew that they needed an iPad until they realized they couldn't live without it. You look at what's happened with mobile, right? Now, the idea of having a wallet, is on your phone. So, while I'm waiting in line at the grocery store, I'm checking my messages, I'm texting back and forth. And I just point my phone and I pay. Those kinds of areas are the kind of innovations that are consumer facing, that I think are really terrific. There's a lot of business work as well being done. But you have to figure out where that's going to go and I think the consumer just has a fantastic opportunity. >> Alright, well good opportunity, look forward to catching up a year from now and seeing how much progress you make. >> I think we had such a great program this year, I can't wait til next year, thank you. >> He's Russ Schrader, he's the Executive Director. I'm Jeff Frick, you're watching theCUBE, we're at Data Privacy Day 2018 in San Francisco. Thanks for watching, we'll catch you next time. (soft electronic music)

[Voiceover] Live from the Mandalay Bay Convention Center in Las Vegas it's The Cube. Covering VMworld 2016. Brought to you by Vmware and it's ecosystems sponsors. Now, here are your hosts, John Furrier and Stu Miniman. >> Welcome back everyone we are here live in Las Vegas for VMworld 2016 at the Mandalay Convention Center. We're in the hang space where The Cube is located. I'm John Furrier with Stu Miniman. We're here with Chad Sakac the President of EMC's Converged Platform division formerly known as VCE. Welcome back. Great to see you. Fist pump. >> It's good to see you. >> Seven years we've been doing The Cube you've been on it every single year. >> I can't believe it. >> We love having you on. >> The Cube has become a fixture of VMworld for me. Seeing you guys. Your good looking faces. It puts a smile on my face. But I can't believe it's been seven years. That's insane. >> Yeah. The seven year itch as they say in VMworld. So I got to ask you. You're always candid and colorful. But you've seen the transition. You've been in the trenches. Coding. Now you're president of a division. Big division doing great. >> It's terrifying isn't it? (laughs) >> It's interesting. The Cube is bigger. We're all getting bigger. What's your take right now? You've seen the journey. Seven years. Where are we? >> VMworld has always had a huge community. One of the things that's been defining about VMware's whole journey has been the community. And that's one thing that has stayed pretty constant. Right? There's a lot of people here. This time in Vegas. Previously in San Fran. They share a passion and a love for all things that Vmware is doing. That said. It's a very different show. It's a very different context. It's a very different ecosystem. Literally at the beginning it was one product. Right? Now if you look at the keynotes they have to struggle to get all of the awesome into an hour and a half and do it in two days. Right? And they can only hit certain highlights. Sanjay did a great job today. Kit did a great job. My favorite, Yanbing. Yanbing Li has got passion, energy and loves her baby vSAN. But imagine trying to cram all of that stuff in previously in years past. If you go back seven years that would've been all of Vmworld would it had just been on just one thing. Right? And then obviously the other thing that's going on is the entire ecosystem has changed. So we're seeing consolidation in the ecosystem. But we're also seeing, I think Pat actually did the best job I've ever seen of that realistic balance of what's happening in traditional IT, private, public hybrid cloud models. And how that's going to play out over the next few years. But there' no question that public clouds are a huge part of the landscape for here. For now. For tomorrow. Forever. >> Pat got some criticism on Twitter. Also, some blog posts out there said that the keynote was a snoozer. But it was straight talk. And that's what the ecosystem wants and we're hearing. Stu might have his own opinion on this but what I'm hearing is I want to see the path. I want to see where VMware is going to be going so I can get behind that train. Clarify. Show me the straight and narrow roadways so I can turn up the gas a little bit. >> There's the expression that basically says the customer is always right. Or the people are always right. You can trust the people. Sometimes the customer is wrong. And sometimes the people are wrong. So last year they went bananas over vMotioning of VM between two clouds. Because it plays to the base. It plays to the audience who are like I love vMotion. Why wouldn't vMotion between clouds make sense? The reality of it is that while that was cool and technically accurate. This year's demonstration of basically saying no, you're not going to motion vm between on prem and public clouds very often, if at all. But you will need to be able to do things that bridge public clouds. Is actually a much more correct and relevant answer for the market. Now the difficulty is is that sometimes you're telling people things before there ready to fully internalize it. >> Embrace it. (laughs) It's shock of the system almost. Really. So you play the base. It's a lot like politics in that way. But I got to ask you the question. >> By the way. Just like in politics if you constantly play to the base you never move forward. >> Yeah. And this has always been a diverse ecosystem. So let's start with the cloud things. Obviously ecosystem is back on the table, I'd say. It's front and center. It's always been front and center but as it consolidates we're seeing its straight path. The question that people want to know is. Will everyone have fair access to the VMware as an independent company visa the new big mega merger was announced by Michael Dell just minutes ago that September seventh will be the close date. >> What are you talking about? >> Dell Technologies. >> What? (laughter) >> You can talk about it. Dell announced it. Michael tweeted about it. >> We're not bait and switching you. We'll show you his tweets if you want. >> I'm joking. I'm joking. And by the way, I'm so pumped and so excited. Frankly, I think not everybody understands exactly what's going on inside the industry. The server storage and networking ecosystems as stand alones are actually shrinking. As workloads move to SAS. As workloads move to public cloud IOS. The parts of the ecosystem that are growing are customers that are basically saying they want converged, hyper-converged and turnkey software stacks and that's they way they want to consume. They want to simplify stuff down. To be able to pull that off you have to have all the ingredients inside the stack. Increasingly, you will not be able to be competitive without having all the those components in the stack. And this is why I am passionate that convergence hyper-convergence and convergence and also turnkey software stacks will be at the center of Dell Technologies. And I keep telling Michael and he keeps agreeing which is a good thing. Right? The reality of it is is that we cannot, in spite of that statement being true, it is also true that people will continue to want variability. That may a be a declining set but it's a bigger set of customers. And the customers are like I'm all in on turnkey. So this one is smaller but growing faster this one's a much bigger ecosystem of, I'll mix and match whatever I want and put it together. Alright? So if you look at Yanbing's section. So she said HP with vSAN. Then she went VxRail and Yanbing thanks for the shout out during the session. That was awesome. They were powering basically some great events with Di data and powerful things in small packages. That's a highly integrated system. And then they brought up a customer that was totally building it themselves. Right? So it literally in a span of two minutes you had the continuum of build it yourself, a turnkey thing and it build it yourself. So will it be sustained? Yeah. Can you expect that we are going to lean in like crazy on our integrated stack? Yeah. But will we do it in exclusion of the ecosystem? No. >> There's just different use cases. >> Yeah. VxRail is winning in the marketplace because it's a highly opinionated vSphere HCIA. If you don't have vSphere. You don't like VMware it's not the HCIA for you. Right? However, more customers say yes than they say no. And that's awesome. But we know that we're going to need to create a next generation of the Microsoft Azure stack. On prem HCIA. It won't be built by the VxRail team. But there customers want it that way. And we're not talking about it a lot this week. But last week we launched VxRack new treno which is a turnkey open stack KVM SUSE based thing. Choice baby. >> So Chad, first of all the Dell deal is announced. So this is the final nail in the coffin of VCE, correct? >> Absolutely. Of course not. The reason that we are shifting the way we talk about VCE is something really simple. If I say VCE what's the first thing that appears in your brain? >> Stu: vBlock. >> Va-blah vBlock. And that's a good thing in a sense. >> How much revenue did you do last year, Chad? >> Three point five plus billion dollars. Almost entirely in vBlock and VxBlock. >> That would be a nice a public company on it's own. >> On it's own. Right. And growing at 40% cumulative annual growth rates. That is amazing. Right? >> It's not a fail. >> And by the way the thing that's interesting is that hasn't slowed down one iota in spite of the fact that everyone knows the Dell deal is going to close. However, the difficult it is is that we are no longer just he vBlock group. We have these hyper converged appliances that are growing like sync and customers are voting with their feet and their dollars. I think in a short amount of time we'll be the number one by customer, by revenue HCIA player in the market. But furthermore, we also do these turnkey cloud stacks. So realistically VCE is more of a product brand than it is a company brand. And we're no longer a separate company. We're a part of VMC and on the seventh we'll be part of Dell EMC. >> Chad, can you help us connect the dots? We've got the converged infrastructure. The platform. You've got some SUSE team. Talk about SAS and public cloud. How does Dell, EMC, VMware stay relevant going forward and play a part in that whole story? >> So it's a great question. I'm going to try to see if I can do this in an uncharacteristically concise way. Do you believe that hybrid cloud models will win? >> Stu: Sure. >> Chad: Do you really believe it? >> I mean what we have today isn't really good hybrid cloud but that's where we need to go. >> So, by the way, we need to make the on premise clouds as simple and easy to consume in utilized modes as the public clouds are. >> Stu: Love that. >> Chad: Right. However, I think that it is inherent that economics, governance, data gravity will always balance out some workloads biasing toward public. Some biasing towards private. Furthermore, do you think that there will be one cloud model that will win? Will it all be the VMware SDDC cloud? Will it all be Azure? Will it all be Amazon? Will it all be cloud foundry? Will it all be SoftLayer? >> Well Andy Jassy has an answer for you but many people will differ with that. Including Satcha and Michael and everybody else. >> I think that there's never been in the history of all time any sustained period where there's a singularity of a stack. >> VMware has done pretty good for a while. >> Yep. But, by the way, there's never been in all of history any extended period of time when there's been a singularity of a stack. Right? So our point of view is very simple. My mission in the converged platform division today is basically to build turnkey CI and HCI to power VMware powered clouds and Cloud Foundry power clouds. Tomorrow, meaning on the seventh, immediately my strategic posture toward Microsoft pivots. EMC has always had a partnership with Microsoft but nothing like Dell's. Right? So immediately, I'm going to go. Well we must have the best on and off premises version of the Microsoft Azure stack. Dell currently leads in that market but it's very early days of that. We go from having two clouds both on and off premises. To a third one that we add. And then of course there's a fourth one which says if you want to run your most mission critical, business critical, classic apps. Virtustream is the way to go for an SAP legacy landscape. That you want to put in the cloud. That needs to have an on premise variant too. So, four clouds. Each one on and off premises. Each one available in Capex or utilitized models. If we can pull that off we can be the strongest cloud player on the market bar none. I think that's cool. >> With the choice as the key sales pitch to the client which is pick the cloud that does the best job. >> The thing that's interesting is that sometimes choice is a euphemism for blah. Like I have no strategy. I have no opinion. It's just pick whatever you want and assemble it. What I'm describing is something a little different. Which is a choice between four highly opinionated turnkey offers. >> Okay. >> Right? Now of course, we'll enable customers to build there own things but I think that over time less and less customers are going to want to do that. >> And Chad, I think that points to what we've seen in the wave of converged infrastructure and cloud is we need to get out of that heterogenous mess where I've got the poor guy buried in wires. Running around. Trouble tickets and everything else like that. It needs to be simpler. We need to have the management tools. Chad, I want to get your viewpoint on VMware. One of the criticisms I've heard is kind of the cloud management stack. We've been swinging a bunch at this and we don't yet have a solution that customers are happy with. Where do you think we are? Where do we need to go? >> So, you've been around the block on this and customers who are watching this have been around the block on this. Cloud management platforms are tough. Its actually a very, very fragmented market. With very little consolidation in the past or even looking forward. Now inside that space vRealize is actually the strongest. And it's the most deployed. It's the most widely used. But again, I don't want to make it sound like ahh we're number one. Right? Clearly there's a lot of work to be done. Last night I was talking with Sajay who heads up the vRealize suite team. And what we've seen is that the team has done a lot of work out of the 6.x, 6.5 dot and you know 6.X days into the 7.X days. And customer feedback is that it's much closer to the mark. A in terms of core product workflow, upgrade-ability. All of those sorts of things. But also in the fact that it actually has extended out to be able to automate and deploy on top of Azure and AWS. In the beginnings of the extended cloud connects vision. Now that said. In those four opinionated cloud stacks. Now this is my personal opinion, here Stu. So I always have to safe harbor all that jazz. (laughs) I think that what you see is you see those highly opinionated cloud stacks. The CMP layers, the top part of it, being able to speak to each other but always favoring their own ecosystem. Right? I think that we're going to be in that mode for a long time. >> So Chad, some people might not be aware that in addition to the VCE products in there that the solutions piece and the cloud that you have. The progress that you've made. We've talked to some of your team. I think we've got Peter coming on today. Can you talk about the EHC NHC maybe even share a bit of revenue if you can. >> Yeah. Sure. First things first, it's important to understand this at its core. The original idea of VCE, which is now eight years old, was a basic premise that says we have a pile of giblets that are all awesome. However, customers struggled to assemble them. And they want to have a turnkey offer that they can lean on us to not only deploy but sustain, support as a single offering. That was the origination story. Replace server networking compute with hypervisor, IT business operations a CMP all of those things and you have the enterprise hybrid cloud. We started getting lots of feedback from customers. We love vSphere. We love vRealize. We love vRealize automation and operations. We love all of this log-in sites stuff. We're all in with Vmware can you guys give us the easy button? Right? And so we started on version one. Then on version two, version three, 3.5 and this week we announced version 4.0. Right? We're now up to hundreds of customers so it's still in the hundreds. But it is the most curated. The most turnkey way to get the VMware SDDC deployed. Now, I still think we have a long ways to go. Because we need to make it so push button, easy. And cloud foundations that Pat announced on Monday. Is a core part of that. Think of cloud foundations turning to validated designs and the enterprise hybrid cloud being the ultimate manifestations. >> Chad, just a clarification. Hundreds of customers but from a revenue standpoint that's probably bigger than the hyper-converged market. >> So you know what's fascinating. That's actually a fact. So I hadn't really thought about it. But we're currently on a revenue run rate that we don't disclose publicly, but I'm like, how do I tiptoe around this? It is larger than the largest HCIA players by a good market margin. >> Right. >> So you're talking about hundreds of millions of dollars worth of annual revenue. And customers are saying, look I'm in. I saw the keynote. I'm aligned with VM where I want to go. Right? And enterprise hybrid cloud is designed to do that. We keep reiterating on it. On virtual geek there's a whole slew of details on the 4.0 lease. And then the other thing that we started to see is we started to see customers say, I get it. With the enterprise hybrid cloud you've made my IT operations for classic IT better. How do you help my developers build the digital enterprise? Which doesn't start with infrastructure. And it doesn't start with IAS. It starts with the way developers see the world. Which is the platform layer. And we're on version 1.1 now of the native hybrid cloud which is targeted at how do we build a platform for building cloud native apps? And that starts not with infrastructure. Not with VMware. Not with EMC. Not with servers or network. It starts with cloud foundry. >> Chad, we got to wrap. I want to get one final point in and I want to get your thoughts on it. It's more of a historical perspective but also kind of a futuristic. Take your EMC hat off and put the personal Chad hat on. The ecosystem. Where is it going to go? Obviously it's consolidating. Which means it's shifting. So the old ecosystem was great and robust as you mentioned. It's not necessarily dying. It's just shifting. It's consolidating. So that means it's shifting to something else where there will be growth. Where is it moving? Where is that puck going so people can skate to where the puck will be? >> That's a great question, John. I'm always a geek at heart. I'm always going to run that vSphere cluster in my basement. It gives me joy and gratitude on cool new intel NUC. Great stuff. But in my new job. (laughs) as the leader of a big business. The broad landscape picture is fascinating. This isn't actually rocket science. You can decode it remarkably and quickly. In industries that are declining or under pressure. Secular pressure. Consolidation is inevitable and you have to pick your partners wisely. I think people underestimate how much giants that they would think of as safe and secure bets are under pressure. Michael was wise enough to take first mover advantage. Because in those periods no one has shrunk themselves to success. Right? Conversely, you see very diversified ecosystems. When you see a very diversified ecosystem ergo cloud management platforms. Ergo security, like oh my goodness, the number of security startups and players. A hyper converged startups. I count 39 of them at the last turn. Right? They go through a life cycle of explosion of ecosystems and then inevitable consolidation phase. And people look at that consolidation phase and say oh, the fun is all over. No that means that the fun has begun because your actually starting to really move the needle at customers. Right? So you can expect to see consolidation and security space. You can expect to see by the way very disruptive point technologies occur. The container ecosystem is going to explode and then consolidate. And when you see that consolidation happening the container act Sysco acquisition is one of the earlier indications in that space but just one of them. It means that it's moving from sizzle to steak. Again, look at the open stack ecosystem. About a year ago everyone was like, all the fun is over. All of them have consolidated down into the big massive players. It's because people are now getting down- >> John: Rubber is hitting the road. >> Rubber is hitting the road. >> So where is it going now? Where is the fun going to be? >> The fun is definitely going to be very much in new data fabrics and new applications. There's no rocket science there. The space that you saw the tip of the iceberg on the cloud. Cloud connection of how you can bridge. Bridge doesn't mean migrate it means create connective tissue between on premises and off premises clouds. It's going to be really, really interesting. I think one thing that is fascinating is roles for human beings that span functions. That is the new magic mojo. When I find someone who is a developer. Who understands infrastructure they've got mojo. When you find someone who understands the span of what's going on inside the ecosystem that person's got a bright future. >> As they say in baseball, the players have to have multiple tools in their bag. Chad, we got to break but great conversation. Thanks for coming on. Really appreciate it. Good seeing you. Congratulations on all your business success and September seventh is going to be the big close date for the mega transaction. >> It's going to be awesome and by the way guys, congrats to you. Seven years of this is great. I can't wait for next year. It'll be a lot of fun. >> Thanks. Chad Sakac here inside The Cube. Where all the things are happening at VMworld inside the Hang Space at the Mandalay Bay this year for VMworld 2016. I'm John Furrier with Stu Miniman. We'll be right back. You're watching The Cube. (upbeat music)

from galvanized San Francisco extraction signal from the noise it's the kue cover the apache spark community event brought you IBM now your host John free George okay welcome back everyone we are live in San Francisco for this special q presentation with the IBM sparkman the event here live at galvanized in San Francisco workspace incubator great place for developer education IBM's big announcement today their commitment to spark they didn't see any numbers but I'm counting in the hundreds of millions of years to quote Papa Chiana on my call with him on Friday with rod $17 fuck yeah holler last for hundreds of millions yeah hundred millions of dollars getting late in the day going to be your coming rod Smith's our next guest rod welcome to the cube thank you very much with a catalyst behind spark at IBM worked hard on it yeah you guys tell a story what's the story well we worked on big data and I have a group of folks that go out and work with customers all the time and what we were doing Hadoop we would do these cool applications that sometimes you know small clusters 20 minutes you get a result and a customer would say can you do that in a couple seconds kind of look around and go what changed it means it did the business problem and they couldn't tell us but it's one of those data points in your head that go something's not quite right you know what's what's changing or what are they trying to tell me that they can't and that's when we started learning you know customers were looking for technology that they could iterate on quickly you know open-ended questions it wasn't the give me a problem do the game pew pew output I'm done this was oh gee there's the journey I now see some interesting insights I have other questions was it was something not right the data that they got didn't match their hypothesis or was it the expectation that if I can do it fast on google and find a Thai restaurant down the block well so I can it went that way something doesn't right what was with me that said why can't you tell me what you're really trying to accomplish what I learned is that as we go through these kind of digital transfer mation real real time they were thinking about how their business is going to change so fast and so the problems always been for technologists and vendors like IBM tell us the problem we pick out the technology and you're pretty well stuck with it it stays that way and they wanted more flexibility open-ended questions lots of different data sources on demand when they had to have it on this they wanted to see results along the way and they would rather have analytics be approximation that they could use quickly rather than after the fact and more accurate okay so you know when you went through that it wasn't they couldn't find a bi person to talk bad about and I couldn't find a data person so you know it was fun to try to put piece puzzles together and that's where spark came into this so I see a lot of other trends are kind of vectoring into that convergence which is in-memory databases you know the community flash for persistence store on the storage side so this you as a close to all that action what was the aha moment for for within IBM is han hey you know what this spark thing is the next Linux me we got to get out in front of this and help the community go faster and then kind of rising tide floats elbows what was that flash point flow we we had two of them one was that in our commerce group there's ways that they work on online pricing and there's a vendor stander which takes about a week when you get data off of a site or retail site they analyze that they correct the analytics they put it back up again takes about a week but we showed them a spark we could do it in about four hours a week down to four hours and now they started to think oh you know what do we offer customers now we have ways to have not just one product many products let's bring in other data location data traffic data weather data social data so that kind of exploded internally on this is a big change this is something that we can relate to cus of multiple data source of the need for unification and speed and and speed speed first because be first that's a heck all the speed i want to bring other data sets and it's time to value i mean if you're going to be a digital business and look at real time where it's going Netflix others have really set the standard on ok so then i'm a so let's take a next level so rod you're crazy we can't do that it would disrupt all these other businesses we have so how does that conversation happen within IBM the way that happens in IBM is rod you are crazy and you're going to cause me odds it up so please go away and I don't go away easily but you keep pushing on this and part of my job is to work with customers can I show value so I can take the product team saying you need to take this more seriously I've got currency now and then as you just said the marketplace starts to light up spark is on the front page as people are talking about how they're using it well Hadoop is growing too at the same time so it loop does it seeds the market seats the Mars you see you're playing ahead do but if you see the customer challenges and you're like you guys just connect the dots and and then it's back to the customer is talking about what their problems they want to use or the solutions are looking for so yeah it takes time because it's it's risky meaning that all of us have quarterly is what we're doing but how do we now make it safer for people in IBM jump in the water so that eventually they don't hate me so what's your what's your comment when a friend says hey rod you know linux was great but it's a different era oh you know here with cloud and mobile open source with the patch he's evolved to the point where it's very manageable for vendors to be contributed as well with with non company contributors how do you guys see the difference between those two worlds because really this is a Linux moment but there's no big bad main many many computer companies name frames out there but their specialized for like the Z systems are great but like this is scale out commodity hardware a dupe now that's growing how do you how do you describe that because there is a Linux correlation what linux was for open source then operating systems now this is kind of distributed analytics I think you're you're you know the the part of this is kind of real-time digital business transformations and while there is not a you know bad company out there you know amazon and others have shown how they can be online businesses and use analytics and be very effective but i'm a brick and mortar company and an online business how do i do the same thing and spark starts to really show that no they don't have a corner on the market we can compete so that's the big factor on this is well it's not one company doing this it's I need to be able to compete at the speed the businesses that didn't have to see that Amazon started kind of post recession or you know Dom bubble bursting you know web services was just kind of kicking through if we remember our history lessons and what happened was they really had no traction they built some building blocks right they made a good decision to integrate to core building blocks compute and storage and they built from there so in a way you guys can enable companies to have their own amazon like extensive experience because it's a fresh clean cute paper right it is and I think we're spark it's interesting is like you said in two verticals what do i do to retail what do I do in health care what are we doing finance right very specialized I we've shown in Watson you can do Watson for cancer research you can do Watson for cooking right but they're very vertical now so specialized domain expertise becomes really interesting right that's the big part and that's the part I really liked about spark they were the community really thought about solution developers you know they stayed away kind of middle ground I you don't have to be a deep dated person or a deep analytics API person what's the problem you want to solve how can I help you do that I think that's a you know that's interesting is that that's because most people go Jay this is speeds and feeds software we look at the solutions more holistic but then you're really talk about customer problems right the so-called outcomes that go on well that's what and I think that's the part that I've enjoyed is I want to talk to you you know about what your problem is I don't want to talk technology I you know I don't want to have to make a technology choice from stay one spark helps me with that I don't notify programming while all those things come together so I can concentrate we can concentrate on talking to the customer but you know learn from them what are you trying to accomplish so you watch the next things on your list good I just gonna say you know looking at your LinkedIn page i love this at BP emerging technologies for 20 some odd years so you see here you've seen a lot of technology's come a lot of emerging technologies and the acceleration of these technologies is only going more right you have a whole lot more in your portfolio you have to look at today then then you did yesterday or five years ago yeah why is sparks a special in the cornucopia of technologies that you've seen coming over the years it's a good question and and as I've done merging technologies I've learned that I have to you know listen to customers very carefully on it and when I hear those kind of repeatable business patterns do I see an economic change a transformation that really sticks with me and sometimes the old things have start really big you know they start out good and then they fade away but I always look for technologies that seem to have lots of dimensions to them from a business value standpoint that's what attracted me to spark and my team working with some customers on pocs we could do them quickly you know I really like to get to the point where you know we an industry we with notebooks and others we can do solutions in less than four hours for a customer what better thing to take your you know employee to lunch and spat them on the back for you know something that you didn't expect for weeks well one of the exciting things that you guys have done is you shine the spotlight on spark and you opened up the conversation globally around IBM is making a big move spark was a little bit of an outlier and the mainstream press I mean the press we're picking up spark oh yeah berkeley some credibility of great people behind it but now it's like wow it's going to get the attention of CX cxos out there and they're going to be like hmm if ibm's looking at it must be relevant because of the history you guys have with innovation but they're going to ask you the question I'm going to ask you which is it's not baked out yet where are we with this what are you guys going to do how does IBM work with the community to continue to bake out spark because a lot of people are using it bringing it in but it's evolving super fast and that's going to be the question is it baked and how does it get baked faster so I think there is lots of areas that if we just talked about if I'm doing retail or health care or fine it's going to be lots of specialized analytics because that's what spark for me is is enabling custom analytics on this second part is as you think about how you want to look at bigger problems I think that many times are learning is to try to you know once we got a technology lets make everything fit it rather than starting to separate it by business problems and I think we can do that now or we can bring to the table technology learning best practices around this and solutions I think you know at the end of the day it's house part can be integrated into a business solution and our customers very quickly and hopefully those customers see it broadly from interoperability standpoint of what they're going to do so the final question I have for you is what was the biggest learning that you've taken away from this process that was magnified through this whole journey of a taking IBM from being a participant in the as a citizen in the community early on as a founding member of spark this is back in two thousand nine so it wasn't like no one knew he was going on and you know we bird cover on Hadoop from the beginning so we'd love to watch these ecosystems grow but from from the early days to now today mmm what was the biggest thing that you learned that was magnified out of all the reactions all the feedback all the customers what can you share I I think for me when we did a spark hack you know our hackathon piece when 28,000 IBM ER showed up with ideas that told us twenty eight thousand 28,000 so now you stopped and 28,000 people who were focused on the customer so they had a thought of how this could be relevant this is great I mean this isn't like back talking for this isn't one little vein with a little stream it's big and it big was what we can do for our customer when was that um about two months ago how did you pull that off just out an email blast all the IBM's put on the message board to a crowd chat what did you do well when you put out an email blast the second one is you put on a webcam to explain to people what you're going to do with it what you'd like them to do and I'll we're setting it up and and then you step back and you know kind of cross your fingers hope people show up and then when you know you invite ten thousand and twenty eight thousand show up you kind of know that we're turning a corner as a company on understanding how we can use that for this this also highlights this whole connectedness apps internet of things and people are things to so their mobile device when you have that kind of people close to the action the creativity is there right there on the front lines and they don't feel like that the work they do is going to be taken by the machinery in the old days I got to go back all these hurdles I gotta jump now they could instantly be there with some solutions so that's that's super compelling the next question is security and how does how do you see that leaving in because now one of the things that came up will first meeting let me back up but I get this you think about security question for a second last week ahead dupe summit we were talking with the Hadoop ecosystem Hortonworks ODP conversations etc but when you looked at kind of like reading the tea leaves it was sparked that was kind of stealing the show the subtext was smart all the spark sessions were packed the developers had was salivating over sparks like to hear that I did why why is that why are the Hadoop developers salivating over spark is it because they wanted to go faster do they see extensions any thoughts I think that I've say it two ways one is I think there was and since I did who do for quite a while I think people thought for a while Hadoop was going to be an analytics platform and it it kind of went down the path of being immoral generalized platform so you can do more than MapReduce jobs so there's been this pent-up demand for really analytics focus and spark offered that focus and the performance side I think that's the parts in Hadoop sold kind of a false dream or it didn't materialize fast but I don't think of material out of false treaty I'm saying if they promise them around yeah it well and people set those you know well the fresh maybe yeah I don't think the vendors all I think was more than well vendors you know it did to unstructured data does that unstructured data does that storing data and I didn't be able to act on it creates some interesting dynamics I mean I've worked with customers who you know started to put data in Hadoop but to have put data dupe you know we're only going to do a year's worth of data and then putting three years of data because they want to do monte pucker up my Carlo simulations against a Monty Python it's time you threw water on us and we love yours we on the cube but the problem says we're talking about before like you know our internal use we can produce you know interesting innovations in days that's going to attract audiences because now they can show their you know business people what they can do for them that's what's really driving this I mean if you gotta see XO you know CMO says you know show me what you can do you know do segmentation on my population for these products they want it in in minutes not so you know going to run it in different jobs and the over a certain period of time I was just talking with the CEOs of docusign box 18 1018 Syrian kinky was executive director and then EVP a platform that Salesforce the common thread amongst those executives was the new digital transformation has such a dynamic or impactful economic impact yes I mean dr. Sanyal using examples how literally Deutsche Telekom saved 230 million dollars on one process yes one process yes with analytics and yeah process improvements extreme it sounds funny but it's extremely low hanging fruit they haven't had technology and the economics and be able support it now we do and now you're seeing the solution developer go I think I can make a business result faster yeah and if they can show it then businesses react and I think that's the beautiful thing about what Hadoop is done I mean I brought that up earlier trying to tease that out with reality we're seeing is that that mark is continuing to grow but there's a world beyond Hadoop yep I mean Hortonworks this public company I mean IBM is massive so you got Hadoop and then sparks a beautiful extension to that that enables so much more well I think spark will go further because it's more to me is another dimension it's an integration technology so i can have sparked up to legacy systems without hadoop you know in there doing analytics in there being an avenue for doing joins on data doing analytics on unstructured and transactional data whether data pulling it all together and I think that's the again talking about multi-dimensional that's what that was hard even five years ago so any relational database that's a nightmare yeah and you're asked about security so you want to touch on yeah okay go ahead so part of the things that I like about spark is the technology is called resilient distributed data sets r dds so I read data from a source and I make it into this r DD I can work on it that gives me a great data point or a great interaction with a Cassandra datastax did a really great job of a spark driver so you think about this in businesses for a db2 or something now I know where I can put my security and my governance I can put those at certain endpoints now as i'm reading in my application writing these things out so again back to my point of an integration it's not something that i'm trying to get around a business i'm at integrating extending their life and/or capabilities that's right so I got to ask you the internal IBM question my last question is it what's the vibe like at IBM because you know I've been you know I worked at IBM way back in the day back in the 80s and the cultures changed right so much mm-hmm but there's still a huge technical group of people at IBM so I got to ask you the question with all this new cloud innovation all this new capabilities to do stuff differently what's it like for all the technical guys at IBM right now because they got to be like Hayden we can now do this we can so new capabilities are emerging what's the what's the vibe like and what are some of the things that that are low-hanging fruit that are that our game change because low-hanging fruit is game-changing today oh yes I what's the vibe eternally at idea I've internally is very hot I mean the guys and gals at this you look at cloud computing look we've done with bluemix it got is getting you know great recent press it's getting great results with customers back to this time to value piece it's new to us I mean there's only a small group that started that so now the rest of the IBM arts are going this is really cool how do we do it now you've got analytics that you know we're starting you've been you know competencies are on this now you can take the real-time aspect so yeah the five is really all those little silos you know identity system here I got to build all the software now you can gotta go horizontal yeah so you know that's kind of a new thing that's kind of exciting it's gonna be fun to watch my final question I guess is my final final question is have you been keeping track this is the sixth and final time analytics well rods great to have you on the cube you're awesome great great commentary great great insight spark in the cloud is what data bricks announce what about an on-premise i'm a customer i want i want on prem I don't necessarily want to do what's next I 40 s or other stuff oh I think you're going to see you know like hybrid models for cloud where spark as a service is there on prem i think one of the really exciting parts to me is that one the unified program model to the portability of the analytic models so let's say I start on prom because I'm worried about security and other things and then I want to move it to a cloud service well I don't have to go rewrite it I can just move the analytics over from a model standpoint so I think you're going to see this evolved very fast as people want to do either on prem or hybrid or you know dedicated cuz of the integration capabilities and the distributed nature of it that's the point yep awesome well I'll let you get the last word on the segment share what the folks who's not or aren't watching what is this all about today why is in San Francisco today IBM's announcement what's so groundbreaking about it I know you're part of it a little bit biased but share the folks why what why now what's this all about what's what's what's going on here well we think that the kind of epicenter for spark innovation is here in San Francisco amp lab with data bricks and others are doing here and we want to be a part of that and I think spark technology senator setting up is about how we can contribute and learn and you know help the community grow we think this is gonna you brought some food to the party I mean you are I said earlier beer right you bring a you know the ml yeah you got them back other wine napa valley of course you got to go to wine well craft beers good north north bay thanks so much for coming on the cube really appreciate the insight because it is a great color from an expert IBM here we're on the ground this is the cube special presentation live in San Ruby back with more with live coverage of the breakouts in the event tonight IBM spark community event here in san fran at the galvanized workspace education center we write back