>>From the Cube Studios in Palo Alto in Boston, bringing you data-driven insights from the cube and E T R. This is breaking analysis with Dave Valante. >>Making technology predictions in 2022 was tricky business, especially if you were projecting the performance of markets or identifying I P O prospects and making binary forecast on data AI and the macro spending climate and other related topics in enterprise tech 2022, of course was characterized by a seesaw economy where central banks were restructuring their balance sheets. The war on Ukraine fueled inflation supply chains were a mess. And the unintended consequences of of forced march to digital and the acceleration still being sorted out. Hello and welcome to this week's weekly on Cube Insights powered by E T R. In this breaking analysis, we continue our annual tradition of transparently grading last year's enterprise tech predictions. And you may or may not agree with our self grading system, but look, we're gonna give you the data and you can draw your own conclusions and tell you what, tell us what you think. >>All right, let's get right to it. So our first prediction was tech spending increases by 8% in 2022. And as we exited 2021 CIOs, they were optimistic about their digital transformation plans. You know, they rushed to make changes to their business and were eager to sharpen their focus and continue to iterate on their digital business models and plug the holes that they, the, in the learnings that they had. And so we predicted that 8% rise in enterprise tech spending, which looked pretty good until Ukraine and the Fed decided that, you know, had to rush and make up for lost time. We kind of nailed the momentum in the energy sector, but we can't give ourselves too much credit for that layup. And as of October, Gartner had it spending growing at just over 5%. I think it was 5.1%. So we're gonna take a C plus on this one and, and move on. >>Our next prediction was basically kind of a slow ground ball. The second base, if I have to be honest, but we felt it was important to highlight that security would remain front and center as the number one priority for organizations in 2022. As is our tradition, you know, we try to up the degree of difficulty by specifically identifying companies that are gonna benefit from these trends. So we highlighted some possible I P O candidates, which of course didn't pan out. S NQ was on our radar. The company had just had to do another raise and they recently took a valuation hit and it was a down round. They raised 196 million. So good chunk of cash, but, but not the i p O that we had predicted Aqua Securities focus on containers and cloud native. That was a trendy call and we thought maybe an M SS P or multiple managed security service providers like Arctic Wolf would I p o, but no way that was happening in the crummy market. >>Nonetheless, we think these types of companies, they're still faring well as the talent shortage in security remains really acute, particularly in the sort of mid-size and small businesses that often don't have a sock Lacework laid off 20% of its workforce in 2022. And CO C e o Dave Hatfield left the company. So that I p o didn't, didn't happen. It was probably too early for Lacework. Anyway, meanwhile you got Netscope, which we've cited as strong in the E T R data as particularly in the emerging technology survey. And then, you know, I lumia holding its own, you know, we never liked that 7 billion price tag that Okta paid for auth zero, but we loved the TAM expansion strategy to target developers beyond sort of Okta's enterprise strength. But we gotta take some points off of the failure thus far of, of Okta to really nail the integration and the go to market model with azero and build, you know, bring that into the, the, the core Okta. >>So the focus on endpoint security that was a winner in 2022 is CrowdStrike led that charge with others holding their own, not the least of which was Palo Alto Networks as it continued to expand beyond its core network security and firewall business, you know, through acquisition. So overall we're gonna give ourselves an A minus for this relatively easy call, but again, we had some specifics associated with it to make it a little tougher. And of course we're watching ve very closely this this coming year in 2023. The vendor consolidation trend. You know, according to a recent Palo Alto network survey with 1300 SecOps pros on average organizations have more than 30 tools to manage security tools. So this is a logical way to optimize cost consolidating vendors and consolidating redundant vendors. The E T R data shows that's clearly a trend that's on the upswing. >>Now moving on, a big theme of 2020 and 2021 of course was remote work and hybrid work and new ways to work and return to work. So we predicted in 2022 that hybrid work models would become the dominant protocol, which clearly is the case. We predicted that about 33% of the workforce would come back to the office in 2022 in September. The E T R data showed that figure was at 29%, but organizations expected that 32% would be in the office, you know, pretty much full-time by year end. That hasn't quite happened, but we were pretty close with the projection, so we're gonna take an A minus on this one. Now, supply chain disruption was another big theme that we felt would carry through 2022. And sure that sounds like another easy one, but as is our tradition, again we try to put some binary metrics around our predictions to put some meat in the bone, so to speak, and and allow us than you to say, okay, did it come true or not? >>So we had some data that we presented last year and supply chain issues impacting hardware spend. We said at the time, you can see this on the left hand side of this chart, the PC laptop demand would remain above pre covid levels, which would reverse a decade of year on year declines, which I think started in around 2011, 2012. Now, while demand is down this year pretty substantially relative to 2021, I D C has worldwide unit shipments for PCs at just over 300 million for 22. If you go back to 2019 and you're looking at around let's say 260 million units shipped globally, you know, roughly, so, you know, pretty good call there. Definitely much higher than pre covid levels. But so what you might be asking why the B, well, we projected that 30% of customers would replace security appliances with cloud-based services and that more than a third would replace their internal data center server and storage hardware with cloud services like 30 and 40% respectively. >>And we don't have explicit survey data on exactly these metrics, but anecdotally we see this happening in earnest. And we do have some data that we're showing here on cloud adoption from ET R'S October survey where the midpoint of workloads running in the cloud is around 34% and forecast, as you can see, to grow steadily over the next three years. So this, well look, this is not, we understand it's not a one-to-one correlation with our prediction, but it's a pretty good bet that we were right, but we gotta take some points off, we think for the lack of unequivocal proof. Cause again, we always strive to make our predictions in ways that can be measured as accurate or not. Is it binary? Did it happen, did it not? Kind of like an O K R and you know, we strive to provide data as proof and in this case it's a bit fuzzy. >>We have to admit that although we're pretty comfortable that the prediction was accurate. And look, when you make an hard forecast, sometimes you gotta pay the price. All right, next, we said in 2022 that the big four cloud players would generate 167 billion in IS and PaaS revenue combining for 38% market growth. And our current forecasts are shown here with a comparison to our January, 2022 figures. So coming into this year now where we are today, so currently we expect 162 billion in total revenue and a 33% growth rate. Still very healthy, but not on our mark. So we think a w s is gonna miss our predictions by about a billion dollars, not, you know, not bad for an 80 billion company. So they're not gonna hit that expectation though of getting really close to a hundred billion run rate. We thought they'd exit the year, you know, closer to, you know, 25 billion a quarter and we don't think they're gonna get there. >>Look, we pretty much nailed Azure even though our prediction W was was correct about g Google Cloud platform surpassing Alibaba, Alibaba, we way overestimated the performance of both of those companies. So we're gonna give ourselves a C plus here and we think, yeah, you might think it's a little bit harsh, we could argue for a B minus to the professor, but the misses on GCP and Alibaba we think warrant a a self penalty on this one. All right, let's move on to our prediction about Supercloud. We said it becomes a thing in 2022 and we think by many accounts it has, despite the naysayers, we're seeing clear evidence that the concept of a layer of value add that sits above and across clouds is taking shape. And on this slide we showed just some of the pickup in the industry. I mean one of the most interesting is CloudFlare, the biggest supercloud antagonist. >>Charles Fitzgerald even predicted that no vendor would ever use the term in their marketing. And that would be proof if that happened that Supercloud was a thing and he said it would never happen. Well CloudFlare has, and they launched their version of Supercloud at their developer week. Chris Miller of the register put out a Supercloud block diagram, something else that Charles Fitzgerald was, it was was pushing us for, which is rightly so, it was a good call on his part. And Chris Miller actually came up with one that's pretty good at David Linthicum also has produced a a a A block diagram, kind of similar, David uses the term metacloud and he uses the term supercloud kind of interchangeably to describe that trend. And so we we're aligned on that front. Brian Gracely has covered the concept on the popular cloud podcast. Berkeley launched the Sky computing initiative. >>You read through that white paper and many of the concepts highlighted in the Supercloud 3.0 community developed definition align with that. Walmart launched a platform with many of the supercloud salient attributes. So did Goldman Sachs, so did Capital One, so did nasdaq. So you know, sorry you can hate the term, but very clearly the evidence is gathering for the super cloud storm. We're gonna take an a plus on this one. Sorry, haters. Alright, let's talk about data mesh in our 21 predictions posts. We said that in the 2020s, 75% of large organizations are gonna re-architect their big data platforms. So kind of a decade long prediction. We don't like to do that always, but sometimes it's warranted. And because it was a longer term prediction, we, at the time in, in coming into 22 when we were evaluating our 21 predictions, we took a grade of incomplete because the sort of decade long or majority of the decade better part of the decade prediction. >>So last year, earlier this year, we said our number seven prediction was data mesh gains momentum in 22. But it's largely confined and narrow data problems with limited scope as you can see here with some of the key bullets. So there's a lot of discussion in the data community about data mesh and while there are an increasing number of examples, JP Morgan Chase, Intuit, H S P C, HelloFresh, and others that are completely rearchitecting parts of their data platform completely rearchitecting entire data platforms is non-trivial. There are organizational challenges, there're data, data ownership, debates, technical considerations, and in particular two of the four fundamental data mesh principles that the, the need for a self-service infrastructure and federated computational governance are challenging. Look, democratizing data and facilitating data sharing creates conflicts with regulatory requirements around data privacy. As such many organizations are being really selective with their data mesh implementations and hence our prediction of narrowing the scope of data mesh initiatives. >>I think that was right on J P M C is a good example of this, where you got a single group within a, within a division narrowly implementing the data mesh architecture. They're using a w s, they're using data lakes, they're using Amazon Glue, creating a catalog and a variety of other techniques to meet their objectives. They kind of automating data quality and it was pretty well thought out and interesting approach and I think it's gonna be made easier by some of the announcements that Amazon made at the recent, you know, reinvent, particularly trying to eliminate ET t l, better connections between Aurora and Redshift and, and, and better data sharing the data clean room. So a lot of that is gonna help. Of course, snowflake has been on this for a while now. Many other companies are facing, you know, limitations as we said here and this slide with their Hadoop data platforms. They need to do new, some new thinking around that to scale. HelloFresh is a really good example of this. Look, the bottom line is that organizations want to get more value from data and having a centralized, highly specialized teams that own the data problem, it's been a barrier and a blocker to success. The data mesh starts with organizational considerations as described in great detail by Ash Nair of Warner Brothers. So take a listen to this clip. >>Yeah, so when people think of Warner Brothers, you always think of like the movie studio, but we're more than that, right? I mean, you think of H B O, you think of t n t, you think of C N N. We have 30 plus brands in our portfolio and each have their own needs. So the, the idea of a data mesh really helps us because what we can do is we can federate access across the company so that, you know, CNN can work at their own pace. You know, when there's election season, they can ingest their own data and they don't have to, you know, bump up against, as an example, HBO if Game of Thrones is going on. >>So it's often the case that data mesh is in the eyes of the implementer. And while a company's implementation may not strictly adhere to Jamma Dani's vision of data mesh, and that's okay, the goal is to use data more effectively. And despite Gartner's attempts to deposition data mesh in favor of the somewhat confusing or frankly far more confusing data fabric concept that they stole from NetApp data mesh is taking hold in organizations globally today. So we're gonna take a B on this one. The prediction is shaping up the way we envision, but as we previously reported, it's gonna take some time. The better part of a decade in our view, new standards have to emerge to make this vision become reality and they'll come in the form of both open and de facto approaches. Okay, our eighth prediction last year focused on the face off between Snowflake and Databricks. >>And we realized this popular topic, and maybe one that's getting a little overplayed, but these are two companies that initially, you know, looked like they were shaping up as partners and they, by the way, they are still partnering in the field. But you go back a couple years ago, the idea of using an AW w s infrastructure, Databricks machine intelligence and applying that on top of Snowflake as a facile data warehouse, still very viable. But both of these companies, they have much larger ambitions. They got big total available markets to chase and large valuations that they have to justify. So what's happening is, as we've previously reported, each of these companies is moving toward the other firm's core domain and they're building out an ecosystem that'll be critical for their future. So as part of that effort, we said each is gonna become aggressive investors and maybe start doing some m and a and they have in various companies. >>And on this chart that we produced last year, we studied some of the companies that were targets and we've added some recent investments of both Snowflake and Databricks. As you can see, they've both, for example, invested in elation snowflake's, put money into Lacework, the Secur security firm, ThoughtSpot, which is trying to democratize data with ai. Collibra is a governance platform and you can see Databricks investments in data transformation with D B T labs, Matillion doing simplified business intelligence hunters. So that's, you know, they're security investment and so forth. So other than our thought that we'd see Databricks I p o last year, this prediction been pretty spot on. So we'll give ourselves an A on that one. Now observability has been a hot topic and we've been covering it for a while with our friends at E T R, particularly Eric Bradley. Our number nine prediction last year was basically that if you're not cloud native and observability, you are gonna be in big trouble. >>So everything guys gotta go cloud native. And that's clearly been the case. Splunk, the big player in the space has been transitioning to the cloud, hasn't always been pretty, as we reported, Datadog real momentum, the elk stack, that's open source model. You got new entrants that we've cited before, like observe, honeycomb, chaos search and others that we've, we've reported on, they're all born in the cloud. So we're gonna take another a on this one, admittedly, yeah, it's a re reasonably easy call, but you gotta have a few of those in the mix. Okay, our last prediction, our number 10 was around events. Something the cube knows a little bit about. We said that a new category of events would emerge as hybrid and that for the most part is happened. So that's gonna be the mainstay is what we said. That pure play virtual events are gonna give way to hi hybrid. >>And the narrative is that virtual only events are, you know, they're good for quick hits, but lousy replacements for in-person events. And you know that said, organizations of all shapes and sizes, they learn how to create better virtual content and support remote audiences during the pandemic. So when we set at pure play is gonna give way to hybrid, we said we, we i we implied or specific or specified that the physical event that v i p experience is going defined. That overall experience and those v i p events would create a little fomo, fear of, of missing out in a virtual component would overlay that serves an audience 10 x the size of the physical. We saw that really two really good examples. Red Hat Summit in Boston, small event, couple thousand people served tens of thousands, you know, online. Second was Google Cloud next v i p event in, in New York City. >>Everything else was, was, was, was virtual. You know, even examples of our prediction of metaverse like immersion have popped up and, and and, and you know, other companies are doing roadshow as we predicted like a lot of companies are doing it. You're seeing that as a major trend where organizations are going with their sales teams out into the regions and doing a little belly to belly action as opposed to the big giant event. That's a definitely a, a trend that we're seeing. So in reviewing this prediction, the grade we gave ourselves is, you know, maybe a bit unfair, it should be, you could argue for a higher grade, but the, but the organization still haven't figured it out. They have hybrid experiences but they generally do a really poor job of leveraging the afterglow and of event of an event. It still tends to be one and done, let's move on to the next event or the next city. >>Let the sales team pick up the pieces if they were paying attention. So because of that, we're only taking a B plus on this one. Okay, so that's the review of last year's predictions. You know, overall if you average out our grade on the 10 predictions that come out to a b plus, I dunno why we can't seem to get that elusive a, but we're gonna keep trying our friends at E T R and we are starting to look at the data for 2023 from the surveys and all the work that we've done on the cube and our, our analysis and we're gonna put together our predictions. We've had literally hundreds of inbounds from PR pros pitching us. We've got this huge thick folder that we've started to review with our yellow highlighter. And our plan is to review it this month, take a look at all the data, get some ideas from the inbounds and then the e t R of January surveys in the field. >>It's probably got a little over a thousand responses right now. You know, they'll get up to, you know, 1400 or so. And once we've digested all that, we're gonna go back and publish our predictions for 2023 sometime in January. So stay tuned for that. All right, we're gonna leave it there for today. You wanna thank Alex Myerson who's on production and he manages the podcast, Ken Schiffman as well out of our, our Boston studio. I gotta really heartfelt thank you to Kristen Martin and Cheryl Knight and their team. They helped get the word out on social and in our newsletters. Rob Ho is our editor in chief over at Silicon Angle who does some great editing for us. Thank you all. Remember all these podcasts are available or all these episodes are available is podcasts. Wherever you listen, just all you do Search Breaking analysis podcast, really getting some great traction there. Appreciate you guys subscribing. I published each week on wikibon.com, silicon angle.com or you can email me directly at david dot valante silicon angle.com or dm me Dante, or you can comment on my LinkedIn post. And please check out ETR AI for the very best survey data in the enterprise tech business. Some awesome stuff in there. This is Dante for the Cube Insights powered by etr. Thanks for watching and we'll see you next time on breaking analysis.

(upbeat music) >> Hey, welcome back everyone to theCUBE's coverage of AWS re:Invent 2021. I'm John Furrier, your host of theCUBE. We've got two sets on the show floor, it's a virtual event, we've got the hybrid stream going, check out all the content we're here for wall-to-wall coverage. It's all been about data cloud transformation, culture change, and making things happen. I got a great segment here with Accenture, Chris Copeland, CTO of Accenture's Federal Services, and Mark Kim, the CEO of Municipal Securities Rulemaking Board, also known as the MSRB. Welcome to theCUBE. >> Thank you, John, it's a pleasure to be here. >> Thanks for coming, first of all, explain what the Municipal Rulemaking Board does, so people know what it is and we'll jump in. >> Sure, thank you, John, for the opportunity to have this conversation, the MSRB serves as the principal regulator of the $4 trillion Municipal Securities market. So Municipal Securities or muni-Bonds as there're most commonly known, finance the majority of this nation's infrastructure from the public schools that educate our kids to the hospitals that care for our sick. Muni-bonds even finance the airport that we flew into to get to this conference. But in addition to writing the rules that regulate this market, the MSRB also provides the technology infrastructure that supports this market. So, in addition to being a financial regulator, the MSRB is also a technology company and we saw the future of technology and cloud computing and that was our decision to embrace that future and to move the MSRB to the cloud. >> Correct, and obviously, Chris, this is critical infrastructure, you're talking about, legacy, has a lot of legacy as well. A lot of data, money's involved. I mean all the wrappings of transformation stories there. >> Yeah, and it's great. I mean, the MSRB and Mark in particular really had the right mindset of understanding that, we all talk about migrating to the cloud. That's really just the beginning. Like it's really about once you're in the cloud, the aperture that opens up the art of the possible and what you can really do. And the MSRB is like right on all of it, right? It's all about data. It's all about transformation, but I think the key for that transformational success that we've seen, is understanding that the organization needs to change too. And that we need to enable that organization to really be productive and deliver on that mission in a cloud first world. >> Well, Mark, I want to get into this 'cause this has been a big part of my reporting this past year during the pandemic and maybe the year earlier. I saw the public sector in particular really forced it to change. >> Yeah. >> Cultural shift instantly, they had no choice. It was a forcing function and there was the haves and have nots, the ones who have done the work, put their toe in the water, invested in some technology, knew about cloud and then ones that weren't, and they were thrown in the water. They had to figure out how to swim very quickly. So take us through the importance of that because we heard today and even in the keynote with Swami on stage from Amazon saying governance could be an enabler, not an inhibitor. So you're in this world of obviously muni-bonds, I'm sure there's a lot of compliance involved. So, take us through the journey, how you guys changed the culture? What was the outcome? Take us a quick highlight on the whole process. >> Absolutely, so, for the MSRB, the cloud migration was always about way more than just moving our applications from our servers to AWS's servers. This was an opportunity for the organization to put in place a cultural transformation. And that's the power of this opportunity for the MSRB. We were able to make a commitment to our people, which we did right at the outset, that we were going to bring all of our people with us on this journey to the cloud. This was a major investment in re-skilling and retraining our staff. We didn't have staff who had experienced migrating applications to the cloud. We didn't have software engineers who had prior experience working in cloud native environments. We trained them and we made that commitment to do that and to bring all of our people along. And that has enabled the MSRB to create a culture of innovation, of teamwork. It also allowed us to break down some silos within our organization. Not only within the IT organization, but between IT and business, it was a transformational opportunity. >> I mean, effecting change is hard, what was the learnings? When did you realize it's working? (John laughs) >> So having completed the migration itself, one of my fears was we've just literally spent millions of dollars investing in our staff, re-skilling and retraining them. We've just gone through a very technical, highly complex migration. These are people who are in high demand. Not to mention that AWS decided to put HQ2 right outside of Washington DC, announced plans to hire 10,000 people over the next 10 years. So I was worried on the other side of the migration that we would have a talent drain, and the best proof that I have that we've got our cultural transformation underway and going in the right direction is we didn't see that brain drain. We have staff that want to stay at the MSRB, that are excited about being able to continue to learn about new technologies, staff that are excited to be kind of on the cutting edge of financial regulation and being a part of building the future of the MSRB. >> Okay, there's a purpose there, I mean, I think this is, this highlights this whole conference here at re:Invent. I was just talking to someone off camera during lunch and like, it's an Amazon learning Conference as they say that their humble is learning, but it's also a thought leadership conference because they're introducing new stuff that's actually like, it gets the juices flowing and you're like, wait a minute, I can do more things. So, it's got that kind of conference, ted kind of vibe to it, plus it's real. >> I think that's one of the best benefits that we saw as part of this program that, and we talk a lot about how to infuse innovation into the fabric of your DNA and organization, and I don't think that personified itself anywhere that I've seen as well as at the MSRB. Mark was talking about people wanting to stay and work there. I'll even, I think he's understating it. People were excited about the process-- >> Yeah, they want to come to work everyday. >> There was competitions going on, on who was going to get certified. There was challenges about who's going to learn the most cloud and that desire to really continuously improve and bring those new innovations was unparalleled that I've seen. What Mark and the MSRB don't have the luxury of just keeping pace with those that they regulate. They've got to stay ahead. >> Yeah. >> And if you're going to stay ahead, you've got to have that innovative culture and you've got to take change as something that isn't this big mountain to climb, but something that's actually exciting to do every day. And I think it really, really came out in the program here. >> That's one of the things I think it's one of the smartest moves you can make and I think you've made it, by getting the people on the right wave of technology is a retention bonus. >> Absolutely. >> It's not just keeping them happy 'cause if you're working on cool stuff, it's fun. >> Right. >> But if you get them on the right way where they're constantly learning, and then they've to be a part of something. >> Yeah. >> This cloud migration, I think that's a real retention thing. Do you agree, you've seen the same thing? >> Yeah, absolutely. Its such a motivator to know that our staff is front and center leading the charge in transforming the MSRB. Not only culturally but also digitally. >> Yeah. >> And bringing us into the future. >> Okay, so I got to put you on the spot because I'm want to put my evil genius hat on for a second. Okay, I want to make money, I'm a FinTech arbitrager, I want to get in and work the muni-bond data angle, obviously worry about, you've got a lot of oversight, governance, regulation. Can you move fast enough to protect the data to make sure things are stable? Take us through that because there's a lot of money involved talking about like a serious part of our economy and a financial system. >> Yeah. >> It's critical infrastructure. >> Yeah. >> So, you got to also have that balance of innovation and compliance and governance without getting in the way. >> Absolutely. >> Take us through how you handle that. >> Absolutely, as a financial regulator that provides the market with its technology infrastructure, failure is not an option nor is falling behind the times. We have to evolve with our evolving market. And the pace of change is moving faster and faster. If you look at today, what's different about the MSRB being in the cloud than route being on-prem in our data centers, for our stakeholders, we don't have customers as a financial regulatory we have stakeholders, the entities that we regulate and the entities that we protect, our stakeholders will see systems that are more available. In the first 12 months of operations in the cloud, we achieved over 99.98% system availability. Performance has improved in our own internal benchmark tests, our systems are running 30% faster than they were and then finally our systems are more secure. This is a hard one to quantify or to explain or to kind of deliver to customers, but I-- >> There's no ROI conversation when you've been hacked. >> Exactly, I am-- >> Its only a disaster. >> But I am confident that our systems are more secure today in the cloud, than they were on-prem in our data centers. >> Yeah, Chris, this is a huge thing. I'm not going to rant a little bit, I'll do a side rant, but everyone who watches theCUBE knows I'm kind of a digital hawk. I truly believe that the red line needs to be changed because we are being attacked at a cyber level and almost like the, I get to see people being excited to work there because it's almost like the military, you got to protect. There's so much downsized, not so much justification of ROI. This is critical infrastructure, financial systems and databases. And there's no malice, there's no government forces to protect you. >> I mean, Mark said it well, failure isn't an option, right? And I think what we're seeing and why everyone is really rapidly moving to the cloud is you cannot get that level of cybersecurity, you cannot get that real time information access, and then run your models to look for trends of where the threats are maybe coming from, and proactively address those threats. You can't do that in a legacy infrastructure model on-prem, you've got to embrace the power of the cloud and the services that the AWS cloud provides to be able to truly try to stay ahead. I mean, you have to bring that innovation every day in your lunch bag and say, how are we going to use these tools that only the cloud affords us to bring security to the forefront? >> And John, can I add on that point? 'Cause I think it's an important one around security. In the legacy environment, in our data centers, the MSRB was handling security by ourselves, and I think one of the biggest lessons learned for us is pick your partners carefully. >> Yes. >> We chose AWS and we chose Accenture Federal Services and we've now tripled our investments in security, both what Amazon is investing in their infrastructure, we've also have AFS providing managed security services for the MSRB in addition to our own security team. So we've literally tripled our security. >> It's interesting and I think that's one of the reasons why you mentioned the retention thing and why people are happy is, it attracts a certain kind of individual to work there. It's the elite tech athlete, we call them, because they like, want the action, the young kids there, they want the tech, they don't want to be boring. So, what better wave to ride when you know there's a lot to protect, again, back to the cyber, this is huge cultural shift in the new generation coming in versus the old IT. The old IT was okay, we're operational, keep the lights on, add some servers, now it's like a lot more is at stake. >> Yeah. >> Okay, great, I know we don't have a lot of time left, but I do want to get the data question. I have to ask you-- >> Sure. >> You're a data company as well, you got to watch the data, what's the vision and data? How are you looking at the data with your team? >> So data is the future of the MSRB and we will remain a financial regulator and write the rules that regulate this market, that's our core mission and we will always do that. We will also always be a technology firm that provides the technology infrastructure for this market. But in the future what the cloud has enabled us to do is to become a data company. We serve as the central repository of market data for this $4 trillion market. And we now, thanks to almost infinite scalable computing power storage, we now have the ability to leverage cloud tools like artificial intelligence, machine learning, to actually get at an unlock insight from the vast amounts of market data that we have and deliver that to the industry that we regulate and serve. >> And you guys have so much headroom because Chris, with Graviton3-- >> Yep. >> And the Stack, you can actually write the apps built for the performance, for your needs. >> That's right. >> Yes. >> For the data needs, 'cause that's your advantage. >> That's right. >> Yeah, it's just incredible. I just find it like, I haven't seen anything like this since the shift from client server to inter networking back in the 90s where you saw a sea change of capabilities just completely change over, it's been pretty incredible. >> Yeah. >> Okay, final word. Just re:Invent, what do you guys think? >> This is my first business trip since the pandemic started and it's fantastic to be with people, to see people to do this in person instead of virtually, so thank you for this opportunity. >> I know, I felt so amazed. Chris, what about you, what's your take? >> It's wonderful to be here, it's great being back, back out in the world I guess. >> Yep >> Getting to meet with Mark, where we're not looking at a screen at each other, meeting with peers, but also just the collaboration and innovation you're going to get in an environment like this and the energy that it brings, you just can't match that. So it's been a great show so far and I'm looking forward to the rest of it. >> The phrase I hear a lot on theCUBE, also I say it a lot, a kid in the candy store 'cause there's so much coming out, just the capabilities, you're starting to see more ease of use, more infrastructure as code now, data as code, a lot of great stuff, all part of the cloud transformation. So great for coming on and sharing the story, Mark, I appreciate it. >> Thank you John. >> It's good to hear about your awesome program, Chris, thanks for coming on too. >> Yep, thanks for having us. >> Appreciate it, okay, Cube Coverage here in Las Vegas. I'm John Furrier, you're watching theCUBE, the leader in global tech coverage, thanks for watching. (upbeat music)

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante as you well know by now the cloud is about shifting i.t labor to more strategic initiatives or as andy jassy laid out years ago removing the undifferentiated heavy lifting associated with deploying and managing i.t infrastructure cloud is also about changing the operating model and rapidly scaling a business operation or a company often overlooked with cloud however is the innovation piece of the puzzle a main source of that innovation is venture funded startup companies that have brilliant technologists who are mission driven and have a vision to solve really hard problems and enter a large market at scale to disrupt it hello everyone and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we're pleased to welcome a special guest and author of the elite 80. a report that details the hottest privately held cyber security and i.t infrastructure companies in the world eric suppenger is that author and joins us today from jmp securities eric welcome to the cube thanks for being here thank you very much dave i'm uh i'm looking forward to uh to having a discussion here with you yeah me too this is going to be great so let's dive right into the elite 80. first if you could tell us about jmp securities and fill us in on the report its history your approach to picking the 80 companies out of thousands of choices sure so jmp is a middle markets investment bank we're a full full-service investment bank based in san francisco we were founded in 2000 and we focus on technology health care financial services and real estate i've been with jmp since 2011. um i've uh i've i cover uh cyber security companies public companies uh i cover uh it infrastructure companies uh more broadly and um we have having been based here in san francisco i've long kept uh a good dialogue with uh private companies uh that that compete with the public companies that i cover and so um about seven years ago i i started uh developing this uh this report which is really designed to highlight uh emerging uh private companies that uh that i think are are well positioned to be leaders in their respective markets and uh and over time we've um we've built the list up to about 80 companies and uh and we publish this report every year uh it's designed to uh to keep tabs on on the companies that are doing well and uh and we rotate about uh about 15 to 20 to 25 percent of the companies uh out of the report every year either as they get acquired or they do an ipo or um uh they uh they if we think that they are slowing and others are getting a little bit more uh more exciting and you talk directly to the companies that's part of your methodology as well you do a lot of background research digging into funding but you also talk to the executives at these companies correct yes for the most part we uh we try to talk to the ceos at least the cfos the object here is to build a a relationship with these companies so that we have some good insights into uh into how they're doing and and how the market trends are evolving as they relate to those companies in particular some of the some of the dynamics that go into us selecting companies is one we do have to talk to the management teams uh two we uh we we base our decisions on who we include on how the companies are performing on how their competitors are uh are are discussing those companies their performance uh how other industry contacts talk about those companies and then we we track their hiring and uh and and how they've uh you know other metrics that we can uh we can gauge them by got it okay so i dug into the report a little bit and tried to summarize a few key takeaways so let's take a look at those and if if you allow me just set up the points and then and ask you to add some color so the first two things that really you know jumped out i want to comment on are the perspectives of the technology companies and then of course the other side is the buyers so it seems that the pandemic really got startups to sharpen their focus i remember talking to a number of vcs early on in the shutdown and they were all over their portfolio companies to reset their icp their ideal customer profile and sharpen their uvp their unique value proposition and they wanted them to do that specifically in the context of the pandemic and the new reality and then on the buy side let's face it if you weren't a digital business you were out of business so picking up on those two thoughts eric what can you share with us in terms of the findings that you have well that's that's very uh consistent with what we had found uh basically um when the pandemic first when the lockdown came uh in march we reached out to quite a few companies and industry contacts at that time feedback was uh you know it was uh it was a period of great uncertainty and a lot of a lot of budgets were were tightened pretty quickly but it didn't take very long and a lot of these companies uh you know having been uh innovation engines and and emerging players what they found was that uh the broader market quickly adopted uh digital transformation in response to the pandemic basically that was how they they uh facilitated uh keeping their their doors open so to speak and so um the ones that were able to uh to leverage uh need for emerging technologies because of an acceleration in digital transformation uh they they really stepped up and and quite a few of these companies they kept hiring they kept uh their sales uh did very well and uh and ultimately um a lot of the vcs that had been uh putting on the brakes uh they actually stepped up and uh and and continued funding uh pretty generously yeah we've got some data on that that we wanna look into so thank you for that now let's take a look at some of the the specific date of the study just break that down the elite 80 raised more than three billion dollars last year eclipsing the previous highs in your studies of 2019 and then a big portion of that capital went to pretty small number only 10 of the 80 firms and and most of that went to cyber security plays so what do you make of these numbers especially you know given your history with with this group of elite companies and the high concentration this year this past year so one of the trends that we've seen in the public in the public market or the ipo market is um companies are are waiting until they're a little bit more mature than they used to be so what we've seen is um the the funding for companies uh the the larger rounds are far larger than they used to be these companies typically are waiting until they're of size you know maybe now they're waiting to be uh 200 million uh in annual salary in annual revenues versus a 100 million before and so they are consuming quite a bit the larger rounds are are much bigger than they used to be um in the in the most recent uh report that we published we had uh one round that was over half a billion and another one that was over 400 million and if you go back just a couple of few years ago a large round was over 100 million and you didn't get too many that were over 200 million so that's that's been a distinct change and and i think that's not necessarily just a function of the pandemic but i think the pandemic caused caused some companies to kind of step up the size of their rounds uh and so there were a handful of uh very large rounds uh certainly bigger than what we've ever seen before yeah those are great observations i mean you're right it was 100 million used to be the magic number to go public and now you get so much late money coming in locking in maybe smaller gains but giving that company you know a little more time to get their act together pre-ipo let's take a look at where the money went you know talk about follow the money and eric you and your team you segmented that three billion dollars into a number of different categories as i said most of it go into cyber security uh categories like application security is assessment and risk there's endpoint endpoint boomed during the pandemic same with identity and this chart really shows those categories that you created to better understand these dynamics and sort of figure out where the money went how did you come up with these these categories and what does this data tell you so these categories were basically uh homegrown these are how i um i think of these companies um it's a little bit of uh pulling some information out of uh the likes of gartner but uh for the most part this was how i how i conceptualize the landscape uh in my mind um the interesting thing to me is you know so a lot of that data is skewed by a few large transactions so um you know if you if you think about the the the allocation of those uh those different categories and and the uh investments in those categories it's it's skewed by large transactions and what was most interesting to me was one the application security space is a space that had quite a few additional smaller rounds and i think that's one that's pretty interesting going forward and then the one that was a surprise to me more than that was the data management um outside of cyber security uh data management's a space that's getting uh a lot more attention and uh and it's getting um uh some pretty good uh growth so that's a space that we're uh we're paying some good good attention to as well yeah that's interesting i mean of course data management means a lot of different things to a lot of different people and vc's throwing money at it maybe trying to define it and then and then the the the ai ops and and the that data management piece you know took a took a portion of it but wow the the cyber guys really are are killing it and now as we mentioned ten companies sucked up the lion's share of of the funding and this next chart shows that concentration of those 10 investments so eric some big numbers here one trust secured more than a half a billion dollars four others nabbed more than a quarter billion in funding give us your thoughts on this what do you make of that high concentration well um i i think this is a function of companies that are waiting uh longer than they used to um they're these these companies are getting to be of considerable scale i mean titanium would be a good example that's a company that could have gone public years ago and uh and i don't think they're particularly eager to get out the door uh they provide liquidity to their previous investors by raising money and uh and and buying those shares back um and so they uh they basically uh just continue to uh to grow uh without the uh the burden or or the um uh the demands that being a public company create um so there's this that's that's really a function of of companies just waiting longer before they get out the door got it now here's another view of that that data the so the left side of this chart uh that we we want to show you next um gives you a sense of the size of the companies the revenue in the elite 80 and you know most of these companies have broken through the 100 million dollar revenue mark as you say uh and they're they're still private and so you can see the breakdown and then the right-hand side of the chart shows the most active investors we just pulled out those with three or more transactions and it's it's interesting to see the players there and of course you've got some strategics you got city in there you've got cisco along with a little bit of p and e private equity action maybe your thoughts on on on this data so so to give you a little flavor around the uh the size of these companies when we first started publishing this report a little bit of the goal was to try to keep those categories relatively equal and as you can see they've skewed uh far to the left uh towards the uh to the larger revenue stream you know size so that's that just goes to the point that um uh the the companies that uh you know that are getting that a lot of these private companies uh they're they're of saw considerable size before they uh they really go out the door and and i think that's a reflection of um of the caliber of uh of or the quality of investments that uh that are out there today these are companies that have built very mature businesses and they're not going into the market until um until they can demonstrate uh high confidence and uh and consistency in their performance yeah i mean you i remember when when cloudera took that massive i think it was the 750 billion a million dollar investment from uh from intel you know way back when they that bridged them to ipo and that was sort of if i recall started that that trend and then now you get a ipo last year like snowflake which is price to perfection and you got guys that really know how to do this they've done it a number of times and so it really is somewhat changed that that dynamic uh for ipos which of course came booming back it was so quiet there for so many years but let's look into these markets a bit um i want to talk about the security space and the i.t infrastructure space and here's a chart from optiv which is one of the elite 80 ironically and we've shared this with with our audience before and the point of this is that the cyber security spaces it's highly fragmented we've reported on this a lot it's got hundreds and hundreds of companies in there it's just mosaic of solutions so very complicated and bespoke sets of tooling and combine that with a lack of skilled expertise you know csos tell us the lack of talent is their biggest challenge makes it a really dynamic market and eric this is part of the reason why vcs they want in so the takeaway i get from that chart is we have a lot of um we still have a great need for best of breed um digital transformation uh cloud mobile all these trends are creating such a disruption that there's still a great opportunity for somebody that can deliver a uh you know a real best of the best of breed uh solution uh in spite of uh all the challenges that uh id it departments are having with trying to uh to meet you know security requirements and things like that uh the the world has embraced uh you know digital delivery and uh you are your success is oftentimes dependent on your your digital differentiation and if that's the case then there's always going to be opportunity for a better technology out there so that's that in the end is uh is why uh optiv has a uh a line card that's uh as as long as you can read it i'm glad you brought the point about best of breeze it's an age-old debate in the industry it's do we go best of breed or do we go you know integrated suites you know you look at a company like microsoft obviously that that works very well for them uh companies like cisco but so this next uh set of data we're gonna bring in some etr customer spending data and see where the momentum is and i think it'll really underscore the points that you're making there in terms of best of breed this chart shares a popular view that we like to to share with our community on the vertical axis is net score or that's spending velocity and the horizontal axis shows market share or pervasiveness in the data as we've said before anything above 40 percent that red line on the vertical axis is considered elevated and you can see a lot of companies in cyber security are above that mark now a couple points i want to make here before we bring eric back in first is the market it's fragmented but it's pretty large at over 100 billion dollars depending on which research firm you look at it's growing at you know the low double digits so so nice growth is putting on 10 billion dollars a year into that number and there are some big pure plays like palo alto networks and fortinet but the market includes some other large whales like cisco uh they've built up a sizeable security business microsoft microsoft's in most markets and serves its you know software customers so but you can see how crowded this market is now we've superimposed in the red recent valuations for some of the companies and and the other point we want to make is there's some big numbers here and some divergence between us eric was saying the the best of breed and the integrated suites and the pandemic as we've talked about a lot is fueled a shift in cyber strategies toward endpoint identity and cloud and you can see that in crowdstrike's 50 billion plus valuation octa another best of breed 34 billion dollars in identity they just bought off zero and paid four and a half billion dollars for auth0 to get access to the developer community z scaler at 28 billion proof point is going private at a 12 billion dollar number so you can see why vcs are pouring money into this market some really attractive valuations eric what are your thoughts on this data so my interpretation is that's that's just further validation that uh that these security markets are uh are getting disrupted and uh and the truth of the matter is there's only one um really well positioned uh platform player in there uh uh palo alto the rest of them are are platforms within their respective uh security technology space but uh you know there's there's not very many um you know broad security solution providers today and the reason for that is because we've got such a uh transformation going on uh across uh technology that the need for best of breed is uh is is getting recognized uh day in day out yeah you're right palo alto they're they csos love to work with palo alto they're kind of the high-end gold standard but and we reported last year on the divergence in valuations between fortinet and palo alto networks fortinet was doing a better job you know pivoting to the cloud we said palo alto will get its act together it did but then you see these pure play best of breeds really you know doing well so now let's take a look at the it infrastructure space and it's it's quite different in terms of the dynamics of the market so here's that same view of the etr data and we've cut it by uh three categories we cut on networking servers and storage and this is a very large market it's it's it's over 200 billion dollars but it's much more of an oligopoly in that you've got great concentration at the top you've got some really big companies like cisco and dell which is spinning out vmware so we're going to unlock you know more value of the core dell company dell's valuation is 79 billion and that includes its 80 ownership in vmware so you do the math and figure out what core dell is worth hpe is much smaller it's notable that its valuation is comparable to netapp netapp's around you know one-fifth the size of revenue-wise uh hpe now eric arista they stand out as the lone player that's having some success clearly against cisco what are your thoughts on on the infrastructure space so so a couple things i'll take away from that now first off uh you mentioned arista arista is a bit of an anomaly um a switching company you know a networking company that is in that upper echelon like you've pointed out above 40 percent it is it is unique and and basically they kind of cracked the code they figured out how to beat cisco at cisco's core competency which is traditionally switching switching and routing and they they did that by delivering a very differentiated uh uh hardware product um that that they were able to tap into some markets that uh that even cisco hasn't been able to open up and and those would be the hyperscale uh hyperscale you know hosting vendors like uh google and facebook and microsoft but i would i would put i would put arista kind of in a in a unique situation the other thing that i'll just point out that i think is an interesting takeaway from the um from the the the slide that you showed is there are some uh infrastructure or what i would consider is bordering on data management type companies i mean you look at uh rubric you look at cohesity and nutanix veeam they're they're all kind of bubbling up there and pure storage and i think that comes back to what i was mentioning earlier where there is some pretty interesting innovation going on in data management which has traditionally not had a lot of innovation so i would bet you those names would have bubbled up just in the last uh year or two where that's been a market that hasn't had a lot of innovation and and now there's some interesting things coming down the pipe you know that's interesting comments that you make in there because if you think back to sort of last decade arista obviously broke out the only two other companies in the in the core infrastructure space and this was a hardware game historically but it's obviously becoming a software game but take a look at pure storage and nutanix you can see their valuations at five billion and seven point four billion dollars respectively uh and then to your point cohesity you got them at 3.7 billion just did a recent you know round rubric 3.3 billion that's from 2019 and so you know presumably that's a higher valuation now veeam got taken out last january at five billion by uh inside capital uh and so i think they're doing very well and they're probably uh up from that and susa is going public at uh at a reported seven billion dollar valuation so quite a bit different dynamic in the infrastructure space so eric i want to bring it back to the elite 80 in in in in startups in general my first question to you is is what do you look for from successful startups to make this elite 80 list so a few factors first off uh their performance is uh is is one of the primary uh situations if it's a company that's not growing we'll we'll probably pull it from the list um i would say it is also very much a function of my perception of the quality of management uh we we do meet with all these management teams um if we feel like uh they're they're they're putting together a uh you know a um a leadership team that's gonna be around for a long time and they've got a product position that's uh pretty attractive uh those would certainly be two key aspects of what i look for beyond that uh certainly feedback that we get from competitors uh feedback that we get from industry contacts like resellers and then then i'd also just say my enthusiasm for their respective market that they're in if it's a a market that i think is is going to be difficult or flat or not very interesting then then that would certainly be a a reason to to not include them uh conversely even if it's a small company if it's if it's a sector that i think is going to be uh around for quite a while and it's very differentiated uh then we'll include um a lot of the smaller companies too well a good example that's like a weka i mean i don't want to i don't want to go into these companies but two because we believe we 80 companies are going to leave somebody else but that that's a good example of a smaller company that looks to be disruptive um how should enterprise customers the buyers do you think evaluate and filter startups you have any sense of that well um a couple things that i struggle with that that would be uh you know something that's a lot more readily available to them is uh is just the quality of the product i mean that's obviously uh why why they're looking at it but uh if it's a uh if it's a company that's got a a unique product that uh is is built uh you know that that can that can that works that would be the starting point then then beyond that it's also is it a management team is is the behavior of the company something that uh reflects a management team that's uh that's that's you know a high quality management team if they if they you know are responsive if they're following up if they're not trying to pull in business uh quickly if they're priced appropriately uh metrics like that would certainly be um key aspects that would be readily available to uh to the you know to the the buyers of technology beyond that um you know i think the viability of that market is going to be uh a key aspect as to whether or not that company is going to be around even if it's a good company if uh if it's a highly competitive uh market that's going to have some big big players that can kind of integrate it and to make it a feature across other other product lines then that's going to make it a a tough a tough road to to go for a start-up these days you know the other thing i wanted to to talk about was the risks and the rewards of working with with startup companies and i've had i've had cios and and enterprise architects tell me that they'll when when they have to do an rfp they'll pull out the gartner magic quadrant they'll always you know pick a couple in the top right just to cover their butts but they many say you know what we also pick some of those those in the challenger space because because that are that are really interesting to us and and we run them through the paces and we manage those risks we don't we don't run the company on them but it helps us find these diamonds in the rough i mean think about you know in the in this in the second part of last decade if you picked a snowflake you might have been able to get ahead of some of your competition things like data sharing or or maybe you found that that well you know what octa is going to help me with my identity in in a new way and you're going to be better prepared to be a digital business but do you have any thoughts on how uh people should manage those risks and and how they should think about the upside i don't i don't think today um a a you know a company can work today using legacy technologies i i think the risk the greater risk is falling behind from a a digital transformation perspective this this era i think the pandemic is probably the best proof point of this um you can't you can't go with just a uh a traditional legacy architecture in a in in a key aspect of your business and so the startups um i i think you've got to take the quote-unquote risk of working with a startup that's uh you know that's got a viability concern or sustainability concern uh the risk of of having a um uh an i.t infrastructure that's inadequate is uh is a far greater risk from my perspective so i think that the startups right now are are are in a very strong position and they're well funded that's the last question i wanted to talk about is how will startups kind of penetrate the enterprise in this modern era i mean you know this is really a software world and software is this sort of capital efficient business but yet you're seeing companies raise hundreds of millions of dollars i mean that's not even absurd these days you see companies go to ipo that have raised over a billion dollars and much of that if not most of it goes to promotion and go to market uh so so how maybe you could give us your perspectives on how you see startups getting into the enterprise in these sectors so i one of the really interesting things that we've seen in the last couple years is a lot of changes to sales models and and if you look at the mid market the ability to leverage viral sales models uh has been wildly successful for some companies um it's been um you know a great strategy uh there's a public company ubiquity that did a uh has built a multi-billion dollar uh you know business on on without without a sales organization so there's some pretty interesting um directions that i think sales and go to market is going to uh incur over the over the coming years uh traditional enterprise sales i think are still uh pretty standard today but i i think that the efficiency of um of you know social networking and and uh and and what would the the delivery of uh of products on on a digital for in a digital format is going to change the way that we do sales so i think i think there's a lot of efficiencies that are going to come in uh in sales over the coming years that's interesting because then you'll you know i i think you're right and and and instead of just just pouring money at promotion maybe get more efficient there and pour money in into engineering because that really is the long-term sustainable value that these companies are going to create right yeah i i would absolutely agree with that and um again if you look at the you know if you look at the charts of the well-established players that that you had mentioned those companies are where they are that the ones at the top are where they are because of their technology i mean it's it's not because of uh their go to market it's it's it's because they have something that other people can't uh can't replicate right well eric hey it's been great having you on today thanks so much for joining us really appreciate your time well dave i greatly appreciate it uh it's been a lot of fun so uh so thank you all right hey go get the elite 80 report all you got to do is search jmp elite 80 and it'll it'll come up there's a there's a lot of data out there so it's really a worthwhile reference tool and uh so thank you everybody for watching remember these episodes are all available as podcasts wherever you listen you can check out etr's website at etr dot plus and we also publish weekly a full report on wikibon.com and siliconangle.com you can email me david.velante at siliconangle.com or dm me on twitter at divalante hit up hit our linkedin post and really appreciate those comments this is dave vellante for the cube insights powered by etr have a great week everybody stay safe and we'll see you next time you

>>Welcome to this cube conversation. I'm john Kerry host of the cube here in Palo alto California. We got a hot startup doing new things differently. The new way the cloud native way brendon, Hannigan, Ceo of sun rays securities. They deliver an awesome new solutions platform on all clouds to change the game and how security is done Brendan. Thanks for joining me on this cube conversation. >>Really nice to talk to you today, john >>you know, I loved showcasing companies that are, that are thinking about their entire optimizing their efforts to bring in the new, the new way to do things. And we certainly with the pandemic we've seen and everyone's validating this general global consensus that cloud scale and devops and def sec apps is generating a new kind of modern applications and this is just clearly has been known for a while inside the industry, but now it's mainstream. You guys are building a company around this notion of security. So let's get into it. What do you guys do is get right to it? What's the product? >>Well, firstly to get going And before getting into the specifics of product, john just I like to frame it, which is the ways in which I started out as a software engineer. You know, a long, long time ago built a company based on classic, traditional ways of developing software. The way we develop software has just changed dramatically change from stem to stern. We've gone from monolithic applications to microservices. We've gone from 18 month development cycles to two weeks from business units and I. T. Controlling it to devoPS teams. And then the amazing this is the incredible thing from a security perspective is we used to call up people in traditional networks and data centers to reconfigure the firewall so I could put my application of data center. But now I represented in code infrastructure is code that basically represents the infrastructure I have shows up in of course the cloud. The reason why I'd like to explain this story is we talk about cloud security and the complexities of cloud security. That's just where it all comes together. The reality is everything has changed around it. And we have a simple belief if everything has changed in terms of how it is, you build technology, value, deploy it and operators, we have to change how it is reduced security and it has to be also from stem to stern. So that's what basically that's why we started this business. Our mission is simple. We want to reinvent how it is. People secure new technology in these new environments and we do it by building a service that sits on top of companies usage of cloud amazon as your google cloud. And we help find risks automatically, eliminate them, Make sure they never come back and then deliver incredible new ways of continuously monitor activity to prevent cyber security incidents from happening in the first place. >>So this reinvention is a big, big trend. We've talked about this on the cube, you know, with many guests, even Pat Gelsinger's now the ceo of intel. When was that VM ware told us that you need to do over it in security, got to redo it all, not just incremental improvement. You know, fundamental revolutionary change was you're basically getting out here. So the question is top to bottom reinvention totally get that. How do you do it? Okay, Do you change the airplane engine out of 30,000 ft? It's hard people, it's easier said than done. What are the elements to reinvent security >>in this? We have we have a magical opportunity here because of cloud. So what happens is into traditional data centers and the traditional enterprise networks, There's, there's kind of Control points that are traditionally, which we understand and security John, right. And it's built up over 2030, 50 years. Right. And there's certain ways around which we rotate our security controls and you're familiar with them, right? Firewalls, Endpoint, antivirus security, information, security, event management system. Think of all those things, those control points are not relevant in the cloud. It's not, it's, they're interesting. V p c s and narrow grooves are kind of interesting in the cloud. Totally insufficient. So there's a necessity to reinvent and there's new control points and I will then tell you why it leads with an incredible better result. The new control points of the cloud, we believe and strenuously push when we speak to our customers, our identities. And it's not about Brandon and john, it's nearly always about non people identities, serverless functions, pieces of compute containers, all of these things have rights to like people. The second control point our data. Where is it? We used to have a data center. It's in the word, it says it data center, but in this instance I may have 20 devops teams. Each one of them is using RDS. One of them is using elastic cash. One of them is using a different thing. So data is the second one. The third one is applications. Why is this so important? The service providers have done a great job with core infrastructure. They give us two mechanisms to set up these environments. We need to help our customers organize and reinvent our security around these three pillars. The reason why it's so important, I love what you said is God, we've got to start from scratch. You get to start from scratch and when you do it, you actually can deliver a level of granularity and control and security that is unimaginable in the traditional enterprise network and data center. >>It's like golf, you got an extra Mulligan off the T if you hit it out of bounds and security, you get a do over. This is this is an opportunity. I love that concept because this is I mean it's not many times you get this clean sheet of paper or the opportunity to to pivot or reinvent or refresh re platform re factor whatever word you use. This is a time >>once in our life this transition, we know digital transformation is transforming industries, every industry is feeling it. We can see and understand the significance of the inventions like like AWS, it's an amazing invention, the power of it and what it delivers to us. The opportunity which is a must take opportunity is reinventing security from top to bottom. And by the way if you don't do it, if you just do this kind of half I have asked you end up with a mess on your hands if you do it properly, you end up in a better place than you would have been a traditional enterprise network and data center. >>The old expression you gotta burn the boats to get people motivated to kind of get it done right with the cloud. Let me ask you questions. Identity security and the data secure. Love that perspective because Identity the first thing in terms in my head when you said that was I thought about the identity of the individual their I. D. You know and you could actually get down to the firmware of a phone or you know to fact multifactor authentication. I get that access authentication. You're talking more in terms of other naming spaces and naming systems like specifically around services and applications identity, not just users. Right? >>Can you expand more on that? We we we we understand this as many people now understand this at a superficial level, but they haven't truly understand stood what's under the hood of what's happening inside cloud when you have reinvented applications, microservices, applications, auto scaling applications, it's all cloud is about incredible innovation happening across teams. What happens in the cloud is you have developers, administrators creating workloads. Those work clothes have huge numbers of compute functions which could be a container, a compute instance, a serverless function. They're gaining access to resources, other compute resources, cues and data to give you a sense of scale job you could have a company. It's not unusual. 80,000 pieces of compute 20,000 active at a particular point in time. We've got companies and then they assume these roles which give them access and rights to do things on these cloud services. It's not unusual to have 10,000 rolls in a cloud environment across multiple different accounts. Now, you see the identities, these pieces of compute have rights to do things. That's good because I can restrict what they do. It can be bad because if I don't have a handle on it, it's a mess. By the way, when you talk about this scale, human beings can't process this much information must be able to understand the risks, configure and automate remediation of these risks. The cloud providers give us the tools to build these flexible workloads. They're incredibly flexible. The dark side of it is in experience and basically inefficient deployment of those tools can lead to a whole host of risks that, quite frankly a lot of customers don't fully appreciate yet. >>And then people call that day to operation. But I love this idea of identity, the thousands and thousands of services out there because with microservices and you're seeing coming out of the cloud native world is these these new kinds of services could be stood up and torn down very quickly. So, you know, the observe ability trend is a great indicator in my opinion of this whole, you know, manic focus on data. So, you know, because you need machines to know, you don't know if something could be terminated and and stood up not even knowing about it, it could be errors. How do you log it? Right. So this is just an example. What's your thoughts on that? What's your reaction? Is that right? >>Ephemeral nature is the beauty of cloud. Right. Because, you know, there's problems that even now when we build our, we have a cloud native application ourselves and when we have a problem sometimes, of course we can go in and spin up 400 servers to go solve a problem and spin them back down half an hour later. We couldn't do that before a cloud. We can actually have developers doing this incredible rapid work with serverless functions to go and interrogate data to go out of data. Like to go and do analytics. It's wonderful. But what you said is their ephemeral. Now, just think about an environment. 20,000 pieces of compute 10,000 active, lots of 20 different teams across a 50 amazon accounts. Somebody comes in and basically during a period of time compromises. It compromises something and gets access to data, but it's a federal, it just comes and goes, we have to know that we have to know what's possible. We have to know if it's happened and then we have to basically greatly minimize the possibility of that happened. My promise because I'm security people are always trying to scare everybody which is valid. However, my promise the power of this cloud has created complexity opportunities but actually it also gives us the solution because using analytics machine learning in our case graphing technologies, we can actually find these things and give micro control two workloads so that actually we can see these things and automatically eliminate these risks and that was impossible >>in the the automation is programmable. You can actually set policies around automation. Pretty cool. I gotta ask you about get to the technical and want to understand the graphics and the platform more. But I want to ask you the question on the reinvention. If I follow your your playbook Yes. What's the end results? Can you take me through the all in bet the redo what happens? Can you just take me through the day in the life of an outcome? What's it look like and walk me through that? >>So firstly what the outcome I want to give our clients is they have these complex cloud environment spreading across, you know, any, even a moderate sized enterprise. What I basically want to be able to give our clients and when we have delivered for our clients is they basically managed to break that cloud from being this amorphous thing into specific work clothes. Each and every one of those workloads have specific controls in place that understand how that workload should operate in this environment across staging development and production. And actually we're able to essentially locked down what it is these workloads can do from an identity perspective, a data access perspective, a platform rights perspective and then monitor anything that changes. That's one thing. So the complexity were actually able to push away the complexity leveraged up lower to give that level of granularity at very deep levels. Identity, data platform. The second thing, actually, and this is john again, what's possible will clown? It doesn't it can't be all security teams, its security needs, It could be audit teams, its developers. So we have customers who have onboard tens and tens and tens of teams onto our platform. Why do we do that when we're finding issues and finding things that need to be resolved for directing it directly to the development teams? So we're saying developer to get into production, you're going to have to fix your identity set up in this environment. It's too risky, but it doesn't have to go to the security team. The security team will only hear about it if the developer doesn't fix it. >>Got it. So they're proactive, >>we're involving the teams responsible for creation and resolution of issues. The security and cloud teams are setting up the ground rules for a workload to operate in this environment and now we've got a level of granularity across workloads, whether they're in production or not. That basically is wonderful. That's the that's the ultimate endgame. >>What's the uh status of the vision and product on execution uh where your customers at now? Um how do you feel about it? Where is it going? Can you share a little bit about the roadmap and kind of where the product is? Uh It's a huge vision, it sounds easy to do, but it's not >>it's not actually and, you know, underlying it also, we actually, we've production service, we have wonderful, very large customers who are deployed and operational on our platform. You know, an example of one of them would be world fuel services, fortunate 93 company were the center of their kind of new security environment and operating model for everything they're doing and cloud. It's a beautiful story job. They've gone from in, in, you know, a few years ago. They 22 to the centers today to to yeah, it's unbelievable. And now all that future real estate were the center of that cloud security operating model. What does it mean? A 50 ft plus different teams on boarded onto the platform, following the rules of the road. If they don't follow the rules where all the exceptions are coming in and we're doing a continuous monitoring process underneath it. What is it that we've done? That's interesting. We actually have this incredible, unique way of collecting information from the cloud so that we can gather it in a very uh continuous way. So we're constantly seeing what's happening in addition to interrogating A PS and clouds are actually monitoring logs so we can see all the actions, what you just said. By the way, something comes and goes, we see it. The second thing which we do is we gather the information. We build a graph. This was actually, this was hard because it's not just as simple as sticking things in a graph with all of it to be. But what is the graph doing? The graph is basically understanding the intricacies of all the identity and access management models. I can see everything that can do anything to any other resource in the cloud, right? There is a surplus functioning container or a VM And we boil it down to very simple things. So underneath it's complex. We represented grass with boiling two simple things. Then we run analytics across the graph too, find and eliminate plaque from risk, find and eliminate identity risk. Get customers to the privilege enforced separation of duties, find data that you may not know is there that has incredible amounts of things capable of accessing it and help our customers lockdown that access. And then finally had we getting it into an operational automation kind of pipeline so that basically on an ongoing operational perspective it's efficient. So we're actually doing this for customers. We've got some very large financial institution customers. We've got, you know, large customers like World Fuel Services. And now actually our mission this year is to actually help simplify a lot of what we're describing so that, you know, you know, other companies and maybe companies not as sophisticated as a big financial institution or World Fuel Services is able to just very quickly get the value out of a solution. Like, >>you know, when you have these new technologies, new way of doing things, it's exciting at the same time, you have to kind of vector into an environment where the customer is ready to be operationalized. So, um, I got to ask you about how um teams are forming. I've I've been having a lot of conversation with VPs of engineering, large enterprises and and also big companies and hyper scale as well. And they're all talking about how, because of what you're doing and the kind of the general philosophy that you're you guys have is changing how teams are organized. You have a platform engineer now who can work on a platform and then flex and go work with other say feature engineers. And so it used to be just to do your features, You got your platform guys, you got your networking people. Okay, now you don't have to talk to the networking people because you can abstract away the network. You now have more composite, more compose herbal applications with all the observe ability. And now you can actually build that foundational platform. Redeploy the platform engineers with the other teams. So you seem like and then you got sRS embedded into teams and so you kind of got this new engineering formation going on, new kind of ways to organize the new modern era is here, it's on on this, this how people organize their teams. >>Actually is. There's no, there's no entire recipe at because you go to different customers and customers are basically experimenting with different ways to organize their teams. There's no question. But actually, I think one thing that's changed in the last 18 months is companies realizing we definitely need to change how it is. We've organized our team. I'm going to give you a simple example. Again in the old world, they would have network teams and network security teams you call up, Let me re configure the firewall. That doesn't work. It's just, it's just so broken. It can't work in clarity, can't be calling on people to re configure a firewall. That's an example. Another example which companies are realizing the latest identity. They will go through an approval process and they go through a governance and certification process. Well, these, these teams in the class, they want to get to work out in into, they need to get it in a month in an hour, in an hour. They can take a month and a manual approval processes sort of realizing that you need a skill set antiseptic ground rules and then the teams should be allowed to innovate within the ground rules. That's what the platform teams need to do. And so what we see emerging, which I think is a really best practice, is cloud centers of excellence. They're responsible for what I would call the shared infrastructure of the enterprise. The 250 Amazon accounts for 50 is your subscriptions, whatever it is that is king. Then the devoPS teams are using this shared infrastructure. The question is, how do you interface, how do you help coordinate between these different responsibilities from a security and governance and risk perspective? And that's actually what a big part of what our product is, helping teams coordinate their activities. That's a big part of what our product is, >>love. The first principles, they're sitting those ground rules. I mean there's been a chef and a cook, you know, you know, working with the environment and putting the new ingredients together and then getting that operational. It's a huge opportunity. Great stuff. Brandon. I gotta ask you the final question. Well I got you here, Sunrise Securities, the name Sunray. Where'd that come from? What does it mean? >>It actually means it's a Gaelic word and it means data and it's just so central to you know, what are people trying to steal? Like we can talk about security we're going to face. But at the end of the day they're trying to do damage. You're trying to get access to data. That's the most valuable thing we're trying to protect. So that's why we put it in our name. >>Digital transformation, everything's data now, everything's data, content, data Securities, data, data is everything >>it is. and I did >>great stuff. Brendan. Thank you for sharing the story here on the cube conversation, Brennan Hannigan's ceo of suddenly secure. Thanks for joining me. >>Thank you very much, john, it was a great pleasure. >>Okay. It's the cube from Palo alto California remote. Still. Thanks for watching.

>>from >>around the globe. It's the cube with digital >>Coverage of IBM think 2021 brought to you by IBM. >>Welcome back to IBM Think 2021 The virtual edition. My name is Dave Volonte and you're watching the cubes continuous coverage of think 21. And right now we're gonna talk about banking in the post isolation economy. I'm very pleased to welcome our next guest. Look at wag lee is the general manager, Global banking financial markets at IBM and john Degnan is the global ceo and vice president and distinguished engineer for banking and financial services. Gentlemen, welcome to the cube. >>Thank you. Yeah >>that's my pleasure. Look at this current economic upheaval. It's quite a bit different from the last one, isn't it? I mean liquidity doesn't seem to be a problem for most pecs these days. I mean if anything they're releasing loan loss reserves that they didn't need. What's from your perspective, what's the state of banking today and hopefully as we exit this pandemic soon. >>So so dave, I think, like you say, it's, you know, it's a it's a state and a picture that in a significantly different from what people were expecting. And I think some way, in some ways you're seeing the benefits of a number of the regulations that were put into into place after the, you know, the financial crisis last time around, right? And therefore this time, you know, a health crisis did not become a financial crisis, because I think the banks were in better shape. And also, you know, governments clearly have put worldwide a lot of liquidity into the, into the system. I think if you look at it though, maybe two or three things ready to call out firstly, there's a there's a massive regional variation. So if you look at the U. S. Banking industry, it's extremely buoyant and I'll come back to that in a minute in the way in which is performing, you know, the banks that are starting to report their first quarter results are going to show profitability. That's you know significantly ahead of where they were last year and probably some of the some of their best performance for quite a long time. If you go into europe, it's a completely different picture. I think the banks are extremely challenged out there and I think you're going to see a much bleaker outlook in terms of what those banks report and as far as Asia pacific is concerned again, you know because they they have come out of the pandemic much faster than consumer businesses back into growth. Again, I think they're showing some pretty buoyant performance as far as as far as banking performance is concerned. I think the piece that's particularly interesting and I think him as a bit of a surprise to most is what we've seen in the U. S. Right. And in the US what's actually happened is uh the investment banking side of banking businesses has been doing better than they've ever done before. There's been the most unbelievable amount of acquisition activity. You've seen a lot of what's going on with this facts that's driving deal raised, you know, deal based fee income for the banks. The volatility in the marketplace is meaning that trading income is much much higher than it's ever been. And therefore the banks are very much seeing a profitability on that investment banking side. That was way ahead of what I think they were. They were expecting consumer businesses definitely down. If you look at the credit card business, it's down. If you look at, you know, lending activity that's going down going out is substantially less than where it was before. There's hardly any lending growth because the economy clearly is flat at this moment in time. But again, the good news that, and I think this is a worldwide which are not just in us, the good news here is that because of the liquidity and and some of the special measures the government put out there, there has not been the level of bankruptcies that people were expecting, right. And therefore most of the provisioning that the banks did um in expectation of non performing loans has been, I think, a much more, much greater than what they're going to need, which is why you're starting to see provisions being released as well, which are kind of flattering, flattering the income, flattering the engine. I think going forward that you're going to see a different picture >>is the re thank you for the clarification on the regional divergence, is that and you're right on, I mean, european central banks are not the same, the same position uh to to affect liquidity. But is that nuances that variation across the globe? Is that a is that a blind spot? Is that a is that a concern or the other other greater concerns? You know, inflation and and and the the pace of the return to the economy? What are your thoughts on that? >>So, I think, I think the concern, um, you know, as far as the european marketplace is concerned is um you know, whether whether the performance that and particularly, I don't think the level of provisions in there was quite a generous, as we saw in other parts of the world, and therefore, you know, is the issue around non performing loans in in europe, going to hold the european uh european banks back? And are they going to, you know, therefore, constrain the amount of lending that they put into the economy and that then, um, you know, reduces the level of economic growth that we see in europe. Right? I think, I think that is certainly that is certainly a concern. Um I would be surprised and I've been looking at, you know, forecasts that have been put forward by various people around the world around inflation. I would be surprised if inflation starts to become a genuine problem in the, in the kind of short to medium term, I think in the industry that are going to be two or three other things that are probably going to be more, you know, going to be more issues. Right. I think the first one which is becoming top of mind for chief executives, is this whole area around operational resiliency. So, you know, regulators universally are making very very sure that banks do not have a technical debt or a complexity of legacy systems issue. They are and you know, the U. K. Has taken the lead on this and they are going so far as even requiring non executive directors to be liable if banks are found to not have the right policies in place. This is now being followed by other regulators around the world. Right. So so that is very much drop in mind at this moment in time. So I think discretionary investment is going to be put you know, towards solving that particular problem. I think that's that's one issue. I think the other issue is what the pandemic has shown is that and and and this was very evident to me and I mean I spent the last three years out in Singapore where you know, banks have become very digital businesses. Right? When I came into the U. S. In my current role, it was somewhat surprising to me as to where the U. S. Market place was in terms of digitization of banking. But if you look in the last 12 months, you know, I think more has been achieved in terms of banks becoming digital businesses and they've probably done in the last two or three years. Right. And that the real acceleration of that digitization which is going to continue to happen. But the downside of that has been that the threat to the banking industry from essentially fintech and big tex has exactly, it's really accelerated. Right, Right. Just to give you an example, Babel is the second largest financial services institutions in the US. Right. So that's become a real problem I think with the banking industry is going to have to deal with >>and I want to come back to that. But now let's bring john into the conversation. Let's talk about the tech stack. Look, it was talking about whether it was resiliency going digital, We certainly saw over the pandemic, remote work, huge, huge volumes of things like TPP and and and and and mortgages and with dropping rates, etcetera. So john, how is the tech stack Been altered in the past 14 months? >>Great question. Dave. And it's top of mind for almost every single financial services firm, regardless of the sector within the overall industry, every single business has been taking stock of how they handled the pandemic and the economic conditions thereafter and all of the business needs that were driven by the pandemic. In so many situations, firms were unable to service their clients or we're not competitive in serving their clients. And as a result they've had to do very deep uh architectural transformation and digital transformation around their core platforms. Their systems of analytics and their systems different end systems of engagement In terms of the core processing systems that many of these institutions, some in many cases there are 50 years old And with any 50 year old application platform there are inherent limitations. There's an in flex itty inflexibility. There's an inability to innovate for the future. There's a speed of delivery issue. In other words, it can be very hard to accelerate the delivery of new capabilities onto an aging platform. And so in every single case um institutions are looking to hybrid cloud and public cloud technology and pre packaged a ai and prepackaged solutions from an I. S. V. Ecosystem of software vendor ecosystem to say. As long as we can crack open many of these old monolithic cause and surround them with new digitalization, new user experience that spans every channel and automation from the front to back of every interaction. That's where most institutions are prioritizing. >>Banks aren't going to migrate, they're gonna they're gonna build an abstraction layer. I want to come back to the disruption is so interesting. The coin base I. P. O. Last month see Tesla and microstrategy. They're putting Bitcoin on their balance sheets. Jamie diamonds. Traditional banks are playing a smaller role in the financial system because of the new fin text. Look at, you mentioned Paypal, the striped as Robin Hood, you get the Silicon Valley giants have this dual disrupt disruption agenda. Apple amazon even walmart facebook. The question is, are traditional banks going to lose control of the payment systems? >>Yeah. I mean I think to a large extent that is that has already happened, right? Because I think if you look at, you know, if you look at the experience in ASia, right? And you look at particularly organizations like and financial, you know, in India, you look at organizations like A T. M. You know, very substantial chance, particularly on the consumer payments side has actually moved away from the banks. And I think you're starting to see that in the west as well, right? With organizations like, you know, cloud, No, that's coming out with this, you know, you know, buying out a later type of schemes. You've got great. Um, and then so you've got paper and as you said, strike, uh and and others as well, but it's not just, you know, in the payment side. Right. I think, I think what's starting to happen is that there are very core part of the banking business. You know, especially things like lending for instance, where again, you are getting a number of these Frontex and big, big tech companies entering the marketplace. And and I think the threat for the banks is this is not going to be small chunks of market share that you're going to actually lose. Right? It's it's actually, it could actually be a Kodak moment. Let me give you an example. Uh, you know, you will have just seen that grab is going to be acquired by one of these facts for about $40 billion. I mean, this organization started like the Uber in Singapore. It very rapidly got into both the payment site. Right? So it actually went to all of these moment pop shops and then offered q are based um, 12 code based payment capabilities to these very small retailers, they were charging about half or a third or world Mastercard or Visa were charging to run those payment rails. They took market share overnight. You look at the Remittance business, right? They went into the Remittance business. They set up these wallets in 28 countries around the Asean region. They took huge chunks of business completely away from DBS, which is the local bank out there from Western Union and all of these, all of these others. So, so I think it's a real threat. I think Jamie Dimon is saying what the banking industry has said always right, which is the reason we're losing is because the playing field is not even, this is not about playing fields. Been even write, all of these businesses have been subject to exactly the same regulation that the banks are subject to. Regulations in Singapore and India are more onerous than maybe in other parts of the world. This is about the banking business, recognizing that this is a threat and exactly as john was saying, you've got to get to delivering the customer experience that consumers are wanting at the level of cost that they're prepared to pay. And you're not going to do that by purely sorting out the channels and having a cool app on somebody's smartphone, Right? If that's not funny reported by arcade processes and legacy systems when I, you know, like, like today, you know, you make a payment, your payment does not clear for five days, right? Whereas in Singapore, I make a payment. The payment is instantaneously clear, right? That's where the banking system is going to have to get to. In order to get to that. You need to water the whole stack. And the really good news is that many examples where this has been done very successfully by incumbent banks. You don't have to set up a digital bank on the site to do it. And incumbent bank can do it and it can do it in a sensible period of time at a sensible level of investment. A lot of IBM s business across our consulting as well as our technology stack is very much trying to do that with our clients. So I am personally very bullish about what the industry >>yeah, taking friction out of the system, sometimes with a case of crypto taking the middle person out of the system. But I think you guys are savvy, you understand that, you know, you yeah, Jamie Diamond a couple years ago said he'd fire anybody doing crypto Janet Yellen and says, I don't really get a Warren Buffett, but I think it's technology people we look at and say, okay, wait a minute. This is an interesting Petri dish. There's, there's a fundamental technology here that has massive funding that is going to inform, you know, the future. And I think, you know, big bags are gonna lean in some of them and others, others won't john give you the last word here >>for sure, they're leaning in. Uh so to just to to think about uh something that lick it said a moment ago, the reason these startups were able to innovate fast was because they didn't have the legacy, They didn't have the spaghetti lying around. They were able to be relentlessly laser focused on building new, using the app ecosystem going straight to public and hybrid cloud and not worrying about everything that had been built for the last 50 years or so. The benefit for existing institutions, the incumbents is that they can use all of the same techniques and tools and hybrid cloud accelerators in terms And we're not just thinking about uh retail banking here. Your question around the industry that disruption from Bitcoin Blockchain technologies, new ways of processing securities. It is playing out in every single securities processing and capital markets organization right now. I'm working with several organizations right now exactly on how to build custody systems to take advantage of these non fungible digital assets. It's a hard, hard topic around which there's an incredible appetite to invest. An incredible appetite to innovate. And we know that the center of all these technologies are going to be cloud forward cloud ready. Ai infused data infused technologies >>Guys, I want to have you back. I wish I had more time. I want to talk about SPAC. So I want to talk about N. F. T. S. I want to talk about technology behind all this. You really great conversation. I really appreciate your time. I'm sorry. We got to go. >>Thank you. Thanks very much indeed for having us. It was a real pleasure. >>Really. Pleasure was mine. Thank you for watching everybody's day. Volonte for IBM think 2021. You're watching the Cube. Mhm.

>>thank you very much for this opportunity to talk about Stamp with a bio design program, which is entrepreneurship education for the medical devices. My name is Julia Key Can. Oh, I am Japanese. I have seen the United States since two doesn't want on the more than half of my life after graduating from medical school is in the United States. I hope I can contribute to make them be reached between Japan that you were saying right I did the research in the period of medical devices with a patient all over the world today is my batteries met their country finished medication stamp of the city. Yeah, North Korea academia, but also a wrong. We in the industry sectors sometimes tried to generate new product which can generate revenue from their own research outward, it is explained by three steps. The first one is the debut river, which is the harbor Wrong research output to the idea which can be product eventually. That they are hard, though, is the best body, which is a hot Arboria. From idea to commercial for the other one is that we see which is a harder to make a martial hold up to become a big are revenue generating products for the academia that passed the heart is a critical on the essential to make a research output to the idea. Yeah, they're two different kind of squash for the developing process in the health care innovation, Why's bio and by all the farmer under the other one is medical device regarding the disciplining method is maybe in mechanical engineering. Electrical engineering on the medical under surgical by Obama is mainly chemical engineering, computer science, biology and genetics. However, very important difference off these to be the innovation process. Medic is suitable on these digital innovation and by Obama, is suitable discovery process needs. Yeah, in general transformation of medical research between the aroma academia output to the commercial product in the medical field is called bench to bed. It means from basically such to critical applications. But it is your bio on the path. Yeah, translation. Medical research for medical devices is better. Bench on back to bed, which means quicker Amit needs to bench on back to Greek application. The difference off the process is the same as the difference off the commercialization. Yeah, our goal is to innovate the newer devices for patient over the war. Yeah, yeah, there are two process to do innovation. One is technology push type of innovation. The other one is news, full type of innovation. Ignore the push stop Innovation is coming from research laboratory. It is suitable for the farm on the bios. Happy type of innovation. New, useful or used driven type of type of innovation is suitable for medical devices. Either Take this topic of innovation or useful type of innovation. It is important to have Mini's. We should think about what? It's waas Yeah, in 2001 stop for the Cube, API has started to stop with Bio Design program, which is on entrepreneurship education for medical devices. Our mission is educated on empowering helps technology, no based innovators on the reading, the transition to a barrier to remain a big innovation ecosystem. Our vision is to be a global leader in advancing Hearst technology innovation to improve lives everywhere. There are three steps in our process. Off innovation, identify invent on England. Yeah, yeah. The most important step is the cluster, which is I didn't buy. I didn't buy a well characterized needs is the Vienna off a grating vision. Most of the value off medical device development is due to Iraq Obina unmet needs. So we focused in this gated by creates the most are the mosque to find on the Civic on appropriate. Yeah, our barrels on the student Hickory World in March, disparate 19 that ideally include individual, which are background in many thing engineering on business. Yeah, how to find our needs. Small team will go to the hospital or clinic or environment to offer them the healthcare providers with naive eyes. The team focused. You look to keep all the um, it needs not technology. This method is senior CTO. It's a rocket car approach which can be applied all that design, thinking the team will generate at least 200 needs from economic needs. Next stick to identify Pace is to select the best. Amit Knees were used for different aspect, which can about it the nominees. These background current existing solutions market size on the stakeholders. Once we pick up ur madness from 200 nominees, they can move to the invention pates. Finally, they can't be the solution many people tend to invent on at the beginning base without carefree evaluating its unmet knees to result in a better tend to pouring love. Their whole idea, even amid NIS, is not what this is. Why most of the medical device innovation fail due to the lack off unmet needs. To avoid this Peter Hall, our approach is identify good needs. First on invention is the sex to generate the idea wrong. Unmet knees. We will use seven Rules off race Tony B B zero before judgment encourage wild ideas built on the ideas off. Others. Go Conte. One conversation time. Stay focused on the topic. The brainstorming is like association game. Somebody's idea can stimulate the others ideas. After generating many ideas, the next step is sleeping of idea whether use five different Dustin to embody the ideas. Intellectual property regulatory. Remember National Business Model on technology How, after this election step, we can have the best solution with system it needs, and finally team will go to the implementation pace. This place is more business oriented mothers. The strategy off business implementations on the business planning. Yeah, yeah, students want more than 50 starting up are spinning off from by design program. Let me show one example This is a case of just reputations. If patient your chest pain, most of that patient go to family doctor and trust. The first are probably Dr before the patient to General Securities. General Card, obviously for the patient Director, Geologist, Director, API geologist will make a reservation. Horta uses it. Test patient will come to the clinic people for devices in machine on his chest. Well, what? Two days? Right? That patient will visit clinic to put all the whole decency After a few days off. Analysis patient Come back to Dr to hear the result Each step in his money to pay. This is a minute, Knees. This is a rough sketch off the solutions. The product name is die. A patch on it can save about $620. Part maybe outpatient right here. >>Yeah, yeah. Life is stressful. We all depend on our heart with life source of our incredible machine. The body, however, sometimes are hard Need to check up. Perhaps you felt dizzy heart racing or know someone who has had a serious heart problem The old fashioned monitors that used to get from most doctors or bulky And you can't wear them exercising or in the shower. If appropriate for you, sudden life will provide you the eye rhythm. Zero patch to buy five inch band aid like patch would. You can apply to your chest in the comfort of your own home or in the gym. It will monitor your heart rate for up to 14 days. You never have to come into a doctor's office as you mail back. Patched us shortly after you were receiving. Easy to understand report of your heart activity, along with recommendations from a heart specialists to understand the next steps in your heart. Health sudden life bringing heart monitoring to you. >>This is from the TV broadcasting become Ah, this is a core value we can stamping on his breast. He has a connotation of the decent died. Now the company names Iris is in the public market cap off. This company is more than six billion di parts is replacing grasp all or that you see the examination. However, our main product is huge. The product lifecycle Very divisive, recent being it's. But if we can educate the human decision oil because people can build with other people beyond space and yeah, young broader stop on by design education is now runs the media single on Japan. He doesn't 15 PBS probably star visited Stamp of the diversity and Bang. He announced that Japan, by design, will runs with vampires. That problem? Yeah, Japan Barzan program has started a University of Tokyo Osaka University and we've asked corroborating with Japanese government on Japanese medical device Industry s and change it to that. Yeah, this year that it's batch off Japan better than parachute on. So far more than five. Starting up as being that's all. Thank you very much for your application.

>> Announcer: From theCUBE studios in Palo Alto and Boston connecting with thought leaders all around the world. This is a CUBE conversation. >> Hello everybody, welcome to this special CUBE conversation. My name is Dave Vellante and you're watching theCUBE. We're here with Sanjay Poonen who's the COO of VMware and a good friend of theCUBE. Sanjay great to see you. Thanks for coming on. >> Dave it's a pleasure. In these new circumstances, shelter at home and remote working. I hope you and your family are doing well. >> Yeah, and back at you Sanjay. Of course I saw you on Kramer Mad Money the other night. I was jealous. I said, "I need Sanjay on to get an optimism injection." You're a great leader And I think, a role model for all of us. And of course the "Go Niners" in the background really incented me to get-- I got my Red Sox cap and we have a lack of sports, but, and we miss it, But hey, we're making the best. >> Okay Red Sox is better than the Patriots. Although I love the Patriots. If i was in the east coast, especially now that Brady's gone. I guess you guys are probably ruing a little bit that Jimmy G came to us. >> I am a huge Tampa Bay fan all of a sudden. I be honest with you. Tom Brady can become a Yankee and I would root for them. I tell you that's how much I love the guy. But anyway, I'm really excited to have you on. It's obviously as you mentioned, these times are tough, but we're making the best do and it's great to see you. You are a huge optimist, but I want to ask you, I want to start with Narendra Modi just announced, basically a lockdown for 21 days. 1.3 billion people in your native country. I wonder if you could give us some, some thoughts on that. >> I'm, my parents live half their time in Bangalore and half here. They happen to be right now in the US, and they're doing well. My dad's 80 and my mom's 77. I go to India a lot. I spent about 18 years of my life there, and the last 32 odd years here and I still go there a lot. Have a lots friends and my family there. And , it's I'm glad that the situation is kind of , as best as they can serve it. It's weird, I was watching some of the social media photos of Bangalore. I tweeted this out last night. The roads look so clean and beautiful. I mean, it looks like 40 years ago when I was growing up. When I would take a bicycle to school. I mean Bangalore's one of the most beautiful cities in India, very green and you can kind of see it all again. And I think, as I've been watching some of the satellite photos of the various big cities to just watch sort of Mother Nature. Obviously, we're in a tough time and, I open my empathy and thoughts and prayers go to every family that's affected by this. And certainly ones who have lost loved ones, but it's sort of, I think it's neat, that we're starting to see some of the beautiful aspects of nature. Even as we deal with the tough aspects of sheltered home. And the incredible tough impacts of this pandemic across the world. >> Yeah, I think you're right. There is a silver lining as much as, our hearts go out to those that are that are suffering. You're seeing the canals in Venice run clear. As you mentioned, the nitrous oxide levels over China. what's going on in Bangalore. So, there is a little bit of light in the end of the tunnel for the environment, I hope. and at least there's an indication that we maybe, need to be more sensitized to this. Okay, let's get into it. I want to ask you, so last week in our breaking analysis. We worked with a data company called ETR down in New York City. They do constant surveys of CIO's. I want to read you something that they came out with just on Monday and get your reaction. Basically, their annual growth and IT spend they're saying, is showing a slight decline for 2020. As a significant number of organizations plan to cut and/or delay IT expenditures due to the coronavirus. Though the current climate may suggest worse many organizations are accelerating spending for 2020 as they ramp up their work-from-home infrastructure. These organizations are offsetting what would otherwise be a notable decline in global IT spend versus last year. Now we've gone from the 4% consensus at the beginning of the year. ETR brought it down to zero percent and then just on Monday, they went to slight negative. But, what's not been reported widely is the somewhat offsetting factor of work-from-home infrastructure. VMware obviously plays there. So I wonder if you could comment on what you're seeing. >> Yeah, Dave, I think , we'll have to see . I'm not an economic pundit. So we're going to have to see what the, IT landscape looks like in the overall sense and we'll probably play off GDP. Certain industries: travel, hospitality, I mean, it's brutal for them. I mean, and I hope that, what I really hope, that's going to happen to that industry, especially there's an infusion through recovery type of bill. Is that no real big company goes under, and goes bankrupt. I mean kind of the situation in 2008. I mean, people wondering what will happen to the Airlines. Boeing, hospital-- these are ic-- some of them like Boeing are iconic brands of the United States and of the world. There's only two real companies that make planes. So we've got to make sure that those industries stay afloat and stay good for the health of the world. Health of the US economy, jobs, and so on. That's always one end. Listen, health and safety of our employees always comes first. Before we even think about that. I always tell people the profits of VMware will wait if you are not well, if your loved ones not well, if your going to take care of people, take care of that first. We will be fine. This too shall pass. But if you're healthy, let's turn our attention because we're not going to just sit at home and play games. We're going to serve our customers. How do we do that? A lot of our customers are adjusting to this new normal. As a result, they have to either order devices with a laptop, screens, things of those kinds, to allow a work-from-home environment to be as close to productive as they work environment. So I expect that there will be a surge in the, sort of, end points that people need. I will have to see how Dell and HP and Lenovo, but I expect that they will probably see some surge in their laptops. As people, kind of, want those in the home and hopefully their supply chains are able to respond. But then with every one of those endpoints and screens that we need now for these types of organizations. You need to manage them, end point management. Often, you need virtual desktops on them. You need to end point security and then in some cases you will probably need, if it's a remote office, branch office, and into the home office, network security and app acceleration. So those Solutions, end point management, Workspace ONE, inclusive of a full-fledged virtual desktop capability That's our product Workspace ONE. Endpoint Securities, Carbon Black and the Network Platform NSX being software-defined was relegated for things like, load balancers and SDWAN capabilities and it's kind of almost feels like good, that we got those solutions, the last three, four years through acquisitions, in many cases. I mean, of course, Airwatch and Nicira were six, seven, eight years ago. But even SD-WAN, we acquired Velocloud three and a half years ago, Carbon Black just four months ago, and Avi in the last year. Those are all parts of that kind of portfolio now, and I feel we were able to, as customers come to us we're not going in ambulance-chasing. But as customers come to us and say, "What do you have as a work-at-home "for business continuity?" We're able to offer them a solution. So we did a webcast earlier this week. Where we talked about, we're calling it work in home with business continuity. It's led with our EUC offerings Workspace ONE. Accompanied by Carbon Black to secure that, and then underneath it, will obviously be the cloud foundation and our Network capabilities of NSX. >> Yeah, so I want to double down on that because it was not, the survey results, showed it was not just collaboration tools. Like Zoom and WebEx and gotomeeting Etc. It was, as you're pointing out, it was other infrastructure that was of VPN's. It was Network bandwidth. It was virtualization, security because they need to secure that work-from-home infrastructure. So a lot of sort of, ancillary activity. It was surprising to me, when I saw the data, that 21% of the CIO's that we surveyed, said that they actually plan on spending more in 2020 because of these factors. And so now we're tracking that daily. And the sentiment changes daily. I showed some other data that showed the CIO sentiment through March. Every day of the survey it dropped. Okay, so it's prudent to be cautious. But nonetheless, people to your point aren't just sitting on their hands. They're not standing still. They're moving to support this new work-from-home normal. >> Yeah, I mean listen, I forgot to say that, Yeah, we are using the video collaboration tools. Zoom a lot. We use Slack. We'll use Teams. So we are, those are accompanied. We were actually one of the first customers to use Zoom. I'm a big fan of my friend Eric Yuan and what they're doing there in modernizing, making it available on a mobile device. Just really fast. They've been very responsive and they reciprocated by using Workspace ONE there. We've been doing ads joined to VMware and zoom in the market for the last several years. So we're a big fan of their technology. So far be it from me to proclaim that the only thing you need here's VMware. There's a lot of other things on the stack. I think the best way, Dave, for us that we've sought to do this is again, I'm very sensitive to not ambulance-chase, which is, kind of go after this. To do it authentically, and the way that authentically is to be, I think Satya Nadella put this pretty well in an interview he did yesterday. Be a first responder to the first responder. A digital first responder, if I could. So when the, our biggest customers are hospital and school and universities and retailers and pharmacies. These are some of our biggest customers. They are looking, in some cases, actually hire more people to serve their communities and customers. And every one of them, as they , hire new people and so and so on, will I just naturally coming to us and when they come to us, serve them. And it's been really gratifying Dave. If I could read you the emails I've been getting the last few days. I got one from a very prominent City, the United States, the mayor's office, the CTO, just thanking us and our people. For being available who are being careful not to, we're being very sensitive to the pricing. To making sure customers don't feel like, in any way, that we're looking at the economics of it will always come just serve your customer. I got an email yesterday from a very large pharmacy. Routinely we were talking to folks in the, in the healthcare industry. University, a president of a school. In fact, Southern New Hampshire University, who I mentioned Jim Cramer. Sent me a note saying, "hey, we're really grateful you even mentioned our name." and I'm not doing this because, Southern New Hampshire University is doing an incredible job of moving a lot of their platform to online to help tens of thousands. And they were one of the early customers to adopt virtual desktops, and the cloud desktops, and the services. So, as we call. So in any of these use cases, I just tell our employees, "Be authentic. "First off take care of your families. "It's really important to take care of your own health and safety. But once you've done that, be authentic in serving our customers." That's what VR has always done. From the days of dying green, to bombers, to Pat, and all of us here now. Take care of our customers and we'll be fine. >> Yeah, and I perfectly understand your sensitivity to that notion of ambulance-chasing and I'm by no means trying to bait you into doing that. But I would stress, the industry needs you and the tech it-- many in the tech industry, like VMware, have very strong balance sheets. They're extremely viable companies and we as a community, as an industry, need companies like VMware to step up, be flexible on pricing, and terms, and payment, and things like that nature. Which it sounds like you're doing. Because the heroes that are on the front lines, they're fighting a battle every day, every hour, every minute and they need infrastructure to be able to work remotely with the stay-at-home mandates. >> I think that's right. And listen, let me talk a little bit of one of the things you talked about. Which is financing and we moved a lot of our business to increasingly, to the cloud. And SaaS and subscription services are a lot more radical than offer license and maintenance. We make that choice available to customers, in many cases we lead with cloud-first solutions. And then we also have financing services from our partners like Dell financial services that really allow a more gradual, radibal payment. Do people want financing? And , I think if there are other scenarios. Jim asked me on his show, "What will you do if one of your companies go bankrupt?" I don't know, that's an unprecedented, we didn't have, we had obviously, the financial crisis. I wasn't here at VMware during the dot-com blow up where companies just went bankrupt in 2000. I was at Informatica at the time. So, I'm sure we will see some unprecedented-- but I will tell you, we have a very fortunate to be profitable, have a good balance sheet. Whatever scenario, if we take care of our customers, I mean, we have been very fortunate to be one of the highest NPS, Net promoter scorer, companies in the industry. And , I've been reaching out to many of our top customers. Just a courtesy, without any agenda other than, we're just checking in. A friend in need is a friend indeed. It's a line that I remembered. And just reach out your customers. Hey listen. Checking in. No, other than can we help you, if there's anything and thank you, especially for ones who are retailers, pharmacies, hospitals, first responders. Thank them for what they're doing to serve many of their people. Especially people in retail. Think about the people who have to go into warehouses to service us, to deliver the stuff that comes to our home. I mean, these people are potentially at risk, but they do it. Put on masks. Braving health situations. That often need the paycheck. We're very grateful for that, and our hope is that this world situation, listen, I mentioned it on on TV as a kind of a little bit of a traffic jam. I love to ski and when I go off and to Tahoe, I tell my family, "I don't know how long it's going to take." with check up on Waze or Google Maps and usually takes four hours, no traffic. Every now and then it'll take five, six, seven. Worst case eight. I had some situation, never happen to me but some of my friends would just got stuck there and had to sleep in their car. But it's pretty much the case, you will eventually get there. I was talking to my dad, who is 80, and he's doing well. And he said, this feels a little bit like World War Two because you're kind of, in many places there. They had a bunker, shelter. Not just shelter in place, but bunker shelter in that time. But that lasted, whatever five, six years. I don't think this is going to last five, six years. It may be five, six months. It might be a whole year. I don't know. I can guarantee it's not going to be six years. So it won't be as bad as World War two. It certainly won't be as bad as the Spanish Flu. Which took 39 people and two percent of the world. Including five percent of my country, India in the 1918 to 1920 period, a hundred years ago. So we will get through this. I like, we shall overcome. I'm not going to sing it for you. It's one of my favorite Louis Armstrong songs, but find ways by which you encourage, uplift people. Making sure, it is tough, it is very tough times and we have to make sure that we get through this. That jobs are preserved as best as we can because that's the part I'm really, really concerned about. The loss of jobs and how we're going to recover as US economy, but we will make it through this. >> Yeah, and I want to sort of second what you're saying. That look, I know there are a lot of people at home that going a little bit stir crazy and this, the maybe a little bit of depression setting in. But to your point, we have to be empathic for those that are suffering. The elderly, who are in intensive care and also those frontline workers. And then I love your optimism. We will get through this. This is not the Spanish Flu. We have, it's a different world, a different technology world. Our focus, like many other small businesses is, we obviously want to survive. We want to maintain our full employment. We want to serve our customers and we, as you, believe that that is the recipe for getting through this. And so, I love the optimism. >> And listen, and we can help be a part of my the moment you texted me and said, "Hey, can I be in your show?" If it helps you drive, whatever you need, sponsorship revenue, advertising. I'm here and the same thing for all of our friends who have to adjust the way in which the wo-- we want to be there to help them. And I've chosen as best as I can, in terms of how I can support my family, the sort of five, five of us at home now. All fighting over bandwidth, the three kids, and my wife, and I. To be positive with them, to be in my social media presence, as best as possible. Every day to be positive in what I tweet out to the world And point people to a hope of what's going to come. I don't know how long this is going to last. But I can tell you. I mean, just the fact that you and I are talking over video interview. High fidelity, reasonably high fidelity, high bandwidth. The ability to connect. I mean it is a whole lot better than a lot of what happened in World War 2 or the Spanish flu. And I hope at the end of it, some of us, some of this will forever change our life. I hope for for example in a lot of our profession. We have to travel to visit customers. And now that I'm building some of these relationships virtually. I hope that maybe my travel percentage will drop. It's actually good for the environment, good for my family life. But if we can lower that percentage, still get things done through Zoom calls, and Workspace ONE, and things of those kinds, that would be awesome. So that's how I think about the way in which I'm adapting my life. And then I set certain personal goals. This year, for example, we're expanding a lot of our focus in security. We have a billion dollar security business and we're looking to grow that NSX, Common Black, Workspace ONE, and accompanying tools and I made it a goal to try and meet at all my sales teams. A thousand C-ISOs. I mean off I know a lot of CIO's in the 25 years, I've had, maybe five, six thousand of them in the world. And blessed to build that relationship over the years of my SAP and VMware experience, but I don't know. I mean, I knew probably 50 or 100. Maybe a few hundred CISO's. And now that we have a portfolio it's relevant to grant them and I think very compelling across network security and End Point security. We own the companies with such a strong portfolio in both those areas. I'm reaching out to them and I'm happy to tell you, I connected, I've got the names of 1,000 of the top CISO's in the Fortune 1000, Global 2000, and connecting with many of them through LinkedIn and other mixers. I hope I talked to many of them through the course of the year. And many of them will be virtual conversations. Again, just to talk to them about being a trusted advisor to us. Seeing if we can help them. And then of course, there will be a product pitch for NSX and Carbon Black and how we're different from whoever it is, Palo Alto and F5 and Netscaler and the SD line players or semantic McAfee Crowdstrike. We're differentiated so I want to certainly earn some of the business. But these are ways in which you adjust to a virtual kind of economy. Where I'm not having to physically go and meet them. >> Yeah, and we share your optimism and those CISO's are, they're heroes, superheroes on the front line. I'll tell ya a quick aside. So John Furrier and I, we're in Barcelona. When really, the coronavirus came to our heightened awareness and John looked at me and said, "Dave we've been doing digital for 10 years. "We have to take all of the software that we've developed, "all these assets and help our customers pivot." So we share that optimism and we're actually lucky to be able to have the studios and be able to have these conversations with you guys. So again, we share that, that optimism. I want to ask you, just on guidance. A lot of companies have come out and said we're not giving guidance anymore. I didn't see anything relative to VMware. Have you guys announced anything on guidance in terms of how you're going to communicate? Where are you at with that? >> No, I think we're just, I mean listen, we take this very carefully because of reg FD and the regulations of public company. So we just allow the normal quarterly ins. And of outside of that, if our CFO decides they may. But right now we're just continuing business as usual. We're in the middle of our, kind of, whatever, middle of our quarter. Quarter ends April. So work hard do the best we can in all the regions, be available for all of our teams. Pat, myself, and others we're, to the extent that we're healthy and we're doing well, but thank God, is reach out to CISO's and CIO's and CTO's and CEOs and help them. And I believe people will spend money. The questions we have to go over. And I think the stronger will survive. The companies with better balance sheet and unfortunately, some of the weaker companies won't. And I think quite frankly, if you do your job well. I don't mean this in any negative sense. The stronger companies will take share in these environments. I was watching a segment for John Chambers. He has been through a number of different, when I know him, so an I have, I've talked to him about some of the stuff. He will tell you that he, advises is a lot of his companies now. From the experiences he saw in 2008, 2001, in many of the crisis and supply chain issues. This is a time where leadership counts. The strong get stronger. Never waste a good crisis, as Winston Churchill said. And as you do that, the strong will come strong because you figure out ways by which, if you're going to make changes that were planned for one or two years from now. Maybe a good time to make them is now. And as you do that you communicate a vision for where you're going. Very clearly to your employees. Again incessantly over and over again. They, hopefully, are able to repeat it in their own words in a simple fashion, and then you get all of your employees in our case 30,000 plus employees of VMware lined up. So one of the things that we've been doing a lot of these days is communicate, communicate, communicate, internally. I've talked a lot about our communication with customer. But inside, our employees, we do calls with our top leaders over Zoom. Calls, intimate calls, and many, often we're adjusting to where I'll say a few words. I have a mandatory every two week goal with all of my senior most leaders. I'll speak for about five minutes and then for the next 25 minutes, the top 12, 15 of them I listen. To things, I want all of them to speak up. There's nobody who should stay silent, because I want to hear what's going on in that corner of the world. >> But fantastic Sanjay. Well, I mean, Boeing, I heard this morning's going to get some support from the government. And strategically that's very important for our country. Congress finally passed, looks like they're passing that bill, and support which is awesome. It's been, especially for all these small businesses that are struggling and want to maintain full employment. I heard Steve Mnuchin the other day saying, "Look, we're talking about two months of payroll "for people if they agree to keep people employed. "or hire them back." I mean the Fed. people say, oh the FED is out of arrows. The Feds, not out of arrows. I mean, I'm not an economist either. But the Fed. has a lot of bullets in their gun, as they say. So Sanjay, thanks so much. You're an awesome leader and really an inspirational executive and a good friend so thank you so much for coming on theCUBE. >> Dave, always a pleasure. Please say hi to all of my friends, your co-anchors, and the staff at CUBE. Thank them for all their hard work. It's a pleasure to talk to you this morning. I wish you, your family, and your friends and all of our community, stay safe and be well. >> Thank you Sanjay and thank you for watching everybody. This is Dave Vellante for the cube and we'll see you next time. (soft music)

>> Announcer: From Santa Clara in the heart of Silicon Valley, it's theCUBE, covering the Churchills 2019. Brought to you by SiliconANGLE Media. >> Hey, welcome back everybody, Jeff Frick here with theCUBE. We're in Santa Clara, California at the ninth annual Churchills. It's an awards banquet put on by the Churchill Club and this year's theme is all about leadership and we're excited to have with us today the MC, he's Rich Karlgaard, the co-founder of the Churchill Club and also a publisher at Forbes. Rich, thanks for stopping by. >> Oh, it's an honor to be here, Jeff. >> So, busy night tonight. The theme is leadership, but we've been suffering a little bit of a black eye on leadership lately in the tech scene in Silicon Valley. >> Well, I really think we have. I travel the world a lot and around the United States and I have to say that large parts of the world and the United States are falling out of love with Silicon Valley. And I think that's directly attributable to some of the companies and some of the leaders who are maybe moving so fast that they're forgetting to do the right things for customers, for employees, and for their community at large. >> Yeah, I'm wondering, get your take, a lot of these guys and gals become successful for a whole bunch of reasons, right? and they happen to be at the top of a company. I'll just pick on Zuckerberg 'cause he's easy to pick on. But you know, he had an application, it was about getting people together, and suddenly these platforms get so big and so ubiquitous, you know, is he the right guy? He never signed up to be the leader of the platform world, and yet he's kind of put in that position. We see that kind of with YouTube, because again, the platform is so big and I think it almost feels like it grows beyond the tentacles of the control. >> Well, it remains to be seen if Mark Zuckerberg is the right guy. I think of somebody from more my era, Bill Gates. And Bill Gates was a fabulous leader of Microsoft, but they ran too fast, they ran too hard, they got in trouble with the U.S. Department of Justice, and Bill Gates ended up resigning from Microsoft. And he served as a great board member of Microsoft ever since, was instrumental, along with John Thompson, the board chairman who will be honored tonight, in bringing in the person I think is the best CEO in the world today, Satya Nadella of Microsoft. Sometimes you have to hand the baton. >> Right, right. But are there some lessons that people should be thinking about when they're maybe thrust into this position that they weren't necessarily ready for? I mean, one thing about Gates is he gave up his CEO job pretty early to Ballmer, arguably whether that was super successful or not. But some of them kind of get out of the way and some of them don't. And they don't necessarily have the skills to take on some of these huge kind of geopolitical, socioeconomic issues. >> Well I think that's right. Another example, Larry Ellison led the brilliant early days of Oracle but when he got in trouble with the Securities and Exchange Commission, he had to really make way for a strong number two, Ray Lane, and that turned out to be the perfect complement, you see. You had Ellison's vision and drive but you had Lane's ability to run really good operations. Steve Jobs never got into trouble but having a really solid number two like Tim Cook was very valuable. So some of these brilliant entrepreneurs need solid number two's, so I think they have lieutenants but I don't think they have really solid number two's. >> So what are you excited about tonight? We got some really great people, you already mentioned John W. Thompson, we've had him on a ton of times, great leader. Who are some of the people you're excited to see tonight? >> Well, we have three great companies, we have Slack, Zoom, and my personal favorite, Peloton. I'm kind of lusting for a Peloton bike in my garage. I hope it arrives under the Christmas tree this year. >> (laughs) All right, Rich. Well, thanks for taking a few minutes and good luck tonight on the MC duties. >> Yeah, well, thank you Jeff. >> All right, he's Rich, I'm Jeff, you're watching theCUBE, we're at the Churchills, the ninth annual awards banquet here with the Churchill Club. Thanks for watching, we'll see you next time. (upbeat electronic music)

(upbeat funky music) >> From our studios, in the heart of Silicon Valley, Palo Alto, California. This is a CUBE conversation. >> Okay, welcome back everyone, we're here at theCUBE studios in Palo Alto for a special CUBE conversation. Talking security, talking about the internet and cloud computing. Martin Bosshardt is the CEO of Open Systems. Martin, great to see you. Last time we chatted was in December you were in Vegas, we had a little on the ground, great to meet your team. Welcome back to theCUBE. >> Thank you so much. It's great to be here. >> So exciting things going on, I want to get a state of the Open Systems and the industry, obviously security's a really big big thing, a lot stuff going on in the industry. Black Hat. Defcon. Amazon had a big event called re:Inforce, which was really kind of the first cloud securities show. Which brings the whole, your kind of value proposition to the table but, you guys have a new office here in Silicon Valley. I saw a video on the internet, trending. >> Yeah. >> Pretty nice place work. Give us the update on the current office and Silicon Valley presence. >> Yeah we are, you know, we are really happy to be now here in the U.S. headquarters in Redwood City and Silicon Valley. So, this really helps us also to be closer to the talents, to be closer to all the going to market activities and also to understand the market better. So, it's really exciting to be here and obviously also our, I mean the people love to work here in Silicon Valley. Weather is always great. >> Yeah, weathers always great and the office has got that good working vibe there. Take a minute to explain Open Systems real quick for the folks not familiar with the video 'cause we did last December in Vegas with your team. Tell them what your companies value propositions is and some of the growth you're experiencing. >> Right, so, Open Systems really is, you know, we operate SD-WAN in a secure way for our customer, so it's really focusing on making a relatively complicated technology, from operational point of view, very easy to consume for our customers. So this is, I think, something we started more than 15 years ago in Europe and I would say Open Systems is very much comparable, or at least the going to market part, is very much comparable to an organic farms. We have a wonderful ecosystems in Switzerland, especially in the financial services industry and our customers just love the way we provided those services and told their neighbors and friends and this is really how we grew on a global scale. Currently Open Systems is operating in more than 180 countries, SD-WAN and security infrastructure for customers and protect approximately 2.5 to three million in users globally. And when we started to enter the U.S. market, we learned that the way we provide SD-WAN in a secure way, really resonates a lot with the U.S. market because we can make complex infrastructures, especially projects going to the cloud, very easy to consume for our customers. So, we are really exciting on the growth side right now, we grow super fast in the U.S., we have been very successful in latest customers, we won Chemers, we won Chemit... >> So you're winning a lot of business. >> We are winning a lot of business and what's exciting about it is those customers give us really very valuable feedback on the difference how we provided services is really exciting... >> You know Martin, I was observing and talking to your team in December when we first met you guys for the first time and you just briefly touched on it on your description of the company success. A lot of the early success and continued success has been word of mouth. >> Right. >> With the organic, not like big marketing splash in the pool, kind of like, you know, banging the drum hard, although you are doing some marketing now but and being in the U.S. That word of mouth has been really a testament to the quality of the product, so I got to ask you, what are they happy about? What's the problem that you're solving? What's the big buzz? Why are they so excited to share, to their peers and colleagues about Open Systems? What's the big revelation? >> Thank you for the credit. I think, you know, everybody goes to the cloud and what you really need is an SD-WAN to access the cloud. What that also means for all those companies, they have to rethink their security posture. So if you add now all those products and then you try to operate those products, it turns out it's relatively complicated compared to an old school MPLS Network we used to operate in the past. So, this is really where Open Systems comes in and helps customers to operate that in very easy ways. So we integrate, all those products needed, to operate the global SD-WAN in a secure way, on a single delivery platform and that allows customers to consume that entire suite in a very very easy way. >> I want to get your vision on the future of Open Systems. I know you guys call it secure SD-WAN. I'm a little bit more radical and controversial in the sense. I think SD-WAN is kind of passe term, I think, it's really cloud connectivity work anywhere, people are working at home more than ever, cloud computing has brought in essentially enterprise cloud. We're calling it cloud 2.0, where, it's not just public cloud and having workloads in there, taking advantage of the greatest of cloud 1.0. It's enterprises, this is hybrid, it's multi-cloud, you seeing a, really a distributed computing, a networking problem and a security problem being at the center of this new work environment. >> Yeah. >> Essentially, people connected to something. >> Right. >> It's cloud right, I mean. We can call it SD-WAN because it used to be an office, campus, remote office, very static dynamic. What's your vision? >> You're absolutely right. I mean, this is really where it all goes. Let's say, a network was a network and it was very clear what a network does, right now it's more like, we want to just connect users to cloud services and it's not so clear where those services are coming from and it's not so clear where those users are sitting, where you consume from. And, it results in a phenomenal opportunity to be much more agile, much more, much faster, also to set-up new services, but it also is a challenge for IT operations. Because you know, you might have a group of users saying, well this and this service doesn't work well and now you have to debug. Why is not performing, why isn't Germany maybe, a service coming from the U.S., not performing well? Or you have an IoT device suddenly not really collecting data in a right way and this is really where SD-WAN becomes an orchestration layer. SD-WAN really helps you to orchestrate all those services and make sure you have the SLA available, at all times, everywhere. And also, understand if it's not delivering right and this is really rare where I believe... Ya, we need new solutions to make these easy because... >> You know, a lot of companies talk about digital transformation, that becomes the office, you know, the top CEO, board conversation, let's transform and be digital. But the underlying infrastructure, which is very complex, you can talk about distributing computing, you got networking, all these things in place and old, new, all kind of mashed together with cloud. It's easy to say digital transformation but you're talking about digital transformation of the business on top of existing complex hardware, which comes out the networking, moving packets from A to B, storing it on drives and now you have people working at home, so you have people working globally. >> Right. >> It's not that simple. >> No. >> It's complicated. >> It is really... >> It's not just a U.S. problem, it's like a have a team in, an engineering team in the U.K. and Germany, wherever, business... So it's a global problem. >> Exactly and also it's about, you know, how do you process all the data in an efficient way. And where we see a lot of iteration power released is right now in the Cloud. It's really exciting how easy it gets to consume all that computing power out of the cloud but you need to make sure it is available and you need to understand what is happening if it's not available and how to fix that. And this is really where, I think networking became more demanding, more challenging but also, obviously offers a tremendous opportunity for innovation. >> And I think the security industry has gotten much broader scope to it, used to be, hey you know, I'm a nerd, I'm Black Hat, I'm a blue team, red team, secure the environment, get a perimeter and okay that's gone, we'll take care of threats, malware, all this stuff's going on. But when you think about like cloud 2.0, cloud 1.0 is compute storage, great applications can load up at the cloud, all this great stuffs happening, hooray, yeah, rah-rah. Now cloud 2.0 is networking and security. >> Right. >> Independent of everything right so, what's your take on that? How is Open Systems, you know, helping companies? And what do you say to your customers when you say, hey, you know, compute networking, the storage is good, the cloud on premise no problem, there's operating models for that but you got networking and you got security to deal with on top of all the complexity. What's your story? >> I think the most important thing is, you know, we have to live with the fact that some device system tools are not secure. So I think IoT's a very good example. If you want to have all those sensors out there and be close to the customer, be close to some business processes, you need IoT. But, it's just not possible to have these very cheap devices built in a secure way. So, it's a lot about how do you design a network, to design it in a resilient secure way and that means that you have to think in cells, you have to think in compartments and that makes it relatively easy, secure again, but, it is from operational point of view, quite a challenge because you do not operate any more one network, you suddenly operate maybe any networks. >> On that point, just to kind of wrap up here. The the security challenges around IoT, Machine Learning and AI, which is clearly becoming part of the fabric of, a company's going to leverage that... >> Right. What are some of the big challenges that companies are having and what do you do to solve it? >> You know, in the old network world, you had a network where everything was connected based on one network. So, when you introduce SD-WAN and you introduce all these capabilities, it is very dangerous if you think just, in the old school of one network because suddenly you have IoT working on the same network as maybe your finance department. Or you have productivity facilities working the same network as your network department. So, it just doesn't make sense to have those very different functionalities on exactly the same network because if you have a compromised situation, you suddenly have your entire company compromised and this is really where compartments become very very important. I think this also something you in every industry, historically as well. Security and safety starts also with compartments. So, if you think fire, fire security, it has a lot to do with fire compartments. In case you have a fire, you don't lose the entire building or the same goes with ship building. I mean, Titanic was the last very big ship that sunk but the reason was the compartments haven't been pressurized. A modern ship doesn't sink anymore. And I think this really what we have to do now also in IT. We have to think in compartments. We have to think in layers and that's easy to do with SD-WAN but it's not so easy to operate. >> Final question for you real quick, you know, people talk about hybrid cloud, multi-clouds, the big conversation in this cloud 2.0. But you guys as being successful in outside the United States and now in the U.S., there's also multi-geo work environment. >> Right. What should people think about when they kind of want to frame that debate or conversation? I'm a multinational, I'm operating in the U.S., now I have regions, clouds have regions. There's also all kind of of now regulatory pressure coming across those areas. >> I would say around 2,000 companies really started to globalize their value chains. You know, in the past, maybe you had a production facility in one country and then you sold your products globally but if you want to be competitive, you have to globalize your value chain. So it doesn't make sense to produce everything in one place. Your product usually, or your service, is produced on a global scale and that means that networks also have to help you to really produce that global value chain. But, it means also that you are operating in different jurisdictions, in different regions and you have to respect those different regulations and laws. And this is, obviously then and also a challenge for network operators because privacy in Germany is different than in the U.S., access rights are different, China's again very different, but all those multinationals, we operate in all those countries and we have to respect the local law. >> And the provide the security they need. >> Exactly. >> Martin, thanks for coming in and sharing your insights. Appreciate, good to see you, we'll follow up with and keep of the progress. Thanks for coming in. >> Thank so much. >> I'm John Furrier for CUBE Conversation in Palo Alto, at theCUBE Studios, thanks for watching. (upbeat funky music)

>> live from Boston, Massachusetts. It's the Cube covering A W s reinforce 2019 brought to you by Amazon Web service is and its ecosystem partners. >> Okay, welcome back. Everyone's two cubes Live coverage here in Boston, Massachusetts, for AWS reinforce. This is Amazon Web services Inaugural conference around Cloud security There first of what? Looks like we'll be more focused events around deep dive security to reinvent for security. But not no one's actually saying that. But it's not a summit. It's ah, branded event Reinforce. We're hearing Mark Ryland off director Office of the Sea. So at eight of us, thanks for coming back. Good to see you keep alumni. Yeah, I'm staying here before It's fun. Wait A great Shadow 80 Bucks summit in New York City Last year we talked about some of the same issues, but now you have a dedicated conference here on the feedback from the sea. So as we've talked to and the partners in the ecosystem is, it's great to have an event where they go deep dives on some of the key things that are really, really important to security. Absolutely. This is really kind of a vibe that how reinvents started, right? So reinventing was a similar thing for commercial. You're deep, not easy to us. Three here, deeper on Amazon. But with security. Yeah, security lens on some of the same issues. One thing that happened >> and kind of signal to us that we needed an event like this over the years with reinvent was consistently over the years, the security and compliance track became one of the most important tracks that was oversubscribed in overflow rooms and like, Hey, there's a signal here, right? And so, but at the same time, we wanted to be able to reach on audience. Maybe they wouldn't go to reinvent because they thought I'd say It's all the crazy Dale Ops guys were doing this cloud thing. But now, of course, they're getting the strong message in their security organizations like, Hey, we're doing cloud. Or maybe as a professional, I need to really get smart about this stuff. So it's been a nice transition from still a lot of the same people, but definitely the different crowd that's coming here and was a cross pollination between multiple and I was >> just at Public sector summit. They about cyber security from a national defense and intelligence standpoint. Obviously, threesome Carlson leads That team you got on the commercial side comes like Splunk who our data and they get into cyber. So you started to see kind of the intersection of all the kind of Amazon ecosystems kind of coming around security, where it's now part of its horizontal. It's not just these are the security vendors and partners writes pretty much everyone's kind of becoming native into thinking about security and the benefits that you guys have talk about that what Amazon has to have a framework, a posture. Yeah, they call it shared responsibility. But I get that you're sharing this with the ecosystem. Makes sense. Yeah, talk about the Amazon Web service is posture for this new security >> world. Well, the new security world is if you look at like a typical security framework like Mist 853 120 50 controls all these different things you need to worry about if you're a security professional. And so what eight obvious able to do is say, look, there's a whole bunch of these that we can take care of on your behalf. There's some that we'll do some things and you got to do some things and there's some There's still your responsibility, but we'll try to make it easy for you to do those parts. So right off the bat we can get a lot of wins from just hey, there's a lot of things will just take care of. And you could essentially delegate to us. And for the what remain, You'll take your expertise and you'll re focus it on more like applications security. There still may be some operating systems or whatever. If using virtual machine service, you still have to think about that. But even there, we'll use we have systems Manager will make it easy to do patch management, updating, et cetera. And if you're willing to go all the way to is like a lambda or some kind of a platform capability, make it super easy because all you gotta do is make sure your code is good and we'll take care of all the infrastructure automatically on your behalf so that share responsibility remains. There's a lot of things you still need to be careful about and do well, but your experts can refocus. They could be very you know like it's just a lot less to worry about it. So it's really a message for howto raise the bar for the whole community, but yet still have >> that stays online with the baby value properties, which is, you know, build stuff, ship fast, lower prices. I mazon ethos in general. But when you think about the core A. W. S what made it so great Waas you can reduce the provisioning of resource is to get something up and running. And I think that's what I'm taking away from the security peace you could say. We know Amazon Web service is really well, and we're gonna do these things. You could do that so us on them and then parts to innovate. So I get that. That's good. The other trend I want to get your reaction to is comments we've had on the Cube with si SOS and customers is a trend towards building in house coding security. Your point about Lambda some cool things air being enabled through a B s. There's a real trend of big large companies with security teams just saying, Hey, you know what? I wanna optimize my talent to code and be security focused on use cases that they care about. So you know, Andy Jazz talks about builders. You guys are about builders you got cos your customers building absolutely. Yet they don't want Tonto, but they are becoming security. So you have a builder mindset going on in the big enterprises. >> Yes, talk about that dynamic. That's a That's a really important trend. And we see that even in security organizations which historically were full of experts but not full of engineers and people that could write code. And what we're seeing now is people say, Look, I have all this expertise, but I also see that with a software defined the infrastructure and everything's in a P I. If I pair up in engineering team with a security professional team, then well, how good things will happen because the security specials will say, Gosh, I do this repetitive task all the time. Can you write code to do that like, Yeah, we can write code to do that. So now I can focus on things that require judgment instead of just more rep repetitive. So So there's a really nice synergy there, and our security customers are becoming builders as well, and they're codifying if you moment expression in code, a policy that used to be in a document. And now they write code this as well. If that policy is whatever password length or how often we rode a credentials, whatever the policy is where Icho to ensure that that actually happening. So it's a real nice confluence of security expertise with the engineering, and they're not building the full stack >> themselves. This becomes again Aki Agility piece I had one customer on was an SMS business. They imported to eight of US Cloud with three engineers, and they wrote all the Kuban aged code themselves. They could have used, you know, other things, but they wanted to make sure it's stable so they could bring in some suppliers that could add value. So, again, this is new. Used to be this way back in the old days, in House developers build the abs on the mainframe, build the APS on the mini computers and then on I went to outsourcing, so we're kind of back. The insourcing is the big trend now, >> right in with the smaller engineering team, I can do a lot that used to require so many more people with a big waterfall method and long term projects. And now I take all these powerful building blocks and put an engineering team five people or what we would call it to pizza team five or six people off to the side, given 34 weeks, and they can generate a really cool system that would have required months and not years before. So that's a big trend, and it applies across the board, including two security. >> I think there's a sea change, and I think it's clear what I like about this show is this cloud security. But it's also they have the on premises conversation, Mrs Legacy applications that have been secured and or need to be secured as they evolve. And then you got cloud native and all these things together where security has to be built in. Yeah, this is a key theme, so I want to get your thoughts on this notion of built in security from Day one. What's your what's your view on this? And how should customers start thinking >> about it? And >> what did you guys bringing to the table? Well, I think that's just a general say maturation that goes on in the industry, >> whether it's cloud or on Prem is that people realize that the old methods we used to use like, Hey, I'm gonna build a nap And then I'm gonna hand it to the security team and they're gonna put firewalls around it That's not really gonna have a good result. So security by design, having security is equal co aspect of If I'm getting doing an architecture, I look a performance. I look, it cost. I look at security. It's just part of my system designed. I don't think of it as like a bolt on afterwards, so that leads to things like, you know, Secure Dev ops and kind of integration teams through. This could be happening on premises to it's just part of I T. Modernization. But Cloud is clearly a driver as well, and cloud makes it easier because it's all programmable. So things that are still manual on premises, you can do in a more automated getting into a lot of conversations here under the covers, A lot of under the hood conversations here around >> security BC to one of the most popular service is you guys have obviously compute a big part of the mission Land, another of the feature VPC traffic flows, where mirroring was a big announcement. Like we talked about that a lot of talking about the E c two nitro. You gave a talk on that. Did you just unpacked it a little bit because this has been nuanced out there. It's out there people are interested in. What's that talk about inscription is, is in a popular conversation taking minutes? Explain your talk. Sure, So we've talked for now a year and 1/2 >> about how we've essentially rien. Imagine reinvented our virtual machine architecture, too. Go from a primarily soft defined system where you have a mainboard with memory and intel processor and all that kind of a coup treatments of a standard server. And then your virtual ization layer would run a full copy of an operating system, which we call a Dom zero privileged OS that would mediate access between the guest OS is in this and the outside world because it would maintain the device model like how do I talk to a network card? How I talked to a storage device. I talked through the hyper visor, but through also a dom zero Ah, copy of Lennox. A copy of Windows to do all that I owe. So what we just did over the past few years, we begin to take all the things we're running inside that privileged OS and move that into dedicated hardware software, harbor combination where we now have components we call nitro components their actual separate little computers that do dbs processing. They do vpc processing they do instance, storage. So at this point now, we've taken all of the components of that damn zero. We've moved it out into these You could call Cho processors. I almost think of them is like the Nitro controllers. The main processor and the Intel motherboard is a co processor where customer workloads run because the trust now is in these external all systems. And when you go to talk to the outside world from easy to now you're talking through these very trusted, very powerful co processors that do encryption. They do identity management for you. They do a lot of work that's off the main processor, but we can accelerate it. We could be more assured that it's trustworthy. It can it can protect itself from potential types of hacks that might have been exposed if that, say, an encryption key was in the and the main motherboard. Now it's not so it's a long story until one hour version and doing three minutes now. But overall we feel that we built a trustworthy system for virtual. What was the title of talk so people can find it online? So I was just called the night to architecture security implications of the night to architecture. So it's taking information that we had out there. But we're like highlighting the fact that if you're a security professional, you're gonna really like the fact that this system has it has no damn zero. It has no shell. You can't log into the system as a human being. It's impossible to log in. It's all software to find suffer driven, and all the encryption features air in these co processors so we can do like full line made encryption of 100 gigabits of network traffic. It's all encrypted like that's never been done before. Really, in the history of computing, what's the benefit of nitro architectural? Simply not shelter. More trust built into it a trusted root. That's not the main board encryption, off load and more isolation. Because even if I somehow we're toe managed to the impossible combination of facts to get sort of like ownership of that main board, I still don't have access to the outside world. From there, I have to go through a whole another layer of very secure software that mediates between the inner world of where customer were close run and the outside world where the actual cloud is. So it's just a bunch of layers that make things more secure, >> and I'm sure Outpost will have that as well. Can you waste on that? Seem to me to hear about that. Okay, Encryption, encrypt everything. Is it philosophy we heard in the keynote? You also talked about that as well. Um, encrypting traffic on the hour. I didn't talk about what that means. What was talked to you? What's the big conversation around? Encryption within a. W s just inside and outside. What's the main story there? >> There's a lot of pieces to the pie, but a big one that we were talking about this week is a pretty long term project we call Project lever. It was actually named after a ah female cryptographer. Eventually Park team that was help. You know, one of the major factors, including World War Two, are these mathematicians and cryptographers. So we we wanted to do a big scale encryption project. We had a very large scale network and we had, you know, all the features you normally have, but we wanted to make it so that we really encrypted everything when it was outside of our physical control. So we done that took a long time. Huge investment, really exciting now going forward, everything we build. So any time data that customers give to us or have traffic between regions between instances within the same region outside reaches, whenever that traffic leaves our physical control so kind of our building boundaries or gates and guards and going down the street on a fiber optic to another data center, maybe not far away or going inter continent intercontinental links are going sub oceanic links all those links. Now we encrypt all the traffic all the time. >> And what's the benefit of that? So the benefit of that is there. Still, you know, it's it's obscure, >> but there is a threat model where, you know, governments have special submarines that are known to exist that go in, sniff those transoceanic links. And potentially a bad guy could somehow get into one of those network junction points or whatever. Inspect traffic. It's not, I would say, a high risk, but it's possible now. That's a whole nother level of phishing attacks. Phishing attack, submarine You're highly motivated to sniff that line couldn't resist U. S. O. So that's now so people could feel comfortable that that protection exists and even things like here's a kind of a little bit of scare example. But we have customers that say, Look, I'm a European customer and I have a very strong sense of regional reality. I wanna be inside the European community with all my data, etcetera, and you know, what about Brexit? So now I've got all this traffic going through. A very large Internet peering point in London in London won't be part of Europe anymore according to kind of legal norms. So what are you doing in that case? Unless they Well, how about this? How about if yes, the packets are moving through London, but they're always encrypted all the time. Does that make you feel good? Yeah, that makes me feel good. I mean, I so my my notion of work as extra territorial extra additional congee modified to accept the fact that hey, if it's just cipher text, it's not quite the same as unscripted. >> People don't really like. The idea of encrypted traffic. I mean, just makes a lot of sense. Why would absolutely Why wouldn't you want to do that right now? Final question At this event, a lot of attendee high, high, high caliber people on the spectrum is from biz dab People building out the ecosystem Thio Hardcore check. He's looking under the hood to see SOS, who oversee the regime's within companies, either with the C i O or whatever had that was formed and every couple is different. But there's a lot of si SOS here to information security officers. You are in the office of the Chief Security Information officer. So what is the conversations they're having? Because we're hearing a lot of Dev ops like conversations in the security bat with a pretty backdrop about not just chest undead, but hack a phone's getting new stuff built and then moving into production operations. Little Deb's sec up So these kinds of things, we're all kind of coming together. What are you hearing from those customers inside Amazon? Because I know you guys a customer driven in the customers in the sea SOS as your customer. What are they saying? What are they asking for? So see, so's our first getting their own minds around >> this big technical transformations that are happening on dhe. They're thinking about risk management and compliance and things that they're responsible for. They've got a report to a board or a board committee say, Hey, we're doing things according to the norms of our industry or the regulated industries that we sit in. So they're building the knowledge base and the expertise and the teams that can translate from this sort of modern dev ops e thing to these more traditional frameworks like, Hey, I've got this oversight by the Securities Exchange Commission or by the banking regulators, or what have you and we have to be able to explain to them why our security posture not only is maintained, it in some ways improved in these in this new world. So they're they're challenge now is both developing their own understanding, which I think they're doing a good job at, but also kind of building this the muscle of the strength. The terminology translate between these new technologies, new worlds and more traditional frameworks that they sit within and people who give oversight over them. So you gotta risk. So there's risk committees on boards of these large publics organizations, and the risk committees don't know a lot about cloud computing. So s O they're part of what they do now is they do that translation function and they can say, Look, I've I've got assurance is based on my work that I do in the technology and my compliance frameworks that I could meet the risk profiles that we've traditionally met in other ways with this new technology. So it's it's a pretty interesting >> had translations with the C I A. Certainly in public sector, those security oriented companies, a cz well, as the other trend, they're gonna educate the boards and they're secure and not get hacked the obsolete. And then there's the innovation side of it. Yeah, we actually gotta build out. Yes. This is what we just talked about a big change for our C says. That we talk to and work with all the time is that hey, we're in engineering community now. We didn't used to write a lot of code, and now we do. We're getting strong in that way. Or else we're parting very closely with an engineering team who has dedicated teams that support our security requirements and build the tools. We need to know that things are going well from our perspective. So that's a really cool, I think, changing that. I think that is probably one >> of my favorite trends that I see because he really shows the criticality of security was pretty much all critically, only act. But having that code coding focus really shows that they're building in house use case that they care about and the fact that I can now get native network traffic. Yeah, and you guys are exposing new sets of service is with land and other things >> over the top. >> It just makes for a good environment to do these clouds. Security things. That seems to be the show >> in a nutshell. Yeah, I think that's one of the nice thing about this show. Is It's a very positive energy here. It's not like the fear and scary stuff sometimes hear it. Security conference is like a the sky's falling by my product kind of thing Here. It's much more of a collaborative like, Hey, we got some serious challenges. There's some bad guys out there. They're gonna come after us. But as a community using new tooling, new techniques, modern approaches, modernization generally like let's get rid of a lot of these crusty old systems we've never updated for 10 or 20 years. It's a positive energy, which is really exciting. Good Mark, get your insights out. So this is your wheelhouse Show. Congratulations. >> You got to ask you the question. Just take your see. So Amazon had off just as an industry participant riding this way, being involved in it. What is the most important story that needs to be told in the press? In the media that should be told what's as important. Either it's being told it, then should be amplified or not being told and be written out. What's the What's the top story? I don't think that even after all this time that you know when people >> hear public cloud computing. They still have this kind of instinctive reaction like, Oh, that sounds kind of scary or a little bit risky and, you know, way need to get to the point where those words don't elicit some sense of risk in people's minds, but rather elicit like, Oh, cool, that's gonna help me be secure instead of being a challenge. Now that's a journey, and people have to get there, and our customers who go deep, very consistently, say, And I'm sure you've had them say to you, Hey, I feel more confident in my cloud based security. Then I do my own premises security. But that's still not the kind of the initial reaction. And so were we still have a ways, a fear based mentality. Too much more >> of a >> Yeah. Modernization base like this is the modern way to get the results in the outcomes I want, and cloud is a part of that, and it doesn't not only doesn't scare me, I want to go there because it's gonna take a community as well. Yeah, Mark, thanks so much for coming back on the greatest. Be hearing great Mark Mark Riley, direct of the office of the chief information security at Amazon Web services here, sharing his inside, extracting the signal. But the top stories and most important things >> being being >> said and discussed and executed here, it reinforced on the Cube. Thanks for watching. We'll be right back with more after this short break.

>> live from Las Vegas. It's the queue covering del Technologies. World twenty nineteen, Brought to you by Del Technologies and its ecosystem partners. >> Welcome back to Las Vegas, Lisa Martin. With the cue, we're live Day one of our duel set coverage of Del Technologies World twenty nineteen student a menace here with me, and we're welcoming back a couple of alumni. But for the first time together on our set, we've got Terry Pellegrino, the BP of high performance computing at Delhi Emcee and Nick, who grew VP of Data Analytics and Cyber Securities just at MasterCard. Did I get that right? All right, good. So, guys, thanks for joining Suited me this afternoon, by the way. So we will start with you High performance computing. Talk about that a lot. I know you've been on the Cube talking about HPC in the Innovation lab down in in Austin, high performance computing, generating a ton of data really requiring a I. We talk a lot of it II in machine learning, but let's look at it in the context of all this data. Personal data data from that word, you know, it turns out do with mastercard, for example How are you guys working together? Dell Technologies and MasterCard to ensure that this data is protected. It secure as regulations come up as fraud, is a huge, expensive >> issue. Well, I think make way worked together to really well worry about the data being secure, but also privacy being a key item that we worry about every day you get a lot of data coming through, and if we let customer information or any kind of information out there, it can be really detrimental. So we've really spent a lot of time not only helping manage and worked through the data through the infrastructure and the solutions that we've put together for. For Nick, who also partnered with the consortium project that got started Mosaic Crown to try to focus even more on data privacy on Mosaic Crown is is really interesting because it's getting together and making sure that the way we keep that privacy through the entire life cycle of the data that we have the right tools tio have other folks understand that critical point. That's that's how we got all the brains working together. So it's not just Delon DMC with daily emcee and MasterCard It's also ASAP We have use of Milan, you're sort of bergamot and we'Ll solve the only three c and all together back in January decided to get together and out of Nick's idea. Think about how we could put together with all those tools and processes to help everybody have more private data. Other. >> I think this was your idea. >> I can't say it was my idea. The European Union itself with what? The advent of Judy parent privacy. Their biggest concern was we don't want people to stop sharing. Data began with artificial intelligence. The great things that we do with it from the security, you know, carrying diseases all the way through, making sure transactions are safe and secure. Look, we don't want people to stop our organizations to stop sharing that data because they have fear of the regulations. How do we create a date on market? So the U has something called Horizon twenty twenty on one of their initiatives. Wass Way wanted to understand what a framework for data market would look like where organizations can share that data with confidence that they're complying to all the regulations there, doing the anonymous ization of that data, and the framework itself allows someone to say, I could do analysis without worrying that if it's surfacing personally identifiable information or potentially financial information, but I can share it so that it can progress the market data economy. So as a result of that, what we did is we put the guilt. I said, This is a really good idea for us. Went to the partners at del. That's it, guys, this is something we should consider doing now. Organization always been looking at privacy, and as a result, we've done a very good job of putting that consortium together. >> So, Nick, we've talked with you on the Cuba quite a few times about security. >> Can you just give >> us? You know, you talked about that opportunity of a I We don't want people to stop giving data in. There was concerned with GPR that Oh, wait, I need you to stop collecting information because I'm going to get sued out of existence. If it happened, how do we balance that? You know, data is the new oil I need, you know, keep not flowing and oh, my God. I'm going to get hacked. I'm going to get sued. I'm going to have the regulation, You know, people's personal information. I'm goingto walk down the grocery store and they're going to be taking it from me. How do we balance that? >> Well, the nice part is, since State is the new oil, well, we considered it is artificial intelligences that refinery for that oil. So, for our perspective, is the opportunity to say we can use a eye to help. Somebody says, Hey, I don't want you to share my data information. I want to be private, but I can use a I d. S. Okay, let's filter those out so I can use a I'd actually sit on top of that. I can sit down and say, Okay, how do I keep that person's safe, secure and only share the necessary data that will solve the problem again, using artificial intelligence through different types of data classifications, whoever secure that data with different methods of data security, how we secure those types of things come into play. And again, there's also people say, I don't ever want my data to be we identified so we can use different methods to do complete anonymous ation. >> How do you do that when there are devices that are listening constantly, what Walmart's doing? Everybody that has those devices at home with the lady's name. I won't say it. I know it activates it. How How do you draw the line with ensuring that those folks that don't want certain things shared if they're in the island Walmart talking about something that they don't want shared? How do you facilitate that? >> Well, part of that is okay. At a certain point, when it comes to privacy, you've gotta have a little bit of parenting. Just because you have that information doesn't mean you need to use that information. So that's where we as humans have to come into play and start thinking about what is the data that we're collecting And how should we use that information on that person and who is walking through a store? And we say we are listening to what their conversations are? Well, I don't need to identify that you or you. I just didn't know what is the top talking about? Maybe that's the case, but again, you have to make that decision again. It's about being a parent at this point. That's the ethical part of data which we've discussed on this program before. Alright, >> so teary. Talkto us some about the underlying architecture that's going to drive all of this. You know, we we love the shift. For years ago, it was like storing my data. You know, Now we're talking about how do we extract the value of the data? We know data's moving a lot, So you know what's changing And I talk every infrastructure company I talked to, it's like, Oh, well, we've got the best ai ai, you know, x, whatever. So you know what kind of things should custom be looking for To be able to say, Oh, this is something, really. It's about scale. It's about, you know, really focused on my data. Yeah, absolutely. Well, I will say first, the end of underlying infrastructure. We have our set of products that have security intrinsic in the way they're designed. I really worry about ki management for software we have silicon based would have trust throughout a lot of our portfolio. We also think about secure supply chain, even thinking through security race. If you lose your hard drive on, we can go and make sure that the data is not removed. So that's on the security front. On the privacy side, as a corporation, William C. Is very careful about the data that we have access to on. Then you think about a HBC. So being in charge of H. P. C for Cordelia emcee way actually are part of how the data gets created, gets transferred, gets generated, curated and then stored. Of course, storage s O. What we want to make sure is our customers feel like where that one company that can help them through their journey for their data. And as you heard Michael this morning during keynote, >> uh, getting that value out of the data because it's really where that little transformation is going to get everybody to the next level. But right now there's a lot of data. Has Nick stated this data has more personal information at times? Andan i'll add one more thing way. Want to really make sure that innovation is not stifled and the way we get there is to make sure >> that the data sets are as broad as possible, and today it's very difficult to share data. Sets mean that there are parts of the industry there are so worried about data that they will not even get it anywhere else than their own data center and locked behind closed doors. But if you think about all the data scientists, they're craving more data. And the way we can get there is with what make it talked about is making sure that the data that is collected is free of personal information and can still be qualified for some analysis and letting all the data scientists out there to get a lot of value out of it. >> So HBC can help make the data scientist job simpler or simplify evaluating this innumerable amun of data. >> Correct. So what in the days you had an Excel spreadsheet and wanted to run and put the table on it, you could do that on a laptop for end up tablet. When you start thinking about finding a black hole in the galaxy, you can do that on tablet. So you're gonna have to use several computers in a cluster with the right storage of the right interconnect. And that's why it's easy comes in place. >> I mean, if I man a tactical level, what you'LL see with HBC computing is when someone's in the moment, right? You want to be able to recognize that person has given me the right to communicate to them or has not given me the right to communicate to them, even though they're trying to do something that could be a transaction. The ability to say Hey, I have I know that this person's or this device is operating here is this and they have given me these permissions. You've got to do that in real time, and that's what you're looking for. HBC competing to do. That's what you're saying. I need my G p you to process in that way, and I need that cpt kind of meat it from the courts. The edges say Yep, you can't communicate. No, you can't. Here's where your permissions like. So, >> Nick, what should we >> be looking for? Coming out of this consortium is people are watching around the industry. You know what, what, what >> what expect for us? The consortium's about people understand that they can trust that they're data's being used properly, wisely, and it's being used in the way it was intended to be used so again, part of the framework is what do you expect to do with the data so that the person understands what their data is being used for the analysis being done? So they have full disclosure. So the goal here is you can trust your data's being used. The way was intended. You could trust that. It's in a secure manner. You can trust that your privacy is still in place. That's what we want this construction to create that framework to allow people to have that trust and confidence. And we want the organization to be able to not, you know, to be able to actually to share that information to again move that date economy forward. >> That trust is Nirvana. Well, Nick Terry, thank you so much for joining suing me on the cue this afternoon. Fascinating conversation about HPC data security and privacy. We can't wait to hear what's in store next for this consortium. So you're gonna have to come back. Thank >> you. We'LL be back. Excellent. Thanks so much. >> Our pleasure. First Minutemen, I'm Lisa Martin. You're watching us live from Las Vegas. The keeps coverage of day one of del technology World twenty nineteen. Thanks for watching

>> From the Hard Rock Hotel in Las Vegas, it's theCUBE covering HOSHO CON 2018. Brought to you by HOSHO. >> Hello everyone, welcome back to theCUBE special live coverage here in Las Vegas for the first ever, Blockchain Security Conference. Really discussing security as an industry, it's called HOSHO CON, put on by HOSHO. We're here with the Co-Founder and CEO of HOSHO and main supporters of sponsoring this project or event HOSHO CON. We have Yo Sub Kwon, who is the CEO and Co-Founder. Good to see you. >> Good to see you, good to be here. Hey thanks for putting this on. I've interviewed Hartej, your Co-founder, in Toronto the Futures conference. We've had many great conversations on theCUBE. But when we talked about HOSHO CON, this conference, he really wanted to do it as an industry conference. Not as just a HOSHO event. >> (Yo agrees) >> This is really key to you guys culture here at HOSHO your company. >> Yeah. >> Take a minute and explain the event. Why this event? Why the format? And that it is open? >> I mean basically, you know, like we've been to just so many events over the, like I think we've done like 80 events this year, and the topic of conversation is, you know, around investing, it's around ICO's, it's around all these things and security touches all of those and I just feel like, and we all felt it and like the other security companies felt it too, that it just wasn't a topic that was discussed in great enough depth especially given the increasing amounts of hacks and theft and all these problems that relate directly to security. And I just feel like it's really important for us as an industry to discuss, you know, what security practices are good? What should be done? How you should do them? What resources are available to companies to learn more about security? And what resources don't exist and need to be developed? And that needs to be done in a collaborative way. Well congratulations and props to you guys for really sponsoring this and taking the leadership role in the industry but again you guys are humble and it's a good way to do it. Is to have these conversations. So thank you for doing that, appreciate it and thanks for having theCUBE here. We really appreciate it. The question I want to ask you is: I've noticed a trend here, first of all a lot of smart people here, so it's like, it's not a massive, no IPO, ICO pitch competitions, this is really down and dirty security. >> Yeah. >> Okay, black hat, white hat but it's kind of a intercultural vibe it's the community. >> Yeah. >> Coming together. But also two kind of tracks are developing there's the crypto security and then there's cyber security threats coming up. Because you said it's touching on all these points. And you're hearing, even hearing a little bit of IOT and hardware, we had Rivetz on earlier the CEO Steven Sprague so a lot of different solutions and a lot of different opportunities, a lot of different vulnerabilities. Can you explain the landscape of how the players are here, where are they coming from? >> Okay, yeah. >> What's their backgrounds? >> Absolutely I mean there are definitely, a lot of brilliant minds here and that was one of the goals of HOSHO CON is to bring people that are of all different, you know, parts of the industry whether they're, they're layers or they're information security experts or they're, you now, regulators or they're it just, developers bring them all into the same room and to kind of discuss these problems that you know, plague all of us and you know a developer's going to have a much different perspective and solution than a lawyer and but those thing can work together and the problems might still be the same. And so we've been in the industry for just like, even though HOSHO's a young company, the people that are on our team, myself, I've been in, I got into Bitcoin eight years ago, like we just have this network of people that are in the industry, have seen the kind of like cyclic nature of, you know, like a gigantic influx of people come in, these problems arise where, you know, entrepreneurs are like really focused on like growing, getting traction and then they focus less on their security, it goes to the wayside and then these big hacks happen and then the industry kind of smartens up and everything you know starts getting a little bit closer to what seems you know maybe safe or like approachable for a growth trajectory and then another gigantic influx happens and then the same thing. And so what we really need to do is like when that next big influx happens is to have standards in place to have things that an entrepreneur can just turn to and be like: "Okay, this is what I need to do "if I want to be considered credible in this industry "and I want to protect my users and my investors." >> Can you talk about some of the top conversations that are going on here, because I think that's a great point? People want you know legitimacy, they want solutions that work, that are credible and then maintain kind of, I won't say enterprise grade, but commercial grade reliable so that people can focus on building up their companies and or preparing for the growth. What is some of the top conversations? >> A lot of it's just learning about what other people do, like even with like Rivetz, we're putting, they're using the trust executions based on like what's already on billions of devices and you know basically letting people know that that space exists on this hardware and that they can be used for all these different purposes to validate you know data going in. And, you know, there's been conversations around custody. I was on a panel earlier today about custody and basically the way I felt like it left off and the conclusion was that there is a long way to go on custody but it is incredibly crucial. Big institutional players that want to enter the markets and want to put their money into a regulated custodian they're, it's difficult to do so even with registered custodian's existing because the limitations that they have in understanding the technology and being able to provide support for all the different digital assets that exist. >> So we're reporting this morning the SEC herein the US has tightened the noose on the ICO-funded startups. I think the story originated out of Decrypt Media but essentially the SEC, Securities and Exchange Commission, is cracking down and they're going back and saying: "You got to refund some of that money." >> Yeah. >> Because of violations. That's one regulatory thing but there's also, there's software that writes these smart contracts. You guys are in that business. The software is software money, security is critical. How stable is this becoming in your mind? What's the to do items? How should a company who want's to either use the ICO process or and or use token economics to fuel their business model they got to be secure on the business front? >> Yeah. So basically smart contracts were so new when we first got in to it that people just didn't know how to develop securely in them and so there were just critical mistakes being made all over the place. We've seen over the last year a lot of improvement on that front, more libraries are being developed and people are writing consistently more secure contracts. But now what we're seeing is contracts are getting increasingly complex and with additional complexity, because it's software there's room for, you know more problems and I think that it's going to, it's going to be an interesting challenge going forward, there's thing like formal verification I think that has a huge place in the future regarding smart contracts but it's there's a lot of tools that need to be developed that's one of the things that we worked on and we're really excited about is Meadow Suite because that's software that let's you develop smart contracts. We built it intentionally with security analysis in mind and then we made it more full featured to become a development tool for writing smart contracts and developing a protocols. And so I think the more of those type of things that you see come out that bring it more to feature parity to what software developers are used to if they're say building a web application it makes it a lot easier to adhere to good practices and write secure code. >> And also kind a not have to do manual audits? >> Yeah. >> I mean at the end of the day you want to get to some sort of automation. >> Absolutely. >> Framework. >> I mean we've already automated a lot of the things that we do. But and there's still a lot left to do but we know that there is a lot left that can be automated and we hope that eventually the tools are just put into developers hands were they can do most of that work themselves. >> Yo Sub take your CEO hat off from HOSHO for a minute put your industry hat on. >> Okay. >> What are some of the names here that, and conversations, topics that you find interesting personally? >> Okay, I mean. >> (John laughs) >> A lot of people that we brought here are like our friends, we know them right? And so like I was talking to. >> Your kind of celebrities. >> I was talking with like TokenMarket earlier and like, you know, we're partners with them and they really, they're really great guys and like some of the stuff that they are trying to do and you know just listening to what other companies are trying to do with like security tokens that seem to be the thing that really moving forward. And I'm kind of fascinated like, we try to stay agnostic you know like when we're like looking at all these different technologies. But then like someone explains something to you and you're awe man that's really cool. >> Yeah. (both laughs) >> And there's some good minds here. What's the coolest thing you've seen so far? >> Well I've been locked in, I've been locked behind doors in a lot of meetings so far but the, let's see, I think what Unchained Capital is working on is really sweet. They basically, I mean like I think their business model makes a lot of sense. Like basically they hold your crypto's so you maintain exposure to it and then they'll issue you a loan. They can like turn around a loan like in 24 hous, you just hand then a bunch of Bitcoin and then they'll just give you cash and then you can you know you have that cash and then you still maintain exposure through crypto if you pay it all back you get your crypto back. (laughs) >> So it's collateralized crypto? >> Exactly I mean like that makes perfect sense to me. Like you know it's just like as long as you can liquidate that crypto and Bitcoin or Ethereum like those are big enough markets now where you can easily liquidate. Well that's awesome. Thanks for putting on this event and I want to get back to HOSHO. How's business going? You're the CEO, Commander in Chief, what's going on with the company? How's things going? >> Yeah. >> Quick update. >> Well everything's crazy right, like we're moving quickly and the next steps are Asia. We really want to basically penetrate those markets. Only, we don't have as much coverage there as we would like but having spent some time there earlier this year doing some reconnaissance it's a crazy, crazy space over there. There's a lot of action happening, there's a lot of adoption. People are really enthusiastic about it but security almost seems like six months to a year behind North America and Europe as far as what exchanges are requiring, what investors are demanding of their portfolio companies. And so I think that now that they've had such major hacks happen over the last six months they're starting to realize. >> Major hacks talking about 60 Million. I mean I heard numbers up to 300 plus million. >> Yeah. >> I mean these are it's not like five dollars out of your wallet. >> Yeah. >> This is massive. >> Like over a billion dollars has been stolen in some capacity and like it's been pretty crazy yeah, so. >> Where's the big vulnerability? Exchanges, is it the DApps, where's the holes? >> They're all over the place but the biggest numbers definitely come from exchanges. Exchanges just need to be far more responsible and just, I feel like a lot of it is just negligence. They're growing so quickly that they don't pay attention to, you know, putting resources into educating their staff on really simple security practices. You know things like phishing and social engineering, like things that were good security practices still are good security practices. And a lot of those attacks are not even anything like some new exploit of a new technology it's the same kind of thing of like phishing, social engineering, sims swapping, you know, poor user access control, bad passwords. >> I mean the basics. >> Yeah. >> But this is what growth does to you you've point earlier. As more people start feeling growth there's more exposure service area wise. >> Yeah. >> New dynamics are kicking in. >> Well I'm starting to see new exchanges that are popping up that are you know taking security very seriously and the way they're treating it is that is their differentiator but in my mind like security shouldn't be a differentiator. Everybody should. >> (John laughs) >> If you're an exchange and you're holding massive amounts of other people's assets you should take security very seriously. That should just be a default, a standard. >> You have to be differentiating strategy with security it's not, it doesn't make sense. >> Marketing 101 you shouldn't be different, it should be standard. (both laughs) >> I mean if that's the state of the art, this is the problem. This highlights the problem. >> It does yeah. >> Alright so what's, what's the future for this event? How do you guys see this unfolding? Obviously this is the first inaugural event here HOSHO CON, How do you see it evolving? >> I think a lot of conversations should hopefully spur from this and we want to make this a yearly event. So we're definitely going to take a lot of the feedback from people that attended and see what they want, what they really enjoyed, what they really want to talk about. And even I think, a lot, since we're recoding all of the talks we'll be putting them up online at some point and I think it'd be really good to see like what the transition is like next year from like, where we were in some of these problems and addressing those problems you know a year from now. Like I think that will be really exciting. >> You guys are expanding in Europe, HOSHO good job with that. Who's the kind of clientele that you guys have? Is it ICO's? Is it companies? It is enterprise? Who are your target customers? >> So we have a lot of companies that are ICO's for sure. We have more exchanges and protocols joining those ranks. And then we are trying to move into enterprise as well. We made a partnership with Telefónica and developed a partnership with them to be able to sell to more enterprise clients and what they need. >> And what's your value proposition that you guys are offering? >> We are, well, we do smart contract audits, we do penetration testing. Those are things that a lot of companies in this space need. And then also we've been helping with security architecture and cryptocurrency assessments. >> And tooling, tools for development. >> And tooling, yeah we're trying to do our part. I mean we can't and won't do it alone but we try to develop things that, if we develop anything that's useful from a security perspective, we try and make it available for everyone. >> Yo Sub thanks for coming on theCUBE, appreciate your time and congratulations, it's a great event. >> Thank you. >> HOSHO CON sponsored by HOSHO and other's in the industry, it's an industry event, it's not just their company, it's their friends all coming together to solve the major problems with security, making it standard, making it safe and supporting the growth with the community. It's theCUBE covering live here in Vegas. I'm John Furrier stay with us for more CUBE coverage after this short break. (upbeat electronic music)

(electronic music) >> Live from Toronto, Canada it's The Cube covering Blockchain Futurist Conference 2018. Brought to you by The Cube. >> Hello everyone, welcome back to The Cube live coverage here in Toronto, Canada Ontario for Untraceable presents Blockchain Futurist Conference. Two days we've been here. We're on day two, amazing event here, great community, I'm John Furrier your host. Dave Vellante went back east so he was here yesterday. Our next guest Pablo Gonzales is the Founder and CEO of Genesis Blockchain Technologies, welcome to The Cube thanks for joining me. >> Thank you for having me. >> So I'm glad to have you on. First of all when Bradley Rodder says oh watch out for that guy, you must be smart because we trust Bradley so but you're doing something really cool. The future of trading and exchanges has been a topic that everyone's been talking about but not a lot of people have been actually moving the needle on. You've got some movement here, people doing here but no one's actually had the full package and they're running as fast as they can to do it. You guys have done it. >> We have. >> How? Take a minute, what have you guys done? What is the product? How did you guys do it and what can people use today? >> Thank you. So it's no longer hot air, as you said. A lot of people are saying what they're going to do. We're here to say what we have done which is very different. Yesterday up at the main stage we launched the world's first decentralized exchange on a mobile platform. We're fully licensed by the Costa Rican Commodities Exchange, we have brokerage license, a currency exchange license and a money remittance license. We already possess the licenses, we're not in pursuit of the licenses we have them. What we did obviously we pursued an MNA strategy, we acquired companies that were over a decade in the business and we just transformed them and cryptomized them, as I use the term and launched the exchange with those licenses and platforms. We listed the exchange with over 40 coins. Over four billion dollars of shared market cap and over half a million dollars of daily trading and liquidity. >> So this is right now going on in Costa Rica, mainly if stable. Is it stable? How's the stability there? >> So Costa Rica is extremely stable, they haven't had an army for over 50 years, it's considered a world-class country for banking, for international businesses so much so. Amazon, HP, Intel, all these humongous companies have large operations in the country. >> And their posture to crypto is they've come out formally. >> Yes. >> To state well what's the posture from Costa Rica? >> So they consider cryptocurrencies a commodity and not a security and that's why went on to pursue a commodities exchange license. >> So that opens up doors for you to do this. >> Of course it opens up the doors, think about it. So you can now trade Bitcoin with gold. In our exchange, not as of today we're going to launch that in January, so now you can trade cryptocurrencies with commodities and cryptocurrencies with fiat currencies. >> So I'm just kind of speculating here in terms of my mind where I'm going with this. Almost imagine the shakeup that's coming. It's like a blender, we trading gold and Bitcoin it's just like who would have thought that was possible a year ago? >> That's correct. >> They've been compared, people compare Bitcoin to new digital gold but actually comparing them this is going to shakeup like a blender. >> That's correct. >> Blend up the commodities market. >> Disrupt it. >> What's your vision? What do you see happening? >> I just think that a lot of people are focusing on they say on one of the interviews earlier today, one of the interviewers was asking me is that Bitcoin to the moon? I'm like guys we need to stop. If we want this industry to really grow and develop stop using those analogies. We need to create a community that's larger, we need mass adoption and I think by including the commodities into the equation you're catering to the traditional investors that are a little bit uncomfortable with cryptocurrencies because they don't know about them but they know about gold and then all of a sudden now you compare gold with Bitcoin. >> It brings retail into it. >> Yes. >> It brings a real retail market. >> That's correct. >> You know I just want to say something. I agree with you 100%. These news outlets out there, these other people they tend to focus on the price of Bitcoin and it's almost like okay can we get over that? Yes it's going to go up and down, if you're in the long game it should be 20,000. Okay we can buy that but let's talk about what people are doing. Who's building something? >> Yes. >> That's the focus. So if I ask you now that question, hey Pablo what have you built and what you you going to continue to build if this is a foundational product, what are you guys going to do on top of it? What's the build plan? >> Thank you. So yesterday we launched the decentralized exchange with 40 coins. We're going to add probably between now and December another 110 different tokens. We're doing 20 for now and in January we're launching a centralized exchange so that's where we're going to add the fiat currencies and the commodities. >> What date again? >> End of January. >> Okay got it. >> Then we're going to make an announcement in November at one of the conferences in Malta and so we're reserving the date and everything else for that but in May of next year we're launching over the counter trading desk with full KYC AML you know counter terrorism financing, all of the world class policies and by this time next year we're going to be launching our institutional platform. So we want to be a one stop shop via the currency exchange that we own. We already have the ability from the Central Bank of Costa Rica which is amazing to issue Visa cards. So now our users, besides trading, they can take their crypto with them from their mobile phone, convert it to fiat and pay, you know, for gasoline, buy groceries. >> So I'm an entrepreneur, I got my own cube coin coming out, cube token, security token or utility, what's in it for me? If I asked you Pablo what's in it for me? What do I get out of it as a business? Are people going to start trading my coins? Am I instantly going to have an over the counter so as a business what do I have to worry about? What's the benefit? What matters to me? What's the impact? >> So if you were to be a coin to list on our exchange you mean? Well first of all we all know exchanges now to list on them you know they're changing, some of them I'm not going to say the name. >> They're charging a lot of money. >> Yeah 400 BTC and crazy amounts like this. We are going to charge. It's a business at the end of the day but what we're looking for with the coins that we're going to list is partnerships and seeing what ways we can do more entrepreneurial projects to change the landscape of the industry together as an exchange and a coin because potentially what a coin is is a company. You know what's behind the coin is what's important to us and not the coin itself. As the company develops and progresses so will the coin's price appreciated value or depreciated value and so yes, besides facilitating trading fees and lowering that, up listing and so forth what we're bringing to the table wants to be much more dynamic. >> You got to balance you know business that you got to do with infrastructure build out. It's like the old telecom days you got to build some cell towers before you roll out mobile. You got to build this entire retail global fabric. >> Yes. How does community play in for it? Obviously community is very important. I agree with you that's big time. How are you guys building your community? Tapping into anything else? Obviously Untraceable has got a great community. How are you going to grow your community. >> So as an exchange there could be a conflict of interest we have to be really careful how we get involved in the community but what we want to do is by selected partnerships with projects and coins. The coins are already doing their work. They are appealing to a community. They are raising the money from that community what we want to do is we want to partner up with those coins, the coins that are worth partnering up with and that way our reach automatically will multiply. On top of that of course we want to work with government and banks and institutions. We believe, it may not be popular what I'm about to say, you know the good old honor kids that came to the hardcore crypto, forget about central banks and centralization, I don't think that that's ever going to happen. I think the more we cooperate with government, that the more we work with them, we together can shape the industry and the landscape for good. I do believe in that. It's a collaboration and cooperation with governments and banks to us is pivotal. >> I mean you can be a coach to the regulatory. >> Absolutely. >> You can be an advocate and partner. >> We are being. >> And not an enemy. >> In Costa Rica, so before they considered and they took a position on whether is was a commodity or not you know they approached us and we were teaching them so much so that a congressman that was going to be at the conference and couldn't make it, he's the founder of the Libertarian movement in Costa Rica he created a think tank of crypto because of us that now has Latin America reach. Think about it, there are 1.3 billion people in Latin America. >> They have mobile phones. >> Exactly. That can now learn about crypto and so we're going to capitalize on this. >> It's a real democratization, what you do is change a society. If you continue to get this right this is really key. Congratulations. Now I want to ask you personal questions so I love the hat, you look great. >> Thank you. >> How did you get here? Were you scratching an itch that was around this? Was it, how did you get to the point where you said hey I'm going to go out and build the first exchange. I'm going to roll up the companies, wire them together, cryptotize them and go nuts and build an exchange. I mean how did you get here? What's the story? >> Thank you well, it's a story. I began entrepreneurial projects over 10 years ago, been in the private sector, because Costa Rica is a services company we put together a call center. Took it from like four people to 4000 people in four years. I went on to like building my own sports brand in over 10 countries but then about two years ago a few companies from Canada they called me from here, they called me to help them go public in the Canadian Securities Exchange. I took two companies public last year and after that I was saying to myself and the crew guys what do we do next? How can we really disrupt the industry? And one of the things we were talking about was man, we're in a decentralized community that brags about decentralization, trading and centralized exchanges. How ironic is that? >> Yeah it's got to change. >> So we said you know what let's be the pioneers, let's head out on a quest to build the world's first mobile decentralized exchange and we achieved that. It's unbelievable. Now you hear all the big guys, the whales talking about we're going to come up with a decentralized exchange because that's what people want at the end of the day and we were able to be the first ones ever to give that. >> And stability is critical. I mean I was just at a bank starting up a new account for a new startup that we're doing and they're like is this a blockchain company? I'm like no, no God no, no, no we're a media business. >> Those are bad guys. >> So you can't even open a bank account some places. So this has really got to get fixed and I got liquid, I got fiat currency, I got to make movements around. The retail market, whether it's trading, investing, it's got to be converted over to the new world. >> Yes, yes. >> I mean it's almost like a full changeover. >> That's correct. Obviously I think that it'll be a transition process. It'll take some time. There are some banks that already getting more involved into the process. What's interesting in our case is we even got the Costa Rican Central Bank to be our bank. Think about it, we're not banking with any private bank or public bank but the Costa Rican Central Bank and I think that more and more banks will follow suit as they see good use cases. The ICO craze of last year, I don't think that it did any good to the greater good of the community. If anything it brought a lot of prejudice. >> It's a black eye. They'll be a hangover on that but that's like the dotcom bubble. All those things on the dotcom bubble actually happened so I think you're going to just see get that jested out of the system. >> Inevitable. >> And focus on quality. That's what happening now. >> Inevitable. >> Pablo thanks for coming on. Pablo Gonzales who is the Founder and CEO of Genesis Blockchain Technologies. First ever exchange bringing all new magic to the marketplace. This is The Cube bringing you the content magic here in Toronto, Canada. I'll be right back with more. 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