>>from the Cube Studios in Palo Alto and Boston connecting with thought leaders all around the world. This is a cube conversation. Alright, welcome back to help us dig into this discussion and happy to welcome to the program. Chris Prasad. He is the senior vice president and general manager of the V Sphere business And just Simon, chief technologist for the high performance computing group. Both of them with VM ware. Gentlemen, thanks so much for joining. >>Thank you for having us. >>All right, Krish. When VM Ware made the bit fusion acquisition, everybody was looking the You know what this will do for this space GP use? We're talking about things like AI and ML. So bring us up to speed. As to, you know, the news today is the what being worth doing with fusion. >>Yeah. Today we have a big announcement. I'm excited to announce that, you know, we're taking the next big step in the AI ml and more than application strategy. With the launch off bit fusion, we just now being fully integrated with the V Sphere seven black home and we'll be releasing this very shortly to the market. As you said when we acquired institution a year ago, we had a showcase that's capable base as part of the normal event. And at that time we laid out a strategy that part of our institution as the cornerstone off our capabilities in the platform in the Iot space. Since then, we have had many customers. Take a look at the technology and we have had feedback from them as well as from partners and analysts. And the feedback has been tremendous. >>Excellent. Well, Chris, what does this then mean for customers, you know, what's the value proposition? That diffusion brings the visa versa? >>Yeah, if you look at our customers, they are in the midst of a big ah journey in digital transformation. And basically, what that means is customers are building a ton of applications, and most of those applications have some kind of data analytics or machine learning embedded in it. And what this is doing is that in the harbor and infrastructure industry, this is driving a lot of innovation. So you see the admin off a lot off specialized accelerators, custom a six FPs. And of course, the views being used to accelerate the special algorithms that these ai ml type applications need And, um, unfortunately, customer environment. Most of these specialized accelerators in a bare metal kind of set up. So they're not taking advantage off optimization and everything that it brings to that. Also, with fusion launched today, we are essentially doing the accelerator space. What we need to compute several years ago. And that is, um, essentially bringing organization to the accent leaders. But we take it one step further, which is, you know, we use the customers the ability to pull these accelerators and essentially going to be a couple of from the server so you can have a pool of these accelerators sitting in the network, and customers are able to then target their workloads and share the accelerators, get better utilization, drive a lot of cost improvements and, in essence, have a smaller pool that they can use for a whole bunch of different applications across the enterprise. That is a huge enabler for our customers. And that's the tremendous positive feedback that we get getting both from customers as well. >>Excellent. Well, I'm glad we've got Josh here to dig into some of the pieces, but before we get to you they got Chris. Uh, part of this announcement is the partnership of VM Ware in Dell. So tell us about what the partnership is in the solutions for for this long. >>Yeah. We have been working with the Dell in the in the AI and ML space for a long time. We have, ah, good partnership there. This just takes the partnership to the next level, and we will have, ah, execution solution support in some of the key. I am. It'll targeted the words like the sea for 1 40 the r 7 40 Those are the centers that would be partnering with them on and providing solutions. >>Okay, Tough. Take us in a little bit further as how you know the mechanisms of diffusion work. >>Yeah, that's a great question. So think of it this way. There there is a client component that we're using in a server component. The server component is running on a machine that actually has the physical GP use installed in it. The client machine, which is running the bit fusion client software, is where the user, the data scientist, is actually running their machine machine learning application. But there's no GPU actually in that host. And what is happening with fusion technology is that it is essentially intercepting the Cuda calls that are being made by that machine learning application and promoting those protocols over to the bit fusion server and then injecting them into the local GPU on the server. So it's actually, you know, we call it into a position in the ability that remote these protocols, but it's actually much more sophisticated than that. There are a lot of underlying capabilities that are being deployed in terms of optimization who takes maximum advantage of the, uh, the networking link that's it between the client machine and the server machine. But given all of that, once we've done it with diffusion, it's now possible for the data scientist either consume multiple GP use for single GPU use or even fractional GP use across that interconnected using the using technology. >>Okay, maybe it would help illustrate some of these technologies. If you got a couple of customers. >>Yeah, sure. So one example would be a retail customer. I'm thinking of who is. Actually it's ah grocery chain that is deploying ah, large number of video cameras into their into their stores in order to do things like, um, watch for pilfering, uh, identify when storage store shelves could be restocked and even looking for cases where, for example, maybe a customer has fallen down in denial on someone needs to go and help those multiple video streams and then multiple applications that are being run that part are consuming the data from those video screens and doing analytics and ml on them would be perfectly suited for this type of environment where you would like to be ableto have these multiple independent applications running. But having them be able to efficiently share the hardware resources of the GP is another example would be retailers who are deploying ML our check out registers who helped reduce fraud customers who are buying, buying things with, uh, fake barcodes, for example. So in that case, you would not necessarily want to deploy ah single dedicated GPU for every single check out line. Instead, what you would prefer to do is have a full set of resource. Is that each inference operation that's occurring within each one of those check out lines but then consume collectively. That would be two examples of the use of this wonderful in technology. >>Okay, great. So, Josh, last question for you is this technology is this only for use and anything else? You can give us a little bit of a look forward as to what we should be expecting from the big fusion technology. >>Yeah. So currently, the target is specifically NVIDIA gpu use with Buddha. Ah, the team, actually, even prior to acquisition had done some work on enablement of PJs. And also, I have done some work on open CL, which is more open standard for device access. So what you will see over time is an expansion of the diffusion capabilities to embrace devices like F PJs of the domain. Specific. A six that was referring to earlier will roll out over time, but we are starting with the NVIDIA GPU, which totally makes sense, since that is the primary hardware acceleration. And for deep learning currently >>excellent. Well, John and Chris, thank you so much for the updates to the audience. If you're watching this live leads growing, the crowd chat out Im to ask your questions. This page, if you're watching this on demand, you can also go to crowdchat dot net slash make ai really to be able to see the conversation that we had. Thanks so much for joy. Yeah, yeah, yeah, >>yeah.

>>Hi. Welcome to the Cube. I'm Lisa Martin on the ground at the Computer History Museum with the Association for Corporate Go Silicon Valley. Tonight is their 13th annual grow worth, and we're very excited to be with one of their pick sponsors. Deloitte Christie. Simon's from Deloitte. Welcome. Thank you. Great to have you here. So you are a veteran and technology. You've been in the tech industry over 25 years. You've probably seen incredible transformation. Tell us about what you're doing with Deloitte and the advisory service is not you. Offer way. Offer a number of service is advisory audit tax too in Silicon Valley to a lot of these emerging growth companies. So it's been very exciting >>in my >>career to see the evolution of what I call old technology right where we kind of got the traditional software semiconductor box companies to what is now digitally what I call a new technology and what is propelling the economy in the throat that we're seeing. Not only in Bali. Exactly. So right now you are working, leading hurt and development of Deloitte's technology practice up in San Francisco. You're working with clients and you mentioned digital and clown Internet media sectors tell us about that, especially as you mentioned new technology. So a lot of them are startup companies, which is really sweet spotted, A C G. And that's why we're so involved with a G. But a lot of these new technology companies that you mentioned, you know, cloud software service, Internet media, data security, those types of companies, eyes really propelling the digital economy. So we see a lot of growth in that sector, primarily in San Francisco but also in the broader Bay Area. Silicon being checked better and as you are you mentioned out of what's going on domestically but also internationally. How do you see the influence of Silicon Valley here in Silicon Valley as well as across the globe? You know, there's a lot of factors weigh serve companies all over the globe. So primarily, Silicon Valley is propelling a lot of those. And to the extent that companies here are international, most of a lot of multinational companies and do sell their products lovely there, developed here with products are actually sold. Are you seeing kind of the inverse where companies may be headquartered in in Europe or Asia? are influencing and bringing technology over to the Silicon Valley. Next thing, let us here. Yeah, some of that, especially as we think about, uh, engineers and the aspects and some of that development that happens there, obviously sourcing that from around interest of an industry perspective in 2017. It's like every company's tech way. Look at tests around the street. Look at Walmart Labs and what they're doing there. How are you seeing some of the clients you advise for? What are some of the industries that you're seeing are now technology? There's definitely a convergence says you mentioned Too many industries, actually, all industries. So when we think about financial service is no fintech. When you think about life sciences, health, when you think about retail, right, you got Internet. So definitely saying convergence and technology is impacting our daily lives and almost everything that we d'oh and in almost every product and service that we buy, there's some form or elements of technology. Exactly. It's really remarkable. Speaking of remarkable, tonight we're here with a C G to recognize two Fantastic Cos Twilio is the emerging growth winner, 2017 and video the Outstanding Growth Award winner. If you look at and video, for example, inventor of the GPS, which is really catalyzed a tremendous amount of technology across industries. If we were just talking about you, look at their market kind of what you see them over the next couple of years. The market drivers you think they're gonna impact mentioned and video write graphic way historically have been known for games and films and virtual reality kind of thing. Now they're actually moving more into artificial intelligence. Artificial intelligence? A. I knew Buzz Word, right? So there's probably a lot of opportunities for a video that technology evolves and develops over the next. Several questions for Twilio. Who's winning the emerging world? What would you do for them? So they're, you know, cloud platform company for software developers. So you think that part of the new technology is and a cloud, so providing an opportunity for engineers to develop software and software is involved in almost everything that we do as well in our daily lives. So you know that convergence of all the industries that's happening, a lot of that is a result of software and the developers who are creating that software Twilio is providing a platform for that communicated a tremendous opportunity. Companies in this new technology. Christy, thank you so much for joining us on the Cuban. Sharing your insight. Have a great evening tonight. Yes, it's, uh, it's a great turn out Isn't a lot of fun. It is. I want to thank you for watching way around the museum with a c D E f G. I'm Lisa Martin. Thanks.

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is a Cube conversation. >> Hi everybody, this is Dave Vellante. And as you know, I've been running a CxO series in this COVID economy. And as we go into the post-isolation world, really want to focus and expand our scope and really look at startups. And of course, we're going to look at startups, let's follow the money. And I want to start with the investor. Mark Roberge is here. He's the managing director at Stage 2 capital. He's a professor at the Harvard Business School, former CRO over at HubSpot. Mark, great to see you. Thanks for coming on. >> Yeah, you bet, Dave. Thanks for having me. >> So I love that, you know... looking at your career a little bit, on your LinkedIn and following some of your videos, I love the fact that you did, and now you teach and you're also applying it with Stage 2 Capital. Tell us a little bit more about both of your career and Stage 2. >> Yeah, I mean, a lot of it's a bit serendipitous, especially last 10 years, but I've always had this learn, do, teach framework in my, in mind as I go through the decades of my career, you know, like you're probably like 80% learning in your twenties, early thirties and you know, 20% doing. Then, you know, I think my thirties was like leading the HubSpot sales team, a lot of doing, a little bit of teaching, you know, kind of hopping into different schools, et cetera, and also doing a lot of, some writing. And now like, I'm teaching it. I think investing kind of falls into that too, you know, where you've got this amazing opportunity to meet, the next generation of, of extraordinary entrepreneurs and engage with them. So yeah, that, that has been my career. You know, Dave, I've been a, passionate entrepreneur since 22 and then, the last one I did was HubSpot and that led to just an opportunity to build out one of the first sales teams in a complete inside environment, which opened up the doors for a data driven mindset and all this innovation that led to a book that led to recruitment on HBS's standpoint, to like come and teach that stuff, which was such a humbling honor to pursue. And that led to me a meeting my co-founder, Jay Po, of Stage 2 Capital, who was a customer to essentially start the first VC fund, running back by sales and marketing leaders, which was his vision. But when he proposed it to me, addressed a pretty sizeable void, that I saw, in the entrepreneur ecosystem that I thought could make a substantial impact to the success rate of startups. >> Great, I want to talk a little bit about how you guys compete and what's different there, but you know, I've read some of your work, looked at some of your videos, and we can bring that into the conversation. But I think you've got some real forward-thinking for example, on the, you know, the best path to the upper right. The upper right, being that, that xy-axis on growth and adoption, you know, do you go for hyper-growth or do you go for adoption? How you align sales and marketing, how you compensate salespeople. I think you've got some, some leading-edge thinking on that, that I'd love for you to bring into the conversation, but let's start with Stage 2. I mean, how do you compete with the big guys? What's different about Stage 2 Capital? >> Yeah, I mean, first and foremost, we're a bunch of sales and marketing and execs. I mean, our backing is, a hundred plus CROs, VPs of marketing, CMOs from, from the public companies. I mean, Dropbox, LinkedIn, Oracle, Salesforce, SurveyMonkey, Lyft, Asana, I mean, just pick a unicorn, we probably have some representation from it. So that's, a big part of how we compete, is most of the time, when a rocket ship startup is about to build a sales team, one of our LPs gets a call. And because of that, we get a call, right. And, and so there's, we're just deep in, in helping... So first off, assess the potential and risks of a startup in their current, go to market design, and then really, you know, stepping in, not just with capital, but a lot of know-how in terms of, you know, how to best develop this go-to-market for their particular context. So that's a big part of our differentiation. I don't think we've ever lost a deal that we tried to get into, you know, for that reason, just because we come in at the right stage, that's right for our value prop. I'd say Dave, the biggest, sort of difference, in our investing theme. And this really comes out of like, post HubSpot. In addition to teaching the HBS, I did parachute into a different startup every quarter, for one day, where you can kind of like assess their go-to-market, looking for, like, what is the underlying consistency of those series A businesses that become unicorns versus those that flatline. And if I, you know, I've now written like 50 pages on it, which I, you know, we can, we can highlight to the crew, but the underlying cliffnotes is really, the avoidance of a premature focus on top line revenue growth, and an acute focus early on, on customer attention. And, I think like, for those of you, who run in that early stage venture community these days, and especially in Silicon Valley, there's this like, triple, triple, double, double notion of, like year one, triple revenue, year two, triple revenue, year three, double revenue, year four, double revenue, it's kind of evolved to be like the holy grail of what your objectives should be. And I do think like there is a fraction of companies that are ready for that and a large amount of them that, should they pursue that path, will lead to failure. And, and so, we take a heavy lens toward world-class customer retention as a prerequisite, to any sort of triple, triple, double, double blitzscaling type model. >> So, let me ask you a couple of questions there. So it sounds like your LPs are heavily, not only heavily and financially invested, but also are very active. I mean, is that a, is that a fears thing? How active are the LPs in reality? I mean, they're busy people. They're they're software operators. >> Yeah. >> Do they really get involved in businesses? >> Absolutely. I mean, half of our deals that we did in fund one came from the LPs. So we get half of our funnel, comes from LPs. Okay. So it's always like source-pick-win-support. That's like, what basically a VC does. And our LPs are involved in every piece of that. Any deal that we do, we'll bring in four or five of our LPs to help us with diligence, where they have particular expertise in. So we did an insuretech company in Q4, one of our LPs runs insurance practice at Workday. And this particular play he's selling it to big insurance companies. He was extremely helpful, to understand that domain. Post investment, we always bring in four or five LPs to go deeper than I can on a particular topic. So one of our plays is about to stand up in account based marketing, you know, capability. So we brought in the CMO, a former CMO at Rapid7 and the CMO at Unisys, both of which have, stood in, stood up like, account based marketing practices, much more deeply, than I could. You know of course, we take the time to get to know our LPs and understand both their skills, and experiences as well as their willingness to help, We have Jay Simons, who's the President of Atlassian. He doesn't have like hours every quarter, he's running a $50 billion company, right? So we have Brian Halligan, the CEO of HubSpot, right? He's running a $10 billion company now. So, we just get deal flow from them and maybe like an event once or twice a year, versus I would say like 10 to 20% of our LPs are like that. I would say 60% of them are active operators who are like, "You know what? I just miss the early days, and if I could be active with one or two companies a quarter, I would love that." And I would say like a quarter of them are like semi-retired and they're like, they're choosing between helping our company and being on the boat or the golf course. >> Is this just kind of a new model? Do you see having a different philosophy where you want to have a higher success rate? I mean, of course everybody wants to have a, you know, bat a thousand. >> Yeah. >> But I wonder if you could address that. >> Yeah. I don't think it, I'm not advocating slower growth, but just healthier growth. And it's just like an extra, it's really not different than sort of the blitzscaling oriented San Francisco VC, okay? So, you know, I would say when we were doing startups in the nineties, early 2000s before The Lean Startup, we would have this idea and build it in a room for a year and then sell it in parallel, basically sell it everywhere and Eric Ries and The Lean Startup changed all that. Like he introduced MVPs and pivots and agile development and we quickly moved to, a model of like, yeah, when you have this idea, it's not like... You're really learning, keep the team small, keep the burn low, pivot, pivot, pivot, stay agile and find product-market fit. And once you do that, scale. I would say even like, West Coast blitzscaling oriented VCs, I agree with that. My only take is... We're not being scientifically rigorous, on that transition point. Go ask like 10 VCs or 10 entrepreneurs, what's product-market fit, and you'll get 10 different answers. And you'll get answers like when you have lots of sales, I just, profoundly disagree with that. I think, revenue in sales has very little to do with product-market fit. That's like, that's like message-market fit. Like selling ice to Eskimos. If I can sell ice to Eskimos, it doesn't mean that product-market fit. The Eskimos didn't need the ice. It just means I was good at like pitching, right? You know, other folks talk about like, having a workable product in a big market. It's just too qualitative. Right? So, that's all I'm advocating is, that, I think almost all entrepreneurs and investors agree, there's this incubation, rapid learning stage. And then there's this thing called product-market fit, where we switch to rapid scale. And all I'm advocating is like more scientist science and rigor, to understanding some sequences that need to be checked off. And a little bit more science and rigor on what is the optimal pace of scale. Because when it comes to scale, like pretty much 50 out of 50 times, when I talk to a series A company, they have like 15 employees, two sales reps, they got to like 2 million in revenue. They raise an 8 million-dollar round in series A, and they hired 12 salespeople the next month. You know, and Dave, you and your brother, who runs a large sales team, can really understand how that's going to failure almost all the time. (Dave mumbles) >> Like it's just... >> Yeah it's a killer. >> To be able to like absorb 10 reps in a month, being a 50, it's just like... Who even does all those interviews? Who onboards them? Who manages them? How do we feed them with demand? Like these are some of the things I just think, warrant more data and science to drive the decisions on when and how fast to scale. >> Mark, what is the key indicator then, of product-market fit? Is it adoption? Is it renewal rates? >> Yeah. It's retention in my opinion. Right? So, so the, the very simple framework that I require is you're ready to scale when you have product-market and go to market-fit. And let's be, extremely precise, and rigorous on the definitions. So, product-market fit for me, the best metric is retention. You know, that essentially means someone not only purchased your offering, but experienced your offering. And, after that experience decided to repurchase. Whether they buy more from you or they renew or whatever it is. Now, the problem with it is, in many, like in the world we live inside's, it's like, the retention rate of the customers we acquire this quarter is not evident for a year. Right, and we don't have a year to learn. We don't have a year to wait and see. So what we have to do is come up with a leading indicator to customer retention. And that's something that I just hope we see more entrepreneurs talking about, in their product market fit journey. And more investors asking about, is what is your lead indicator to customer retention? Cause when that gets checked off, then I believe you have product-market fit, okay? So, there's some documentation on some unicorns that have flirted with this. I think Silicon Valley calls it the aha moment. That's great. Just like what. So like Slack, an example, like, the format I like to use for the lead indicator of customer retention is P percent of customers, do E event, in T time, okay? So, it basically boils it down to those three variables, P E T. So if we bring that to life and humanize it, 70% of the customers, we sign up, this is Slack, 70% of the customers who sign up, send 2000 team messages in 30 days, if that happens, we have product-market fit. I like that a lot more, than getting to a million in revenue or like having a workable product in a big market. Dropbox, 85% of customers, share one file in one hour. HubSpot, I know this was the case, 75% of customers, use five or more of the 25 features in the platform, within 60 days. Okay? P percent, do E event, in T time. So, if we can just format that, and look at that through customer cohorts, we often get visibility into, into true product market-fit within weeks, if not like a month or two. And it's scientifically, data-driven in terms of his foundation. >> Love it. And then of course, you can align sales compensation, you know, with that retention. You've talked a lot about that, in some of your work. I want to get into some of the things that stage two is doing. You invest in SaaS companies. If I understand it correctly, it's not necessarily early stage. You're looking for companies that have sort of achieved some degree of revenue and now need help. It needs some operational help and scaling. Is that correct? >> Yeah. Yeah. So it's a little bit broader in size, as any sort of like B2B software, any software company that's scaling through a sales team. I mean, look at our backers and look at my background. That's, that's what we have experience in. So not really any consumer plays. And yeah, I mean, we're not, we have a couple product LPs. We have a couple of CFO type LPs. We have a couple like talent HR LPs, but most of us are go-to-market. So we don't, you know, there's awesome seed funds out there that help people set up their product and engineering team and go from zero to one in terms of the MVP and find product-market fit. Right? We like to come in right after that. So it's usually like between the seed and the A, usually the revenue is between half a million and 1.5 million. And of course we put an extraordinary premium on customer retention, okay? Whereas I think most of our peers put an extraordinary premium on top line revenue growth. We put an extraordinary premium on retention. So if I find a $700,000 business that, you know, has whatever 50, 70 customers, you know, depending on their ticket size, it has like North of 90% local retention. That's super exciting. Even if they're only growing like 60%, it's super exciting. >> What's a typical size of investments. Do you typically take board seats or not? >> Yeah. We typically put in like between like seven hundred K, one and a half million, in the first check and then have, larger amounts for follow on. So on the A and the B. We try not to take board's seats to be honest with you, but instead the board observers. It's a little bit selfish in terms of our funds scale. Like the general counsel from other venture capitalists is of course, like, the board seat is there for proper governance in terms of like, having some control over expenditures and acquisition conversations, et cetera, or decisions. But a lot of people who have had experience with boards know that they're very like easy and time efficient when the company is going well. And there are a ton of work when the company is not going well. And it really hurts the scale, especially on a smaller fund like us. So we do like to have board observers seats, and we go to most of the board meetings so that our voice is heard. But as long as there's another fund in there that, has, world-class track record in terms of, holding proper governance at the board level, we prefer to defer to them on that. >> All right, so the COVID lock down, hit really in earnest in March, of course, we all saw the Sequoia memo, The Black Swan memo. You were, I think it HubSpot, when, you remember the Rest In Peace Good Times memo, came out very sort of negative, put up all over the industry, you know, stop spending. But there was some other good advice in there. I don't mean to sort of, go too hard on that, but, it was generally a negative sentiment. What was your advice to your portfolio companies, when COVID hit, what were you telling them? >> Yeah, I summarized this in our lead a blog article. We kicked off our blog, which is partially related to COVID in April, which has kind of summarize these tips. So yes, you are correct, Dave. I was running sales at HubSpot in '08 when we had last sort of major economic, destabilization. And I was freaking out, you know (laughs briefly) at the time we were still young, like 20, 30 reps and numbers to chase. And... I was, actually, after that year, looking back, we are very fortunate that we had a value prop that was very recession-proof. We were selling to the small business community, who at the time was cutting everything except new ways to generate sales. And we happen to have the answer to that and it happened to work, right? So it showed me that, there's different levels of being recession proof. And we accelerated the raise of our second fund for stage two with the anticipation that there would be a recession, which, you know, in the venture world, some of the best things you could do is close a fund and then go into a recession, because, there's more deals out there. The valuations are lower and it's much easier to understand, nice to have versus must have value props. So, the common theme I saw in talking to my peers who looked back in the '01 crisis, as well as the '08 crisis, a year later was not making a bolder decision to reorient their company in the current times. And usually on the go-to-market, that's two factors, the ICP who you're selling to, ideal customer profile and the CVP, what your message is, what's your customer value prop. And that was really, in addition to just stabilizing cash positions and putting some plans in there. That was the biggest thing we pushed our portfolio on was, almost like going through the exercise, like it's so hard as a human, to have put like nine months into a significant investment leading up to COVID and now the outcome of that investment is no longer relevant. And it's so hard to let that go. You know what I mean? >> Yeah. >> But you have to, you have to. And now it's everything from like, you spent two years learning how to sell to this one persona. And now that persona is like, gyms, retail and travel companies. Like you've got to let that go. (chuckle simultaneously) You know what I mean? Like, and, you know, it's just like... So that's really what we had to push folks on was just, you know, talking to founders and basically saying this weekend, get into a great headspace and like, pretend like you were parachuted into your company as a fresh CEO today. And look around and appreciate the world and what it is. What is this world? What are the buyers talking about? Which markets are hot, which markets are not, look at the assets that you have, look at your product, look at your staff, look at your partners, look at your customer base, and come up with a strategy from the ground up based on that. And forget about everything you've done in the last year. Right? And so, that's really what we pushed hard on. And in some cases, people just like jumped right on it. It was awesome. We had a residential real estate company that within two weeks, stood up a virtual open house module that sold like hotcakes. >> Yeah. >> That was fantastic execution. And we had other folks that we had to have like three meetings with to push them deep enough, to go more boldly. But that, was really the underlying pattern that I saw in past, recessions and something I pushed the portfolio on, is just being very bold on your pivots. >> Right? So I wanted to ask you how your portfolio companies are doing. I'm imagining you saw some looked at this opportunity as a tailwind. >> Yeah. >> You mentioned the virtual, open house, a saw that maybe were exposed, had, revenue exposure to hard-hit industries and others kind of in the middle. How are your portfolio companies doing? >> Yes, strong. I'm trying to figure out, like, of course I'm going to say that, but I'm trying to figure out like how to provide quant, to just demonstrate that. We were fortunate that we had no one, and this was just dumb luck. I mean, we had no one exclusively selling to like travel, or, restaurants or something. That's just bad luck if you were, and we're fortunate that we got a little lucky there, We put a big premium, obviously we had put a big premium on customer retention. And that, we always looked at that through our recession proof lens at all our investments. So I think that helped, but yeah, I mean, we've had, first off, we made one investment post COVID. That was the last investment on our first fund and that particular company, March, April, May, their results were 20% higher than any month in history. Those are the types of deals we're seeing now is like, you literally find some deals that are accelerating since COVID and you really just have to assess if it's permanent or temporary, but that one was exciting. We have a telemedicine company that's just like, really accelerating post COVID, again, luck, you know, in terms of just their alignment with the new world we're living in. And then, jeez! I mean, we've had, I think four term sheets, for markups in our portfolio since March. So I think that's a good sign. You know, we only made 11 investments and four of them, either have verbal or submitted term sheets on markups. So again, I feel like the portfolio is doing quite well, and I'm just trying to provide some quantitative measures. So it doesn't feel like a political answer. (Mark chuckles) >> Well, thank you for that, but now, how have you, or have you changed your sort of your thesis post COVID? Do you feel like your... >> Sure. >> Your approach was sort of geared towards, you know, this... >> Yeah. >> Post COVID environment? But what changes have you made. >> A little bit, like, I think in any bull market, generally speaking, there's just going to be a lot of like triple, triple, double, double blitzscaling, huge focus on top-line revenue growth. And in any down market, there's going to be a lot of focus on customer retention unit economics. Now we've always invested in the latter, so that doesn't change much. There's a couple of things that have changed. Number one, we do look for acceleration post COVID. Now, that obviously we were not, we weren't... That lens didn't exist pre-COVID, So in addition to like great retention, selling through a sales team, around the half million to a million revenue, we want to see acceleration since COVID and we'll do diligence to understand if that's a permanent, or a temporary advantage. I would say like... Markets like San Francisco, I think become more attractive in post COVID. There's just like, San Francisco has some magic happening there's some VC funds that avoid it, cause it's too expensive. There's some VC funds that only invest in San Francisco, because there's magic happening. We've always just been, you know... we have two portfolio companies there that have done well. Like we look at it and if it's too expensive, we have to avoid it. But we do agree that there's magic happening. I did look at a company last week. (chuckles inaudibly) So Dave, there are 300K in revenue, and their last valuation is 300 million. (both chuckle) >> Okay, so why is San Francisco more attractive, Mark? >> Well, I mean and those happened in Boston too. >> We looked at... (Mark speaks inaudibly) >> I thought you were going to tell me the valuations were down. (Dave speaks inaudibly) >> Here's the deal all right, sometimes they do, sometimes they don't and this is one, but in general, I think like they have come down. And honestly, the other thing that's happened is good entrepreneurs that weren't raising are now raising. Okay? So, a market like that I think becomes more attractive. The other thing that I think that happens is your sort of following strategies different. Okay so, there is some statistical evidence that, you know, obviously we're coming out of a bear market, a bullish market in, in both the public and the private equities. And there's been a lot of talk about valuations in the private sector is just outrageous. And so, you know, we're fortunate that we come in at this like post seed, pre-A, where it's not as impacted. It is, but not as or hasn't been, but because there's so many more multibillion-dollar funds that have to deploy 30 to 50 million per investment, there's a lot of heating up that's happened at that stage. Okay? And so pre COVID, we would have taken advantage of that by taking either all or some of our money off the table, in these following growth rounds. You know, as an example, we had a company that we made an investment with around 30 million evaluation and 18 months later, they had a term sheet for 500. So that's a pretty good return in 18 months. And you know, that's an expensive, you know, so that that's like, wow, you know, we probably, even though we're super bullish on the company, we may want to take off a 2X exposition... >> Yeah. >> And take advantage of the secondaries. And the other thing that happens here, as you pointed out, Dave is like, risk is not, it doesn't become de-risk with later rounds. Like these big billion dollar funds come in, they put pressure on very aggressive strategic moves that sometimes kills companies and completely outside of our control. So it's not that we're not bullish on the company, it's just that there's new sets of risks that are outside of the scope of our work. And so, so that that's probably like a less, a lesser opportunity post COVID and we have to think longer term and have more patient capital, as we navigate the next year or so of the economy. >> Yeah, so we've got to wrap, but I want to better understand the relationship between the public markets and you've seen the NASDAQ up, which is just unbelievable when you look at what's happening in main street, and the relationship between the public markets and the private markets, are you saying, they're sort of tracking, but not really identical. I mean, what's the relationship. >> Okay, there's a hundred, there's thousands of people that are better at that than me. Like the kind of like anecdotal thoughts that I, or the anecdotal narrative that I've heard in past recessions and actually saw too, was the private market, when the public market dropped, it took nine months roughly for the private market to correct. Okay, so there was a lag. And so there's, some arguments that, that would happen here, but this is just a weird situation, right? Of like the market, even though we're going through societal crazy uncertainty, turmoil and, and tremendous tragedy, the markets did drop, but they're pretty hot right now, specifically in tech. And so there's a number of schools of thoughts there that like some people claim that tech is like the utilities companies of the eighties, where it's just a necessity and it's always going to be there regardless of the economy. Some people argue that what's happened with COVID and the remote workplace have made, you know, accelerated the adoption of tech, the inevitable adoption, and others could argue that like, you know, the worst is still the come. >> Yeah. And of course, you've got The Fed injecting so much liquidity into the system, low interest rates, Mark, last question. Give me a pro tip for entrepreneurs. (Mark Sighs) >> I would say, like, we've talked a lot about, this methodology with, you know, customer retention, really focusing there, align everything there as opposed to top line revenue growth initially. I think that the extension I do at this point is, do your diligence on your investors, and what their thoughts are on your future growth plans to see if they're aligned. Cause that, that becomes like, I think a lot of entrepreneurs, when they dig into this work, they do want to operate around it. But that becomes that much harder when you have investors that think a different way. So I would just, you know, just always keep in mind that, you know, I know it's so hard to raise money, but you know, do the diligence on your investors to understand, what they'd like to see in the next two years and how it's aligned with your own vision. >> Mark is really great having you on. I'd love to have you back and as this thing progresses, and see how it all shakes out. It really a pleasure. Thanks for coming on. >> No, thanks, Dave. I appreciate you having me on. >> And thank you everybody for watching. This is Dave Vellante for The Cube. We'll see you next time. (music plays)

>> Female Voice: From San Francisco, it's theCUBE, covering VMware RADIO 2019, brought to you by VMware. >> Welcome to theCUBE's exclusive coverage of VMware RADIO 2019, Lisa Martin with John Furrier in San Francisco, talking all sorts of innovation in this innovation long history culture at VMware, welcoming back to theCUBE, Mornay Van Der Walt, VP of R&D in the Explorer Group. Mornay, thank you for joining John and me on theCUBE today. >> Thank you for having me. >> So, I got to start with Explorer Group. Super cool name. >> Yeah. >> What is that within R&D? >> So the origins of the Explorer Group. I've had many roles at VMware, and I've been fortunate enough to do a little bit of everything. Technical marketing; product development; business development; one of the big things I did before the Explorer group was created was actually EVO:RAIL. I was the founder of that, pitched that idea. Raghu and Ray and Pat were very supportive. We took that to market, took it to (inaudible), handed that off to Dell EMC, the rest is history, right? And then was, "what's next?" So Ray and me look at some special projects, go and look at IoT, go and look at Telemetry, and did some orders for them, and then said "Alright, why don't you look at all our innovation programs." Because beyond RADIO, we actually have four other programs. And everyone, was -- RADIO gets a lot of airtime and press, but it's really the collective. It's the power of those other four programs that support RADIO that allow us to take an idea from inception to an impactful outcome. So hence the name, the Explorer Group. We're going out there, we're exploring for new ideas, new technologies, what's happening in the market. >> Talk about the R&D management style. You've actually got all these-- RADIO's one-- kind of a celebration, it's kind of the best of the best come together, with papers and submissions. Kind of a symposium meets kind of a, you know, successive end for all the top engineers. There's more, as you've mentioned. How does all of it work? Because, in this modern era of distributed teams, decentralization, decisions around business, decisions on allocating to the portfolio, what gets invested, money, spend, how do you organize? Give a quick minute to explain how R&D is structured. >> So, obviously, we have the BUs structured-- well there's PCS, Raghu and Rajeev head that up. And then we've got the OCTO organization, which Ray O'Farrell heads up. And the business, you know, it's innovating every day to get products out the door, right, and that's something that we've got to be mindful of because, I mean, that's ultimately what's allowing us to get products into the hands of our customers, solving tough problems. But then in addition to that, we want to give our engineers an avenue to go and explore, and, you know, tinker on something that's maybe related to their day job, or completely off, unrelated to their day job. The other thing that's important is, we also want to give, because we're such a global R&D, you know, our setup globally, we want to give teams the opportunity to work together, collaborate together, get that diversity of thought going, and so a lot of times, if we do a Hackathon, which we call a Borathon, we actually give bonus points if teams pull from outside of their business units. So you've got an idea, well, let's make it a diverse idea in terms of thought and perspective. If you're from the storage business unit, bring in folks from the network business unit. Bring in folks from the cloud business unit. Maybe you've partnered with some folks that are in IT. It's very, you know, sometimes engineers will go, "Ah, it's just R&D that's innovating." But in reality, there's great innovation coming out of our IT department. There's great innovation coming out of our global support organization. Our SEs that are on the front lines, sometimes are seeing the customers' pain points firsthand, and then they bring that back, and some of that makes it into the product. >> How much of R&D is applied R&D, which is kind of business unit aligned, or somewhat aligned, versus the wacky, crazy ideas: "Go solve a big, hairy problem", that's out there, that's not, kind of, related to the current product sets? >> Ah, that's tough to put an actual number on it, >> John: Well ballpark, I mean. >> But if I just say, like, if I had to just think about budgets and that, it's probably ten to fifteen percent is the wacky stuff, that's, you know, not tied to a roadmap, that's why we call it "off-road innovation", and the five programs that my Explorer Group ultimately leads is all about driving that off-road innovation. And eventually you want to find an on-ramp, >> Yeah. >> to a roadmap, you know, that's aligned to a business unit, or a new emerging, you know, technology. >> How does someone come up with an idea and say, "Hey, you know, I want to do this"? Do they submit, like, a form? Is there a proposal? Who approves it? I mean, do you get involved? How does that process work? >> So that's a good question. It really depends on the engineer, right? You take someone who's just a new college grad, straight out of, you know, college. That's why we have these five programs. Because some of these folks, they've got a good idea, but they don't really know how to frame it, pitch it. And so if you've got a good idea, and let's say, this is your first rodeo, so to speak, We have a program called TechTalks where it allows you to actually go and pitch your idea; get some feedback. And that's sometimes where you get the best feedback, because you go and, you know, present your idea, and somebody will come back and say, "Well, you know, have you met, you know, Johnny and Sue over there, in this group? They're actually working on something similar. You should go and talk to them, maybe you guys can bring your ideas together." Folks that are, you know, more seasoned, you know, longer tenure, sometimes they just come up, and-- "I'm going to pitch an idea to xLabs," and for xLabs, for example --that's an internal incubator-- there is, like, a submissions process. We want to obviously make sure, that, you know, your idea's timing in the market's correct, we've got limited funding there so we're going to make sure we're really investing on the right, you know, type of ideas. But if you don't want to go and pitch your idea and get feedback, go and do a Borathon. Turn an idea into a little prototype. And we see a lot of that happening, and some of the greatest ideas are coming from our Borathons, you know? And it's also about tracking the journey. So, we have RADIO here today, we have mentioned xLabs, TechTalks, we have another program called Flings. Some of our engineers are shipping product, and they've got an idea to augment the product. They put it out as a Fling, and our customers and the ecosystem download these, and it augments the product. And then we get great feedback. And then that makes it back into the product roadmap. So there's a lot of different ways to do it, and RADIO, the process for RADIO, there's a lot of rigor in it. It's, like, it's run as a research program. >> Lisa: It's a call for papers, right? >> Call for papers, you know, there's a strict format, it's got to be, you know, this many pages; if you go over about one line, you're sort of, disqualified, so to speak. And then once you've got those papers, like this year we had 560 papers be submitted, out of those 560, 31 made it onto mainstage, and another 61 made it as posters, as you can see in the room we're sitting in. >> I have an idea. Machine learning should get all those papers. (laughs) I mean, that's-- >> Funny you say that. We actually have, one of our engineers, Josh Simons, is actually using machine learning to go back in time and look at all the submissions. So idea harvesting is something we're paying a lot of attention to, because you submit an idea, >> Interesting. >> the market may not be right for it, or reality is, I just don't have a budget to fund it if it's an xLab. >> John: So it's like a Google search for your, kind of, the indexing all those workers. >> Internally, yeah, and sometimes it's-- there's a great idea here, you merge that with another idea from another group or another geo, and then you can actually go and fund something. >> Well, that's important because timing is critical, in these early-- most stuff can be early in just incubation, gestation period for that tech or concept, could be in play because the computer-- all the new things, right? >> Correct. And, do you actually have the time? You're an engineer working on a release, the priority is getting that release out the door, right? >> (laughs) >> So, put the idea on the back burner, come off the release, and then, you know, get a couple of colleagues together and maybe there's a Borathon being held and you go and move that idea forward that way. Or, it's time for RADIO submissions, get a couple of colleagues together and submit a RADIO paper. So we want to have different platforms for our engineers to submit ideas outside of their day job. >> And it sounds like, the different programs that you're talking about: Flings, xLab, Borathon, RADIO, what it sounds like is, there isn't necessarily a hierarchy that ideas have to go through. It really depends on the teams that have the ideas, that are collaborating, and they can put them forward to any of these programs, >> Correct, yeah. >> and one might get, say, rejected for RADIO, but might be great for a Borathon or a Fling? >> Correct. >> So they've got options there, and there's multiple committees, I imagine? Is that spearheaded out of Ray's OCTO group, >> Yep. >> that's helping to make the selections? Tell us a little bit about that process. >> Sure, so. That's a great point, right? To get an idea out the door, you don't always have to take the same pathway. And so one thing we started tracking was these innovation journeys that all take different pathways. We just published an impact report on innovation for FY19, and we've got the vSAN story in there, right? It was an idea. A group of engineers had an idea, like, in 2009, and they worked on their idea a little bit-- it first made it to RADIO in 2011. And then they came back in 2013, and, sort of, the rest is history, you know. vSAN launched in 2014. We had a press release this week for Carbon Avoidance Meter. It was an idea that actually started as a calculator many years ago. Was used, and then sort of died on the vine, so to speak? One of our SEs said, "You know, this is a good idea. I want to evolve this a little bit further." Came and pitched an xLabs idea, and we said, "Alright, we're going to fund this as an xLabs Lite. Three to six months project, limited funding, work on one objective --you're still doing your day job-- move the project forward a little bit." Then Nicola Acutt, our Sustainability VP, got involved, wanted to move the idea a little bit further along, came back for another round of funding through an xLabs Lite, and then GSS, with their Skyline platform, picked it up, and that's going to be integrated in the coming months into Skyline, and we're going to be able to give our customers a carbon, sort of, readout of their data center. And then they'll be able to, you know, map that, and get a bigger picture, because obviously, it's not just the servers that are virtualized, there's cooling in the data center plants, and all these other factors that you've got to, you know, take into account when you want to look at your carbon footprint for your facility. So, we have lots of examples of how these innovation pathways take different turns, and sometimes it's Team A starting with an idea, Team B joins in, and then there's this convergence at a particular point, and then it goes nowhere for a couple of months, and then, a business unit picks it up. >> One of the things that's come out-- Pat Gelsinger mentioned that a theme outside of the normal product stuff is how people do work. There's been some actual R&D around it, because you guys have a lot of distributed, decentralized operations in R&D because of the global nature. >> Yeah. >> How should companies and R&D be run when the reality is that developers could be anywhere? They could be at a coffee shop, they could be overseas, they could be in any geography, how do you create an environment where you have that kind of innovation? Can you just share some of the best practices that you guys have found? >> I'm not sure if there's 'best practices', per se, but to make sure that the programs are open and inclusive to everybody on the planet. So, I'll give you some stats. For example, when RADIO started in the early days, we were founded in Palo Alto. It was a very Palo Alto-centric company. And for the first few years, if you looked at the percentage of attendees, it was probably over 75% were coming from Palo Alto. We've now over the years shifted that, to where Palo Alto probably represents about 44%, 16% is the rest of North America, and then the balance is from across the globe. And so that shift has been deliberate, obviously that impacts the budget a little bit, but in our programs, like a Borathon, you can hack from anywhere. We've got a lot of folks that are remote office workers, using, you know, collaborative tools, they can be part of a team. If the Borathon's happening in China, it doesn't stop somebody in Palo Alto or in Israel or in Bulgaria, participating. And, you know, that's the beautiful nature of being global, right? If you think about how products get out of the door, sometimes you've got teams and you are literally following the sun, and you're doing handoff, you know, from Team A to B to C, but at the end of the day you're delivering one product. And so that's just part of our culture, I mean, everybody's open to that, we don't say, "Oh, we can't work with those guys because they're in that geo-location." It's pretty open. >> This is also, really, an essential driver, and I think I saw last year's RADIO, there were participants from 25+ countries. But this is an essential-- not only is VMware a global company, but many of your customers are as well, and they have very similar operating models. So that thought diversity, to be able to build that into the R&D process is critical. >> Absolutely. And also, think about, you know, when you're going to Europe. Smaller borders, countries, you deploy technology differently. And so, you want to have that diversity in thought as well, because you don't just want to be thinking, "Alright, we're going to deploy a disaster recovery product in North America where they can fail over from, you know, East Coast to West Coast. You go to Europe, and typically you're failing over from, you know, site A to site B, and they're literally three or four miles apart. And so, just having that perspective as well, is very important. And we see that, you know, when we release certain products, you'll get, you know, better uptick in a certain geo, and then, "Why is it stalling over here?" well it's, sometimes it's cultural, right? How do you deploy that technology? Just because it works in the US, doesn't mean it's going to work in Europe or in APJ. >> How was your team involved in the commercialization? You mentioned vSAN and the history of that, but I'm just wondering, looking at it from an investment standpoint of deciding which projects to invest in, and then there's also the-- if they're ready to go to market, the balance of "How much do we need to invest in sales and marketing to be able to get this great idea-- because if we can't market it and sell it, you know, then there's obviously no point." So what's that balance like, within your organization, about, "how do we commercialize this effectively, at scale"? >> So that is ultimately not the responsibility of my group. We'll incubate ideas, like, for example, through an xLabs project. And, you know, sometimes we'll get to a point and we'll work, collaborate with a business unit, and we'll say, "Alright, we feel this project's probably a 24 months project", if it's an xLabs Full. So these folks are truly giving up their day job. But at the end of the day, you want to have an exit and when we say exit, what does that exit mean? Is that an exit into a business unit? Are you exiting the xLabs project because we're now out of funding? You know, think about a VC, I'm going to fund you to, you know, to a particular point; if there is no market traction, >> Right. >> we may, you know, sunset the project. And, you know, so our goal is to get these ideas, select which ones we want to invest in, and then find a sort of off-ramp into a business unit. And sometimes there'll be an off-ramp into a business unit, and the project goes on for a couple of months, and then we make a decision, right? And it's not a personal decision, it's like, "Well we funded that as an xLabs; we're now going to shut it down because, you know, we're going to go and make an acquisition in this space. And with the talent that's going to come onboard, the talent that was working on this xLab project, we can push the agenda forward." >> John: You have a lot of action going on so you move people around. >> Exactly. >> Kind of like the cloud, elastic resource, yeah? (laughs) >> So, then, some of these things, because xLabs is only a two-year-old, you know, we haven't had things exit yet that are, you know, running within a business unit that we're seeing this material impact. You know, from a revenue point of view. So that's why tracking the journeys is very important. And, you know, stay tuned, maybe in about three or four years we'll have this, similar, you know, interview, and I'll be able to say, "Yeah, you know, that started as an xLab, and now it's three years into the market, and look at the run rate. >> So there's 31-- last question for you-- there's 31 projects that were presented on mainstage. Are there any that you could kind of see, early on, "ooh", you know, those top five? Anything that really kind of sticks out-- you don't have to explain it in detail, but I'm just curious, can you see some of that opportunity in advance? >> Absolutely. There's been some great papers up on mainstage. And covering, you know, things on the networking side, there's a lot of innovation going in on the storage side. If you think about data, right, the explosion of data because of edge computing, how are you going to manage that data? How are you going to take, you know, make informed decisions on that data? How can you manipulate that data? What are you going to have to do from a dedupe point of view, or a replication point of view, because you want to get that to many locations, quickly? So, I saw some really good papers on data orchestration, manipulation, get it out to many places, it can take an informed decision. I saw great-- there was a great paper on, you know, you want to go and put something in AWS. There's a bull that you get at the end of the month, right? Sometimes those bulls can be a little bit frightening, right? You know, what can you do to make sure that you manage those bulls correctly? And sometimes, the innovation has got nothing to do with the product per se, but it has to do with how we're going to develop. So we have some innovation on the floor here where an engineer has looked at a different way of, basically, creating an application. And so, there's a ton of these ideas, so after RADIO, it doesn't stop there. Now the idea harvesting starts, right? So yes, there were 31 papers that made it onto mainstage, 61 that are posters here. During that review process, and you asked that question earlier and I apologize, I didn't answer it-- you know, when we look at the papers, there's a team of over 100 folks from across the globe that are reviewing these papers. During that review process, they'll flag things like "This is not going to make it onto mainstage, but the idea here is very novel; we should send this off to our IP team," you know. So this year at RADIO, there were 250 papers that were flagged for further followup with our IP team, so, do we go and then file an IDF, Invention Disclosure Form, do those then become patents, you know? So if we look at the data last year, it was 210. Out of those 210, 74 patents were filed. So there's a lot of work that now will happen post-RADIO. Some of these papers come in, they don't make it onto mainstage; they might become a poster. But at the same time they're getting flagged for a business unit. So from last year, there were 39 ideas that were submitted that are now being mapped to roadmap across the BUs. Some of these papers are great for academic research programs, so David Tennenhouse's research group will take these papers and then, you know, evolve them a little bit more, and then go and present them at academic conferences around the world. So there's a lot of, like, the "what's next?" aspect of RADIO has become a really big deal for us. >> The potential is massive. Well, Mornay, thank you so much for joining John and me, >> Thank you. >> and I've got to follow xLabs, there's just a lot of >> (laughs) >> really, really, innovative things that are so collaborative, coming forward. We thank you for your time. >> Thank you. >> For John Furrier, I'm Lisa Martin; you're watching theCUBE, exclusive coverage of VMware RADIO 2019, from San Francisco. Thanks for watching.

>> Live from Orlando, Florida It's the que covering Accelerate nineteen. Brought to you by important >> Welcome back to the Cubes Coverage of Fortinet. Accelerate twenty nineteen. Live from Orlando, Florida I'm Lisa Martin with Peter Burress, and we're welcoming to the keep for the first time. Jeff Fully senior business development manager from Siemens. Jeff. Thanks for joining Peter and me today. >> Thanks for having me appreciate >> it. So everybody knows Seaman's in some form or fashion or capacity. Ah, here we are in a cyber security event. Talk to us a little bit about what Seamen's and Fortinet are doing together as partners and a little bit about your role in business. >> Sure, so the organization the part of semen that I'm a part of, is more of a digital industries. So what we do is ah, lot of NT operational technology environment area. So it's it's more of the harsh environments oil and gas, waste water, rail transportation. So we do a lot of the communication and the cyber security around that. We're working with Fortinet in order to bring the best of the practices on cybersecurity into that OT environment. So we're doing a collaboration between the two because there's that communication that needs to happen. They still need that access point into at OT environment >> Now. Explain why? Because because, you know, guys have grown up presuming that everything was going to be connected and a lot of business leaders presume that everything's going to be connected. The okey guys have had to work in a very, very different world where they had to do real time work, sometimes for thirty years. So take us a little bit through that dynamic. And why is it that today we actually Khun, start having conversations about how these two things come together, work together and generate value together? >> Sure, so typically from operational technology environment when they put something together, is normally for a twenty or thirty year span. They want to put something in the network and the environment that's going to last. That's going to be out there. It's not. They don't change it. They don't upgrade it normally, as they do in the ninety environment, which typically has like a five year life cycle. So in OT environment, what's happening? Noah's know times are changing and all these cyber attacks are happening. They're being mandated to do this. A good example is, in two thousand five, President Obama signed into a legislative order that you, we must in the US secure critical infrastructure and part of that securing that, saying We're going to make sure that you know we're not going to be happy because in the utility market, if we take down four of the major interconnects between their power grid than that stated that us had become a third world country in eight days. So what we're doing is >> not do that. >> No, we're trying to help prevent that. So by doing so, we need to add security. And historically, from noti environment, it's always been about there's not been remote access. There's not been that connectivity. It's always been about electrical and mechanical devices. But now is these devices are getting smarter. They're getting Mohr intelligent. There's more information to get out of it. You get more efficiency and more information out of so you can know. Do your job better. You could do remote access. And like in Florida, here we have a bunch of hurricanes. There's the ability to say after a hurricane, I could get remote access or I could do that communication out to these devices where you wouldn't be able to do periodically in the past. So because of that, because connectivity we need to start securing our infrastructure to make sure that no, as we get access to that potential, that the bad guys get access to those devices, too. So we're working with our product portfolio and partners like Fortinet in order to make sure that we're applying the best of the security in the O t world. >> So when this convergence, we're talking probably with folks who are not used to change. Change is hard for everybody. However, as you said and back in two thousand five became a presidential mandate. But also it >> was two thousand fifteen >> two thousand five. Obama signed in tow the listen president till two thousand. And I'm sorry. >> Thank you for the mass >> housing one. >> Yeah, just years ago on the math expert. So just a few years ago, there was this mandate from President Obama which we clarified was only four years ago. So but historically, folks that are not used to having to change system so quickly. Yet here's this mandate. There's also this increasing abundance of separate tax. How do you have those, I presume, difficult conversations with Theo Teesside about the opportunity for OT convergence and the benefits and why they have to get on board with this. >> So historically, from the OT side, they've been very reluctant to do something like this. They want to own their own environment. They want to do that. It's always been the perception that if you bring that cyber security of the world into that OT environment, it's going to hinder their operations. But that's not really the case. The convergence of T and O. T has been happening for decades now. I started my job seem it's in two thousand in the telecom world, and we were doing that convergence of n ot back in two thousand when we're doing voiceover. I pay right because that was happening back then. So this convergence of Tino Tee is It's an ongoing thing. It's just in. Different markets are different industries, so now that we're doing that, we're bringing it in there. They're starting to have that conversation, but then it becomes a really who owns that The operation are who owns that security? No ot still wants to drive their own. They want to own their own. Where I saying, Look, I know we have the knowledge we have experience. Let's help you get there So there's generally a demarcation point that they've come to an agreement on where I Teo say we're going to help you to this point. And then you can own all the critical assets out on the far end. >> So let's talk about that demarcation point. What constitutes what characterizes that demarcation point? What are where are we today? Because we're moving from hardwired, uh, thirty year footprint to increasingly wireless, uh, faster. We're moving towards that, but we're how far our way when you talk to customers. What is what are the attributes of that demarcation point? It's >> interesting because we sew it. That goes everything we saw of customers that are on dialogue, communication, serial communication, Ethernet fiber, wireless. Lt s o. There's a broad range of that we call the pipe. So you know the pipe is the communication just between the side down to the OT side really helps to find that demarcation is when you get down to what are the critical assets, what's really the operation or what's making money for that company on those of the assets, which really the operational organization's own and then the side really provides that communication down to that to that ball. >> Got it. So it's really business specific. But are we starting to see Are we started to see? Well, it's got a little bit more processing power or it's got a little bit more. There's the's security attributes that are associated with it or ot guys picking up on T related security, starting elements of it faster than others >> they are on. But really, it's it's ah, it's region and as industry specific and it's really what's driving it So like in the U. S. Like I meant in the utility sector, three utility sector has requirements called no exit, and these narcs IP requirements said you must do these things and they get very specific to the point of. You must have something that will detect anti virus or malware. You must do this if you look into Canada. Canada just recently passed away. Be requirements for Ontario and those are based upon framework cyber security framework to do that. So it's really debate the industry that they're in and the region that they're in. That's what's really driving that our how deeper and far they're going to go. >> And it goes back to your original point that it's being driven by regulatory edict or a past exposure and trying to make sure it doesn't happen again. >> They don't want to make the news, and they don't want to be pushed by the government. But those were really the two things in the operational technology or environment that's really driving for that cyber. >> Thank you, Sierra, One of your favorite success stories that really highlights the opportunities that O. T. And I t Convergence have enabled for customers of forty nine Seaman's >> Oh yeah, there's, ah again because I'm global experience. No, I've got around the world, but actually one of the favorites is Actually, there's two of them that have happened just here in North America, Oneness in Texas and one is in Canada. And both of these requirements came to say that they had a specific date, that they needed to make requirements to meet the regulatory otherwise, that they were going to get fined and they came to us and it is both home were pretty last minute. So what we're able to do is to say, Look, we have this platform that's rated for harsh environment. That's no into your networking to provide that communication. So then what we could do is we can work with our partners, put that application on that OT environment and then install and get certified for your application. So there was two of you, Like I said, one in the U. S. And one in Canada. Which way made the deadline's where they came back and said, No, thank you very much, very appreciative. >> And how quickly were you able to get this up and running is that they didn't miss the deadline and we're able to certain gleanings value from this. >> I just did a write up on one. We got a phone call on a Friday that they needed to provide a solution. So we worked over the weekend, and on Monday we proposed a solution. So once you do that, no, obviously they need to go through their value chain to get to sign offs, and we have to go through our process. But it was within thirty days were able to install it make their deadline and make sure that they were compliant. >> That's a pretty good marketing message to deliver that you guys could enable Such It is such a big convergence and it's a month's period >> of thirty days. >> Pretty impressive. >> That was, That was That was one thing that I think we all worked out. There was a deadline. We all work toward that. It was a trusted partner thing, you know. The customer came to us, they were asking for some stuff. They trusted us to do that. So like I said, we worked over the weekend, help them do that. We felt we had the right solution to address their requirements and at the end of the day were ableto meet that thirty day deadline. >> But the trust is not just with you. It's not just a seaman's. It's with an expanding array of cos it Seaman's is working. That's correct. What is it like working with a company like Ford Net to try to ensure that these new domains that are characterized by enormous uncertainty, technological operational organisational are not undermined by challenges of crafting that sushi solution together in such ways, it can be implemented quickly and with a high degree facility. >> I think it's a great opportunity for saying it's important not to be working together only from the fact of Fortinet has got the history. They've got the technology. They've got the name in their market space on DH. They've got the capability to deliver that Siemens. And for if you look from our customer space in our environment, no, we're very well developed, well entrenched in our customer. So to be able to bring the technology and the experience and the know how and bring that those cyber security requirements which are now being pushed down into the OT environment in and no amount of time it's not. There's no development needed, there's no additional stuff fourteen and already has that knowledge from the space. So to bring that into the environment, it's very beneficial. I think both of us, in order to help drive their customer opportunities in our market. >> And they talked a lot this morning during the keynote about where they are from the competitive leadership perspective that was peppered, ah, lot throughout the first at least ninety minutes of the keynote. But presumably obviously everybody has choice. Everybody likes choice. Simons has choice there. I'm just curious to get your take on some of the announcements that came out today from Fortinet. Does that excite Seaman's? Were you involved in that? In terms of being able to take the next set of customers who have the same challenge that you describe with the Texas based on Canada based customers and show them we can help you together? Seaman's importing that transform in thirty days. >> I think it's very exciting with fourteen that's doing in the new capabilities and functional yet they're coming out with. I think that's really going to be able to enhance our offering because it's really a differentiator for us. If you look at us from the operational technology side, there's not a lot of people out there that can actually do with porting that's able to bring to the table. So all these additional features functionality that was coming out by Fortinet to be able to put it on to our platform and our environment and to be able to offer that in the operational technology side. So I think it's a big differentiator from our competitors for both forty and for seeming to be able to jointly provide this offering to our customers. >> Just one question about your competition. A lot of companies like Siemens, especially that especially strong in the OT space, not just your customers. But suppliers like yourselves have also struggled a bit as they try to find a Z trying navigate that way forward to convergence of tea. No tea on appropriate convergence of tea. No tea. What is it about Seamans that has allowed you to not stub your toe or cut off your leg? Like some of the competitors, >> I believe that's because we've had a long history in both the A I T o T space. If you look at the vertical, are the digital industry that we're in right now. It's been very much ot centric for the last twenty five thirty years, but we have seen minces No. Three hundred seventy nine thousand people worldwide strong. We're very embracing the newer technology and the newer capabilities myself coming. No, starting with Siemens twenty years ago with a nice background being able to bring that knowledge that ability and doing that convergence of the idea no t within Seaman's for so long. I think we understand our customers, and we've been listening to them. And then we're partnering up with companies like Fortinet. Health says, Bring that technology that capability to our customers >> said that expertise, that partnership, What's your recommendation has be wrapped things up here for customers who are at the precipice of being able to understand why I know Teenie to converge with your recommendation for them to tackle this challenge successfully. >> I think the best advice I could have is let's sit down and have that conversation. Let's see what the requirements are. Let's see what they're trying to accomplish because I believe with the solutions that Siemens has between communication, the network in the security and then they technology and the capability that forty nets bring to the table we can to help design a customized solution for their environment in order to make sure that they can address their cyber security needs >> and do so quickly. Well, Jeff, thank you so much for joining Peter and me on the cute this afternoon. We appreciate your time. >> Thank you for >> for Peter. Boris. I'm Lisa Martin. You're watching the Cube