>> Announcer: From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hi, and welcome to this CUBE Conversation, from our Boston area studio, I'm Stu Miniman, happy to welcome to the program, first of all we have a first time guest, always love when we have a founder on the program, Anurag Goel is the founder and CEO of Render, and we've brought along a longtime friend of the program, Dr. Steve Herrod, he is a managing director at General Catalyst, a investor in Render. Anurag and Steve, thanks so much for joining us. >> Thank you for having me. >> Yeah, thanks, Stu. >> All right, so Anurag, Render, your company, the tagline is the easiest cloud for developers and startups. It's a rather bold statement, most people feel that the first generation of cloud has happened and there were certain clear winners there. The hearts and minds of developers absolutely has been a key thing for many many companies, and one of those drivers in the software world. Why don't you give us a little bit of your background, and as the founder of the company, what was it, the opportunity that you saw, that had you create Render? >> Yeah, so I was the fifth engineer at Stripe, and helped launch the company and grow it to five billion dollars in revenue. And throughout that period, I saw just how much money we were spending on just hiring DevOps engineers, AWS was a huge huge management headache, really, there's no other way to describe it. And even after I left Stripe, I was thinking hard about what I wanted to do next, and a lot of those ideas required some form of development and deployment, and putting things in production, and every single time I had to do the same thing over and over and over again, as a developer, so despite all the advancements in the cloud, it was always repetitive work, that wasn't just for my projects, I think a lot of my friends felt the same way. And so, I decided that we needed to automate some of these new things that have come about, as part of the regular application deployment process, and how it evolves, and that's how Render was born. >> All right, so Steve, remember in the early days, cloud was supposed to be easy and inexpensive, I've been saying on theCUBE it's like well, I guess it hasn't quite turned out that way. Love your viewpoint a little bit, because you've invested here, to really be competitive in the cloud, tens of billions of dollars a year, that need to go into this, right? >> Yeah, I had the fortunate chance to meet Anurag early on, General Catalyst was an investor in Stripe, and so seeing what they did sort of spurred us to think about this, but I think we've talked about this before, also, on theCUBE, even back, long ago in the VMware days, we looked very seriously at buying Heroku, one of the early players, and still around, obviously, at Salesforce in this PaaS space, and every single infrastructure conversation I've had from the start, I have to come back to myself and come back to everyone else and just say, don't forget, the only reason any infrastructure even exists is to run applications. And as we talked about, the first generation of cloud, it was about, let's make the infrastructure disappear, and make it programmatic, but I think even that, we're realizing from developers, that is just still way too low of an abstraction level. You want to write code, you want to have it in GitHub, and you want to just press go, and it should automatically deploy, automatically scale, automatically secure itself, and just let the developer focus purely on the app, and that's a idea that people have been talking about for 20 years, and should continue to talk about, but I really think with Render, we found a way to make it just super easy to deploy and run, and certainly it is big players out there, but it really starts with developers loving the platform, and that's been Anurag's obsession since I met him. >> Yeah, it's interesting, when I first was reading I'm like "Wait," reminds me a lot of somebody like DigitalOcean, cloud for developers who are, Steve, we walked through, the PaaS discussion has gone through so many iterations, what would containerization do for things, or serverless was from its name, I don't need to think about that underlying layer. Anurag, give us a little bit as to how should we think of Render, you are a cloud, but you're not so much, you're not an infrastructure layer, you're not trying to compete against the laundry list of features that AWS, Azure, or Google have, you're a little bit different than some of the previous PaaS players, and you're not serverless, so, what is Render? >> Yeah, it is actually a new category that has come about because of the advent of containers, and because of container orchestration tools, and all of the surrounding technologies, that make it possible for companies like Render to innovate on top of those things, and provide experiences to developers that are essentially serverless, so by serverless you could mean one of two things, or many things really, but the way in which Render is serverless is you just don't have to think about servers, all you need to do is connect your code to GitHub, and give Render a quick start command for your server and a build command if needed, and we suggest a lot of those values ourselves, and then every push to your GitHub repo deploys a new version of your service. And then if you wanted to check out pull requests, which is a way developers test out code before actually pushing it to deployment, every pull request ends up creating a new instance of your service, and you can do everything from a single static site, to building complex clusters of several microservices, as well as managed Postgres, things like clustered Kafka and Elasticsearch, and really one way to think about Render, is it is the platform that every company ends up building internally, and spends a lot of time and money to build, and we're just doing it once for everyone and doing it right, and this is what we specialize in, so you don't have to. >> Yeah, just to add to that if I could, Stu, what's I think interesting is that we've had and talked about a lot of startups doing a lot of different things, and there's a huge amount of complexity to enable all of this to work at scale, and to make it work with all the things you look for, whether it's storage or CDNs, or metrics and alerting and monitoring, all of these little startups that we've gone through and big companies alike, if you could just hide that entirely from the developer and just make it super easy to use and deploy, that's been the mission that Anurag's been on to start, and as you hear it from some of the early customers, and how they're increasing the usage, it's just that love of making it simple that is key in this space. >> All right, yeah, Anurag, maybe it would really help illustrate things if you could talk a little bit about some of your early customers, their use case, and give us what stats you can about how your company's growing. >> Certainly. So, one of our more prominent customers was the Pete Buttigieg campaign, which ran through most of 2019, and through the first couple of months of 2020. And they moved to us from Google Cloud, because they just could not or did not want to deal with the complexity in today's standard infrastructure providers, where you get a VM and then you have to figure out how to work with it, or even Managed Kubernetes, actually, they were trying to run on Managed Kubernetes on GKE, and that was too complex or too much to manage for the team. And so they moved all of their infrastructure over to Render, and they were able to service billions of requests over the next few months, just on our platform, and every time Pete Buttigieg went on stage during a debate and said "Oh, go to PeteForAmerica.com," there's a huge spike in traffic on our platform, and it scaled with every debate. And so that's just one example of where really high quality engineering teams are saying "No, this stuff is too complex, it doesn't need to be," and there is a simpler alternative, and Render is filling in that gap. We also have customers all over, from single indie hackers who are just building out their new project ideas, to late stage companies like Stripe, where we are making sure that we scale with our users, and we give them the things that they would need without them having to "mature" into AWS, or grow into AWS. I think Render is built for the entire lifecycle of a company, which is you start off really easily, and then you grow with us, and that is what we're seeing with Render where a lot of customers are starting out simple and then continuing to grow their usage and their traffic with us. >> Yeah, I was doing some research getting ready for this, Anurag, I saw, not necessarily you're saying that you're cheaper, but there are some times that price can help, performance can be better, if I was a Heroku customer, or an AWS customer, I guess what might be some of the reasons that I'd be considering Render? >> So, for Heroku, I think the comparison of course, there's a big difference in price, because we think Heroku is significantly overpriced, because they have a perpetual free tier, and so their paid customers end up footing the bill for that. We don't have a perpetual free tier that way, we make sure that our paid customers pay what's fair, but more importantly, we have features that just haven't been available in any platform as a service up until now, for example, you cannot spin up persistent storage, block storage, in Heroku, you cannot set up private networking in Heroku as a developer, unless you pay for some crazy enterprise tier which is 1500, 3000 dollars a month. And Render just builds all of that into the platform out of the box, and when it comes to AWS, again, there's no comparison in terms of ease of use, we'll never be cheaper than AWS, that's not our goal either, it's our goal to make sure that you never have to deal with the complexity of AWS while still giving you all of the functionality that you would need from AWS, and when you think about applications as applications and services as opposed to applications that are running on servers, that's where Render makes it much easier for developers and development teams to say "Look, we don't actually need "to hire hundreds of DevOps people," we can significantly reduce our DevOps team and the existing DevOps team that we have can focus on application-level concerns, like performance. >> All right, so Steve, I guess, a couple questions for you, number one is, we haven't talked about security yet, which I know is a topic near and dear to your heart, was one of the early concerns about cloud, but now often is a driver to move to cloud, give us the security angle for this space. >> Yeah, I mean the key thing in all of the space is to get rid of the complexity, and complexity and human error is often, as we've talked about, that is the number one security problem. So by taking this fresh approach that's all about just the application, and a very simple GitOps-based workflow for it, you're not going to have the human error that typically has misconfigured things and coming into there, I think more broadly, the overall notion of the serverless world has also been a very nice move forward for security. If you're only bringing up and taking down the pieces of the application as needed, they're not there to be hacked or attacked. So I think for those two reasons, this is really a more modern way of looking at it, and again, I think we've talked about many times, security is the bane of DevOps, it's the slowest part of any deployment, and the more we get rid of that, the more the extra value proposition comes safer and also faster to deploy. >> The question I'd like to hear both of you is, the role of the developer has changed an awful lot. Five years ago, if I talked to companies, and they were trying to bring DevOps to the enterprise, or anything like that, it seemed like they were doomed, but things have matured, we all understand how important the developer is, and it feels like that line between the infrastructure team and the developer team is starting to move, or at least have tools and communication happening between them, I'd love, maybe Steve if you can give us a little bit your macroview of it, and Anurag, where that plays for Render too. >> Yeah, and Anurag especially would be able to go into our existing customers. What I love about Render, this is a completely clean sheet approach to thinking about, get rid of infrastructure, just make it all go away, and have it be purely there for the developers. Certainly the infrastructure people need to audit and make sure that you're passing the certifications and make sure that it has acceptable security, and data retention and all those other pieces, but that becomes Anurag's problem, not the developer problem. And so that's really how you look at it. The second thing I've seen across all these startups, you don't typically have, especially, you're not talking about startups, but mid-sized companies and above, they don't convert all the way to DevOps. You typically have people peeling off individual projects, and trying to move faster, and use some new approach for those, and then as those hopefully go successful, more and more of the existing projects will begin to move over there, and so what Render's been doing, and what we've been hoping from the start, is let's attract some of the key developers and key new projects, and then word will spread within the companies from there, but so the answer, and a lot of these companies make developers love you, and make the infrastructure team at least support you. >> Yeah, and that was a really good point about developers and infrastructure, DevOps people, the line between them sort of thinning, and becoming more of a gray area, I think that's absolutely right, I think the developers want to continue to think about code, but then, in today's environment, outside of Render when we see things like AWS, and things like DigitalOcean, you still see developers struggling. And in some ways, Render is making it easy for smaller companies and developers and startups to use the same best practices that a fully fledged DevOps team would give them, and then for larger companies, again, it makes it much easier for them to focus their efforts on business development and making sure they're building features for their users, and making their apps more secure outside of the infrastructure realm, and not spending as much time just herding servers, and making those servers more secure. To give you an example, Render's machines aren't even accessible from the public internet, where our workloads run, so there's no firewall to configure, really, for your app, there's no DMZ, there's no VPN. And then when you want to make sure that you're just, you want a private network, that's just built into Render along with service discovery. All your services are visible to each other, but not to anyone else. And just setting those things up, on something like AWS, and then managing it on an ongoing basis, is a huge, huge, huge cost in terms of resources, and people. >> All right, so Anurag, you just opened your first region, in Europe, Frankfurt if I remember right. Give us a little bit as to what growth we should expect, what you're seeing, and how you're going to be expanding your services. >> Yeah, so the expansion to Europe was by far our most requested feature, we had a lot of European users using Render, even though our servers were, until now, based in the US. In fact, one of, or perhaps the largest recipe-sharing site in Italy was using Render, even though the servers were in the US, and all their users were in Italy, and when we moved to Europe, that was like, it was Christmas come early for them, and they just started moving over things to our European region. But that's just the start, we have to make sure that we make compute as accessible to everyone, not just in the US or Europe but also in other places, so we're looking forward to expanding in Asia, to expanding in South America, and even Africa. And our goal is to make sure that your applications can run in a way that is completely transparent to where they're running, and you can even say "Look, I just want my application to run "in these four regions across the globe, "you figure out how to do it," and we will. And that's really the sort of dream that a lot of platforms as service have been selling, but haven't been able to deliver yet, and I think, again, Render is sort of this, at this point in time, where we can work on those crazy crazy dreams that we've been selling all along, and actually make them happen for companies that have been burned by platforms as a service before. >> Yeah, I guess it brings up a question, you talk about platforms, and one of the original ideas of PaaS and one of the promises of containerization was, I should be able to focus on my code and not think about where it lives, but part of that was, if I need to be able to run it somewhere else, or want to be able to move it somewhere else, that I can. So that whole discussion of portability, in the Kubernetes space, it definitely is something that gets talked quite a bit about. And can I move my code, so where does multicloud fit into your customers' environments, Anurag, and is it once they come onto Render, they're happy and it's easy and they're just doing it, or are there things that they develop on Render and then run somewhere else also, maybe for a region that you don't have, how does multicloud fit into your customers' world? >> That's a great question, and I think that multicloud is a reality that will continue to exist, and just grow over time, because not every cloud provider can give you every possible service you can think of, obviously, and so we have customers who are using, say, Redshift, on AWS, but they still want to run their compute workloads on Render. And as a result, they connect to AWS from their services running on Render. The other thing to point out here, is that Render does not force you into a specific paradigm of programming. So you can take your existing apps that have been containerized, or not, and just run them as-is on Render, and then if you don't like Render for whatever reason, you can take them away without really changing anything in your app, and run them somewhere else. Now obviously, you'll have to build out all the other things that Render gives you out of the box, but we don't lock you in by forcing you to program in a way that, for example, AWS Lambda does. And when it comes to the future, multicloud, I think Render will continue to run in all the major clouds, as well as our own data centers, and make sure that our customers can run the appropriate workloads wherever they are, as well as connect to them from the Render services with ease. >> Excellent. >> And maybe I'll make one more point if I could, Stu, which is one thing I've been excited to watch is the, in any of these platform as a services, you can't do everything yourself, so you want the opensource package vendors and other folks to really buy into this platform too, and one exciting thing we've seen at Render is a lot of the big opensource packages are saying "Boy, it'd be easier for our customers to use our opensource "if it were running on Render." And so this ecosystem and this set of packages that you can use will just be easier and easier over time, and I think that's going to lead to, at the end of the day people would like to be able to move their applications and have it run anywhere, and I think by having those services here, ultimately they're going to deploy to AWS or Google or somewhere else, but it is really the right abstraction layer for letting people build the app they want, that's going to be future-proof. >> Excellent, well Steve and Anurag, thank you so much for the update, great to hear about Render, look forward to hearing more updates in the future. >> Thank you, Stu. >> Thanks, Stu, good to talk to you. >> All right, and stay tuned, lots more coverage, if you go to theCUBE.net you can see all of the events that we're doing with remote coverage, as well as the back catalog of what we've done. I'm Stu Miniman, thank you for watching theCUBE. (calm music)

(upbeat music playing) >> Announcer: Live from San Diego, California, it's theCUBE! Covering KubeCon and CloudNativeCon, brought to you by Red Hat, the cloud native computing foundation and its ecosystem partners. >> Welcome back to theCUBE, here at KubeCon, CloudNativeCon 2019 in San Diego, I am Stu Miniman John Troyer is my co-host and joining us is one of our esteemed Cube alumni multi-time guests. Steve Herrod who is the managing director at General Catalyst. Steve, thanks so much for joining us. Always great to see you. >> It's good to see you again. >> Stu: All right I'm having >> And John. >> A flashback meeting with the two of you at a certain campus in Palo Alto and the like. But, you know it's interesting Steve, before we get into this technology, we kicked off this morning talking about a company, Docker. We knew Docker from the early on. I said, look Docker had the opportunity to be this generation's VM-ware. It has had a huge impact on the market. You know, we wouldn't have 12 thousand people here if it wasn't for them. Give us your take kind of as to, you know, this wave of technology and we'll start there. >> Yeah, well I guess I'll start with Docker the company. I mean, it just shows you boy, it's hard to build big companies these days and I think there will be plenty of people talking about why that didn't work out or did work out. Maybe there was too much stuff given to open source. Maybe not enough, maybe there isn't enough community. But I do think, I think that's the tale of just how hard it is to be out in this world. But on the flip side they certainly moved for the idea of containers and got things going. We always have a saying in the venture business, actually in the startup business, which is it's sometimes the second mouse that gets the cheese. Someone's got to break a little glass and then sometimes someone else comes in afterwards and gets some of the reward for it. >> Well Steve this is a sprawling ecosystem. We went from 8 thousand people last year, 4 thousand the year before to over 12 thousand, and this ecosystem keeps growing. You've got a portfolio company that launched this week. You're checking out the show floor. Maybe let's start with the new one coming out from your side. >> Yeah you know I have several startups that are here but I think what's been interesting is the opportunity to create new companies. If you look at the, I'm sure you've covered a lot of them. But if you look at the sponsor sheets here, there's literally hundreds of booths that you can go see and many of which are in similar areas, many of which are open source. So it's really a challenge, like as you all trained interviewers and me trained looking at the space. Think how complex it is to a customer right now. Do that, think about like which service mesh do I pull together with this and that and which command line and which API tool, so I think that's both the challenge and the opportunity you often see this early on. One company that we just had coming out is called Render and their idea is to build an application platform service kind of on top of all this and just to hide it all from the user which I think is, I think that's what always happens in these ecosystems. You get so many players and then someone will be the bundler and make a suite out of it. Or someone will write a service on top of it all and take it away from you. So I think it's sort of a healthy part of a rapidly changing ecosystem. And Render will be doing some interesting things, but they talk to Application developers, not to infrastructure people. App developers don't want to know about any of this. >> Well we're sitting here at KubeCon in the midst of kind of, right at that margin, right at that boundary between from one perspective it looks very developer-y, But from another perspective, this seems very operator-y here. How do you see, in the market in the place, with the buyers, the CIOs or the technical buyers out there. I mean how are you looking at infrastructure versus developers and cloud et cetera? >> It's funny, you know we're all infrastructure people for the most part. What I often say, I know you all know that as well, like at the end of the day infrastructure is only there to run applications. It has no other purpose in life except to be a great place to run applications. But it's also accountable for doing a lot of the things you need. It has to make it run fairly at a certain performance. It has to make sure it's safe from attack. It needs to make sure the data is backed up. So I always just try to think about that when I'm looking at these startups, and we were just talking about this before the show. When I go up to one of the booths and I ask, I usually ask, how do you make someone's life better? Sometimes you get someone who's not the most senior person at the company and they'll quickly go into the technology on how it's this or that. But if you can't frame it in the context of how some enterprises' applications are better, faster, safer then it's really not that interesting, I think, to a CIO that has all these decision making. So, anyway I keep coming back to that with what ever infrastructure or application companies out there and try to wonder what's going on. >> Yeah, no I do really like that as we often frame it, it's what is the business value? It's, you know, nobody really has a problem that I need to rub Kubernetes on. Yes, I need agility, I need you know, the result of what having a distributed architecture drives from my business is what I need. Not the niggling little details there. Um, so I love that piece of what you do better for a company. The other thing, I walk around and I talk to some of these companies and some of them, I scratch my head a little bit as to the oh well I created a cool project, and we've open sourced it and that's my business. And as you know we've talked about the cautionary tale of Docker. Where are we with open source and business model and what's your latest take on that? >> Boy, that is ever evolving. It's funny though, if you look at even just the last ten years since you've been covering things. The go to model for most open source companies has shifted from maybe supportive subscription to really, some of them are open core meaning that parts of it are closed source. But, more and more that the really well to do ones are running them as a service. So that tends to be what we look for now is, whether you're running it directly, or you're doing something with a Microsoft, Google, Amazon where you get some of the revenue from it, which is a big, a big if. That seems to be one of the better ways to consume it and the people who have control over the software should be the best at operationalizing it. So that's kind of the change that we've seen as of late. >> Yeah, quick follow up on that, when we look at the hyper scale, the public clouds. Their marketplaces are getting more and more, you know, it's just a big force in the marketplace. Especially AWS, but Azure's pushing that way and Google to some extent there. Do you give any advice to your portfolio customers? How they should think about their relationships with the big cloud players? >> Well yeah, I mean that's one of the biggest discussions, not even just for our tech companies, but our commerce companies and everywhere else. But I do think what's kind of interesting, in many cases we're seeing the companies talk about maybe Amazon or someone is running that software as a service and it's maybe it's a little older version or maybe it's not all the bells and whistles. So there's certainly a case where good enough is good enough and it kind of crushes the startup, but you also hear a fair amount of tales of where it introduces them to this concept for the first time and then they're going to move over to perhaps the best of breed case, so obviously getting that right is a big job for the founder as well as for an investor. But, um I really see it as a mixed bag. The notion of being introduced to a customer at a lower cost than ever before matters a lot if they then switch to you. >> Well Steve, another boundary that you're sitting at is the boundary between all these technology providers and the customer. Any particular observations on trends over in the customer side? Are people looking to save money, are people feeling good, are the techies really leading the adoption? Is CIO down? Digital transformation? I mean, you're sitting right there in the middle. >> Yeah I mean the good news for I think all startups are that software matters and the digital transformation that's been going on for many, many years continues in a broad way. I would say at the end of the day though, the one question that I almost ask just back to your point on business value. I ask any startup, tell me why you are at least 10 times better than everyone else in this space. And because it is, the bad news of so many startups and so many cool ideas is how's anyone to choose? So if you ask any of your CIOs, they're just massively confused. They try to look for a bigger vendor who could possibly bundle it all together and make it a suite. That's super enticing as you know to all these guys. But when you have this much churn and change going on, you know someone has to step into that role, so I would just say that the ideal thing is you have smaller number of vendors, that never works with a lot of rapid innovation so somewhere in the middle you need to have startups that are really good at bundling in with other folks and fitting into APIs and doing that. >> Alright, so Steve, we've had an interesting view on what's going on in the security industry this week and I know you've got a perspective on it. Our team did the AWS reinforce show in Boston and it was generally upbeat, talking about all the great things that cloud's doing and you know, modernize everything we're doing. Pat Gelsinger from VMware, you know, banging on the table at VMware saying you know, we need a do-over, we need to start over with security. Here at this show, if some people are very cautiously optimistic that we've solved a bunch of the problems of security. You know, where in your view are we, and where are we going? >> I think we'll never be done with security. However, I do think we've reached a maturity level, if you, well, you were here. A couple years ago, there were so many security companies just for containers and I think, you know that's interesting to some extent, but, every CIO is going to have a mixed environment. And so I think what you see this year and what you saw with Palo Alto's acquisitions, so my companies Alumio I know you've talked to. It's really saying let's have one master policy and have it actually then go out and talk to Amazon, talk to my local infrastructure, talk to containers, talk to server lists. That will be the next wave of things going on. But, um, I think whenever you see a maturing of a company like this, the management tools and the security tools that have to inter operate start to really make a showing. And I actually see that quite a bit in this show, so that's a sign of a little bit of maturity going on here. >> Okay, last thing, Steve, I guess, what's catching your eye? Anything interesting or spaces there that you'd call out that we haven't already touched on? >> Well, I spend a lot of time these days actually on, and I hesitate to say it, but on AI. And I mean specifically it is such a hyped term and it's used in many ways like cloud used to be used, so it's just sort of a marketing term in many ways. But specifically, the picks and shovels that are enabling that, many of which show up here too because it is being deployed in containers, that sort of thing. So certainly the tools, but more importantly the vertical applications that can have a meaningful benefit from it. And I'll say, same thing as with infrastructure. AI is a means to an end, it's not the actual thing you're trying to do. But there's real, there's been a real advance there and so I'm really enjoying watching where you get these 10x improvements because you're using the data and AI there. So I continue to love infrastructure and developer tools and I think especially as they get applied to some of these new areas, like AI. That's where I'm excited about what we'll be seeing. >> Well, Steve, really appreciate you coming by. Congrats to the Demon Render, definitely look to catch up there if we don't catch him this week, we'll get him to our Palo Alto studios sometime. >> Yeah, Render is cool. You can go try it out. Render.com >> All right. For John Troyer, I'm Stu Miniman. Getting towards the end of day 1 of 3 days. Wall to wall coverage. Check out theCUBE.net for all of the coverage, and as always, thanks for watching theCUBE. (upbeat music playing)

>> from our studios in the heart of Silicon Valley, Palo Alto, California It is a cute conversation. >> Hello and welcome to the Special Cube conversation with remote gas. Steve, harried managing director of General Catalyst, is he's a venture capitalist. >> Former >> CTO of the M. Where? Cube alumni. Steve, welcome to this special cube conversation coming in remote from Palo Alto. You're right across town, but still grab you big news happening. And also get your thoughts on the emerald 2019. Welcome to our remote conversation. >> Yeah, we were close. And yet this makes it even more convenient. We >> love the new format. Bring people into no matter where they are, no matter. Whatever it takes to get the stories we want to do that. And two important ones having. We know the emeralds coming next week. But congratulations. In order to you and your portfolio companies signal FX, another cube alumni from we've been covering since the beginning of their funding acquisition. Bye, Splunk today for over a billion dollars. 60% in cash and 40%. And stop. Congratulations. You've been on the board. You've known these guys from VM. We're quite a team. Quite an exit It's a win win for those guys. Congratulations. >> Yeah, Great group of guys. Several, which were at being where, as you as you mentioned, and as you've had on your show, that's great. They were doing a really good job of monitoring and getting metrics about applications and how they're doing it. And they're marrying it with spunk, stability to ingest logs and really understand operational >> data. And I think that combination will be very powerful. >> It brings kind of what we've been monitored. Calling Cloud 2.0, Suzie, monitoring 2.0, is really observe ability As the world starts moving into the kinds of service is we're seeing with Cloud on premises operations more than ever, that game has changed much more dynamic, and the security impact is significant. And certainly as as applications connect with its coyote or any I p device having that day, that scales really critical part of that. And I know signal left fax was one of those companies where you invested early, and I remember interviewing a couple of years ago in saying, Damn, these guys might be too early. I mean, they're so smart, they're so on it. But this is an example of skating to where the puck is As we increase, Key would say, These guys were just hitting their stride. Steve, can you Can you share any color commentary on on the deal and or you know why this is so important? >> Well, they've been at this for a long time, and they're a great team. I've been involved. Is investor less time? Obviously. But it was the really original team out of Facebook monitoring really at scale applications and then trying to take that technology that Facebook could use and applied it to our world. And, you know, as you discovered, we're in a world of micro service's and containers, and that is definitely hitting its stride right now. And so they were in the right place knowing how >> to monitor this very fast moving >> information and make some sense out of it. So you're a really good job on their part, and it was a pleasure to be >> along for part of the ride with him. >> It's great to me, great founders that have a vision and stay the course because, you know it's always it's always tricky when you're early to see the future especially around their top micro surfaces and containers way back before became the rage and now more relevant operationally for enterprises, it's easy to get distracted and man that fashion. We'll just jump on this trend of this way. They stayed the course. They stayed the nose to the grindstone and now observe ability. Which, to me is code word for monitoring. 2.0 is probably one of the hottest segments you saw Cummings going public companies filing the pager Duty dynatrace. Now you guys with your acquisition with Signal FX, This is an important sector this would normally be viewed in. I t. Rule is kind of list of white space, but it seems to be a much bigger landscape. Can you comment on your view on this and why it's so important? Why is observe ability so hot? Steve? >> Well, it's been this actually had a great market to be in for quite a while. They've been a large number of companies, continue to be both built up, and it's pretty simple. That amount of e commerce, or the amount of customer interactions you're having over applications and over the Web has gone up, and so anything that's not performing well or as downtime literally cost you a lot of money as a company. And so as these applications get more complex and they're being relied on >> Maur for revenue and for custom directions, >> you simply have to have better tools. And that's gonna be something that continues to evolve, that we got more complex, absent, more commerce is going >> to go through them. >> Complexity is actually something that people, a lot of people are talking about. I want to ask you something around today's marketplace, but I want you to compare and contrast it, similar to what your experience wasn't v m Where were you? The CTO virtual ization of all very, very quickly on ended up becoming a really critical component of the infrastructure, and a lot of people were pooh poohing that initially at first, then all sudden became. We've got to kill the M where you know so the resiliency of the M, where was such that they continue to innovate on virtualization, and so that's been a part of the legacy of V M wear, and the embers will cover next next week. But when you look at what's happening now with cloud computing and now some of the hybrid cloud up opportunities with Micro Service's and other other cool things. The role of the application is being is important part of the equation. It used to be the standup infrastructure, and that would enable the application to do things virtualization kind of change that game. Now you don't need to stand up. Any infrastructure could just deploy an application, and the infrastructure can be code and be self form, so you can have unique requirements. As infrastructure driven by the application, the whole world seemed to have flipped around. Do you see it that way? Is that accurate assessment? What's your thoughts on that? >> I think you're right on a bunch of fronts. People have been calling a different things, but the beauty of the, um where and you know this is a while ago now, but the reason it was successful is that you didn't have to change any of your software to use. It sort of slid him underneath an added value. But at the same time applications evolved. And so the that path of looking like hardware was something that was great for not changing applications. You have to think about a little differently when people are taking advantage of new application patterns or new service. Is that air in the cloud? And as you build up these as they're called cloud Native applications, it really is about the infrastructure. You know. It's job in life is to run applications. It sort of felt like the other way around. It used to be you wrote an application for what your infrastructure was. It shouldn't be like that anymore. It's about what you need to do to get the job done. And so we see the evolution of the clouds and their service. Is that air there? Certainly the notion of containers and a lot of the stuff that being where is now doing has been focused on those new applications and making sure Veum, where adds value to them, whatever type >> of application they are. >> It's interesting one of the exciting things in this way that we're on this year around multi cloud hybrid cloud in Public Cloud Now that we've kind of crossed over to the reality that public cloud has been there, done that succeeded I call that cloud 1.0, you saw the emergence of hybrid cloud. Even early on, around 2012 2013 we were talking about that of'em world instantly pad Kelsey here, but now you're seeing hybrid cloud validated. You got Outpost, you've got Azure stack, among other things. The reality is, if you are cloud native, you might not need to have anything on premise. Like companies like ours with 50 plus people. We don't have an I T department, but most enterprises have stuff on premise, so the nuance these days is around. You know, what's the architecture of of I T. These days, we add security into It's complicated. So these debates can there be a soul cloud for a workload? Certainly that's been something that we've been covering with the Amazon Jet I contract, where it's not necessarily a soul cloud for the entire Department of Defense. It's a soul cloud for the workload, the military application workload or app. The military. It's $10 million application, and it's okay to have one cloud, as we would say, But yet they're going to use Microsoft's cloud for other things. So the ODS having a multiple cloud approach, multiple environments, multiple vendors, if you will, but you don't have to split the cloud up. Her say This is kind of one of those conversations really evolving quickly because there's no real school of thought around this other than the old way, which was have a multi vendor environment split the things. What's your thoughts on the the workload relationship to the cloud? Is it okay to have a workload, have a single cloud for that workload and coexist with other clouds? >> It's funny. I've been thinking about this more lately. Where if you went back earlier in time, forgetting cloud, there used to be a lot of different type of servers that you >> can run on, whether it >> be a mainframe or a mini mainframe or Unix system or Olynyk system. And to some extent, people are choosing what would run where, based on the demands of the application, sometimes on price, sometimes on certifications or even what's been poured into the right one. So this is a beating myself, you know, that's that's a while ago. It's not too different to kind of think about the different kind of cloud service is there out there, whether you're running your own on your own data center or whether you're leveraging one from the other partners. I really do think in the ideal world you get your choice of the best possible platform for the application across a variety of characteristics. And it's kind of up to the vendors of management software and monitoring software at security software to give you more flexibility to choose where to run. And so for getting D'Amore exactly. But think of a virtualization layer that really tries to abstract out and let you more fluidly run things on different clouds. Do you think that's where a lot of the the core software is head of these days really >> enable that toe work better >> as a >> 1,000,000 other use cases, but with storage being moved around >> for disaster recovery or for whatever it else might >> be? But that quarter flexibility reminds me a lot of choosing what application >> would want. Run would run where within your own company >> and the kubernetes trend in containers certainly really makes that so much more flexible because you can still run VM. Where's viens beams under the covers over Put stuff on bare metal a lot of great opportunities that's exciting >> and you slap in a P I in front of them and micro service is sort of works in tandem with that so that you could really have your application composed >> across multiple environments. >> And I think the ob surveilling observe ability is so hot because it takes what network management was doing in the old way, which is monitoring. Make sure things are operating effectively and combining with data. And so when I heard about the acquisition of signal effects into Splunk, I'm like, There it is. We're back to data. So observe ability is really a data challenge and opportunity for using what would be a white space monitoring. But it's more than monitoring because it's about the data and the efficacy of that data and how it's being used, whether it's for security or whatever your thoughts >> s. So there's more data than ever, for sure, and so being able to stream that in being able to capture it at cost, all that is a big part of our environment still working. The key thing is turning that into some actionable insight, and whether you're using no interesting calculations for that or different forms of machine learning like that's where this really has to go is with all this data coming in. How do >> I avoid false false >> positives? How do I only alert people when needed, then that allows you to do what everyone's talked about for 30 years, which is automatic remediation. But for now, let's talk about it. Is how do I process all of this rich data and give me the right information to take action? >> Do you want to thank you for coming on this promote cube conversation? You've been with us at the Cube since 2010. I think our first cube event was A M C. World 2010. That show doesn't existing longer because that folded into Del Technologies world. So VM world next week is the last show standing that has been around since the Cube. You've been around? Of course, you guys had VM worlds had their 10th anniversary was 2013 as a show. But this is our 10th year. Well, thank you for being part of our community and being a contributor with your commentary and your friendship and referral. Appreciate all that. So I gotta ask you looking back over the 10 years since you been with Doug, you've vm world. What's the most exciting moments? What are moments that you can say? Hey, that was an amazing time. That was a grind, but we got through it. Funny moments. Your thoughts. >> Boy, that's a tough question. I've enjoyed working with you, John and the Cube. There's been somebody really interesting things for me. The sum of the big acquisitions that we went through a V Um, where? Where? I think the NSX exposition. When we get a syrah, I think that really pushed us an interesting spots. But we have gone through, uh, I pose an acquisition ourself by the emcee begun Theo. It's a pretty vicious competition from Be Citrix Airs in or Microsoft. Yeah, that's just the joy of being a These companies is lots of ups and downs along the way that they almost kind of fit together to make an exciting life. >> What was some moments for you? I know you had left was the 2015 or 26 boys with your last day of >> the world. You go now, you know about six years. >> What do you miss about the end? Where >> the team is what everyone kind of cliche says. But it's totally true. The chance to kind of work with all those people at the executive staff all the way down to like these awesome engineers with Koi is so I definitely missed that Miss Shipping products. You don't get to do that as much directly as a venture capitalist. But on the flip side, this is a great world to be, and I get to see enthusiastic. You're very optimistic founders all day long, pushing the envelope. And while that was existing at the end where, uh, it's it's what I see every single day here. >> You've been on The Cube 10 times at the M World. That's the all time spot you're tied for. First congratulates on the leaderboard. It's been a great 10 years. Going forward. We've seen are so good. Looking back, I would say that you know Palmer, it's taking over from Diane Greene. Really set the table. He actually laid out. Essentially, what I think now is a clearly a cloud SAS architecture. I think he got that pretty much right again. Or maybe early in certain spots of what he proposed at that time. There's some things that didn't materialize is fast, but ultimately from core perspective. You guys got that right, Um, and then went in Try to do the cloud. But then and this year it comes in for suffered to find, you know, line with Amazon. And since that time, the stock has been really kind of it on the right. So, you know, some key moments there for Of'em. Where from Self >> Somali. More stuff. It's fun to see Pivotal now possibly coming back into after after getting started there. But I think you know, there's there's a hugely talented team of execs there. Pat L Singers come >> in and done a great job. I think, Greg, >> you and all these folks that Aaron, >> there are good thinkers. And so I >> think you'll consider just continue to see it evolved. Quite event and probably some cool announcements next week. >> Talk aboutthe roll Ragu and the team play because he doesn't really get a lot of the spotlight. He avoids it. I know he did talk to him privately that he won't come on the Q. I don't know what the other guys go on other guys in jail, so he's been instrumental. He was really critical in multiple deals. Could you share some insight into his role at bm bm were and why it's been so important. >> I'll push him to get on, especially now that you have remote. You can probably grab him now. He and Rajiv and Rayo Funeral Just all the guys air. I think he and Reggie basically split up half and half of the products. But Roger is very, very seminal in the whole cloud strategy that has clearly been working Well, he's a good friend in a very smart guy. >> Well, I want you to give me a personal word that you're gonna get me in a headlock and tell him to come on the Cube this year. We want him on. He's a great, great great guest. He's certainly knowledgeable going forward. Steve, 10 years out, we still got 10 more years of great change coming. If you look at the wee that's coming, you're out investing in companies again. You had one big exit today with the $1,000,000,000 acquisition that was happen by Splunk and signal effects. Ah, lot more action. You've been investing in security. What's your outlook? As you look at the next 10 years is a lot more action to happen. We seem to be early days in this new modern era. Historic time in the computer industry as applications without dictating infrastructure capabilities is still a lot more to do. What do you excited about? >> There's a million things I get to see every day, which are clearly where the world is headed. But I think at the end of the day there's there's infrastructure, which the job in life of infrastructure is to run applications. And so then you look at applications. How are they changing and what is the underlying fabric gonna need to do to support them? And if you look at the future of applications, it's clearly some amazing things around artificial intelligence and machine learning to actually make them smarter. It's all different factors form factors that they're running on and being displayed on. I think we clearly have a world where with the next generation of networking, you could do even more at the edge and communicate in a very different way with the back end. I kind of look at all these application patterns and really trying to think about what is the change to the underlying clouds and fabrics and compute that's gonna be needed to run them. I think we have plenty of head room of interesting ideas ahead. >> Stew, Dave and I were talks to Dave. Stupid Valenti student and I were talking about, you know, as infrastructure and cloud get automate as automation comes in, new waves are gonna be formed from it. What new waves do you see? Is it like R P ay, ay, ay, ay. Because as those things get sucked in and the ships and two new waves What? Oh, that's some of the key ways people should pay attention to. I'm not saying the industries is going away, but as it becomes automated, and as the shift happens, the value still is there. Where is those new waves? >> Well, then, today it looks like most applications they're gonna be composed of a lot of service is, um and I think they're gonna be able. They're going to need to be displaying on everything from big screens to small screens to purely as a headless 80. I front ends, and so again, I think at the end of the day, this this infrastructure is gonna have to have a lot of computation capability after crunch do tons of data but also have to stitch together these connections between components and provide really good experiences and predictability in the network and all those air very hard problems that we've been working on for a while. I think we'll keep working on them and new forms for the next 10 years at least. >> Awesome. Steve. Thanks for being a friend with us in the queue, but you're funny. Favorite moment of the Q. Can you share any observations about the cube and your experiences? Your observations over the 10 years we've come a long way, >> you go ugly, actually enjoyed it. I mean, it's a microcosm of all the other stuff going on, but I saw your first little box that you built and used for the Cube like that was that was really cool. But now the fact that I'm on my laptop, you doing this over the network and it's showing up is pretty awesome. So think you're following the same patterns of the other, have the other applications moving the cloud and having good user experiences. >> Cube native here software native Steve. Thank you so much for stating the time commenting on the acquisition. I know it's fresh on the press. Ah, lot more analysis and cut to come next week. It's certainly I'll be co hosting at Splunk dot com later in the year. So I'm looking forward to connect with a team there and again. Thanks for all your contribution into the cube community. We really appreciate one. Thank you for your time. >> Thanks. You guys are awesome. Thanks for chatting. >> Okay. Steve Herod, managing director at general counsel, Top tier VC From here in Silicon Valley and offices around the world, I'm John for breaking down the news as well as a V Emerald preview with the former CTO of'em. Were Steve hair now a big time venture capitalists. I'm John Ferrier. Thanks for watching.

our Studios in the heart of Silicon Valley Palo Alto California this is a cute conversation hello everyone welcome to the special cube conversation with a remote guest Steve Herod managing director of general kennel s he's a venture capitalist former CTO of VMware cube alumni Steve welcome to this special cube conversation coming in remote from Palo Alto you're right across town but still we're gonna grab you big news happening and also get your thoughts on the Emerald 2019 welcome to our remote conversation yeah hey Jon yeah we're close and yet this makes it even more convenient go we'd love the new format of bring people into no matter where they are no matter what whatever it takes to get the stories we want to do that and and two important ones to having we we know vm world's coming next week but congratulations in order to you and your portfolio companies signal FX another cube alumni firm we've been covering since the beginning of their funding acquisition by Splunk today for over a billion dollars sixty percent in cash and forty percent in stop congratulations you've been on the board you've known these guys from VMware quite a team quite an exit it's a win-win for those guys congratulations yeah great group of guys several of which were at VMware has you as you mentioned and as you've had on your show that's great they were doing a really good job of monitoring and getting metrics about applications and how they're doing it and they're marrying it with spunks ability to ingest logs and really understand operational data and I think the combination will be very powerful it brings kind of what we've been monitoring cloud 2.0 essentially monitoring 2.0 is really observability as the world starts moving into the the kinds of services we're seeing with cloud and on-premises operations more than ever that game has changes much more dynamic and the security impact is significant and certainly as applications connect whether it's IOT or any IP device having that data at scale is really a critical part of that and I know signal FX was one of those companies where you invested early and I remember interview them a couple years ago and saying damn these guys might be too early I mean they're so smart they're so on it but this is an example of skating to where the as Wayne Gretzky would say these guys were just hitting their stride Steve can you can you share any color commentary on on the deal and or you know why this is so important well they've been at this for a long time and they're a great team I've been involved as an investor less time obviously but yeah it was the really original team out of Facebook monitoring really at scale applications and then trying to take that technology that Facebook could use and applied it to our world and you know as you discovered we're in a world of micro services and containers and that is definitely hitting its stride right now and so they were in the right place knowing how to monitor this very fast moving information and and make some sense out of it so yeah really good job on their part and it was a pleasure to be along for part of the ride with them it's great to meet great founders that have a vision and stay the course because you know it's always tricky when you're early to see the future especially around ok we're talking micro services and containers way back before it became the rage and now more relevant operationally for enterprises it's easy to get distracted and it's fashion well just jump on this trend or this wave they stayed the course they stayed the nose to the grindstone and now observability which to me is code word for monitoring 2.0 is probably one of the hottest segments you saw companies going public companies filing the pager Duty dynaTrace now the you guys with your acquisition with signal FX this is an important sector this would normally be viewed in the IT world as kind of lists of white space but it seems to be a much bigger landscape can you comment on your view on this and why it's so important why is observability so hot Steve well it's been this actually been a great market to be in for quite a while they've been a large number of companies continuing to be both built up and it's pretty simple the amount of e-commerce or the amount of customer interactions you're having over applications and over the web has gone up and so anything is not performing well or house downtime literally cost you a lot of money as a company and so as these applications get more complex and they're being relied on more for revenue and for customer interactions you know simply you have to have better tools and that's gonna be something that continues to evolve we have more complex apps and more commerce is going to go through them complexity is obviously something that people a lot of people are talking about I want to ask you something around today's marketplace but I want you to compare and contrast it similarly to what your experience was at VMware when you the CTO you know virtualization evolved very very quickly and ended up becoming a really critical component of the infrastructure and a lot of people were pooh-poohing that initially at first and then all the sudden became we got to kill VMware and you know so the resiliency of VMware was such that they continued to innovate on virtualization and so that's been you know part of the legacy of VMware and VM roads will cover next next week but when you look at what's happening now with cloud computing and now some of the hybrid cloud opportunities with micro services and other other cool things the the role of the application is being is important part of the equation it used to be the stand up infrastructure and that would enable the application to do things virtualization kind of changed that game now you don't need to stand up any infrastructure you can just deploy an application then the infrastructure can be code and be self formed so you can have unique requirements as infrastructure driven by the application the whole world seems to have flipped around do you see it that way is that accurate assessment and what's your thoughts on that I think you're right on a bunch of fronts people have been calling it different things but the beauty of VMware and you know this is a while ago now but the reason it was successful is that you didn't have to change any of your software to use it sort of slid in underneath and added value but at the same time applications evolved and so the path of looking like hardware was something that was great for not changing applications you have to think about a little differently when people are taking advantage of new application patterns or new services that are in the cloud and as you build up these as they're called cloud native applications it really is about the infrastructure you know it's job and life as to run applications and it's it sort of felt like the other way around it needs to be you wrote an application for what your infrastructure was it shouldn't be like that anymore it's about what what you need to do to get the job done and so we see the evolution of the clouds and their services that are there certainly the notion of containers and a lot the stuff that VMware is now doing has been focused on those new applications and making sure VMware adds value to them whatever type of application they are it's interesting one of the exciting things in this wave that we're on this year around multi cloud hybrid cloud and public cloud now that we've kind of crossed over to the reality that public cloud has been there done that succeeded I call that cloud 1.0 you saw the emergence of hybrid cloud even early on around 2012-2013 we were talking about that at VMworld you know certainly Pat Kelson here but now you're seeing hybrid cloud validated you got outpost you got Azure stack among other things the reality is if you are cloud native you might not need to have anything on premise like companies like ours with 50 plus people we don't have an IT department but most enterprises have stuff on premise so the the nuance these days is around you know what's the architecture of IT these days when you add security into it's complicated so there's debates can there be a sole cloud for a workload certainly that's been something that we've been covering with the Amazon Jedi contract where it's not necessarily a sole cloud for the entire department of defense it's a sole cloud for the workload the military application workload or app the military it's 10 billion dollar application and it's okay to have one cloud as we would say but yet they're gonna use Microsoft's cloud for other things so the DoD's having a multiple cloud approach multiple environments multiple vendors if you will but you don't have to split the cloud up or say this is kind of one of those conversations really evolving quickly because there's no real school of thought around this other than the old way which was have a multi-vendor environment split two things what's your thoughts on the the workload relationship to the cloud is it okay to have a workload have a single clap for that workload and coexist with other clouds it's funny I've been thinking about this more lately where if you went back earlier in time forgetting cloud there used to be a lot of different type of servers that you could run on whether it be a mainframe or a mini mainframe or UNIX system or a Linux system and to some extent people are choosing what would run where based on the demands of the application sometimes on price sometimes on certifications or even what's been ported to the right one so this is I'm beating myself but you know that's that's a while ago it's not too different to kind of think about the different kind of cloud services are out there whether you're running your own on your own data center or whether you're leveraging one from the other partners I really do think in the ideal world you get your choice of the best possible platform for the application across a variety of characteristics and it's kind of up to the vendors of management software and monitoring software at security software to give you more flexibility to choose where to run and so forgetting VMware exactly but think of a virtualization layer that that really tries to abstract out and let you more fluidly run things on different clouds I do think that's where a lot of the you know the core software is head of these days to really enable that to work better and so a million other use cases with with you know storage being moved around for disaster recovery or for whatever it else might be but that core of flexibility reminds me a lot of you know choosing what application would one run would run where within your own company and the kubernetes trend in container certainly really makes that so much more flexible because you can still run VMware's on the ends beams under the covers or put stuff on bare metal a lot of great opportunities so it's exciting and you slap an API in front of them and and micro-services sort of works in tandem with that so that you you could really have your application composed across multiple environments and I think the observable observability is so hot because it takes what network management was doing in the old way which is monitoring making sure things are operating effectively and combining with data and so when I heard about the acquisition of signal FX into Splunk I'm like there it is we're back to data so observability is really a data challenge and opportunity for using what would be a white space monitoring but it's more than monitoring because it's about the data and the efficacy of that data and how it's being used whether it's for security or whatever your thoughts so there's more data than ever for sure and so being able to stream that in being able to capture it at cost all that is a big part of our you know the environments we all work and the key thing is turning that into some actionable insight and whether you're using you know interesting calculations for that or different forms of machine learning like that's where this really has to go is with all this data coming in do I avoid false false positives how do i only alert people when needed and then that allows you to do what everyone has talked about for 30 years which is automatic remediation but for now let's talk about it is how do i process all of this rich data and give me the right information to take action see we want to thank you for coming on this promote cube conversation you've been with us at the cube since 2010 I think our first cube event was EMC world 2010 that show doesn't exist any longer because that folded into Dell technologies world so VM world next week is the last show standing that has been around since the cube cubes been around of course you guys had the VM worlds had their 10th anniversary I think was 2013 as a show but this is our 10th year I want to thank you for being part of our community and being a contributor with your commentary and your friendship and referral appreciate all that so I gotta ask you looking back over the 10 years since you've been with the cube VMworld what's the most exciting moments what are moments that you can say hey that was an amazing time that was a grind but we got through it funny moments your thoughts yeah boy that's a tough question I've enjoyed you know working with you John and the cube there have been so many really interesting things for me the some of the big acquisitions that we went through at VMware where I think the nsx acquisition when we get nasarah I think that really pushed us in an interesting spot but we had gone through IPOs and acquisition ourselves by EMC and we've gone through some pretty vicious competition from whether it be Citrix or Zin or Microsoft yeah that's just the joy of being at these companies it's lots of ups and downs along the way but they all kind of fit together to make an exciting life what were some moments for you I know you had left was a twenty fifteen or twenty six point eight vs world you go down there yeah about six years what do you miss about VMware the team is what everyone kind of cliche says but it's totally true the chance to kind of work with all those people at the executive staff all the way down to like these awesome engineers with Co ideas so I definitely missed that miss shipping products you don't get to do that as much as a venture capitalist but but on the flip side this is a great world to be and I get to see enthusiastic you know very optimistic founders all day long pushing the envelope and while that was existing at the EM where it's it's what I see every single day here you've been on the cube ten times at vmworld that's the all time spot you're tied but first congratulations on the leaderboard well it's been a great ten years going forward we've seen more so go looking back I would say that you know Palmer it's taking over from Diane Greene really set the table he actually laid out essentially what I think now as a clearly a cloud SAS architecture I think he got that pretty much right again or maybe early in certain spots of what he proposed at that time though some things that didn't materialize as fast but ultimately from a core perspective you guys got that right and then went in try to do the cloud but then and this year it comes in for a software-defined you know line with Amazon and since that time the stock has been really kind of up to the right so you know some key moments there for VMware from small somalia more stuff it's fun to see pivotal now possibly coming back into after after getting started there but I think you know there's there's a hugely talented team of executives there Pat Yeltsin jurors come in and done a great job I think Raghu and all these folks that are in there are good thinkers and so I think you'll consider to continue to see it evolve quite a bit and probably some cool announcements next week talk about the role Raghu and the team played because he doesn't really get a lot of the spotlight he avoids it I know he'd I've talked to him privately he won't come on the qoi let the other guys go on other guys and gals so he's been instrumental he was really critical in multiple deals could you share some insight into his role at VMware VMware and why it's been so important well I'll push them to get on especially now that you have remote you can probably grab him no he and Rajiv and andraia Ferrell just all the guys are I think he and regime basically split up half and half of the products but I know Raghu is very very similar in the whole cloud strategy that has clearly been working well he's good friend in a very smart guy well I want you to give me a personal word that you're gonna give him in a headlock and tell him to come on the cube this year we want him on he's a great great great guest he's certainly knowledgeable going forward Steve 10 years out we still got 10 more years of great change coming if you look at the wave that's coming you're out investing in companies again you had one big exit today with the billion dollar acquisition that was happening by Splunk and signal affects a lot more action you've been investing in security what's your outlook as you look at the next ten years there's a lot more action to happen we seem to be early days in this new modern era historic time in the computer industry has applications of now dictating infrastructure capabilities is still a lot more to do what are you excited about there's there's a million things I get to see everyday which are clearly where the world is headed but I think at the end of the day there's there's infrastructure which the job and life of infrastructure is to run applications and so then you look at applications how are they changing and and what is the underlying fabric gonna need to do to support them and if you look at the future of applications it's clearly some amazing things around artificial intelligence and machine learning to actually make them smarter it's all different factors form factors that they're running on and being displayed on I think we clearly have a world where with the next generation of networking you can do even more at the edge and communicate in a very different way with the backend so I kind of look at all these application patterns and really try to think about what is the change to the underlying clouds and fabrics and compute that's going to be needed to run them I think we have plenty of headroom of interesting ideas ahead stew Dave and I were talks to Dave Stuben they want this too many man died we're talking about you know as infrastructure and cloud get automated as automation comes in new waves are gonna be formed from it what new waves do you see is it's like RPAs a I I mean because as those things get sucked in and they ships in to new waves what are the some of the key ways people should pay attention to I'm not saying the inverse tress is going away but as it becomes automated and as the shift happens the value still is there where is those new waves well I think today it looks like most applications are going to be composed of a lot of services and I think they're gonna be able they're gonna need to be displaying on everything from big screens to small screens to purely as headless api friends and so again I think at the end of the day this this infrastructure is gonna have to have a lot of computation capability have to crunch through tons of data but also have to stitch together these connections between components and provide really good experiences and ability in the network and all those are very hard problems that we've been working on for a while I think we're gonna keep working on them and new forms for the next ten years at least awesome see thanks for being a friend with us in the cube what's your funny favorite moment of the Q can you share any observations about the cube and your experiences your observations over the 10 years we've come a long way you've come a long way actually I've enjoyed it I mean it's a microcosm of all the other stuff going on but I saw your first little box that you built and used for the cube like that was that was really cool but now the fact that I'm on my laptop you know doing this over the network and it's showing up is pretty awesome so I think you're following the same patterns of the other of the other applications moving to the cloud and having good user experience because cube native here software if the male native Steve thank you so much for staying the time commenting on the acquisition I know it's fresh on the press a lot more analysis and cut to come next week it's certainly I'll be co-hosting ATS plunks Kampf later in the year so I'm looking forward to connecting with the team there and again thanks for all your contribution into the cube community we really appreciate it one thank you for your time thanks John you guys are awesome thanks for chatting okay Steve Herod managing director at General Counsel top tier VC from here in Silicon Valley and they have offices around the world I'm Jean ferré breaking down the news as well as a VM real preview with the former CTO of VMware Steve hare now a big-time venture capitalist I'm John Ferrier thanks for watching [Music] you [Music]

>> Live from Seattle, Washington, it's theCUBE, covering KubeCon and Cloud Native Con North America 2018 brought to you by Red Hat, the Cloud Native Computing Foundation and it's ecosystem partners. >> Hey welcome back everyone, we are live here in Seattle. It's theCUBE's coverage of KubeCon, Cloud Native Con, a part of CNCF, Cloud Native Computing Foundation, the rise of Kubernetes, this is what the show is all about. Three days of wall to wall coverage. We've been there from the beginning covering this KubeCon effort from the beginning. I'm John Furrier with Stu Miniman, we're here to analyze and break down the event with our guest analyst for the segment, Steve Herrod, CUBE alumni, he was there the first day we ever did theCUBE in 2010. He's been a good friend of theCUBE. Now he's a venture capitalist, managing director at General Catalyst, a premiere VC in the industry. Steve, great to see you. >> Good to be here. >> Thanks for coming on. >> Feels like the early days of some of the other conferences, too, doesn't it? >> It feels like AWS, you know seven/eight years ago where it tips over, there's a tipping point. We see that doubling, so you know, it's kind of that tipping point where there's more demand for theCUBE and we can fill it so there's great content but it's a bigger picture, right? And I want to break through that, I want to get your thoughts and let's have a shared conversation around what's really going on here. You're talking about a disruption in the industry of cloud computing. You got Amazon, just a freight train just taking all the beach, the waves coming in and this is an opportunity, this is my opinion, for the industry to kind of say, hey, it's a multi cloud world so you're not going to take all of it. You got Google, you got Microsoft, you got start ups. This is a way to create an opensource way to fill the gap. Your thoughts? You agree? >> I totally agree and I think what's interesting, this conference does not have a corporate, at least an explicit corporate sponsor. It has four or five that are all trying to have their play in it. Microsoft's not one of them, which is sort of interesting. But it was, I think, a very bold thing this year to have this big of a venue and invite this many people and then hope that you're going to get the sponsorships and all the other stuff that follows. >> In Seattle. >> In Seattle. Yeah, our weather is a little bit-- >> It's very meta. (laughing) >> Interesting. But, just to your point, I do think this is really interesting because it is more open than a lot of these conferences where people are coming together. Both open source but also so much focus on how do you do functions in a way that works across places, how do you service meshes. Like everything is, it's both good and bad because there's so many choices that people are being seen right now. >> You were the CTO of VMware, Stu you worked in the CTO office at EMC back in the day, you're seeing a systems kind of vibe going on in cloud and you got application renaissance, kind of almost like the app server days, think WebSphere or whatever, that movement in the 90's and 2000's, that kind of grew quickly, all kind of being modernized. So you have cloud scale. >> Mm-hmm. >> AI has been around for a long time but because of the cloud, there's a renaissance. Video's been around for a long time but because of the cloud, things like theCUBE is happening. So the cloud is enabling a rebirth of a lot of things. >> Mm-hmm. >> And enabling a lot of new things, how do you guys view that systems view, application renaissance? Jassy talks about a reinvent as a new kind of persona developing. >> Mm-hmm. >> As a buyer and IT investments are changing, you're making start up investments, it's crazy. >> Yep. >> What do you think? >> Yeah, so first of all John, I like what you're saying about that systems view because too often we would kind of focus on a specific tool. So virtualization was great, but, you know, big thing, I took a bunch of servers and made it smaller servers but I took the same old application and I shoved it in there, and I left it running for another five or 10 years when I probably should have modernized it. Today, you know we just had Cheryl on talking about the ecosystem and customers and what I want to focus on is how the users get value. What are building on top of this? >> Right. >> Not the next cool thing to build, but how do I run my business? How do I do cool things with genomics? How do I improve healthcare? And in many ways we're seeing some of these top down things. I mean what's gotten me so excited about things like serverless and been really poking and teasing at how that fits in with this ecosystem is it's not just about a way to kind of turn the crank on making things a little bit more efficient or, you know, I can manage more machines with fewer people, but you know it moves up things and for someone like myself, a networking guy with an infrastructure background? >> Right. >> It's a little out of my comfort zone and that's okay. You know we talked to Lou Tucker, Lou's really excited about where AI's going and what's there, so I think we're in a real renaissance here and it's a big inflection point. >> Well I think to your point, what's interesting, whenever I do a teacher course to a college or when I'm talking to start ups or even in the old days it's really easy to forget that infrastructure is not a thing in it's own right. It's solely there to enable applications and to enable other things and so whenever you get really deep in the weeds on this is a new security model for this type of container or this, it's important and you're thinking about the best way to do it but, really you're right, you have to abstract it out to can I ship value faster? Can I save customers money? Can I do something safer? You really have to think about it in that context. And there's so much activity here you have to really make sure you're thinking about where it all fits together. >> And you know, the computer science conversations changes, too. The nature of what is computer science is evolving. I want to get to that in the next kind of discussion point but I want to just, Steve, ask you, you were on the VMware side when VMware kind of entered in with virtualization. It was a desktop, it was an app, it was like you loaded it on a machine and then that ended up transforming a massive industry and so a lot of people compare what VMware did in it's growth and it's impact but saying the cloud has got certainly more orders of magnitude, you mentioned security. >> Mm-hmm. >> Where's the VMware moment in this cloud transformation impact? Your thoughts there, just because you've been on both sides, one as a driver, CTO at VMware and now as an investor. Where do you see cloud-- >> Yeah, I kind of thought of it as two different angles. One is, appealing to developers and then that taking you all the way through operations which is, I mean that is, dev ops is sort of looking at that. VMware's first product was a workstation product that made developers have a bunch of environments right in front of them and we always had a vision for getting into the operations center but we knew we had to kind of come up through that path and I think likewise, a lot of this tooling that we see here is developer first and it's them saying, "I like this tool "and I can make my job be more enjoyable this way." But what you're really seeing, especially at this one is, how do you start in the developer tools and then not be detested by developers but then actually be paid for it by the operations side. So if you look at the type of vendors that are here? You start having venture capitalists here. You have a few people wearing suits here. It is about making this more enterprisey, more production ready and that's kind of the natural progression of any major impact like this. >> And Heptio, certainly Stu was reporting earlier, the number has been better than the filing of VMware. You know, a half a billion dollar acquisition for talent and a position in the marketplace. There's liquidity so there's investment opportunities. We talked to Jerry Chan about this at AWS, I want to get your thoughts, how is the investment thesis going on because what are you investing in? The notion of a stack, has kind of transformed into Lego blocks and services. >> Yep. >> So the notion of a stack is kind of changing although I've heard people say the, "Kubernetes stack." I'm like, well, what does that mean? (laughing) >> Which one? Yeah. >> So there's a lot of kind of stack derivatives. >> Mm-hmm. >> But how do you invest in this? What are you looking for? Where is the value? >> Yep. >> Where are sniffing out the deals? Where's the white spaces? And where should entrepreneurs go? >> Yeah, and I have several companies presenting here so I've certainly done some investments around this space, but I focus on a few things very specifically. I've been around this a little while. I really like to think about not tools that go to the new, hot new companies. I really try to think about what is more mainstream company going to adopt? And that usually means a few things. It has to have enterprise capabilities. It has to fit into the rest of the things. But I look at like how are you going to digest this with your other tools and the other processes that you have in place? If it's a security solution, I look at, I don't want really something that only protects the brave new world, I want it to fit in somehow with security policies and other things that are happening. >> So mainstream adoption? IT kind of impact? >> Yeah, just like a tool that actually works across environments and lets you go from here to there. You all have talked to Illumio several times? >> Yeah. >> They're trying to do micro segmentation for physical machines all the way through containers. The other thing I'm keeping a close eye on is, this is chaos, in terms of the number of start ups doing very specific point solutions and you have to really think about how does that grow into a big enough chunk of a budget or a big enough problem. So every single time I make an investment, I ask how does this do something 10 times better than something else and is that important to the company? And that's really hard to answer sometimes. >> Steve, and what's your take on the kind of opensource, open core, business model today? To be honest, I go around, I talked to some of the founders there, and everybody wants to contribute to opensource but maybe I don't want to build a business around it, because actually monetizing that is really tough. Is it just, I look to get acquired by one of the big players here? Or can I actually build a business with opensource at it's core? >> That's literally the billion dollar question. >> Yeah. >> But I do think, like on the positive side, the number of exits or big things recently with Magento, with Cloudera doing great, with, obviously, Red Hat, but we've seen, and Neilsoft, like a lot of big acquisitions and some good IPOs. But on the flip side, you definitely have to think about it differently now. There's a growing license that is very careful about allowing clouds to host your opensource project without contributing back. Hopefully that'll allow this hosted model to play out. I personally, I certainly look to opensource. You can see what's going on from traction but when you see it as a great lead generation engine which it often is for folks, I think that's a really healthy way to avoid spending a bunch of marketing money. >> Yeah, it's been fun. A lot of different shows we go to. Love your analysis, thanks for coming on, appreciate it. Just in general, as not a VC, but as a tech person and in the industry, I want to ask you and Stu what wave are we on? Obviously Kubernetes is now kind of front and center but we've still got cloud native. Is it the cloud? You got IoT and Amazon ARM, but we saw a lot of conversations around Edge. They had some interesting announcements around satellite telemetry coming in to regions. So you got Google, you got Microsoft, you got the big players. Is it the rich get richer? Is there going to be a new second tier? Cloud service provider? Where is this going? How is it going to reshape the industry? I mean, just big picture, what's your thoughts? >> Well, this is literally what I get paid to do is figure out where things are headed. I'd say, just at a top level, this is a super fun time to be in this lower level of the stack. You mentioned already AI gets, sort of AI washing goes on a lot right now but the very core of it is literally changing every application in interesting ways. And for me, I was a former hardware designer. The fact that you can now build and have really cool new hardware that's accelerating this stuff is really exciting. You saw Amazon's announcements, not only an ARM based server but Inferentia chips. Google has been doing this with TPUs-- >> Hundred gig networking in there, like, you know, high speed-- >> It is impressive. >> Cluster configurations, it's amazing stuff. >> So I love the fact that we can actually have very big innovation at each stage of the stack and it's because the combination of every company becoming an app, digital company coupled with the power of AI to transform things means you need dev ops to faster, you need these platforms that let you do more self service. And then I sprinkle on top of that is just the ridiculous demand for high quality engineers and if you don't give them an environment where they feel productive, they're just not going to stay at your company. And so all the mix comes together. I don't think they're going to be, there'll be some giant companies that already are, but I think the ability to create a new company that becomes large quickly or becomes small quickly if you screw up is bigger than ever. >> Yeah, I think it's total acceleration. >> Everything's faster. >> Values accelerated but it's also failure, too, right? >> Exactly, everything is accelerated. >> You have an option to abandon in you NPV calculations and IRRS (laughing) in your portfolio. >> Exactly, no it's-- >> The word pivot comes to mind. >> Everything is faster, that's the right way to think about it. >> Stu what's your take on this? >> Yeah, so we're at an interesting point in the industry. It's a bit of a paradox. On the one hand, the challenge of our time, we've been talking on theCUBE since the early days, John, is it's about distributed architectures and we're decomposing all of the pieces. Even Kubernetes itself, we're going to talk about how it's decomposing. On the other hand, everything is consolidating. >> That's right. >> I've seen more vertical stack integration from the chip and hardware level all the way through. You see Apple, Microsoft, Google-- >> That's right. >> And Amazon, all have chips companies and are going really interesting stuff there but it is such a complex individual. >> It is. >> That no one company can do it all, so there is opportunity for people to build on top of that. We have new marketplaces, we have new ways of doing it so it's, yes, there's going to be some really big winners and we have seen changes but there are still opportunities and yeah, John, keeps us busy always. >> Well here's my take on it, I want to get you guys' reaction to my view on this. So obviously we're in the media business, we're disrupting media with theCUBE so we look at the market and it's kind of matched the music industry. The power curve, the power law is very flat and straight and then a very long tail, with the head of the power law is the big players. But then when media came out, it kind of created a fatter tail and a bigger torso. I think that I see in the cloud, I see the rich getting richer. Amazon, Google, Microsoft, Alibaba, and maybe a couple players underneath there, IBM, Oracle, those big guys. And then it's going to be a second tier of cloud service providers. Someone who's going to package all these awesome sets of features in the long tail so you're going to start to see a growth because the big guys cannot be winning all the mid range business. I think, you're right, I think there's going to be a lot of solutions that are just exceptional. >> Mm-hmm. >> And I think the scale of the cloud is going to create an opportunity for new kinds of service providers. Someone who says, hey, you know what? I'm going to package this differently. I'm going to assemble-- >> I think so. >> A cloud solution, on either one of all of the clouds. Why wouldn't I use the accelerated Amazon, or the power of Google? >> I think that's well thought and I do think, we've talked about this for a while too, but I do believe there's going to be specialization by industry where you have certain algorithms and data that's unique to it, by geography. There's still going to be sovereignty issues. Even by just what type of things am I trying to build. So I do think simultaneously there's commonality on the platform but that allows you to do specialization and to really serve a specific industry quite well. >> And machine learning is a great specialty thing. The metadata to power machine learning. >> So Steve, do you have final questions you want to ask us before we run out of time? >> Well I would just say, you see a lot of these conferences. I actually like to show up at these and say, what in point time does this look like the AWS reinvent. For me, what point in time does this look like maybe the VMware event in my case, but I don't know, it just feels to me like we've jumped over, we're sort of at that point where this is going to keep going and growing. >> Yeah, how do we make sure we've hit the inflection point but not jumped the charts? >> Yeah, I mean, do you think we are here? And how does this feel versus some of the other events that you spend time on? >> Yeah, I mean, John you want me to? >> I mean, you know. >> So my take, first of all, is there's a little worry and there's some concern of us that have been through this before, is like, wait, did we just create another OpenStack? >> Yeah. >> And my resounding answer so far, is no. While there might be 35 main projects here each one of those was started for a reason. They stand on their alone, they have, you know we've got Matt Klein on from Lyft, as our next guest here. >> Yeah. >> You know, Envoy, if Kubernetes didn't exist, Envoy would probably still exist. So there's a lot of these pieces that are good but it is complicated. >> It is very complicated. >> And there's all these pieces but that's a real opportunity for a lot of companies. The SIs, the big platforms, to be able to help put this together. >> Yeah. >> And the customers are thrilled with what is going on. >> That's well stated, yeah. >> There's interesting things there. Right, this ecosystem, the only ecosystem I've seen probably grow faster is the Amazon one so it is doing well and we've been looking for years as to like a nice, vendor independent ecosystem. >> Right. >> To grow because, you know, there's some of the ones in the storage industry and things like that. >> Yeah. >> All died. >> That's right. >> So there are vendor shows and this, you know the Lennox Foundation's done a nice job. >> Right, I agree. >> With it and it's been-- >> That's the unique part here for me. >> We bet early on it, so. >> Well we bet early on it, it was a good bet, but here's the challenge that they have; they have lightning in a bottle and it's definitely arrived so there's a little bit of jump to shark moment. You got some things happening that's kind of glam oriented but absolutely it's arrived. I think the challenge that they have is opensource community is a core constituency of this event, and the Lennox Foundation is structured to be kind of a very tight top, thin at the top period of management and the scale of this event and this movement is too big for them, I think, to handle. I think they either have to have sub brand or start segmenting out because if they lose the opensource community, the they're going to lose the vibe of the event and that's the core of what it is. >> Right. >> The downstream benefits, kind of a an opensource parlance, is the IT impact and the developer impact. And inherent in that is business benefits so you're going to start to see more suits coming in and you're going to start to have a melting pot and that is a risky proposition if they don't get out front on that. So yes, it's arrived, but there's so much time they're going to be doing it just to the projects. >> Right. >> Just to the innovation. >> You're going to have to wear these next time that you see them. >> There's a money making aspect of it, yes. >> Right. >> The money making aspect of this is huge. >> Yeah. >> And I think that's what we're watching. >> Yep. >> As the business people come in and say, look at this, this is billions and billions of dollars. >> Yeah. >> This is-- >> Maybe just one more thought on that. The notion is really important, this is a distributed, not really owned by one person, one company, and there's the chaos that comes with that and so how do you do the balance between these two things? >> Yeah, yeah. >> Its like when, I know, when Amazon announced their Blockchain thing, it's like, Blockchain's supposed to be distributed. Now we have a company running it in one cloud. It's like that balance between the push and pull of centralization that we're going to see. >> Well have to put some computer science architecture together and put an operating system around it. >> There ya go. >> We'll have some dev ops. Steve, thanks for coming on theCUBE, great to have you on. >> Good to see you guys. >> Well it's great to see you. A legend in the industry, Steve Herrod, CUBE alumni from 2010, been on every year. Now a venture capitalist, former CTO of VMware. With Stu Miniman, I'm John Furrier, analyst of KubeCon, stay with us for more coverage after this short break. (upbeat techno music)

[Music] [Applause] [Music] welcome to the special cube conversations here in Palo Alto cube studios I'm John Ferrier the founder of Silicon angle in the cube we're here with divest cargoes the founder and CEO of arcus Inc our curse com ar-are see us calm and Steve Herod General Partner at at General Catalyst VCU's funded him congratulations on your launch these guys launched on Monday a hot new product software OS for networking powering white boxes in a whole new generation of potentially cloud computing welcome to this cube conversation congratulations on your >> launch thank you John >> so today I should talk about this this >> startup when do you guys were founded let's get to the specifics date you were founded some of the people on the team and the funding and we were formally incorporated in February of 2016 we really got going in earnest in August of 2016 and have you know chosen to stay in stealth the the founding team consists of myself a gentleman by the name of Kop tell he's our CTO we also have a gentleman by the name of Derek Young he's our chief architect and our backgrounds are a combination of the semiconductor industry I spent a lot of time in the semiconductor industry most recently I was president of easy chip and we sold that company to Mellanox and Kher and Derek our networking protocol experts spent 20 plus years at places like Cisco and arguably some of the best protocol guys in the world so the three of us got together and basically saw an opportunity to to bring some of the insights and and architectural innovation you know we had in mind to the Mobius a pedigree in there some some top talent absolutely some of the things that they've done in the past from some notable yeah I mean you know some if you if you'd like some just high-level numbers we have 600 plus years of experience of deep networking expertise within the company our collective team has shipped over 400 products to production we have over 200 IETF RFC papers that have been filed by the team as well as 150 plus patents so we really can do something on the pedigree for sure yeah we absolutely focused on getting the best talent in the world because we felt that it would be a significant differentiation to be able to start from a clean sheet of paper and so really having people who have that expertise allowed us to kind of take a step back and you know reimagine what could be possible with an operating system and gave us the benefit of being able to you know choose >> best-in-class approaches so what's the >> cap the point that this all came >> together what was the guiding vision was it network os's are going to be cloud-based was it going to be more I owe t what was the some of the founding principles that really got this going because clearly we see a trend where you know Intel's been dominating we see what NVIDIA is doing competitively certainly on the GPU side you're seeing the white box has become a trend Google makes their own stuff apples big making their own silicon seeking the that's kind of a whole big scale world out there that has got a lot of hardware experience what was the catalyst for you guys when you found this kinda was the guiding principle yeah I would say there were three John and you hit you hit on a couple of them in your reference to Intel and NVIDIA with some of the innovation but if I start at the top level the market the networking market is a large market and it's also very strategic and foundational in a hyper-connected world that market is also dominated by a few people and there's essentially three vertically integrated OEM so that dominate that market and when you have that type of dominance it leads to ultimately high prices and muted innovations so we felt number one the market was going through tremendous change but at the same time it had been tightly controlled by a few people the other part of it was that there was a tremendous amount of innovation that was happening at the silicon component level coming from the semiconductor industry I was early at Broadcom very you know involved in some of the networking things that happened in the early stages of the company we saw tremendous amounts of innovation feature velocity that was happening at the silicon component level that in turn led to a lot of system hardware people coming into the market and producing systems based on this wide variety of choices for you know for the silicon but the missing link was really an operating system that would unleash all that innovation so Silicon Valley is back Steve you you know you're a VC now but you were the CTO at VMware one of the companies that actually changed how data centers operate certainly as it certainly as a pretext and cloud computing was seeing with micro services and the growth of cloud silicon's hot IT operations is certainly being decimated as we old knew it in the past everything's being automated away you need more function now there's a demand this is this penny how you see I mean you always see things are a little early as of technologist now VC what got you excited about these guys what's the what's the bottom line yeah maybe two points on that which so one silicon is is definitely become interesting again if you will in the in the Silicon Valley area and I think that's partly because cloud scale and web scale allows these environments where you can afford to put in new hardware and really take advantage of it I was a semiconductor I first austerity too so it's exciting for me to see that but um you know is the fish that it's kind of a straightforward story you know especially in a world of whether it's cloud or IOT or everything networking is you know like literally the core to all of us working going forward and the opportunity to rethink it in a new design and in software first mentality felt kind of perfect right now I think I I think device even sell the team a little short even is with all the numbers that are there kr for instance this co-founder was sort of everyone you talk to will call him mister BGP which is one of the main routing protocols in the internet so just a ridiculously deep team trying to take this on and there been a few companies trying to do something kind of like this and I think what do they say that the second Mouse gets the cheese and I think I think we've seen some things that didn't work the first time around and we can really I think improve on them and have a >> chance to make a major impact on the networking market you know just to kind of go on a tangent here for a second >> because you know as you're talking kind of my brain is kind of firing away because you know one of things I've been talking about on the cube a lot is ageism and if you look at the movement of the cloud that's brought us systems mindset back you look at all the best successes out there right now it's almost a old guys and gals but it's really systems people people who understand networking and systems because the cloud is an operating system you have an operating system for networking so you're seeing that trend certainly happened that's awesome the question I have for you device is what is the difference what's the impact of this new network OS because I'm almost envisioning if I think through my mind's eye you got servers and server list certainly big train seeing and cloud it's one resource pools one operating system and that needs to have cohesiveness and connectedness through services so is this how you guys are thinking about how are you guys think about the network os what's different about what you guys are doing with ARC OS versus what's out there today now that's a great question John so in terms of in terms of what we've done the the third piece you know of the puzzle so to speak when we were talking about our team I talked a little bit about the market opportunity I talked a little bit about the innovation that was happening at the semiconductor and systems level and said the missing link was on the OS and so as I said at the onset we had the benefit of hiring some of the best people in the world and what that gave us the opportunity was to look at the twenty plus years of development that had happened on the operating system side for networking and basically identify those things that really made sense so we had the benefit of being able to adopt what worked and then augment that with those things that were needed for a modern day networking infrastructure environment and so we set about producing a product we call it our Co s and the the characteristics of it that are unique are that its first of all its best-in-class protocols we have minimal dependency on open source protocols and the reason for that is that no serious network operator is going to put an open source networking protocol in the core of their network they're just not going to risk their business and the efficacy and performance of their network for something like that so we start with best-in-class protocols and then we captured them in a very open modular Services microservices based architecture and that allows us the flexibility and the extensibility to be able to compose it in a manner that's consistent with what the end-use case is going to be so it's designed from the onset to be very scalable and very versatile in terms of where it can be deployed we can deploy it you know in a physical environment we can deploy it visa via a container or we could deploy it in the cloud so we're agnostic to all of those use case scenarios and then in addition to that we knew that we had to make it usable it makes no sense to have the best-in-class protocols if our end customers can't use them so what we've done is we've adopted open config yang based models and we have programmable api's so in any environment people can leverage their existing tools their existing applications and they can relatively easily and efficiently integrate our Co s into their networking environment and then similarly we did the same thing on the hardware side we have something that we call D pal it's a data plane adaptation layer it's an intelligent how and what that allows us to do is be Hardware agnostic so we're indifferent to what the underlying hardware is and what we want to do is be able to take advantage of the advancements in the silicon component level as well as at the system level and be able to deploy our go S anywhere it's let's take a step back so you guys so the protocols that's awesome what's the value proposition for our Co S and who's the target audience you mentioned data centers in the past is a data center operators is it developers is it service providers who was your target customer yeah so so the the piece of the puzzle that wraps everything together is we wanted to do it at massive scale and so we have the ability to support internet scale with deep routing capabilities within our Co s and as a byproduct of that and all the other things that we've done architectural II were the world's first operating system that's been ported to the high-end Broadcom strata DNX family that product is called jericho plus in the marketplace and as a byproduct of that we can ingest a full internet routing table and as a byproduct of that we can be used in the highest end applications for network operators so performance is a key value public performance as measured by internet scale as measured by convergence times as measured by the amount of control visibility and access that we provide and by virtue of being able to solve that high-end problem it's very easy for us to come down so in terms of your specific question about what are the use cases we have active discussions in data center centric applications for the leaf and spine we have active discussions for edge applications we have active discussions going on for cloud centric applications arcus can be used anywhere who's the buyer those network operator so since we can go look a variety of personas network operator large telco that's right inner person running a killer app that's you know high mission-critical high scale is that Mike right yeah you're getting you're absolutely getting it right basically anybody that has a network and has a networking infrastructure that is consuming networking equipment is a potential customer for ours now the product has the extensibility to be used anywhere in the data center at the edge or in the cloud we're very focused on some of the use cases that are in the CDN peering and IP you know route reflector IP peering use cases great Steve I want to get your thoughts because I say I know how you invest you guys a great great firm over there you're pretty finicky on investments certainly team check pedigrees they're on the team so that's a good inside market tamp big markets what's the market here for you but how do you see this market what's the bet for you guys on the market side yeah it's pretty pretty straightforward as you look at the size of the networking market with you know three major players around here and you know a longer tail owning a small piece of Haitian giant market is a great way to get started and if you believe in the and the secular trends that are going on with innovation and hardware and the ability to take advantage of them I think we have identified a few really interesting starting use cases and web-scale companies that have a lot of cost and needs in the networking side but what I would love about the software architecture it reminds me a lot of things do have kind of just even the early virtualization pieces if you if you can take advantage of movement in advantages and hardware as they improve and really bring them into a company more quickly than before then those companies are gonna be able to have you know better economics on their networking early on so get a great layer in solve a particular use case but then the trends of being able to take advantage of new hardware and to be able to provide the data and the API is to programmatic and to manage it who one would that it's creative limp limitless opportunity because with custom silicon that has you know purpose-built protocols it's easy to put a box together and in a large data center or even boxes yeah you can imagine the vendors of the advances and the chips really love that there's a good company that can take advantage of them more quickly than others can so cloud cloud service refined certainly as a target audience here large the large clouds would love it there's an app coming in Broadcom as a customer they a partner of you guys in two parts first comes a partner so we we've ported arc OS onto multiple members of the Broadcom switching family so we have five or six of their components their networking system on chip components that we've ported to including the two highest end which is the jericho plus and you got a letter in the Broadcom buying CA and that's gonna open up IT operations to you guys and volge instead of applications and me to talk about what you just said extensibility of taking what you just said about boxes and tying applique and application performance you know what's going to see that vertically integrated and i think i think eloping yeah from from a semiconductor perspective since i spent a lot of time in the industry you know one of the challenges i had founded a high court count multi processor company and one of the challenges we always had was the software and at easy chip we had the world's highest and network processor challenge with software and i think if you take all the innovation in the silicon industry and couple it with the right software the combination of those two things opens up a vast number of opportunities and we feel that with our Co s we provide you know that software piece that's going to help people take advantage of all the great innovation that's happening you mentioned earlier open source people don't want to bring open source at the core the network yet the open source communities are growing really at an exponential rate you starting to see open source be the lingua franca for all developers especially the modern software developers wine not open sourcing the core the amino acids gotta be bulletproof you need security obviously answers there but that seems difficult to the trend on open source what's the what's the answer there on why not open source in the core yeah so we we take advantage of open source where it makes sense so we take advantage of open and onl open network Linux and we have developed our protocols that run on that environment the reason we feel that the protocols being developed in-house as opposed to leveraging things from the open source community are the internet scale multi-threading of bgp integrating things like open config yang based models into that environment right well it's not only proven but our the the the capabilities that we're able to innovate on and bring unique differentiation weren't really going back to a clean sheet of paper and so we designed it ground-up to really be optimized for the needs of today Steve your old boss Palmer rich used to talk about the harden top mmm-hmm similar here right you know one really no one's really gonna care if it works great it's under the under the harden top where you use open source as a connection point for services and opportunities to grow that similar concept yes I mean at the end of the day open source is great for certain things and for community and extensibility and for visibility and then on the flip side they look to a company that's accountable and for making sure it performs and as high quality and so I think I think that modern way for especially for the mission critical infrastructure is to have a mix of both and to give back to community where it makes sense to be responsible for hardening things are building them when they don't expense so how'd you how'd you how'd you land these guys you get him early and don't sit don't talk to any other VCS how did it all come together between you guys we've actually been friends for a while which has been great in it at one point we actually decided to ask hey what do you actually do I found that I was a venture investor and he is a network engineer but now I actually have actually really liked the networking space as a whole as much as people talk about the cloud or open source or storage being tough networking is literally everywhere and will be everywhere and whatever our world looks like so I always been looking for the most interesting companies in that space and we always joke like the investment world kind of San Francisco's applications mid here's sort of operating systems and the lower you get the more technical it gets and so well there's a vaccine I mean we're a media company I think we're doing things different we're team before we came on camera but I think media is undervalued I wrote just wrote a tweet on that got some traction on that but it's shifting back to silicon you're seeing systems if you look at some of the hottest areas IT operations is being automated away AI ops you know Auto machine learning starting to see some of these high-end like home systems like that's exactly where I was gonna go it's like the vid I I especially just love very deep intellectual property that is hard to replicate and that you can you know ultimately you can charge a premium for something that is that hard to do and so that's that's really something I get drugs in the deal with in you guys you have any other syndicates in the video about soda sure you know so our initial seed investor was clear ventures gentleman by the name of Chris rust is on our board and then Steve came in and led our most recent round of funding and he also was on the board what we've done beyond that institutional money is we have a group of very strategic individual investors two people I would maybe highlight amongst the vast number of advisers we have our gentleman by the name of Pankaj Patel punka JH was the chief development officer at Cisco he was basically number two at Cisco for a number of years deep operating experience across all facets of what we would need and then there's another gentleman by the name of Amarjeet Gill I've been friends with armored teeth for 30 years he's probably one of the single most successful entrepreneurs in the he's incubated companies that have been purchased by Broadcom by Apple by Google by Facebook by Intel by EMC so we were fortunate enough to get him involved and keep him busy great pedigree great investors with that kind of electoral property and those smart mines they're a lot of pressure on you as the CEO not to screw it up right I mean come on now get all those smart man come on okay you got it look at really good you know I I welcome it actually I enjoy it you know we look when you have a great team and you have as many capable people surrounding you it really comes together and so I don't think it's about me I actually think number one it's about I was just kidding by the way I think it's about the team and I'm merely a spokesperson to represent all the great work that our team has done so I'm really proud of the guys we have and frankly it makes my job easier you've got a lot of people to tap for for advice certainly the shared experiences electively in the different areas make a lot of sense in the investors certainly yeah up to you absolutely absolutely and it's not it's not just at the at the board it's just not at the investor level it's at the adviser level and also at you know at our individual team members when we have a team that executes as well as we have you know everything falls into place well we think the software worlds change we think the economics are changing certainly when you look at cloud whether it's cloud computing or token economics with blockchain and new emerging tech around AI we think the world is certainly going to change so you guys got a great team to kind of figure it out I mean you got a-you know execute in real time you got a real technology play with IP question is what's the next step what is your priorities now that you're out there congratulations on your launch thank you in stealth mode you got some customers you've got Broadcom relationships and looking out in the landscape what's your what's your plan for the next year what's your goals really to take every facet of what you said and just scale the business you know we're actively hiring we have a lot of customer activity this week happens to be the most recent IETF conference that happened in Montreal given our company launch on Monday there's been a tremendous amount of interest in everything that we're doing so that coupled with the existing customer discussions we have is only going to expand and then we have a very robust roadmap to continue to augment and add capabilities to the baseline capabilities that we brought to the market so I I really view the next year as scaling the business in all aspects and increasingly my time is going to be focused on commercially centric activities right well congratulations got a great team we receive great investment cube conversation here I'm John furry here the hot startup here launching this week here in California in Silicon Valley where silicon is back and software is back it's the cube bringing you all the action I'm John Fourier thanks for watching [Music]

>> Announcer: Live from Las Vegas, it's the Cube, covering VMworld 2017. Brought to you by VMware and its ecosystem partners. (bright music) >> Hi, I'm Stu Miniman, joined by Justin Warren, and you're watching SiliconANGLE's production of the Cube here at VMworld 2017. Three days of wall-to-wall coverage. Sometimes people ask me, "Stu, you guys are doing so many interviews, isn't it tiring?" I say well, but I get really good guests, and that makes my job really easy. We've had lots of customers on, I've been enjoying just as many others. One of the people that I've gotten to get to know through the VMware community, I'm thrilled to be able to bring back on the program, is Steve Herrod, who's now the managing director of General Catalyst. Steve, thanks so much for joining us. >> Thank you, I feel like a veteran of this program, I love being on it. >> Yeah, I remember back when we created one of our first what we called Sizzle Videos, we had B roll from you, and Pat Gelsinger before he was on the VMware side, so you are always welcome on our program. We're glad that we could find time that fit on both of our schedules. You made a guest appearance, a younger Steve Herrod maybe, in the keynote had a lot of us laughing, so. >> Yeah, that was fun to be back. I think the story's kind of interesting. I don't know if it got lost in the dialogue a little bit, but the idea was something seemed super novel at the time, and then it becomes kind of the new normal, right, and I think that was the point he was trying to make. And it was, it was truly the case back in the early years of VMware, trying to convince people to do these virtual machines was ridiculous. Now it's about all these other topics. >> I think back, you know, I've worked with VMware for 15 years, I think back to how many people I explained what is virtualization. When vMotion first came out, the awe and excitement on everybody's, but it's 2017, come on. Virtualization's like the legacy. Now it's cloud, and developers, and blockchain, and everything. >> Steve: Containers and serverless! >> Stu: Serverless. >> That's right. >> Well, I guess they brought up serverless before I did, so that's great. Steve, what's happening in your world these days, what are some of the big conversations? >> Yeah, this's obviously one of my favorite conferences to come back to also, just to really see what's going on at a top level. Mostly because of the customers that are here, and then, obviously the infrastructure vendors. But I don't know, I feel like as I get older and go through this industry longer, you see a lot of the new things that are popping up, and for me it's always been about heterogeneity. And when we started VMware, what actually mattered was you had different vendors of servers, and like, it caused chaos by having different server vendors. That's kind of tamed, yeah exactly, there's like the BIOS or the HAL, and Windows had to change, or something. And like, no one talks about that whatsoever now, but if you just kind of squint your eyes a little bit, the heterogeneity is now am I in a public cloud, or private cloud? Or maybe, do I put my software into a container versus a VM? So I just, I always like looking at what is the heterogeneity, and then what are the real customers supposed to do with it? How do they navigate it and what companies can be built to help you sort of smooth it out and use the different things. I've been doing that all my life, and continue to look for companies that do that. >> Yeah, that mix of different things in customers, particularly Enterprise customers, who have like nine of everything. It seems like with VMware and the AWS now being more, well, we're friends now. Whereas previously it was like, oh no, you have to pick one or the other. It's like the heterogeneous nature of things, is that well, actually no, we need to work with multiple of, you all need to play nicely with each other, otherwise we can't use you. Because even if I, you know, MNA, for example, I go and buy someone, they might have something different. And that seems to get lost a bit. The vendors seem to focus a lot on greenfields. So do you think that this kind of, we're friends and yes, you can use both of us, and it's all good, do you think that's the way it should always have been and that's going to be good for customers, they're going to adopt this and want more than they might have with something that was like, no, no, you have to choose. >> I think that's absolutely right. The way I've seen people doing things, the customer always wins. That's kind of, every time I have a startup who's gotten created and they have a great customer, and they say, you know, blank vendor won't work with us, I have them call the customer and tell them to tell their other vendor, work with this startup. And the good news is any company that's successful is super customer-centric and they do listen. I think in this case, it's really fascinating. If you think about it, it used to be, like, you've been covering this forever, it used to be VMware was about server consolidation. And that's like the furthest thing from anyone's mind now, right, now it's, the real limiter to doing these new things tends to be people and operational skills. And so the idea that you can use the same way you're used to working with infrastructure, the same way that you grade storage, and the same way you think about it, and then apply to a world that just kind of outsources all of the underlying goo that they used to do on the servers, it makes a ton of sense from a VMware customer standpoint. And yeah, obviously as you look at the relationships you have with Google or with Amazon, you know, they're very incented to have new cloud services that people are able to consume, and the number one problem for them is how do you get, like, real important apps to leverage these new services. So it's symbiotic in the sense that maybe some of these existing apps, as you start to morph them, they can leverage a Amazon or a Google service. And so it's helpful on the needs of the public clouds as well. >> One of the areas where the heterogeneity of the environment causes even more complexity is security. So I know that that's something you've looked at awhile, we've talked to some of the companies that you work with. Heck, I think, you know, IoT, the surface area, is just changing by orders of magnitude. Security, top issue being discussed here. You know, Pat Gelsinger got up on stage and says, hey, I need to apologize for the industry because we failed you. (laughing) So you know, Steve, why haven't your portfolio companies fixed all of this yet? (laughing) >> Why do you still have security issues? >> Stu: What's your take on what VMware is doing, and yeah. >> I mean, it's obviously something people, if there was the Cube in 1981, it would have been talking about security (laughing) as a challenge. But I do think, you know, things have changed quite a bit as of late. I think the number of really advanced attackers, you know, truly nation states or organized crime going after it, it's the same reason that robbers rob banks, cause it's where the money is. And so I think the sophistication has gone up. At the same time, when the complexity of the environment has gone up a ton as well. And so I would say if we were in the good old days of less sophisticated attackers and like, a closed-in data center with no roaming mobile phones or SaaS, like, we'd probably be in pretty good shape. But a combination of those has really made it take to the next level. I think, you know, I think you have to really look at the complexity of those changes right now. I think the fact that there is a public cloud and a private cloud and that you have a device that has certain characteristics and then you have your server, it leads to the heterogeneity that we were talking about before. And so I really obsess over companies that can come in, like VMware is certainly trying to do as well, but that really try and come in and make something where a single way of thinking about security applies wherever stuff is running. And I think it's just too complex to have to have different admins, different policies, different everything. And certainly, if nothing else, it'll keep you from moving faster and leveraging the full cloud models. >> Yeah, given that security is, has been, it's been an issue for forever. It seems like that's something that just doesn't change. Is that due to the fact that we haven't actually done anything about it the right way, or do you think that it's just an inherent situation that is not going away because the problem is humans? And the problem is always humans, everything is a people problem. But in this case, is security, is it just going to be something that we have to manage rather than solve? >> I personally think that, I'm pretty optimistic we can do so, so much better than we have. I think it's always been- >> Justin: We are coming off a pretty low bar, so. (laughing) >> I thrive under low expectations. (laughing) So it's really good. But on a serious note, I think that a lot of the way that people looked at security has always been the cat and mouse game, where it's, I'm trying to stay ahead of the other guy, whether it's zero days, or whether it's, I mean, now we're getting malware infected through ad networks that show up on your favorite websites and through emails, like, the sophistication of spam attacks, or phishing attacks, are just ridiculous now. I mean, it looks so realistic. So I'm just a big advocate of let's totally think a different way about how we do security. And one thing I talk about often and I'm really obsessed with is the notion of, okay, we're always going to try and stop the bad stuff from hitting, but now we actually have to stop it from doing damage once it's in. And that's whether it's the segmentation that goes on in the network or whether it's, I have companies that are really focused on doing it in web browsers, the notion that you really have to sandbox and keep things in place is something I think is going to be a big step forward. Even like a database level right now, whenever you hear, I broke into Anthem Health and stole like six million records, like maybe we have row by row encryption, or maybe we have ways that, again, try your best not to have them happen, but when they do, let's just stop the damage from being as big as it is. So a model like that I think will be a really important part of the security posture going forward, which just people haven't put enough effort into. >> Okay. >> Steve, we've talked to you the last few years about developers. This year, I know they've got a hackathon, but I don't see as many hoodies, there's no longer a developer track, even, Pivotal made an announcement this morning, I'm like, come on, they didn't bring James Waters out? Rob Mees like all dressed up, looking proper, with the blue shirt and you know, the blazer and everything, so, where are the developers for the community here? >> Well, I do know, like when we were first starting to introduce a developer track, the day we announced the spring acquisition, for those that were around for that, there was complete stares and just like, this audience is a great, great audience, mostly focused on infrastructure, and thus, you know, it really wasn't a good fit there. So I think part of it is just knowing your audience, knowing that the goal of this particular conference is to make IT-enabled development of apps in a new way. So I think it's very smart that it's changed the focus quite a bit. But I do think, you know, when you have this type of solution, you're trying to solve all the problems in the hypervisor layer or in the management tools layers that you have, I think, as you go and think, like, take the security model a little bit further, some interesting announcements and good things going on here, but I'm kind of obsessed also with how do we make developers do a better job of having the applications being protected in the first place? And so there's a lot of research and interesting startups that are around self-protecting software. And it's like really putting it at an even higher level in the stack. And that's something that you would do at an infrastructure layer. It's something you would actually do at a developer conference or a developer focus. So I think you got to just be careful that you know your audience, you're certainly talking about the right solutions, but you're aware of the different approaches to doing this. Especially for things like dev ops, you really need to really immerse yourself with how people are developing and shipping their software to get the solutions in place. >> Yeah, it does feel like VMware has stopped apologizing for existing, so, you know, sort of bringing developers and saying, you know, we have a developer track, it's sort of like, oh wait, no, no, no, we're cool, really, we're cool. Whereas letting that go feels more like, no, no, we know who we are, and this is our audience. We will be the best us we can be rather than trying to be someone else. >> I think the buzz I've gotten just from walking around as you all said as well, this has been a very positive VMworld, and again, it's not only not being apologetic, but it's also like real announcements and real partnerships that are shipping. You know, obviously the Amazon and Google being big ones, but just across the board. Yeah, there's a lot of positive, if you even look at like the top tracks that are going on, it's VMware on AWS. So there's like real progress, and I think there's real interest in that side of things that makes you not have to focus on some of the developer stuff that might have been focused on in the past. >> Yeah, well certainly they're doing well on things like NSX and VSAN, which just seem to be selling like hotcakes. >> Yeah, those are- >> So that helps. And customers love it. >> Very interesting, yeah. >> Yeah Steve, speaking of the public clouds, I mean, this year we're finally starting to see some of these things come together. For a few years, we were almost like, oh, you know, messaging was like, they don't exist, or they're book sellers, or you know, if they win, we all lose, and everything. I was at the AWS summit in New York City a couple of weeks ago, and there's a couple of sessions done by VMware, Amazon's in the booth, Andy Jassy gets a big applause here. Last year, I've been at re:Invent for a number of years, that big AWS show. I know you've been there for years, starting to see some of the people that, you know, were early in this community playing there, how do you see those worlds colliding, the landscape, the competition, the coopetition, you know, what interests you there these days? >> I think it's pretty clear, and people have been talking about this for a while, but it's more clear to me than ever that, you know, there's always a swing back and forth of decentralized, centralized, I think, I think what we're really trying to find out is what are the boundaries going to be between applications that live in the public cloud and applications that stay on premises. And it's usually tracking some level of certifications, some level of data movement, all the things that you all have talked about before. But I think, you know, whether it's 50% is in the public cloud or 80% or 20%, I think that's where these lines are being drawn now. And it's very obvious that customers who want some of the benefits of the public cloud are going to be using more, and VMware needs to be the guider to help them get there. And likewise, Amazon and Google, they'd love to have more of the on-premises workloads and have a way to really speak to those more valuable, in many cases, applications. So it makes perfect sense, this is like this, I guess, battle that'll be going on forever. And I don't want to forget this either. What I think is also fascinating is, we also have these, you know, people talk about edge computing, but whatever it is, there's increasingly powerful devices, network connected, even further from the data centers. So I think we're going to have, in the end we're going to have like these edge device things, you're going to have your own data center, and then you're going to have a plethora of public clouds and SaaS offerings. And I think, again, just getting back to the master theme, how do you tame and let people effectively use these different layers and protect them? That's going to be where I think a lot of interesting companies are born. >> Yeah, great point. Cause sometimes people conflate some of these things. Cause for me it was, the public cloud kind of pulled from the data center, and now you've got the edge kind of pulling, >> Steve: Yeah, the other way. >> You know, that relation from the public cloud and that interesting dynamic and, you know, where a customer lives. What's the role of IT in the future? What's the role of the CIO? Is there some of the things, did you look at those pieces? >> I try to, you know, I actually tried to create this, I tried to make this nerdy formula, like, the number one question for IT has traditionally been like, where should I run stuff to be most cost effective, most responsive from a time standpoint to my customers, that I can secure it, based on the type of data, that I can pass certain certifications. So in many ways, when we got started with VMware, it was all about, let's take inventory of all my applications and bucket them and choose which bucket could be virtualized, which had to stay native. Now they're bucketizing them and saying, which ones could run in the public cloud, which ones need to be rewritten? And I think at the end of the day, an IT, a good IT team will know the business value and the, like, the goal of these applications and then help provide the easiest way to run them and the right place for what they're trying to do. Again, whether it's these end devices or whether it is their own data centers or elsewhere, I think the idea that they're a broker of services, some of which they provide themselves and some of which they outsource, I think that's the modern IT role. >> Yeah, that's quite a substantial change from what IT has traditionally done. And there has been, talking to customers and service providers and vendors, there has been a shift in ability, I think. But it feels like it's still only just getting started, rather than it being, you know, well advanced. Is that what you're seeing as well? >> It's a real shift, like you're saying, I think it's, we used to say it's like moving from the builder of services to the broker or services. So I do think that's a good analogy, where it used to be, if I don't build it myself, I can't offer support for it, I can't do cost controls, I can't offer it quickly. And so now I think they're just realizing their job is to get you the best thing for what you need to do. And again, some percentage of that time, it is by building it themselves. >> Justin: Yeah, okay. >> Steve, I'll give the final word with a wildcard, you know, VR, AR, AI, ML, blockchain, Ethereum, you know, what's exciting you these days? What things are you looking, yeah, John Furrier's going to run up here and tell you about the ICO soon I think. (laughing) But you know, you're down from the Valley, what's real, what's interesting, especially from your technology standpoint? >> I have an awesome job, much like you, I get to meet interesting people all day long. And all of them have interesting ideas of where the world is going. All of them are optimists, they think they're going to be the one to deliver it, so I love that part of it. But cutting through what's real and what's hype versus not is really the core job. I guess for you as well. (laughing) So I would just say, as with the traditional Gartner cycle, things get so overblown, and then reality settles in, and then they go forward. I probably get five pitches a week on this is machine learning for blah, and if you even knew a little bit about AI and ML, you realize, no, you're using stats. Like, it's just being used to so many ways. And we used to do it with the cloud, cloud washing it was called at the time. So anyway, I do think there's a lot of really substantive things going on. I love the blockchain work. I think it's also been a little overinflated, but the idea that you can do distributive brokering and keep consistency is going to play out in all sorts of areas. Maybe John's ICO will be a sign of the future for the core piece there. But I'm a big fan of what's going on with the combination of proper machine learning that's successful by near-humans and that has cloud resources to back it. I think it's those two things, you have to have both of them to really just start attacking a lot of problems. And we look at, certainly I look at the ones as they apply to security and to things like that, but they apply across everything from medical to almost every other part of our life. So I see a lot of those right now, and I think it's going to be a pretty big change as we head forward. >> Awesome, well Steve Herrod, always a pleasure to have you on the program. Thanks so much for joining us. For Justin Warren, I'm Stu Miniman. The Cube will be back with lots more coverage from VMworld 2017. Thanks for watching the Cube. (bright music)

(upbeat music) >> Hi everybody, this is Dave Vellante. And welcome to this CUBE conversation where we welcome an ESG senior analyst, Bob Laliberte Bob, good to see you. >> Great to see you too. Thanks for having me >> Love it, I love to have the analyst sessions. Set it up. What's your scope, what's your area of expertise? >> So my coverage area right now is networking in its entirety. So that spans everything from enterprise networking, wired, wireless, campus, data center, et cetera. All the way up through telco and, in cloud networking. >> So how do you look at the landscape? One of the big things I think about a lot is how does the shift to cloud migration? How does that affect the existing, network layers? I mean, you got Cisco as the big whale and it's just, it's amazing to me. They still have whatever percent market share they have 60, 65% of the market. Are things, what's happening in the competitive landscape. How is cloud affecting that? >> That's a great question. I think the interesting piece is so many times organizations think about the network as plumbing. But the reality is the it's really important plumbing because as you talk about cloud and things get more distributed, well, guess what connects those distributed locations? It's the network. And so organizations as they've moved to the cloud you've seen a big shift with things like SD-WAN and so forth. How do I get more efficient connectivity up to that cloud? How do I not only enable able better connectivity between my data centers in the cloud, but now all my remote workers in the cloud. And so there's been a lot of big shifts going on that have driven the importance of having not only network, but secure networks. So like I said, cloud is one thing, and you're moving your applications there. But with the pandemic you saw the remote work. Think about the network administrators who we're managing, hey, I've got to control network connections between my data centers, a couple clouds and maybe dozens maybe a hundred remote branches. And now I'm connecting to 10,000 micro branches that I need to ensure that they can connect up to these applications and so forth. Hell of a lot more complex environment today than it used to be for these network teams. When we look at the, what we're seeing, how the networking providers are responding it's by driving comprehensive end-to-end solutions. So unifying, wired, wireless, and WAN. Driving efficiencies there. You're seeing even ThousandEyes for Cisco and things like that. Because they know the Internet's becoming more integral part of the corporate network. So being able to drive those types of things being able to, I think look at how to drive those operational efficiencies through AI and ML. So one of the big shifts we've seen in networking is the transition to cloud-based network management. And obviously that couple of things that helps with, first of all, the operations teams who are working remotely can more easily access it. But once all that data is up in the cloud, it creates a platform to be able to invest in AI/ML, and be able to drive intelligent alerting and even automation. And that's really what's needed because as the environments get more distributed and complex, you need to have that those operational efficiencies that automation, that intelligence to help them. >> How has remote work and hybrid work affected sort of network, spending priorities. Obviously when the pandemic hit you had to accommodate end points. And I always have this theory okay, when people come back to the office and I know it's going to be a different world but, the HQ probably needs some love as well. So has that been a tailwind for the industry? >> Absolutely, that's what we're seeing now. I think when the pandemic first hit, everyone said I've got to ramp up my VPNs. I've got to scale out my concentrators. I've got to add more firewalls in my data center. And then after a while, when they realized this was here to stay, they said, okay we just created that hub-and-spoke network that we just got rid of with SD-WAN. So what are the better solutions we can implement? So now you're seeing them not only implement better networking solutions for the remote workers. But reimagining what the campus looks like. Because it's not going to be ever 100% full or maybe it will, but how, for how many times a year will it be 100% full? So you've got to go from 80% cubes and 20% conference and collaboration areas, to 80% collaboration areas and 20% cubes. So we're seeing a lot of transition taking place in the campus environment as organizations are deploying newer technologies like Wi-Fi 6E. That have greater bandwidth to allow for those collaboration apps to run in those collaboration areas. Instead of just having the single wired conference room for video. Everyone's got to be able to run their video, voice and video collaboration apps. >> So how do you look at the landscape now? Again, you can't talk about networking without talking about Cisco. I think they, up there, I saw you and Zeus as talking about out, Cisco's quarter and other networking topics. Their long term guidance is for 60% growth for a company that size that's really outstanding. I mean, Cisco's, really has always been an execution machine of course. And it's a new era now under Chuck. There are more than ankle biters. If you look at Arista's doing pretty well there's guys like Extreme, there's others that are out there but nobody seemed to be able to unseat Cisco. What's happening in the landscape? >> I mean, that's a great question. Cisco's just been around for so long and been so big for so long. And you have to also keep in mind that with Cisco it's not just about the technology, but the fact from a if you think about it from a cultural standpoint these are workers who have been trained on Cisco since, some of them since high school. The educational component that Cisco has done has groomed generations of network technologists. So when they come into the market, they're fully familiar and used to Cisco. Plus they make a really good product and they've got products that cover everything. They cover the whole gambit. So they're still able to maintain their share. They're able to grow. They're able to move. They've made a shift last year. They announced in last spring that they were going to focus more on end-to-end. So instead of just having, hey, here's a point product, here's a point product. Here's a point product. Let's think about it in its entirety. Let's deliver a complete end-to-end solution solve bigger problems for customers, which obviously makes it much harder to remove when you're just trying to remove a piece of that single problem. But the other competitors are also having good years. And I think also the rising tide floats all boats. And so because of this distributed nature, the importance of the network, everyone is doing that. Plus obviously this has to be said, the supply chain issues where people are ordering ahead as well. But organizations, you look at Arista, they've gone from just being a data center company to expanding all the way down to the campus edge, wireless, right there creating an end-to-end environment Extreme did the same thing. They went out and made a lot of acquisitions. They pulled them all together, integrated. They're all moving to this cloud based end-to-end network management. Arista has been on a tear, bringing in a lot of, not only innovative technology, but innovative technologists. So if you look at some of the organizations they bought. I keep calling it Route 128, it's 128 Technologies. So sorry folks I live in Massachusetts. It's always been Route 128. >> You Remember when don't we. 128 Technology's Mist was their big. Mist was their, Mist was kind of like their VMware. VMware to EMC was Mist was to Juniper. And so we call it the Mistification of Juniper where every organization, every company they bring in they're rolling under that and this the AI engine. So they're bringing in 128 Technologies into that. They've got their own, their own stuff under that, their wired switches. So they've got this unified wired and wireless and WAN assurance now that they have. They've been gaining a lot of traction with that. And again, for the things we were talking about because it's far more distributed and complex. You need to have, It's not like people are getting replaced. It's not like, hey, we're leveraging this automation so that we can get rid of network teams. It's because it's getting so much more complex just to have the same number of people manage that more complex environment. We need those intelligence solutions. >> So I want to ask you about network and multi-cloud. And so it's kind of tongue in cheek because we coined this term super cloud. And so what we meant by that, so here's the premise. And I wonder you could give us your perspective. Multi-cloud, I've said many times is I think largely a symptom of multi-vendor I run in this, I run in AWS or, Azure, I've done the work to understand their primitives and or Google, whatever it is. But it's not like an abstraction layer that's floating above all those but now you're starting to see that. In fact, it re:Invent in November. The ecosystem it seemed like was everybody was focused on developing what we call these super clouds. And again, it's tongue in cheek, this abstraction layer it hides the underlying complexity of the primitives and the APIs adds incremental value on top of that. So there's a company Prosimo, which Steve Herrod, is invested in and others Praveen Akkiraju, whom I'm sure you know from Viptela. Aviatrix is another company that's sort of, Steve Malaney has come on theCUBE and talked about what they're doing. Like yeah, that's super cloud. It seems like it's something new and different than just multi-cloud which is kind of connecting in to different clouds. It's that value on top. What do you think about that? And what does that mean for networking? >> That's a really good point because we are starting to see the inception of organizations going beyond having multiple cloud providers and looking at starting to deploy applications across multiple clouds. It's still really early. The vast majority of organizations are still, I use this application for this cloud and this application for that cloud. But that's the next frontier. That's what they're trying to solve is how do I create this basically cloud fabric and make it as simple as possible. And again, all the things we've been talking about how do I, instead of you having to learn Amazon, Google, Azure networking technology, learn mine, I'll take care of it, but I'll abstract all that complexity from you and make it so much simpler to be able to connect to these interconnect, and connect to them in a seamless fashion. And so that's what they're really trying to do is they're. And the hard part is it takes really sophisticated solutions to remove that high level of complexity and make it simple for an organization to do that. So yeah, absolutely. >> If I had more time I'd make it shorter as somebody who writes a lot. And I think you're right. I think it is future. It's not definitely not here today, but the other thing is it ties into digital transformation. We used this again, throw that buzzword around but, companies not just tech company, I mean everybody's becoming like a tech company, but organizations, financial services companies, healthcare they're building their own clouds on top of the hyperscalers who spend $100 billion a year on CapEx. And that seems to be a trend that I think is going to take legs over this next decade. Just like in the previous decade everybody was thinking, okay, we're going to SaaSify our business softwares (indistinct) the world. And now it's software and cloud services are the way in which I'm going to create customer experiences. >> Correct, yeah. It's why should I go out and make an investment in technology when the technology's already there? And I can rent it for when I need it scale it as I need it and, and do all of that. I agree with that. I think that's something that we're seeing. The interesting part though is that when we look at our data points, probably let than 40% of the applications and workloads are in the cloud today. So there's still a role that the corporate data center plays. We are seeing over time. They expect that to progress and transition but I think there's still always going to be maybe a quarter of the workloads and applications may never leave. Depending on how they're built, et cetera. So there's always going to be that distributed environment where you've got workloads in the private data centers, workloads in multiple public clouds. And also, the big thing too is don't forget about the edge. We're seeing a lot more edge activity take place as organizations recognize, as they deploy more IOT devices, and want to get realtime business insights they've got to deploy the compute there. >> Well, and that's something that I wanted to ask you about, but going back to what you just said, which is, I agree with you. So that suggests to me, Bob that we're just kind of, with cloud just entering the steep part of the S curve. Amazon's headed toward $100 billion, run rate business. Maybe they probably won't get there this year but they will next year. We're entering that steep growth phase, really could be. It's incredible. But I wanted to ask you about the edge. Because you're right is we got to move compute to the edge, ARM is going to dominate. I would think, the edge. They already are with our smartphones. How do you see the cloud guys participating in the edge? Whether it was Andy Jassy, or now Adam Selipsky or anybody at Amazon. They have the dogma of in the fullness of time all workloads are going to be in the cloud. So they either have to change their definition of cloud. Or they're wrong. So what's your thought on that? >> I think it really starts coming down to what's your definition of edge. And so, much like when the cloud technologies first came about and you had all the shadow IT. Everyone running off, and everyone thought oh this is all great, until you realized you had to operationalize it and you had to pull the brakes. Stop doing that. We're going to make sure IT operations. >> Call the CIO up. Exactly, finding out where stuff was by going through accounting and seeing credit card charges. For the edge what we've seen I think is maybe organizations really saying I've got to deploy my servers in my own site. Right at that edge in order to get the lowest possible latency. And so what I think we're starting to see is organizations looking at that and saying, okay well I'm in a metro and I've got 25 locations in a metro. And I've deployed technology to every single one of those sites. Do I need it there? Or can I put it in an Equinix facility that's less than five milliseconds from all 25 sites? So I think there's starting to be this pragmatic approach of looking at let's look at the edge, let's take a look at what type of latencies. What is our definition of real time. When do we actually need the data and so forth? What kind of connectivity do we have? And then from there figure out how we go about connecting it. And so for companies like AWS and Google and Azure a lot of them there's local zones and things like that. They're deploying them in those colos because they don't have data centers in every metro but they can leverage an Equinix. They can leverage someone else's hardware that's there to deploy their software stack within that location. So I think that's something that we're starting to see more and more of as the edge. And obviously the association with the telcos as well. They've got a great footprint. If you want to get close to the edge with their colos Their home offices and things like that and whatnot. Their ability to move the compute closer to the edge, the base stations of the antennas and things like that, are certainly significant. And that's why you're seeing the wavelengths and things like that, programs like that. >> So I was going to close, but there some really interesting topics you just brought up. Call it whatever you going to call it near edge, far edge or deep edge. And you mentioned real time. Yeah. So for those Equinix data centers, I don't need, true real time. But for Tesla, I need real time. I need real time inference at the edge probably using a bunch of ARM cores and I can't go back to any cloud. How do you look at that? Both, I would think big markets. Do you have a sense as to, is one bigger than the other? Are they both just enormous or we don't even know yet. >> I'm not sure that we know yet. I think certainly, it's riding the tail of the IOTs. So the more sensors, the more things that are deployed the more that, that data businesses realize they can leverage that data to make real time business insights to drive either better experiences. And if you're in retail. So location based services and real time offer management it doesn't do any good to offer a coupon for something that you've, that's 40 yards behind you. That that's past, like you said with the cars there's, I've seen some studies recently. They say, well, based on the latency, if the command is to stop and you're at one millisecond, it stops within four inches. If you are at 50 milliseconds, it stops 10 feet later. That's a big difference. And I don't know if those numbers are right but you get the idea about the impact, what the real time impact is of. >> Margin is not huge. >> Exactly, so that's where organizations, I think first and foremost need to take a pragmatic approach to determine what is real time for us. What's our definition of it. And then that can lead them to where do I need to place this compute technology? And then that goes to how do I then connect to it? So for the Teslas and so forth, obviously you're going to want 5G connections if possible. Ultra low latency and not just any 5G. The good stuff, the millimeter bandwidth stuff that that's the ultra low latency. >> So let's wrap. So, what's going on in your research world obviously the big, big acquisition tech target they seem to be investing in ESG. You guys are really growing and hiring. That's awesome. Any research that you're working on? >> Yeah, there's a couple of couple of projects we have going on right now. We're wrapping up a four part distributed cloud research series. So we did it on distributed cloud infrastructure. Applications, observability. And now this last one is on the edge. Coincidentally. So we're working on that. We've got some new network modernization research that we've published. And we're going to be looking, from a networking perspective looking at end-to-end network modernization which will be coming out soon. >> Awesome, Bob, thanks so much for coming on theCUBE. I really would love to have you back and chat about some of those things. Observability hot space. God, I wish we had more time. >> Absolutely, appreciate it, thanks. >> And thank you for watching this CUBE conversation. This is Dave Vellante and we'll see you next time. (upbeat music)

>> Announcer: Live from San Fransciso, celebrating 10 years of hi-tech coverage, it's the theCUBE, covering VMworld 2019. Brought to you by VMware and its eco-system partners. >> Welcome back everyone. It's theCUBE's live coverage at VMworld 2019. I'm John Furrier, Dave Vellante, Dave, 10 years doing theCUBE at VMworld, what a transformation, lot of technologies coming back into the center of all the action. SD-WAN's one of them, we got two great guests, two entrepreneurs, the co-founders of VeloCloud. Sanjay Uppal who's the VP and GM of VeloCloud Business Unit part of VMware, VMware bought on December 2017, Steve Woo, Senior Director of VeloCloud Business Unit. Also co-founder, you guys both strong in networking, entrepreneurs, congratulations on. >> Thank you. >> That was two years ago. Okay, so, we were reminiscing about 10 years, 2010, when we first started doing theCUBE to now, but more than ever SD-WAN, just over the past 24 months, 36 months, a lot's changing as cloud has become more obvious. Certainly public cloud, no debate, but we start talking about cloud 2.0. Enterprise requirements are much unique and different that just, you know, being born in the cloud at least like the startups are. So, whole different challenges. This is a kind of difficult, it's a networking challenge. Networking and security are the two biggest, hottest areas right now in tech as clouds scale, the enterprise comes in. What's the vision, Sanjay? >> So what's going on here as you were rightly pointing out, cloud is changing. It's no longer people just want to get from private to public, it's a multi-cloud world and it's a hybrid cloud world. Now, that's talking at it from the compute standpoint. But, other services are also moving to the cloud, security services are moving to the cloud, so when you look at it from that standpoint, our customers want to get from the clients, which could be a user, it could be a thing, it could be a machine, all the way to the container which has the application. So we're looking at SD-WAN as being that fabric that connects from the client to the cloud to the container. And as you're rightly pointing out, networking and security is the hot area right now. So how does security and networking impact this client to cloud to container world is where SD-WAN is headed toady. >> And Pat Gelsinger who just came fresh off the keynote, he'll be on tomorrow, I'm going to ask him this question directly but, we've always been saying public cloud is such a great resource, I mean, who doesn't want all that massive compute, massive storage, if you can use it? But when you start getting into hybrid, right? I said the data center's an edge. And he's talking about a thin edge and a big edge and a thick edge, so when you're a networking packet, when you're in networking you move stuff around, you're an edge and you're a center, you're a core. These are networking concepts, this is not new, I mean, this is not new. >> Yes, this is not new. And I think the concept of the edge, as he was pointing out, there's different edges everywhere and you have to really look at it from, as you're crossing the boundary, how do you get the packets from point A to point B? Making sure that the performances are short, so you get the application layer performance, but yet not increasing your attack surface from a security standpoint. And so, the facilities that Steve and myself and other folks at VeloCloud have constructed is really reducing the attack surface by segmentation. But making sure that the conversation from the client to the cloud to the container has that assured performance, particularly for real time applications. Which are actually not easy to get right because the underlying transport may not actually help in any great way. >> So, John, you said it's not really new for you networking guys, it's really not. At the same time, Pat talked about choice versus complexity so it's a much more complex world. So you've had to change the way in which, you approach from a technology standpoint I presume? The roadmap has probably shifted, maybe you could talk about that a little bit. >> So, absolutely. So the discussion about moving to the cloud has been about the compute, but then you have to also actually look at the network, right? They forecast that 30 to 50% of the enterprise traffic is going to go to the cloud, right? But the network in the past was built for applications going to the on premise data center. So what we've had is inequality where you've had a full enterprise grade network going to the enterprise data center, but actually your cloud access was a second grade citizen. As Sanjay was saying, I still want performance, I still want security, and then in fact, as people actually expand to the cloud but actually put more and more workloads in the cloud, they start to realize, gee, where's my automation? Where's my scaling? So that still has to be done at the branch that the remote sites that need access to the cloud, and they need this automated, secure, high performing access to all the cloud workloads. Especially even that it's now moved to multi-cloud, right? So you went from on premise, a little bit in the hybrid, private cloud, now many more instances and now multi-cloud, becomes more and more complex and that's where cloud delivered SD-WAN really addresses that problem. >> So Steve, lay out the architecture, so let's just all roleplay for a second here. I'm a CCO, CIO, I'm progressive, got my hands in all the top things, certainly security's number one concern I have. And I'm building my own stack, I love the cloud, I don't want to make it a second class citizen, I really want to re-architect this. What the playbook, what do I do, what's your recommendation? >> Alright, so the playbook is, and this is advice from the cloud compute centers as well, right? Go direct to the cloud, don't back haul it through the enterprise data center and introduce latency so you now need Internet Breakout at more locations, not just the central data center. But I still need the security, so how do I have cloud security for traffic going straight to the cloud versus going back to the east west, to the data center? So really, the advantage that the SD-WAN solution has is it's actually a hybrid that has a footprint on premise but also has a cloud footprint. So Sanjay and I and VeloCloud, we have this big network of cloud gateways so you have the footprint on prem and in the cloud to have distributed security. >> So, Sanjay, talk about, back to your original bumper sticker, client, cloud, containers. So, I see that security piece. How important has the container piece become? And what is that role of the container in the future? Is it going to be a wrapper for legacy apps, is it going to be primary for new apps? Because Kubernetes clearly is orchestrating a bunch of containers and other services so the role of the container's certainly super valuable. How does that impact some of the efficiencies that's needed for networking and to ensure security? >> Yeah, great question. You know, the networking folks, and networking was always relegated to being the underlay or the plumbing. Now what's becoming important is that the applications are making their intent aware to the network. And the intent is becoming aware. As the intent becomes aware, we networking people know what to do in the SD-WAN layer, which then shields all the intricacies of what needs to get done in the underlay. So to put it in very simple terms, the container's what really drives the need and what we're doing is we're building the outcome to satisfy that need. Now containers are critical because as Pat was saying, all of the new digital applications are going to be built with containers in mind. So the reason we call it client to cloud to container is because the containers can literally be anywhere. You know, we're talking about them being in the private cloud and then the public cloud, they could be right next to where the client is because of the edge cloud. They could be in the telco network which is the telco cloud. So between these four clouds, you literally have a network of these containers and the underlying infrastructure that we are doing is to provide that SD-WAN layer that'll get the containers to talk to one another as well as to talk to the clients that are getting access to those applications. >> You know, sometimes it takes a history lesson to figure out the future. I was talking with Steve Herrod and I want to get your reaction to a comment he made to me when we were talking about the impact of VMware back in the old days, you know, virtualization. Virtualization kind of came out as an application and then it became what it did in the server world, just changed the game. But one key thing that we talked about and he mentioned was, the key was that virtualization allowed for massive efficiencies. Not just on price and consolidation of service and efficiency on price, but it enabled more efficiencies in performance without any code changes to the application. So the question is, is that, okay, containers I buy 100%, we agree, since Docker and early days to now with the Kubernetes, containers are going to be a game changer. What's that dynamic that's going to come next? Is there a view from your perspective on that step up function of value without a lot of application rewrites or network changes? I mean, I'm just trying to figure out how that fits together what's your view on that? >> Yeah, let me drag this first and then maybe Steve can comment as well, so. The first thing is that SD-WAN, just like server virtualization did, we're doing what server virtualization was for the network. So you don't require any changes to your underlay, meaning that you don't require changes to your broadband, you don't require changes to your LTE and even 5G, as well as the NPLS network so you don't have to twiddle with those bits, we manage it all in the overlay, this is exactly similar to what VMs did when it came to server virtualization. Now, when containers come in, because we get the visibility of what the container wants, we can both in real time, as well as a priori, figure out how the network should be configured. And that is a game changer because a container could be right next to you, it could be in the cloud, far edge, thin edge, it's not just a destination, it's literally everywhere. And that underlying fabric, if the underlying fabric of the network doesn't work, your digital transformation project for containers is not going to work either. You there's a key building block over there. >> So if I get this right, you're saying is that because you have that underlay visibility without any changes, by making efficiencies there, you then can understand what the container wants so you're bringing intelligence to the container and vice versa? >> Yes, so that containers tells us what do they need to run, I mean the application tells us, which is built with containers. And what we do is we dynamically measure how the network is performing, and we adapt to what the container wants. We call this outcome driven. We know what the outcome is and we adapt the networking to deliver that outcome. >> So I want to ask you guys, so Pat talked today about 8% better improvement relative to bare metal, but it's really about the entire system, the entire network. And I'm curious as to how you guys are evolving. You know, John and I talk about cloud 2.0, how you're evolving to support that. Because it's really about application performance in total, what the user sees, not what I can measure in some on prem data center, I'm not saying Pat was doing that, but my guess to deduce the numbers for the keynote they probably did do that. So, how is your infrastructure and architecture evolving to support application performance across the network? >> Right, right. So, to add to what Sanjay was saying in terms of just being aware of the requirements of the containers and optimizing and having visibility but actually, leverage the container and virtual machine technology in the SD-WAN platform itself. So in terms of solving the network problem, it's not just about us virtualizing the network resources and then choosing the best path across the network to the applications, but actually hosting some applications that deserve to be moved out to the edge to help solve the performance problem as well. A good example is IOT, where you just have a lot of data, a lot of real time data that needs real time control response instead of necessarily going over the most efficient path to an existing cloud data center on premise, perhaps do some of the analytics actually in the SD-WAN network edge, and we can do that with containers. >> So what about the real time aspect? Because I think that's a key point, you mentioned that, Sanjay, earlier. Because, I remember, not the date myself, but I remember back in the days when policy was a revolution, oh my God, we can do policy based stuff! And provisional stuff, that was an, oh my God, static network, though, I mean everything was provisioned, buttoned up nicely, you're not dealing with a static network when you're dealing with services. So you're moving up the stack, we're talking containers now, at the application level, assuming you have the fabric down here. There's going to be a lot of stuff being turned on, turned off, things provisioning, unprovisioning, so a lot of dynamic nature going on. So, if I see this right, policy is key and enables some intelligence, it's got to have an impact on the real time so talk about what real time means, some of the challenges, is it just a transactional issue? Is it latency? And is that where the container magic happens? Just unpack that a little bit. >> So there's really four classes of real time applications that we see. Voice, video, VDI and IOT. Now, there's of course, other applications that are built from these building blocks or these types of application, sub-applications. Now, each of these has a latency requirement, but it also has a requirement in terms of dynamism, so as you know, video can change dramatically from one moment to the other, variable portrayed video, right? Voice doesn't change as dramatically but has very stringent requirements in terms of when that packet should show up. So when we look at these, and you put them on a best effort network that only says that they're going to get the packet from point A to point B, these real time applications may not work. So what we have constructed is an overlay that supports realtime applications even on best effort networks. And this is actually a fairly significant shift in the industry, like if you look at running, you know, all of us have done a voice call, on a broadband and you hear these artifacts and rubberbanding and you can't hear the other person, right? But with VeloCloud, we're able to provide guarantees running on best effort networks. And I think that is a game changer. That is going to be a game changer also as the applications get much more dynamic. I mean, you bring in containers, one of the issues is where should that application run? That can be decided in real time. VMware invented this whole vMotion idea, well how about vMotioning the container? And how are you going to vMotion it and how are you going to decide where that container should be? So all of this is really what a networking infrastructure can provide for you in real time. >> And you've got this overlay, and without performance degradation or dramatic performance degradation, right? So what's the secret sauce behind that? >> So, the secret sauce in our solution is something we call dynamic multi-path optimization. So just like virtualization was done for the data center, first continuously monitor the resource's performance, capacity of the different underlay resources and then in real time, recognizing the business priority of the different applications, instantly put the workload, or in this case, the network WAN traffic on the right resource and actually have the flexibility to move it as conditions change, as capacity changes. And further than that, if you can't stare around the problems that we may see in the network, we can actually remediate the actual traffic streams and since we're on both ends we can have a lot of optimization tricks and actually make sure that real time data applications work perfectly. >> So it's a data analysis and a math problem to solve? >> Yeah, so we use that for real time optimization, and then the other benefit is we have this huge, in the cloud, of course, huge data lake of information that we continue to share more and more with the users so they can see the overlay, so that the entire underlay environment of the WAN, where it's going in the different hybrid cloud, and also the overlay performance. There's going to be huge value in that in terms of solving network problems. >> Are the telcos a bottleneck to the future or is 5G going to solve all that, or? >> Telcos are a partner, and more than 50% of our business is done with the telco. So it's us working with the telco and then going eventually to the enterprise. >> And they're moving at the speed that you want em to move? They're saddled with pressures on costs and network function virtualization, and it's a complicated problem. >> Right, as you heard Pat say in the morning, the telcos are going through a dramatic change. Because they're shifting away from this custom proprietary hardware infrastructure into a completely software driven world, right? And so the telco is a critical partner. They are virtualizing their own network, they are virtualizing the core of the network using VMware and other technologies, and as they're doing that, they're virtualizing what goes out to the enterprise customer. And the network virtualization piece, of course, is built on SD-WAN. One thing I wanted to add to what Steve said, is that we collect almost 10 billion flow records a day. From across all of our 150,000 sites, and this is a treasure trove of information. It is this information that allows us to develop the next generation algorithms. We're the only ones who have that much information that is collected, it's rich information, it's about how the network performs, how the applications are, where it is going, how the application workloads are. And using this we generate the next generation algorithms that'll optimize the networks and make them more secure. >> And that is the benefit of SaaS, the beautiful thing about having a SaaS platform, easy to stand up, the data becomes a really critical aspect for making the network smarter, to your point, this is all those data points. It's an operating, sounds like an operating system to me. >> It's a highly distributed network operating system. >> Guys, thanks for coming on, great insight. Final question to end the segment, as two co-founders and entrepreneurs, when you started VeloCloud, knowing what's going on today, explain in your entrepreneurial mind, where this is going, because this isn't your, as they say, grandfather's SD-WAN market anymore. It's really turning into, quite frankly, next generation networking, next generation software, you mentioned it's network operating system, it's one big distributed network. And all these new things are happening, what's the vision? Is this what you thought it would be when you guys started? >> Well, you know, the amazing this is many startups usually go through a pivot, right? They start off as one thing and maybe more than one pivot, in fact, I think it was a couple of years ago that we just for grins, looked at the first few slides that Steve has made when we had got started. For our seed investor, where we actually had absolutely nothing! And it was, actually is very true, the graphics were very very poor, other than that the idea of moving to the cloud and using the cloud as the network, even at that time we said the cloud is the network. That has not changed. And so, the enduring vision here is that regardless of where you are, you're on laptops right now, clients could be sensors, actuators, all of this is going to go through a network cloud. And that network cloud is going to be responsible for getting you to any final destination. Whether it's your nearby container or whether it's running in some public cloud. And so the vision is trust the network, it's going to make sure that it'll figure out whether you should be on Wi-Fi or Bluetooth or LTE or 5G or whatever have you. You just say this application's important to me. The network is going to take care of the rest of it. >> Well you guys are certainly music to our ears, we love network effects, we think network effects is not just the way media is today but also technology, the network is all interconnected it's all instrumented, you can get the data. There's no blindspots, if you can instrument it, you can automate it. You guys are pioneers, thanks for coming on theCUBE, appreciate it. >> Good to have ya. >> Thank you. >> CUBE coverage here, 10 years covering VWworld, I'm John Furrier, Dave Vellante. Back with more live coverage after this short break. (electronic music)

>> Woman: From San Fransisco, it's theCUBE, covering VMware Radio 2019. Brought to you by VMware. >> Hey, welcome back to theCUBE's exclusive coverage of VMware's Radio 2019, Lisa Martin with John Furrier, John, we started really bright and early this morning with a very excited Pat Gelsinger. VMware, this is the fifteenth Radio, Radio is R&D innovation offsite. There's about 1800 VMware engineers from lots of B.U.s, very competitive event, very passion driven event, and really just is a... what a great manifestation of the VMware culture and the spirit of innovation. >> This is the best of the best event, and the story around Radio 2019 is really a cumulation of multiple years, as you pointed out, of cultural innovation, engineering. VMware has always been an engineering culture, coming out of Stanford, and from day one they've had that guiding principle. They've also been open and transparent, as we heard on theCUBE interviews today, that has created the culture of community. Open Source dives beautifully into it. And so radio is about that cumulation of the talent. It's the best of the best internally, they submit papers, it's a bottoms-up process, so it's truly a meritocracy from an engineering standpoint. But it's a culture of engineering, and their job is to come up with the future, and what's notable about this event is it's the second year now theCUBE's been here. Last year was the first year they've invited press, so three outlets from the media were allowed, were one of them. And we get exposed, we get to look under the hood, and look at the engine of innovation coming down the road for VMware and their partners. So, it's a super exciting event, Radio is a community within VMware that's now global, 50% outside of North America and the United States, all a bottoms-up, a hive mind, we heard that here. Really successful for VMware to continue this, bringing the press in, get the stories out there, take that transparency and open message from the content. We can share it, we get access to the data, it's a beautiful co-creation formula with theCUBE and VMware. It's a success, and their challenge is can they take it global and extend it. >> And this is day four of Radio19 and you can hear the amount of people that are still here, still passionate, these are projects that they're doing outside of their day jobs. So, the transparency that you talked about, I loved when we were talking with David Tennenhouse about the bottoms-up approach, that this is not a set agenda, we're going to talk about Blockchain, and IOT, and security, this is driven as you said, from thousand-plus submissions of people who want to have papers presented here. >> People don't want to leave, because this is like a kid in the candy store, it's like being intoxicated with technology and there's so much content here. Now that's also a bellwether and a barometer of the company. If R&D is weak, you don't have the innovation. There's companies that don't really invest in R&D, they wouldn't have this kind of mojo or this kind of excitement. But VMware prides themselves on doing 15% R&D, that's way outside the box. The rest is all done within the constraints of what they're doing in the market, so relevance is high, but still room to play and dream the future. And again, I've always believed that you can't dream it up, you can't build it. >> Now of course, VMware, all about, as every business should be, we needed to be developing products and solutions and services that the market needs to solve real-world problems. One of the cool things we learned about today, John, is, from the EMEA CTO John Bagley, is the CTO Ambassador program, the CTOA program, where there are folks, and this is also a competitive program, it's a couple, I think you said a four year tenure to get folks through the program, but being out in the field, in customer sights, learning about all these enterprise organizations, what they actually need, so in that spirit of openness that you talked about, they're bringing in customer information, building and fostering relationships, so that what they're investing in from an R&D standpoint, is going to be able to solve customer problems that they don't even know they have today. >> Yeah, that Champion program, that Ambassador CTO program, that Joe mentioned, what's interesting about VMware, and this is what I love, I admire about the company, as well as companies like AWS and Amazon web services, the people are smart and they think about scaling. So, that's kind of a cliché these days, how does it scale, makes you look smarter if you ask that question, but VMware actually thinks about how to scale, and so, the problem that they had was, they had these field CTOs that were out evangelizing with customers half the time, and doing internal real CTO work around architecture with the teams to build great stuff and move that to market, they couldn't scale. So they used their community of their own ecosystem to find people to come in and replicate. You heard Joe Bagley, "I had to be Steve Herrod," cause he can't be everywhere. That's the mindset of this culture, and I think they have real opportunity to crush it at Open Source, they have a real opportunity to take the Radio culture, and superimpose that in as a new way to do work, new way to create distributed, decentralized teams, and ultimately better software, and at the end of the day, they have to attract great engineers and keep them, work on hard problems, because, Pat's ambitious. And we know Pat. What he says, and what's real, they're all catching up to Pat. Pat has this great vision and he's nailing it, but the engineers got to build what Pat says they got to do. When he says "I'm abstracting away Kubernetes, as an abstraction layer," yeah that sounds simple, but it's really hard to do. >> Absolutely, and I want to get your perspective too, on this, not just the culture of innovation, that you talked about, that VMware has had for a very long time, but also in the spirit of VMware leveraging their innovation programs like Radio, to attract and retain this high quality talent, from your perspective, how does a conference like this, which is kind of academic in nature, it's kind of like a science fair for engineers, how does it differ from some of the other companies, like a Google that say "we have innovation programs." In your perspective, how is this different? >> Well, Google actually is fairly similar in the sense that they came out of Stanford, they have that kind of ethos of academic. Facebook is exactly the opposite, he wants to be Bill Gates, and be like Microsoft, as I was saying the other day. Google's internal stuff is pretty strong, they don't externalize it, and that's why Google Cloud's having such a hard time gaining market shares, that they're not good on the external game. Their thing is the SAS offering, it's all programmable. They're awesome at technology, but they're not good at externalizing it. So, I think Google's struggle is not a lot of internal to external translation. What Radio has done successfully, and we heard a little bit here, was they took it from the Palo Alto bubble, which Google lives in, and they've extended it beyond to the rest of the world, so 50% of the Radio attendees here are from outside the United States. So what they got right is, they've actually externalized it better, they're allowing press to come in, the storytelling that we're doing, that's going on, the collaboration here, is about people collaborating, that's why this successful. And it a world where everything's open, and information's freely available, there's a an audience for "high end," tech nerd activity. This is, this meets the high bar of the geeks of the best of the best, and so why isn't it being covered? Well, it is. We are here. >> You're right, we are here. And also, if you look at, it's one thing for companies to have innovative cultures, but it's another thing, some of the key elements that really can catalyze innovation are partnerships, diversity, that come to mind, both of which VMware does very, very well. Big foci on partnerships, which we've seen and heard about here as well, as well as, not just diversity and gender and things, but also thought diversity, and how groups from completely disparate business units can come together, either organically, before Radio, or even probably, can you imagine the hallway conversations that are going on here? Where suddenly, these different ideas are coming together. Partnerships and diversity are really catalysts for VMware's innovation- >> Well that's a great point, one of the first, on the partnership side, clearly a catalyst, because of multi-cloud and cloud native, seeing that. Diversity is a homerun for them, because they are a diverse culture, but look, how many women are here? Not many, I mean still, more than some, still a lot more work to do. But diversity of opinion, the inclusion that VMware has, they're a very inclusive company. So, it's not like, I just don't think there's enough population of women, in my opinion, that are in the community. But they're inclusive, there's different people with different backgrounds, different technical backgrounds, so from so from a quote "diversity" skill set, it's a melting pot. You've got people talking about carbon fiber, sustainability, to kubernetes, all kind of coming together. So I think diversity's a real strength for them. >> So we heard, I know you had a really, really intriguing Blockchain conversation today. We talked a lot about some of those emerging technologies, Vmworld 2019, which theCUBE will be at, for, I believe the tenth year, it's just around the corner. What excites you about some of the things you heard today that you think we might hear more about in August? >> What excited me about VMworld is what Pat Gelsinger said off camera, that it's going to be a ton of news, a ton of activity, and I think if you look at what VMware's doing, again, like I said, Pat Gelsinger's got an amazing vision, and I think he's cleared the runway, or sailed away from the icebergs. VMware's in a really good market position right now. They have great growth going on, and, look, the organic innovation here at Radio, amazing. Content's solid, people are still buzzing for it, they could probably stay here for a week, two weeks. Acquisitions, CloudHealth, Bitnami, again, two smart acquisitions, they're making smart deals, the ecosystem's evolving, it's a new VMware. So I think Vmworld is going to be, have a spring to its step this year, I think you'll see a lot of action, they'll be two CUBE sets again this year, it's going to be a different company next ten years, VMWare, than it was the past ten years. >> Well, I'm excited to be there with theCUBE, two sets as you mentioned, my interest is certainly heightened after some of the things we heard today. John, as always, I had a blast co-hosting with you. You got some awesome swag to go home with. Until next time, right? >> Yeah. >> All right, for John Furrier, I'm Lisa Martin, you've been watching our exclusive coverage of VMware Radio2019 from San Fransisco. Thanks for watching.

>> Announcer: From San Francisco, it's theCUBE. Covering VMware Radio 2019. Brought to you by VMware. >> Hi, welcome to theCUBE's exclusive coverage of VMware Radio 2019. Lisa Martin with John Furrier, in San Francisco. This is an internal R&D innovation off site that VMware does, lots of innovation going on here from engineers from all over the globe. We're pleased to welcome Joe Baguley, the CTO from EMEA, from VMware. Joe, welcome to theCUBE. >> Hi. >> So we've been having some great conversations this morning about this tremendous amount of innovation, I mean the potential is massive. Not just from Radio, but from all the other innovation programs that VMware has, really speaks very strongly to the culture of innovation that VMware has had. But of course all this innovation has to be able to be harnessed to deliver what customers need. Talk to us about that, you're in the field, field CTO. What is that connection with the innovation that happens within VMware? How do customers help influence that and vice versa? >> Yeah, I think we're very unique in the structure that we've put around that to drive that innovation over the years. So my job as field CTO is, I call it sort of 50, 50. So 50% is Chief Technology Officer, which is this kind of stuff for Radio and 50% is Chief Talking Officer, which is out with our customers and presenting at conferences, et cetera. But the general remit is connecting R&D in the field. And so for eight years now I've been connecting R&D in the field at VMware, I actually did at my previous company as well. And what we've done is, we've built a series of programs over the years to do that, and one of the biggest ones is the CTO Ambassadors. And so that was, you know, you get to a point, you get to a growth size, I've been here eight years, and suddenly you need someone else to help you because I can't be everywhere. And the original role was, back in the day I was hired to scale Steve Herrod, because Steve Herrod couldn't be in Europe all the time, I was like mini Steve Herrod that could be there when needed. But then eventually I can't be in every European country and our major regions as we get bigger and bigger, and we've grown dramatically. So the CTO Ambassadors is to support that. And that's really, we've got 140 of our top customer facing techies from around the globe in this program called the Ambassadors. And they have to be customer facing, and they have to be individual contributors, so like a pre-sales manager or something doesn't count. They're a massively active community, there's a whole bunch of them here at Radio as well. And their job is really that conduit, that source of information, and also a sounding board, a much shorter range sounding board for R&D. So if R&D want to get a feel of what's going on, they don't have to ask everyone they can bounce off the Ambassadors, which is part of what we do, and that makes it easier. >> So like a filter too, they're also also filtering input from the field, packaging it up for R&D. >> Totally. Yeah, and when you're at an organization of our scale, filtering is really important. Because obviously, you can't have every customer directly talking to every engineer, it's never going to work. (laughs) >> I mean another radio project stay right there, a machine learning based champion CTO to go through all the feedback. >> Yeah, so I started my career, with my previous company doing that, I was the filter. So I'd get a hundred questions a day from various people in the field, and 99 of those I'd bounce right back because I knew the answer. But there was the one that I was like, uh. Then I'd turn around to R&D and ask them. But the great thing was that R&D knew that if I was asking then it was a real question, it wasn't the 99. So the CTO Ambassadors, and what we do in Octo Global field is really a method of scaling that. >> I want to ask you about that because that's a great example of here reputation comes in. Because your reputation is on the line if you go back and pull the fire alarm, if you will, send too many lame requests back, you're going to be lame. So you've got to kind of check, balance there. So that begs the question, how do you do the filtering for the champions that work for you? Is there a high bar? Is there a certain line? Like being a kid, you've got to be this tall to ride the roller coaster. Is there criteria? Is there certification? Take us through the filtering there. >> The Ambassador program is a rotating nomination system. So essentially there's a two year tenure. So what happens is, if you're in the field and you want to be an ambassador, which is a really prestigious thing, then you nominate yourself or get nominated and then people vote on you and you put forward your case, et cetera. Essentially it's a democratic process based on your peers and other people in the company. And then after you're allowed a maximum of two years. Sorry, two tenures so you get four years, if that makes sense, I'm not confusing you. >> John: So term limits? >> Yeah there's term limits, right, we have term limits. And after two terms you have to go out for a year to give someone else a chance because otherwise it will just glub- >> It'll turn into the US government. (laughs) >> But no, it's important to maintain freshness, maintain diversity and all those kind of things. And so it comes back to that filter piece we were talking about before. The reputation is massive, of the CTO Ambassadors. I mean when we started this six years ago as a program, most of R&D were like, who are these Ambassador guys? What value are they going to add? Now, if you're in R&D, one of the best things you can say, if you want to get something done, is what the CTO Ambassador said. I mean, literally it is, you can go and we have- >> John: The routine approach to that. Talk about how you guys add in a new category. So, for instance kubernetes, we saw this years ago when KubeCon was started, theCUBE was there present at the creation of that trend we kind of got it right away. Now Gelsinger and the team sees this as a massive traction layer. So that would be an example, where we need an Ambassador. So do you like just create one or how does that work? >> They create themselves, that's the best thing. So we have an annual conference which is in February, held in Paolo Alto where we all get together along with all the chief technologists, which is the level below me. And the principles, which the most senior field people. So literally the best of the best get together. It's about 200 plus get together for a week. And we are an hour and a half on on one with Pat for example, so Pat's there with all of us in a room. But one of the sessions we do is the shark tank, and there's two of them. One of them is, come up with your really cool, crazy, wacky ideas, and the other one is the acquisition shark tank. So there we get the MNA team, include our E-staff sit in, and the Ambassadors, as teams, will come in and present. We think we should acquire, uh because that's making a big difference. The great thing is, not nine times out of 10 but probably seven times out of 10, the E-staff are going, yeah we know about that, when actually we can't really tell you what's going on but yeah we know about them. But there's the two or three times out of 10 that people are like, oh yeah, so tell me more about them. And it might be a company that's just coming up, it might be 2013 and there's this company called Docker that no one's heard of, but the Ambassadors are shouting about Docker, and saying it's a big, you know. So there's that- >> So white space is too emerging you can see it's a telemetry, literally feedback from the field to direct management on business strategy. >> And our customers are pushing our field in directions faster than maybe R&D get pushed if you know what I mean. >> You guys deserve a lot of credit because Pat Gelsinger was just on this morning with Lisa and me, and we were talking about that. He just came back from the Sales President's club cruise, and one of the comments he said was the sales executive said, hey, who does strategy? Because everything's fitting together beautifully. Which kind of highlights how radiance this all progresses, not like magic, there's a process here, and this kind of points to your job is to fit that pieces in, is that correct? >> Yeah. People always say, as a CTO do you all sit down once a week and talk about strategy? And that's not what you do. There's a hive mind, there's a continual interaction, there's conference calls, there's phone calls, there's meetings, there's get togethers of various different types, groups, and levels. And what happens is there's themes that emerge over that. And so my role specifically, as the EMEA CTO is to represent Europe, Middle East, and Africa's voice in those conversations. And maybe the nuances that we might have around particular product requirements or whatever, to remind people that maybe sit in a bubble in Silicon Valley. >> John: I'm sure you raised your hand on privacy and GDPR? (laughs) >> Just a couple of times, yeah. Yeah, now and again. >> The canary in the coal mine is a really big point that helps companies, if they're not listening to the signals coming in. >> Well you do, and you see a lot. There's a lot of the tech companies that I see, it's often defined as the three bubbles, or your Massimo Re Ferrè, who's now at Amazon. When he was here, did this fantastic blog post talking about the first bubble is Silicon Valley, and the second bubble is North America, and the third bubble is everywhere else. And so you kind of watch these things emerge. And my job is to jump over that pop into the Silicon Valley bubble before something happens and say, no you should be thinking about X, you should think about Y. At an event like Radio I've got a force multiplier because I've got 40 plus Ambassadors with me all popping up at all these little booths you see behind you, and the shows, and the talks. >> And the goal here is not to be a bubble, but to be completely one hive mind. >> And the diversity at VMware just blows my mind, it really does. I think a lot of people comment on it quite often, and in fact I've been asked to be a non-exec director of other companies, to help them advise on their culture. Which is not in tech, in culture, which is quite interesting. And so the diversity that we have here is really infusing people to innovate in a way that they've not done before. It's that diverse set of opinions really helps. >> Well it does. And this, from what we've heard, Radio is a very, there's a lot of internal competition, it's like a badge of honor to be able to respond to the call for papers, let alone get selected. Touch on the synergies, the symbiosis that I feel like I'm hearing between the things that are presented here, the CTO Ambassadors and the customers. Like maybe a favorite example of a product or service that came from, maybe a CTO Ambassador, to Radio, to market. >> Yeah, I'm just trying to think of any one specific one. There are always bits and pieces, and things here and there. I think I should have thought of that before I came on really. I think what you're looking at here is, it's much more about an informed conversation and so it's those ideas around the fact. And also, quite often someone will have a cool idea, and they'll go to the Ambassadors, can you find me five customers that want to try this? Bang, we've got it. So if you're out there on a customer, and someone comes to you as an ambassador and says, I've got a really cool thing I'd like you to try. It might be before, we have a thing called Fling, so it might even be before it's made a fling. You probably heard from Morney how that process goes. Then engage fast, because you're probably getting that conduit direct into the core of R&D. So a lot of the features that people see and functions and products et cetera, that people see. A lot of the work you see, we're doing with the next version if you realized our management platform, a lot of that has been driven by work that's been done by Ambassadors in the field, and what we're doing there. All the stuff you'll see, I've got my jacket over there with NANO EDGE written on it. A lot of the EDGE stuff that you see, a lot of the stuff around ESXi on Arm, a lot of the stuff around that is driven specifically around a particular product range. So a really good example is, a few years ago, probably around four, myself and Ray sat down and had a meeting in VMware Barcelona, with a retail customer, and the retail customer was talking about could we get them an STDC, but small enough to fit in every store. They didn't say that at the time, but that's how we kind of got to it. So that started off a whole process in our minds, and then I went back and we, the easiest actual way for me to do it was to then get a bunch of the Ambassadors to present that as one of their innovation ideas, which became NANO EDGE. I originally called it VX Nook, because we were going to do it on intel Nooks. (laughs) Unfortunately the naming committee wouldn't allow VX Nook, so it became NANO EDGE. And that drove a whole change within the company, I think within R&D. So if you think up until that point, four years ago, most of what we were doing was, how do we run things bigger and faster? It was all like Monster VM, remember that? All those kinds of things, right? How do we get these SAP HANA 12 terabyte VMs running? And really NANO EDGE was not necessarily a product, per se but it was more of a movement driven by a particular individual, Simon Richardson, who had got promoted to Principle as a result, through the Ambassador program. That was driven through our R&D to get them to think small as well as big, you know. So next time you're building that thing, how small can you run your SX, how small can we get an SX? >> John: Small, at scale. Which is EDGE, right? >> And, you know, so get small, at scale, which was EDGE. And so suddenly everyone starts talking about EDGE, and I'm like, hang on I've been talking about this for a while now, but we just didn't really call it that. And then along comes technology like Kubernetes, which is how do you manage thousands of small things. And it's kind of, these things come together. But yes, totally, you can almost say our EDGE strategy, and a lot of the early EDGE work was done and driven out of stuff that was done from CTO Ambassadors. It's just one of the examples. >> What are some of the Kubernetes service mesh? Because one of the things we heard from Pat, and we've heard this before, but most recently at Dell Technologies World, in the last couple of weeks, was don't look down, look up. Which basically means we're automating the infrastructure. I get that, I've covered ad nauseam. But looking up the stack means you're talking about kubernetes app developers, you've got cloud native, you've got services meshes, microservices, new kinds of challenges around instrumentation. How are you guys inside Radio looking at that trend? Because there's some commercial impact, You've got Heptio, you've got Craig and the team, some of the original guys. >> Yeah, yeah. >> As well as you have a future state coming out, with state, pun intended, data, stateless. (laughs) These are new dynamics. >> Yeah, yeah. >> What's the R&D take on this? >> So there's two ways that I really talk to people about this. The first one is, I've got a concept that I talk about called application chromatography. Which sounds mental, but you remember from high school probably, chromatography was where you had that really special paper and you put the dot of liquid on and it spread it to all it's constituent parts. That's actually what's happening with our applications right now. So, we've gone through a history of re-platform. You know, mainframe, blah blah blah blah blah. So then when we got to x86, everything's on x86, along comes cloud, and as you know John, for the last 10 years it's been everything's going to cloud because we think that's the next platform. It's not, but then everything's not going to SAS, it's not all going to paths, it's not all going to Functions, it's not all going to containers. What you're seeing is those applications are coming off that one big server, and they're spreading themselves out to the right places. So I talk to customers now and they say, okay, well actually I need a management plan, and a strategy and an architecture for infrastructure as a service, containers as a service, functions as a service platform as a service and SAS, and I need a structure for that on premises and off premises. So that's truly driving R&D thinking is not how do we help our customers get from one of those to the other? They're going to all of them. >> It sounds like a green screen for media. >> It is, and then the other side of that is I've just had a conversation with some of the best, you know, what these events are like? Some of the best conversations in the water cooler, in the- >> In the hallway, yup exactly. >> I've just had a fascinating conversation with one of our guys has been talking about, oh it's really cool if we got kubernetes cause I could use it right down at the edge. I could use it to manage thousands as a tiny EDGE things. And as I'm talking to him and sort of saying, you know what he's doing, I suddenly went, hang on a second, how does a developer talk to that? He's like, well I've not really thought about that. I said, well that's your problem. We need to stop thinking about things from how can that framework help me? But how can I extend that framework? And so a lot of that- >> Moving beyond just standing up kubernetes, for what purpose? Or is that what you know, the why, what? >> So if the developers there, it shouldn't be all. I'm going to use this new framework to solve my problem or the EDGE if an R&D person would, but people like myself are there to drive them to think of the bigger picture. So ultimately at some point a developer in the future is going to want to sit there and through an API, push out software SQL server, a bit of Mongo over here, some stuff on AWS, go and use the service on our Azure at the same time pushing stuff into their own data center and maybe push a container to every store if they're a retailer and they want to do that through one place. That's what we're building. And you know, driving that, all these bits and pieces you see behind you pulling those all together into this sort of consistent operations model. As I'm sure you've heard many of- >> And it's dynamics not static, so it's not like provisioning the old way. You got to track what's being turned on and off because how do you log off? What goes turns on? What services get turned on? Turned off, turned on. >> If you don't get a theme of really, I suppose not only Radio, but our industry of the last few years, people have always said if that cliche change is constant, right? Oh, change is constant. Yet still architects build systems that are static, right? You guys that just, I'm designing an architect in this new system for the next three years. I'm like, that's stupid. What you need to do is design a system that you know is going to change before you've even finished starting it. More or less started going half way through it. So actually, as I see, I was in a fantastic session yesterday with the Architects around ESXi and VCenter, which might be boring to most, but where we architecting that for scale at a huge way. >> Well, I think that's the key thing I mean this is, first of all, we'd love this conversation because, if you can make it programmable with API and have data available, that's the architecture because it's programmable, it's not static. So you let it morph into however the application, because I think I mentioned green screen, you know chroma keys as we have those concepts here, but that's what you're saying. The apps are going to have this notion of, I need an app right now and then it goes away. Services are going to be provisioning and turning on and off. >> There is a transience, there's a transience to infrastructure, there's a transience to applications, there's a transience to components that traditional mechanisms aren't built to do. So if you look at actually, what are we building here? And what's that sort of hive mind message? It's how do we provide that platform going forward that supports transience? that allows customers to come, I mean people used to use the term agile, but it's been over years and it's not right. It's the fact that literally it's a situation of constant change. And what your deploying onto, it's constantly changing and what you're deploying is constantly changing. So we're trying to work out how do we put that piece in the middle, that is also changing but allows you some kind of constancy in what you're doing, right? So we can plug new things in the bottom, a new cloud here, a new piece of software there, a new piece of hardware there or whatever. And at the same time, there's new ways of doing architecture coming on top. That's the challenge of this, the software defined data centers, almost like an operating system for clouds or the future operating system for all apps on all clouds and all of- >> It's a systems thinking for sure, absolutely. >> Let's put your Chief Talking Officer hat on for a second as we look- >> I thought I've been doing that for the last fifteen minutes. (laughs) >> At VMWorld 2019, which is just around the corner. Any cool ANEA customers that are going to be on stage that we should be excited to hear about it? >> Actually, I was having a meeting yesterday morning about that, so I can't really say, but there's some exciting stuff we're lining up right now. We're obviously now is the time we start thinking about the keynotes, now at the time you start thinking about who's on stage. Myself and a few others are responsible for what those demos are, you know the cool demos you see on stage every year. So we literally had the meeting yesterday morning at Radio to discuss what's going to be the wow at VMWorld this year. So I'm not going to give anything away to you. I'll just say make sure you're there to watch it because it's going to be good. And we're also making sure there's a big difference between what we're doing in Moscone now and what we're going to be doing it in Barcelona when we- >> And when expand theCUBE outside of the United States certainly, we'd love to have you guys plug in and localize some of these unique challenges. Like you said, I agree bubble now the west of the world has different challenges content different. >> Definitely, I think to that end, multicloud is probably more of a thing in Europe than it was necessarily in, in North America for a longer time because those privacy laws you talked about before, people have always been looking at the fact that maybe they had to use a local cloud for some things. You know, a German cloud run by German people in a German data center and they could use another cloud like Amazon for other things. And you know, we have UK cloud who provide a specific government based cloud, et cetera. Whereas in America there was, you could use an American cloud and that was fine. So I think actually in Europe we've already been at the forefront of that multicloud thinking for a while. So it's worth watching. >> It is worth watching, I wish we had more time to, so you're just going to have to come back. >> Definitely, anytime tell me when. >> We look forward to seeing you at VMWorld. We thank you for sharing some insights with John and me on theCUBE today. >> Cool, thank you. >> For John Ferrier, I'm Lisa Martin. You're watching theCUBE's exclusive coverage of VMware Radio 2019, thanks for watching. (upbeat music)

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty-bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)

>> [Announcer] From San Francisco, it's theCUBE. Covering Radio 2018, brought to you by VMware. (upbeat music) >> Hello everyone welcome back, this is theCUBE's exclusive coverage here at VMware's Radio 2018, this is their seminal, big-tent event for their top engineers, smartest people come together present their reports, their projects, and come together as a community and share great content and agenda. As Steve Herrod former CTO says, this is like a sales kickoff for engineers, it's motivated and they flex their muscles, technically, stretch their minds. I'm here with Pat Gelsinger, the CEO VMware, great to see you, welcome back to theCUBE. >> Hey thank you very much, it's fun to be here at Radio. >> So this is nerd central, this is >> Absolutely, this is like geek city baby. >> Dave and I always complement you on your business acumen obviously doing great as a CEO, the numbers, business performance, world class organization, check, best place to work, one of the best places to work for, check. But you're kind of a geek at heart, you like to get down and dirty, technical, this is your event. You gettin' down with the folks? >> Yeah it's fun, I was just at our sales, we have a top sales people, our sales club, so we did it in Abu Dhabi this year, so I was just over there a couple of week ago for that so hobnobbing with the sales guys which is super important, right? Their motivation, their creme de la creme of the year, but to me this one is better, right? Just 'cause now the tech guys comin' together 'cause most companies don't do anything like this, right? So it really is a unique piece of the VMware culture where the tech guys get together and they just geek out for a couple of days and to be awarded best of Radio, it's like, oh man you're a god inside of VMware. >> It's like the Sundance Film Festival, Cannes Film Festival, the Oscars, it's a huge accomplishment and knowing people internally. >> Yeah and some of Ray's numbers this morning as he showed in the keynote, I mean it's competitive to get your paper shown here is competitive, right? So there's a set of judges that are picking the papers that are here out of this we already have over 200 invention disclosures that have come out of just the preparation for the conference and we haven't even gotten started yet, and now the keynotes this morning and poster sessions all week long, and letting the engineers just really vibrate off of each others' ideas and challenge them and all of our PEs and fellows roaming around here they're sort of like the big guys on campus, but hey the young Turks are coming up and they're challenging them on ideas it really is a delightful few days. >> I love your perspective, I wanna get your reaction 'cause one, not only do you have a storied history working at Intel, really a great innovative founders of Silicon Valley with HPs of the world, and now you're the chief of VMware a modern era's here, you talk about this all the time publicly about the business context and at the events, but it's different Google had pioneered this notion of 20% of your time you could work on side project, more of an academic culture Google has, I mean I love that it's cool, but VMware has a unique culture and I want you to talk about that dynamic because you have to be versatile now, agile more than ever, you have to be faster time to market, and it's always been hard for companies to crack the code on knocking down the big ideas, solving the hardest problems but yet making it practical at the same time. What's your reaction to how you guys are doing it, >> what's different? Share some color. >> In some ways and I think some of the panel, we had a panel session this morning, Steve did one session, but we had of the original engineers in the company, the five of the original engineers, right were here and they were saying it was sort of like we're doing research in a business who had business objectives, right? Solving problems that had never been solved before, Sort of the VMware culture is if it's not a hard problem, it's not worth it, right? And our objective isn't to be 2x or 10% better, but to be 10x better, right? And when you're doin' those kind of things you can't always put that on a schedule, right? The problem is solved when it's solved, right? And I was just meeting with one of my teams last night and this is, well alright that looked pretty good but I don't think you've met the minimum viable product yet so let's put it in an open beta for six months before we actually call it GA 'cause I don't think you're done >> solving the hard problem yet, right? >> So you're squinting through and looking at the projects from that? >> Yeah right, is it ready? And have we really delivered something that customers can say, "Yeah here's the value proposition you promised, here's what you're delivering me, it is a quality product," right? Which is something that's deep in that history of VMware right in many cases, and I love one of the statistics this morning, they said the early core dumps of ESX, right they found that over 2/3 of them were a result of memory parody errors, not of ESX failures of any sense, so meaning that the hardware was less reliable than the software was, that's all we sort of this magic that we say, we're out to produce world class infrastructure software that's better than the hardware ever could have been and for a hardware guy that's sort >> So that was your problem, originally I think it was on your watch actually the first core dump. Throwback Thursday would they do core dumps from like 10 years ago look at a simpler core, >> look at x say "Hey look at the core dump, Hey look at cool that is." (laughing) >> If I see the Biaz prompt oh my gosh where did that come from? >> Let's get some vinyl records and look at some core dumps from 1992. >> So Pat, now this is important because I think this is a killer point, when you look at innovation VMware has to meet the challenge of being on that next wave and you've said on theCUBE many times, if you're not on that next wave you're driftwood. A lot of companies who try to do R&D end up solving hard problems to attract the top talent, but they end up getting so focused on the problem they end up in a cul-de-sac on the wrong wave, they miss the next wave. >> [Pat] Yeah. >> How do you manage that? 'Cause this is your sticking point is to make sure you don't miss the next wave, you transition properly, how do you avoid that problem of getting so focused on the intoxicating aspect of solving problem and being in a cul-de-sac no market wave missed? >> Yeah and it's hard right? In that sense and I'll say there's, we sort of look at it from three different dimensions, one is, hey you gotta keep this bubbling cauldron of ideas and that's why we're here at Radio, right? Just these people working on ideas, right? You have some really cool stuff and every once in a while you're telling the engineers, "Well that's good but you haven't solved the hardest piece of that problem yet and so on." Then you have to be able to take it from that bubbling cauldron to, I'll say, an incubation product, right? 'Cause VMware yeah we do R&D, we do core research as well, but fundamentally we've been able to create markets based on our products and really scale them, right? The embarrassing truth of any enterprise software company is for every dollar of R&D you spend, you spend two dollars of sales and marketing, so we can't under invest in those products that we've picked that now are scaling into the market, we have to put the >> dedicated sales >> [John] Get the leverage >> out of it >> The SEs et cetera, that's really frightening. When I'm done innovating a new idea maybe I've dumped 10 million or 15 million into the core idea, okay, now I got to go spend twice that amount on >> Good marketing. >> Marketing of it and boy it's expensive to bring things into the enterprise and if the product isn't robust and solid and really compelling, then it might be three or four x, so you're now rewarded with your R&D investment to go spend on sales and marketing now, so yeah we've really taken and we have a very BCG matrix kind of view of how we take products from incubation into early market success and then into scale and finally cash cow and retirement and that process is one you have to be equally disciplined about. The third piece of it is you have to be able to declare failure and for failures, it's how do you harvest technologies and learning, but be able to look at something vCloud Air and say, "Okay we weren't successful" and now go build a multi cloud, an Amazon partnership coming out of it, we have to be able to make those shifts right and be able to declare failure, be able to move our customers forward, and then move on to the next big thing >> [John] I mean the math works >> 'Cause you're not gonna get 'em all right. >> So to your point, the math works when you can abandon quickly >> [Pat] Yeah. >> That's where the winners are 'cause then you can move the probability of success somewhere else. >> Yeah and if you can't declare failure, right, and view that in the positive and proud way. One of the failures of vCloud Air became the success of our hybrid cloud service capability now, right a lot of this ability to move workloads between public clouds was a direct harvesting of our vCloud Air failure, we're able to take that technology forward and that's now one of the pillars of how we're differentiate and our Amazon service, OBH partnership, IBM, are building on those hybrid cloud capabilities. >> Pat we've been watching you that's one of the things I will say that you're really amazing at, you're good at, you're the captain, you've got your hand on the wheel, you gotta know when to say, "Hey, close that hatch, or we're going to sink," you gotta, or I'm not that there, knowing when to make the calls. So I gotta ask you, when you look at the marketplace now, you have the option to build, the option to buy, and you have to kinda also balance those three areas, you've got Ray, you've got Rajiv, and you've got the Corp Dev guys, they have to work together and sometimes, hey let's go buy that hot start up or no I have it internally, and sometimes it might be in a core competency area. Talk about as the CEO, you've got your hand on the wheel, okay, you're steering the ship, you're setting the direction, the team's workin' hard, how do you make those calls buy build, and when it's in the core area as the market's shifting, what's that look like for you? What your view as you look forward? >> Yeah there's clearly and we think about the case let's take two examples of our buy. AirWatch, hey we saw that we had nothing in mobility and if we're gonna be in end-user computing we must have mobility in the family, so we really in some degree, we didn't have a choice, we had to go buy if we're gonna be in that space and it became foundational for us in that area. You might have argued, hey we should have done that five years sooner, but we didn't, we had to make a buy decision and then we went out and shopped, literally MobileIron or AirWatch? We looked at those and bake those off until almost the last day, alright? And I went into that expecting we were gonna buy MobileIron, right? >> [John] Really? What was the tipping point? >> Right, well, I became a Silicon Valley company, I thought their technology was a little bit better, I thought the AirWatch guys were a little bit too much market and focused on winning the early market, I didn't know if the product had the quality of a VMware product, so I really was handicapping the MobileIron one and the team came out unanimously with my agreement that AirWatch was the right thing, right? In the case of Nicira, one of the other foundational acquisitions that we did, we had a lot of the distributive virtual switch technology we had already innovated, but we hadn't put a control plane, a scale control plane against and that's Nicira did, so there it was really bringing those pieces together which really has become, I'll say, a marquee aspect of our acquisition, in many cases we're in the space >> You feel good about that, how much you paid for that. >> Oh yeah, I mean at the time people said, "1.2 billion for less than 10 million of revenue, what are you guys stupid?" Now everybody says, "Wow you're brilliant." >> So they didn't look at the underlying technology. >> Absolutely >> Leverage you were getting. >> Four years of hard work, core technology, right, and boom, we're unquestionably the leader in software defined networking now as a result of making a pretty bold bet at the time. Obviously organic innovation is the best because it sort of fits in your stream, you don't have to go, you know, change gooey practices or test release practices, it's already part of you as well. But sometimes, hey, I get to look over 10 startups and pick the winner. I may not be able to fund 10 startups internally and pick the winner, but I can look out over, you pay a premium, and one of the unique things about VMware is that over the 60 or so 70 acquisitions I think we've done now, as a company we have a highly successful track record. >> Is that because of the architectural decisions? It's not just bolt on a business unit and say stand alone and produce cash you guys are thinking strategically around how it fits architecturally, is that the difference? >> I'd say it boils down to a handful of things. That's absolutely one of 'em. We're looking deep at technology, how does it fit our technology, can we bring it in? Second we look at the culture of the company, right? We've said no to some acquisitions just 'cause we've decided that culture won't fit our culture or we're not gonna be able to mold it into our culture as well. Number three, we protect this thing, we run a process by which, hey if this is the acquired company, right, and here's the CEO of this startup company, he has passion, he is the commander of his universe, and tomorrow some low-level legal person can say, "No you can't do that," right, yesterday he was enjoying (laughing). Do we protect them? Do we turn their passion and get them to believe that their passion, remember, they're, yeah they wanna be successful, but they wanna turn their passion and objective into a big industry-changing event. And is that passion better executed inside of the platform of VMware? So we protect them, that low-level legal person can't say no or that finance person, we run a special board process around 'em to protect 'em. >> You don't want people handcuffed. >> Yeah, absolutely, we want them to be unleashed, that they have more power not less after they become part of this company that the platform for their vision and passion becomes bigger as part of ours so we protect 'em like crazy in that process. >> And you do that here at Radio as well. You wanna unleash the ground swell, get the grass roots movement going, let the sparks of innovation kinda fly out there. >> Yeah and our success rate is close to 90% on acquisitions and the industry average is below 50% so I think we've really mastered organic and inorganic innovation as good as any company has in the industry. >> Yeah I will say that's the totally true. And also Vsam became a project that came out of Radio that's been highly successful. >> [Pat] Yeah totally organic in that one. >> So you guys think strategically, it's not just bolting on revenue, although that could help if you can find it, there's not much out there for you guys. (both men laughing) Let's talk about some of the hot trends here at Radio. One of the things we're seeing, obviously with tie-in of the competitive, but also the comradery, a lot of, it's interesting to see how competitive it is, but also again VMware's got a hard core engineering culture, but also a hardcore community culture that shines through, it's obvious, so props to the folks running Radio and then the process. But when you look at the trends, what's trending up is the blockchain. We talked to some of your folks there you guys are looking at this, this is really strategic aspect, you talked with Dave about it briefly at Dell Technologies World, what's your view on blockchain? Obviously, you look at infrastructure, blockchain jumps out at you, your reaction to the hype and allusions and reality of blockchain crypto currency, not so much the ICO's, I think that's just a funding dynamic, lot of project-based stuff, but really there's some infrastructuring dynamics, your thoughts on blockchain as an infrastructure enabler for future wave? >> Yeah you know a couple of comments and one is, I think blockchain as a algorithmic breakthrough is on par with public private key encryption, alright? It's just sort of opened up the world of general purpose cryptography, and I think this idea of an immutable distributive ledger, right, sort of busts apart the database and I don't have to bring things together now the databases spreads, right, across it, immutability, right, transactability, et cetera, takes a lot of the acid characteristics of core databases and now does it in the fully distributive way, very powerful and I think it's gonna change supply chains, change financial systems, it's gonna have very broad implications so overall we're in, we believe very much in the importance of that. >> Real quick, to interrupt you real quick, >> 'cause I wanna get this thought in because you brought up general purpose, one of the things we've been kind of talking off camera, most of our team members is, blockchain looks a lot like maybe processors, general purpose processors, opening up an PC revolution, in the sense of general purpose computing. Blockchain seems to have that same dynamic, potentially, not as a direct metaphor, but if you can open up a new dynamic, that could explode new business models yet to be foreseen. >> Oh yeah, yeah, yeah absolutely. If we could take the cost of transactions down by an order of magnitude, right? If you could increase the reliability of a supply chain, right? If you could right in fact guarantee the source of origin of any product against the ultimate place of consumption, these are industry-changing type of capabilities, so we do see it quite significantly that way. But then as VMware looks at it, if there's not a hard problem to solve, then we shouldn't be in this space. So our team, one of the core problems of blockchain, right >> [John] Slow. >> Is the exponential compute requirements of higher order blockchains, so our team has solved that problem we've done some algorithmic breakthroughs that we believe allow blockchain to scale, a close to linear scale as opposed to exponential scale, wow that's game-changing for, we're also solving the auditability problem, immutable, anonymous, immutable is great, but a lot of things need to audited, right? So how can you bring some of those core concepts into blockchain? So those are some of the hard problems that we're solving, sort of back to the 10x culture, solve hard problems in fundamental ways and that's what we think that we can bring to the blockchain universe. >> Well Pat, I think it's amazing that you're here at the event, I know that you love, look forward to this as well, but to have the CEO come in at the Radio event and really lead the troops by example is awesome. We've got VMworld coming up around the corner, give us some teasers, what's happening? I know you're gonna get in trouble from Robin Matlock, (Pat laughing) but come on tell us what's coming at VMworld. >> (laughes) Well you know we have, of course we have a lot of key products, updates and other things that are coming out. I hope to broaden at VMworld this year, the view of the cloud, right? And you say, "Broaden the view of the cloud, what are you talking about Pat?" Well you're gonna have to come to VMware to get the full story, but I do think that we've thought about the hybrid cloud world largely in this idea of public and private in the past, right? But we see that the vision that we're pursuing is one much larger than that where, right, it's public, private, telco, and edge, right? And the confluence of those four worlds, we believe is something that VMware is uniquely positioned to be able to bring right to the marketplace and the implications of that so, I'm quite excited as I broaden our general view >> of the cloud as we come up on VMworld. >> And one of the exciting things it's our ninth year at VMworld, we've been every year one since theCUBE's existed and thank you for your support. >> Ah that's great. >> But I gotta say, one of the things we can do is look at the tape as they say, you said in 2011 or 2012, hybrid cloud and I kind of was like, Pat come on, hybrid cloud. >> Now everybody's talking about it. >> I think that's what it is. >> Yeah. >> But 2012? How many years ago was that? >> I think 2012 I think is when we first started to use that word. >> Yeah you put the stake in the ground, >> again, you saw that as a wave and a lot's been changed and you look back since 2012 you make the right calls, you feel good about where you're at? Things you could do over? What would you do given from a progress standpoint? What's changed radically in your mind? 'Cause we're still talking about private cloud, what, I mean obviously service mesh is around the corner other cool stuff's happening. >> Yeah you know, clearly I think when we think about the STBC, hey we called it right, we're executing better than anybody else. So you can sort of say check, right? Virtual storage, check. We talk about what we've done at NuComputing, transformed their workplace, check. We're unquestionably the industry leader in that area. I think this idea of hybrid cloud it's taken us too hard, too long too hard to realize that the multicloud vision, so that's the one I'd say, okay we haven't delivered as rapidly or as effectively as we needed to, it's now really starting to materialize, but it's taken me a couple, three years longer than it should have to get there and we comment on the vCloud Air and a little bit of the miss that we had there and that delayed our schedule, also some of the Amazon aspects sent us sideways a little bit, but hey I think we're on a very good path now but then to broaden it, to what we're doing in telco, what we're doing in edge, okay this gets to be really really powerful. >> Pat, great for you success. Thanks for coming by theCUBE here at Radio 2018 this is where all the R&D, it's where the ideas are booming I'm John Furrier with Pat Gelsinger, here in San Francisco for Radio 2018, we'll be back with more coverage after this break, thanks for watching. (upbeat music)