>> Narrator: Live from Washington DC, it's theCube, covering AWS Public Sector Summit 2017. Brought to you by Amazon Web Services and its partner Ecosystem. >> Welcome back here to Washington, D.C. You're watching Cube Live here at Silicon Angle T.V. The flagship broadcast of Silicon Angle. We are at AWS Public Sector Summit 2017 wrapping up day one coverage here in the Walter Washington Convention Center. Along with John Furrier, we are now joined by our esteemed colleague Jeff Frick who's been alongside all day handling all the machinations behind the scenes. >> Behind the scenes, John. >> John: Doing an admirable job of that, Jeff. >> So what do you think, our first ever visit to your town. >> John: I love it, I love it. >> I sense something tableau at the Opry. The Opry's the other big convention center, here, or Graceland. >> International Harbor. >> It's the same company. >> National harbor, MGM. >> You're a D.C. guy. >> Gaylord. >> Gaylord, thank you. >> What's the connection? So we going to get some tickets for the Nationals game? >> We got Nats game tonight, Strasburg pitched last night, did not pitch well, but who knows? Maybe we'll get Gio tonight. >> Well the action certainly Amazon Web Services >> Yeah let's talk about what we have going on here today, Jeff. >> Well, I mean, we interviewed, you and I did some great interviews. Intel came on, which is obviously Bellwether in the tech business. Jeff, former Intel employee knows what it's like to march to the cadence of Moore's law and Intel is continuing to do well in platinum sponsor or diamond sponsor here at the event. Look it, the chips are getting smarter and smarter, security at the Silicon, powering 5G, a networks transmission, a lot of the plumbing that's going on in cloud and in cars and devices and companies, it's going to all be connected. So it's a connected world we're living in and Intel's going to be a key part of that so they're highly interested and motivated by all the people that are popping up in the cloud. >> We were just talking and Jeff, I know, you're able to listen on the last interview that we did, but a point that you made, that, you know, a point that you raised, about four years ago, when the CIA deal came down and AWS is ON one side and IBM's on the other, and AWS wins that battle. You called it the shot heard round the cloud. And that, now four years later, has turned out to be a hugely pivotal moment. >> Yeah, I mean this is like moments in time history here, again, documenting it on the Cube for the first time. I don't think anything was written about this I'll say it since we're going to be analyzing it. The shot heard around the cloud was 2013 when AWS public sector under Teresa Carlton's team and her leadership, beat IBM for the Central Intelligence Agency, CIA, contract. Guaranteed lots of spec for IBM. Amazon comes out of the woodwork and wins it. And they won it because essentially the sales motion and the power of IBM had this thing lopped in. But at that time the marketplace was booming with what we call Shadow IT, where you could put your credit card down and go into Amazon cloud and get some instants. What happened was someone actually cut a little prototype, showed their boss, and they said, "I like that better than that, let's do a bake-off." So what happened was at the last minute, new opportunity comes in and then they do what they call a bake-off. Bake-offs and RAPs come in and they won. Went to court and the judge in the ruling actually said Amazon has a better product. So they ruled in favor of Amazon Web Services. That was what I called the shot heard around the cloud. Since that point on, the cloud has become more legitimate every single day for not only startups, enterprises, as well as now public sector. So shot heard around the cloud fast forward to today, this show's on a trajectory to take on the pace of re:Invent, which as their core Amazon Web Services show, then of course which is why we're here chronicalizing this moment in history. This is where we believe, Jeff you and I talked about this, and Dave Alante and I talked about the research team, this is where the influction point kicks up. This is a new growth pillar unpredicted by Wall Street, new growth predictor for revenue for Amazon, they're already a cash machine. They're already looking like a hockey stick this way. You add on public sector, it's going to be phenomenal. So, a lot of people are seeing it but this is just growing like a weed. >> Jeff, follow up on that. >> I was going to say, the two mega trends, John, that we've talked about time and time again, and Teresa Carlson and team have done a terrific job here in the public sector, but I always go back to the James, Tuesday night in the James Hamilton at re:Invent, and if you've never gone you got to go, and he talks about just all these big iron infrastructure investments that Amazon continues to make because they have such scale behind them. Whether it's in chips, whether it's in networking, whether it's in new fibers that they're running across the oceans. They can invest so much money to the benefit of their customers, whether it be security, you know, in all the areas of compute, that is fascinating to me. The other thing we always hear about, about cloud, right, is at some point, it's cheaper to own rather than rent. We just keep coming back to Netflix, like at nighttime, I think Netflix owns whatever the number, 45 percent of all internet traffic in the evening is Netflix, whatever the number is. They're still on Amazon. So, it's not necessarily better to rent than buy. You have to know what you're doing and we were at another show the other day, it was Gannet, the newspaper company. When they're using a lot of servers, they use hundreds, but he said there are sometimes, using AWS, that they actually turn all the servers off. You cannot do that in a standard infrastructure world. You can't turn everything off and then on. Which again, you got to manage it. You don't want the expensive bill. But to me, being able to leverage such scale to the benefit of every customer whether it's Netflix or a startup, it's pretty tough. >> And this is the secret, and this is something again, shared with the Cube audience, here, is not new to us, but we're going to re-amplify it because the people make a mistake with the cloud, it's in one area, they don't match the business model to their variable cost expenses. If you get into the cloud business, and you can actually ratchet your revenue coming in and then manage that cost delta redline, blackline, know where those lines are, as long as you're in the black, and revenue, and you then have the cost variable step up with your revenue, that is the magical formula. It's not that hard, it's back of an envelope. >> Right, right. >> Red line cost, black line revenue. >> The other great story, it was from summit, actually, in San Francisco earlier this year, at they keynote, they had Nextdoor, everybody knows Nextdoor it's the social media for your mom, my mom. They love it, right, people are losing dogs, and looking for a plumber, but the guy talked from about Nextdoor. >> John: Don't knock Nextdoor. >> I don't knock Nextdoor, the Nextdoor CEO gets up and he said, well, I laugh because the Nextdoor guy's mom didn't know what he did until he did Nextdoor. Anyway, he said, you know, we have the entire production system for Nextdoor. And then we would build production plus one on a completely separate group of hardwares inside of Amazon. When that was tested out and ready to run, guess what, we just turn off the first one. You can't, you can't, you can't do that in an owned infrastructure world. You can't build N and N plus one and N plus two and turn off N, you just can't do that. >> Well, the Fugue CEO, Josh, everyone should check out on Youtube.com/siliconangle, he was awesome. He basically saw a throwaway infrastructure mindset to your point about Nextdoor. You build it up and then you bring your new stuff in, you digitally throw it away. >> Right, right. >> That's the future. And this is the business model aspect. And public sector, we were joking, look it, let's just be honest with ourselves, it is a glacier antiquated old systems, people trying hard, you know, government servants, you know, that, employees of the government, not appointees, they don't have a lot of budget and they're always under scrutiny for cost. So the cost benefits always there and they have old systems. So they want new systems. So the demand is there. The question is, can they pull it off. >> So, talk about the government mindset or the shift. We've heard a little bit about that today. About how, to the point that you just made there, John, that you know, very reluctant, some foot-dragging going on, that's historical, that's what happens. But now, maybe the CIA deal, whatever it was, we hit that tipping point, and all the sudden, the minds are opening, and some people are embracing, or being more engaging, with new mousetraps, with better ways to do things. >> We've got the speakers coming on here, so we should wrap it up real quick. Final thoughts, from Day One. >> I was just going to say that the other thing is that before there was so much fat, in not only government in general, but in infrastructure purchasing, 'cause you had to, you better not run out of hardware at Q3 when you're running the numbers. So everything was so over provision, so much expense and over provisioning. With Amazon you don't need to over provision. You can tap it when you need it and turn it off so there's a huge amount of budget that should actually be released. >> I want to ask you guys, we'll wrap up here, final, since you're emceeing, final thoughts. What is your impression of day one? I'll start here and you guys can have time to think of an answer. My takeaway for public sector is Teresa Carlson has risen up as a prime executive for Amazon Web Services. She went from knocking doors eight years ago to full on blown growth strategy for Amazon. And it's very clear, they're not there yet. They only have 10,000 people here, so the conference isn't that massive. But it's on its way to becoming massive. Here's their issue. They have to start getting the cadence of re:Invent launches into the public sector. And that's the big story here. They are quickly shortening the cycles between what they launch at Amazon re:Invent and what they roll out of the public sector. The question is how fast can they do that? And that's what we're going to be watching. And then the customer behaviors starting to procure. So greenlight for Amazon. But they got to get those release cycles. Stuff gets released at Amazon re:Invent, they got to roll them with government, shorten that down to almost zero, they'll win. >> Yeah, my just quick impression is, I like to look at the booth action, because we've all had booth duty, right. What's going on in the booths? Did the people that paid for a booth here feel like they got their money's worth? And the traffic in the booths has been good, they've been three deep, four deep. So the people that are here are curious they're interested, they're spending time going booth to booth to booth, and that's a very good sign. >> This is a learning conference. Alright your thoughts. >> I would say, the only thing that is, I wouldn't say it's a red light by any means, but it's like a caution light, it's about budgets, you know, when you run government, you're always, you are vulnerable to somebody else's budget decision. I'm, you know, whether it's Congress, whether it's a city council, whether it's a state legislation, whatever it is, that's always just kind of a, a little hangup you have to deal with because you might have the best mousetrap in the world, but if somebody says nah, you can't write that check this year, maybe next year. We're going to put our money somewhere else. That's the only thing. >> I got my Trump joke in, I don't know if you heard that, but my Trump joke is, I'll say it at the end, there's a lot of data lakes in D.C., and they've turned into data swamps. So Amazon's here to drain the data swamp. >> Jeff: He got it in. He's been practicing that all week. >> I've heard it three times, are you kidding? Funny every time. >> Well you know our Cube, you know we talk about data swamps. I hate the word data lake, as everyone knows, I just hate that word, it's just not. >> Well, there is value in that swamp. >> Hated the word data lake. >> For Jeff Rick, John Furrier, I'm John Walsh. Thank you for joining us here at the AWS Public Sector Summit 2017. Back tomorrow with more coverage, live here on the Cube.