>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> OpenAI The company, and ChatGPT have taken the world by storm. Microsoft reportedly is investing an additional 10 billion dollars into the company. But in our view, while the hype around ChatGPT is justified, we don't believe OpenAI will lock up the market with its first mover advantage. Rather, we believe that success in this market will be directly proportional to the quality and quantity of data that a technology company has at its disposal, and the compute power that it could deploy to run its system. Hello and welcome to this week's Wikibon CUBE insights, powered by ETR. In this Breaking Analysis, we unpack the excitement around ChatGPT, and debate the premise that the company's early entry into the space may not confer winner take all advantage to OpenAI. And to do so, we welcome CUBE collaborator, alum, Sarbjeet Johal, (chuckles) and John Furrier, co-host of the Cube. Great to see you Sarbjeet, John. Really appreciate you guys coming to the program. >> Great to be on. >> Okay, so what is ChatGPT? Well, actually we asked ChatGPT, what is ChatGPT? So here's what it said. ChatGPT is a state-of-the-art language model developed by OpenAI that can generate human-like text. It could be fine tuned for a variety of language tasks, such as conversation, summarization, and language translation. So I asked it, give it to me in 50 words or less. How did it do? Anything to add? >> Yeah, think it did good. It's large language model, like previous models, but it started applying the transformers sort of mechanism to focus on what prompt you have given it to itself. And then also the what answer it gave you in the first, sort of, one sentence or two sentences, and then introspect on itself, like what I have already said to you. And so just work on that. So it it's self sort of focus if you will. It does, the transformers help the large language models to do that. >> So to your point, it's a large language model, and GPT stands for generative pre-trained transformer. >> And if you put the definition back up there again, if you put it back up on the screen, let's see it back up. Okay, it actually missed the large, word large. So one of the problems with ChatGPT, it's not always accurate. It's actually a large language model, and it says state of the art language model. And if you look at Google, Google has dominated AI for many times and they're well known as being the best at this. And apparently Google has their own large language model, LLM, in play and have been holding it back to release because of backlash on the accuracy. Like just in that example you showed is a great point. They got almost right, but they missed the key word. >> You know what's funny about that John, is I had previously asked it in my prompt to give me it in less than a hundred words, and it was too long, I said I was too long for Breaking Analysis, and there it went into the fact that it's a large language model. So it largely, it gave me a really different answer the, for both times. So, but it's still pretty amazing for those of you who haven't played with it yet. And one of the best examples that I saw was Ben Charrington from This Week In ML AI podcast. And I stumbled on this thanks to Brian Gracely, who was listening to one of his Cloudcasts. Basically what Ben did is he took, he prompted ChatGPT to interview ChatGPT, and he simply gave the system the prompts, and then he ran the questions and answers into this avatar builder and sped it up 2X so it didn't sound like a machine. And voila, it was amazing. So John is ChatGPT going to take over as a cube host? >> Well, I was thinking, we get the questions in advance sometimes from PR people. We should actually just plug it in ChatGPT, add it to our notes, and saying, "Is this good enough for you? Let's ask the real question." So I think, you know, I think there's a lot of heavy lifting that gets done. I think the ChatGPT is a phenomenal revolution. I think it highlights the use case. Like that example we showed earlier. It gets most of it right. So it's directionally correct and it feels like it's an answer, but it's not a hundred percent accurate. And I think that's where people are seeing value in it. Writing marketing, copy, brainstorming, guest list, gift list for somebody. Write me some lyrics to a song. Give me a thesis about healthcare policy in the United States. It'll do a bang up job, and then you got to go in and you can massage it. So we're going to do three quarters of the work. That's why plagiarism and schools are kind of freaking out. And that's why Microsoft put 10 billion in, because why wouldn't this be a feature of Word, or the OS to help it do stuff on behalf of the user. So linguistically it's a beautiful thing. You can input a string and get a good answer. It's not a search result. >> And we're going to get your take on on Microsoft and, but it kind of levels the playing- but ChatGPT writes better than I do, Sarbjeet, and I know you have some good examples too. You mentioned the Reed Hastings example. >> Yeah, I was listening to Reed Hastings fireside chat with ChatGPT, and the answers were coming as sort of voice, in the voice format. And it was amazing what, he was having very sort of philosophy kind of talk with the ChatGPT, the longer sentences, like he was going on, like, just like we are talking, he was talking for like almost two minutes and then ChatGPT was answering. It was not one sentence question, and then a lot of answers from ChatGPT and yeah, you're right. I, this is our ability. I've been thinking deep about this since yesterday, we talked about, like, we want to do this segment. The data is fed into the data model. It can be the current data as well, but I think that, like, models like ChatGPT, other companies will have those too. They can, they're democratizing the intelligence, but they're not creating intelligence yet, definitely yet I can say that. They will give you all the finite answers. Like, okay, how do you do this for loop in Java, versus, you know, C sharp, and as a programmer you can do that, in, but they can't tell you that, how to write a new algorithm or write a new search algorithm for you. They cannot create a secretive code for you to- >> Not yet. >> Have competitive advantage. >> Not yet, not yet. >> but you- >> Can Google do that today? >> No one really can. The reasoning side of the data is, we talked about at our Supercloud event, with Zhamak Dehghani who's was CEO of, now of Nextdata. This next wave of data intelligence is going to come from entrepreneurs that are probably cross discipline, computer science and some other discipline. But they're going to be new things, for example, data, metadata, and data. It's hard to do reasoning like a human being, so that needs more data to train itself. So I think the first gen of this training module for the large language model they have is a corpus of text. Lot of that's why blog posts are, but the facts are wrong and sometimes out of context, because that contextual reasoning takes time, it takes intelligence. So machines need to become intelligent, and so therefore they need to be trained. So you're going to start to see, I think, a lot of acceleration on training the data sets. And again, it's only as good as the data you can get. And again, proprietary data sets will be a huge winner. Anyone who's got a large corpus of content, proprietary content like theCUBE or SiliconANGLE as a publisher will benefit from this. Large FinTech companies, anyone with large proprietary data will probably be a big winner on this generative AI wave, because it just, it will eat that up, and turn that back into something better. So I think there's going to be a lot of interesting things to look at here. And certainly productivity's going to be off the charts for vanilla and the internet is going to get swarmed with vanilla content. So if you're in the content business, and you're an original content producer of any kind, you're going to be not vanilla, so you're going to be better. So I think there's so much at play Dave (indistinct). >> I think the playing field has been risen, so we- >> Risen and leveled? >> Yeah, and leveled to certain extent. So it's now like that few people as consumers, as consumers of AI, we will have a advantage and others cannot have that advantage. So it will be democratized. That's, I'm sure about that. But if you take the example of calculator, when the calculator came in, and a lot of people are, "Oh, people can't do math anymore because calculator is there." right? So it's a similar sort of moment, just like a calculator for the next level. But, again- >> I see it more like open source, Sarbjeet, because like if you think about what ChatGPT's doing, you do a query and it comes from somewhere the value of a post from ChatGPT is just a reuse of AI. The original content accent will be come from a human. So if I lay out a paragraph from ChatGPT, did some heavy lifting on some facts, I check the facts, save me about maybe- >> Yeah, it's productive. >> An hour writing, and then I write a killer two, three sentences of, like, sharp original thinking or critical analysis. I then took that body of work, open source content, and then laid something on top of it. >> And Sarbjeet's example is a good one, because like if the calculator kids don't do math as well anymore, the slide rule, remember we had slide rules as kids, remember we first started using Waze, you know, we were this minority and you had an advantage over other drivers. Now Waze is like, you know, social traffic, you know, navigation, everybody had, you know- >> All the back roads are crowded. >> They're car crowded. (group laughs) Exactly. All right, let's, let's move on. What about this notion that futurist Ray Amara put forth and really Amara's Law that we're showing here, it's, the law is we, you know, "We tend to overestimate the effect of technology in the short run and underestimate it in the long run." Is that the case, do you think, with ChatGPT? What do you think Sarbjeet? >> I think that's true actually. There's a lot of, >> We don't debate this. >> There's a lot of awe, like when people see the results from ChatGPT, they say what, what the heck? Like, it can do this? But then if you use it more and more and more, and I ask the set of similar question, not the same question, and it gives you like same answer. It's like reading from the same bucket of text in, the interior read (indistinct) where the ChatGPT, you will see that in some couple of segments. It's very, it sounds so boring that the ChatGPT is coming out the same two sentences every time. So it is kind of good, but it's not as good as people think it is right now. But we will have, go through this, you know, hype sort of cycle and get realistic with it. And then in the long term, I think it's a great thing in the short term, it's not something which will (indistinct) >> What's your counter point? You're saying it's not. >> I, no I think the question was, it's hyped up in the short term and not it's underestimated long term. That's what I think what he said, quote. >> Yes, yeah. That's what he said. >> Okay, I think that's wrong with this, because this is a unique, ChatGPT is a unique kind of impact and it's very generational. People have been comparing it, I have been comparing to the internet, like the web, web browser Mosaic and Netscape, right, Navigator. I mean, I clearly still remember the days seeing Navigator for the first time, wow. And there weren't not many sites you could go to, everyone typed in, you know, cars.com, you know. >> That (indistinct) wasn't that overestimated, the overhyped at the beginning and underestimated. >> No, it was, it was underestimated long run, people thought. >> But that Amara's law. >> That's what is. >> No, they said overestimated? >> Overestimated near term underestimated- overhyped near term, underestimated long term. I got, right I mean? >> Well, I, yeah okay, so I would then agree, okay then- >> We were off the charts about the internet in the early days, and it actually exceeded our expectations. >> Well there were people who were, like, poo-pooing it early on. So when the browser came out, people were like, "Oh, the web's a toy for kids." I mean, in 1995 the web was a joke, right? So '96, you had online populations growing, so you had structural changes going on around the browser, internet population. And then that replaced other things, direct mail, other business activities that were once analog then went to the web, kind of read only as you, as we always talk about. So I think that's a moment where the hype long term, the smart money, and the smart industry experts all get the long term. And in this case, there's more poo-pooing in the short term. "Ah, it's not a big deal, it's just AI." I've heard many people poo-pooing ChatGPT, and a lot of smart people saying, "No this is next gen, this is different and it's only going to get better." So I think people are estimating a big long game on this one. >> So you're saying it's bifurcated. There's those who say- >> Yes. >> Okay, all right, let's get to the heart of the premise, and possibly the debate for today's episode. Will OpenAI's early entry into the market confer sustainable competitive advantage for the company. And if you look at the history of tech, the technology industry, it's kind of littered with first mover failures. Altair, IBM, Tandy, Commodore, they and Apple even, they were really early in the PC game. They took a backseat to Dell who came in the scene years later with a better business model. Netscape, you were just talking about, was all the rage in Silicon Valley, with the first browser, drove up all the housing prices out here. AltaVista was the first search engine to really, you know, index full text. >> Owned by Dell, I mean DEC. >> Owned by Digital. >> Yeah, Digital Equipment >> Compaq bought it. And of course as an aside, Digital, they wanted to showcase their hardware, right? Their super computer stuff. And then so Friendster and MySpace, they came before Facebook. The iPhone certainly wasn't the first mobile device. So lots of failed examples, but there are some recent successes like AWS and cloud. >> You could say smartphone. So I mean. >> Well I know, and you can, we can parse this so we'll debate it. Now Twitter, you could argue, had first mover advantage. You kind of gave me that one John. Bitcoin and crypto clearly had first mover advantage, and sustaining that. Guys, will OpenAI make it to the list on the right with ChatGPT, what do you think? >> I think categorically as a company, it probably won't, but as a category, I think what they're doing will, so OpenAI as a company, they get funding, there's power dynamics involved. Microsoft put a billion dollars in early on, then they just pony it up. Now they're reporting 10 billion more. So, like, if the browsers, Microsoft had competitive advantage over Netscape, and used monopoly power, and convicted by the Department of Justice for killing Netscape with their monopoly, Netscape should have had won that battle, but Microsoft killed it. In this case, Microsoft's not killing it, they're buying into it. So I think the embrace extend Microsoft power here makes OpenAI vulnerable for that one vendor solution. So the AI as a company might not make the list, but the category of what this is, large language model AI, is probably will be on the right hand side. >> Okay, we're going to come back to the government intervention and maybe do some comparisons, but what are your thoughts on this premise here? That, it will basically set- put forth the premise that it, that ChatGPT, its early entry into the market will not confer competitive advantage to >> For OpenAI. >> To Open- Yeah, do you agree with that? >> I agree with that actually. It, because Google has been at it, and they have been holding back, as John said because of the scrutiny from the Fed, right, so- >> And privacy too. >> And the privacy and the accuracy as well. But I think Sam Altman and the company on those guys, right? They have put this in a hasty way out there, you know, because it makes mistakes, and there are a lot of questions around the, sort of, where the content is coming from. You saw that as your example, it just stole the content, and without your permission, you know? >> Yeah. So as quick this aside- >> And it codes on people's behalf and the, those codes are wrong. So there's a lot of, sort of, false information it's putting out there. So it's a very vulnerable thing to do what Sam Altman- >> So even though it'll get better, others will compete. >> So look, just side note, a term which Reid Hoffman used a little bit. Like he said, it's experimental launch, like, you know, it's- >> It's pretty damn good. >> It is clever because according to Sam- >> It's more than clever. It's good. >> It's awesome, if you haven't used it. I mean you write- you read what it writes and you go, "This thing writes so well, it writes so much better than you." >> The human emotion drives that too. I think that's a big thing. But- >> I Want to add one more- >> Make your last point. >> Last one. Okay. So, but he's still holding back. He's conducting quite a few interviews. If you want to get the gist of it, there's an interview with StrictlyVC interview from yesterday with Sam Altman. Listen to that one it's an eye opening what they want- where they want to take it. But my last one I want to make it on this point is that Satya Nadella yesterday did an interview with Wall Street Journal. I think he was doing- >> You were not impressed. >> I was not impressed because he was pushing it too much. So Sam Altman's holding back so there's less backlash. >> Got 10 billion reasons to push. >> I think he's almost- >> Microsoft just laid off 10000 people. Hey ChatGPT, find me a job. You know like. (group laughs) >> He's overselling it to an extent that I think it will backfire on Microsoft. And he's over promising a lot of stuff right now, I think. I don't know why he's very jittery about all these things. And he did the same thing during Ignite as well. So he said, "Oh, this AI will write code for you and this and that." Like you called him out- >> The hyperbole- >> During your- >> from Satya Nadella, he's got a lot of hyperbole. (group talks over each other) >> All right, Let's, go ahead. >> Well, can I weigh in on the whole- >> Yeah, sure. >> Microsoft thing on whether OpenAI, here's the take on this. I think it's more like the browser moment to me, because I could relate to that experience with ChatG, personally, emotionally, when I saw that, and I remember vividly- >> You mean that aha moment (indistinct). >> Like this is obviously the future. Anything else in the old world is dead, website's going to be everywhere. It was just instant dot connection for me. And a lot of other smart people who saw this. Lot of people by the way, didn't see it. Someone said the web's a toy. At the company I was worked for at the time, Hewlett Packard, they like, they could have been in, they had invented HTML, and so like all this stuff was, like, they just passed, the web was just being passed over. But at that time, the browser got better, more websites came on board. So the structural advantage there was online web usage was growing, online user population. So that was growing exponentially with the rise of the Netscape browser. So OpenAI could stay on the right side of your list as durable, if they leverage the category that they're creating, can get the scale. And if they can get the scale, just like Twitter, that failed so many times that they still hung around. So it was a product that was always successful, right? So I mean, it should have- >> You're right, it was terrible, we kept coming back. >> The fail whale, but it still grew. So OpenAI has that moment. They could do it if Microsoft doesn't meddle too much with too much power as a vendor. They could be the Netscape Navigator, without the anti-competitive behavior of somebody else. So to me, they have the pole position. So they have an opportunity. So if not, if they don't execute, then there's opportunity. There's not a lot of barriers to entry, vis-a-vis say the CapEx of say a cloud company like AWS. You can't replicate that, Many have tried, but I think you can replicate OpenAI. >> And we're going to talk about that. Okay, so real quick, I want to bring in some ETR data. This isn't an ETR heavy segment, only because this so new, you know, they haven't coverage yet, but they do cover AI. So basically what we're seeing here is a slide on the vertical axis's net score, which is a measure of spending momentum, and in the horizontal axis's is presence in the dataset. Think of it as, like, market presence. And in the insert right there, you can see how the dots are plotted, the two columns. And so, but the key point here that we want to make, there's a bunch of companies on the left, is he like, you know, DataRobot and C3 AI and some others, but the big whales, Google, AWS, Microsoft, are really dominant in this market. So that's really the key takeaway that, can we- >> I notice IBM is way low. >> Yeah, IBM's low, and actually bring that back up and you, but then you see Oracle who actually is injecting. So I guess that's the other point is, you're not necessarily going to go buy AI, and you know, build your own AI, you're going to, it's going to be there and, it, Salesforce is going to embed it into its platform, the SaaS companies, and you're going to purchase AI. You're not necessarily going to build it. But some companies obviously are. >> I mean to quote IBM's general manager Rob Thomas, "You can't have AI with IA." information architecture and David Flynn- >> You can't Have AI without IA >> without, you can't have AI without IA. You can't have, if you have an Information Architecture, you then can power AI. Yesterday David Flynn, with Hammersmith, was on our Supercloud. He was pointing out that the relationship of storage, where you store things, also impacts the data and stressablity, and Zhamak from Nextdata, she was pointing out that same thing. So the data problem factors into all this too, Dave. >> So you got the big cloud and internet giants, they're all poised to go after this opportunity. Microsoft is investing up to 10 billion. Google's code red, which was, you know, the headline in the New York Times. Of course Apple is there and several alternatives in the market today. Guys like Chinchilla, Bloom, and there's a company Jasper and several others, and then Lena Khan looms large and the government's around the world, EU, US, China, all taking notice before the market really is coalesced around a single player. You know, John, you mentioned Netscape, they kind of really, the US government was way late to that game. It was kind of game over. And Netscape, I remember Barksdale was like, "Eh, we're going to be selling software in the enterprise anyway." and then, pshew, the company just dissipated. So, but it looks like the US government, especially with Lena Khan, they're changing the definition of antitrust and what the cause is to go after people, and they're really much more aggressive. It's only what, two years ago that (indistinct). >> Yeah, the problem I have with the federal oversight is this, they're always like late to the game, and they're slow to catch up. So in other words, they're working on stuff that should have been solved a year and a half, two years ago around some of the social networks hiding behind some of the rules around open web back in the days, and I think- >> But they're like 15 years late to that. >> Yeah, and now they got this new thing on top of it. So like, I just worry about them getting their fingers. >> But there's only two years, you know, OpenAI. >> No, but the thing (indistinct). >> No, they're still fighting other battles. But the problem with government is that they're going to label Big Tech as like a evil thing like Pharma, it's like smoke- >> You know Lena Khan wants to kill Big Tech, there's no question. >> So I think Big Tech is getting a very seriously bad rap. And I think anything that the government does that shades darkness on tech, is politically motivated in most cases. You can almost look at everything, and my 80 20 rule is in play here. 80% of the government activity around tech is bullshit, it's politically motivated, and the 20% is probably relevant, but off the mark and not organized. >> Well market forces have always been the determining factor of success. The governments, you know, have been pretty much failed. I mean you look at IBM's antitrust, that, what did that do? The market ultimately beat them. You look at Microsoft back in the day, right? Windows 95 was peaking, the government came in. But you know, like you said, they missed the web, right, and >> so they were hanging on- >> There's nobody in government >> to Windows. >> that actually knows- >> And so, you, I think you're right. It's market forces that are going to determine this. But Sarbjeet, what do you make of Microsoft's big bet here, you weren't impressed with with Nadella. How do you think, where are they going to apply it? Is this going to be a Hail Mary for Bing, or is it going to be applied elsewhere? What do you think. >> They are saying that they will, sort of, weave this into their products, office products, productivity and also to write code as well, developer productivity as well. That's a big play for them. But coming back to your antitrust sort of comments, right? I believe the, your comment was like, oh, fed was late 10 years or 15 years earlier, but now they're two years. But things are moving very fast now as compared to they used to move. >> So two years is like 10 Years. >> Yeah, two years is like 10 years. Just want to make that point. (Dave laughs) This thing is going like wildfire. Any new tech which comes in that I think they're going against distribution channels. Lina Khan has commented time and again that the marketplace model is that she wants to have some grip on. Cloud marketplaces are a kind of monopolistic kind of way. >> I don't, I don't see this, I don't see a Chat AI. >> You told me it's not Bing, you had an interesting comment. >> No, no. First of all, this is great from Microsoft. If you're Microsoft- >> Why? >> Because Microsoft doesn't have the AI chops that Google has, right? Google is got so much core competency on how they run their search, how they run their backends, their cloud, even though they don't get a lot of cloud market share in the enterprise, they got a kick ass cloud cause they needed one. >> Totally. >> They've invented SRE. I mean Google's development and engineering chops are off the scales, right? Amazon's got some good chops, but Google's got like 10 times more chops than AWS in my opinion. Cloud's a whole different story. Microsoft gets AI, they get a playbook, they get a product they can render into, the not only Bing, productivity software, helping people write papers, PowerPoint, also don't forget the cloud AI can super help. We had this conversation on our Supercloud event, where AI's going to do a lot of the heavy lifting around understanding observability and managing service meshes, to managing microservices, to turning on and off applications, and or maybe writing code in real time. So there's a plethora of use cases for Microsoft to deploy this. combined with their R and D budgets, they can then turbocharge more research, build on it. So I think this gives them a car in the game, Google may have pole position with AI, but this puts Microsoft right in the game, and they already have a lot of stuff going on. But this just, I mean everything gets lifted up. Security, cloud, productivity suite, everything. >> What's under the hood at Google, and why aren't they talking about it? I mean they got to be freaked out about this. No? Or do they have kind of a magic bullet? >> I think they have the, they have the chops definitely. Magic bullet, I don't know where they are, as compared to the ChatGPT 3 or 4 models. Like they, but if you look at the online sort of activity and the videos put out there from Google folks, Google technology folks, that's account you should look at if you are looking there, they have put all these distinctions what ChatGPT 3 has used, they have been talking about for a while as well. So it's not like it's a secret thing that you cannot replicate. As you said earlier, like in the beginning of this segment, that anybody who has more data and the capacity to process that data, which Google has both, I think they will win this. >> Obviously living in Palo Alto where the Google founders are, and Google's headquarters next town over we have- >> We're so close to them. We have inside information on some of the thinking and that hasn't been reported by any outlet yet. And that is, is that, from what I'm hearing from my sources, is Google has it, they don't want to release it for many reasons. One is it might screw up their search monopoly, one, two, they're worried about the accuracy, 'cause Google will get sued. 'Cause a lot of people are jamming on this ChatGPT as, "Oh it does everything for me." when it's clearly not a hundred percent accurate all the time. >> So Lina Kahn is looming, and so Google's like be careful. >> Yeah so Google's just like, this is the third, could be a third rail. >> But the first thing you said is a concern. >> Well no. >> The disruptive (indistinct) >> What they will do is do a Waymo kind of thing, where they spin out a separate company. >> They're doing that. >> The discussions happening, they're going to spin out the separate company and put it over there, and saying, "This is AI, got search over there, don't touch that search, 'cause that's where all the revenue is." (chuckles) >> So, okay, so that's how they deal with the Clay Christensen dilemma. What's the business model here? I mean it's not advertising, right? Is it to charge you for a query? What, how do you make money at this? >> It's a good question, I mean my thinking is, first of all, it's cool to type stuff in and see a paper get written, or write a blog post, or gimme a marketing slogan for this or that or write some code. I think the API side of the business will be critical. And I think Howie Xu, I know you're going to reference some of his comments yesterday on Supercloud, I think this brings a whole 'nother user interface into technology consumption. I think the business model, not yet clear, but it will probably be some sort of either API and developer environment or just a straight up free consumer product, with some sort of freemium backend thing for business. >> And he was saying too, it's natural language is the way in which you're going to interact with these systems. >> I think it's APIs, it's APIs, APIs, APIs, because these people who are cooking up these models, and it takes a lot of compute power to train these and to, for inference as well. Somebody did the analysis on the how many cents a Google search costs to Google, and how many cents the ChatGPT query costs. It's, you know, 100x or something on that. You can take a look at that. >> A 100x on which side? >> You're saying two orders of magnitude more expensive for ChatGPT >> Much more, yeah. >> Than for Google. >> It's very expensive. >> So Google's got the data, they got the infrastructure and they got, you're saying they got the cost (indistinct) >> No actually it's a simple query as well, but they are trying to put together the answers, and they're going through a lot more data versus index data already, you know. >> Let me clarify, you're saying that Google's version of ChatGPT is more efficient? >> No, I'm, I'm saying Google search results. >> Ah, search results. >> What are used to today, but cheaper. >> But that, does that, is that going to confer advantage to Google's large language (indistinct)? >> It will, because there were deep science (indistinct). >> Google, I don't think Google search is doing a large language model on their search, it's keyword search. You know, what's the weather in Santa Cruz? Or how, what's the weather going to be? Or you know, how do I find this? Now they have done a smart job of doing some things with those queries, auto complete, re direct navigation. But it's, it's not entity. It's not like, "Hey, what's Dave Vellante thinking this week in Breaking Analysis?" ChatGPT might get that, because it'll get your Breaking Analysis, it'll synthesize it. There'll be some, maybe some clips. It'll be like, you know, I mean. >> Well I got to tell you, I asked ChatGPT to, like, I said, I'm going to enter a transcript of a discussion I had with Nir Zuk, the CTO of Palo Alto Networks, And I want you to write a 750 word blog. I never input the transcript. It wrote a 750 word blog. It attributed quotes to him, and it just pulled a bunch of stuff that, and said, okay, here it is. It talked about Supercloud, it defined Supercloud. >> It's made, it makes you- >> Wow, But it was a big lie. It was fraudulent, but still, blew me away. >> Again, vanilla content and non accurate content. So we are going to see a surge of misinformation on steroids, but I call it the vanilla content. Wow, that's just so boring, (indistinct). >> There's so many dangers. >> Make your point, cause we got to, almost out of time. >> Okay, so the consumption, like how do you consume this thing. As humans, we are consuming it and we are, like, getting a nicely, like, surprisingly shocked, you know, wow, that's cool. It's going to increase productivity and all that stuff, right? And on the danger side as well, the bad actors can take hold of it and create fake content and we have the fake sort of intelligence, if you go out there. So that's one thing. The second thing is, we are as humans are consuming this as language. Like we read that, we listen to it, whatever format we consume that is, but the ultimate usage of that will be when the machines can take that output from likes of ChatGPT, and do actions based on that. The robots can work, the robot can paint your house, we were talking about, right? Right now we can't do that. >> Data apps. >> So the data has to be ingested by the machines. It has to be digestible by the machines. And the machines cannot digest unorganized data right now, we will get better on the ingestion side as well. So we are getting better. >> Data, reasoning, insights, and action. >> I like that mall, paint my house. >> So, okay- >> By the way, that means drones that'll come in. Spray painting your house. >> Hey, it wasn't too long ago that robots couldn't climb stairs, as I like to point out. Okay, and of course it's no surprise the venture capitalists are lining up to eat at the trough, as I'd like to say. Let's hear, you'd referenced this earlier, John, let's hear what AI expert Howie Xu said at the Supercloud event, about what it takes to clone ChatGPT. Please, play the clip. >> So one of the VCs actually asked me the other day, right? "Hey, how much money do I need to spend, invest to get a, you know, another shot to the openAI sort of the level." You know, I did a (indistinct) >> Line up. >> A hundred million dollar is the order of magnitude that I came up with, right? You know, not a billion, not 10 million, right? So a hundred- >> Guys a hundred million dollars, that's an astoundingly low figure. What do you make of it? >> I was in an interview with, I was interviewing, I think he said hundred million or so, but in the hundreds of millions, not a billion right? >> You were trying to get him up, you were like "Hundreds of millions." >> Well I think, I- >> He's like, eh, not 10, not a billion. >> Well first of all, Howie Xu's an expert machine learning. He's at Zscaler, he's a machine learning AI guy. But he comes from VMware, he's got his technology pedigrees really off the chart. Great friend of theCUBE and kind of like a CUBE analyst for us. And he's smart. He's right. I think the barriers to entry from a dollar standpoint are lower than say the CapEx required to compete with AWS. Clearly, the CapEx spending to build all the tech for the run a cloud. >> And you don't need a huge sales force. >> And in some case apps too, it's the same thing. But I think it's not that hard. >> But am I right about that? You don't need a huge sales force either. It's, what, you know >> If the product's good, it will sell, this is a new era. The better mouse trap will win. This is the new economics in software, right? So- >> Because you look at the amount of money Lacework, and Snyk, Snowflake, Databrooks. Look at the amount of money they've raised. I mean it's like a billion dollars before they get to IPO or more. 'Cause they need promotion, they need go to market. You don't need (indistinct) >> OpenAI's been working on this for multiple five years plus it's, hasn't, wasn't born yesterday. Took a lot of years to get going. And Sam is depositioning all the success, because he's trying to manage expectations, To your point Sarbjeet, earlier. It's like, yeah, he's trying to "Whoa, whoa, settle down everybody, (Dave laughs) it's not that great." because he doesn't want to fall into that, you know, hero and then get taken down, so. >> It may take a 100 million or 150 or 200 million to train the model. But to, for the inference to, yeah to for the inference machine, It will take a lot more, I believe. >> Give it, so imagine, >> Because- >> Go ahead, sorry. >> Go ahead. But because it consumes a lot more compute cycles and it's certain level of storage and everything, right, which they already have. So I think to compute is different. To frame the model is a different cost. But to run the business is different, because I think 100 million can go into just fighting the Fed. >> Well there's a flywheel too. >> Oh that's (indistinct) >> (indistinct) >> We are running the business, right? >> It's an interesting number, but it's also kind of, like, context to it. So here, a hundred million spend it, you get there, but you got to factor in the fact that the ways companies win these days is critical mass scale, hitting a flywheel. If they can keep that flywheel of the value that they got going on and get better, you can almost imagine a marketplace where, hey, we have proprietary data, we're SiliconANGLE in theCUBE. We have proprietary content, CUBE videos, transcripts. Well wouldn't it be great if someone in a marketplace could sell a module for us, right? We buy that, Amazon's thing and things like that. So if they can get a marketplace going where you can apply to data sets that may be proprietary, you can start to see this become bigger. And so I think the key barriers to entry is going to be success. I'll give you an example, Reddit. Reddit is successful and it's hard to copy, not because of the software. >> They built the moat. >> Because you can, buy Reddit open source software and try To compete. >> They built the moat with their community. >> Their community, their scale, their user expectation. Twitter, we referenced earlier, that thing should have gone under the first two years, but there was such a great emotional product. People would tolerate the fail whale. And then, you know, well that was a whole 'nother thing. >> Then a plane landed in (John laughs) the Hudson and it was over. >> I think verticals, a lot of verticals will build applications using these models like for lawyers, for doctors, for scientists, for content creators, for- >> So you'll have many hundreds of millions of dollars investments that are going to be seeping out. If, all right, we got to wrap, if you had to put odds on it that that OpenAI is going to be the leader, maybe not a winner take all leader, but like you look at like Amazon and cloud, they're not winner take all, these aren't necessarily winner take all markets. It's not necessarily a zero sum game, but let's call it winner take most. What odds would you give that open AI 10 years from now will be in that position. >> If I'm 0 to 10 kind of thing? >> Yeah, it's like horse race, 3 to 1, 2 to 1, even money, 10 to 1, 50 to 1. >> Maybe 2 to 1, >> 2 to 1, that's pretty low odds. That's basically saying they're the favorite, they're the front runner. Would you agree with that? >> I'd say 4 to 1. >> Yeah, I was going to say I'm like a 5 to 1, 7 to 1 type of person, 'cause I'm a skeptic with, you know, there's so much competition, but- >> I think they're definitely the leader. I mean you got to say, I mean. >> Oh there's no question. There's no question about it. >> The question is can they execute? >> They're not Friendster, is what you're saying. >> They're not Friendster and they're more like Twitter and Reddit where they have momentum. If they can execute on the product side, and if they don't stumble on that, they will continue to have the lead. >> If they say stay neutral, as Sam is, has been saying, that, hey, Microsoft is one of our partners, if you look at their company model, how they have structured the company, then they're going to pay back to the investors, like Microsoft is the biggest one, up to certain, like by certain number of years, they're going to pay back from all the money they make, and after that, they're going to give the money back to the public, to the, I don't know who they give it to, like non-profit or something. (indistinct) >> Okay, the odds are dropping. (group talks over each other) That's a good point though >> Actually they might have done that to fend off the criticism of this. But it's really interesting to see the model they have adopted. >> The wildcard in all this, My last word on this is that, if there's a developer shift in how developers and data can come together again, we have conferences around the future of data, Supercloud and meshs versus, you know, how the data world, coding with data, how that evolves will also dictate, 'cause a wild card could be a shift in the landscape around how developers are using either machine learning or AI like techniques to code into their apps, so. >> That's fantastic insight. I can't thank you enough for your time, on the heels of Supercloud 2, really appreciate it. All right, thanks to John and Sarbjeet for the outstanding conversation today. Special thanks to the Palo Alto studio team. My goodness, Anderson, this great backdrop. You guys got it all out here, I'm jealous. And Noah, really appreciate it, Chuck, Andrew Frick and Cameron, Andrew Frick switching, Cameron on the video lake, great job. And Alex Myerson, he's on production, manages the podcast for us, Ken Schiffman as well. Kristen Martin and Cheryl Knight help get the word out on social media and our newsletters. Rob Hof is our editor-in-chief over at SiliconANGLE, does some great editing, thanks to all. Remember, all these episodes are available as podcasts. All you got to do is search Breaking Analysis podcast, wherever you listen. Publish each week on wikibon.com and siliconangle.com. Want to get in touch, email me directly, david.vellante@siliconangle.com or DM me at dvellante, or comment on our LinkedIn post. And by all means, check out etr.ai. They got really great survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching, We'll see you next time on Breaking Analysis. (electronic music)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> UiPath has had a long, strange trip to IPO. How so you ask? Well, the company was started in 2005. But it's culture, is akin to a frenetic startup. The firm shunned conventions and instead of focusing on a narrow geographic area to prove its product market fit before it started to grow, it aggressively launched international operations prior to reaching unicorn status. Well prior, when it had very little revenue, around a million dollars. Today, more than 60% of UiPath business is outside of the United States. Despite its headquarters being in New York city. There's more, according to recent SEC filings, UiPath total revenue grew 81% last year. But it's free cash flow, is actually positive, modestly. Wait, there's more. The company raised $750 million in a Series F in early February, at a whopping $35 billion valuation. Yet, the implied back of napkin valuation, based on the number of shares outstanding after the offering multiplied by the proposed maximum offering price per share yields evaluation of just under 26 billion. (Dave chuckling) And there's even more to this crazy story. Hello everyone, and welcome to this week's Wikibon CUBE Insights, Powered by ETR. In this Breaking Analysis we'll share our learnings, from sifting through hundreds of pages (paper rustling) of UiPath's red herring. So you didn't have to, we'll share our thoughts on its market, its competitive position and its outlook. Let's start with a question. Mark Roberge, is a venture capitalist. He's a managing director at Stage 2 Capital and he's also a teacher, a professor at the B-School in Harvard. One of his favorite questions that he asks his students and others, is what's the best way to grow a company? And he uses this chart to answer that question. On the vertical axis is customer retention and the horizontal axis is growth to growth rate and you can see he's got modest and awesome and so forth. Now, so I want to let you look at it for a second. What's the best path to growth? Of course you want to be in that green circle. Awesome retention of more than 90% and awesome growth but what's the best way to get there? Should you blitz scale and go for the double double, triple, triple blow it out and grow your go to market team on the horizontal axis or should be more careful and focus on nailing retention and then, and only then go for growth? What do you think? What do you think most VCs would say? What would you say? When you want to maybe run the table, capture the flag before your competitors could get there or would you want to take a more conservative approach? What would Daniel Dines say the CEO of UiPath? Again, I'll let you think about that for a second. Let's talk about UiPath. What did they do? Well, I shared at the top that the company shunned conventions and expanded internationally, very rapidly. Well before it hit escape velocity and they grew like crazy and it got out of control and he had to reign it in, plug some holes, but the growth didn't stop, go. So very clearly based on it's performance and reading through the S1, the company has great retention. It uses a metric called gross retention rate which is at 96 or 97%, very high. Says customers are sticking with it. So maybe that's the right formula go for growth and grow like crazy. Let chaos reign, then reign in the chaos as Andy Grove would say. Go fast horizontally, and you can go vertically. Let me tell you what I think Mark Roberge would say, he told me you can do that. But churn is the silent killer of SaaS companies and perhaps the better path is to nail product market fit. And then your retention metrics, before you go into hyperbolic growth mode. There's all science behind this, which may be antithetical to the way many investors want to roll the dice and go for super growth, like go fast or die. Well, it worked for UiPath you might say, right. Well, no. And this is where the story gets even more interesting and long and strange for UiPath. As we shared earlier, UiPath was founded in 2005 out of Bucharest Romania. The company actually started as a software outsourcing startup. It called the company, DeskOver and it built automation libraries and SDKs for companies like Microsoft, IBM and Google and others. It also built automation scripts and developed importantly computer vision technology which became part of its secret sauce. In December 2015, DeskOver changed its name to UiPath and became a Delaware Corp and moved its headquarters to New York City a couple of years later. So our belief is that UiPath actually took the preferred path of Mark Roberge, five ticks North, then five more East. They slow-cooked for the better part of 10 years trying to figure out what market to serve. And they spent that decade figuring out their product market fit. And then they threw gas in the fire. Pretty crazy. All right, let's take a peak (chuckling) at the takeaways from the UiPath S1 the numbers are impressive. 580 million ARR with 65% growth. That asterisk is there because like you, we thought ARR stood for annual recurring revenue. It really stands for annualized renewal run rate. annualized renewal run rate is a metric that is one of UiPath's internal KPIs and are likely communicate that publicly over time. We'll explain that further in a moment. UiPath has a very solid customer base. Nearly 8,000, I've interviewed many of them. They're extremely happy. They have very high retention. They get great penetration into the fortune 500, around 63% of the fortune 500 has UiPath. Most of UiPath business around 70% comes from existing customers. I always say you're going to get more money out of existing customers than new customers but everybody's trying to go out and get new customers. But UiPath I think is taking a really interesting approach. It's their land and expand and they didn't invent that term but I'll come back to that. It kind of reminds me of the early days of Tableau. Actually I think Tableau is an interesting example. Like UiPath, Tableau started out as pretty much a point tool and it had, but it had very passionate customers. It was solving problems. It was simplifying things. And it would have bid into a company and grow and grow. Now the market fundamentals for UiPath are very good. Automation is super hot right now. And the pandemic has created an automation mandate to date and I'll share some data there as well. UiPath is a leader. I'm going to show you the Gartner Magic Quadrant for RPA. That's kind of a good little snapshot. UiPath pegs it's TAM at 60 billion dollars based on some bottoms up calculations and some data from Bain. Pre-pandemic, we pegged it at over 30 billion and we felt that was conservative. Post-pandemic, we think the TAM is definitely higher because of that automation mandate, it's been accelerated. Now, according to the S1, UiPath is going to raise around 1.2 billion. And as we said, if that's an implied valuation that is lower than the Series F, so we suspect the Series F investors have some kind of ratchet in there. UiPath needed the cash from its Series F investors. So it took in 750 million in February and its balance sheet in the S1 shows about 474 million in cash and equivalent. So as I say, it needed that cash. UiPath has had significant expense reductions that we'll show you in some detail. And it's brought in some fresh talent to provide some adult supervision around 70% of its executive leadership team and outside directors came to the company after 2019 and the company's S1, it disclosed that it's independent accounting firm identified last year what it called the "material weakness in our internal controls over financial report relating to revenue recognition for the fiscal year ending 2018, caused by a lack of oversight and technical competence within the finance department". Now the company outlined the steps it took to remediate the problem, including hiring new talent. However, we said that last year, we felt UiPath wasn't quite ready to go public. So it really had to get its act together. It was not as we said at the time, the well-oiled machine, that we said was Snowflake under Mike Scarpelli's firm operating guidance. The guy's the operational guru, but we suspect the company wants to take advantage of this mock market. It's a good time to go public. It needs the cash to bolster its balance sheet. And the public offering is going to give it cache in a stronger competitive posture relative to its main new competitor, autumn newbie competitor Automation Anywhere and the big whales like Microsoft and others that aspire and are watching what UiPath is doing and saying, hey we want a piece of that action. Now, one other note, UiPath's CEO Daniel Dines owns 100% of the class B shares of the company and has a 35 to one voting power. So he controls the company, subject of course to his fiduciary responsibilities but if UiPath, let's say it gets in trouble financially, he has more latitude to do secondary offerings. And at the same time, it's insulated from activist shareholders taking over his company. So lots of detail in the S1 and we just wanted to give you some of those highlights. Here are the pretty graphs. If whoever wrote this F1 was a genius. It's just beautiful. As we said, ARR, annualized renewal run rate all it does is it annualizes the invoice amount from subscriptions in the maintenance portion of the revenue. In other words, the parts that are recurring revenue, it excludes revenue from support and perpetual license. Like one-time licenses and services is just kind of the UiPath's and maybe that's some sort of legacy there. It's future is that recurring revenue. So it's pretty similar to what we think of as ARR, but it's not exact. Lots of customers with a growing number of six and seven figure accounts and a dollar-based net retention of 145%. This figure represents the rate of net expansion of the UiPath ARR, from existing listing customers over a 12 month period. Translation. This says UiPath's existing customers are spending more with the company, land and expand and we'll share some data from ETR on that. And as you can see, the growth of 86% CAGR over the past nine quarters, very impressive. Let's talk about some of the fundamentals of UiPath's business. Here's some data from the Brookings Institute and the OECD that shows productivity statistics for the US. The smaller charts in the right are for Germany and Japan. And I've shared some similar data before the US showed in the middle there. Showed productivity improvements with the personal productivity boom in the mid to late 90s. And it spilled into the early 2000s. But since then you can see it's dropped off quite significantly. Germany and Japan are also under pressure as are most developed countries. China's labor productivity might show declines but it's level, is at level significantly higher than these countries, April 16th headline of the Wall Street Journal says that China's GDP grew 18% this quarter. So, we've talked about the snapback in post-COVID and the post-isolation economy, but these are kind of one time bounces. But anyway, the point is we're reaching the limits of what humans can do alone to solve some of the world's most pressing challenges. And automation is one key to shifting labor away from these more mundane tasks toward more productive and more important activities that can deliver lasting benefits. This according to UiPath, is its stated purpose to accelerate human achievement, big. And the market is ready to be automated, for the most part. Now the post-isolation economy is increasingly going to focus on automation to drive toward activity as we've discussed extensively, I got to share the RPA Magic Quadrant where nearly everyone's a winner, many people are of course happy. Many companies are happy, just to get into the Magic Quadrant. You can't just, you have to have certain criteria. So that's good. That's what I mean by everybody wins. We've reported extensively on UiPath and Automation Anywhere. Yeah, we think we might shuffle the deck a little bit on this picture. Maybe creating more separation between UiPath and Automation Anywhere and the rest. And from our advantage point, UiPath's IPO is going to either force Automation Anywhere to respond. And I don't know what its numbers are. I don't know if it's ready. I suspect it's not, we'd see that already but I bet you it's trying to get there. Or if they don't, UiPath is going to extend its lead even further, that would be our prediction. Now personally, I would have Pegasystems higher on the vertical. Of course they're not an IPO, RPA specialist, so I kind of get what Gartner is doing there but I think they're executing well. And I'd probably, in a broader context I'd probably maybe drop blue prism down a little bit, even though last year was a pretty good year for the company. And I would definitely have Microsoft looming larger up in the upper left as a challenger more than a visionary in my opinion, but look, Gartner does good work and its analysts are very deep into this stuff, deeper than I am. So I don't want to discount that. It's just how I see it. Let's bring in the ETR data and show some of the backup here. This is a candlestick chart that shows the components of net score, which is spending momentum, however, ETR goes out every quarter. Says you're spending more, you're spending less. They subtract the lesses from the mores and that's net score. It's more complicated than that, but that's that blue line that you see in the top and yes it's trending downward but it's still highly elevated. We'll talk about that. The market share is in the yellow line at the bottom there. That green represents the percentage of customers that are spending more and the reds are spending less or replacing. That gray is flat. And again, even though UiPath's net score is declining, it's that 61%, that's a very elevated score. Anything over 40% in our view is impressive. So it's, UiPath's been holding in the 60s and 70s percents over the past several years. That's very good. Now that yellow line market share, yes it dips a bit, but again it's nuanced. And this is because Microsoft is so pervasive in the data stat. It's got so many mentions that it tends to somewhat overwhelm and skew these curves. So let's break down net score a little bit. Here's another way to look at this data. This is a wheel chart we show this often it shows the components of net score and what's happening here is that bright red is defection. So look at it, it's very small that wouldn't be churn. It's tiny. Remember that it's churn is the killer for software companies. And so that forest green is existing customers spending more at 49%, that's big. That lime green is new customers. So again, it's from the S1, 70% of UiPath's revenue comes from existing customers. And this really kind of underscores that. Now here's more evidence in the ETR data in terms of land and expand. This is a snapshot from the January survey and it lines up UiPath next to its competitors. And it cuts the data just on those companies that are increasing spending. It's so that forest green that we saw earlier. So what we saw in Q1 was the pace of new customer acquisition for UiPath was decelerating from previous highs. But UiPath, it shows here is outpacing its competition in terms of increasing spend from existing customers. So we think that's really important. UiPath gets very high scores in terms of customer satisfaction. There's, I've talked to many in theCUBE. There's places on the web where we have customer ratings. And so you want to check that out, but it'll confirm that the churn is low, satisfaction is high. Yeah, they get dinged sometimes on pricing. They get dinged sometimes, lately on service cause they're growing so fast. So, maybe they've taken the eye off the ball in a couple of counts, but generally speaking clients are leaning in, they're investing heavily. They're creating centers of excellence around RPA and automation, and UiPath is very focused on that. Again, land and expand. Now here's further evidence that UiPath has a strong account presence, even in accounts where its competitors are presence. In the 149 shared accounts from the Q1 survey where UiPath, Automation Anywhere and Microsoft have a presence, UiPath's net score or spending velocity is not only highly elevated, it's relative momentum, is accelerating compared to last year. So there's some really good news in the numbers but some other things stood out in the S1 that are concerning or at least worth paying attention to. So we want to talk about that. Here is the income statement and look at the growth. The company was doing like 1 million dollars in 2015 like I said before. And when it started to expand internationally it surpassed 600 million last year. It's insane growth. And look at the gross profit. Gross margin is almost 90% because revenue grew so rapidly. And last year, its cost went down in some areas like its services, less travel was part of that. Now jump down to the net loss line. And normally you would expect a company growing at this rate to show a loss. The street wants growth and UiPath is losing money, but it's net loss went from 519 million, half a billion down to only 92 million. And that's because the operating expenses went way down. Now, again, typically a company growing at this rate would show corresponding increases in sales and marketing expense, R&D and even G&A but all three declined in the past 12 months. Now reading the notes, there was definitely some meaningful savings from no travel and canceled events. UiPath has great events around the world. In fact theCUBE, Knock Wood is going to be at its event in October, in Las Vegas at the Bellagio . So we're stoked for that. But, to drop expenses that precipitously with such high growth, is kind of strange. Go look at Snowflake's income statement. They're in hyper-growth as well. We like to compare it to Snowflake is a very well-run company and it's in hyper-growth mode, but it's sales and marketing and R&D and G&A expense lines. They're all growing along with that revenue. Now, perhaps they're growing at a slower rate. Perhaps the percent of revenue is declining as it should as they achieve operating leverage but they're not shrinking in absolute dollar terms as shown in the UiPath S1. So either UiPath has applied some magic automation mojo to it's business (chuckling). Like magic beans or magic grits with my cousin Vinny. Maybe it has found the Holy grail of operating leverage. It's a company that's all about automation or the company was running way too hot on the expense side and had a cut and clean up its income statement for the IPO and conserve some cash. Our guess is the latter but maybe there's a combination there. We'll give him the benefit of the doubt. And just to add a bit more to this long, strange trip. When have you seen an explosive growth company just about to go public, show positive cashflow? Maybe it's happened, but it's rare in the tech and software business these days. Again, go look at companies like Snowflake. They're not showing positive cashflow, not yet anyway. They're growing and trying to run the table. So you have to ask why is UiPath operating this way? And we think it's because they were so hot and burning cash that they had to reel things in a little bit and get ready to IPO. It's going to be really interesting to see how this stock reacts when it does IPO. So here's some things that we want you to pay attention to. We have to ask. Is this IPO, is it window dressing? Or did UiPath again uncover some new productivity and operating leverage model. I doubt there's anything radically new here. This company doesn't want to miss the window. So I think it said, okay, let's do this. Let's get ready for IPO. We got to cut expenses. It had a lot of good advisors. It surrounded itself with a new board. Extended that board, new management, and really want to take advantage of this because it needs the cash. In addition, it really does want to maintain its lead. It's got Automation Anywhere competing with it. It's got Microsoft looming large. And so it wants to continue to lead. It's made some really interesting acquisitions. It's got very strong vision as you saw in the Gartner Magic Quadrant and obviously it's executing well but it's really had to tighten things up. So we think it's used the IPO as a fortune forcing function to really get its house in order. Now, will the automation mandate sustain? We think it will. The forced match to digital worked, it was effective. It wasn't pleasant, but even in a downturn we think it will confer advantage to automation players and particularly companies like UiPath that have simplified automation in a big way and have done a great job of putting in training, great freemium model and has a culture that is really committed to the future of humankind. It sounds ambitious and crazy but talk to these people, you'll see it's true. Pricing, UiPath had to dramatically expand or did dramatically expand its portfolio and had to reprice everything. And I'm not so worried about that. I think it'll figure that pricing out for that portfolio expansion. My bigger concern is for SaaS companies in general. I don't like SaaS pricing that has been popularized by Workday and ServiceNow, and Salesforce and DocuSign and all these companies that essentially lock you in for a year or two and basically charge you upfront. It's really is a one-way street. You can't dial down. You can only dial up. It's not true Cloud pricing. You look at companies like Stripe and Datadog and Snowflake. It is true Cloud pricing. It's consumption pricing. I think the traditional SaaS pricing model is flawed. It's very unfairly weighted toward the vendors and I think it's going to change. Now, the reason we put cloud on the chart is because we think Cloud pricing is the right way to price. Let people dial up and dial down, let them cancel anytime and compete on the basis of your product excellence. And yeah, give them a price concession if they do lock in. But the starting point we think should be that flexibility, pay by the drink. Cancel anytime. I mentioned some companies that are doing that as well. If you look at the modern SaaS startups and the forward-thinking VCs they're really pushing their startups to this model. So we think over time that the term lock-in model is going to give way to true consumption-based pricing and at the clients option, allow them to lock-in for a better price, way better model. And UiPath's Cloud revenue today is minimal but over time, we think it's going to continue to grow that cloud. And we think it will force a rethink in pricing and in revenue recognition. So watch for that. How is the street going to react to Daniel Dines having basically full control of the company? Generally, we feel that that solid execution if UiPath can execute is going to outweigh those concerns. In fact, I'm very confident that it will. We'll see, I kind of like what the CEO says has enough mojo to say (chuckling) you know what, I'm not going to let what happened to for instance, EMC happen to me. You saw Michael Dell do that. You saw just this week they're spinning out VMware, he's maintaining his control. VMware Dell shareholders get get 40.44 shares for every Dell share they're holding. And who's the biggest shareholder? Michael Dell. So he's, you got two companies, one chairman. He's controlling the table. Michael Dell beat the great Icahn. Who beats Carl Icahn? Well, Michael Dell beats Carl Icahn. So Daniel Dines has looked at that and says, you know what? I'm not just going to give up my company. And the reason I like that with an if, is that we think will allow the company to focus more on the long-term. The if is, it's got to execute otherwise it's so much pressure and look, the bottom line is that UiPath has really favorable market momentum and fundamentals. But it is signing up for the 90 day short clock. The fact that the CEO has control again means they can look more long term and invest accordingly. Oftentimes that's easier said than done. It does come down to execution. So it is going to be fun to watch (chuckling). That's it for now, thanks to the community for your comments and insights and really always appreciate your feedback. Remember, I publish each week on Wikibon.com and siliconangle.com and these episodes are all available as podcasts. All you got to do is search for the Breaking Analysis podcast. You can always connect with me on Twitter @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn posts. And we'll see you in clubhouse. Follow me and get notified when we start a room, which we've been doing with John Furrier and Sarbjeet Johal and others. And we love to riff on these topics and don't forget, please check out etr.plus for all the survey action. This is Dave Vellante, for theCUBE Insights Powered by ETR. Be well everybody. And we'll see you next time. (gentle upbeat music)

>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel and AWS. Yeah, welcome back to the cubes. Live coverage here for eight of us. Reinvent 2020. Virtual normally were on the show floor getting all of the interviews and talking about the top newsmakers and we have one of them here on the Cube were remote. I'm John for your host of the Cube. George Ellis Eros, GM and director of product manager for AWS. Talking about Wavelength George. Welcome to the remote Cube Cube. Virtual. Thanks for coming on. >>Good to be here. Thanks for having a John >>Eso Andy's Kino. One of the highlights last year, I pointed out that the five g thing is gonna be huge with the L A Wavelength Metro thing going on this year. Same thing. Mawr Proofpoint S'more expansion. Take us through what was announced this year. What's the big update on wavelength? >>Yes, so John Wavelength essentially brings a W services at the edge of the five G network, allowing our AWS customers and developers to reach their own end users and devices. Five devices with very low latency enabling a number off emerging applications ranging from industrial automation and I O. T. All the way to weigh AR VR smart cities, connected vehicles and much more this year we announced earlier in the year the general availability of wavelength in two locations one in the Bay Area and one in the Boston area. And since then we've seen we've been growing with Verizon or five D partner in the U. S. And and increasing that coverage in multiple off the larger U. S cities, including Miami and D. C in New York. And we launched Las Vegas yesterday at Andy's keynote with Verizon. We also announced that we are going toe to have a global footprint with K d D I in Japan launching a wavelength in Tokyo with SK detail SK Telecom in in South Korea or launching indigestion and with Vodafone in London >>so significant its expansion. Um, we used to call these points of presence back in the old days. I don't know what you call them now. I guess they're just zones like you calling them zones, but this really is gonna be a critical edge network, part of the edge, whether it's stadiums, metro area things and the density and the group is awesome. And everyone loves at about five gs. More of a business at less consumer. When you think about it, what has been some of the response as you guys had deployed mawr, What's the feedback? Um, can you take us through what the response has been? What's it been like? What have been some of the observations? >>Yeah, customers air really excited with the promise of five G and really excited to get their hands on these new capabilities that we're offering. Um, And they're telling us, you know, some consistent feedback that we're getting is that they're telling us that they love that they can use the same A W s, a P I S and tools and services that they used today in the region to get their hands on this new capabilities. So that's being pretty pretty consistent. Feedback these off use and the you know, Sometimes customers tell us that within a day they are able to deploy their applications in web. So that's a that's pretty consistent there. We've seen customers across a number of areas arranging, you know, from from manufacturing to healthcare to a ar and VR and broadcasting and live streaming all the way to smart cities and and connected vehicles. So a number of customers in these areas are using wavelength. Some of my favorite you know, examples are in in actually connected vehicles where you really can see that future materialized. You get, you know, customers like LG that are building the completely secularized vehicle, tow everything platform, and customers like safari that allow multiple devices to do, you know, talkto the Waveland, the closest Waveland Zone process. All of those device data streams at the edge. And then, um, it back. You know messages to the drivers, like for emergency situations, or even construct full dynamic maps for consumption off the off the vehicle themselves. >>I mean, it's absolutely awesome. And, you know, one of things that someone Dave Brown yesterday around the C two and the trend with smaller compute. You have the compute relationship at the edge to moving back and forth so I can see those dots connecting and looking forward to see how that plays out. Sure, and it will enable more capabilities. I do want to get your your thoughts, or you could just for the audience and our perspective just define the difference between wavelength and local zones because we know what regions are. Amazon regions are well understood all around the world. But now you have this new concept called locals owns part of wavelength, not part of wavelengths. Are they different technology? Can you just explain? Take him in to exclaim wavelength versus local zones how they work together? >>Yeah, So let me take a step back at AWS. Basically, what we're trying to do is we're trying to enable our customers to reach their end users with low latency and great performance, wherever those end users are and whatever network they're they're using to get connected, whether that's the five g mobile network with the Internet or in I o t Network. So we have a number of products that help our customers do that. And we expect, like, in months off other areas of the AWS platform, that customers are gonna pick and twos and mix and match and combine some of these products toe master use case. So when you're talking about wavelength and local zones, wavelength is about five g. There is obviously a lot off excitement as you said yourself about five g about the promise off those higher throughput. They're Lowell agencies. You know, the large number of devices supported and with wavelengths were enabling our customers toe to make the most of that. You know, of the five G technology and toe work on these emerging new use cases and applications that we talked about When it comes to local zones, we're talking more about extending AWS out two more locations. So if you think about you mentioned AWS regions, we have 24 regions in another five coming. Those are worldwide and enabled most of our customers to run their workloads. You know all of their workloads with low latency and adequate performance across the world. But we are hearing from customers that they want AWS in more locations. So local zones basically bring a W S extend those regions to more locations by bringing a W s closer to population I t and industrial centers. You know, l A is a great example of that. We launched the lay last year toe to local zones in L. A and toe toe a mainly at the media and entertainment customers that are, you know, in the L. A Metro, and we've seen customers like Netflix, for example, moving their artist workstations to the local zones. If they were to move that somewhere, you know, to the cloud somewhere further out the Laden's, he might have been too much for their ass artists work clothes and having some local AWS in the L. A. Metro allows them to finally move those workstation to the cloud while preserving that user experience. You know, interacting with the workstations that's happened. The cloud. >>So just like in conceptualizing is local zone, like a base station is in the metro point of physical location. Is it outpost on steroids? Been trying to get the feel for what it is >>you can think off regions consisting off availability zones. So these are, you know, data center clusters that deliver AWS services. So a local zone is much like an availability zone. But instead of being co located with the rest of the region, is in another locations that, for example, in L. A. Rather than being, you know, in in Virginia, let's say, um, they are internally. We use the same technology that we use for outpost, I suppose, is another great example of how AWS is getting closer to customers for on premises. Deployments were using much of the same technology that you you probably know as Nitro System and a number of other kind of technology that we've been working on for years, actually, toe make all this possible. >>You know, anyone who's been to a football game or any kind of stadium knows you got a great WiFi signal, but you get terrible bandwidth that is essentially kind of the back hall component for the telecom geeks out there. This is kind of what we're talking about here, right? We're talking about more of an expansionary at that edge on throughput, not just signal. So there's, you know, there's there's a wireless signal, and it's like really conductivity riel functionality for applications. >>Yeah, and many. Many of those use case that we're talking about are about, you know, immersive experiences for for end users. So with five t, you get that increasing throughput, you can get up to 10 GPS. You know, it is much higher with what you get 40. You also get lower latents is, but in order to really get make the most out of five G. You need to have the cloud services closer to the end user. So that's what Wavelength is doing is bringing all of those cloud services closer to the end user and combined with five G delivers on these on these applications. You know, um, a couple of customers are actually doing very, very, very exciting things on immersive application, our own immersive experiences. Um, why be VR is a customer that's working on wavelength today to deliver a full 3 60 video off sports events, and it's like you're there. They basically take all of those video streams. They process them in the waving zone and then put them back down to your to your VR headset. But don't you have seen those? We are headsets there, these bulky, awkward, big things because we can do a lot of the processing now at the edge rather than on the heads of itself. We are envisioning that these headsets will Will will string down to something that's indistinguishable potential from, you know, your glasses, making that user experience much better. >>Yeah, from anything from first responders toe large gatherings of people having immersive experiences, it's only gonna get better. Jorge. Thanks for coming on. The Cuban explaining wavelength graduates on the news and expansion. A lot more cities. Um, what's your take for reinvent while I got you? What's the big take away for you this year? Obviously. Virtual, but what's the big moment for you? >>Well, I think that the big moment for me is that we're continuing to, you know, to deliver for our customers. Obviously, a very difficult year for everyone and being able to, you know, with our help off our customers and our partners deliver on the reinvent promised this year as well. It is really impressed for >>me. All right. Great to have you on. Congratulations on local news. Great to see Andy pumping up wavelength. Ah, lot more work. We'll check in with you throughout the year. A lot to talk about. A lot of societal issues and certainly a lot of a lot of controversy as well as tech for good, great stuff. Thanks for coming. I appreciate it. >>Thanks for having me. Thanks. >>Okay, That's the cube. Virtual. I'm John for your host. Thanks for watching. We'll be back with more coverage from reinvent 2023 weeks of coverage. Walter Wall here in the Cube. Thanks for watching. Yeah,

(bright music) >> Announcer: From around the globe, it's theCUBE with digital coverage of Dell Technologies World Digital Experience. Brought to you by Dell Technologies. >> Hello, and welcome back to theCUBE's virtual coverage of Dell Technologies World Digital Experience. I'm John Furrier, your host of theCUBE here for this interview. We're not face to face this year, we're remote because of the pandemic. We've got a great guest, CUBE alumni, John Roese who's the Global Chief Technology Officer at Dell Technologies. John, great to see you. Thank you for remoting in from New Hampshire. Thanks for your time and thanks for coming on. >> Oh, glad to be here. Glad to be here from New Hampshire. The travel is a lot easier this way so-- >> It's been an interesting time. What a year it's been with the pandemic, the good, bad, and the ugly has been playing out. But if you look at the role of technology, the big theme this year at Dell Technologies World is the digital transformation acceleration. Everyone is kind of talking about that, but when you unpack the technology side of it, you're seeing a technology enablement theme that is just unprecedented from an acceleration standpoint. COVID has forced people to look at things that they never had to look at before. Disruption to business models and business systems like working at home. (Furrier laughs) Who would have forecasted that kind of disruption. Workloads changing, workforces working differently with in the mid of things. So an absolute exposure to the core issues and challenges that need to be worked on and double down on. And some cases, projects that might not have been as a priority. So you have all of this going on, customers really trying to double down on the things that are working, the things they need to fix, so they can come out of the pandemic with a growth strategy with modern apps, with cloud and hybrid and multicloud. This has been a huge forcing function. I'd love to get your first reaction to that big wave. >> Yeah, no, no, I think as a technologist, sometimes you can see the future maybe a little clearer than the business people can. Because there's one thing about technology, it either is, or it isn't. Either is code or hardware and real or it's marketing. And we knew the technology evolution was occurring, we knew the multicloud world was real, we knew that machine intelligence was real. And we've been working on this for maybe decades. But prior to COVID, many of these areas were still considered risky or speculative. And people couldn't quite grok exactly why they wanted a machine doing work on their behalf or why they might want an AI to be a participant in their collaboration sessions or why they might want an autonomous vehicle at all. And we were talking about how many people autonomous vehicles that were going to kill as opposed to how many that we're going to help. Then we had COVID. And suddenly we realized that the fragility of our physical world and the need for digital is much higher. And so it's actually opened up an enormous accelerant on people's willingness to embrace new technologies. And so whether it's a predictable acceleration of machine intelligence or autonomous systems, or this realization that the cloud world is actually more than one answer, there's multiple clouds working together. Because if you try to do a digital transformation acceleration, you realize that it's not one problem. It's many, many problems all working together, and then you discover that, hey, some of these can be solved with cloud one and some can be solving with cloud two, and some of them you want to do in your own infrastructure, in a private cloud, and some might belong at the edge. And then suddenly you come to this conclusion that, hey, having strategy has to deal with this system as a system. And so across the board, COVID has been an interesting catalyst to get people to really think practically about the technology available to them and how they might be able to take advantage of it quicker. And that's a mixed blessing for us technologists because they want things sooner, and that means we have to do more engineering. But at the same time, open-minded consumers of technology are very helpful in digital transformations. >> Well, I want to unpack that rethinking with COVID and post COVID. I mean, everything is going to come down to before COVID and after COVID world. I think it's going to be the demarcation that's going to be looked at historically. Before we get into that though, I want to get your thoughts on some of the key pillars of these transformational technologies in play today. Last year at Dell World, when we were physically face to face, we were laying out on theCUBE and in our analysis, the Dell Technologies has got an end to end view. You saw a little bit at VMworld this year, the Project Monterey, is looking much more systematically across the board. You mentioned systems as consequences. The reaction of changes. But lay out for us the key areas, the key pillars of the transformational technologies that customers need to look at now to drive the digital path. >> Yeah, we cast a very wide net. We look at literally thousands of technologies, we organize them and we try to understand and predict which ones are going to matter. And it turns out that over the last couple of years, we figured out there's really six, what I'll call expanding technology areas that are actually probably likely to be necessary for almost any digital transformation. And they aren't exactly what people have been doing historically. So in no particular order, and they may sound obvious, but when you think about your future, it's very likely all six of these are going to touch you. The first is, the obvious one of being able to develop and deliver a multicloud. The cloud journey is by no means done. We are at like the second inning of a nine inning game, maybe even earlier. We have barely created the multiple cloud world, much less the true multicloud world, and then really exploiting and automating has work to be done. But that's a strategic area for us and everybody to navigate forward. In parallel to that, what we realize is that multiple cloud is no longer just present in data centers and public clouds, it's actually existing in the real world. So this idea of edge, the reconstituting of IT out in the real world to deliver the real time behavior necessary to actually serve what we predict will be about 70% of the world's data that will happen outside of data centers. The third is 5G. And that's a very specific technology, and I have a long telco background. I was the CTO of one of the largest telecom companies in the world and I was involved in 2G, 3G and 4G. (Furrier chuckles) 5G is not another G. It is not just faster 4G. It does that, but with things like massive machine type communication with having a million sensorized devices in a kilometer or ultra reliable, low latency communication. The ability to get preferential services to critical streams of data across the infrastructure, mobile edge compute, putting the edge IT out into the cellular environment. And the fact that it's built in the cloud and IT era. So it's programmable, software defined. 5G is going to go from being an outside of the IT discussion to being the fabric inside the IT discussion. And so I will bet that anybody who has people in the real world and that they're trying to deliver a digital experience, will have to take advantage of the capabilities of 5G to do it right. But super strategic important area for Dell and for our industry. Continuing on, we have the data world, the data management world. It's funny, we've been doing data as an industry for a very long time, but the world we were in was the data at rest world, databases, data lakes, traditional applications. And that's great. It still matters, but this new world of data in motion is beginning. And what that means is the data is now moving into pipelines. We're not moving it somewhere and then figuring it out, we're figuring it out as the data flows across this multicloud environment. And that requires an entirely different tool, chain, architecture and infrastructure. But it's incredibly important because it's actually the thing that powers most digital transformation if they're real time. In parallel to that, number five on the list is AI and machine learning. And we have a controversial view on this. We don't view AI as purely a technology. It clearly is a technology, but what we really think customers should think about it as is as a new class of user. Because AIs are actually some of the most aggressive producers and consumers of data and consumers of IT infrastructure. We actually estimate that within the next four or five years, the majority of IT capacity in an enterprise environment will actually be consumed at the behest of the machine learning algorithm or an AI system than a traditional application or person. And all you have to do is do one AI project to understand that I'm correct, because they are just massive demand drivers for your infrastructure, but they have massive return on that demand. They give you things you can't do without them. And then last on the list is this area of security. And to be candid, we have really messed up this area as an industry. We have a security product for every problem, we have proliferation of security technologies. And to make matters worse, we now operate most enterprises on the assumption the bad guys are already inside and we're doing things to prevent them from causing harm. Now, if that's all it is, we really lost this one. So we have an obligation to reverse this trend, to start moving back to embedding the security and the infrastructure with intrinsic security, with zero trust models, with things like SASSY, which is basically creating new models of the edge security paradigm to be more agile and software defined. But most importantly, we have to pull it all together and say, "You know what we're really measuring is the trustworthiness "of the systems we work with, "not the individual components." So this elevation of security to trust is going to be a big journey for all of us. And every one of those six are individual areas, but when you combine them, they actually describe the foundation of a digital transformation. And so it's important for people to be aware of them, it's important for companies like Dell to be very active in all of them, because ultimately what you have today, plus those six properly executed, is the digital transformation outcome that most people are heading towards. >> You just packed it all six pillars into one soundbite. That was awesome. Great insight there. One of the things that's interesting, you mentioned AI. I love that piece around AI being a consumer. They are a consumer of data, they're also a consumer of what used to be handled by either systems or humans. That's interesting. 5G is another one. Pat Gelsinger has said at VMworld that 5G, and when I interviewed him he said 5G is a business app, not a consumer app. Yet, if you look at the recent iPhone announcement by Apple, iPhone 12, and iPhone 12 Pro, 5G is at the center of that announcement. But they're taking it from a different perspective. That's a real world application. They've got the watch, they have new chips in their devices, huge advantage. It's not just bandwidth. And remember the original iPhone launch with 3G if you remember. That made the iPhone. Some are saying if it didn't have the 3G or 2G and 3G, I think it was 3G in the first iPhone. 3G, it would have not been as successful. So again, Apple is endorsing 5G. Gelsinger talks about it as a business app. Double down on that, because I think 5G will highlight some of the COVID issues because people are working at home. They're on the go. They want to do video conferencing. Maybe they want to do this programmable. Unpack the importance of 5G as an enabler and as an IT component. >> Yeah. As I mentioned, 5G isn't just about enhanced mobile broadband which is faster YouTube. It's about much more than that. And because of that combination of technologies, it becomes the connective tissue for almost every digital transformation. So our view by the way, just to give you the Dell official position, we actually view that the 5G or the telecom industry is going through three phases around 5G. The first phase has already happened. It was an early deployment of 5G using traditional technology. It was just 5G as an extension of the 4G environment. That's great, it's out there. There's a phase that we're in right now, which I call the geopolitical phase, where all of a sudden, everybody from companies to countries to industries have realized this is really important. And we have to figure out how to make sure we have a secure source of supply that is based on the best technology. And that has created an interest by people like Dell and VMware and Microsoft, and many other companies to say, "Wait a minute. "This isn't just a telecom thing. "This is, as Pat said a business system. "This is part of the core of all digital." And so that's pulled people like Dell and others more aggressively into the telecom world in this middle phase. But what really is happening is the third phase. And the third phase is a recasting of the architecture of telecom to make it much more like the cloud and IT world. To separate hardware from software, to implemented software defined principles, to putting machine interfaces, to treat it like a cloud and IT system architecturally. And that's where things like OpenRAN, integrated open networks, and these new initiatives are coming into play. All of that from Dell perspective is fantastic because what it says is the telecom world is heading towards companies like us. And so, as you may know, we set up a brand new telecom business at scale up here to our other businesses this year. We already are doing billions of dollars in telecom, but now we believe we should be playing a meaningful tier-one role in this modern telecom ecosystem. It will be a team sport. There's lots of other players we have to work with. But because of the breadth of applications of 5G. And whether it's again, an iPhone with 5G is great to do YouTube, but it's incredibly powerful if you run your business applications on there, and what you want to actually deliver is an immersive augmented experience. So without 5G, it will be very hard to do that. So it becomes a new and improved client. We announced a Latitude 9,000 Series, and we're one of the first to put out a 5G enabled laptop. In certain parts of the world, we're now starting to ship these. Well again, when you have access to millimeter wave and gigabit speed capacity, you can do some really interesting things on that device, more oriented towards what we call collaborative computing which the client device and the adjacent infrastructure have so much bandwidth between them, that they look like one system. And they can share the burden of augmented reality, of data processing, of AI processing all in the real time domain. Carry that a little further, and when we get into the areas like healthcare transformation or educational transformation. What we realize immediately is reach is everything. You want to have a premium broadband experience, and you need a better system to do that. But really the thing that has to happen is not just a Zoom call, but an immersive experience in which a combination of low bandwidth, always on sensors are able to send their data streams back. But also, if you want to have a more immersive experience to really exploit your health situation, being able to do it with holography and other tools, which require a lot more bandwidth is critical. So no matter where you go in a digital transformation in the real world that has real people and things out in the real world involved in it, the digital fabric for connectivity is critical. And you suddenly realize the current architecture's pre-5G aren't sufficient. And so 5G becomes this linchpin to basically make sure that the client and the cloud and the data center all have a framework that they can actually work together without, let's call it a buffering resistance between them called the network. Imagine if the network was an enabler, not an impediment. >> Yeah, I think you're on point here. I think this is really teases out to me the next-gen business transformation, digital transformation because if you think about what you just talked about, connective tissue, linchpin with 5G, data as a driver, multicloud, the six pillars you laid out, and you mentioned systems, connective tissue systems. I mean, you're basically talking tech under the hood like operating system mindset. These systems design are interesting. If you put the pieces together, you can create business value. Not so much speeds and feeds, business value. You mentioned telco cloud. I find that fascinating. I've been saying on theCUBE for years, and I think it's finally playing out. I want to get your reactions of this is, this rise of the specialty cloud. I called it tier-one on the power law kind of the second wave of cloud. Look at Snowflake. They went public. Biggest IPO in the history of the New York Stock Exchange of Wall Street, second to VMware. They built on Amazon. (Furrier laughs) Okay. You have the telco cloud, we have theCUBE cloud, we have the media cloud. So you're seeing businesses looking at the cloud as a business model opportunity, not just buying gear to run something faster, right? So you're getting at something here where it's real benefits are now materializing and are now visible. First of all, do you agree with that? I'm sure you do. I'd love to get your thoughts on that. And if you do, how do companies put this together? Because you need software, you got to have the power source with cloud. What's your reaction to that? >> Absolutely. I think, now obviously there are many clouds. We have some mega clouds out there and then we have lots of other specialty clouds. And by the way, sometimes you remember we view cloud as an operating model, an experience, a way to present an IT service. How it's implemented is less important than what it looks like to the user. Your example of Snowflake. I don't view Snowflake as AWS. I view Snowflake as a storage business. (Furrier chuckles) >> It's a business. >> It's a business cloud. I mean, they could lift it up and move it onto another cloud infrastructure and still be Snowflake. So, as we look forward, we do see more of the consumables that we're going to use and digital transformation appearing as these cloud services. Sometimes they're SaaS cloud, sometimes they're an infrastructure cloud, sometimes they're a private cloud. One of the most interesting ones though that we see that hasn't happened yet is the edge clouds that are going to form. Edge is different. It's in the real time domain, it's distributed. If you do it at scale, it might look like massive amounts of capacity, but it isn't infinite in one place. Public cloud is infinite capacity all in one place. An edge cloud is infinite capacity distributed across 50,000 points of presence at which each of them has a finite amount of capacity. And the other difference though, is that edge clouds tend to live in the real time domain. So 30 millisecond round trip latency. Well, the reason this one's exciting to me is that when you think about what happened at the software and business model innovation, when for instance public clouds and even co-location became more accessible, companies who had this idea that needed a very large capacity of infrastructure that could be consumed as a service suddenly came into existence. Salesforce.com go through the laundry list. But all of those examples were non-real time functions because the clouds they were built on were non-real time clouds if you take them in the end to end, in the system perspective. We know that there are going to be both from the telecom operators and from cloud providers and co-location providers, and even enterprises, a proliferation of infrastructure out in the real time domain called edges. And those are going to be organized and delivered as cloud services. They're going to be pools of flexible elastic capacity. What excites me is suddenly we're going to spawn a level of innovation, where people who had this great idea that they needed to access cloud light capacity, but they ran into the problem that the capacity was too far away from the time domain they needed to operate. And we've already seen some examples of this in AR and VR. Autonomous vehicles require a real time cloud near the car, which doesn't exist yet. When we think about things like smart cities and smart factories, they really need to have that cloud capacity in the time domain that matters if they want to be a real time control system. And so, I don't know exactly what the innovation is going to be, but when you see a new capability show up, in this case, it's inevitable that we're going to see pools of elastic, consumable capacity in the real time environment as edges start to form. It's going to spawn another innovation cycle that could be as big as what happened in the public cloud environment for non-real time. >> Well, I think that's a great point in time series. Databases for one would be one instant innovation. You mentioned data, data management, time is valuable to the latency and this maybe not viable after if you're a car, right? So you pass them. So again, all different concepts. And the one thing that, first of all, I agree with you on this whole cloud thing. A nice edge cloud is going to develop nicely. But the question there is it's going to be software defined, agreed. Security, data, you've got databases, you've got software operated. You mentioned security being broken, and security product for every problem. And you want to bake it in, intrinsic or whatever you call it these days. How do you get the security model? Because you've got access. Do you federate that? How do you build in security at that level? Whether it's a space satellite or a moving vehicle, the edge is the edge. So what's your thoughts on security as you're looking at this mobility, this agility is horizontally scalable distributed system. What's the security paradigm? >> Well the first thing, it has nothing to do with security, but impacts your security outcome in a meaningful way when you talk about the edge. And that is, we have got to stop getting confused that an edge is a single monolithic thing. And we have got to start understanding that an edge is actually a combination of two things. It is a platform that will provide the capacity and a workload that will do the job, the code. And today, what we find is many people are advocating for edges are actually delivering an end to end stack that includes bespoke hardware, its infrastructure, and the workloads and capabilities. If that happens, we end up with 1,000 black boxes that all do one thing, which doesn't make any sense out in the real world. So the minute you shift to what the edge is really going to be, which is a combination of edge platforms and edge workloads, you start your journey towards a better security model. First thing that happens is you can secure and make a high integrity the edge platform. You can make sure that that platform has a hardware to trust, that it operates potentially in a zero trust model, that it has survivability and resiliency, but it doesn't really care what's running on it as much as it has to be stable. Now if you get that one right, now at least you have a stable platform between your public and private environments and the edge. At the workload level though, now you have to think about, well, edge workloads actually should not be bloated. They should not be extremely large scale because there's not enough capacity at the edge. So concepts like SASSY is a good example, which is one of the analyst firms that coined that term. But I like the concept, which is, hey, what if at the edge you're delivering the workload, but the workload is protected by a bunch of cloud-oriented security services that effectively are presented as part of the service chain? So you don't have to have your own firewall built into every workload because you're in an edge architecture, you can use virtual firewalling that's coming to you as a software service, or you can use the SDN, the service chain it into the networking path, and then you can provide deep packet inspection and other services. It all goes back to this idea that, when you deal with the edge, first and foremost, you have to have a reliable stable platform to guarantee a robust foundation. And that is an infrastructure security problem. But then you have to basically deal with the security problems of the workload in a different way than you do it in a data center. In a data center, you have infinite computing. You can put all kinds of appendages on your code, and it's fine because there's just more compute next to you. In the edge, we have to keep the code pure. It has to be an analytics engine or an AI engine for systems control in a factory. And the security services actually have to be a function of the end to end path. More likely delivered as software services slightly upstream. That architectural shift is not something people have figured out yet. But if we get it right, now we actually have a modern, zero trust distributed, software defined, service changeable, dynamic security architecture, which is a much better approach to an intrinsic security than trying to just hard-code the security into the workload and tie it to the platform which never has worked. So we're going to have to have a pretty big rethink to get through this. But for me, it's pretty clear what we have to do. >> Now I'd say that's good observation. Great insight. I'll just double down and ask a followup on that. I get that. I see where you're going with that software defined, software operated service. I love the SASSY concept. We've covered it. But the edge is still purpose-built devices. I mean, we've talked about an iPhone, and you're talking about a watch, you're talking about a space module, whatever it is at the edge on a tower, it could be a radio. I mean, whatever it is, you seem to have purpose-built hardware. You mentioned this root of trust. That'll kind of never kind of go away. You're going to have that. What's your thoughts on that as someone who realizes I got to harden the edge, at least from a hardware standpoint, but I want to be enabled for self-defined. I don't want to have a product be purpose-built and then be obsolete in a year. Because that's again the challenge of supply chain management, building hardware. What's your thoughts on that? >> Yeah. Our edge strategy, we double click a little bit is different than the strategy to build for a data center. We want consistency between them, but there's actually five areas of edge that actually are specific to it. The first is the hardware platform itself. Edge hardware platforms are different than the platforms you put in data centers, whether it be a client or the infrastructure underneath it. And so we're already building hardened devices and devices that are optimized for power and cooling and space constraints in that environment. The second is the runtime on that system is likely to be different. Today we use the V Cloud Foundation where that works very well, but as you get smaller and smaller and further away, you have to miniaturize and reduce the footprint. The control plane, we would like to make that consistent. We are using Tanzu and Dell Technologies Cloud Platform to extend out to the edge. And we think that having a consistent control plan is important, but the way you adapt something like Tanzu from the edge is different because it's in a different place. The fourth is life cycle, which is really about how you secure, how you deploy, how you deal with day two operations. There's no IT person out at the edge, so you're not in a data center. So you have to automate those systems and deal with them in a different way. And then lastly, the way you package an edge solution and deliver it is much different than the way you build a data center. You actually don't want to deal with those four things I just described as individual snowflakes. You want them packaged and delivered as an outcome. And that's why more and more of the edge platform offerings are really cloudlets or they're a platform that you can use to extend your IT capacity without having to think about Kubernetes versus VMs versus other things. It's just part of the infrastructure. So all of that tells us that edge is different enough, that the way you designed for it, the way you implement it, and even the life cycle, it has to take into account that it's not in a data center. The trick is to then turn that into an extended multicloud where the control plane is consistent, or when you push code into production with Kubernetes, you can choose to land that container in a data center or push it out to the edge. So you have both a system consistency goal, but also the specialization of the edge environment. Everything from hardware, to control plane, to lifecycle, that's the reality of how these things have to be built. >> That's a great point. It's a systems architecture, whether you're looking at from the bottoms up component level to top down kind of policy and or software defined. So great insight. I wish we had more time. I'd love to get you back and talk about data. We were talking before you came on camera about data. But quickly before we go, your thoughts on AI and the consequences of AI. AI is a consumer. I love that insight. Totally agree. Certainly it's an application. Technology is kind of horizontal. It can be vertically specialized with data. What's your thoughts on how AI can be better for society and some of the unintended consequences that we manage that. >> Yeah, I'm an optimist. I actually, we've worked with enough AI systems for long enough to see the benefit. Every one of Dell's products today has machine intelligence inside of it. So we can exceed the potential of its hardware and software without it. It's a very powerful tool. And it does things that human beings just simply can't do. I truly believe that it's the catalyst for the next wave of business process functionality, of new innovation. So it's definitely not something to stay away from. That being said, we don't know exactly how it can go wrong. And we know that there are examples where corrupted or bad bias data could influence it and have a bad outcome. And there are an infinite set of problems to go solve with AI, but there are ones that are a little dangerous to go pursue if you're not sure. And so our advice to customers today is, look, you do not need to build The Terminator to get advantage from AI. You can do something much simpler. In fact, in most enterprise context, we believe that the best path is go look at your existing business processes, where there is a decision that's made by a human being, and it's an inefficient decision. And if you can locate those points where a supply chain decision or an engineering decision or a testing decision is done by human beings poorly, and you can use machine intelligence to improve it by five or 10%, you will get a significant material impact on your business if you go after the right processes. At Dell we're doing a ton of AI and machine learning in our supply chain. Why is that important? Well, we happen to have the largest tech supply chain in the world. If we improve it by 1%, it's a gigantic impact on the company. And so our advice to people is you don't have to build man autonomous car. You don't have to build The Terminator. You can apply it much more tactically in spaces that are much safer. Even in the HR examples, we tell our HR people, "Hey, use it for things like performance management "and simplifying the processing of data. "Don't use it to hire a bot." That's a little dangerous right now. Because you might inadvertently introduce racism or sexism into that, and we still have some work to do there. So it's a very large surface area. Go where the safe areas are. It'll keep you busy for the next several years, improving your business in dramatic ways. And as we improve the technology for bias correction and management of AI systems and fault tolerance and simplicity, then go after the hard one. So this is a great one. Go after the easy stuff. You'll get a big benefit and you won't take the risk. >> You get the low hanging fruit learn, iterate through it. I'm glad you guys are using machine learning and AI in the supply chain. Make sure it's secure, big issue. I know you guys were on top of it and have a great operation there. John, great to have you on. John Roese, the Global Chief Technology Officer at Dell Technologies. Great to have you on. Take a minute to close out the last minute here. What's the most important story from Dell Technologies World this year? I know it's virtual. It's not face to face. But beyond that, what's the big takeaway in your mind, if you could share one point, what would it be for the folks watching? >> Yeah, I think the biggest point is something we talked about, which is we are in a period of digital transformation acceleration. COVID is bad, but it woke us up to the possibilities and the need for digital transformation. And so if you were on the fence or if you're moving slowly and now you have an opportunity to move fast. However, moving fast is hard if you try to do it by yourself. And so we've structured Dell, we've the six big areas we're focused on. They only have one purpose, it's to build the modern infrastructure platforms to enable digital transformation to happen faster. And my advice to people is, great. You're moving faster. Pick your partners well. Choose the people that you want to go on the journey with. And we think we're well positioned for that. And you will have much better progress if you take a broad view of the technology ecosystem and you've lightened up the appropriate partnerships with the people that can help you get there. And the outcome is a successful digital leader just is going to handle things like COVID and ease disruption better than a digital laggard. And we now have the data to prove that. So it's all about digital acceleration is the punchline. >> Well great to have you on. Great segment, great insight. And thank you for sharing the six pillars and the conversation. Super relevant on what's going on to create new business value, new opportunities for businesses and society. I'm John Furrier with theCUBE. Thanks for watching. (bright music)

>> Narrator: From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> Hey welcome back everybody, Jeff Frick here with theCUBE we're in our Palo Alto studio, it's still 2020, we're still gettin' through the COVID crisis and we're still reaching out to our community really to talk to leaders who have lead through difficult times, led through transitions, and really go out to the experts and get some advice from people who have been around the block a few times, and I'm really, really excited to have one of my all time favorite business executives joining us, I haven't talked to him in years and years and almost decades, David Pottruck is joining us, he is formerly the CEO of Schwab, how he kind of made his name, now he's an author, he's teaching at the Wharton School, he's a New York Times best selling author and he's also the chairman of Red Eagle Ventures, David, great to see you. >> Thanks, Jeff, it's good to be with you today. >> Absolutely, so before we get in, just to check in, how are you doing, how are you gettin' through 2020, I can't believe we're already on the backside of this crazy year. >> Well, it's been a pretty challenging year as you know, and we've seen companies learn to operate in a virtual world. Zoom has been one of the huge beneficiaries, but technology companies in general, the whole FAANG group of Facebook, Amazon, Netflix and such, they've all benefited from people getting more virtual, and one of the non profits I'm involved with sends out videos to schools on social and emotional learning and that's seen a big uptick. So, the world is changing, and changing in very substantial ways, and I don't think we'll ever go back to the way it was in total, we will go back to having face to face meetings, of course, but I do think that operating virtually and doing more things remotely, remote business meetings over zoom are going to be a fixed part of the future, >> Right, right. >> At least in my opinion. >> So, the reason I wanted to reach out to you is you've managed through some crazy transitions and some crazy disruptions back in the day and for a lot of the young people that don't remember, there was a time before we did everything online. There was a time where you had a broker and you called him on the phone and you paid a pretty big price based on a percentage of the transactions. You were at Schwab in the late 90s when this new thing called the internet came along, and these new things called internet only businesses to compete with you, I wonder if you can kind of take us back as you started to see some of these new kinds of threats, coming not necessarily from people that you recognize from up and down the street, but people who are coming over horizons that you've never ever seen before. And how did you start to get a feel for hmm, the landscapes a changin'. >> You know it's really funny to look back that there actually was a day when something called the internet didn't exist. And, there was no connectivity, there was no internet. We were, of course, at that time a telephone based brokerage firm, what used to be called discount brokers. We don't use that phrase very much anymore at Schwab, but, we were a telephone based discount broker, and the internet popped up and started becoming commercialized, and some online only brokerage firms popped up. And these firms didn't have call centers, they didn't have branch offices, if you wanted to do a trade you did it over your computer, online, and the pricing was dramatically less. To give you some idea, to buy 100 shares of IBM, Merrill Lynch would have charged you $250, for that one trade, Schwab would have charged you $80 and E-Trade would have charged you $25. So, we were much cheaper than Merrill Lynch, but E-Trade was much cheaper than us. So, we were, at the time, we were worried about is there enough security on the internet, can we do trades. We have a reputation to protect, a brand new company they don't have a reputation to protect, we have customer security, we have a reputation to protect. Well, we started doing online trades, and the way we did it was we gave all of our customers a 20% discount on our normal pricing, so instead of charging 80-something dollars, you paid something like $60. So, it was a nice discount, customers liked it, they were doing online trades, and we're seeing that is just taking off, it's getting huge, and we're getting great press, the analysts love it, Wall Street loves it, we're a public company and it's going great, but of course at the same time I'm getting, a basket full of letters and emails from our customers saying "why can't you do trades for $25 like E-Trade? Why are they able to do an online trade for $25 and you're charging $65? I thought you stood for value, I thought you guys wanted to be the best value for the money." So, I'm in this dilemma where Wall Street doesn't see these letters, they don't get reported, I see them, and there dozens and then hundreds, and then thousands. >> Wow. >> We had millions of customers, so to get a thousand letters or emails in a month that's very possible. And so I go to Chuck with this and I said you know, I think we need to make a change because no great company was built on the back of unhappy customers. >> Right, right. But you know, it's so funny, not funny, I'm sure it was a huge challenge in the moment, but you know, Clayton Christensen's another one of my favorite business leaders and why I like him so much, and rest in peace he passed earlier this year, is his very simple statement in "The Innovator's Dilemma" that smart people making sound business decisions based on their customer feedback will always miss discontinuous change. You were right in the middle of this thing and you had to get discontinuous change and it's funny, you've mentioned quite a bit in some of your other conversations about looking for faint signals, well this was not a faint signal, this was pretty much, sounds like came up and banged you over the head. So, how do you make and convince the rest of the people of the team that this is kind of a short-term pain but it's a long-term gain, really thinking about this long-term relationship with our customers, even though it's going to cost us on a per transaction basis in the short-term. >> Well, I had our financial staff run some models, and show me what would be the impact if we reduced our pricing from 60 something dollars a trade to $29 a trade, and the assumption of more and more trades moving to the internet. We also had a model into that the fact that people trade a little more when prices go down, costs go down cause I don't have the cost of someone answering the telephone, so there were some benefits, and I had to run the math to understand how long would it take us to go through the trough to get to the other side. A big important part of this is modeling the numbers. You don't just make this decision as a public company and just hope for the best >> Jeff: Right. >> You need to model it out, you need to run math and say how long will it take, what do we have to assume, what do we need to do, what costs do we need to cut, how are we going to protect ourselves as best as we can? And we knew that the math said that our profitability will go down 25% when we make this change of internet pricing, and we expected that Wall Street would be so upset, because they didn't see this coming, no analyst saw this coming cause they don't know about complaint letters I'm getting, so, analysts would be upset and the stock would go down 40%, going to your board and telling them you want approval for a 25% reduction in profits and a 40% reduction in your stock price is not what you want to do as a CEO, you don't want to go to your board with that and when they ask you, well how sure are you that we're going to climb out of this, you say it's going to take 18 months, what if it takes three years, you know, I was, I didn't see the choice we had, honestly, in my heart, you don't build a great company with an increasing number of unhappy customers. I didn't think we had a choice, and Clayton Christensen was one of the consultants that I used to help me think all this through because it was really hard to make this change, Jeff, because we were doing so well. >> Right. >> Ostensibly, we were killing it. >> Right, so it's interesting, I wonder if you could contrast it to what's happening say now with COVID, right, it was this, didn't sneak up on anyone, it was a really kind of a light switch moment in mid-March where suddenly everyone has to work from home, all your digital transformation initiatives are now put on fast forward, but we still have this situation where there's a variety of potential outcomes and timing that's really hard to gauge, so when you're thinking about managing through change within perfect information and you almost have kind of will we go back to normal, will we stay where we are or some spectrum in between, how do you help people think about how they should come up with contingency plans and think about managing through a number of options with imperfect information and really kind of no clear line, you said you had an 18 month ROI that the analytics point to, we're not really sure how long this thing is going to go and what it's going to look like when we get to the other side. >> Well, I think there's two issues there, one of them is how we get through this pandemic period. Until we get to, there's three things we need, we need inexpensive testing that is not done by a professional that we can do at home to see if we're safe. That's number one. Number two, we need a treatment that helps us get through this and get to the other side without dying, we need the fatality rate to even drop further. And number three we need a vaccine. So those are the three things that we need, that the world is working on all three of those, and my guess is that in the first half of 2021 we will have all three of those, we'll have all three of those and this will be a thing, basically, a thing of the past. >> Jeff: Right. >> So, but I don't think the world goes back, to exactly the way it was. People have learned they can have very effective meetings without everybody flying to Chicago, or New York, or Las Angeles, they can do it over Zoom, that doesn't mean meetings go away, but I think they're going to go down in numbers and more online things are going to happen. More people are going to be working from home at least part of the week. It's going to be different. >> Yeah. >> Those CEO's who sit in a somewhat of an ivory tower and get numbers fed to them from their financial staff, and they're not out talking to customers directly, people look at that as anecdotal information, I think it's more important than that, I think you need to see the passion behind the voice and the eyeballs of some of your best customers to understand what's going on with them, and a lot of CEO's don't actually do that. >> Right. You've made a really interesting comment in another interview that you did earlier, and you talked about the high gain questions. And one of the challenges of all CEO's is nobody wants to be the one that tells his CEO bad news, whether that be someone on your staff, whether that be some lower level person who's on the front lines and really knows there's some broken things, or whether it's a good customer as you said and kind of a social setting, how you doin', oh we love you, blah blah blah. But as a CEO you really have stressed that that is really some important hard to find, and hard to filter information up to the executive suite, so what were some of the tips and tricks you used to make sure that people either A. weren't afraid to tell you bad news, and B. that you could kind of go out and sniff it out a little bit more creatively than just kind of waiting for it to come through in the weekly reports. >> Well, obviously, you know, I think all kinds of executives get out and they talk to their customers on a regular basis, they're out and they're talking to them, the problem with those kind of discussions are no one wants to be disrespectful, people want to be nice in those meetings by and large, and you ask questions "how are we doing" "oh you guys are doing great", meanwhile the guy who tells you you're doing great is also looking at some newer technology that might replace you. (laughs) So that kind of question doesn't get you very far. So what we used to do, to be quite specific, is that we used to do a monthly luncheon where I had 12 of my mostly top executives but some people a level or two down, 12 Schwab people with 24 customers. And so they were tables of six, two of us, four customers, and we had a theme that we would talk through and the themes were always around things of, if you had to pick out three things we don't do well, what would they be? Give the customer permission to be comfortable being critical. What are the three things that you've heard about our customers, our competitors doing, that are better than us? What are the things that we need to change to make you even more delighted? You need to ask those kinds of high gain questions where there's no polite answer, the customer is permitted and given the opportunity to answer in a truthful and critical fashion. >> That's a great lesson, as you said give them permission and give them the format and the forum to say some of those things so that you get some of that information. Another great leadership principle that you shared many times, I want to dig into a little bit is kind of motivation verses inspiration. And that those are often confused, but very different concepts in the way that you lead people. I wonder if you can dig in a little bit on your philosophy on those two things. >> Sure, you know it's funny, those terms motivation and inspiration are used almost interchangeably as if they're the same thing. And they're not. Motivation is fundamental in business, and it's the exchange of behaviors for rewards. I was a psychology major in college, this was one of the things we learned about the exchange of behaviors for rewards and that's motivation. Inspiration on the other hand, is the effort to make people want to do something for, not for rewards that are tangible, but to be part of something great. We want you to be part of a movement, we want you to be part of something special, something that's going to change the world for the better and trying to get your employees to buy into this notion that we are on a mission and that mission is to make the world a somewhat better place, it doesn't mean we don't make money, of course we make money, but we're also out for more than a financial bottom line, we're out for a bottom line that's great for customers and maybe pretty great for employees as well. >> So it's interesting, cause you've seen 'em right, you've been in finance for ever, it's always about the shareholders, you've talked about the stock price a number of times in terms of a measure, but it seems more purposed led or purpose forward organizations now are more appealing to the younger generation, I think the search for a little bit more meaning in our day to day job and what that company is all about seems to have elevated over the last several years and taken a higher role in what they used to call triple line accounting, is it not only your shareholders who always are at the top of the list and have been traditionally, but your customers, your employee, and more and more your community and even the environment. Have you seen the swing towards, it's not just about shareholder value? >> Well, not on Wall Street. (laughs) I think, Wall Street is about money, and the people who go to work on Wall Street, and the way Wall Street operates, it's measured in dollars and cents and share price and profits and distributions to private equity partners and so forth, it's a numbers game and it is a profit game on Wall Street, we should be honest about that, it is what it is. >> Jeff: Sure. >> And, I have yet to see the Wall Street firm that is talking about triple bottom lines cause that just doesn't happen very much on Wall Street, it doesn't happen from my perspective, it almost doesn't happen at all. But there are other companies where they do talk about a more triple bottom line, and I think as a leader if you want to be that kind of company and you want to be that kind of leader you have to be comfortable talking about that, and not feel embarrassed by it, not feel that oh, that's too airy fairy, that's too goody two shoes. If you really believe that our goal is to have a triple bottom line, profitability, great for employees, and great for customers and the world at large, then as a leader you need to talk about that. You need to be willing to stand up and have those kinds of conversations and let yourself be challenged by perhaps the press, employees, shareholders, who think that that's not a good strategy. I believe that in many cases that's a great strategy because on a long-term basis you don't want every employee in your company, and all of your senior executives to basically be up for sale, that if a bigger job comes in with a bigger compensation, they're out the door. You're looking for loyalty, you're looking for buy in, for participation, for wanting to give every bit of themselves for the mission of the company. And as the CEO, if you want to take that path, you got to be willing to put yourself out there and talk about it and suffer the slings and arrows from those who don't believe that that's the best path for the company. >> Right, right. Well and that's another thing that you've talked about quite often, is really that the company feeds off the passion of the CEO, and the CEO has to have that passion because they're lookin', they're watchin', they're lookin' at your moves, they're lookin' at what you say, they're lookin' at your body language, they're lookin' at everything that you do. And I think within the context of these transitions and these difficult times, you have another great line that you've used a number of times, which is: "You need to have a perception of momentum." I love that line, so everyone needs to think that we're on the right path, we're not there yet, I feel it, he looks like he feels it, he looks like he's confident, so now I'm confident and I'm going to jump in and help be part of this change process. You've seen that time and time. >> Well, momentum is a tricky thing, you can have momentum and not have the perception of momentum. Because if you're doing a turn around, what often happens is in the early stages of the turn around, the numbers start to change but they're small, and you really haven't seen, it's not as steep. The turn around doesn't go steep, the turn around goes and builds slowly. And, what you need to be measuring in the beginning, are kind of the inputs and behaviors rather than the outputs, sales and profits. Those take longer. But you need to build belief, you need to build buy in, because it can take a long time before things start getting better and you don't want your best people to wonder whether this is the right move, should I be looking for another job, so, you have to build the perception of momentum even as you're building the reality of momentum. >> Right, right. So another thing we cover a lot of tech conferences, obviously, Cloud and AI, machine learning are hot things. But, you know, it always goes back to the big three. It's the technology, okay, but it's also people, and more importantly I think that gets left out is process. So, when you're thinking about, you know you're management is, and again, especially through a transition or a difficult time or some unknown and choppy waters, how do you think about those three, prioritizing those three and organizing those three between people, process and technology? >> Okay, well, you know always looking for technology that can be implemented to give you productivity, better customer service, you need to be monitoring what you're competitors are doing, and be looking out, sometimes at the bleeding edge, where you don't need to implement those kinds of changes right away, but you need to know where you want to go down the road, so you have some sense of that. As far as process goes, your processes are both a strength and a weakness because the strength of how well you run your processes today is also how hard they're going to be to change tomorrow. You know, companies are built for predictability, reliability, risk minimization, and all of your processes are built for those things. But those are also the things that are the opposite of big breakthrough changes. So you need to be thinking about, all right, are we strengthening our processes but also, if we have a change coming that's going to require a change of some of those processes, how is that going to get in our way and how are we going to get past that? >> Jeff: Right. >> I've left people for the last because to me that's the heart and soul of a successful executive. One person never gets everything done, it's all about the quality of your team. You've got to be a recruiter, you've got to be always on the look out for new talent that can help your company, and you've got to be thinking about how you're going to recruit that talent. You have to be a magnet for talent. When I sit on boards and I talk to the CEOs, I ask them, what are you doing to be a magnet for talent? What does that mean? What are you doing for great people to want to work for you? For you, and your company, what are you doing, how are you reinvesting in people, how are you putting time and energy in their professional development, in their growth? How are you getting to know them? How are you understanding their ambitions, their hopes and desires for the future? How much time and effort do you spend on that? And that's all part of having people not leave, everyone, in a way you can look at the world and think everyone is for sale. But you want people that are not for sale, that are committed to you and committed to the mission and in today's world where everything seems so fluid, I know my ideas about this probably seem very old and perhaps out of date, but I still believe in them with all my heart, that you want people that are committed to you and what we are accomplishing together. And you have to be reinforcing that with your words, and even more importantly with your actions. >> Yeah, I think it goes back to your inspiration, people are much more motivated by inspiration than just collecting a paycheck or getting a compensation back for what they're doing, which is a great segue to the last topic I wanted to cover with you, and I remember this, we had dinner, I think it was 1996 at the Wharton's Zweig Series, and you were such a phenomenal speaker, and I remember asking you the question and I remember your answer, and I've repeated it ad nauseam for the last 20 years. I said, "David, you're such a great speaker, why, how?" And you were so matter of fact in that you just said "hey, it's an important part of my job, I treat it as a skill, I hired a coach, I practiced like I would do any other skill", and why that's such a powerful story is you clearly are in a position of power, you could clearly have a crazy ego that got in the way of such a matter of fact accomplishment of these tasks and all the PR people I talk to and they hear this story "oh my gosh, we got to get him talking to my executives" because so many people let ego get in the way of what is really an important task for a CEO and a leader which is communication and you recognize that early on and really went after it to make sure that you were very good at this very important task. >> Well, what happened to me, I got lucky, I got lucky. When I got promoted to be the CEO of Schwab, I knew I was going to have to do a lot more public speaking and I already thought I was pretty good at being a public speaker, but I thought I needed to fine tune my messaging, I needed to get it better. So, I looked around and I got some referrals and I hired a guy that I thought was going to be a speech writer for me, that would help craft the message. And, we had our first meeting, and we're talking about an upcoming speech and he says to me things like, "Well, Dave, I want to know more about your life. Tell me how you grew up, tell me what you're proudest moments were, I want to learn about you." And I said to him, "Terry, I'm not looking for a biographer, I want a speech writer, I need a guy that can help me craft my message." And he said, "Well, Dave, that's not how I do things. I need to know who you are, I need to know what your passions are and where they come from so that we can give a message that has more than just words it has meaning, it has your passion built into it, that's what we need to do." And that's what Terry taught me, was that it's not just the words, it's also the passion, energy, and meaning and connection behind the words. And I want to mention one other thing that I think is very important. When people talk about being really good communicators, they often talk about speaking. They don't focus on listening. And listening is a tremendously important skill. So for example, you give a speech, you're the CEO or Senior Executive, you give a speech, do you stay there and do you do a Q+A session? The Q+A session can even be more important than the speech sometimes, because all the employees know that the speech is something that was pre-arranged, it's not on the cuff, it's something that's been thought about and prepared. But the questions and answers are authentic and in the moment. People are clamoring for authentic leadership. That Q+A session, where you're listening for the question and maybe the question behind the question. So you're not just trying to get through them as fast as you can, but you're trying to really answer and listen for the question and the question behind the question. And then answer those from the heart with passion, and that's how you will score the most points with your audience. >> That's great. And then who knows what comes from it, in getting ready for this I came across your blog post talking about Gopi Kallayil a mutual friend at Wharton who reached out to you after that same dinner, and you were happy enough, or you were kind enough to respond and grow a friendship and a relationship that again is lasted for decades. So that's such an important message to listen, as somebody said right, "God gave you two ears and one mouth should try to use them in that ratio." (laughs) Well David, thank you so much for taking some time, again I think these are really trying times in leadership, I think it's really an opportunity for great leaders to shine and those that don't there's really no place to hide. So I really appreciate you sharing your insight and taking a few minutes with us. >> Thanks, Jeff, I hope all the people that follow you and listen to your broadcasts learn something today and come away with some benefit from this time we've spent together. >> Undoubtedly, undoubtedly. Well, thanks again. All right, he's Dave Pottruck, I'm Jeff Frick, you're watching theCUBE, thanks for watching and we'll see you next time. (upbeat music)

>> Announcer: From the Cube Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is The Cube Conversation. >> Everyone welcome to this special live stream here in The Cube Studios. I'm John Furrier, your host. We've got a great panel discussion here for one hour, sponsored by Lumina PR, not sponsored but organized by Lumina PR. An authentic conversation around professionals in the news media, and communication professionals, how they can work together. As we know, pitching stories to national media takes place in the backdrop in today's market, which is on full display. The Coronavirus, racial unrest in our country and a lot of new tech challenges from companies, their role in society with their technology and of course, an election all make for important stories to be developed and reported. And we got a great panel here and the purpose is to bridge the two worlds. People trying to get news out for their companies in a way that's relevant and important for audiences. I've got a great panelists here, Gerard Baker Editor at Large with the Wall Street Journal, Eric Savitz, Associate Editor with Barron's and Brenna Goth who's a Southwest Staff Correspondent with Bloomberg Publications. Thanks for joining me today, guys, appreciate it. >> Thank you. >> So we're going to break this down, we got about an hour, we're going to probably do about 40 minutes. I'd love to get your thoughts in this power panel. And you guys are on the front lines decades of experience, seeing these waves of media evolve. And now more than ever, you can't believe what's happening. You're seeing the funding of journalism really challenging at an all time high. You have stories that are super important to audiences and society really changing and we need this more than ever to have more important stories to be told. So this is really a challenge. And so I want to get your thoughts on this first segment. The challenge is around collecting the data, doing the analysis, getting the stories out, prioritizing stories in this time. So I'd love to get your thoughts. We'll start with you, Brenna, what's your thoughts on this as you're out there in Arizona. Coronavirus on the worst is one of the states there. What are your challenges? >> I would say for me, one of the challenges of the past couple months is just the the sheer influx of different types of stories we've had and the amount of news coming out. So I think one of the challenging things is a lot of times we'll get into a bit of a routine covering one story. So early on maybe the Coronavirus, and then something else will come up. So I personally have been covering some of the Coronavirus news here in Arizona and in the Southwest, as well as some of the protests we've seen with the Black Lives Matter movement. And prioritizing that is pretty difficult. And so one thing that I I've been doing is I've noticed that a lot of my routine projects or things I've been working on earlier in the year are off the table, and I'll get back to them when I have time. But for now, I feel like I'm a little bit more on breaking news almost every day in a way that I wasn't before. >> Gerard, I want to get your thoughts on this. Wall Street Journal has been since I could remember when the web hit the scene early on very digital savvy. Reporting, it's obviously, awesome as well. As you have people in sheltering in place, both journalists and the people themselves and the companies, there's an important part of the digital component. How do you see that as an opportunity and a challenge at the same time because you want to get data out there, you want to be collecting and reporting those stories? How do you see that opportunity, given the challenge that people can't meet face to face? >> First of all, thank you very much for having me. I think as we've all discovered in all fields of endeavor in the last three months, it's been quite a revelation, how much we can do without using without access to the traditional office environment. I think one of the things that Coronavirus, this crisis will have done we all agree I think is that it will have fundamentally changed the way people work. There'll be a lot more people quite a bit more working from home. They'll be a lot more remote working. Generally, there'll be a lot less travel. So on the one hand, it's been eye opening. actually how relatively easy, I use that word carefully. But how we've managed, and I think it's true of all news organizations, how we've managed surprisingly well, I think, without actually being at work. At the Wall Street Journal, we have a big office, obviously in midtown Manhattan, as well as dozens of bureaus around the world. Nobody has really been in that office since the middle of March. And yet we've put out a complete Wall Street Journal product, everything from the print edition, obviously, through every aspect of digital media, the website, all of the apps, video, everything, audio, podcasts. We've been able to do pretty well everything that we could do when we were all working in the office. So I think that will be an important lesson and that will clearly induce some change, some long term changes, I think about the way we work. That said, I'd point to two particular challenges that I think we have not properly overcome. Or if you like that we have, the two impediments, that the crisis has produced for us. One is, as you said, the absence of face to face activity, the hive process, which I think is really important. I think that a lot of the best ideas, a lot of the best, the best stories are developed through conversations between people in an office which don't necessarily we can't necessarily replicate through the online experience through this kind of event or through the Zoom meetings that we've all been doing. I think that has inhibited to some extent, some of the more creative activity that we could have done. I think the second larger problem which we all must face with this is that being essentially locked up in our homes for more than three months, which most of us has been I think accentuates a problem that is already that has been a problem in journalism for a long time, which is that journalists tend to cluster in the major metropolitan areas. I think, a couple of years ago, I read a study which said, I think that more than three quarters of journalists work for major news organizations, print, digital TV, radio, whatever, live and work in one of four major metropolises in the US. That's the New York area, the Washington DC area, the San Francisco area and the LA area. And that tends to create a very narrow worldview, unfortunately, because not enough people either come from those areas, but from outside those areas or spend enough time talking to people from outside those areas. And I think the Coronavirus has accentuated that. And I think in terms of coverage, I'm here in New York. I've been in New York continuously for three and a half months now which is quite unusual, I usually travel a lot. And so my reporting, I write columns now, mainly, but obviously I talk to people too. But the reporting, the editing that we're doing here is inevitably influenced by the experience that we've had in New York, which has obviously been, frankly, devastating. New York has been devastated by Coronavirus in a way that no where else in the country has. And I think to some extent, that does, perhaps have undue influence on the coverage. We're all locked up. We're all mindful of our own health. We're all mindful of people that we know who've gone to hospital or have been very, very sick or where we are, we are heavily influenced by our own immediate environment. And I think that has been a problem if we had been, imagine if the journalists in the country, instead of being clustered in New York and LA and San Francisco had been sort of spread over Texas and Missouri and Florida, things like that. I think you'd have a very different overall accounting of this story over the last three months. So I think it's just, it's accentuated that phenomenon in journalism, which I think we're mindful of, and which we all need to do a better job of addressing. >> It's really interesting. And I want to come back to that point around, who you're collaborating with to get this, now we have virtual ground truth, I guess, how you collaborate. But decision making around stories is, you need an open mind. And if you have this, I guess, I'll call it groupthink or clustering is interesting, now we have digital and we have virtual, it opens up the aperture but we still have the groupthink. But I want to get Eric's take first on his work environment, 'cause I know you've lived on both sides of New York and San Francisco area, as well as you've worked out in the field for agencies, as well on the other side, on the storytelling side. How has this current news environment, journalism environment impacted your view and challenges and your opportunities that you're going after the news? >> Well, so there's there's a few elements here. So one, Barron's Of course, covers the world, looks at the world through a financial lens. We cover the stock market every day. The stock market is not the center of story, but it is an important element of what's been unfolding over the last few months and the markets have been incredibly volatile, we change the way that we approach the markets. Because everything, the big stories are macro stories, huge swings in stock prices, huge swings in the price of oil, dramatic moves in almost every financial security that you can imagine. And so there's a little bit of a struggle for us as we try and shift our daily coverage to be a little more focused on the macro stories as we're still trying to tell what's happening with individual stocks and companies, but these bigger stories have changed our approach. So even if you look at say the covers of our magazine over the last few months, typically, we would do a cover on a company or an investor, that sort of thing. And now they're all big, thematic stories, because the world has changed. And world is changing how it looks at the financial markets. I think one thing that that Gerard touched on is the inability to really leave your house. I'm sitting in my little home office here, where I've been working since March, and my inability to get out and talk to people in person to have some, some interface with the companies and people that I cover, makes it tougher. You get story ideas from those interactions. I think Gerard said some of it comes from your interactions with your colleagues. But some of that also just comes from your ability to interact with sources and that is really tougher to do. It's more formalistic if you do it online. It's just not the same to be on a Zoom call as to be sitting in a Starbucks with somebody and talking about what's going on. I think the other elements of this is that there's, we have a lot of attempts, trying new things trying to reach our readers. We'll do video sessions, we'll do all sorts of other things. And it's one more layer on top of everything else is that there's a lot of demands on the time for the people who are working in journalism right now. I would say one other thing I'll touch on, John, which is, you mentioned, I did use, I worked for public communications for a while, and I do feel their pain because the ability to do any normal PR pitching for new products, new services, the kinds of things that PR people do every day is really tough. It's just really hard to get anybody's attention for those things right now. And the world is focused on these very large problems. >> Well, we'll unpack the PR comms opportunities in the next section. But I want to to just come back to this topic teased out from Gerard and Brenna when you guys were getting out as well. This virtual ground truth, ultimately, at the end of the day, you got to get the stories, you got to report them, they got to be distributed. Obviously, the Wall Street Journal is operating well, by the way, I love the Q&A video chats and what they got going on over there. So the format's are evolving and doing a good job, people are running their business. But as journalists and reporters out there, you got to get the truth and the ground truth comes from interaction. So as you have an aperture with digital, there's also groupthink on, say, Twitter and these channels. So getting in touch with the audience to have those stories. How are you collecting the data? How are you reporting? Has anything changed or shifted that you can point to because ultimately, it's virtual. You still got to get the ground truth, you still got to get the stories. Any thoughts on this point? >> I think in a way what we're seeing is in writ large actually is a problem again, another problem that I think digital journalism or the digital product digital content, if you like, actually presents for us today, which is that it's often said, I think rightly, that one of the, as successful as a lot of digital journalism has been and thank you for what you said about the Wall Street Journal. And we have done a tremendous job and by the way, one of the things that's been a striking feature of this crisis has been the rapid growth in subscriptions that we've had at the Journal. I know other news organizations have too. But we've benefited particularly from a hunger for the quality news. And we've put on an enormous number subscriptions in the last three months. So we've been very fortunate in that respect. But one of the challenges that people always say, one of the one of the drawbacks that people always draw attention to about digital content is that there's a lack of, for want of a better words, serendipity about the experience. When you used to read a newspaper, print newspapers, when may be some of us are old enough to remember, we'd get a newspaper, we'd open it up, we'd look at the front page, we look inside, we'd look at what other sections they were. And we would find things, very large number of things that we weren't particularly, we weren't looking for, we weren't expecting to, we're looking for a story about such. With the digital experience, as we know, that's a much it's a much less serendipitous experience. So you tend to a lot of search, you're looking, you find things that you tend to be looking for, and you find fewer things that, you follow particular people on social media that you have a particular interest in, you follow particular topics and have RSS feeds or whatever else you're doing. And you follow things that, you tend to find things that you were looking for. You don't find many things you weren't. What I think that the virus, the being locked up at home, again, has had a similar effect. That we, again, some of the best stories that I think anybody comes across in life, but news organizations are able to do are those stories that you know that you come across when you might have been looking for something else. You might have been working on a story about a particular company with a particular view to doing one thing and you came across somebody else. And he or she may have told you something actually really quite different and quite interesting and it took you in a different direction. That is easier to do when you're talking to people face to face, when you're actually there, when you're calling, when you're tasked with looking at a topic in the realm. When you are again, sitting at home with your phone on your computer, you tend to be more narrowly so you tend to sort of operate in lanes. And I think that we haven't had the breadth probably of journalism that I think you would get. So that's a very important you talk about data. The data that we have is obviously, we've got access broadly to the same data that we would have, the same electronically delivered data that we would have if we'd been sitting in our office. The data that I think in some ways is more interesting is the non electronically delivered data that is again, the casual conversation, the observation that you might get from being in a particular place or being with someone. The stimuli that arise from being physically in a place that you just aren't getting. And I think that is an important driver of a lot of stories. And we're missing that. >> Well, Gerard, I just want to ask real quick before I go to Brenna on her her take on this. You mentioned the serendipity and taking the stories in certain directions from the interactions. But also there's trust involved. As you build that relationship, there's trust between the parties, and that takes you down that road. How do you develop trust as you are online now? Is there a methodology or technique? Because you want to get the stories out fast, it's a speed game. But there's also the development side of it where a trust equation needs to build. What's your thoughts on that piece? Because that's where the real deeper stories come from. >> So I wasn't sure if you're asking me or Gerard. >> Gerard if he wants can answer that is the trust piece. >> I'll let the others speak to that too. Yeah, it is probably harder to... Again, most probably most people, most stories, most investigative stories, most scoops, most exclusives tend to come from people you already trust, right? So you've developed a trust with them, and they've developed a trust with you. Perhaps more importantly, they know you're going to treat the story fairly and properly. And that tends to develop over time. And I don't think that's been particularly impaired by this process. You don't need to have a physical proximity with someone in order to be able to develop that trust. My sources, I generally speak to them on the phone 99% of the time anyway, and you can still do that from home. So I don't think that's quite... Obviously, again, there are many more benefits from being able to actually physically interact with someone. But I think the level of, trust takes a long time to develop, let's be honest, too, as well. And I think you develop that trust both by developing good sources. and again, as I said, with the sources understanding that you're going to do the story well. >> Brenna, speed game is out there, you got to get stories fast. How do you balance speed and getting the stories and doing some digging into it? What's your thoughts on all this? >> I would say, every week is looking different for me these days. A lot of times there are government announcements coming out, or there are numbers coming out or something that really does require a really quick story. And so what I've been trying to do is get those stories out as quick as possible with maybe sources I already have, or really just the facts on the ground I can get quickly. And then I think in these days, too, there is a ton of room for following up on things. And some news event will come out but it sparks another idea. And that's the time to that when I'm hearing from PR people or I'm hearing from people who care about the issue, right after that first event is really useful for me to hear who else is thinking about these things and maybe ways I can go beyond the first story for something that more in depth and adds more context and provides more value to our readers. >> Awesome. Well, guys, great commentary and insight there on the current situation. The next section is with the role of PR, because it's changing. I've heard the term earned media is a term that's been kicked around. Now we're all virtual, and we're all connected. The media is all virtual. It's all earned at this point. And that's not just a journalistic thing, there's storytelling. There's new voices emerging. You got these newsletter services, audiences are moving very quickly around trying to figure out what's real. So comms folks are trying to get out there and do their job and tell a story. And sometimes that story doesn't meet the cadence of say, news and/or reporting. So let's talk about that. Eric, you brought this up. You have been on both sides. You said you feel for the folks out there who are trying to do their job. How is the job changing? And what can they do now? >> The news cycle is so ferocious at the moment that it's very difficult to insert your weigh in on something that doesn't touch on the virus or the economy or social unrest or the volatility of the financial markets. So I think there's certain kinds of things that are probably best saved for another moment in time, If you're trying to launch new products or trying to announce new services, or those things are just tougher to do right now. I think that the most interesting questions right now are, If I'm a comms person, how can I make myself and my clients a resource to media who are trying to tell stories about these things, do it in a timely way, not overreach, not try insert myself into a story that really isn't a good fit? Now, every time one of these things happen, we got inboxes full of pitches for things that are only tangentially relevant and are probably not really that helpful, either to the reporter generally or to the client of the firm that is trying to pitch an idea. But I will say on the on this at the same time that I rely on my connections to people in corporate comms every single day to make connections with companies that I cover and need to talk to. And it's a moment when almost more than ever, I need immediacy of response, accurate information access to the right people at the companies who I'm trying to cover. But it does mean you need to be I think sharper or a little more pointed a little more your thinking about why am I pitching this person this story? Because the there's no time to waste. We are working 24 hours a day is what it feels like. You don't want to be wasting people's time. >> Well, you guys you guys represent big brands in media which is phenomenal. And anyone would love to have their company mentioned obviously, in a good way, that's their goal. But the word media relations means you relate to the media. If there's no media to relate to, the roles change, and there's not enough seats at the table, so to speak. So getting a clip on in the clip book that gets sent to management, look, "We're on Bloomberg." "Great, check." But is at it? So people, this is a department that needs to do more. Is there things that they can do, that isn't just chasing, getting on your franchises stories? Because it obviously would be great if we were all on Barron's Wall Street Journal, and Bloomberg, but they can't always get that. They still got to do more. They got to develop the relationships. >> John, one thing I would be conscious of here is that many of our publications, it's certainly true for journalists, true for us at Barron's and it's certainly true for Bloomberg. We're all multimedia publishers. We're doing lots of things. Barron's has television show on Fox. We have a video series. We have podcasts and newsletters, and daily live audio chats and all sorts of other stuff in addition to the magazine and the website. And so part of that is trying to figure out not just the right publication, but maybe there's an opportunity to do a very particular, maybe you'd be great fit for this thing, but not that thing. And having a real understanding of what are the moving parts. And then the other part, which is always the hardest part, in a way, is truly understanding not just I want to pitch to Bloomberg, but who do I want to pitch at Bloomberg. So I might have a great story for the Wall Street Journal and maybe Gerard would care but maybe it's really somebody you heard on the street who cares or somebody who's covering a particular company. So you have to navigate that, I think effectively. And even, more so now, because we're not sitting in a newsroom. I can't go yell over to somebody who's a few desks away and suggest they take a look at something. >> Do you think that the comm-- (talk over each other) Do you think the comms teams are savvy and literate in multimedia? Are they still stuck in the print ways or the group swing is they're used to what they're doing and haven't evolved? Is that something that you're seeing here? >> I think it varies. Some people will really get it. I think one of the things that that this comes back to in a sense is it's relationship driven. To Gerard's point, it's not so much about trusting people that I don't know, it's about I've been at this a long time, I know what people I know, who I trust, and they know the things I'm interested in and so that relationship is really important. It's a lot harder to try that with somebody new. And the other thing is, I think relevant here is something that we touched on earlier, which is the idiosyncratic element. The ability for me to go out and see new things is tougher. In the technology business, you could spend half your time just going to events, You could go to the conferences and trade shows and dinners and lunches and coffees all day long. And you would get a lot of good story ideas that way. And now you can't do any of that. >> There's no digital hallway. There are out there. It's called Twitter, I guess or-- >> Well, you're doing it from sitting in this very I'm still doing it from sitting in the same chair, having conversations, in some ways like that. But it's not nearly the same. >> Gerard, Brenna, what do you guys think about the comms opportunity, challenges, either whether it's directly or indirectly, things that they could do differently? Share your thoughts. Gerard, we'll start with you? >> Well, I would echo Eric's point as far as knowing who you're pitching to. And I would say that in, at least for the people I'm working with, some of our beats have changed because there are new issues to cover. Someone's taking more of a role covering virus coverage, someone's taking more of a role covering protests. And so I think knowing instead of casting a really wide net, I'm normally happy to try to direct pitches in the right direction. But I do have less time to do that now. So I think if someone can come to me and say, "I know you've been covering this, "this is how my content fits in with that." It'd grab my attention more and makes it easier for me. So I would say that that is one thing that as beats are shifting and people are taking on a little bit of new roles in our coverage, that that's something PR and marketing teams could definitely keep an eye on. >> I agree with all of that. And all everything everybody said. I'd say two very quick things. One, exactly as everybody said, really know who you are pitching to. It's partly just, it's going to be much more effective if you're pitching to the right person, the right story. But when I say that also make the extra effort to familiarize yourself with the work that that reporter or that editor has done. You cannot, I'm sorry to say, overestimate the vanity of reporters or editors or anybody. And so if you're pitching a story to a particular reporter, in a field, make sure you're familiar with what that person may have done and say to her, "I really thought you did a great job "on the reporting that you did on this." Or, "I read your really interesting piece about that," or "I listened to your podcast." It's a relatively easy thing to do that yields extraordinarily well. A, because it appeals to anybody's fantasy and we all have a little bit of that. But, B, it also suggests to the reporter or the editor or the person involved the PR person communications person pitching them, really knows this, has really done their work and has really actually takes this seriously. And instead of just calling, the number of emails I get, and I'm sure it's the same for the others too, or occasional calls out of the blue or LinkedIn messages. >> I love your work. I love your work. >> (voice cuts out) was technology. Well, I have a technology story for you. It's absolutely valueless. So that's the first thing, I would really emphasize that. The second thing I'd say is, especially on the specific relation to this crisis, this Coronavirus issue is it's a tricky balance to get right. On the one hand, make sure that what you're doing what you're pitching is not completely irrelevant right now. The last three months has not been a very good time to pitch a story about going out with a bunch of people to a crowded restaurant or whatever or something like that to do something. Clearly, we know that. At the same time, don't go to the other extreme and try and make every little thing you have seen every story you may have every product or service or idea that you're pitching don't make it the thing that suddenly is really important because of Coronavirus. I've seen too many of those too. People trying too hard to say, "In this time of crisis, "in this challenging time, what people really want to hear "about is "I don't know, "some new diaper "baby's diaper product that I'm developing or whatever." That's trying too hard. So there is something in the middle, which is, don't pitch the obviously irrelevant story that is just not going to get any attention through this process. >> So you're saying don't-- >> And at the same time, don't go too far in the other direction. And essentially, underestimate the reporter's intelligence 'cause that reporter can tell you, "I can see that you're trying too hard." >> So no shotgun approach, obviously, "Hey, I love your work." Okay, yeah. And then be sensitive to what you're working on not try to force an angle on you, if you're doing a story. Eric, I want to get your thoughts on the evolution of some of the prominent journalists that I've known and/or communication professionals that are taking roles in the big companies to be storytellers, or editors of large companies. I interviewed Andy Cunningham last year, who used to be With Cunningham Communications, and formerly of Apple, better in the tech space and NPR. She said, "Companies have to own their own story "and tell it and put it out there." I've seen journalists say on Facebook, "I'm working on a story of x." And then crowdsource a little inbound. Thoughts on this new role of corporations telling their own story, going direct to the consumers. >> I think to a certain extent, that's valuable. And in some ways, it's a little overrated. There are a lot of companies creating content on their websites, or they're creating their own podcasts or they're creating their own newsletter and those kinds of things. I'm not quite sure how much of that, what the consumption level is for some of those things. I think, to me, the more valuable element of telling your story is less about the form and function and it's more about being able to really tell people, explain to them why what they do matters and to whom it matters, understanding the audience that's going to want to hear your story. There are, to your point, there are quite a few journalists who have migrated to either corporate communications or being in house storytellers of one kind or another for large businesses. And there's certainly a need to figure out the right way to tell your story. I think in a funny way, this is a tougher moment for those things. Because the world is being driven by external events, by these huge global forces are what we're all focused on right now. And it makes it a lot tougher to try and steer your own story at this particular moment in time. And I think you do see it Gerard was talking about don't try and... You want to know what other people are doing. You do want to be aware of what others are writing about. But there's this tendency to want to say, "I saw you wrote a story about Peloton "and we too have a exercise story that you can, "something that's similar." >> (chuckles) A story similar to it. We have a dance video or something. People are trying to glam on to things and taking a few steps too far. But in terms of your original question, it's just tougher at the moment to control your story in that particular fashion, I think. >> Well, this brings up a good point. I want to get to Gerard's take on this because the Wall Street Journal obviously has been around for many, many decades. and it's institution in journalism. In the old days, if you weren't relevant enough to make the news, if you weren't the most important story that people cared about, the editors make that choice and you're on the front page or in a story editorially. And companies would say, "No, but I should be in there." And you'd say, "That's what advertising is for." And that's the way it seemed to work in the past. If you weren't relevant in the spirit of the decision making of important story or it needs to be communicated to the audience, there's ads for that. You can get a full page ad in the old days. Now with the new world, what's an ad, what's a story? You now have multiple omni-channels out there. So traditionally, you want to get the best, most important story that's about relevance. So companies might not have a relevant story and they're telling a boring story. There's no there, there, or they miss the story. How do you see this? 'Cause this is the blend, this is the gray area that I see. It's certainly a good story, depending on who you're talking to, the 10 people who like it. >> I think there's no question. We're in the news business, topicality matters. You're going to have a much better chance of getting your story, getting your product or service, whatever covered by the Wall Street Journal, Barron's or anywhere else for that matter, if it seems somehow news related, whether it's the virus or the unrest that we've been seeing, or it's to do with the economy. Clearly, you can have an effect. Newspapers, news organizations of all the three news organizations we represent don't just, are not just obviously completely obsessed with what happened this morning and what's going on right now. We are all digging into deeper stories, especially in the business field. Part of what we all do is actually try to get beyond the daily headlines. And so what's happening with the fortunes of a particular company. Obviously, they may be impacted by they're going to be impacted by the lockdown and Coronavirus. But they actually were doing some interesting things that they were developing over the long term, and we would like to look into that too. So again, there is a balance there. And I'm not going to pretend that if you have a really topical story about some new medical device or some new technology for dealing with this new world that we're all operating in, you're probably going to get more attention than you would if you don't have that. But I wouldn't also underestimate, the other thing is, as well as topicality, everybody's looking at the same time to be different, and every journalist wants to do something original and exclusive. And so they are looking for a good story that may be completely unrelated. In fact, I would also underestimate, I wouldn't underestimate either the desire of readers and viewers and listeners to actually have some deeper reported stories on subjects that are not directly in the news right now. So again, it's about striking the balance right. But I wouldn't say that, that there is not at all, I wouldn't say there is not a strong role for interesting stories that may not have anything to do what's going on with the news right now. >> Brenna, you want to add on your thoughts, you're in the front lines as well, Bloomberg, everyone wants to be on Bloomberg. There's Bloomberg radio. You guys got tons of media too, there's tons of stuff to do. How do they navigate? And how do you view the interactions with comms folks? >> It looks we're having a little bit of challenge with... Eric, your thoughts on comm professionals. The questions in the chats are everything's so fast paced, do you think it's less likely for reporters to respond to PR comms people who don't have interacted with you before? Or with people you haven't met before? >> It's an internal problem. I've seen data that talks about the ratio of comms people to reporters, and it's, I don't know, six or seven to one or something like that, and there are days when it feels like it's 70 to one. And so it is challenging to break through. And I think it's particularly challenging now because some of the tools you might have had, you might have said, "Can we grab coffee one day or something like that," trying to find ways to get in front of that person when you don't need them. It's a relationship business. I know this is a frustrating answer, but I think it's the right answer which is those relationships between media and comms people are most successful when they've been established over time. And so you're not getting... The spray and pray strategy doesn't really work. It's about, "Eric, I have a story that's perfect for you. "And here's why I think you you should talk to this guy." And if they really know me, there's a reasonable chance that I'll not only listen to them, but I'll at least take the call. You need to have that high degree of targeting. It is really hard to break through and people try everything. They try, the insincere version of the, "I read your story, it was great. "but here's another great story." Which maybe they read your story, maybe they didn't at least it was an attempt. Or, "if you like this company, you'll love that one." People try all these tricks to try and get get to you. I think the highest level of highest probability of success comes from the more information you have about not just what I covered yesterday, but what do I cover over time? What kinds of stories am I writing? What kinds of stories does the publication write? And also to keep the pitching tight, I was big believer when I was doing comms, you should be able to pitch stories in two sentences. And you'll know from that whether there's going to be connection or not, don't send me five or more pitches. Time is of the essence, keep it short and as targeted as possible. >> That's a good answer to Paul Bernardo's question in the chat, which is how do you do the pitch. Brenna, you're back. Can you hear us? No. Okay. We'll get back to her when she gets logged back in. Gerard, your thoughts on how to reach you. I've never met you before, if I'm a CEO or I'm a comms person, a company never heard of, how do I get your attention? If I can't have a coffee with you with COVID, how do I connect with you virtually? (talk over each other) >> Exactly as Eric said, it is about targeting, it's really about making sure you are. And again, it's, I hate to say this, but it's not that hard. If you are the comms person for a large or medium sized company or even a small company, and you've got a particular pitch you want to make, you're probably dealing in a particular field, a particular sector, business sector or whatever. Let's say it says not technology for change, let's say it's fast moving consumer goods or something like that. Bloomberg, Brenna is in an enormous organization with a huge number of journalist you deal and a great deal of specialism and quality with all kinds of sectors. The Wall Street Journal is a very large organization, we have 13, 1400 reporters, 13 to 1400 hundred journalist and staff, I should say. Barron's is a very large organization with especially a particularly strong field coverage, especially in certain sectors of business and finance. It's not that hard to find out A, who is the right person, actually the right person in those organizations who's been dealing with the story that you're trying to sell. Secondly, it's absolutely not hard to find out what they have written or broadcast or produced on in that general field in the course of the last, and again, as Eric says, going back not just over the last week or two, but over the last year or two, you can get a sense of their specialism and understand them. It's really not that hard. It's the work of an hour to go back and see who the right person is and to find out what they've done. And then to tailor the pitch that you're making to that person. And again, I say that partly, it's not purely about the vanity of the reporter, it's that the reporter will just be much more favorably inclined to deal with someone who clearly knows, frankly, not just what they're pitching, but what the journalist is doing and what he or she, in his or her daily activity is actually doing. Target it as narrowly as you can. And again, I would just echo what Eric and I think what Brenna was also saying earlier too that I'm really genuinely surprised at how many very broad pitches, again, I'm not directly in a relative role now. But I was the editor in chief of the Journal for almost six years. And even in that position, the number of extraordinarily broad pitches I get from people who clearly didn't really know who I was, who didn't know what I did, and in some cases, didn't even really know what Wall Street Journal was. If you can find that, if you actually believe that. It's not hard. It's not that hard to do that. And you will have so much more success, if you are identifying the organization, the people, the types of stories that they're interested in, it really is not that difficult to do. >> Okay, I really appreciate, first of all, great insight there. I want to get some questions from the crowd so if you're going to chat, there was a little bit of a chat hiccup in there. So it should be fixed. We're going to go to the chat for some questions for this distinguished panel. Talk about the new coffee. There's a good question here. Have you noticed news fatigue, or reader seeking out news other than COVID? If so, what news stories have you been seeing trending? In other words, are people sick and tired of COVID? Or is it still on the front pages? Is that relevant? And if not COVID, what stories are important, do you think? >> Well, I could take a brief stab at that. I think it's not just COVID per se, for us, the volatility of the stock market, the uncertainties in the current economic environment, the impact on on joblessness, these massive shifts of perceptions on urban lifestyles. There's a million elements of this that go beyond the core, what's happening with the virus story. I do think as a whole, all those things, and then you combine that with the social unrest and Black Lives Matter. And then on top of that, the pending election in the fall. There's just not a lot of room left for other stuff. And I think I would look at it a little bit differently. It's not finding stories that don't talk on those things, it's finding ways for coverage of other things whether it's entertainment. Obviously, there's a huge impact on the entertainment business. There's a huge impact on sports. There's obviously a huge impact on travel and retail and restaurants and even things like religious life and schooling. I have the done parents of a college, was about to be a college sophomore, prays every day that she can go back to school in the fall. There are lots of elements to this. And it's pretty hard to imagine I would say to Gerard's point earlier, people are looking for good stories, they're always looking for good stories on any, but trying to find topics that don't touch on any of these big trends, there's not a lot of reasons to look for those. >> I agree. Let me just give you an example. I think Eric's exactly right. It's hard to break through. I'll just give you an example, when you asked that question, I just went straight to my Wall Street Journal app on my phone. And of course, like every organization, you can look at stories by sections and by interest and by topic and by popularity. And what are the three most popular stories right now on the Wall Street Journal app? I can tell you the first one is how exactly do you catch COVID-19? I think that's been around since for about a month. The second story is cases accelerate across the United States. And the third story is New York, New Jersey and Connecticut, tell travelers from areas with virus rates to self isolate. So look, I think anecdotally, there is a sense of COVID fatigue. Well, we're all slightly tired of it. And certainly, we were probably all getting tired, or rather distressed by those terrible cases and when we've seen them really accelerate back in March and April and these awful stories of people getting sick and dying. I was COVID fatigued. But I just have to say all of the evidence we have from our data, in terms of as I said earlier, the interest in the story, the demand for what we're doing, the growth in subscriptions that we've had, and just as I said, little things like that, that I can point you at any one time, I can guarantee you that our among our top 10 most read stories, at least half of them will be COVID-19. >> I think it's safe to say general interest in that outcome of progression of that is super critical. And I think this brings up the tech angle, which we can get into a minute. But just stick with some of these questions I just want to just keep these questions flowing while we have a couple more minutes left here. In these very challenging times for journalism, do byline articles have more power to grab the editors attention in the pitching process? >> Well, I think I assume what the questioner is asking when he said byline articles is contributed. >> Yes. >> Contributed content. Barron's doesn't run a lot of contributing content that way in a very limited way. When I worked at Forbes, we used to run tons of it. I'm not a big believer that that's necessarily a great way to generate a lot of attention. You might get published in some publication, if you can get yourself onto the op ed page of The Wall Street Journal or The New York Times, more power to you. But I think in most cases-- >> It's the exception not the rule Exception not the rule so to speak, on the big one. >> Yeah. >> Well, this brings up the whole point about certainly on SiliconANGLE, our property, where I'm co founder and chief, we basically debate over and get so many pitches, "hey, I want to write for you, here's a contributed article." And it's essentially an advertisement. Come on, really, it's not really relevant. In some case we (talk over each other) analysts come in and and done that. But this brings up the question, we're seeing these newsletters like sub stack and these services really are funding direct journalism. So it's an interesting. if you're good enough to write Gerard, what's your take on this, you've seen this, you have a bit of experience in this. >> I think, fundamental problem here is that is people like the idea of doing by lines or contributed content, but often don't have enough to say. You can't just do, turn your marketing brochure into a piece of an 800 word with the content that that's going to be compelling or really attract any attention. I think there's a place for it, if you truly have something important to say, and if you really have something new to say, and it's not thinly disguised marketing material. Yeah, you can find a way to do that. I'm not sure I would over-rotate on that as an approach. >> No, I just briefly, again, I completely agree. At the Journal we just don't ever publish those pieces. As Eric says, you're always, everyone is always welcome to try and pitch to the op ed pages of the Journal. They're not generally going to I don't answer for them, I don't make those decisions. But I've never seen a marketing pitch run as an op ed effectively. I just think you have to know again, who you're aiming at. I'm sure it's true for Bloomberg, Barron's and the Journal, most other major news organizations are not really going to consider that. There might be organizations, there might be magazines, digital and print magazines. There might be certain trade publications that would consider that. Again, at the Journal and I'm sure most of the large news organizations, we have very strict rules about what we can publish. And how and who can get published. And it's essentially journal editorials, that journal news staff who can publish stories we don't really take byline, outside contribution. >> Given that your time is so valuable, guys, what's the biggest, best practice to get your attention? Eric, you mentioned keeping things tight and crisp. Are there certain techniques to get your attention? >> Well I'll mention just a couple of quick things. Email is better than most other channels, despite the volume. Patience is required as a result because of the volume. People do try and crawl over the transom, hit you up on LinkedIn, DM you on Twitter, there's a lot of things that people try and do. I think a very tightly crafted, highly personalized email with the right subject line is probably still the most effective way, unless it's somebody you actually, there are people who know me who know they have the right to pick up the phone and call me if they really think they have... That's a relationship that's built over time. The one thing on this I would add which I think came up a little bit before thinking about it is, you have to engage in retail PR, not not wholesale PR. The idea that you're going to spam a list of 100 people and think that that's really going to be a successful approach, it's not unless you're just making an announcement, and if you're issuing your earnings release, or you've announced a large acquisition or those things, fine, then I need to get the information. But simply sending around a very wide list is not a good strategy, in most cases, I would say probably for anyone. >> We got Brenna back, can you hear me? She's back, okay. >> I can hear you, I'm back. >> Well, let's go back to you, we missed you. Thanks for coming back in. We had a glitch on our end but appreciate it, bandwidth internet is for... Virtual is always a challenge to do live, but thank you. The trend we're just going through is how do I pitch to you? What's the best practice? How do I get your attention? Do bylines lines work? Actually, Bloomberg doesn't do that very often either as well as like the Journal. but your thoughts on folks out there who are really trying to figure out how to do a good job, how to get your attention, how to augment your role and responsibilities. What's your thoughts? >> I would say, going back to what we said a little bit before about really knowing who you're pitching to. If you know something that I've written recently that you can reference, that gets my attention. But I would also encourage people to try to think about different ways that they can be part of a story if they are looking to be mentioned in one of our articles. And what I mean by that is, maybe you are launching new products or you have a new initiative, but think about other ways that your companies relate to what's going on right now. So for instance, one thing that I'm really interested in is just the the changing nature of work in the office place itself. So maybe you know of something that's going on at a company, unlimited vacation for the first time or sabbaticals are being offered to working parents who have nowhere to send their children, or something that's unique about the current moment that we're living in. And I think that those make really good interviews. So it might not be us featuring your product or featuring exactly what your company does, but it still makes you part of the conversation. And I think it's still, it's probably valuable to the company as well to get that mention, and people may be looking into what you guys do. So I would say that something else we are really interested in right now is really looking at who we're quoting and the diversity of our sources. So that's something else I would put a plug in for PR people to be keeping an eye on, is if you're always putting up your same CEO who is maybe of a certain demographic, but you have other people in your company who you can give the opportunity to talk with the media. I'm really interested in making sure I'm using a diverse list of sources and I'm not just always calling the same person. So if you can identify people who maybe even aren't experienced with it, but they're willing to give it a try, I think that now's a really good moment to be able to get new voices in there. >> Rather than the speed dial person you go to for that vertical or that story, building out those sources. >> Exactly. >> Great, that's great insight, Everyone, great insights. And thank you for your time on this awesome panel. Love to do it again. This has been super informative. I love some of the engagement out there. And again, I think we can do more of these and get the word out. I'd like to end the panel on an uplifting note for young aspiring journalists coming out of school. Honestly, journalism programs are evolving. The landscape is changing. We're seeing a sea change. As younger generation comes out of college and master's programs in journalism, we need to tell the most important stories. Could you each take a minute to give your advice to folks either going in and coming out of school, what to be prepared for, how they can make an impact? Brenna, we'll start with you, Gerard and Eric. >> That's a big question. I would say one thing that has been been encouraging about everything going on right now as I have seen an increased hunger for information and an increased hunger for accurate information. So I do think it can obviously be disheartening to look at the furloughs and the layoffs and everything that is going on around the country. But at the same time, I think we have been able to see really big impacts from the people that are doing reporting on protests and police brutality and on responses to the virus. And so I think for young journalists, definitely take a look at the people who are doing work that you think is making a difference. And be inspired by that to keep pushing even though the market might be a little bit difficult for a while. >> I'd say two things. One, again, echoing what Brenna said, identify people that you follow or you admire or you think are making a real contribution in the field and maybe directly interact with them. I think all of us, whoever we are, always like to hear from young journalists and budding journalists. And again, similar advice to giving to the advice that we were giving about PR pitches. If you know what that person has been doing, and then contact them and follow them. And I know I've been contacted by a number of young journalists like that. The other thing I'd say is and this is more of a plea than a piece of advice. But I do think it will work in the long run, be prepared to go against the grain. I fear that too much journalism today is of the same piece. There is not a lot of intellectual diversity in what we're seeing There's a tendency to follow the herd. Goes back a little bit to what I was saying right at the opening about the fact that too many journalists, quite frankly, are clustered in the major metropolitan areas in this country and around the world. Have something distinctive and a bit different to say. I'm not suggesting you offer some crazy theory or a set of observations about the world but be prepared to... To me, the reason I went into journalism was because I was always a bit skeptical about whenever I saw something in any media, which especially one which seemed to have a huge amount of support and was repeated in all places, I always asked myself, "Is that really true? "Is that actually right? "Maybe there's an alternative to that." And that's going to make you stand out as a journalist, that's going to give you a distinctiveness. It's quite hard to do in some respects right now, because standing out from the crowd can get you into trouble. And I'm not suggesting that people should do that. Have a record of original storytelling, of reporting, of doing things perhaps that not, because look, candidly, there are probably right now in this country, 100,00 budding putative journalists who would like to go out and write about, report on Black Lives Matter and the reports on the problems of racial inequality in this country and the protests and all of that kind of stuff. The problem there is there are already 100,000 of those people who want to do that in addition to probably the 100,000 journalists who are already doing it. Find something else, find something different. have something distinctive to offer so that when attention moves on from these big stories, whether it's COVID or race or politics or the election or Donald Trump or whatever. Have something else to offer that is quite distinctive and where you have actually managed to carve out for yourself a real record as having an independent voice. >> Brenna and Gerard, great insight. Eric, take us home close us out. >> Sure. I'd say a couple things. So one is as a new, as a young journalist, I think first of all, having a variety of tools in your toolkit is super valuable. So be able to write long and write short, be able to do audio, blogs, podcast, video. If you can shoot photos and the more skills that you have, a following on social media. You want to have all of the tools in your toolkit because it is challenging to get a job and so you want to be able to be flexible enough to fill all those roles. And the truth is that a modern journalist is finding the need to do all of that. When I first started at Barron's many, many years ago, we did one thing, we did a weekly magazine. You'd have two weeks to write a story. It was very comfortable. And that's just not the way the world works anymore. So that's one element. And the other thing, I think Gerard is right. You really want to have a certain expertise if possible that makes you stand out. And the contradiction is, but you also want to have the flexibility to do lots of different stories. You want to get (voice cuts out) hold. But if you have some expertise, that is hard to find, that's really valuable. When Barron's hires we're always looking for people who have, can write well but also really understand the financial markets. And it can be challenging for us sometimes to find those people. And so I think there's, you need to go short and long. It's a barbell strategy. Have expertise, but also be flexible in both your approach and the things you're willing to cover. >> Great insight. Folks, thanks for the great commentary, great chats for the folks watching, really appreciate your valuable time. Be original, go against the grain, be skeptical, and just do a good job. I think there's a lot of opportunity. And I think the world's changing. Thanks for your time. And I hope the comms folks enjoyed the conversation. Thank you for joining us, everyone. Appreciate it. >> Thanks for having us. >> Thank you. >> I'm John Furrier here in the Cube for this Cube Talk was one hour power panel. Awesome conversation. Stay in chat if you want to ask more questions. We'll come back and look at those chats later. But thank you for watching. Have a nice day. (instrumental music)

>>from around the globe. It's the Cube with digital coverage of you. I path live the release show brought to you by you. >>I path Hi. Welcome back to this special R p A drill down with support from you. I path You're watching The Cube. My name is Dave Volante and Bobby CMO. You know I passed Bobby. Good to see you again. Hope you're doing well. Thanks for coming on. >>Hi, Dave. It's great to see you as well. It's always a pleasure to be on the Cube and even in the virtual format, this is really exciting. >>So, you know, last year at forward, we talked about the possibility of a downturn. Now nobody expected this kind of downturn. But we talked about that. Automation was likely something that was going to stay strong even in the downturn. We were thinking about potential recession or an economic downturn. Stock market dropped, but nothing like this. How are you guys holding up in this posted 19 pandemic? What are you seeing in the marketplace? >>Yeah, we certainly we're not thinking of a black swan or rhino or whatever we call this, but, you know, it's been a pretty crazy couple of months for everybody. You know, when When this first started, we were like everybody else. Not sure how it impact our business. The interesting thing has been that you're in code. It actually brought a reality check through. A lot of companies and organizations realize that it's very few tools to respond quickly, right? Bond with, you know, cost pressures that we're urgent or preserving revenue, perhaps, or responding to Ah, strange resource is, you know, in all centers, or or built to support. You know, the surge in in, um, in the healthcare community. And so r p a became one of those tools that quickly waas knowledge and adopted. And so we went out two months ago to go find those 1st 1st use cases. Talk about him, then. You know, 1st 30 days we had 50 in production, right? Companies, you know, great organizations like Cleveland Clinic, right? You know where they use their parking lot? Give the first tests the swab tests, right of, uh, well, who have proven right? You know, they had a line of 88 hours by, you know, putting a robot in place in two days. They got that line down by 80 or 90% right? It is a huge hit as we see that kind of a kind of benefit all across right now in the world. Right now we have. We were featured in The Wall Street Journal recently with nurses and a large hospital system in Ireland called Matter. The nurses said in the interview that, you know they have. They were able to free up time to be a patient's right, which is what they're there for, anyway, thanks to robots during this during this emergency. So I think you know, it's it's definitely raise The awareness that that this technology is provides an amazing time to value, and that's it's pretty unprecedented in the world of B two B software. >>I want to share some data with you in our community is the first time we've we've shown this. Guys would bring up the data slide, and so this is ah, chart that e. T are produced. There's enterprise technology research. They go out of reporter. They survey CIOs and I T practitioners and a survey in different segments and the use of methodology Net score. And this is sort of how method how Net scores derived. And so what this chart shows is the percent of customers that responded there were about 125 You I path customers that responded. Are you adopting new U I path? Are you increasing spending in 2020? Are you planning on flat spending or decreasing spending? Are you replacing the platform of beacons? And so basically, we take the green, uh, subtract the read from the green, and that gives us net score. But the point is that Bobby abouts about 80% of your customers are planning to spend Maurin 2020 than they spent in 2019 and only about 6% of planning on spending less, which is fairly astounding. I mean, we've been reporting on this for a while in the heat nous in the in the automation market generally and specifically. But are you seeing this in the marketplace? And maybe you could talk about why? >>Well, we just finished our first fiscal quarter into the end of April, and we're still privately held, so we can be, uh, find some insights of our company, but yeah, the the pace of our business picked up actually in in the mark. April timeframe. Um, customer adoption, large customer adoption. Um, the number of new new companies and new logos were at a record high. And, you know, we're entering into this quarter now, and we have some 20 plus $1,000,000 deals that are like that. It closed, right? I mean, that's probably a 30% increase Versus what? How many we have today alone. Right? So our business, you know, is is now well over 400 million and air are we ended last year, 3 60 and the growth rate continues fast. I think you know what's interesting is that the pace of the recode world was already fast, right? The the luxury of time has kind of disappeared. And so people are thinking about, you know, they don't have they can't wait now, months and years for digital transformation. They have to do things in days and days and days and weeks. And and that's where our technology really comes into play. Right? And and and it actually is also coming to play well in the world of the remote workforce. Reality two of the ability for remote workers to get trained while they're home on automation to build automation pipelines to to build automation. Now, with our latest release, you can download our podcast, capture and report what you're doing, and it basically generates the process definition document and the sample files, which allow for faster implementation by our center of excellence. So what's really happening here? We see it is a sense of urgency coming out of this. Prices are coming down the curve. Hopefully, now this is of urgency that our customers are facing in terms of how they respond, you know, and respond digitally to helping their business out. And it varies a lot by industry, our state and local business was really thinking was not going to be the biggest laggard of any industry picked up in a significant way in the last couple of months, New York State, with Governor Cuomo, became a big customer of ours. There's a quote from L. A County, see Iot that I've got here. They just employed us. It's public, this quote, he said. Deputy CIO said Price is always the mother of invention. We can always carry forward the good things they're coming out of this crisis situation. He's referring to our P A is being a lesson. They learned hearing this, that they're going to carry forward. And so we see this state of Oklahoma became a customer and others. So I think that's that's what we're seeing kind of a broad based. It's worldwide. >>You're really organizations can't put it off anymore. I think you're right. It sort of brought forward the future into the present. Now you mentioned 360 million last year. We had forecast 350 million was pretty good for you guys released, so it's happy about that. But so obviously still a strong trajectory. You know, it might have been higher without without covert. We'll never know, but sort of underscores the strength of the space. Um, and February you guys, there was an article that so you're essentially Theo Dan, Daniel Hernandez was quoted. Is that on hold now? Are you guys still sort of thinking about pressing forward or too early to say right? >>Yeah. I mean, I think I think the reality is we have a very, very strong business. We've raised, you know, significant money from great investors, some of which are the leading VCs in the world. and also that the public company investors and, you know, we have, ah, aggressive plan. We have an aggressive plan to build out our platform for hyper automation to continue. The growth path is now becoming the center of companies of I, T and Digital Strategies, not on the side. Right. And so to do that, you know, we're gonna want capital to help fuel our our our ambitions and fuel Our ability to serve our customers and public markets is probably a very, very logical one. As Daniel mentioned in a in a A recent, uh, he's on Bloomberg that he definitely sees. That is ah, maybe accelerating that, You know, we're late Last year, we started focusing on sustainable growth as a company and operational regular. These are important things in addition to having strong growth that, you know, a long term company has to have in place. And I can tell you, um, I'm really excited about the fact that we, you know, we operate very much like a public company. Now, internally, we you know, we do draft earnings releases that aren't public yet, and we do mock earnings, earnings calls, and we have hired Thomas Hansen is runs our chief revenue officer with storage backgrounds. And so you're gonna interview as well. These are these are these are the best of the best, right? That joint, they're joined this company, they're joining alongside the arm Kalonzo the world that are part of this company. And so I think, Yeah, I think it's an AR It's likely. And and it's gonna We're here to be a long term leader in this decade of automation. >>Well, and one of the other things that we forecast on our breaking analysis we took a look at the total available market kind of like into it. Early days of service Now is you know, people were really not fully understanding the market and chillin C it is is quite large, so video. So when we look at the competition, you know, you guys, if I showed you the same wheel with automation anywhere, it would also look strong. You know, some of the others, maybe not a strong but still stronger than many of the segments. I mean, for instance, you know, on Prem hardware. You know, compared with that and you know the automation space in general across the board is very, very strong. So I wonder if maybe you could talk a little bit about how you guys differentiate from the competition. How you see that? >>Yeah, I think you know, we've We've come a long way in the last three years, right? In terms of becoming the market leader, having the highest market share, we're very open and transparent about our numbers with We've long had the vision of a robot. Every person, uh, and and we've been delivering on that on on that vision and ah, building out a platform that helps companies, you know, transform digitally enterprise wide. Right. So, you know, I don't see any of our competitors with a platform for hyper automation like this. We have an incredible focus on the ability to help people actually find the ideas, build the pipeline, score the pipelines and integrate those with the automation center of excellence. Right? We have the ability now with our latest release to help test automation testers now not only in the world of art A but actually take robotic robots and and architecture into doing test automation. The traditional test automation market in a much better and faster way So you know, we're innovating at a pace that that it is, I think, much faster than I don't. I don't know automation anywhere. I won't share any their numbers. You know, who knows what the numbers are. We have guesses, but I'm fairly certain that we continue to gain share on them. But you know, what's most important is customer adoption, and we've also seen a number of customers switch from some of our competitors to us. Our competitors are undercapitalized and middle. Invest in R and D. This is an investment area, really build a platform out from our competitors have architectures that are hard to upgrade, right? This has been a big source of pain for companies that have been on our competitors. Where upgrades are difficult requires them to retest every time where our upgrades are very rolling, you know, are very smooth. We have an insider program which you know, I don't think any of our competitors have. If you go inside that you had pat that your customer every single bit every single review betting, private preview, public preview and general availability, you can provide feedback on and the customers can score up new ideas. They drive our our roadmap. Right. And this is I think we operate differently. I think our growth is a is a good indication of that. And, you know, and there are new competitors like Microsoft. But I think you know, you know, medium or long term, you know, they're gonna make effort around our, um and you know, they're behind the, um, automation is really hard. The buried entry here is not it's not. Not easy. And we're going to keep me on that platform, play out, and I think that's ah, that's what makes us so different. Um and ah, you know, we have the renewal numbers, retention numbers, expansion numbers and and the revenue numbers to improve that, uh, you know, we're number one. >>Well, so I mean, there's a lot of ways to skin the cat, and you're right. You guys are really focused, you know, you automation anywhere really focused on this space, and you shared with us how you differentiate there. But as you point out Microsoft, they sort of added on I had talked to Allan, preferably the day from paga. You know, those guys don't position themselves as our PC, but they have r p A. I talked to, you know, our mutual friend Robert Young John the other day, right? They're piling onto this this trend, right? So why not? Right, It's it's ah, it's hot. But so, you know, clearly you guys are innovating there. I want to talk about your vision before we get into the latest product release two things that I would call out the term hyper automation with, I think is the Gartner term. And then it will probably stick. And then this this idea of a robot for every person How would you describe your vision? >>Yeah, I mean, we think that robots can and improve, you know, the the lives of of or pers everywhere, right? We think in every every function, every role. And we see that already, the job satisfaction and the people don't want to do the mundane, repetitive work, right? The new hires coming out of college, you know, they're gonna be excel and sequel server. We're no longer the tools of productivity. For them, it's it's your path. We have business. Schools that have committed top tier business schools have committed to deploying your path or to putting you're passing every force in the school these students are graduating with the right path is their most important skill going into companies. And they're gonna expect to be able to use robots within their companies in their daily lives. A swell. So, you know, we have customers today that are rolling out a robot for every person you know. We had Ah, Conoco Phillips on just earlier in our launch, talking about citizen developers, enabling says, developer armies of developers and growing enterprise wide. See, Intel was on as well from Singapore, the large telco. They're doing the exact same thing. So I think you know, I think this is this is this is this is about broad based digital transformation. Everybody participating And what happens is the leading companies to do this, you know, they're going to get the benefit of benefits out of it. It can reinvest that productivity, benefits and data science and analytics and serving customers and in, you know, and and, ah, new product ideas. And so, you know, this is this. You know, automation is going to fuel now the ability for companies to really differentiate and serve their customers better. And it's only needed enterprise wide view on it that you really maximizing. Take Amazon, for example, a great customer during during this prices. You know, they're trying to hire hundreds of thousands of people, right? Help in the fact that in their in their distribution centers elsewhere, this all served demand to help people who like you and I home or ordering things that we need, right? Well, they're use your path robots all throughout their HR hr on boarding HR recruiting HR administration And so helping them has been a big during this prices surge of robots is helping them actually hire workers. You know another example of Schneider Electric and amazing customer of ours. They're bringing their plants, their manufacturing facilities, implants back online faster by using robots to help manage the PPE personal protective equipment in the plant allow people workers to get back to work faster. Right? So what's happening is is, you know in that in those cases is your different examples of robots and different functions, right? In all cases, it's about helping grow a company faster. It's about helping protect workers. It's about helping getting revenue machines back up and running after Kobe is going to be critical to get back to work faster. So I'm I'm really excited about the fact that as people think about automation across the organization, the number of ideas and Aaron opportunities for improvement are are we're just starting to tap that potential. >>Well, this is why I think the vision is so important because you're talking about things that are transformative. Now, as you well know, one of the criticisms of RPS. So you have people, the suppliers and just yeah, we, you know, looking at mundane tasks, just automating mundane tasks like sometimes paving the cow path and say, you're very much aware of that criticism. But if I look at the recent announcements, you're really starting to build out that vision that you just talked about. They're really four takeaways. You sort of extending the core PAP platform, injecting AI end some or and more automation end to end automation really taken that full lifestyles lifecycle systems view and the last one is sort of putting it talks to the robot. For every person that sort of citizen automation, if you will, that sort of encompasses your product announcements. So it wasn't just sort of a point Announcement really is a underscores the platform. I wonder if you could just What do we need to know about you guys? Just that out. >>So we think about how we think about the rolls back to a division of robots person how automation can help different roles. And so this product launch $20 for this large scale launch that you just articulated, um, impacts in a fax and helps many different kinds of new roles Certainly process analysts now who examined processes, passes performance improvements. You know, they're a user of our process mining solution in our past. Find a solution that helps speed on our way. Arpaio engine, no testers and quality engineers. Now they can actually use studio pro and actually used test robots are brand new, and our new test manager is sort of the orchestration and management of test executions. Now they can participate in in leveraged power of robots and what they do as well. And we kind of think about that, you know, kind of across the board in our organization across the platform. They can use tools like you have path insights in Europe. If you're an analyst or your, uh ah. B I, this intelligence person really know what's going on with robots in terms of our wife for my organization and provide that up to the, you know, sea levels in the board of directors in real time. So I think that's that's the big part. Here is we're bringing, and we're helping bring in many, many different kinds of roles different kinds of people. Data scientist. You mentioned AI. Now data scientists can build a model. The models applied to ai fabric an orchestrator. It's drag and drop by our developer in studio, and now you can turn, you know, a a mundane, rules based task right into an experience based ones where a robot can help make a decision right. Based on experience and data, they can tweak and tune that model and data scientists can interact, you know, with the automation is flowing through your path. So I think that's how we think about it, right? You know, one of the great new capabilities, as well as the ability to engage line workers, dispatch out workers If you're a telco or or retail story retail store workers you know the robots can work with humans out in the field. We've got one real large manufacturer with 18,000 drivers in a DST direct store delivery scenario. And you know the ability for them to interact with robots and help them do their job in the field. Our customers better after the list data entry and data manipulation, multiple systems. So I this is this makes us very unique in our vision and in our execution. And again, I don't I have not heard of a single ah example by competitors that has any kind of a vision or articulation to be able to help a company enterprise wide and, you know, with the speed and the and the full, full vision that we have. >>Okay, so you're not worried about downturns. You can't control black swans Anyway, you're not worried about the competition. It feels like you know, you're worried about what you're worried about. You want about growing too fast. Additionally, deploying the the capital that you've raised. What worries you? >>Yeah. You know, we're paranoid or paranoid company, right? And when it comes to the market and and trying to drive, I think we've done a lot to help actually push the rock up the hill in terms of really, really driving our market, building the market, and we want to continue that right and not let up. So there's this kind of desire to never let up, right? Well, we always remind ourselves we must work harder, must work harder. We must work harder. And that's that's That's sort of this this mentality around ourselves, by the smartest people. Hire the smartest people you work with our customers, our customers are priority. Do that with really high excellence and really high sincerity that it comes through and everything that we do, you know, to build a world class operation to be, you know, Daniel DNS. When I first met him, he said, You know, I really want to be the enemy of the great news ecology company that serve customers really well. And it was amazing things for society, and and, you know, we're on that track, but we've got, you know, we're in the in the in the early innings. So, you know, making sure that we also run our business in a way that, um, you know, uh, is ready to be Ah, you know, publicly successful company on being able to raise new sources of capital to fund our ambitions and our ideas. I mean, you saw the number of announcements from our 24 release. It reminded me of an AWS re invent conference, where it's just innovation, innovation, innovation, innovation. And these are very real. They're not made up mythical announcements that some of our competitors do about launching some kind of discovery box doesn't exist, right? These are very real with real customers behind them, and and so you know, just doing that with the same level of tenacity. But being, you know, old, fast, immersed and humble, which are four core culture values along the way and not losing that Azeri grow. That's that's something we talk about maintaining that culture that's super critical to us. >>Everybody's talking about Okay, What What's gonna be permanent? Postpone it. I was just listening to Julie Sweet, CEO of Accenture, and she was saying that, you know, prior to Covic, they had data that showed that the top 25% of companies that have leaned into digital transformation were outperforming. You know, the balance of their peers, and I know question now that the the rest of that base really is going to be focused on automation. Automation is is really going to be one of those things that is high, high priority now and really for the next decade and beyond. So, Bobby, thanks so much for coming on the Cube and supporting us in this in this r p. A drill down. Really appreciate it, >>Dave. It's always a pleasure as always. Great to see you. Thank you. >>Alright. And thank you for watching everybody. Dave Volante. We'll be right back right after this short break. You're watching the cube. >>Yeah, yeah, yeah, yeah.

>> From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hello, everybody, this is Dave Vellante, and welcome to this breaking analysis. I'm here with Erik Bradley, who's the managing director of ETR and runs their VENN program. Erik, good to see you. >> Very nice to see you too, Dave. Hope you're doing well. >> Yeah, I'm doing okay, hanging in there. You know, you guys in New York are fighting the battle, looks like we're making some progress here, so all the best to you and your family and the wider community. I'm really excited to have you on today because I had the pleasure of sitting in on a CIO/CISO panel last week and we're going to explain sort of what that's all about but one of the things that ETR does that I really like is they go deeper with anecdotal information, and it's almost like in depth interviews in these round tables. So they compliment their quarterly surveys and their other drilldown surveys with other anecdotal information from people in their communities, so it's a tried and true survey practice that adds some color to the data set. So guys, if you'd bring up the agenda, I want to share with the audience what we're going to talk about today. So, we'll talk a little bit about, you know, we just did intros. I wanted to ask Erik what ETR VENN is and then we will go through some of the guests, but if we go back to Erik, explain a little bit about VENN and the whole process, and how you guys do that? >> Yes, sure we should hire you for marketing, you just did a great job actually describing that, but about three years ago, what we decided was, ETR does an amazing job collecting the data. It can tell you what's happening, who it's happening to, and when it's happening, but it can't always tell you why it's happening. So leveraging a lot of my background in 20 plus years in journalism and the institution of Wall Street research, we decided to take the ETR community, the people that actually take the surveys and start doing interviews with them, and start doing events with them. And in enable to doing that, we're basically just trying to complement the survey findings and the data. So what we always say is that ETR will give you the quantitative answer and VENN will give you the qualitative answer. >> Now guys, let's bring up the agenda slide again, let's take a look at the folks that participated in the round table, now, for ETR's clients, they actually know the names and the titles and well the company that these guys work for. We've anonymized it for the public, but you had a CIO of a global auto supplier, a CISO of a diversified holdings firm who actually had some hospitality exposure, but also some government contract manufacturing exposure, a chief architect of a software ISV, and a VP and CISO of a global hospitality resort chain. So you had three out of the four, Erik were really in industries that are getting hit hard, obviously you know the software company, may be a little bit better but, maybe you could add some color to that? >> Well actually the software company unfortunately was getting hit hard as well because they're a software ISV that actually plays into the manufacturing space as well so this particular panel of CIOs and CISOs were actually in a very hard hit industries and are going to make sure we do two more follow ups with different industry verticals to make sure we're getting a little bit of a wider berth and collect all of that information in a better way. But coming back to this particular call the whole reason we did this and as you know you spoke to my colleague and friend Sagar Kadakia who is the director of research for ETR. And we were nimble enough to actually change our survey while it was in the field to start collecting data on what the real time impact was on the COVID-19 pandemic. We were able to take that information, extrapolate it and then say, okay, let's start reaching out to these people and dig deeper, find out why it's happening and even more so is it permanent? And which vendors are going to win and which vendors might lose from it? So that was the whole reason we set up a series of calls, we've only conducted one so far, we have another one this coming Tuesday as well with four entirely new panelists that are going to be from different industry verticals 'cause as you astutely pointed out, these verticals were very hard hit and not all of them are as hard as others, so it's important to get a wider cross-section. >> So guys, let's take a look at some of the budget impacts, the anecdotal sort of evidence that we gathered here, so let me just scan through it and then Erik, I'll ask you to comment. So, I mean like Erik said, some hard hit industries. All major projects, anything sort of next-gen have been essentially shelved, that was the ISV and then another one we cut at least 70% of the big projects moving forward, he mentioned ServiceNow actually called him out, but ServiceNow is a SaaS company, probably you know weather the storm here, but he did say, we've put that on hold. The best comment you know As-a-Service has Saved our Saas, (laughs) that one's great. And then we're going to get into some of the networking commentary, some really interesting things about how to support the work from home, you know we're kind of shifting from a hardened top into users, remote workers and then a lot of commentary on security, so you know that's sort of a high level scan and there's just so much information here, Erik but maybe you could sort of summarize on some of those, that commentary? >> Yeah, we should definitely dig in to each of those sectors a little more, but to summarize what we're seeing here was the real winners and losers are clear. Not everyone was prepared to have a work from home strategy. Not everyone was prepared to send their workers out, their VPN didn't have enough bandwidth so there was a real quick uptake in spending, but longer term we're starting to see that these changes will become more permeant. So the real winners and losers right now, we're going to see on the losers side traditional networking, the MPLS networking is in a lot of trouble according to all the data and the commentary that we're seeing, it's expensive, it's difficult to ramp up bandwidth as quickly as you need and it doesn't support remote. So we're seeing that lose out and the winners there are in the SD-WAN space, it's going to be impossible to ignore that going forward and some of our CIO and even CISO panelists said that change will be permanent. Also we're seeing at the same time, what they were calling a run SaaS and cloud, now we know these trends obviously were already happening but they're being exacerbated, they're happening even more quickly and more strong and I don't see that changing any time soon. That of course is at the expense of data centers, whether it be your own or hosted. Which has huge ramifications on on-prem hardware, even the firewall providers. So what we're seeing here is obviously we know things are going to be impacted by this situation, we didn't necessarily expect all of our community members and IT decision makers to talk about them being possibly permanent, so that on a high level was something that was extremely interesting. And the last one that I would bring up is that as we make this shift towards working from home, towards remote access, you also have to align yourself with the security that can support that. And one of the things that we're seeing in our data side on ETR, is a widening bifurcation between the next-gen security vendors and the more traditional security or the legacy security players, that bifurcation just keeps getting wider and wider and this situation could be the last straw. >> So I want to follow up on a couple of those things, you talked about sort of the network shift and toward SD-WAN, what people have described to me is that they've got a hardened top, it's a hierarchal network, it's very well understood, and it's safe right, and now all of a sudden you got all these remote workers and so you've got to completely sort of rethink your whole network architecture, the other thing I want to grill into is your cloud commentary. There's a comment that I saw Erik, that really stood out, one of the folks said, I would like to see the data centers be completely deleted, if you will or closed down, I mean I think we're going to see you know, a lot more of this, obviously. Not only from the standpoint of, and you heard this a lot the kind of pay by the drink, but just generally getting rid of all that sort of so called non-differentiated heavy lifting as we often hear about. >> That is a extreme comment, I don't think everyone feels that way, but yes, the comment was made and we've heard that comment from other people as you and I both know the larger the enterprise the harder that is to go completely SaaS, but yeah, when a situation like this happens and seeing the inflexibility of their on-prem infrastructure, yes it becomes something that really has to be addressed and it can become a permanent change, I was also shocked about that comment. That gentleman also stated that his executives outside of the IT area, the CEO, the CFO had never ever, ever wanted to discuss cloud, they did not want to discuss work from home, they did not want to discuss remote access. He said that conversation has changed immediately and to the credit of the actual IT companies out there, the technology companies, they're doing everything they can with this opportunity to make that happen. >> Yeah and so, right, I mean the whole work from home conversation that's to your point earlier, Erik, big chunks of COVID, you know the post COVID world are going to remain permanent, guys bring up the SaaS slide if you will, the SaaS commentary "As-a-Service-Saved our SaaS" as the wittiest quip award according to ETR, you know but you had, it was very interesting to hear folks, in fact I think somebody even called out, hey you know we expected Oracle to be auditing us but they're actually being very supportive as is IBM, SalesForce was an interesting comment Erik, one of the folks said they would share accounts you know on-prem but when they all do the work from home they had to actually buy some more. You also got Cisco with big props, Microsoft was called out, a lot of organizations actually allowing them to defer payments, so the SaaS vendors actually got very high marks, didn't they? >> They really did and even I wrote that summary and it was difficult to write that about Oracle because we all know that they're infamous for auditing their own customers in 2009, right after we we came out of the financial crisis. They have notoriously been a bad act, I don't know if they found religion and they decided to be nice to their customers, but every single person mentioned them as one of the vendors that was actually helping. That was very shocking. And then we all know that when bad situations happen people become opportunistic and right now it's really seeming that the SaaS vendors understand that they need a longterm relationship with these customers and they're being altruistic instead which is really nice to see. >> Yeah, I think the, I think anybody with a cloud realizes that hey, we have an opportunity here, the lifetime value of that customer whereas maybe in 2009 when Oracle didn't have a cloud they had to get people in a headlock to try to preserve their you know income statement. If we, let's go to the networking drilldown guys, that next slide, because Fortinet, some of the things that we've been reporting on is the sort of divergence in valuations between Fortinet and Palo Alto before this whole thing hit. Fortinet has done a really good job with it's cloud offerings, Palo Alto struggled a little bit with trying to figure out the sales compensation, is maybe a little bit behind, although both companies got strong props and I've talked to a number of customers and Palo Alto's going to be in the mix, but Fortinet from a cloud standpoint seems to be doing quite well, obviously networking, you know Cisco is the big gorilla there, but so and we also got call outs from guys like Trend Micro, which was interesting from some of the folks so your thoughts on this Erik? >> Yeah, I'll start in the networking side because this is something that I really, I've dug into quite amount in not only this panel but a lot of interviews and it really seems as if as networking refresh starts to come up and it's coming up with a lot of large importers, when your network refresh comes up, people are going to do an RFP for SD-WAN. They are sick and tired of paying MPLS network vendors and they really want to look at something else. That was even prior to this situation. Now what we're hearing is this is a permanent change, I particularly had one person say, I wanted to find this quote real quickly if I can, but basically they were basically saying that from a permanency perspective, the freedom from MPLS will reduce our network spend by over half, while more than doubling or tripling our bandwidth. You can't ignore that, you're going to save me money and triple my bandwidth. And hey, by the way, my refresh is due, it's something that's coming and it's going to happen. And yes you mentioned a few, right, there's Viptela, there's VeloCloud, there's some big players like Cisco. But Palo Alto just acquired CloudGenix in the midst of all of this. They just went and got an SD-WAN player themselves and they just keep acquiring a portfolio to shift from their on-prem to next-gen. It's going to take some time, 'cause 70% plus of their revenue is still on-prem hardware, but I do believe that their portfolio that they're creating is the way the world is moving and that's just one comment on the traditional networking versus the next-gen SD-WAN. >> And the customers have indicated you know it's not easy just to get off of their MPLS networks. I mean it takes time, it's like slowly pulling off the bandaid, but like many things COVID-19 is sort of accelerating that, we haven't talked about digital transformation, that came up. As a maybe more strategic initiative, but one that you know very clearly has legs. >> You know David, it's very simple, you just said it, people, when things are going well and they're comfortable they don't change and that's the same for an enterprise or a company, hey everything's great, our revenue's fine, why would we do this? We'll worry about that next year. Then something like this happens and you realize wow, we've been dragging our feet. That digital transformation that we've been talking about and we've been a little bit slow to accept, we need to accept it, we need to move now. And yes, it was another one of the major themes and it sounds silly for researchers like you and I, because we know this is a theme, we know cloud adoption is there, we know digital transformation is there, but there are still a lot of people that haven't moved as quickly as they should and this is going to be that final catalyst to get them there without a doubt. Quickly on your point of Fortinet, I was actually very impressed with the commentary that came from that because Fortinet is sometimes one of those names that you think of that maybe plays in a smaller pool or isn't as big as some of the 800 pound gorillas out there, but in other interviews besides this I heard the phrase point of 40 everything, so through our R&D and through acquisitions, Fortinet has really expanded their portfolio. And right now is their time to shine because when you have smaller satellite you know offices and branches that you need to connect, they're really, really good at it. And you don't always want to call a Palo Alto and pay that price, when you have smaller branch offices and I actually I was glad you brought up Fortinet because it's not a name that we get to herald that often and it was deserving from this panel. >> Yeah and you know companies that can secure gateways, secure endpoints are obviously going to have momentum, Zscaler came up, you know I think that's and I tell you looking at I've done a couple of breaking analysis on security, and Fortinet has been strong in two dimensions, you know ETR as our audience is I think getting to know, we really look at two key metrics, one is a net score which is a measure of spending momentum and the other is market share, which is a measure of pervasiveness, and companies like Fortinet in security, you know show up on both of those dimensions so it's notable. >> Yes, it certainly is, it is and I'm glad you brought up Zscaler too, very recently by strong request we did a very in depth research on Zscaler versus Palo Alto Prisma access. And they were very interested and this was before all this happened. You know does Palo Alto have a chance of catching up, taking share from Zscaler? And I've had the pleasure myself personally hosting Jay, the CEO of Zscaler at an event in New York City. And I have nothing but incredible respect for the company. But what we found out through this research is Zscaler at the moment their technology is still ahead according to their answers there is no doubt, however there doesn't seem to be any real secret sauce that will stop Palo Alto from catching up. So we do believe that parody of a feature set will shrink over time and then it'll come down to Palo Alto who obviously has a wider end-user interface. Now, what's happening today might change that because if I had to make a decision right now for my company on secure web gateway, I'm still probably going to got to Zscaler, it's the name. If I had to choose that in a year from now, Palo Alto might have had a better chance, so in this panel as you brought up, Zscaler was mentioned numerous times as just the wave of the future along with CASB Brokers, right, whether you're talking about a Netskope or Forcepoint, all those people that also play in the CASB space, to secure your access, zero trust is no longer a marketing hype term, it is real and it is becoming more real by the week. >> And so I want to kind of end on one of the other comments that really struck me because we're constantly talking about okay, do you go with a portfolio of a suite of services or do you go with best of breed, what about startups? Are startups more risky in a crisis like this? And one of your panelists, I just loved his comment, he said, one of the things that I've always done, he said, you always hear about the guy, oh we're going to to the garden, we're going to check out the magic water, we'll pick out three guys in the upper right hand corner and test them out, he says, one of the things that I've always liked to do, is I'll pick two from the upper right, and I'll take one from the lower left, one of the emerging techs and I'll give them a shot, they won't win every time but then he called out FireEye as one of the organizations that he found early that gave them competitive advantage. >> Right. >> Love that comment. >> It's a great comment and honestly if you're in charge of procurement, you'd be stupid not to do that. Not only just to see what the technology is, but now I can play you off the big guys because I have negotiation leverage and I can say, oh well I can always just take their contract. So it's silly not to do it from a business perspective, but from a technology perspective what we kept hearing from these people with the smaller vendors and my partner Peter Steube, my colleague and I we did the host together, we asked this question, really believing that the financial insecurity of the moment in the times would make smaller vendors not viable. We heard the exact opposite, what our panelists said was no, I'd be happy to work with a smaller vendor right now because they're going to give me pricing flexibility, they're going to work with me right now, I don't need to pay them upfront because we're seeing a permanent shift from CAPEX to OPEX and the smaller vendors are willing to work with me and I can pay them later. So we were actually surprised to hear that and glad to hear it because to connect to your other point, the other person who was talking about security in a platform approach versus best of breed, he said listen, platform approaches you're already with the vendor you can bundle a little bit, but the problem is if you're just going to acquire a new technology every time there's a new threat, the bad guys are just going to switch the threat and you can't acquire indefinitely so therefore best of breed with security will always beat platform and that's kind of a message to Palo Alto and Cisco in my opinion because they seem to be the ones fighting that out, even Microsoft now trying to say that they're a platform approach in security. >> Wow and it says to me the security business is going to as we predicted is going to stay fragmented because you're still going to get that best of breed, you know just like cloud is going to be fragmented and it's you know multiple vendors, ever since I've been in this business people are trying to consolidate the number of vendors but technology moves so quickly, it gives competitive advantage, Erik, awesome thank you so much for joining us, I'm looking forward to next Tuesday with the next VENN and love to have you back and talk about it any time, you're a great guest, thanks so much. >> Certainly! I'll do my best to get a better AV connection the next time guys, I apologize for that, but it was great talking to you guys. >> Hey, we're all learning you know, so thank you everybody for watching, this Dave Vellante for theCUBE and we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto, in Boston connecting with alt leaders all around the world, This is a CUBE conversation. >> Hello everybody, this is Dave Vellante and welcome to this Breaking Analysis. I'm here with Erik Bradley, who's the managing director of ETR and runs their VEN program. Erik good to see you. >> Very nice to see you too Dave. Hope you're doing well. >> Yeah, I'm doing okay hanging in there. You know, you guys in New York are fighting the battle. Looks like we're making some progress here so, you know, all the best, you and your family and the wider community. I'm really excited to have you on today because I had the pleasure of sitting in on a CIO/ CISO panel last week. And we're going to explain sort of what that's all about, but one of the things ETR does that I really like is they go deeper with anecdotal information and it's almost like in-depth interviews in these round tables. So they compliment their quarterly surveys, and their other drill down surveys, with other anecdotal information for people in their community. So it's a tried and true survey practice that adds some color to the dataset. So guys if you bring up the agenda, I want to share with the audience what we're going to talk about today. So, we'll talk a little bit about, you know we just did intros, I want to ask Erik, what ETR VENN is and then we'll go through some of the guests, but if we go back to Erik, explain a little bit about VENN and the whole process and how you guys do that. >> Yeah sure, we should hire you for marketing. You just did a great job, actually, describing that, but about three years ago what we decided was, ETR does an amazing job collecting the data. It can tell you what's happening, who it's happening to and when it's happening. But it can't always tell you why it's happened. So leveraging a lot of my background in twenty-plus years in journalism and institutional Wall Street research, we decided to take the ETR community, the people that actually take the surveys, and start doing interviews with them and start doing events with them. And enable to doing that, we're basically just trying to compliment the survey findings and the data. So what we always say is that ETR will always give you the quantitative answer and VENN will give you the qualitative answer. >> Now guys, let's bring up the agenda slide again, let's take a look at the folks that participated in the round table. Now, for ETR's clients, they actually know the names and the titles and well the company that these guys work for. We've anonymized it for the public. But you had a CIO of a Global Auto Supplier, a CISO of a Diversified Holdings Firm, who actually had some hospitality exposure but also some government contract manufacturing exposure. Chief Architect of a Software ISV and a VP and CISO of a Global Hospitality Resort Chain. So you had three out of the for, Erik, were really in industries that are getting hit hard. Obviously the software company maybe a little bit better. But maybe you can add some color to that. >> Well actually the software company, unfortunately, was getting hit hard as well because they're a software ISV that actually plays into the manufacturing space as well. So, this particular panel of CIOs and CISOs were actually in a very hard hit industries. And are going to make sure we do two more follow-ups with different industry verticals to make sure we're getting a little bit of a wider berth and collect all of that information in a better way. But coming back to this particular call, the whole reason we did this, and as you know, you spoke to my colleague and friend, Sagar Kadakia, who is the Director of Research for ETR, and we were nimble enough to actually change our survey while it was in the field, to start collecting data on what the real-time impact was on the COVID-19 pandemic. We were able to take that information, extrapolate it, and then say okay let's start reading out to these people and dig deeper. Find out why it's happening and even more so, is it permanent? And which vendors are going to win and which vendors might lose from it. So that was the whole reason we set up the series of calls. We've only conducted on so far. We have another one this coming Tuesday as well with four entirely new panelists that are going to be from different industry verticals because, as you astutely pointed out, these verticals were very hard hit and not all of them are as hard as others. So it's important to get a wider cross-section. >> So, guys let's take a look at some of the budget impacts the anecdotal evidence that we gathered here. So let me just scan through it and then Erik, I'll ask you to comment. So, you know, like Erik said, some hard hit industries. All major projects, anything sort of next-generation, have been essentially shelved. That was the ISV. And then another one, we cut at least 70% of the big projects moving forward. He mentioned ServiceNow actually calls them out, but the ServiceNow is a SaaS company they'll probably, you know, weather the storm here. But he did say we've put that on hold. The best comment, you know, "As-a-service has Saved our SaaS." (Erik laughs) That one's great. And then we're going to get into some of the networking commentary. Some really interesting things about how to support the work from home. You know, kind of shifting from a hardened top into remote workers. And then a lot of commentary on security. So, you know, that's sort of a high level scan and there's just so much information here Erik, but maybe you could sort of summarize on some of that commentary. >> Yeah, we should definitely dig into each of those sectors a little more, but to summarize what we're seeing here was the real winners and losers are clear. Not everyone was prepared to have a work from home strategy. Not everyone was prepared to send their workers out. Their VPN wasn't, they didn't have enough bandwidth. So there was a real quick uptick in spending, but longer term we're starting to see that these changes will become more permanent. So the real winners and losers right now, we're going to see on the loser's side traditional networking. The MPLS networking is in a lot of trouble according to all the data and the commentary that we're seeing. It's expensive, it's difficult to ramp to up bandwidth as quickly as you need and it doesn't support remote. So we're seeing that lose out and the winners there are in the SD-WAN space. It's going to be impossible to ignore that going forward and some of our CIO and CISO panelists said that change will be permanent. Also, we're seeing, at the same time, what they were calling a "SaaS and Cloud". Now, we know these trends obviously were already happening but they're being exacerbated. They're happening even more quickly and more strong. And I don't see that changing any time soon. That, of course, is at the expense of network, I'm sorry, data centers. Whether it be your own or hosted. Which has huge ramifications on on-prem hardware. Even the firewall providers. So what we're seeing here is obviously we know things are going to be impacted by this situation. We didn't necessarily expect all of our community members and IT decision-makers to talk about them being possibly permanent. So that on a high level was something that was extremely interesting. And the last one that I would bring up is that as we make this shift towards working from home, towards remote access, you also have to align yourself with the security that can support that. And one of the things that we're seeing in our data side on ETR, is a widening bifurcation between the next-generation security vendors and the more traditional security or the legacy security players. That bifurcation just keeps getting wider and wider and this situation could be the last straw. >> So I want to follow up on a couple of those things. You're talking about sort of the network shift you know, towards the SD-WAN. What people have described to me is that they got a, you know, a hardened top. It's a hierarchical network. It's very well understood and it's safe, right? And now all of a sudden you got all those remote workers and so you've got to completely soft of rethink your whole network architecture. The other thing I want to drill into is your Cloud commentary. There's a comment that I saw, Erik, that really stood out. One of the folks said, "I would like to see the data centers "be completely deleted, if you will, or closed down." I think we're going to see, you know, a lot more of this obviously. Not only from the standpoint of, and you heard this a lot, the kind of paid by the drink. But just generally getting rid of all that sort of so-called non-differentiated heavy-lifting as we often hear about. >> That is a extreme comment. I don't think everyone feels that way. But, yes, the comment was made and we've heard the comment from other people. As you and I both know, the larger the enterprise the harder that is to go completely SaaS. But yeah, when a situation like this has and see the inflexibility of their on-prem infrastructure, yes it becomes something that really has to be addressed and it can become a permanent change. I was also shocked about that comment. That gentleman also stated that his executives outside of the ITs area, the CEO, the CFO, had never ever, ever wanted to discuss Cloud. They did not want to discuss work from home. They did not want to discuss remote access. He said that conversation has changed immediately and to the credit of the actual IT companies out there, the technology companies, they're doing everything they can with this opportunity to make that happen. >> Yeah, and so you're right the whole work from home conversation. To your point earlier, Erik, big chunks of COVID, the post-COVID world are going to remain permanent. Guys bring up the SaaS slide if you will. The SaaS commentary, "As-a-Service Saved our SaaS." "The wittiest quip award" going to the ETR. You know, but you had, what's very interesting to hear folks, in fact I think somebody even called out, "Hey," you know, "we expected Oracle to," you know, "be auditing us but they're actually being supportive "as is IBM." Salesforce was an interesting common, Erik. One of the folks said they would share accounts on-prem, but when they all do the work from home they had to actually buy some more. You also got Cisco with big props. Microsoft was called out. A lot of organizations actually allowing them to defer payments. So the SaaS vendors actually got very high marks didn't they? >> They really did and even I wrote that summary and it was difficult to write that about Oracle because we all know that they're infamous for auditing their own customers in 2009 right after we came out of financial crisis. They have notoriously been a-- I don't know if they found religion and they decided to be nice to their customers, but every-single person mentioned them as one of the vendors that was actually helping. That was very shocking. And we all know that when bad situations happen people become opportunistic. And right now it's really seeming that the SaaS vendors understand that they need a longterm relationship with these customers and they're being altruistic instead. Which is really nice. >> Yeah I think that anybody with a Cloud realizes that hey, we have an opportunity here that the lifetime value of that customer, whereas maybe in 2009 when Oracle didn't have a Cloud, they had to get people in a headlock to try to persevere their, you know, income statement. Let's go to the networking drill down guys, that next slide because Fortinet, some of the things we've been reporting on is the sort of divergence in evaluations between Fortinet and Palo Alto before this whole thing hit, Fortinet has done a really good job with its Cloud offerings. Palo Alto struggles a little bit with trying to figure out the sales compensation, is maybe a little bit behind. Although both companies got strong props and I've talked to a number of customers, Palo Alto is going to be in the mix. Fortinet, from a Cloud standpoint, seems to be doing quite well? Obviously networking, Cisco is the big gorilla there. But we also got call outs from guys like Trend Micro which was interesting, from some of the folks. So, your thoughts on this Erik. >> Yeah, I'll start on the networking side because this is something that I've really, I've dug into quite amount, in not only this panel, but a lot of interviews and it really seems as if as networking refresh starts to come up, and it's coming up with a lot of large enterprises, when your network refresh comes up people are going to do an RFP for SD-WAN. They are sick and tired of paying MPLS network vendors and they really want to look at something else. That was even prior to this situation. Now what we're hearing is this is a permanent change. I particularly had one person say, I wanted to find this quote real quickly if I can, but basically they basically saying that, "From a permanency perspective, the freedom from MTLS "will reduce our networks spend by over half "while more than doubling or tripling our bandwidth." You can't ignore that. You're going to save me money and triple my bandwidth, and hey by the way, my refresh is due. It's something that's coming and it's going to happen. And yes, you mentioned the few right? There's Viptela, there's Velocloud, there's some big players like Cisco. The Palo Alto just acquired CloudGenix in the midst of all of this. They just went and got an SD-WAN player themselves. And they just keep acquiring a portfolio to shift from their on-prem to next-generation. It's going to take some time, because 70% plus of their revenues is still on-prem hardware, but I do believe that their portfolio that they're creating is the way the world is moving. And that's just one comment on the traditional networking versus the next-generation SD-WAN. >> And the customers have indicated, you know it's not easy just to get off of their MPLS network. I mean it takes time, it's like slowly pulling of the bandaid. But, like many things, COVID-19 is sort of accelerating that. We haven't talked about digital transformation. That came up as a maybe more strategic initiative. But one that very clearly has legs. >> You know, David, it's very simple. You just said it. People, when things are going well and they're comfortable, they don't change. And that's the same for an enterpriser company. Hey, everything's great, our revenue's fine. Why would we do this? We'll worry about that next year. Then something like this happens and you realize wow, we've been dragging our feet. That digital transformation that we've been talking about, and we've been a little bit slow to accept, we need to accept it, we need to move now. And yes, it was another one of the major themes and it sounds silly for researchers like you and I because we know this is a theme. We know Clouded option is there, we know digital transformation is there. But, there are still a lot of people that haven't moved as quickly as they should and this is going to be that final catalyst to get them there, without a doubt. Quickly on your point of Fortinet, I was actually very impressed with the commentary that came from that because Fortinet is sometimes one of those names that you think of that maybe plays in a smaller pool or isn't as big as some of the 800 pound gorillas out there. But in other other interviews besides this I've heard the phrase coined of "Forti-everything". So through RND and through acquisition, Fortinet has really expanded the portfolio and right now is their time to shine because when you have smaller satellite, you know, offices and branches that you need to connect, they're really, really good at it. And you don't always want to call a Palo Alto and pay that price when you have smaller branch offices. And I actually, I was glad you brought up Fortinet because it's not a name that we get to herald that often and it was deserving from this panel. >> Yeah and, you know, companies that can secure gateways, secure endpoints, obviously going to have momentum. Zscaler came up, you know I think that, and I'll tell ya, looking at, I've done a couple of breaking analysis on security and Fortinet has been strong in two dimensions. You know ETR is, as our audience is I think getting to know. We really look at two key metrics. One is net score, which is a measure of spending momentum, and the other is market share, which is a measure of pervasiveness. And companies like Fortinet, in security, show up on both of those dimensions so it's notable. >> Yes, it certainly is, it is. And I'm glad you brought up Zscaler too. Very recently by client request, we did a very in-depth research on Zscaler versus Palo Alto Prisma Access and they were very interested. This was before all this happened, you know. Does Palo Alto have a chance of catching up, taking share from Zscaler. And I've had the pleasure, myself, personally hosting Jay the CEO of Zscaler at an event in New York City. And I have nothing but incredible respect for the company. But what we found out through this research is Zscaler, at the moment, their technology is still ahead, according to their answers. There's no doubt. However, there doesn't seem to be any real secret sauce that will stop Palo Alto from catching up. So we do believe the parody of feature set will shrink over time. And then it will come down to Palo Alto obviously has a wider and user base. Now, what's happening today might change that. Because if I had to make a decision right now, for my company on secure web gateway, I'm still probably going to go to Zscaler. It's the name. If I had to choose that in a year from now, Palo Alto might have had a better chance. So in this panel, as you brought up, Zscaler was mentioned numerous times as just the wave of the future. Along with CASB brokers right? Whether you're talking about a Netskoper or Forcepointer. All those people that also play in CASB space to secure your access. Zero trust is no longer a marketing-hype term. It is real and it is becoming more real by the week. >> And so, I want to kind of end on one of the other comments that really struck me because we're constantly talking about okay, do you go with a portfolio of a suite of services or do you go with best of breed? What about startups? Are startups more risky in a crisis like this? And one of your panelists, I just love this comment, he said, "One of things that I've always done," he said, "You always hear about the guy, "oh we're going to go to the gardener, we're going to "check out the magic water, we'll pick out three guys "in the upper right hand corner and test them out." He says, "One of the things I always like to do, "I'll pick two from the upper right "and I'll take one from the lower left." One of the emerging, text, "And I'll give em a shot." It won't win every time, but then he called out FireEye as one of the organizations that he found early that gave them competitive advantage. >> Right. >> Love that comment. >> It's a great comment. And honestly if you're in charge of procurement you'd be stupid not to do that. Not only just to see what the technology is, but now I can play you off the big guys because I have negotiating leverage and I can say oh, well I could always just take their contract. So it's silly not to do it from a business perspective. But from technology perspective, what we kept hearing from these people with the smaller vendors. My partner Peter Steube, my colleague and I, we did the host together, we asked this question really believing that the financial insecurity of the moment and the times would make smaller vendors not viable. We heard the exact opposite. What our panelists said was, "No, I'd be happy "to work with a smaller vendor right now "because they're going to give me pricing flexibility, "they're going to work with me right now. "I don't need to pay them upfront "because we're seeing a permanent shift from CapEx to OpEX, "and the smaller vendors are willing to work with me and I can pay them later." So we were actually surprised to hear that and glad to hear it because, to connect to your other point, the other person who was talking about security and the platform approach versus best of breed, he said "Listen, platform approaches you're already "with the vendor, you can bundle a little bit. "But the problem is, if you're just going to acquire "a new technology every time there's a new threat, "the bad guys are just going to switch the threat. "And you can't acquire indefinitely. "So therefore, best of breed with security "will always beat platform." And that's kind of a message to Palo Alto and Cisco, in my opinion, because they seem to be the ones fighting that out. Even Microsoft now, trying to say they're a platform approach in security. >> Well and this says to me the security business, as we predicted, is going to stay fragmented because you're still going to get that best of breed. You know, just like Cloud is going to be fragmented and it's, you know, multiple vendors. Ever since I've been in this business people are trying to consolidate the number of vendors, but technology moves so quickly, it gives competitive advantage. Erik, awesome! Thank you so much for joining us. I'm looking forward to next Tuesday with the next vendor and love to have you back and talk about it anytime. You're a great guest, thanks so much. >> Certainly, I'll do my best to get a better AV connection the next time guys, I apologize for that. But it was great talking to you tonight. >> Hey we're all learning, you know so, thank you everybody for watching, this is Dave Vellante for theCUBE and we'll see you next time. (upbeat music)

>>long from Las Vegas. It's the Q covering a ws re invent 2019. Brought to you by Amazon Web service is and in along with its ecosystem partners. >>Hey, welcome back to the cubes. Coverage of AWS 19 from Las Vegas. This is Day two of our coverage of three days. Two sets, lots of cute content. Lisa Martin here with Justin Warren, founder and chief analyst. A pivot nine. Justin and I are joined by a couple of guests New to the Cube. We've got David Meister next to meet Global head of sales for Io Tahoe. Welcome. Eddie Edwards with a cool name. Global Data Service is director from Direct Energy. Welcome, Eddie. Thank you. Okay, So, David, I know we had somebody from Io Tahoe on yesterday, but I'd love for you to give her audience an overview of Io Tahoe, and then you gotta tell us what the name means. >>Okay. Well, day pie stir. Io Tahoe thinks it's wonderful event here in AWS and excited to be here. Uh, I, oh, Tahoe were located in downtown on Wall Street, New York on and I Oh, Tahoe. Well, there's a lot of different meanings, but mainly Tahoe for Data Lake Input output into the lake is how it was originally meant So But ah, little background on Io Tahoe way are 2014. We came out way started in stealth came out of stealth in 2017 with two signature clients. When you're going to hear from in a moment direct energy, the other one g e and we'll speak to those in just a moment I owe Tahoe takes a unique approach way have nine machine learning machine learning algorithms 14 future sets that interrogates the data. At the data level, we go past metadata, so solving that really difficult data challenge and I'm gonna let Eddie describe some of the use cases that were around data migration, P II discovery, and so over to you >>a little bit about direct energy. What, you where you're located, What you guys do and how data is absolutely critical to your business. Yeah, >>sure. So direct energy. Well, it's the largest residential energy supplier in the er us around 5000 employees. Loss of this is coming from acquisitions. So as you can imagine, we have a vast amount of data that we need some money. Currently, I've got just under 1700 applications in my portfolio. Onda a lot. The challenges We guys are around the cost, driving down costs to serve so we can pass that back onto our consumers on the challenge that with hard is how best to gain that understanding. Where I alter whole came into play, it was vainly around off ability to use the products quickly for being able to connect to our existing sources to discover the data. What, then, that Thio catalog that information to start applying the rules around whether it be legislation like GDP, are or that way gets a lot of cases where these difference between the states on the standings and definitions so the product gives us the ability to bring a common approach So that information a good success story, would be about three months ago, we took the 30 and applications for our North America home business. We were able to running through the product within a week on that gave us the information to them, consolidate the estate downwards, working with bar business colleagues Thio, identify all the data we don't see the archival retention reels on, bring you no more meaning to the data on actually improve ourselves opportunities by highlights in that rich information that was not known >>previously. Yes, you mentioned that you growing through acquisition. One thing that people tend to underestimate around I t. Is that it's not a heterogeneous. It's not a homogeneous environments hatred genius. Like as soon as you buy another company, you've got another. You got another silent. You got another day to say. You got something else. So walk us through how iota who actually deals with that very disparity set of data that you've night out inherited from just acquiring all of these different companies? >>Yeah, so exactly right. You know, every time we a private organization, they would have various different applications that were running in the estate. Where would be an old article? I say, Hey, sequel tap environment. What we're able to do is use the products to plug in a name profile to understand what's inside knowledge they have around their customer base and how we can number in. That's in to build up a single view and offer additional products value adding products or rewards for customers, whether that be, uh on our hay truck side our heat in a ventilation and air con unit, which again we have 4600 engineers in that space. So it's opening up new opportunities and territories to us. >>Go ahead, >>say additionally to that, we're across multiple sectors, but the problem death by Excel was in the financial service is we're located on Wall Street. As I mentioned on this problem of legacy to spirit, data, sources and understanding, and knowing your data was a common problem, banks were just throwing people at the problem. So his use case with 1700 applications, a lot of them legacy is fits right into what we d'oh and cataloging is he mentioned. We catalogue with that discover in search engine that we have. We enable search cross enterprise. But Discovery we auto tag and auto classify the sensitive data into the catalog automatically, and that's a key part of what we do. And it >>was that Dave is something in thinking of differentiation, wanting to know what is unique about Iota. What was the opportunity that you guys saw? But is the cataloging and the sensitive information one of the key things that makes it a difference >>Way enabled data governance. So it's not just sensitive information way catalog, entire data set multiple data sets. And what makes us what differentiates us is that the machine learning way Interrogate in brute force The data So every single so metadata beyond so 1,000,000,000 rose. 100,000 columns. Large, complex data sets way. Interrogate every field value. And we tell you what this looks like A phone number. This looks like an address. This looks like a first name. This looks like the last name and we tagged at to the catalog. And then anything that sensitive in nature will color coded red green, highly sensitive, sensitive. So that's our big differentiator. >>So is that like 100% visibility into the granularity of what is in this data? >>Yes, that's that's one of the issues is who were here ahead of us. We're finding a lot of folks are wanting to go to the cloud, but they can't get access to the data. They don't know their data. They don't understand it. On DSO where that bridge were a key strategic partner for aws Andi we're excited about the opportunity that's come about in the last six months with AWS because we're gonna be that key geese for migration to the cloud >>so that the data like I love the name iota, How But in your opinion, you know, you could hear so many different things about Data Lake Data's turning into data Swamp is there's still a lot of value and data lakes that customers just like you're saying before, you just don't know what they have. >>Well, what's interesting in this transition to one of other clients? But on I just want to make a note that way actually started in the relational world. So we're already a mess. We're across header genius environment so but Tahoe does have more to do with Lake. But at a time a few years back, everybody was just dumping data into the lake. They didn't understand what what was in there, and it's created in this era of privacy, a big issue, and Comcast had this problem. The large Terry Tate instance just dumping into the lake, not understanding data flows, how they're data's flowing, not understanding what's in the lake, sensitivity wise, and they want to start, you know they want enable b I. They want they want to start doing analytics, but you gotta understand and know the data, right? So for Comcast, we enable data ops for them automatically with our machine learning. So that was one of the use cases. And then they put the information and we integrated with Apache Atlas, and they have a large JW aws instance, and they're able to then better govern their data on S O N G. Digital. One other customer very complex use case around their data. 36 e. R. P s being migrated toe one virtually r p in the lake. And think about finance data How difficult that is to manage and understand. So we were a key piece in helping that migration happen in weeks rather than months. >>David, you mentioned cloud. Clearly weird. We're at a cloud show, but you mentioned knowing your data. One of the aspect of that cloud is that it moves fast, and it's a much bigger scale than what we've been used to. So I'm interested. Maybe, Eddie, you can. You can fill us in here as well about the use of a tool to help you know your data when we're not creating any less stated. There's just more and more data. So at this speed and this scale, how important is it that you actually have tooling to provide to the to the humans who have to go on that operate on all of this data >>building on what David was saying around the speed in the agility side, you know, now all our information I would know for North America home business is in AWS Hold on ns free bucket. We are already starting work with AWS connect on the call center side. Being able to stream that information through so we're getting to the point now is an organization where we're able to profile the data riel. Time on. Take that information Bolts predict what the customers going going to do is part that machine learning side. So we're starting to trial where we will interject into a call to say, Well, you know, a customer might be on your digital site trying to do a journey. You can see the challenges around data, and you could Then they go in with a chop using, say, the new AWS trap that's just coming through at the moment. So >>one of the things that opportunities I'm here. Sorry, Eddie is the opportunity to leverage the insights into the data to deliver more. You mentioned like customer words, are more personalized experience or a call center agent. Knowing this is the problem of this customer is experiencing this way. Have tried X, y and Z to resolve, or this customer is loyal to pay their bills on time. They should be eligible for some sort of reward program. I think consumers that I think amazon dot com has created us this demanding consumer that way expect you to know us. I expect you to serve us up things that you think we want. Talk to me about the opportunity that I owe Ty was is giving your business to be able to delight customers in ways that you probably couldn't even have predicted? >>Well, they touched on the tagging earlier, you know, survive on the stunned in the data that's coming through. Being able to use the data flow technology on dhe categorizing were able than telling kidding with wider estate. So David mentioned Comcast around 36 e. R. P. You know, we've just gone through the same in other parts of our organization. We're driving the additional level of value, turning away from being a manually labor intensive task. So I used to have 20 architects that daily goal through trying to build an understanding the relationship. I do not need that now. I just have a couple of people that are able to take the outputs and then be able to validate the information using the products. >>And I like that. There's just so much you mentioned customer 360. Example at a call centre. There's so much data ops that has to happen to make that happen on. That's the most difficult challenge to solve. And that's where we come in. And after you catalogue the data, I just want to touch on this. We enable search for the enterprise so you're now connected to 50 115 100 sources with our software. Now you've catalogued it. You profiled it. Now you can search Karen Kim Kim Smith, So your your your engineers, your architect, your data stewards influences your business analysts. This is folks can now search anything they want and find anything sensitive. Find that person find an invoice, and that helps enable. But you mentioned the customer >>360. But I can Also. What I'm hearing is, as it has the potential to enable a better relationship between I t in the business. >>Absolutely. It brings those both together because they're so siloed. In this day and age, your data siloed and your business is siloed in a different business unit. So this helps exactly collaborate crowdsource, bring it all together. One platform >>and how many you so 1700 applications. How many you mentioned the 36 or so air peace. What percentage? If you can guess who have you been able to reduce duplicate triplicate at center applications? And what are some of the overarching business benefits that direct energy is achieving? >>So incentive the direct senator, decide that we're just at the beginning about journey. We're about four months in what? We've already decommissioned 12. The applications I was starting to move out to the wider side in terms of benefits are oh, I probably around 300% of the moment >>in a 300% r A y in just a few months. >>Just now, you know you've got some of the basic savings around the story side. We're also getting large savings from some of the existing that support agreements that we have in place. David touched on data Rob's. I've been able to reduce the amount of people that are required to support the team. There is now a more common on the standing within the organization and have money to turn it more into a self care opportunity with the business operations by pushing the line from being a technical problem to a business challenge. And at the end of the day, they're the experts. They understand the data better than any IittIe fault that sat in a corner, right? So I'm >>gonna ask you one more question. What gave you the confidence that I Oh, Tahoe was the right solution for you >>purely down Thio three Open Soul site. So we come from a you know I've been using. I'll tell whole probably for about two years in parts of the organization. We were very early. Adopters are over technologies in the open source market, and it was just the ability thio on the proof of concept to be able to turn it around iTunes, where you'll go to a traditional vendor, which would take a few months large business cases. They need any of that. We were able to show results within 24 48 hours on now buys the confidence. And I'm sure David would take the challenge of being able to plug in some day. It says on to show you the day. >>Cool stuff, guys. Well, thank you for sharing with us what you guys are doing. And I have a Iot Tahoe keeping up data Lake Blue and the successes that you're cheating in such a short time, but direct energy. I appreciate your time, guys. Thank you. Excellent. Our pleasure. >>No, you'll day. >>Exactly know your data. My guests and my co host, Justin Warren. I'm Lisa Martin. I'm gonna go often. Learn my data. Now you've been watching the Cube and AWS reinvent 19. Thanks for watching

>> [Disembodied Voice] From New York, it's the cube. Covering escape 19. >> Welcome back to the Cube's coverage here in New York City for the inaugural multi-cloud conference called Escape 2019. This is a conference dedicated, first conference dedicated to conversations and content and people around the trend of multi-cloud, which I've been critical of, I've called BS in the past. But it is multi-vendor it's developing and the architecture for true multi-cloud is on the horizon. Where well, we will be relevant. Our next guest is Daniel Wall, senior Distinguished Engineer at Red Hat, working on a lot of the technology around what Kubernetes and containers is create a lot of buzz around and that is the abstraction layer around working across clouds. Daniel, welcome to The Cube. >> Thank you for having me. >> I'm sure I butchered what you do, but I know you make a lot of tools. You make containers work. Talk about your role at Red Hat real quick. >> So my role at Red Hat is I am the technical lead of container technology, everything basically underneath Kubernetes main projects over the last few years is to look at what Docker did and then split them into individual tasks. I believe that Docker should be broken into four different main tasks move and container images around playing with containers, building container images, and running containers in production. And then we can run different security realms around each one of them. So we have tools to do that a Scopio, Podman build, and CRI-O is the one we use for Kubernetes. >> And how's it going? Good? >> It's going great. Yeah, we're getting great up. A lot of community support. A lot of people are really excited about some of the security features for so you can run full containers where you traditionally would do a darker you can run a totally non routes and much more secure. >> Well, I'm really interested in your talk you're giving here because the folks that follow The Cube know some of my tirades I've been on the past. I've been saying for a long time that there's been a very non-selection of clouds outside the big three, >> Right. >> And you had a power law that has, know who the big guys and a long tail of people creating their own little niche services. But income, the essentials and the global size and channel part is people using cloud. We have a video cloud, we're building more and more clouds for our media business. This, I was talking about the rise of these new clouds right?. >> Right. >> You're actually put some structure around this around, You're talking about Walmart clouds and niche clouds. Could you explain so this is really important. I want you to take some time to explain that. >> Okay, so my talk today I call it the Walmart clouds, although the analogy is when Walmart first started showing up in the United States and different areas, all of the department stores basically went out of business because Walmart was able to out-commoditize everything in the universe. And so, all these major vendors, district department stores went out of business. The one thing that didn't go out of business was sort of like specialty stores. So, I always kid around and say my wife has me every weekend sitting out front of these specialty stores that she loves to stop shop at. So if I look at the way the clouds have happened is basically most people say there's three major clouds, although I think they ignore one. So you look at Amazon, you have Google and you have Microsoft Azure, although I think Alibaba is going to become important in the future. And I call those the Walmart clouds, because basically, their whole goal is to commoditize and get rid of all the other, >> And scale up and provide more and more departments more services, >> But basically it they will always be rushing to get to the cheapest price. But there were a bunch of other cloud vendors out of the specialty cloud vendors like you talking about the Cube one, you this might be the best one to do in video. So I might want to put part of my workload in the Microsoft cloud or the Amazon cloud to get the cheapest price but I want to run certain certain workloads inside the U.S. We look at another example that is Nvidia right? and there's the Nvidia cloud and they might put the best GPUs in there. And you might want to do your machine learning your AI technologies might want to go in there because they might work better. IBM, who obviously bought Red Hat, but but IBM, you look at what they're doing in their cloud, they can have power series, they can have, mainframe workload z series. They might even have, some of their future, super duper computers type things in it. And then you have Oracle and Oracle would have database, they're probably going to do databases, they've massive database technologies inside of their cloud. So when you really >> Well, they think they're one of the big clouds. But they're not. >> They do. >> But their specialty Database Cloud. >> Basically, I believe that they are. I believe IBM, I think all of them are niche, especially clouds. But the bottom line is you need an API to move between these clouds so you can put workloads in different instances. And I believe that the Walmart clouds the the AWS and Microsoft and Google, their whole goal is to get you into their cloud. They might talk a little bit about on prem cloud and supporting your data centers. But their real goal is to get you off your data centers into their cloud, so they can start making money. They won't have no interest in supporting these, sort of the specialty cloud vendors. But if you look at open shift, which Kubernetes, from Red Hat, our goal is to basically make moving your cloud instances around and keep commodity and stability and move to clouds around. >> Let's take it through a working example. So there's couples and use cases that I see happening, I want to get your reaction. One is our cloud. We're (mutters intelligibly) which we do have. It's coming out. It's on Amazon. So we were small, self funded, company growing having fun. We're building on Amazon. We don't do any work in Azure our solutions on Amazon. Another use case might be a vendor that says hey I have proprietary software, I'm going to stand up my own cloud infrastructure and do all that and build it from the ground up. Is there a difference between the two? Because one is co-locating essentially on Amazon. leveraging the cheap commodity, but building differentiated niche on top of it, versus the standing up a full cloud? >> Well, what I would argue, first of all is is I would want you are your cloud, the one that you're saying is in say, Amazon, it what is the chance of you guys basically getting an offer from Azure to a nickel less per hour. >> Pretty high!(laughs amusingly) >> To be able to move your cloud over, >> It might be high. >> And the problem I would see is if your cloud inside of Amazon cloud starts to take advantage of Amazon's features, then all of a sudden it gets harder and harder for you. the cost of moving off is going to get harder and harder. If you use open source solutions, pure open source and not tied to individual cloud vendors. Then it would become much easier for you to move around. So you could take advantage of, commodity, right? And that you mean, another analogy I use with the big cloud vendors is Hansel and Gretel right. They all want you to come on in and come on in have some of our candy, have some our candy. And next thing you know, you're inside the cage. And, you know, but if you stick to open source, right, this is in a lot of ways the major cloud vendors is a major threat to open source, and that they're trying to lock everybody in right there. We lost it. >> Okay so what's the path? So I told it, by the way, I'm getting what your saying. So I say great I'll take advantage of the cheap I as the infrastructure service layer. But then what an open source toy usually open shift, I still got to build my app, I got to still host it. >> Right. So you build you build your app on top of it. So let me define what open shift is. And so open shift is basically Red Hat's enterprise version of Kubernetes. So if you look at Kubernetes, Kubernetes in some ways is just a higher level distribution of software. So when when Red Hats got into Linux business, there were lots and lots of Linux distributions. And what Red Hat did is they picked a whole kernel and a whole bunch of packages and joined them together and created a distribution that everybody could agree on and build on. So with open shift we're doing is we're taking Kubernetes, but there's a whole bunch of CNCF projects, and we're joining them all together and then testing them and making enterprise so that ready. But really Kubernetes is the key factor here in that if you build everything Kubernetes you CNCF open source projects, for your, save your storage, put it on staff, so Gloucester, one of the network based file systems in the open source world, instead of diving directly into Amazon, now you have the flexibility to be able to get out of the- >> So here's an Architectural question. So I got to ask you as multi-cloud conversation starts to heat up, and by the way, I think people have multiple clouds. It's just not multi-clouding. Right, right, right. Yeah, but it's coming. So architecturally what do someone have to think about architecturally for multi cloud? What's in the mind of the technical architect out there? >> What's on them? What are they should be thinking about from an architecture because you don't want to forclose the future. But I also want to get the best what I can get today from the clouds. >> I mean, I keep keep on hammering on it, but stick to the open source projects to do this as the CNCF projects just to allow you flexibility. A lot of it, the real problem with a lot of this technology right now is it's developing so fast. I mean, I think we have a Kubernetes version every two weeks, it seems at least in my team and see it feels like it. >> So you think Red Hat's of good vendor for the supplier for that person. >> Obviously >> Yeah you know some stuff is hard to deal with so it (mutters) look I'm so busy, these guys, I'm trying to get the transformation going. I don't have time to keep track of what's going on in CNCF. >> Yeah, well, we're a co worker of mine talks about your Red Hat and open shift is a plumbing tool or an electric we're building the foundation of your house and we put the electrical systems and the plumbing empties into your house, but we still need applications to run so we need you you need a toast or you need a toilet, you need a sink. And the applications and one of the one of the differences between Red hat and sort of the cloud vendors is we try not to get into the product, the lab and product business. So we want to support open source projects and other products running in our environment. If you compare that to running inside a cloud, you know if you become incredibly successful inside of Amazon, your video cloud business wants to prevent Amazon to say, oh, we'll just do video will steal everything they're doing and all a sudden we'll do the video inside of Amazon and then put your your cloud out of business. And, your only option then is now you're competing Amazon in Amazon against Amazon. How do you get out of Amazon >> That's called 3D chess.I think. Or maybe 4D chess. >> So if you you know My point being if you have an opportunity to get out and compete against Amazon say on Microsoft compete on your local compete on one of the niche clouds So any vendor that basically ties totally to Amazon, >> This is this is absolutely why I'm here because I believe multi-vendor, that was the buzzword in the 80s and 90s. Is everyone wants to they want to homogeneous they want a heterogeneous network. So multi-vendor will be around multi-cloud has to survive, it will survive. But right now we are in the foundational stages. The second interview, he has talked about plumbing and streets, and that's what we're at. So I guess the final question for you is, as we're setting the foundational infrastructure for multi-cloud, what's the big takeaway that you see that you could share? You mentioned get involved in open source what specifically architecturally should should folks think about in terms of foundational. >> I think, look at what the CNCF that cloud cloud native foundation is doing for open source projects, depends on what level you want to come in. And the bottom line is, built on top of Kubernetes use open standards to do it. Don't fall for the Hansel and Gretel effect of eating the candy because you will find yourself in a cage. >> Well, multi cloud is arrived and it's being thought through by industry leaders from entrepreneurs. We just had the former CEO of Sierra on, now running AVA trace, industry veteran, lot of tech chops in here, laying down the lines, if you will. A lot of good stuff Kubernetes is a key part of the containers. >> Okay, huge part of it. Thanks for coming on. >> Thanks for having me. >> And thanks for sharing the insights here on The Cube. We're in New York City for the inaugural multi-cloud conference Escape 19. I'm John Furrier back with more after this short break (pulsating music) (pulsating music)

>> From the SiliconANGLE Media Office in Boston, Massachusetts, it's theCUBE! Now here's your host, Dave Vellante. >> Hi, everybody, welcome to this Cube Insights, powered by ETR. In this breaking analysis I want to talk to you about what I learned this week at Dell Technology's financial analyst meeting in New York. They gathered all the financial analysts, Rob Williams hosted it, he's the head of IR, Michael Dell of course was there. They had Dennis Hoffman who is the head of strategic planning, Jeff Clarke who basically runs the business and Tom Sweet, of course, who was the star of the show, the CFO, all the analysts want to see him. Dell laid out its longterm goals, it provided much clearer understanding of its strategic direction, basically focused on three areas. Dell believes that IT is getting more complex, we know that, they want to capitalize on that by simplifying IT. We'll talk about that. And then they want to position for the wave of digital transformations that are coming and they also believe, Dell believes, that it can capitalize on the consolidation trend, consolidating vendors, so I'll talk about each of those. And so let me bring up the first slide, Alex, if you would. The takeaways from the Dell financial analyst meeting. Let me share with you the overall framework that Tom Sweet laid out. And I have to say, the messaging was very consistent, these guys were very well-prepared. I think Dell is, from a management perspective, very well-run company. They're targeting three to 5% growth on what they're saying is a 4% GDP forecast. Or sorry, 4%, I have GDP here, it's really 4% industry growth. GDP's a little lower than that obviously. So this is IDC data, Gartner data, 4% industry growth. So that's an error on my part, I apologize. The strategies to grow relative to their competition. So grow share on a relative basis. So whatever the market does, again, not GDP, but whatever the market does, Dell wants to grow faster than the market. So it wants to gain share, that's its primary metric. From there they want to grow operating income and they want to grow that faster than revenue, that's going to throw off cash. And then they're going to also continue to delever the balance sheet. I think they paid down 17 billion in debt since the EMC acquisition. They want to get to a two X debt to EBITA ratio within 18 months. And what they're saying is, you know, they talked about, Tom Sweet talked about this consistent march toward investment-grade rating. They've been talkin' about that for awhile. He made the comment, we don't need to have a triple A rating but we want to get to the point where we can reduce our interest expense, and that will, 'cause they'll drop right into the bottom line. So they talked about these various levers that they can turn, some of them under the P and L, gaining share, some are their operating structure and their organizational structure, and one big one is obviously their debt structure. The other key issue here is will this cut the liquidity discount that Dell faces? What do I mean by that? Well, VMware has about a $60 billion valuation. Dell owns about 80% of VMware, which would equate to 48 billion. But if you look at Dell's market cap, it's only 37 billion. So it essentially says that Dell's core business is worth minus 11 billion. We used to talk about this when EMC owned VMware. Its core business only comprised about 40% of the overall value of the company, in this case because of the high debt, Dell has a negative value. And it's not just the high debt. Michael Dell has control over the voting shares, it's essentially a conglomerate structure, there's very high debt, and it's a relatively low margin business, notwithstanding VMware. And so as a result, Dell trades at a discount relative to what you would think it should trade at, given its prominence in the market, $92 billion company, the leader in every category under the sun. So that's the big question is can Dell turn these levers, drop EBITA or cash to the bottom line, affect operating income, and then ultimately pay down its debt and affect that discount that it trades at? Okay, bring up, if you would, Alex, the next slide. Now I want to share with you the takeaways from the Dell line of business focus. This really was Jeff Clarke's presentations that I'm going to draw from. Servers, we know, they're softer demand, but the key there is they're really faced tough compares. Last year, Dell's server business grew like crazy. So this year the comparisons are lessened. But there's less spending on servers. I'll share with you some of the ETR data. Storage, they call it holding serve, you saw last quarter I did an analysis, I took the ETR data and the income statement, it showed Pure was gaining share at like 22% growth from the income statement standpoint. Dell was 0% growth but is actually growing faster than its competitors. With the exception of Pure. It's growing faster than the market. So Dell actually gained share with 0% growth. Dell's really focused on consolidating the portfolio. They've cut the portfolio down from 80, I think actually the right number is 88 products, down to 20 by May of 2020. They've got some new mid-range coming, they've just refreshed their data protection portfolio, so again, by May of next year, by Dell Technologies World they'll have a much, much more simplified portfolio. And they're gaining back share. They've refocused on the storage business. You might recall after the acquisition, EMC was kind of a mess. It was losing share before the acquisition, it was so distracted with all the Elliott Management stuff goin' on. And kind of took its eye off the ball, and then after the acquisition it took awhile for them to get their act together. They gained back about 375 basis points in the last 18 months. Remember a basis point is 1/100th of 1%. So gaining share and their consistent focus on trying to do that. Their PC business, which is actually doin' quite well, is focused on the commercial segment and focused on higher margins. They made the statement that the PCs are kind of undersupply right now so it's helping margins. There's a big focus in Jeff Clarke's organization on VMware integration. To me this makes a lot of sense. To the extent that you can take the VMware platform and make Dell hardware run VMware better, that's something that is an advantage for Dell, obviously. And at the same time, VMware has to walk the fine line with the ecosystem. But certainly it's earned the presence in the market now that it can basically do what I just said, tightly integrate with Dell and at the same time serve the ecosystem, 'cause frankly, the ecosystem has no choice. It must serve VMware customers. The strategy, essentially, is to, as I say, capitalize on vendor consolidation, leverage value across the portfolio, so whether it's pivotal, VMware integration, the security portfolio, try to leverage that and then differentiate with scale. And Dell really has the number one supply chain in the tech business. Something that Dave Donatelli at HP, when he was at HP, used to talk about. HPE doesn't really talk about that supply chain advantage anymore 'cause essentially it doesn't have it. Dell does. So Jeff Clarke's reorganization, he came in, he streamlined the organization, really from the focus on R and D to product to collaboration across the organization and the VMware integration. I actually was quite impressed with when I first met Jeff Clarke I guess two years ago now, what he and the organization have accomplished since then. No BS kind of person. And you can see it's starting to take effect. So we'll keep an eye on that. The next slide I want to show you, I want to bring in the ETR data. We've been sharing with you the ETR spending intention surveys for the last couple of weeks and months. ETR, enterprise technology research, they have a data platform that comprises 4,500 practitioners that share spending data with them. CIOs, IT managers, et cetera. What I'm showing here is a cut off of the server sector. So I'm going to drill down into server and storage. So these are spending intentions from the July survey asking about the second half of 2019 relative to the first half of 2019. And this is a drill-down into the giant public and private firms. Why do I do that? Because in meeting the ETR, this is the best indicator. So it's big, big public companies and big private companies. Think Uber. Private companies that spend a ton of dough on IT. UPS before it went public, for example. So those companies are in here. And they're, according to ETR, the best indicators. What this chart shows, so the bars show, and I've shared this with you a number of times, the lime green is we're adding, we're new to this platform, we're new adoption. The evergreen is we're spending more, the gray is we're spending the same, the light red or pink is we're spending less, and the dark red is we're leaving the platform. So if you subtract the red from the green you get what's called a net score, and that's that blue line. And this is the overall server spending intentions from that July survey. The end is about 525 respondents out of the 4,500. And this is, again, those that just answered the question on server. So you can see the net score on server spend is dropping. And you can see the market share on server is dropping. The takeaway here is that servers, as a percentage of overall IT spend, are on a downward slope, and have been for quite some time. Back to the January '16 survey. Okay, so that's going to serve us. Let's take a look at the same data for storage. So if, Alex, if you bring up the storage sector slide, You can see kind of a similar trend. And I would argue what's happening here, a couple of things. You've got the CLOB effect, I'll talk about that some more, and you've also got, in this case, the flash, all-flash array effect. What happened was you had all-flash arrays and flash come into the data center, and that gave performance a huge headroom. Remember, spinning disk was the last bastion of mechanical movement and it was the main bottleneck in terms of overall application performance. IO was the problem. Well you put a bunch of flash into the system and it gives a lot of headroom. People used to over-provision capacity just for performance reasons. So flash has had the effect of customers saying, hey, my performance is good, I don't need to over-provision anymore, I don't need to buy so much. So that combined with cloud, I think, has put down the pressure on the storage business as well. Now the next slide, Alex, that I want you to bring up is the vendor net scores, the server spending intentions. And what I've done is I've highlighted Dell EMC. Now what's happening here in the slide, and I realize it's an eye chart, but basically where you want to be in this chart is in the left-hand side. What it shows is the spending intentions and the momentum from the October '18, which is the gray, the April '19, which is the blue, and then the July '19 which is the most recent one. Again, the end is 525 in the servers for the July '19 survey. And you can see Dell's kind of in the middle of the pack. You'd love to be in the left-hand side, you know, Docker, Microsoft, VMware, Intel, Ubuntu. And you don't want to be on the right-hand side, you know, Fujitsu, IBM, is sort of below the line. Dell's kind of in the middle there, Dell EMC. The next slide I want to show you is that same slide for storage. And again, you can see here is that on-- So this is vendor net scores, the storage spending intentions. On the left-hand side it's all the high growth companies. Rubrik, Cohesity, Nutanix, Pure, VMware with vSAN, Veeam. You see Dell EMC's VxRail. On the right-hand side, you see the guys that are losing momentum. Veritas, Iron Mountain, Barracuda, HitachiHDS, Fusion-io still comes up in the survey after the acquisition by Western Digital. Again, you see Dell EMC kind of holding serve in the middle there. Not great, not bad. Okay, so that's kind of just some other ETR data that I wanted to share. All right, next thing we're going to talk about is the macros market summary. And Alex, I've got some bullet points on this, so if you bring up that slide, let me talk about that a little bit. So five points here. First, cloud continues to eat away at on-prem, despite all this talk about repatriation, which I know does happen. People try to throw everything to the cloud and they go, whoa! Look at my Amazon bill, yeah, I get that. That's at the margin. The main trend is that cloud continues to grow. That whole repatriation thing is not moving the on-prem market. On-prem is kind of steady eddy. Storage is still working through that AFA injection. Got a lot of headroom from performance standpoint. So people don't need to buy as much as they used to because you had that step function in performance. Now eventually the market will catch up, all this digital transformation is happening, all this data is flowing through the system and it will catch up, and the storage market is elastic. As NAN prices fall, people will, I predict, will buy more storage. But there's been somewhat of a lull in the overall storage market. It's not a great market right now, frankly, at the macro level. Now ETR does these surveys on a quarterly basis. They're just about to release the October survey, and they put out a little glimpse on Friday about this survey. And I'll share some bullet points there. Overall IT spending clearly is softening. We kind of know that, everybody kind of realizes that. Here's the nuance. New adoptions are reverting to pre-2018 levels, and the replacements are rising. What does this mean? So the number of respondents that said, oh yes, we're adopting this platform for the first time is declining, and the replacements are actually accelerating. Why is that? Well I was at ETR last week and we were talking about this and one of the theories, and I think it's a good one, is that 2016, 2017 was kind of experimentation around digital transformation. 2018, people started to put things into production or closer to production, they were running systems in parallel, and now they're making their bets, they're saying, hey, this test worked, let's put this heavy into production in 2019, and now we're going to start replacing. So we're not going to adopt as much stuff 'cause we're not doing as much experimentation. We're going to now focus and narrow in on those things that are going to drive our business, and we're going to replace those things that aren't going to drive our business. We're going to start unplugging them. So that's some of what's happening. Another big trend is Microsoft. Microsoft is extending its presence throughout. They're goin' after collaboration, you saw the impact that they had on Slack and Slack stock recently. So Slack Box, Dropbox, are kind of exposed there. They're goin' after security, they've just announced a SIM product. So Splunk and IBM, they're kind of goin' after that base. The application performance management vendors. For instance, New Relic. Microsoft goin' after them. Obviously they got a huge presence in cloud. Their Windows 10 cycle is a little slower this time around, but they've got other businesses that are really starting to click. So Microsoft is one of the few vendors that really is showing accelerated spending momentum in the ETR data. Financial services and telcos, which are always leading spender indicators, are actually very weak right now. That's having a spillover effect into Europe, which is over-banked, if I can use that term. Banking heavy, if you will. So right now it's not a pretty picture, but it's not a disaster. I don't want to necessarily suggest this as like going back to 2007, 2008, it's not. It's really just a matter of things are softening and it's, you know, maybe taking a little breath. Okay, so let me summarize the meeting overall. Again, it was a very well-run meeting. Started at 9:00, ended at 12:00, bagged lunch, go home. Nice and crisp. So these guys are very well-prepared. I think, again, Dell is a extremely well-managed company. They laid out a much clearer vision for Wall Street of its strategy, where it's headed. As they say, they're going after IT complexity. I want to make a comment on this. You think about Legacy EMC. Legacy EMC was not the company that you would expect to deal with complexity. In fact, they were the culprit of complexity. One of the things that Jeff Clarke did when he came in, he said, this portfolio's too complex, needs to be simplified. Joe Tucci used to say, overlap is better than gaps. Jeff Clarke said we got too much overlap. We don't have a lot of gaps so let's streamline that portfolio. Taking advantage of vendor consolidation, this is an interesting one. Ever since I've been in this business, which has been quite a long time now, I've been hearing that buyers want to consolidate the number of vendors that they have. They've really not succeeded in doing that. Now can they do that now 'cause there are less vendors? Well, in a sense, yes, there are less sort of on-prem big vendors. EMC's no longer in the market, you don't have companies like Sun and Digital anymore, Compact is gone. HP split in two, but still. You're not seeing a huge number of new vendors, at scale, come into the market. Except you've got AWS and Google as new players there. So I think that injects sort of a new dynamic that a lot of people like to put cloud aside and kind of ignore it and talk about the old on-prem business, but I think that you're going to see a lot of experimentations and workload ins and outs, particularly with AWS and Google and of course Azure, which is in itself, their cloud is almost a separate force. So we'll see how that shakes up. As I say, servers right now, Dell's got a very tough compare. I think Dell will be fine in the server space. Storage, it's all about simplifying the portfolio, they've got a refreshed portfolio focused on regaining share. They've rebranded everything Power, so their whole line is going to be Power by, if it's not already, by May of next year, Dell Technologies World. It's a much more scalable portfolio. And I think Dell's got a lot of valuation levers. They're a $92 billion company, they've got their current operations, their current P and L, their share gains, their cross-company synergies, particularly with VMware, they can expand their TAM into cloud with partnerships like they're doing with AWS and others, Google, Microsoft. The Edge is a TAM expansion opportunity to them. And also corporate structure. You've seen them. VMware acquired Pivotal. They're cleaning that up. I'm sure they could potentially make some other moves. Secureworks is out there, for example. Maybe they'll do some things with RSA. So they got that knob to turn and they can delever. Paying down the debt to the extent that they can get back to investment grade, that will lower their interest rates, that'll drop right to the bottom line, and they'll be able to reinvest that. And Tom Sweet said, within 18 months, we'll be able to get there with that two X ratio relative to EBITA, and that's when they're going to start having conversations with the rating agencies to talk about you know, hey, maybe we can get a better rating and lower our interest expense. Bottom line, did Wall Street buy the story? Yes. But I don't think it's going to necessarily change anything in the near term. This is a show me from Missouri, prove it, execute, and then I think Dell will get rewarded. Okay, so this is Dave Vellante, thanks for watching this Cube Insights powered by ETR. We'll see ya next time. (electronic music)

>>from our studios in the heart of Silicon Valley, Palo Alto, California It is a cute conversation. >>Hey, welcome back already, Jeffrey. Here with the cue, we're in our pal Amato Studios for acute conversation or excited, have ah, many Time Cube alone. I has been at all types of companies. He's moving around. We like to keep him close because he's got a great feel for what's going on. And now he's starting a new adventure. Eso really happy to welcome Alan Cohen back to the studio. Only great to see you. >>Hey, Draft, how are you >>in your new adventure? Let's get it right. It's the D C v c your partner. So this is ah, on the venture side. I'm gonna dark. You've gone to the dark side of the money side That is not a new firm, dark side. You know what's special about this town of money adventure right now, but you guys kind of have a special thesis. So tell us about yeah, and I think you've spoken >>to Matt and Zack. You know my partners in the past, So D. C. V. C is been in the venture business for about a decade and, um, you know, the 1st 5 years, the fund was very much focused on building, ah, lot of the infrastructure that we kind of take for granted. No things have gone into V m wear and into Citrix, and it's AWS, and hence the data collect of the D. C out of D. C. V. C. Really, the focus of the firm in the last five years and going forward is an area we call deep tech, which think about more about the intersection of science and engineering so less about. How do you improve the IittIe infrastructure? But how do you take all this computational power and put it to work in in specific industries, whether it's addressing supply chains, new forms of manufacturing, new forms of agriculture. So we're starting to see all that all the stuff that we've built our last 20 years and really apply it against kind of industrial transformation. So and we're excited. We just raise the $725 million fund. So we I got a little bit of ammunition to work with, >>Congratulate says, It's fun. Five. That's your eighth fund. Yeah, and really, it's consistent with where we're seeing all the time about applied a I and applied machine. Exactly. Right in New York, a company that's gonna build a I itt s'more the where you applying a i within an application, Where you applying machine, learning within what you do. And then you can just see the applications grow exactly right. Or are you targeting specific companies that are attacking a particular industrial focus and just using a eyes, their secret sauce or using deep taxes or secret uh, all of the above? Right. So, like I >>did when I think about D c v c like it's like so don't think about, um, I ops or throughput Orban with think about, um uh, rockets, robots, microbes, building blocks of effectively of human life and and of materials and then playing computational power and a I against those areas. So a little bit, you know, different focus. So, you know, it's the intersection of compute really smart computer science, but I'll give you a great example of something. It would be a little bit different. So we are investors and very active in a company called Pivot Bio, which is not exactly a household name. Pivot bio is a company that is replacing chemical fertilizer with microbes. And what I mean by that is they create microbes they used. So they've used all this big data and a I and computational power to construct microbes that when you plant corn, you insert the microbe into the planting cycle and it continuously produces nitrogen, which means you don't have to apply fertilizer. Right? Which fertilizer? Today in the U. S. A. $212 billion industry and two things happen. One you don't have. All of the runoff doesn't leech into the ground. The nitrous does. Nitrogen doesn't go into the air, and the crop yield has been a being been between about 12 and 15% higher. Right? >>Is it getting put? You know, the food industry is such a great place, and there's so many opportunities, both in food production. This is like beyond a chemical fertilizer instead of me. But it's great, but it's funny because you think of GMO, right? So all food is genetically modified. It's just It took a long time in the past because you had to get trees together, and yet you replant the pretty apples and throw the old apple trees away. Because if you look at an apple today versus an apple 50 years, 100 years, right, very, very different. And yet when we apply a man made kind of acceleration of that process than people, you know, kind of pushed back Well, this is this is not this is not nature, So I'm just curious in, in, in in, Well, this is like a microbe, you know? You know, they actually it is nature, right? So nature. But there'll be some crazy persons that wait, This is not, you know, you're introducing some foreign element into Well, you could take >>potash and pour it on corn. Or you could create a use, a microbe that creates nitrogen. So which one is the chemical on which one is nature, >>right, That that's why they get out. It's a funny part of that conversation, but but it's a different area. So >>you guys look, you guys spent a lot of time on the road. You talked a lot of startups. You talked a lot of companies. You actually talked to venture capitalists and most of the time where you know, we're working on the $4 trillion I t sector, not an insignificant sector, right? So that's globally. It's that's about the size of the economy. You know, manufacturing, agriculture and health care is more like 20 to $40 billion of the economy. So what we've also done is open the aperture to areas that have not gone through the technical disruption that we've seen an I t. Right now in these industries. And that's what's that mean? That's why I joined the firm. That's why I'm really excited, because on one hand you're right. There is a lot of cab you mentioned we were talking before. There is a lot of capital in venture, but there's not a CZ much targeted at the's area. So you have a larger part of global economy and then a much more of specific focus on it. >>Yeah, I think it's It's such a you know, it's kind of the future's here kind of the concept because no one knows, you know, the rate of which tech is advancing across all industries currently. And so that's where you wake up one day and you're like, Oh, my goodness, you know, look at the impacts on transportation. Look at the impacts on construction of the impacts on health care. Look at the impacts on on agriculture. So the opportunity is fantastic and still following the basic ideas of democratizing data. Not using a sample of old data but using, you know, real time analytics on hold data sets. You know, all these kind of concepts that come over really, really well to a more commercial application in a nightie application. Yeah. So, Jeff, I'm kind of like >>looking over your shoulder. And I'm looking at Tom Friedman's book The world is flat. And you know, if we think about all of us have been kind of working on the Internet for the last 20 years, we've done some amazing things like we've democratized information, right? Google's fairly powerful part of our lives. We've been able to allow people to buy things from all over the world and ship it. So we've done a lot of amazing things in the economy, but it hasn't been free. So if I need a 2032 c r. 20 to 32 battery for my key fob for my phone, and I buy it from Amazon and it comes in a big box. Well, there's a little bit of a carbon footprint issue that goes with that. So one of our key focus is in D. C V. C, which I think is very unique, is we think two things can happen is that weaken deal with some of the excess is over the economy that we built and as well as you know, unlock really large profit pulls. At the end of the day, you know, it has the word Venture Patrol says the word capital, right? And so we have limited partners. They expect returns. We're doing this obviously, to build large franchises. So this is not like this kind of political social thing is that we have large parts of the economy. They were not sustainable. And I'll give you some examples. Actually, you know, Jeff Bezos put out a pledge last week to try to figure out how to turn Amazon carbon neutral. >>Pretty amazing thing >>right with you from the was the richest person Now that half this richest person in the world, right? But somebody who has completely transformed the consumer economy as well as computing a comedy >>and soon transportation, right? So people like us are saying, Hey, >>how can we help Jeff meet his pledge? Right? And like, you know, there are things that we work on, like, you know, next generation of nuclear plants. Like, you know, we need renewables. We need solar, but there's no way to replace electricity. The men electricity, we're gonna need to run our economy and move off of coal and natural gas, Right? So, you know, being able to deal with the climate impacts, the social impacts are going to be actually some of the largest economic opportunities. But you can look at it and say, Hey, this is a terrible problem. It's ripping people across. I got caught in a traffic jam in San Francisco yesterday upon the top of the hill because there was climate protest, right? And you know, so I'm not kind of judging the politics of that. We could have a long conversation about that. The question is, how do you deal with these real issues, right and obviously and heady deal with them profitably and ethically, and I think that something is very unique about you know, D. C. V. C's focus and the ability to raise probably the largest deep tech fund ever to go after. It means that you know, a lot of people who back us also see the economic opportunity. And at the end of day there, you know, a lot of our our limited partners, our pension funds, you know, in universities, like, you know, there was a professor who has a pension fund who's gotta retire, right? So a little bit of that money goes into D C V C. So we have a responsibility to provide a return to them as well as go after these very interesting opportunities. >>So is there any very specific kind of investment thesis or industry focus Or, you know, kind of a subset within, you know, heavy lifting technology and science and math. That's a real loaded question in front of that little. So we like problems >>that can be solved through massive computational capability. And so and that reflects our heritage and where we all came from, right, you and I, and folks in the industry. So, you know, we're not working at the intersection of lab science at at a university, but we would take something like that and invest in it. So we like you know we have a lot of lessons in agriculture and health care were, surprisingly, one of the largest investors in space. We have investments and rocket labs, which is the preferred launch vehicle for any small satellite under two and 1/2 kilograms. We are large investors and planet labs, which is a constellation of 200 small satellites over investors and compel a space. So, uh, well, you know, we like space, and, you know, it's not space for the sake of space. It's like it's about geospatial intelligence, right? So Planet Labs is effectively the search engine for the planet Earth, right? They've been effectively Google for the planet, right? Right. And all that information could be fed to deal with housing with transportation with climate change. Um, it could be used with economic activity with shipping. So, you know, we like those kinds of areas where that technology can really impact and in the street so and so we're not limited. But, you know, we also have a bio fund, so we have, you know, we're like, you know, we like agriculture and said It's a synthetic biology types of investments and, you know, we've still invest in things like cyber we invest in physical security were investors and evolve, which is the lead system for dealing with active shooters and venues. Israel's Fordham, which is a drone security company. So, um, but they're all built on a Iot and massive >>mess. Educational power. I'm just curious. Have you private investment it if I'm tree of a point of view because you got a point of view. Most everything on the way. Just hear all this little buzz about Quantum. Um, you know, a censure opened up their new innovation hub in the Salesforce tower of San Francisco, and they've got this little dedicated kind of quantum computer quanta computer space. And regardless of how close it is, you know there's some really interesting computational opportunities last challenges that we think will come with some period of time so we don't want them in encryption and leather. We have lost their quantum >>investments were in literally investors and Righetti computing. Okay, on control, cue down in Australia, so no, we like quantum. Now, Quantum is a emerging area like it's we're not quite at the X 86 level of quantum. We have a little bit of work to get there, but it offers some amazing, you know, capabilities. >>One thing >>that also I think differentiates us. And I was listening to What you're saying is we're not afraid. The gold long, I mean a lot of our investments. They're gonna be between seven and 15 years, and I think that's also it's very different if you follow the basic economics adventure. Most funds are expected to be about 10 years old, right? And in the 1st 3 or four years, you do the bulk of the preliminary investing, and then you have reserves traditional, you know, you know, the big winners emerged that you can continue to support the companies, some of ours, they're going to go longer because of what we do. And I think that's something very special. I'm not. Look, we'd like to return in life of the fun. Of course, I mean, that's our do share a responsibility. But I think things like Quantum some of these things in the environment. They're going to take a while, and our limited partners want to be in that long ride. Now we have a thesis that they will actually be bigger economic opportunities. They'll take longer. So by having a dedicated team dedicated focus in those areas, um, that gives us, I think, a unique advantage, one of one of things when we were launching the fund that we realized is way have more people that have published scientific papers and started companies than NBA's, um, in the firm. So we are a little bit, you know, we're a little G here. That >>that's good. I said a party one time when I was talking to this guy. You were not the best people at parties we don't, but it is funny. The guy was He was a VC in medical medical tech, and I didn't ask him like So. Are you like a doctor? Did you work in a hospital where you worked at A at a university that doesn't even know I was investment banker on Wall Street and Michael, that's that's how to make money move. But do you have? Do you have the real world experience of being in the trenches? Were Some of these applications are being used, but I'm also curious. Where do you guys like to come in? ABC? What's your well, sweets? Traditionally >>we are have been a seed in Siri's. A investor would like to be early. >>Okay, Leader, follow on. Uh, everybody likes the lead, right? Right, right, right. You know what? Your term feet, you >>know? Yeah, right. And you have to learn howto something lead. Sometimes you follow. So we you know, we do both. Okay, Uh, there are increasing as because of the size of the fund. We will have the opportunity to be a little bit more multi stage than we traditionally are known for doings. Like, for example, we were seed investors in little companies, like conflict an elastic that worked out. Okay, But we were not. Later stage right. Investors and company likes companies like that with the new fund will more likely to also be in the later stages as well for some of the big banks. But we love seed we love. Precede. We'd like three guys in in a dog, right? If they have a brilliant >>tough the 7 50 to work when you're investing in the three guys in a dog and listen well and that runs and runs and you know you >>we do things we call experiments. Just you know, uh, we >>also have >>a very unique asset. We don't talk about publicly. We have a lot of really brilliant people around the firm that we call equity partners. So there's about 60 leaning scientists and executives around the world who were also attached to the firm. They actually are, have a financial stake in the firm who work with us. That gives us the ability to be early Now. Clearly, if you put in a $250,000 seed investment you don't put is the same amount of time necessarily as if you just wrote a $12 million check. What? That's the traditional wisdom I found. We actually work. Address this hard on. >>Do you have any? Do you have any formal relationships within the academic institutions? How's that >>work? Well, well, I mean, we work like everybody else with Stanford in M I t. I mean, we have many universities who are limited partners in the fund. You know, I'll give you an example of So we helped put together a company in Canada called Element A I, which actually just raised $150 million they, the founder of that company is Ah, cofounder is a fellow named Joshua Benji. Oh, he was Jeff Hinton's phD student. Him in the Vatican. These guys invented neural networks ing an a I and this company was built at a Yasha his position at the University of Montreal. There, 125 PhDs and a I that work at this firm. And so we're obviously deeply involved. Now, the Montreal A icing, my child is one of the best day I scenes in the world and cool food didn't and oh, yeah, And well, because of you, Joshua, because everybody came out of his leg, right? So I think, Yes, I think so. You know, we've worked with Carnegie Mellon, so we do work with a lot of universities. I would, I would say his university's worked with multiple venture firm Ah, >>such an important pipeline for really smart, heavy duty, totally math and tech tech guys. All right, May, that's for sure. Yeah, you always one that you never want to be the smartest guy in the room, right, or you're in the wrong room is what they say you said is probably >>an equivalent adventure. They always say you should buy the smallest house in the best neighborhood. Exactly. I was able to squeeze its PCB sees. I'm like, the least smart technical guy in the smartest technical. There >>you go. That's the way to go. All right, Alan. Well, thanks for stopping by and we look forward. Thio, you bring in some of these exciting new investment companies inside the key, right? Thanks for the time. Alright. He's Alan. I'm Jeff. You're watching the Cube. We're Interpol about the studios. Thanks for watching. We'll see you next time.

>> Announcer: From Sand Hill Road in the heart of Silicon Valley, it's theCUBE, presenting the People First Network, insights from entrepreneurs and tech leaders. (bright electronic music) >> Everyone, welcome to this special CUBE conversation. We're here at Sand Hill Road at Mayfield Fund. This is theCUBE, co-creation of the People First Network content series. I'm John Furrier, host of theCUBE. Our next guest, Yuvi Kochar, who's the Data-centric Digital Transformation Strategist at GameStop. Variety of stints in the industry, going in cutting-edge problems around data, Washington Post, comScore, among others. You've got your own practice. From Washington, DC, thanks for joining us. >> Thank you, thanks for hosting me. >> This is a awesome conversation. We were just talking before we came on camera about data and the roles you've had over your career have been very interesting, and this seems to be the theme for some of the innovators that I've been interviewing and were on the People First is they see an advantage with technology, and they help companies, they grow companies, and they assist. You did a lot of different things, most notably that I recognized was the Washington Post, which is on the mainstream conversations now as a rebooted media company with a storied, historic experience from the Graham family. Jeff Bezos purchased them for a song, with my opinion, and now growing still, with the monetization, with subscriber base growing. I think they're number one in subscribers, I don't believe, I believe so. Interesting time for media and data. You've been there for what, how many years were you at the Washington Post? >> I spent about 13 years in the corporate office. So the Washington Post company was a conglomerate. They'd owned a lot of businesses. Not very well known to have owned Kaplan, education company. We owned Slate, we owned Newsweek, we owned TV stations and now they're into buying all kinds of stuff. So I was involved with a lot of varied businesses, but obviously, we were in the same building with the Washington Post, and I had front row seat to see the digital transformation of the media industry. >> John: Yeah, we-- >> And how we responded. >> Yeah, I want to dig into that because I think that illustrates kind of a lot what's happening now, we're seeing with cloud computing. Obviously, Cloud 1.0 and the rise of Amazon public cloud. Clearly, check, done that, a lot of companies, startups go there. Why would you provision a data center? You're a startup, you're crazy, but at some point, you can have a data center. Now, hybrid cloud's important. Devops, the application development market, building your own stack, is shifting now. It seems like the old days, but upside down. It's flipped around, where applications are in charge, data's critical for the application, infrastructure's now elastic. Unlike the old days of here's your infrastructure. You're limited to what you can run on it based on the infrastructure. >> Right. >> What's your thoughts on that? >> My thoughts are that, I'm a very, as my title suggests, data-centric person. So I think about everything data first. We were in a time when cloud-first is becoming old, and we are now moving into data-first because what's happening in the marketplace is the ability, the capability, of data analytics has reached a point where prediction, in any aspect of a business, has become really inexpensive. So empowering employees with prediction machines, whether you call them bots, or you call them analytics, or you call them machine learning, or AI, has become really inexpensive, and so I'm thinking more of applications, which are built data-out instead of data-in, which is you build process and you capture data, and then you decide, oh, maybe I should build some reporting. That's what we used to do. Now, you need to start with what's the data I have got? What's the data I need? What's the data I can get? We were just talking about, everybody needs a data monetization strategy. People don't realize how much asset is sitting in their data and where to monetize it and how to use it. >> It's interesting. I mean, I got my computer science degree in the 80s and one of the tracks I got a degree in was database, and let's just say that my main one was operating system. Database was kind of the throwaway at that time. It wasn't considered a big field. Database wasn't sexy at all. It was like, database, like. Now, if you're a database, you're a data guru, you're a rock star. The world has changed, but also databases are changing. It used to be one centralized database rules the world. Oracle made a lot of money with that, bought all their competitors. Now you have open source came into the realm, so the world of data is also limited by where the data's stored, how the data is retrieved, how the data moves around the network. This is a new dynamic. How do you look at that because, again, lagging in business has a lot to do with the data, whether it's in an application, that's one thing, but also having data available, not necessarily in real time, but if I'm going to work on something, I want the data set handy, which means I can download it or maybe get real-time. What's your thoughts on data as an element in all that moving around? >> So I think what you're talking about is still data analytics. How do I get insights about my business? How do I make decisions using data in a better way? What flexibility do I need? So you talk about open source, you think about MongoDB and those kind of databases. They give you a lot of flexibility. You can develop interesting insights very quickly, but I think that is still very much thinking about data in an old-school kind of way. I think what's happening now is we're teaching algorithms with data. So data is actually the software, right? So you get an open source algorithm. I mean Google and everybody else is happy to open source their algorithms. They're all available for free. But what, the asset is now the data, which means how you train your algorithm with your data, and then now, moving towards deploying it on the edge, which is you take an algorithm, you train it, then you deploy it on the edge in an IoT kind of environment, and now you're doing decision-making, whether it's self-driving cars, I mean those are great examples, but I think it's going down into very interesting spaces in enterprise, which is, so we have to all think about software differently because, actually, data is a software. >> That's an interesting take on it, and I love that. I mean I wrote a blog post in 2007 when we first started playing with the, in looking at the network effects on social media and those platforms was, I wrote a post, it was called Data is the New Development Kit. Development kit was what people did back then. They had a development kit and they would download stuff and then code, but the idea was is that data has to be part of the runtime and the compilation of, as software acts, data needs to be resident, not just here's a database, access it, pull it out, use it, present it, where data is much more of a key ingredient into the development. Is that kind of what you're getting at? >> Yes. >> Notion of-- >> And I think we're moving from the age of arithmetic-based machines, which is we put arithmetic onto chips, and we then made general-purpose chips, which were used to solve a huge amount of problems in the world. We're talking about, now, prediction machines on a chip, so you think about algorithms that are trained using data, which are going to be available on chips. And now you can do very interesting algorithmic work right on the edge devices, and so I think a lot of businesses, and I've seen that recently at GameStop, I think business leaders have a hard time understanding the change because we have moved from process-centric, process automation, how can I do it better? How can I be more productive? How can I make better decisions? We have trained our business partners on that kind of thinking, and now we are starting to say, no, no, no, we've got something that's going to help you make those decisions. >> It's interesting, you mentioned GameStop. Obviously, well-known, my sons are all gamers. I used to be a gamer back before I had kids, but then, can't keep up anymore. Got to be on that for so long, but GameStop was a retail giant in gaming. Okay, when they had physical displays, but now, with online, they're under pressure, and I had interviewed, again, at an Amazon event, this Best Buy CIO, and he says, "We don't compete with price anymore. "If they want to buy from Amazon, no problem, "but our store traffic is off the charts. "We personalize 50,000 emails a day." So personalization became their strategy, it was a data strategy. This is a user experience, not a purchase decision. Is this how you guys are thinking about it at GameStop? >> I think retail, if you look at the segment per se, personalization, Amazon obviously led the way, but it's obvious that personalization is key to attract the customer. If I don't know what games you play, or if I don't know what video you watched a little while ago, about which game, then I'm not offering you the product that you are most prone or are looking for or what you want to buy, and I think that's why personalization is key. I think that's-- >> John: And data drives that, and data drives that. >> Data drives that, and for personalization, if you look at retail, there's customer information. You need to know the customer. You need to know, understand the customer preferences, but then there's the product, and you need to marry the two. And that's where personalization comes into play. >> So I'll get your thoughts. You have, obviously, a great perspective on how tech has been built and now working on some real cutting-edge, clear view on what the future looks like. Totally agree with you, by the way, on the data. There's kind of an old guard/new guard, kind of two sides of the street, the winners and the losers, but hey, look, I think the old guard, if they don't innovate and become fresh and new and adopt the modern things that need to attract the new expectations and new experiences from their customers, are going to die. That being said, what is the success formula, because some people might say, hey, I'm data-driven. I'm doing it, look at me, I'm data. Well, not really. Well, how do you tell if someone's really data-driven or data-centric? What's the difference? Is there a tell sign? >> I think when you say the old guard, you're talking about companies that have large assets, that have been very successful in a business model that maybe they even innovated, like GameStop came up with pre-owned games, and for the longest of times, we've made huge amount of revenue and profit from that segment of our business. So yes, that's becoming old now, but I think the most important thing for large enterprises at least, to battle the incumbent, the new upstarts, is to develop strategies which are leveraging the new technologies, but are building on their existing capability, and that's what I drive at GameStop. >> And also the startups too, that they were here in a venture capital firm, we're at Mayfield Fund, doing this program, startups want to come and take a big market down, or come in on a narrow entry and get a position and then eat away at an incumbent. They could do it fast if they're data-centric. >> And I think it's speed is what you're talking about. I think the biggest challenge large companies have is an ability to to play the field at the speed of the new upstarts and the firms that Mayfield and others are investing in. That's the big challenge because you see this, you see an opportunity, but you're, and I saw that at the Washington Post. Everybody went to meetings and said, yes, we need to be digital, but they went-- >> They were talking. >> They went back to their desk and they had to print a paper, and so yes, so we'll be digital tomorrow, and that's very hard because, finally, the paper had to come out. >> Let's take us through the journey. You were the CTO, VP of Technology, Graham Holdings, Washington Post, they sold it to Jeff Bezos, well-documented, historic moment, but what a storied company, Washington Post, local paper, was the movie about it, all the historic things they've done from a reporting and journalism standpoint. We admire that. Then they hit, the media business starts changing, gets bloated, not making any money, online classifieds are dying, search engine marketing is growing, they have to adjust. You were there. What was the big, take us through that journey. >> I think the transformation was occurring really fast. The new opportunities were coming up fast. We were one of the first companies to set up a website, but we were not allowed to use the brand on the website because there was a lot of concern in the newsroom that we are going to use or put the brand on this misunderstood, nearly misunderstood opportunity. So I think it started there, and then-- >> John: This is classic old guard mentality. >> Yes, and it continued down because people had seen downturns. It's not like media companies hadn't been through downturns. They had, because the market crashes and we have a recession and there's a downturn, but it always came back because-- >> But this was a wave. I mean the thing is, downturns are economic and there's business that happens there, advertisers, consumption changes. This was a shift in their user base based upon a technology wave, and they didn't see it coming. >> And they hadn't ever experienced it. So they were experiencing it as it was happening, and I think it's very hard to respond to a transformation of that kind in a very old-- >> As a leader, how did you handle that? Give us an example of what you did, how you make your mark, how do you get them to move? What were some of the things that were notable moments? >> I think the main thing that happened there was that we spun out washingtonpost.com. So it became an independent business. It was actually running across the river. It moved out of the corporate offices. It went to a separate place. >> The renegades. >> And they were given-- >> John: Like Steve Jobs and the Macintosh team, they go into separate building. >> And we were given, I was the CTO of the dotcom for some time while we were turning over our CTO there, and we were given a lot of flexibility. We were not held accountable to the same level. We used the, obviously, we used-- >> John: You were running fast and loose. >> And we were, yes, we had a lot of flexibility and we were doing things differently. We were giving away the content in some way. On the online side, there was no pay wall. We started with a pay wall, but advertising kind of was so much more lucrative in the beginning, that the pay wall was shut down, and so I think we experimented a lot, and I think where we missed, and a lot of large companies miss, is that you need to leave your existing business behind and scale your new business, and I think that's very hard to do, which is, okay, we're going to, it's happening at GameStop. We're no longer completely have a control of the market where we are the primary source of where, you talk about your kids, where they go to get their games. They can get the games online and I think-- >> It's interesting, people are afraid to let go because they're so used to operating their business, and now it has to pivot to a new operating model and grow. Two different dynamics, growth, operation, operating and growing. Not all managers have that growth mindset. >> And I think there's also an experience thing. So most people who are in these businesses, who've been running these businesses very successfully, have not been watching what's happening in technology. And so the technology team comes out and says, look, let me show you what we can do. I think there has to be this open and very, very candid discussion around how we are going to transform-- >> How would you talk about your peer, developed peers out there, your peers and other CIOs, and even CISOs on the security side, have been dealing with the same suppliers over, and in fact, on the security side, the supplier base is getting larger. There's more tools coming out. I mean who wants another tool? So platform, tool, these are big decisions being made around companies, that if you want to be data-centric, you want to be a data-centric model, you got to understand platforms, not just buying tools. If you buy a hammer, they will look like a nail, and you have so many hammers, what version, so platform discussions come in. What's your thoughts on this? Because this is a cutting-edge topic we've been talking about with a lot of senior engineering leaders around Platform 2.0 coming, not like a classic platform to... >> Right, I think that each organization has to leverage or build their, our stack on top of commodity platforms. You talked about AWS or Azure or whatever cloud you use, and you take all their platform capability and services that they offer, but then on top of that, you structure your own platform with your vertical capabilities, which become your differentiators, which is what you take to market. You enable those for all your product lines, so that now you are building capability, which is a layer on top of, and the commodity platforms will continue to bite into your platform because they will start offering capabilities that earlier, I remember, I started at this company called BrassRing, recruitment automation. One of the first software-as-a-service companies, and I, we bought a little company, and the CTO there had built a web server. It was called, it was his name, it was called Barrett's Engine. (chuckles) And so-- >> Probably Apache with something built around it. >> So, in those days, we used to build our own web servers. But now today, you can't even find an engineer who will build a web server. >> I mean the web stack and these notions of just simple Web 1.0 building blocks of change. We've been calling it Cloud 2.0, and I want to get your thoughts on this because one of the things I've been riffing on lately is this, I remember Marc Andreessen wrote the famous article in Wall Street Journal, Software is Eating the World, which I agree with in general, no debate there, but also the 10x Engineer, you go into any forum online, talking about 10x Engineers, you get five different opinions, meaning, a 10x Engineer's an engineer who can do 10 times more work than an old school, old classical engineer. I bring this up because the notion of full stack developer used to be a real premium, but what you're talking about here with cloud is a horizontally scalable commodity layer with differentiation at the application level. That's not full stack, that's half stack. So you think the world's kind of changing. If you're going to be data-centric, the control plane is data. The software that's domain-specific is on top. That's what you're essentially letting out. >> That's what I'm talking about, but I think that also, what I'm beginning to find, and we've been working on a couple of projects, is you put the data scientists in the same room with engineers who write code, write software, and it's fascinating to see them communicate and collaborate. They do not talk the same language at all. >> John: What's it like? Give us a mental picture. >> So a data scientist-- >> Are they throwing rocks at each other? >> Well, nearly, because the data scientists come from the math side of the house. They're very math-oriented, they're very algorithm-oriented. Mathematical algorithms, whereas software engineers are much more logic-oriented, and they're thinking about scalability and a whole lot of other things, and if you think about, a data scientist develops an algorithm, it rarely scales. You have to actually then hand it to an engineer to rewrite it in a scalable form. >> I want to ask you a question on that. This is why I got you and you're an awesome guest. Thanks for your insights here, and we'll take a detour into machine learning. Machine learning really is what AI is about. AI is really nothing more than just, I love AI, it gets people excited about computer science, which is great. I mean my kids talk about AI, they don't talk about IoT, which is good that AI does that, but it's really machine learning. So there's two schools of thought on machine. I call it the Berkeley school on one end, not Berkeley per se but Berkeley talks about math, machine learning, math, math, math, and then you have other schools of thought that are on cognition, that machine learning should be more cognitive, less math-driven, spectrum of full math, full cognition, and everything in between. What's your thoughts on the relationship between math and cognition? >> Yeah, so it's interesting. You get gray hair and you kind of move up the stack, and I'm much more business-focused. These are tools. You can get passionate about either school of thought, but I think that what that does is you lose sight of what the business needs, and I think it's most important to start with what are we here trying to do, and what is the best tool? What is the approach that we should utilize to meet that need? Like the other day, we were looking at product data from GameStop, and we know that the quality of data should be better, but we found a simple algorithm that we could utilize to create product affinity. Now whether it's cognition or math, it doesn't matter. >> John: The outcome's the outcome. >> The outcome is the outcome, and so-- >> They're not mutually exclusive, and that's a good conversation debate but it really gets to your point of does it really matter as long as it's accurate and the data drives that, and this is where I think data is interesting. If you look at folks who are thinking about data, back to the cloud as an example, it's only good as what you can get access to, and cybersecurity, the transparency issue around sharing data becomes a big thing. Having access to the data's super important. How do you view that for, as CIOs, and start to think about they're re-architecting their organizations for these digital transformations. Is there a school of thought there? >> Yes, so I think data is now getting consolidated. For the longest time, we were building data warehouses, departmental data warehouses. You can go do your own analytics and just take your data and add whatever else you want to do, and so the part of data that's interesting to you becomes much more clean, much more reliable, but the rest, you don't care much about. I think given the new technologies that are available and the opportunity of the data, data is coming back together, and it's being put into a single place. >> (mumbles) Well, that's certainly a honeypot for a hacker, but we'll get that in a second. If you and I were doing a startup, we say, hey, let's, we've got a great idea, we're going to build something. How would we want to think about the data in terms of having data be a competitive advantage, being native into the architecture of the system. I'll say we use cloud unless we need some scale on premise for privacy reasons or whatever, but we would, how would we go to market, and we have an app, as apps defined, great use case, but I want to have extensibility around the data, I don't want to foreclose any future options, How should I think about my, how should we think about our data strategy? >> Yes, so there was a very interesting conversation I had just a month ago with a friend of mine who's working at a startup in New York, and they're going to build a solution, take it to market, and he said, "I want to try it only in a small market "and learn from it," and he's going very old school, focus groups, analytics, analysis, and I sat down, we sat at Grand Central Station, and we talked about how, today, he should be thinking about capturing the data and letting the data tell him what's working and what's not working, instead of trying to find focus groups and find very small data points to make big decisions. He should actually utilize the target, the POC market, to capture data and get ready for scale because if you want to go national after having run a test in... >> Des Moines, Iowa. >> Part of New York or wherever, then you need to already have built the data capability to scale that business in today's-- >> John: Is it a SaaS business? >> No, it's a service and-- >> So he can instrument it, just watch the data. >> And yes, but he's not thinking like that because most business people are still thinking the old way, and if you look at Uber and others, they have gone global at such a rapid pace because they're very data-centric, and they scale with data, and they don't scale with just let's go to that market and then let's try-- >> Yeah, ship often, get the data, then think of it as part of the life cycle of development. Don't think it as the old school, craft, launch it, and then see how it goes and watch it fail or succeed, and know six months later what happened, know immediately. >> And if you go data-centric, then you can turn the R&D crank really fast. Learn, test and learn, test and learn, test and learn at a very rapid pace. That changes the game, and I think people are beginning to realize that data needs to be thought about as the application and the service is being developed, because the data will help scale the service really fast. >> Data comes into applications. I love your line of data is the new software. That's better than the new oil, which has been said before, but data comes into the app. You also mentioned that app throws off data. >> Yuvi: Yes. >> We know that humans have personal, data exhaust all the time. Facebook made billions of dollars on our exhaust and our data. The role of data in and out of the application, the I/O of the application, is a new concept, you brought that up. I like that and I see that happening. How should we capture that data? This used to be log files. Now you got observability, all kinds of new words kind of coming into this cloud equation. How should people think about this? >> I think that has to be part of the design of your applications, because data is application, and you need to design the application with data in mind, and that needs to be thought of upfront, and not later. >> Yuvi, what's next for you? We're here in Sand Hill Road, VC firm, they're doing a lot of investments, you've got a great project with GameStop, you're advising startups, what's going on in your world? >> Yes, so I'm totally focused, as you probably are beginning to sense, on the opportunity that data is enabling, especially in the enterprise. I'm very interested in helping business understand how to leverage data, because this is another major shift that's occurring in the marketplace. Opportunities have opened up, prediction is becoming cheap and at scale, and I think any business runs on their capability to predict, what is the shirt I should buy? How many I should buy? What color should I buy? I think data is going to drive that prediction at scale. >> This is a legit way that everyone should pay attention to. All businesses, not just one-- >> All businesses, everything, because prediction is becoming cheap and automated and granular. That means you need to be able to not just, you need to empower your people with low-level prediction that comes out of the machines. >> Data is the new software. Yuvi, thanks so much for great insight. This is theCUBE conversation. I'm John Furrier here at Sand Hill Road at the Mayfield Fund, for the People First Network series. Thanks for watching. >> Yuvi: Thank you. 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(funky music) >> Announcer: From our studios in the heart of Silicon Valley, Palo Alto, California, this is a CUBE Conversation. >> Everyone, welcome to this special CUBE Conversation here in Palo Alto, California with CUBE Studios. I'm John Furrier, your host of this CUBE Conversation with Dheeraj Pandey, CEO of Nutanix. CUBE alumni, very special part of our community. Great to see you again, thanks for coming in. We're previewing your big show coming up, Nutanix NEXT in Europe. Thanks for joining me. >> It's an honor. >> It's always great to get you. I saw your interview on Bloomberg with Emily Chang. Kind of short interview, but still, you're putting the message out there. You've been talking software. We covered your show here in North America. Clearly moving to the subscription model, and I want to get into that conversation. I think there's some notable things to talk about now that we're in this cloud 2.0 era, as we're calling it, kind of a goof on web 2.0. But cloud 2.0 is a whole shift happening, and you've been on it for a while. But you got the event coming up in Europe, Nutanix NEXT. What's the focus? Give a quick plug for that event. Let's talk about that. >> Yeah, in fact, the reiteration of the message is a key part of any of our user conferences. We have 14,000 customers around the world now, across 150 countries. We've done almost more than $5 billion worth of just software business in the last six, seven years of selling. It's a billion six run rate. There's a lot going on in the business, but we need to take a step back and in our user conference talk about the vision. So what's the vision of Nutanix? And the best part is that it hasn't changed. It's basically one of those timeless things that hopefully will withstand the test of time in the future as well. Make computing invisible anywhere. People scratch their heads. What does computing mean? What does invisible mean? What does anywhere mean? And that's where we'll actually go to these user conferences, talk about what is computing for us. Is it just infrastructure? Is it infrastructure and platform? Now that we're getting into desktop delivery, is it also about business users and applications? The same thing about invisible, what's invisible? For us, it's always been a special word. It's a very esoteric word. If you think about the B2B world, it doesn't talk about the word invisible a lot. But for us it's a very profound word. It's about autonomous software. It's about continuous, virtues of continuous delivery, continuous consumption, continuous mobility. That's how you make things invisible. And subscription is a big part of that continuous delivery message and continuous consumption message. >> So the event is October 9th, around the first week of October. You got some time there, but getting geared up for that. I wanted to ask you what you've learned from the North America conference and going into the European conference. It's ultimately the same message, same vision, with a tweak, you got some time under your belt since then. The subscription model business, which you were talking in your Bloomberg interview, is in play. It is not a new thing. It's been in operation for a while. Could you talk about that specifically? Because I think most people would say, hey, hardware to software, hard to do. Software subscription, hard to maintain and grow. Where are you on that transition? Explain and clarify your mix of business, hardware, software. Where are you in the progress of that transformation? >> Well, you know, I have been a big student of history, and I can't think of a company that's gone from hardware to software and software subscription in such a short span. Actually, I don't know of any company. If you know of one, please let me know. But why? The why of subscription is to be frictionless. Hybrid is impossible without having the same kind of consumption model, both on-prem and off-prem. And if we didn't go through that, we would be hypocritical as a company to talk about cloud and hybrid itself. The next 10 years for this company is about hybrid, and doing it as if private and public are one in the same is basically the essence of Nutanix's architecture. >> Well, I can think of some hardware-software dynamics that, again, might not match your criteria, but some might say Apple. Is it a software or hardware company? Hardware drives the ecosystem, they commoditize it. Peloton bicycle is a bike, but it's mainly a software business and in-person business. So there's different models. Oracle has hardware, they have software. It doesn't always relate to the enterprise. What's the argument to say, hey, why don't you just create your own box and kick ass with that box, or is it just different dynamics? What's that? >> Well, there's a tension in the system. People want to buy experiences as opposed to buying things. They don't want to integrate things, like, oh, I need to actually now get a hardware vendor to behave as a software vendor when it comes to support issues and such. And at the same time, you want to be flexible and portable. How do you really work with the customer with their relationships that they have with their hardware vendors? So the word anywhere in our vision is exactly that. It's like, okay, we can work on multiple servers, multiple hypervisors, and multiple clouds. At the end of the day, the customer experience is king. And that's one thing that the last 10 years has taught us, John, if anything, is don't sell things to people. You know, Kubernetes is a thing. Cloud is a thing. Can you really go sell experiences? The biggest lesson in the last year for us has been integrate better. Not just with partners, but also within your own products. And now if you can do that well, customers will buy from you. >> I think you just kind of clarified where I was thinking out loud, because if you think about Apple, the hardware is part of the experience. So they have to have it. >> Mm-hmm. >> You don't have to have the hardware to create those experiences. Is that right? >> Absolutely, which is why it's now 2% of our business, and yet we are saying that we take the burden of responsibility of supporting it, integrating with it. One of the biggest issues with cloud is operations. What is operations? It's day two patching. How do you do day two patching? Intel is coming up with microcode upgrades every quarter now because of security reasons. If we are not doing an awesome job of one-click upgrade of firmware and microcode and BIOS, we don't belong in the hybrid cloud world. I think that's the level of mundaneness that we've gotten to with our software that makes us such a high NPS company with our customers. >> I want to just drill in on the notion of a thing versus experience. You mentioned Kubernetes is a thing. I would say Hadoop was a thing. But Hadoop was a great example. It was hard to do. Kubernetes, jury's still out. People love them. Kubernetes, we'll see how that goes. If it can be abstracted away, it's not a thing anymore. We'll see. But Hadoop was a great example. Unbelievable technology direction, big data, all the goodness of object storage and unstructured data. We knew that. Just hard to work with. Setting up clusters, managing clusters. And it ended up being the death of the sector, in my opinion. What is an experience? Define what does that mean. Is it frictionless only? Is there a trust equation? Just unpack your vision on what that means. A thing, which could be a box with software on it, and experience, which is something different. >> Yeah, I mean, now you start to unpeel the word experience. It's really about being frictionless, trusted, and invisible. If you can really do these things well, around the word, define frictionless. Well, it has to be consumer-grade. It has to be web scalable, 'cause customers are looking for the Amazon architecture inside, and aren't just going and renting it from Amazon, but also saying, can I get the same experience inside? So you've got to make it web scale. You've got to make it consumer-grade. Because our operators and users, talk about Hadoop, I mean, they struggled with the experience of Hadoop itself because it was a thing, it was a technology, as opposed to being something that was consumer-grade itself. And then finally, security. Trust is very important. We must secure always on resilient. The word resilience is very important. In fact, that's one of the things we'll actually talk about at our conference, is resilience. What does it mean, not just for Nutanix stock, to be where it is today from where it was six months ago. And that's what I'm most proud of, is you go through these transitions, you actually talk about resilience of software, resilience of systems, resilience of customer support, and resilience of companies. >> So you mentioned hybrid cloud. We were talking before we came on camera about hybrid cloud. But software's a two-way relationship. Talk about what you mean by that, and then I want to ask you a follow-up question of where hardware may or may be an opportunity or a problem in that construct. >> Yeah, I mean, look, in the world of hybrid, what's really important is delivering an experience that's really without silos. Ideally, on-prem infrastructure is an availability zone. How do you make it look like an availability zone that can stand up shoulder-to-shoulder with a public cloud availability zone? That's where you sell an experience. That's how you talk about a management plane where you can actually have a single pane of glass that really delivers a cloud experience both ways. >> You're kind of a contrarian. I always love interviewing you because you seem to be on the next wave before any realizes it. Right now everyone's trying to go on-premise and you're moving from on-premise to the cloud. Not you guys moving, but your whole vision is. You've been there, done that on premises. Now you've got to be where the customers are, which is where they need to be, which is the cloud. I heard you say that. It's interesting, you're going the other way, right? >> Mm-hmm. But you could look at the infrastructure and say, hey, there's a lot of hardware inside these clouds that have a lot of hardware-specific features like hardware assist that software or network latency might not be able to deliver. Is that a missed opportunity for you guys, or does your software leverage these trends? And even on premises, there's hardware offload-like features coming. How do you reconcile that? Because I would just argue inside of the company, say, hey, Dheeraj, let's not go all in on software. We can maximize this new technology, this thing, for our software. How do you-- >> Look, I think if you look at our features, like security, the way we use TPM, which is a piece of assist that you get from Intel's motherboards for doing key encryption management. What does it mean to really do encryption at scale using Intel's vectored instructions? How do you do RDMA? How do you look at InfiniBand? How do you look at Optane drives? We've been really good at that lowest level, but making sure that it's actually selling a solution that can then go drive SAP HANA and Oracle databases and GPU for graphics and desktops. So as a company, we don't talk about those things because they are the how of the business. You don't talk about the how. You'd rather talk about the why and the what, actually. >> So from a business strategy standpoint, I just want to get this clear because there's downfalls for getting into the hardware business. You know them. Inventory, all these hardware cycles are moving fast. You mentioned Intel shipping microcode for security reasons. So you're basically saying you'd rather optimize for decoupling hardware from the software and ride the innovation of the hardware guys, like Nvidia and Intel and others. >> Absolutely, and do it faster than anybody else, but more integrated than anybody else. You know, all together now is kind of our message for .NEXT. How do you bring it all together? Because the world is struggling with things, and that's the opportunity for Nutanix. >> Well, I would say making compute invisible is a great tagline. I would add storage and networking to that too. >> Yeah, computing, by the way. >> Computing. >> I said computing. >> Okay, computing. >> 'Cause computing is compute storage networking. Computing is infrastructure, platform, and apps. It's a very clever word, and it's a very profound word as well. >> Well, let's just throw Kubernetes in there too and move up the stack, because ultimately, we're writing a lot of stories on covering this editorially, is that the world's flipped upside down. It used to be the infrastructure. We're calling this cloud 2.0, like I said earlier. The world used to be the infrastructure enabled what the apps could do, and they were limited to the resources they had. Now the apps are in charge. They're dictating terms below the software line, if you want to call it the app line. So the apps are in charge now. Whoever can serve up the best infrastructure capability, which changes the entire computing industry because now the suppliers who can deliver that elastic or flexible capacity or resource, wins. >> Absolutely. >> And that's ultimately a complete shift. >> You know, I tell people, John, about the strategy of Nutanix because we have some apps now. Frame is an app for us. Beam is an app. Calm is an app. These are apps, they're drawn on the platform, which is the core platform of Nutanix, the core hyper-convergence innovation that we did. If you go back to the '90s, who was to say that Windows really fueled Office or Office fueled Windows? They had to work in conjunction, because without one, there would be no, the other, actually. So without Office there would be no Windows. Without Windows there would be no Office. How platforms and apps work with each other synergistically is at the core of delivering that experience. >> I want to add just you're a student of history. As an entrepreneur, you've been there through the many waves and you also invest a lot, and I want to ask you this question. It used to be that platforms was the holy grail. You'd go to a VC and say, hey, I'm building a platform. Big time investment. An entrepreneur will come back: I got a tool. You're a feature. You're a feature, not a platform. Platforms was the elite engineering position to come in to look for the big money. How would you define platforms now? Because with cloud, if apps are in charge, and there's potential features that are coming around the corner that no one's yet invented, what is this platform 2.0 world look like if you were coming out of grad school or you were a young engineer or a young entrepreneur? How do you think about that right now? >> Well, the biggest thing is around extensibility and openness. You know, we were talking about openness before, but the idea of APIs, where API is the new graphically why, because the developer is the builder. And how do you really go sell to them and still deliver a great experience? And not just from the point of view of, well, I've given you the best APIs, but the best SDKs. What does it mean to give them a development kit that gets them up and running in no time? And maybe even a graphical Kickstarter. We're working with our partners a lot, where it's not just about delivering APIs or raw APIs because they're not as consumable, but to deliver SDKs and to deliver graphical structural kits to them so that they can be up and running, building applications in two months rather than two years. I think that's at the core of what our platform is. >> And data and having an operating system thinking seems to be another common pattern. Understand the subsystems of data. Running and assembling things together. >> I think what is Nutanix, I mean, if people ask me what is Nutanix, I start with data. Data is the core of the company. We've done data for virtualization. We're now doing data for applications with Nutanix Files. We have object store data. We are doing Era, which is database as a service. Without data, we'd be dead as a company. That's how important it is. Now, how do you meld that with design and delivery is basically where the three Ds come together: data-- >> I wrote a blog post. Dave Vellante always laughs when I bring this up because he always references it too. In 2007 I said, data is the new development kit. 'Cause back then, development kits existed. SDKs, software development kits. MSDN was Microsoft's thing. You remember those glory days, Dheeraj, I know. But the thesis was, if data does actually come in, it's actually an input into the software. This is what I think you guys are doing that is clever that's not well understood, is data is an input, like a software library almost. A module, but it's dynamic and it's always changing. And writing software for that is a nouveau kind of thing. This is new. >> Yeah, I know, and delivered to the developer, because right now data and hardware data is sitting in silos which are mainframe-like systems. How do you deliver it where they can spin it up on their own? Making sure that we democratize data is the biggest challenge in most companies. >> We're in a new era, I think you just pointed that out, and we talk about it at CUBE all the time. We don't really talk about up-front. It used to be UI was the thing, user interface, ease of use. I think now the new table stake feature in all companies is if you can't show value instantly in any solution that has a thing or things in it, then it's pretty much not going to happen. I mean, this is the new expectation that becomes the experience for-- >> Yeah, I mean, millennials are the new developers, and they need to actually see instant gratification, many of these-- >> Well, cost too. I don't want to spend a million dollars to find out it didn't work. I want to maybe spend something variable. >> And look, agility, the cliched word, and I don't want to talk about agility per se, but at the end of the day it's all about, can we provide that experience where you don't have to really learn something over 18 months and provide it in the next three hours. >> Great conversation here with Dheeraj Pandey, CEO of Nutanix, about his vision. I always loved your software vision. You guys have smart engineers there. Let's talk about your company. I think a lot of people at your conference and your community and others want to know, is how you're doing and how the company's doing. Because I think you guys are in the midst of a major transition we talked about earlier, hardware to software, software to subscription, recurring revenue. I mean, it's pretty much a disruptive enabler for you guys at one level as an opportunity. It's changing how you do accounting. It's having product management. Your customers are going to consume it differently. It's been a big challenge. And stock's taken a little bit of a hit, but you're kind of playing the long game. Talk about the growth strategy as you guys go forward. This has been a struggle. There's been some personnel changes in the company. What's going on? Give us the straight scoop. >> Yeah, in fact the biggest thing is about the transformation for this coming decade. And there's fundamental things that need to change for the world of cloud. Otherwise, you're basically just talking the word rather than walking the walk itself. So this last quarter I was very pleased to announce that we finally showed the first strong point of this whole transformation. There's a really good data point coming out that the company is growing back again. We beat street estimates on pretty much every metric. Billings, revenue, gross margin. And we also guided above street estimates for billings, revenue, and gross margin, and I think that's probably one of the biggest things I'm proud of in the last six, nine months of this subscription transition. We're also telling the street about how to look at us from software and support billings point of view as opposed to looking at overall billings and revenue. If you take a step back into the company, I talk about this in our earnings call, 'til three years ago, we were a commercial company, also doing federal and some international. And the last three years we proved to ourselves and to the community that we can do enterprise, you know, high-end customers, upmarket, and also do a very good job of international. Now, the next three years is really about saying, can we do both enterprise and commercial together? All together now, which is also our, coincidentally, our .NEXT message, is the proof that we actually have to go and show that we can do federal, enterprise, and commercial to really build a very large business from it. >> Well, federal's got certification levels. We know that's different depending upon which agency you're talking to. Commercial, a little bit different ball game. SaaS becomes important, cloud becomes important. The big trend is on-premise hardware. Outposts for AWS, Azure Stack for Microsoft. How do you fit into that? Because you, again, you said you're both ways. >> Mm-hmm. >> So are you worried about that? Is that a headwind, tailwind for you? What's the impact for this now fashionable on-premises shift? Which I think is just a temporary thing as cloud continues to grow. But I still argue with Michael Dell about this. I think cloud is going to be a bigger TAM. Even though there's a huge total addressable market on enterprise, that's like saying there's a great TAM for horses and buggies when cars are coming out. It's different world between public cloud and on-premises. How does that impact Nutanix, this on-premise-- >> Well, remember I said about the word anywhere in our vision? Make computing invisible anywhere? With software you can actually reduce the tension between public and private. It's not this or that. It's this and that. Our software running on Outpost is a reality. It's not like we're saying, Outpost is one thing and Nutanix is another. And that's the value of software. It's so fungible, it's so portable, that you don't have to take sides between-- >> Are you guys at ISV inside Amazon Marketplace? >> No, but again, it's still a thing. Marketplace is still not where it should be, and it's hard to search and discover things from there. So we are saying, let's do it right. Remember, we were not the first hyper-convergence company. Right? We were probably the ninth one, like the way Google was as a search engine, actually. But we did it right, because the experience mattered. You know that search box that did everything? That's what Nutanix's overall experience is today. We will do the public cloud right with our software so that we can use the customer's credits with Amazon-- >> But you're still selling direct. And your partners. >> Well, everything is coming through partners, so at the end of the day we have to do an even better job of that, like what we're doing at HPE now. I think being able to go and find that common ground with partners is what commercial is all about. Commercial is a lot about distribution. As a company, we've done a really good job of enterprise and federal. But doing it with partners-- >> What are the biggest impact areas for your business and business model, elements with software transition that you're scaling up on the subscription side? What are the biggest areas? >> Well, one is just communication, 'cause obviously a lot is changing. At a private company, things change, nobody cares. The board just needs to know about it. But at a public company, we have investors in the public market. And many of them are in the nosebleeding section, actually, of this arena. So really, you're sitting in the arena, being the man in the arena, or the woman in the arena. How do you really take this message to the bleachers section is probably the biggest one, actually. >> Well, I think one of the things I've always speculated on, you look at the growth of, just pick some stocks that we all know. VMware, Microsoft. You look at the demarcation point where, right when the stock was low to high was the shift to cloud and software. With VMware, it was they had a failing strategy and they kill it and they do a deal with Amazon. Game has changed, now they're all in the software-defined data center. Microsoft, Satya Nadella comes in, boom, they're in cloud. Real commitment. And with Microsoft specifically, that was a real management commitment. They were committed to software. They were committed to the cloud business model, and took whatever medicine they needed to take. >> That's it. That's it, you take short-term pain for long-term gain, and look, anything that becomes large over time, to me it's all about long-term greed, and I use this word a lot. I want all our employees and our customers and our investors to really think about the word. There's greed, but it's long-term greed, and that's how most companies have become large over time. So I think for us to have done this right, to say, look, we are set for the next 10 years, was very important. >> It's interesting. Everyone wants to be like Jeff Bezos. Everyone wants to be like you guys now, because long-term greed or long-term thinking is the new fashion. It's the new standard and tack. >> Yeah, I mean, look the CEOs, the top 200 CEOs, came out and talked about, are we taking good care of main street, or are we just focused on this hamster wheel of three months reporting to Wall Street alone? And I think consensus is emerging that you got to take care of main street. You and I were talking about, that I look at investors as customers, and I look at customers as investors. Which is really kind of a contrarian way of thinking about it. >> It's interesting. We live in the world, we've seen many waves. I think the wave we're on now from an entrepreneurial and venture creation standpoint, whether you're public or private, is the long game is the new 3D chess. It's where the masters are playing their best game. You look at the results of the best companies. I just bought the book about Uber from Mike Isaac from the New York Times. Short-term thinking, win at all costs, that's not the 3D chess game that's going on with entrepreneurs these days. All the investment thesis is stay long-term. And certainly now, with this perceived bubble popping, or this downturn that may or may not happen, long-term game is more important than ever. Your thoughts on it? >> I think the word authenticity has never been more important, not just in the Valley, but around the world, actually. What you're seeing with all this Me Too movement and a lot of skeletons in the cupboard out there, I think at the end of the day, the word authentic cannot be artificially created. It has to come from within. What you talk about, Satya... I look at Shantanu Narayen, the Adobe CEO, and they're authentic CEOs. I mean, I look at Dara now, at Uber, he's talking about bringing authenticity to Uber. I think there's no shortcuts to success in this world. >> I think Adobe's a great example. What they've done has been amazing. I know you're on the board there, so congratulations. Final word, I'll let you get your plug in for the event and your customer base. Talk to your customers and investors out there that might watch this. From your state of mind, what's the state of the union for Nutanix? Speak directly to your customers and investors right now. >> Well, the tagline for .NEXT Copenhagen is all together now. We're bringing clouds together. We're bringing app infrastructure and data together. I think it's a really large opportunity for us to go sell an experience to our customers, rather than selling things. All these buzzwords that come up in technology, as a company, we've done a really good job of integrating them, and the next decade is about integrating the public cloud and the private cloud. And I look at investors and customers alike. I talk about long-term greed with them. Providing an experience to them is the core of our journey. >> Thanks for your insight, Dheeraj. This was a CUBE Conversation here in Palo Alto. I'm John Furrier, thanks for watching. (funky music)