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

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCube and ETR, this is Breaking Analysis with Dave Vellante. >> When a piece of digital art sells for $69.3 million, more than has ever been paid for works, by Gauguin or Salvador Dali, making it created the third most expensive living artists in the world. One can't help but take notice and ask, what is going on? The latest craze around NFTs may feel a bit bubblicious, but it's yet another sign, that the digital age is now fully upon us. Hello and welcome to this week's Wikibon's CUBE insights, powered by ETR. In this Breaking Analysis, we want to take a look at some of the trends, that may be difficult for observers and investors to understand, but we think offer significant insights to the future and possibly some opportunities for young investors many of whom are fans of this program. And how the trends may relate to enterprise tech. Okay, so this guy Beeple is now the hottest artist on the planet. That's his Twitter profile. That picture on the inset. His name is Mike Winkelmann. He is actually a normal looking dude, but that's the picture he chose for his Twitter. This collage reminds me of the Million Dollar Homepage. You may already know the story, but many of you may not. Back in 2005 a college kid from England named Alex Tew, T-E-W created The Million Dollar Homepage to fund his education. And his idea was to create a website with a million pixels, and sell ads at a dollar for each pixel. Guess how much money he raised. A million bucks, right? No, wrong. He raised $1,037,100. How so you ask? Well, he auctioned off the last 1000 pixels on eBay, which fetched an additional $38,000. Crazy, right? Well, maybe not. Pretty creative in a way, way early sign of things to come. Now, I'm not going to go deep into NFTs, and explain the justification behind them. There's a lot of material that's been published that can do justice to the topic better than I can. But here are the basics, NFTs stands for Non-Fungible Tokens. They are digital representations of assets that exist in a blockchain. Now, each token as a unique and immutable identifier, and it uses cryptography to ensure its authenticity. NFTs by the name, they're not fungible. So, unlike Bitcoin, Ethereum or other cryptocurrencies, which can be traded on a like-for-like basis, in other words, if you and I each own one bitcoin we know exactly how much each of our bitcoins is worth at any point of time. Non-Fungible Tokens each have their own unique values. So, they're not comparable on a like-to-like basis. But what's the point of this? Well, NFTs can be applied to any property, identities tweets, videos, we're seeing collectables, digital art, pretty much anything. And it's really. The use cases are unlimited. And NFTs can streamline transactions, and they can be bought and sold very efficiently without the need for a trusted third party involved. Now, the other benefit is the probability of fraud, is greatly reduced. So where do NFTs fit as an asset class? Well, they're definitely a new type of asset. And again, I'm not going to try to justify their existence, but I want to talk about the choices, that investors have in the market today. The other day, I was on a call with Jay Po. He is a VC and a Principal at a company called Stage 2 Capital. He's a former Bessemer VC and one of the sharper investors around. And he was talking about the choices that investors have and he gave a nice example that I want to share with you and try to apply here. Now, as an investor, you have alternatives, of course we're showing here a few with their year to date charts. Now, as an example, you can buy Amazon stock. Now, if you bought just about exactly a year ago you did really well, you probably saw around an 80% return or more. But if you want to jump in today, your mindset might be, hmm, well, okay. Amazon, they're going to be around for a long time, so it's kind of low risk and I like the stock, but you're probably going to get, well let's say, maybe a 10% annual return over the longterm, 15% or maybe less maybe single digits, but, maybe more than that but it's unlikely that any kind of reasonable timeframe within any reasonable timeframe you're going to get a 10X return. In order to get that type of return on invested capital, Amazon would have to become a $16 trillion valued company. So, you sit there, you asked yourself, what's the probability that Amazon goes out of business? Well, that's pretty low, right? And what are the chances it becomes a $16 trillion company over the next several years? Well, it's probably more likely that it continues to grow at that more stable rate that I talked about. Okay, now let's talk about Snowflake. Now, as you know, we've covered the company quite extensively. We watched this company grow from an early stage startup and then saw its valuation increase steadily as a private company, but you know, even early last year it was valued around $12 billion, I think in February, and as late as mid September right before the IPO news hit that Marc Benioff and Warren Buffett were going to put in $250 million each at the IPO or just after the IPO and it was projected that Snowflake's valuation could go over $20 billion at that point. And on day one after the IPO Snowflake, closed worth more than $50 billion, the stock opened at 120, but unless you knew a guy, you had to hold your nose and buy on day one. And you know, maybe got it at 240, maybe you got it at 250, you might have got it at higher and at the time you might recall, I said, You're likely going to get a better price than on day one, which is usually the case with most IPOs, stock today's around 230. But you look at Snowflake today and if you want to buy in, you look at it and say, Okay, well I like the company, it's probably still overvalued, but I can see the company's value growing substantially over the next several years, maybe doubling in the near to midterm [mumbles] hit more than a hundred billion dollar valuation back as recently as December, so that's certainly feasible. The company is not likely to flame out because it's highly valued, I have to probably be patient for a couple of years. But you know, let's say I liked the management, I liked the company, maybe the company gets into the $200 billion range over time and I can make a decent return, but to get a 10X return on Snowflake you have to get to a valuation of over a half a trillion. Now, to get there, if it gets there it's going to become one of the next great software companies of our time. And you know, frankly if it gets there I think it's going to go to a trillion. So, if that's what your bet is then you know, you would be happy with that of course. But what's the likelihood? As an investor you have to evaluate that, what's the probability? So, it's a lower risk investment in Snowflake but maybe more likely that Snowflake, you know, they run into competition or the market shifts, maybe they get into the $200 billion range, but it really has to transform the industry execute for you to get in to that 10 bagger territory. Okay, now let's look at a different asset that is cryptocurrency called Compound, way more risky. But Compound is a decentralized protocol that allows you to lend and borrow cryptocurrencies. Now, I'm not saying go out and buy compound but just as a thought exercise is it's got an asset here with a lower valuation, probably much higher upside, but much higher risk. But so for Compound to get to 10X return it's got to get to $20 billion valuation. Now, maybe compound isn't the right asset for your cup of tea, but there are many cryptos that have made it that far and if you do your research and your homework you could find a project that's much, much earlier stage that yes, is higher risk but has a much higher upside that you can participate in. So, this is how investors, all investors really look at their choices and make decisions. And the more sophisticated investors, they're going to use detailed metrics and analyze things like MOIC, Multiple on Invested Capital and IRR, which is Internal Rate of Return, do TAM analysis, Total Available Market. They're going to look at competition. They're going to look at detailed company models in ARR and Churn rates and so forth. But one of the things we really want to talk about today and we brought this up at the snowflake IPO is if you were Buffet or Benioff and you had to, you know, quarter of a dollars to put in you could get an almost guaranteed return with your late in the game, but pre IPO money or a look if you were Mike Speiser or one of the earlier VCs or even someone like Jeremy Burton who was part of the inside network you could get stock or options, much cheaper. You get a 5X, 10X, 50X or even North of a hundred X return like the early VCs who took a big risk. But chances are, you're not one of these in one of these categories. So how can you as a little guy participate in something big and you might remember at the time of the snowflake IPO we showed you this picture, who are these people, Olaf Carlson-Wee, Chris Dixon, this girl Sono. And of course Tim Berners-Lee, you know, that these are some of the folks that inspired me personally to pay attention to crypto. And I want to share the premise that caught my attention. It was this. Think about the early days of the internet. If you saw what Berners-Lee was working on or Linus Torvalds, in one to invest in the internet, you really couldn't. I mean, you couldn't invest in Linux or TCP/IP or HTTP. Suppose you could have invested in Cisco after its IPO that would have paid off pretty big time, for sure. You know, he could have waited for the Netscape IPO but the core infrastructure of the internet was fundamentally not directly a candidate for investment by you or really, you know, by anybody. And Satya Nadella said the other day we have reached maximum centralization. The main protocols of the internet were largely funded by the government and they've been co-opted by the giants. But with crypto, you actually can invest in core infrastructure technologies that are building out a decentralized internet, a new internet, you know call it web three Datto. It's a big part of the investment thesis behind what Carlson-wee is doing. And Andreessen Horowitz they have two crypto funds. They've raised more than $800 million to invest and you should read the firm's crypto investment thesis and maybe even take their crypto startup classes and some great content there. Now, one of the people that I haven't mentioned in this picture is Camila Russo. She's a journalist she's turned into hardcore crypto author is doing great job explaining the white hot defining space or decentralized finance. If you're just at read her work and educate yourself and learn more about the future and be happy perhaps you'll find some 10X or even hundred X opportunities. So look, there's so much innovation going around going on around blockchain and crypto. I mean, you could listen to Warren Buffet and Janet Yellen who implied this is all going to end badly. But while look, these individuals they're smart people. I don't think they would be my go-to source on understanding the potential of the technology and the future of what it could bring. Now, we've talked earlier at the, at the start here about NFTs. DeFi is one of the most interesting and disruptive trends to FinTech, names like Celsius, Nexo, BlockFi. BlockFi let's actually the average person participate in liquidity pools is actually quite interesting. Crypto is going mainstream Tesla, micro strategy putting Bitcoin on their balance sheets. We have a 2017 Jamie diamond. He called Bitcoin a tulip bulb like fraud, yet just the other day JPM announced a structured investment vehicle to give its clients a basket of stocks that have exposure to crypto, PayPal allowing customers to buy, sell, and Hodl crypto. You can trade crypto on Robin Hood. Central banks are talking about launching digital currencies. I talked about the Fedcoin for a number of years and why not? Coinbase is doing an IPO will give it a value of over a hundred billion. Wow, that sounds frothy, but still big names like Mark Cuban and Jamaat palliate Patiala have been active in crypto for a while. Gronk is getting into NFTs. So it goes to have a little bit of that bubble feel to it. But look often when tech bubbles burst they shake out the pretenders but if there's real tech involved, some contenders emerge. So, and they often do so as dominant players. And I really believe that the innovation around crypto is going to be sustained. Now, there is a new web being built out. So if you want to participate, you got to do some research figure out things like how PolkaWorks, make a call on whether you think avalanche is an Ethereum killer dig in and find out about new projects and form a thesis. And you may, as a small player be able to find some big winners, but look you do have to be careful. There was a lot of fraud during the ICO. Craze is your risk. So understand the Tokenomics and maybe as importantly the Pump-a-nomics, because they certainly loom as dangers. This is not for the faint of heart but because I believe it involves real tech. I like it way better than Reddit stocks like GameStop for example, now not to diss Reddit. There's some good information on Reddit. If you're patient, you can find it. And there's lots of good information flowing on Discord. There's people flocking to Telegram as a hedge against big tech. Maybe there's all sounds crazy. And you know what, if you've grown up in a privileged household and you have a US Education you know, maybe it is nuts and a bit too risky for you. But if you're one of the many people who haven't been able to participate in these elite circles there are things going on, especially outside of the US that are democratizing investment opportunities. And I think that's pretty cool. You just got to be careful. So, this is a bit off topic from our typical focus and ETR survey analysis. So let's bring this back to the enterprise because there's a lot going on there as well with blockchain. Now let me first share some quotes on blockchain from a few ETR Venn Roundtables. First comment is from a CIO to diversified holdings company who says correctly, blockchain will hit the finance industry first but there are use cases in healthcare given the privacy and security concerns and logistics to ensure provenance and reduce fraud. And to that individual's point about finance. This is from the CTO of a major financial platform. We're really taking a look at payments. Yeah. Do you think traditional banks are going to lose control of the payment systems? Well, not without a fight, I guess, but look there's some real disruption possibilities here. And just last comment from a government CIO says, we're going to wait until the big platform players they get into their software. And so that is happening Oracle, IBM, VMware, Microsoft, AWS Cisco, they all have blockchain initiatives going on, now by the way, none of these tech companies wants to talk about crypto. They try to distance themselves from that topic which is understandable, I guess, but I'll tell you there's far more innovation going on in crypto than there is in enterprise tech companies at this point. But I predict that the crypto innovations will absolutely be seeping into enterprise tech players over time. But for now the cloud players, they want to support developers who are building out this new internet. The database is certainly a logical place to support a mutable transactions which allow people to do business one-on-one and have total confidence that the source hasn't been hacked or changed and infrastructure to support smart contracts. We've seen that. The use cases in the enterprise are endless asset tracking data access, food, tracking, maintenance, KYC or know your customer, there's applications in different industries, telecoms, oil and gas on and on and on. So look, think of NFTs as a signal crypto craziness is a signal. It's a signal as to how IT in other parts of companies and their data might be organized, managed and tracked and protected, and very importantly, valued. Look today. There's a lot of memes. Crypto kitties, art, of course money as well. Money is the killer app for blockchain, but in the future the underlying technology of blockchain and the many percolating innovations around it could become I think will become a fundamental component of a new digital economy. So get on board, do some research and learn for yourself. Okay, that's it for today. Remember all of these episodes they're available as podcasts, wherever you listen. I publish weekly on wikibon.com and siliconangle.com. Please feel free to comment on my LinkedIn post or tweet me @dvellante or email me at david.vellante@siliconangle.com. Don't forget to check out etr.plus for all the survey action and data science. This is Dave Vellante for theCUBE Insights powered by ETR. Be well, be careful out there in crypto land. Thanks for watching. We'll see you next time. (soft music)

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation as we've been reporting the Koba 19 pandemic has created a bifurcated IT spending picture and over the last several weeks we've reported both on the macro and even some come at it from from a vendor and a sector view I mean for example we've reported on some of the companies that have really continued to thrive we look at the NASDAQ and its you know near at all-time highs companies like oh and in CrowdStrike we've reported on snowflake uipath the sectors are PA some of the analytic databases around AI maybe even to a lesser extent cloud but still has a lot of tailwind relative to some of those on-prem infrastructure plays even companies like Cisco bifurcated in and of themselves where you see this Meraki side of the house you know doing quite well the work from home stuff but maybe some of the traditional networking not as much well now what if you flip that to really try to understand what's going on with the shape of the recovery which is the main narrative right now is it a v-shape does it a u-shape what is what's that what do people expect and now you understand that you really have to look at different industries because different industries are going to come back at a different pace with me again is Sagar khadiyah who's the director of research at EGR Sagar you guys are all over this as usual timely information it's great to see you again hope all is well in New York City thanks so much David it's a pleasure to be back on again yeah so where are we in the cycle we give dividend a great job and very timely ETR was the first to really put out data on the koban impact with the survey that ran from mid-march to to mid-april and now everybody's attention sagar is focused on okay we're starting to come back stores are starting to open people are beginning to to go out again and everybody wants to know what the shape of the recovery looks like so where are we actually in that research cycle for you guys yeah no problem so like you said you know in that kind of march/april timeframe we really want to go out there and get an idea of what we're doing the budget impacts you know as it relates to IT because of kovat 19 right so we kind of ended off there around a decline of 5% and coming into the year the consensus was of growth of 4 or 5% right so we saw about a 900,000 basis points wing you know to the negative side and the public covered in March and April were you know which sectors and vendors were going to benefit as a result of work from home and so now as we kind of fast forward to the research cycle as we kind of go more into May and into the summer rather than asking those exact same question to get again because it's just been you know maybe 40 or 50 days we really want Singh on the recovery type as well as kind of more emerging private vendors right we want to understand what's gonna be the impact on on these vendors that typically rely on you know larger conferences more in-person meetings because these are younger technologies there's not a lot of information about them and so last Thursday we launched our biannual emerging technology study it covers roughly 300 private emerging technologies across maybe 60 sectors of technology and in tandem we've launched a co-ed flash poll right what we wanted to do was kind of twofold one really understand from CIOs the recovery type they had in mind as well as if they were seeing any any kind of permanent changes in their IT stacks IT spend because of koban 19 and so if we kind of look at the first chart here and kind of get more into that first question around recovery type what we asked CIOs and this kind of COBIT flash poll again we did it last Thursday was what type of recovery are you expecting is it v-shaped so kind of a brief decline you know maybe one quarter and then you're gonna start seeing growth in 2 to H 20 is it you shaped so two to three quarters of a decline or deceleration revenue and you're kind of forecasting that growth in revenue as an organization to come back in 2021 is it l-shaped right so maybe three four five quarters of a decline or deceleration and then you know very minimal to moderate growth or none of the above you know your organization is actually benefiting from from from koban 19 as you know we've seen some many reports so those are kind of the options that we gave CIOs and you kind of see it on that first chart here interesting and this is a survey a flash service 700 CIOs or approximately and the interesting thing I really want to point out here is this you know the koban pandemic was it didn't suppress you know all companies you know and in the return it's not going to be a rising tide lifts all ships you really got to do your research you have to understand the different sectors really try to peel back the onion skin and understand why there's certain momentum how certain organizations are accommodating the work from home we heard you know several weeks ago how there's a major change in in networking mindsets we're talking about how security is changing we're going to talk about some of the permanence but it's really really important to try to understand these different trends by different industries which you're going to talk about in a minute but if you take a look at this slide I mean obviously most people expect this u-shaped decline I mean a you know a u-shaped recovery rather so it's two or three quarters followed by some growth next year but as we'll see some of these industries are gonna really go deeper with an l-shape recovery and then it's really interesting that a pretty large and substantial portion see this as a tailwind presumably those with you know strong SAS models some annual recurring revenue models your thoughts if we kind of star on this kind of aggregate chart you know you're looking at about forty four percent of CIOs anticipated u-shaped recovery right that's the largest bucket and then you can see another 15 percent and to say an l-shape recovery 14 on the v-shaped and then 16 percent to your point that are kind of seeing this this tailwind but if we kind of focus on that largest bucket that you shaped you know one of the thing to remember and again when we asked is two CIOs within the within this kind of coded flash poll we also asked can you give us some commentary and so one of the things that or one of the themes that are kind of coming along with this u-shaped recovery is you know CIOs are cautiously optimistic about this u-shaped recovery you know they believe that they can get back on to a growth cycle into 2021 as long as there's a vaccine available we don't go into a second wave of lockdowns economic activity picks up a lot of the government actions you know become effective so there are some kind of let's call it qualifiers with this bucket of CIOs that are anticipating a u-shape recovery what they're saying is that look we are expecting these things to happen we're not expecting that our lock down we are expecting a vaccine and if that takes place then we do expect an uptick in growth or going back to kind of pre coded levels in in 2021 but you know I think it's fair to assume that if one or more of these are apps and and things do get worse as all these states are opening up maybe the recovery cycle gets pushed along so kind of at the aggregate this is where we are right now yeah so as I was saying and you really have to understand the different not only different sectors and all the different vendors but you got to look into the industries and then even within industries so if we pull up the next chart we have the industry to the breakdown and sort of the responses by the industries v-shape you shape or shape I had a conversation with a CIO of a major resort just the other day and even he was saying what was actually I'll tell you it was Windham Resorts public company I mean and obviously that business got a good crush they had their earnings call the other day they talked about how they cut their capex in half but the stock sagar since the March lows is more than doubled yeah and you know that's amazing and now but even there within that sector they're peeling that on you're saying well certain parts are going to come back sooner or certain parts are going to longer depending on you know what type of resort what type of hotel so it really is a complicated situation so take us through what you're seeing by industry sure so let's start with kind of the IT telco retail consumer space Dave to your point there's gonna be a tremendous amount of bifurcation within both of those verticals look if we start on the IT telco side you know you're seeing a very large bucket of individuals right over twenty percent that indicated they're seeing a tail with our additional revenue because of covin 19 and you know Dave we spoke about this all the way back in March right all these work from home vendors you know CIOs were doubling down on cloud and SAS and we've seen how some of these events have reported in April you know with this very good reports all the major cloud vendors right select security vendors and so that's why you're seeing on the kind of telco side definitely more positivity right as it relates to recovery type right some of them are not even going through recovery they're they're seeing an acceleration same thing on the retail consumer side you're seeing another large bucket of people who are indicating what we've benefited and again there's going to be a lot of bifurcation here there's been a lot of retail consumers you just mentioned with the hotel lines that are definitely hurting but you know if you have a good online presence as a retailer and you know you had essential goods or groceries you benefited and and those are the organizations that we're seeing you know really indicate that they saw an acceleration due to Koga 19 so I thought those two those two verticals between kind of the IT and retail side there was a big bucket or you know of people who indicated positivity so I thought that was kind of the first kind of you know I was talking about kind of peeling this onion back you know that was really interesting you know tech continues to power on and I think you know a lot of people try I think that somebody was saying that the record of the time in which we've developed a fit of vaccine previously was like mumps or something and it was I mean it was just like years but now today 2020 we've got a I we've got all this data you've got these great companies all working on this and so you know wow if we can compress that that's going to change the equation a couple other things sagar that jump out at me here in this chart I want to ask you about I mean the education you know colleges are really you know kind of freaking out right now some are coming back I know like for instance my daughter University Arizona they're coming back in the fall evidently others are saying and no you can clearly see the airlines and transportation as the biggest sort of l-shape which is the most negative I'm sure restaurants and hospitality are kind of similar and then you see energy you know which got crushed we had you know oil you know negative people paying it big barrels of oil but now look at that you know expectation of a pretty strong you know you shape recovery as people start driving again and the economy picks up so maybe you could give us some thoughts on on some of those sort of outliers yeah so I kind of bucket you know the the next two outliers as from an l-shaped in a u-shaped so on the l-shaped side like like you said education airlines transportation and probably to a little bit lesser extent industrials materials manufacturing services consulting these verticals are indicating the highest percentages from an l-shaped recovery right so three plus orders of revenue declines and deceleration followed by kind of you know minimal to moderate growth and look there's no surprise here those are the verticals that have been impacted the most by less demand from consumers and and businesses and then as you mentioned on the energy utility side and then I would probably bucket maybe healthcare Pharma those have some of the largest percentages of u-shaped recovery and it's funny like I read a lot of commentary from some of the energy in the healthcare CIOs and they were said they were very optimistic about a u-shaped type of recovery and so it kind of you know maybe with those two issues then you could even kind of lump them into you know probably to a lesser extent but you could probably open into the prior one with the airlines and the education and services consulting and IMM where you know these are definitely the verticals that are going to see the longest longest recoveries it's probably a little bit more uniform versus what we've kind of talked about a few minutes ago with you know IT and and retail consumer where it's definitely very bifurcated you know there's definitely winners and losers there yeah and again it's a very complicated situation a lot of people that I've talked to are saying look you know we really don't have a clear picture that's why all these companies have are not giving guidance many people however are optimistic not only for a vet a vaccine but but but also they're thinking as young people with disposable income they're gonna kind of say dorm damn the torpedoes I'm not really going to be exposed and you know they can come back much stronger you know there seems to be pent up demand for some of the things like elective surgery or even the weather is sort of more important health care needs so that obviously could be a snap back so you know obviously we're really closely looking at this one thing though is is certain is that people are expecting a permanent change and you've got data that really shows that on the on the next chart that's right so one of the one of the last questions that we asked on this you know quick coded flash poll was do you anticipate permanent changes to your kind of IT stack IT spend based on the last few months you know as everyone has been working remotely and you know rarely do you see results point this much in one direction but 92% of CIOs and and kind of IT you know high level ITN users indicated yes there are going to be permanent changes and you know one of the things we talked about in March and look we were really the first ones you know you know in our discussion where we were talking about work from home spend kind of negating or balancing out all these declines right we were saying look yes we are seeing a lot of budgets come down but surprisingly we're seeing 2030 percent of organizations accelerate spent and even the ones that are spending less they even then you know some of their some of their budgets are kind of being negated by this work from home spend right when you think about collaboration tool is an additional VPN and networking bandwidth in laptops and then security all that stuff CIOs now continue to spend on because what what CIO is now understand as productivity has remained at very high levels right in March CIOs were very with the catastrophe and productivity that has not come true so on the margin CIOs and organizations are probably much more positive on that front and so now because there is no vaccine where you know CIOs and just in general the population we don't know when one is coming and so remote work seems to be the new norm moving forward especially that productivity you know levels are are pretty good with people working from home so from that perspective everything that looked like it was maybe going to be temporary just for the next few months as people work from home that's how organizations are now moving forward well and we saw Twitter basically said we're gonna make work from home permanent that's probably cuz their CEO wants to you know live in Africa Google I think is going to the end of the year I think many companies are going to look at a hybrid and give employees a choice say look if you want to work from home and you can be productive you get your stuff done you know we're cool with that I think the other point is you know everybody talks about these digital transformations you know leading into Kovan and I got to tell you I think a lot of companies were sort of complacent they talked the talk but they weren't walking the walk meaning they really weren't becoming digital businesses they really weren't putting data at the core and I think now it's really becoming an imperative there's no question that that what we've been talking about and forecasting has been pulled forward and you you're either going to have to step up your digital game or you're going to be in big trouble and the other thing that's I'm really interested in is will companies sub optimize profitability in the near term in order to put better business resiliency in place and better flexibility will they make those investments and I think if they do you know longer term they're going to be in better shape you know if they don't they could maybe be okay in the near term but I'm gonna put a caution sign a little longer term no look I think everything that's been done in the last few months you know in terms of having those continuation plans because you know do two pandemics all that stuff that is now it look you got to have that in your playbook right and so to your point you know this is where CIOs are going and if you're not transforming yourself or you didn't or you know lesson learned because now you're probably having to move twice as fast to support all your employees so I think you know this pandemic really kind of sped up you know digital transformation initiatives which is why you know you're seeing some companies desks and cloud related companies with very good earnings reports that are guiding well and then you're seeing other companies that are pulling their guidance because of uncertainty but it's it's likely more on the side of they're just not seeing the same levels of spend because if they haven't oriented themselves on that digital transformation side so I think you know events like this they typically you know Showcase winners and losers then you know when when things are going well and you know everything is kind of going up well I think that - there's a big you know discussion around is the ESPY overvalued right now I won't make that call but I will say this then there's a lot of data out there there's data and earnings reports there's data about this pandemic which change continues to change maybe not so much daily but you're getting new information multiple times a week so you got to look to that data you got to make your call pick your spot so you talk about a stock pickers market I think it's very much true here there are some some gonna be really strong companies emerging out of this you know don't gamble but do your research and I think you'll you'll find some you know some Dems out there you know maybe Warren Buffett can't find them okay but the guys at Main Street I think you know the I am I'm optimistic I wonder how you feel about about the recovery I I think we may be tainted by tech you know I'm very much concerned about certain industries but I think the tech industry which is our business is gonna come out of this pretty strong yeah we look at the one thing we we should we should have stated this earlier the majority of organizations are not expecting a v-shaped recovery and yet I still think there's part of the consensus is expecting a v-shaped recovery you can see as we demonstrate in some of the earlier charts the you know almost the majority of organizations are expecting a u-shaped recovery and even then as we mentioned right that you shape there is some cautious up around there and I have it you probably have it where yes if everything goes well it looks like 2021 we can really get back on track but there's so much unknown and so yes that does give I think everyone pause when it comes from an investment perspective and even just bringing on technologies and into your organization right which ones are gonna work which ones are it so I'm definitely on the boat of this is a more u-shaped in a v-shaped recovery I think the data backs that up I think you know when it comes to cloud and SAS players those areas and I think you've seen this on the investment side a lot of money has come out of all these other sectors that we mentioned that are having these l-shaped recoveries a lot of it has gone into the tech space I imagine that will continue and so that might be kind of you know it's tough to sometimes balance what's going on on the investor in the stock market side with you know how organizations are recovering I think people are really looking out in two to three quarters and saying look you know to your point where you set up earlier is there a lot of that pent up demand are things gonna get right back to normal because I think you know a lot of people are anticipating that and if we don't see that I think you know the next time we do some of these kind of coded flash bolts you know I'm interested to see whether or not you know maybe towards the end of the summer these recovery cycles are actually longer because maybe we didn't see some of that stuff so there's still a lot of unknowns but what we do know right now is it's not a v-shaped recovery agree especially on the unknowns there's monetary policy there's fiscal policy there's an election coming up there's a third there's escalating tensions with China there's your thoughts on the efficacy of the vaccine what about therapeutics you know do people who have this yet immunity how many people actually have it what about testing so the point I'm making here is it's very very important that you update your forecast regularly that's why it's so great that I have this partnership with you guys because we you know you're constantly updating the numbers it's not just a one-shot deal so suck it you know thanks so much for coming on looking forward to having you on in in the coming weeks really appreciate it absolutely yeah well I will really start kind of digging into how a lot of these emerging technologies are faring because of kovat 19 so that's I'm actually interested to start thinking through the data myself so yeah well we'll do some reporting in the coming weeks about that as well well thanks everybody for watching this episode of the cube insights powered by ETR I'm Dave Volante for sauger kuraki check out ETR dot plus that's where all the ETR data lives i published weekly on wiki bon calm and silicon angle calm and reach me at evil on Tay we'll see you next time [Music]

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation hey welcome back here writer jeff rick here with the cube we're in our Palo Alto studios you know kind of continuing our leadership coverage reaching out to the community for people that we've got in our community to get their take on you know how they're dealing with the Kovach crisis how they're helping to contribute back to the community to to bring their resources to bear and you know just some general good tips and tricks of getting through these kind of challenging times and we're really excited to have one of my favorite guests he's being used to come on all the time we haven't had them on for three years which I can't believe it sabi Mehta the CEO of true SATA founder to say to obby I checked the record I can't believe it's been three years since we last that down great to see you Jeff there's well first of all it's always a pleasure and I think the only person to blame for that is you Jeff well I will make sure that it doesn't happen again so in just a check-in how's things going with the family the company thank you for asking you know family is great we have I've got two young kids who have become video conferencing experts and they don't teach me the tricks for it which I'm sure is happening a lot of families around the world and the team is great we vent remote at this point almost almost two months ago down and can't complain I think their intellectual property business like you are so it's been a little easier for us to go remote compared to a lot of other businesses in the world and in America but no complaints it'll be very fortunate we are glad that we have a business and a company that can withstand the the economic uncertainty and the family's great I hope the same for the queue family I haven't seen Dave and John and it's good to see you again and I hope all of you guys are helped happy and healthy great I think in we're good so thank you for asking so let's jump into it you know one of the things that I've always loved about you is you know really your sense of culture and this kind of constant reinforcing of culture in your social media posts and the company blog post at true SATA you know celebrating your interns and and you really have a good pulse for that and you know I just I think we may even talked about it before about you know kind of the CEOs and leadership and and social media those that do and that and those that don't and you know I think it's it's probably from any kind of a risk reward trade-off you know I could say something group it versus what am I getting at it but really it's super important and in these times with the distributed workforce that the the importance and value of communicating and culture and touching your people frequently across a lot of different mediums and topic areas is is more important than ever before share with us kind of your strategy why did you figure this out early how have you you know kind of adjusted you know your method of keeping your team up and communicating absolutely like I guess I owe you guys a little bit of gratitude for it which is we launched our company and you know I'm showing a member on the cube it was a social media launch you know if you say that say it like that I think there are two or three things that are very important Jeff and you hit on all of them one is the emphasis on information sharing it becomes more important than times like these and we as as a society value the ability to share a positive conversation of positive perspective and a positive outlook more but since day zero at the seder we've had this philosophy that there are no secrets it is important to be open and transparent both inside and outside the company and that our legacy is going to be defined by what we do for the community and not just what we do for our shareholders and by its very nature the fact that you know I grew up in a different continent now live and call America now a different continent my home I guess I was it's very important for me to stay connected to my roots it is a good memory or reminder that the world is very interconnected unfortunately the pandemic is the is the best or worst example of it in a really weird way but I think it's also a very important point Jeff that I believe we learned early and I hope coming out from this is something that we don't lose the point you made about kindness social media and social networking has a massively in my opinion massively positive binding force for the world at the same time there were certain business models it tried to capitalize on the negative aspects of it you know whether they are the the commercialized versions of slam books or not so nice business models that capitalize on the ability for people to complain I hope that people society and us humans coming out of it learn from people like yourself or you know the small voice that I have on social media or the messages we share and we are kinda in what we do online because the ability to have networks that are viral and can propagate or self propagate is a very positive unifying force and I hope out of this pandemic we all realize the positive nature's of it more than the negative nature's of it because unfortunately as you know that our business models built on the negative forces of social media and I really really hope they're coming out of this are positive voices drown out the negative voices that's great point and and it's a great I want to highlight a quote from one of your blog's again I think you're just a phenomenal communicator and in relationship to what's going on with kovat and and I quote we are fighting fear pain and anxiety as much as we are fighting the virus this is our humble attempt to we'll get into what you guys did to help the thousands of first responders clerks rockstars but I just really want to stick with that kindness theme you know I used to or I still joke right that the greatest smile in technology today is our G from signal FX the guys are gonna throw up a picture of him he's a great guy he looks like everybody's favorite I love that guy but therefore signal effects and actually it's funny signal FX also launched on the cube at big data a big data show I used to say the greatest smile intact is avi Mehta I mean how can I go wrong and and what I when I reached out to you I I do I consciously thought what what more important time do we have than to see people like you with a big smile with the great positive attitude focusing on on the positives and and I just think it's so important and it segues nicely into what we used to talk about it the strata shows and the big data shows all the time everyone wanted to talk about Hadoop and big data you always stress is never about the technology it's about the application of the technology and you focus your company on that very where that laser focus from day one now it's so great to see is we think you know the bad news about kovat a lot of bad news but one of the good news is is you know there's never been as much technology compute horsepower big data analytics smart people like yourself to bring a whole different set of tools to the battle than just building Liberty ships or building playing planes or tanks so you guys have a very aggressive thing that you're doing tell us a little bit about is the kovat active transmission the coat if you will tell us about what that is how did it come to be and what are you hoping to accomplish of course so first of all you're too kind you know thank you so much I think you also were the first people to give me a hard time about my new or Twitter picture I put on and he said what are you doing RV you know you have a good smile come on give me the smile die so thank you you're very kind Jeff I think as I as we as you know and I know I think you've a lot to be thankful for in life and there's no reason why we should not smile no matter what the circumstance we have so much to be thankful for and also I am remiss happy Earth Day you know I'm rocking my green for Earth Day as well as Ramadan Kareem today is the first day of Ramadan and you know I I wish everybody in the world Ramadan Kareem and on that friend right on that trend of how does do we as a community come together when faced with crisis so Court was a very simple thing you know it's I'm thank you for recognizing the hard work of the team that led it it was an idea I came up with it you know in the shower I'm like there are two kinds of people or to your you can we have we as humans have a choice when history is being made which I do believe I do believe history is being made right whether you look at it economically and a economic shock and that we have not felt as humanity since the depression so you look at it socially and again something we haven't seen sin the Spanish blue history is being made in in these times and I think we as humans have a choice we can either be witnesses to it or play our part in helping shape it and coat was our humble tiny attempt to when we look back when history was being made we chose to not just sit on the sidelines but be a part of trying to be part of the solution so all riddled with code was take a small idea I had team gets the entire credit read they ran with it and the idea was there was a lot of data being open sourced around co-ed a lot of work being done around reporting what is happening but nothing was being done around reporting or thinking through using the data to predict what could happen with it and that was code with code we try to make the first code wonder oh that came out almost two weeks ago now when you first contacted us was predicting the spread and the idea around breaking the spread wasn't just saying here is the number of cases a number of deaths and know what to be very off we wanted to provide like you know how firefighters do can we predict where it may go to next at a county by county level so we could create a little bit of a firewall to help it from stop you know have the spread of it to be slower in no ways are we claiming that if you did port you can stop it but if he could create firewalls around it and distribute tests not just in areas and cities and counties where it is you know spiking but look at the areas and counties where it's about to go to so we use a inner inner in-house Network algorithm we call that Orion and we were able to start predicting where the virus is gonna go to we also then quickly realize that this could be an interesting where an extra you know arrow and the quiver in our fight we should also think about where are there green shoots around where can recovery be be helped so before you know the the president email announced this it was surrender serendipitous before the the president came and said I want to start finding the green shoes to open the country we then did quote $2 which we announced a week ago with the green shoots around a true sailor recovery index and the recovery index is looking at its car like a meta algorithm we're looking at the rates of change of the rates of change so if you're seeing the change of the rates of change you know the meta part we're declining we're saying there are early shoots that we if as we plan to reopen our economy in our country these are the counties to look at first that was the second attempt of code and the third attempt we have done is we calling it the odd are we there yet index it got announced yesterday and now - you're the first public announcement of it and the are we there yet index is using the government's definition of the phase 1 phase 2 phase 3 and we are making a prediction on where which are the counties that are ready to be open up and there's good news everywhere in the country but we we are predicting there are 73 different counties that ask for the government's definition of ready to open are ready to open that's all you know we were able to launch the app in five days it is free for all first responders all hospital chains all not-for-profit organizations trying to help the country through this pandemic and poor profit operations who want to use the data to get tests out to get antibodies out and to get you know the clinical trials out so we have made a commitment that we will not charge for code through - for any of those organizations to have the country open are very very small attempt to add another dimension to the fight you know it's data its analytics I'm not a first responder this makes me sleep well at night that I'm at least we're trying to help you know right well just for the true heroes right the true heroes this is our our humble attempt to help them and recognize that their effort should not go to its hobby that that's great because you know there is data and there is analytics and there is you know algorithms and the things that we've developed to help people you know pick they're better next purchase at Amazon or where they gonna watch next on Netflix and it's such a great application no it's funny I just finished a book called ghost Bob and is a story of the cholera epidemic in London in like 1850 something or other about four but what's really interesting at that point in time is they didn't know about waterborne diseases they thought everything kind of went through the air and and it was really a couple of individuals in using data in a new and more importantly mapping different types of datasets on top of it and now this is it's as this map that were they basically figured out where the the pump was that was polluting everybody but it was a great story and you know kind of changing the narrative by using data in a new novel and creative way to get to an answer that they couldn't and you know they're there's so much data out there but then they're so short a date I'm just curious from a data science point of view you know um you know there there aren't enough tests for you know antibodies who's got it there aren't enough tests for just are you sick and then you know we're slowly getting the data on the desk which is changing all the time you know recently announced that the first Bay Area deaths were actually a month were they before they thought they were so as you look at what you're trying to accomplish what are some of the great datasets out there and how are you working around some of the the lack of data in things like you know test results are you kind of organizing pulling that together what would you like to see more of that's why I like talking to you so I missed you you are these good questions of me excellent point I think there are three things I would like to highlight number one it doesn't take your point that you made with the with the plethora of technical advances and this S curve shift that these first spoke at the cube almost eleven years ago to the date now or ten years ago just the idea of you know population level or modeling that cluster computing is finally democratized so everybody can run complicated tests and a unique segment or one and this is the beauty of what we should be doing in the pandemic I'm coming I'm coming I'm quite surprised actually and given the fact we've had this S curve shift where the world calls a combination of cloud computing so on-demand IO and technical resources for processing data and then the on-demand ability to store and run algorithms at massive scale we haven't really combined our forces to predict more you know that the point you made about the the the waterborne pandemic in the eighteen eighteen hundreds we have an ability as humanity right now to actually see history play out rather than write a book about it you know it has a past tense and it's important to do are as follows number one luckily for you and I the cost of computing an algorithm to predict is manageable so I am surprised why the large cloud players haven't come out and said you know what anybody who wants to distribute anything around predictions lay to the pandemic should get cloud resources for free I we are running quote on all three cloud platforms and I'm paying for all of it right that doesn't really make sense but I'm surprised that they haven't really you know joined the debate or contribute to it and said in a way to say let's make compute free for anybody who would like to add a new dimension to our fight against the pandemic number one but the good news is it's available number two there is luckily for us an open data movement you know that was started on the Obama administration and hasn't stopped because you can't stop open movements allows people companies like ours to go leverage know whether it's John Hancock Carnegie Mellon or the new data coming out of you know California universities a lot of those people are opening up the data not every single piece is at the level we would like to see you know it's not zip plus 4 is mostly county level it's available the third innovation is what we have done with code but not it's not an innovation for the world right which is the give get model so we have said we will curate everything is available lie and boo cost anybody is used but they're for purposes and computations you want to enrich it every organization who gives code data will get more out of it so we have enabled a data exchange keep our far-off purple form and the open up the rail exchange that my clients use but you know we've opened up our data exchange part of our software platform and we have open source for this particular case a give get model but the more you give to it the more you get out of there and our first installations this was the first week that we have users of the platform you know the state of Nevada is using it there are no our state in North Carolina is using it already and we're trying to see the first asks for the gift get model to be used but that's the three ways you're trying to address the that's great and and and and so important you know in this again when this whole thing started I couldn't help but think of the Ford plant making airplanes and and Keiser making Liberty ships in in World War two but you know now this is a different battle but we have different tools and to your point luckily we have a lot of the things in place right and we have mobile phones and you know we can do zoom and well you know we can we can talk as we're talking now so I want to shift gears a little bit and just talk about digital transformation right we've been talking about this for ad nauseam and then and then suddenly right there's this light switch moment for people got to go home and work and people got to communicate via via online tools and you know kind of this talk and this slow movement of getting people to work from home kind of a little bit and digital transformation a little bit and data-driven decision making a little bit but now it's a light switch moment and you guys are involved in some really critical industries like healthcare like financial services when you kind of look at this not from a you know kind of business opportunity peer but really more of an opportunity for people to get over the hump and stop you can't push back anymore you have to jump in what are you kind of seeing in the marketplace Howard you know some of your customers dealing with this good bad and ugly there are two towers to start my response to you with using two of my favorite sayings that you know come to mind as we started the pandemic one is you know someone very smart said and I don't know who's been attributed to but a crisis is a terrible thing to waste so I do believe this move to restoring the world back to a natural state where there's not much fossil fuels being burnt and humans are not careful about their footprint but even if it's forced is letting us enjoy the earth in its glory which is interesting and I hope you don't waste an opportunity number one number two Warren Buffett came out and said that it's only when the tide goes out you realize who's swimming naked and this is a culmination of both those phenomenal phrases you know which is one this is the moment I do believe this is something that is deep both in the ability for us to realize the virtuosity of humanity as a society as social species as well as a reality check on what a business model looks like visa vie a presentation that you can put some fancy words on even what has been an 11-year boom cycle and blitzscale your way to disaster you know I have said publicly that this the peak of the cycle was when mr. Hoffman mr. Reid Hoffman wrote the book bit scaling so we should give him a lot of credit for calling the peak in the cycle so what we are seeing is a kind of coming together of those two of those two big trends crises is going to force industry as you've heard me say many for many years now do not just modernize what we have seen happen chef in the last few years or decades is modernization not transformation and they are different is the big difference as you know transformation is taking a business model pulling it apart understanding the economics that drive it and then not even reassembling it recreating how you can either recapture that value or recreate that value completely differently or by the way blow up the value create even more value that hasn't happened yet digital transformation you know data and analytics AI cloud have been modernizing trends for the last ten years not transformative trends in fact I've also gone and said publicly that today the very definition of technology transformation is run a sequel engine in the cloud and you get a big check off as a technology organization saying I'm good I've transformed how I look at data analytics I'm doing what I was doing on Prem in the cloud there's still sequel in the cloud you know there's a big a very successful company it has made a businessman out of it you don't need to talk about the company today but I think this becomes that moment where those business models truly truly get a chance to transform number one number two I think there's going to be less on the industry side on the new company side I think the the error of anointing winners by saying grow at all cost economics don't matter is fundamentally over I believe that the peak of that was the book let's called blitzscaling you know the markets always follow the peaks you know little later but you and I in our lifetimes will see the return to fundamentals fundamentals as you know never go out of fashion Jeff whether it's good conversations whether it's human values or its economic models if you do not have a par to being a profitable contributing member of society whether that is running a good balance sheet individually and not driven by debt or running a good balance sheet as a company you know we call it financial jurisprudence financial jurisprudence never goes out of fashion and the fact that even men we became the mythical animal which is not the point that we became a unicorn we were a profitable company three years ago and two years ago and four years ago and today and will end this year as a profitable company I think it's a very very nice moment for the world to realize that within the realm of digital transformation even the new companies that can leverage and push that trend forward can build profitable business models from it and if you don't it doesn't matter if you have a billion users as my economic professor told me selling a watermelon that you buy for a dollar or fifty cents even if you sell that a billion times you cannot make it up in volume I think those are two things that will fundamentally change the trend from modernization the transformation it is coming and this will be the moment when we look back and when you write a book about it that people say you know what now Jeff called it and now and the cry and the pandemic is what drove the economic jurisprudence as much as the social jurisprudence obvious on so many things here we can we're gonna be we're gonna go Joe Rogan we're gonna be here for four hours so hopefully hopefully you're in a comfortable chair but uh-huh but I don't I don't sit anymore I love standing on a DD the stand-up desk but I do the start of my version of your watermelon story was you know I dad a couple of you know kind of high-growth spend a lot of money raised a lot of money startups back in the day and I just know finally we were working so hard I'm Michael why don't we just go up to the street and sell dollars for 90 cents with a card table and a comfy chair maybe some iced tea and we'll drive revenue like there's nobody's business and lose less money than we're losing now not have to work so hard I mean it's so interesting I think you said everyone's kind of Punt you know kind of this pump the brakes moment as well growth at the ethic at the cost of everything else right there used to be a great concept called triple-line accounting right which is not just shareholder value to this to the sacrifice of everything else but also your customers and your employees and-and-and your community and being a good steward and a good participant in what's going on and I think that a lot of that got lost another you know to your point about pumping the brakes and the in the environment I mean we've been kind of entertaining on the oil side watching an unprecedented supply shock followed literally within days by an unprecedented demand shock but but the fact now that when everyone's not driving to work at 9:00 in the morning we actually have a lot more infrastructure than we thought and and you know kind of goes back to the old mob capacity planning issue but why are all these technology workers driving to work every morning at nine o'clock it means one thing if you're a service provider or you got to go work at a restaurant or you're you're carrying a truck full of tools but for people that just go sit on a laptop all day makes absolutely no sense and and I'd love your point that people are now you know seeing things a little bit slowed down you know that you can hear birds chirp you're not just stuck in traffic and into your point on the digital transformation right I mean there's been revolution and evolution and revolution people get killed and you know the fact that digital is not the same as physical but it's different had Ben Nelson on talking about the changes in education he had a great quote I've been using it for weeks now right that a car is not a is not a mechanical horse right it's really an opportunity to rethink the you know rethink the objective and design a new solution so it is a really historical moment I think it is it's real interesting that we're all going through it together as well right it's not like there quake in 89 or I was in Mount st. Helens and that blew up in in 1980 where you had kind of a population that was involved in the event now it's a global thing where were you in March 20 20 and we've all gone through this indeed together so hopefully it is a little bit of a more of a unifying factor in kind of the final thought since we're referencing great books and authors and quotes right as you've all know Harare and sapiens talked about what is culture right cultures is basically it's it's a narrative that we all have bought into it I find it so ironic that in the year 2020 that we always joke is 20/20 hindsight we quickly found out that everything we thought was suddenly wasn't and the fact that the global narrative changed literally within days you know really a lot of spearhead is right here in Santa Clara County with with dr. Sarah Cody shutting down groups of more than 150 people which is about four days before they went to the full shutdown it is a really interesting time but as you said you know if you're fortunate enough as we are to you know have a few bucks in the bank and have a business that can be digital which you can if you're in the sports business or the travel business the hotel business and restaurant business a lot of a lot of a lot of not not good stuff happening there but for those of us that can it is an opportunity to do this nice you know kind of a reset and use the powers that we've developed for recommendation engines for really a much more power but good for good and you're doing a lot more stuff too right with banking and in in healthcare telemedicine is one of my favorite things right we've been talking about telemedicine and electronic medicine for now well guess what now you have to cuz the hospitals are over are overflowing Jeff to your point three stories and you know then at some point I know you have you I will let you go you can let me go I can talk to you for four hours I can talk to you for but days my friend you know the three stories that there have been very relevant to me through this crisis I know one is first I think I guess in a way all are personal but the first one you know that I always like to remind people on there were business models built around allowing people to complain online and then using that as almost like a a stick to find a way to commercialize it and I look at that all of our friends I'm sure you have friends have lots of friend the restaurant is big and how much they are struggling right they are honest working the hardest thing to do in life as I've been told and I've witnessed through my friends is to run a restaurant the hours the effort you put into it making sure that what you produce this is not just edible but it's good quality is enjoyed by people is sanitary is the hard thing to do and there was yet there were all of these people you know who would not find in their heart and their minds for two seconds to go post a review if something wasn't right and be brutal in those reviews and if they were the same people were to look back now and think about how they assort the same souls then anything to be supportive for our restaurant workers you know it's easy to go and slam them online but this is our chance to let a part of the industry that we all depend on food right critical to humanity's success what have we done to support them as easy as it was for us to complain about them what have we done to support them and I truly hope and I believe they're coming out of it those business models don't work anymore and before we are ready to go on and online on our phones and complain about well it took time for the bread to come to my table we think twice how hard are they working right number one that's my first story I really hope you do tell me about that my second story is to your have you chained to baby with Mark my kids I'm sure as your kids get up every morning get dressed and launch you know their online version of a classroom do you think when they enter the workforce or when they go to college you and me are going to try and convince them to get in a oil burning combustion engine but by the way can't have current crash and breakdown and impact your health impact the environment and show up to work and they'll say what do you talk about are you talking about I can be effective I can learn virtually why can't I contribute virtually so I think there'll be a generation of the next class of you know contribute to society who are now raised to live in an environment where the choice of making sure we preserve the planet and yet contribute towards the growth of it is no longer a binary choice both can be done so I completely agree with you we have fundamentally changed how our kids when they grew up will go to work and contribute right my third story is the thing you said about how many industries are suffering we have clients you know in the we have health care customers we have banking customers you know we have whoever paying the bills like we are are doing everything they can to do right by society and then we have customers in the industry of travel hospitality and one of my most humbling moments Jeff there's one of the no sea level executives sent us an email early in this in this crisis and said this is a moment where a strong David can help AV Goliath and just reading that email had me very emotional because they're not very many moments that we get as corporations as businesses where we can be there for our customers when they ask us to be their father and if we as companies and help our customers our clients who area today are flying people are feeding people are taking care of their health and they're well if V in this moment and be there for them we we don't forget those moments you know those as humans have long-term memories right that was one of the kindest gentlest reminders to me that what was more important to me my co-founder Richard you know my leadership team every single person at Reseda that have tried very hard to build automations because as an automation company to automate complex human process so we can make humans do higher order activities in the moment when our customers asked us to contribute and be there for them I said yes they said yes you said yes and I hope I hope people don't forget that that unicorns aren't important there are mythical animals there's nothing all about profits there's nothing mythical about fortress balance sheet and there's nothing mythical about a strong business model that is built for sustainable growth not good at all cost and those are my three stories that you know bring me a lot of lot of calm in this tremendous moment of strife and and in the piece that wraps up all those is ultimately it's about relationships right people don't do business I mean companies don't do business with companies people do business with people and it's those relationships and and in strong relationships through the bad times which really set us up for when things start to come back I me as always it's I'm not gonna let it be three years to the next time I hear me pounding on your door great to catch up you know love to love to watch really your your culture building and your community engagement good luck I mean great success on the company but really that's one thing I think you really do a phenomenal job of just keeping this positive drumbeat you always have you always will and really appreciate you taking some time on a Friday to sit down with us well first of all thank you I wish I could tell you I just up to you but we celebrate formal Fridays that to Seder and that's what this is all so I want to end on a good on a positive bit of news I was gonna give you a demo of it but if you want to go to our website and look at what everything we're doing we have a survival kit around a data survival kit around kovat how am I using buzzwords you know a is let's not use that buzzword right now but in your in your lovely state but on my favorite places on the planet when we ran the algorithm on who is ready as per the government definition of opening up we have five counties that are ready to be open you know between Santa Clara to LA Sacramento Kern and San Francisco the metrics today the data today with our algorithm there are meta algorithm is saying that those five counties those five regions look like I've done a lot of positive activities if the country was to open under all the right circumstances those five look you know the first as we were men at on cream happy Earth Day a pleasure to see you so good to know your family is doing well and I hope we see we talk to each other soon thanks AVI great conversation with avi Mehta terrific guy thanks for watching everybody stay safe have a good weekend Jeff Rick checking out from the cube [Music]

>> From Tavern on the Green, in Central Park, New York, it's theCUBE, covering Veritas Vision Solution Day, brought to you by Veritas. >> Welcome back to the beautiful Tavern on the Green, in the heart of Central Park. You're watching theCUBE, the leader in live tech coverage. My name's Dave Vellante. We're covering Vertias Solution Days, #VtasVision. Veritas used to have the big, single tent, big tent customer event, and decided this year, it's going to go belly to belly. Go out to 20 cities, intimate customer events where they can really sit down with customers across from the table; certainly, this beautiful venue is the perfect place to do that. Harish Venkat is here as the VP of Marketing and Global Sales Enablement at Veritas. Thanks for coming on, Harish. >> Yeah, thanks for having me. >> So, we're going to change it up a little bit. Let's hit the Escape key a few times and talk about >> Yeah. >> some of the big mega trends that you're seeing. You spend a lot of time with customers. You had some intimate conversations today. What do you see as the big trends driving the marketplace? >> So at my level, what I observe with the highest thing is simplicity, instant gratification, is two things that customers love. Forget about customers, even we as individuals, we love simplicity and instant gratification. Examples around that, you know, think about back in the days where you had to take a picture, process the film, and then realize, "oh my god, the film's not even worth watching." Now you have digital photography, you take millions of pictures, and instantly you view the picture, and keep whatever you want, delete whatever you don't want. A small example of how simplicity and instant gratification is changing the world. In fact, if you listen to Warren Buffett, he'll say, "Invest in companies that is making your life a lot easier," so, if I spread that across the entire industry, I can go on with examples like Netflix disrupting Blockbuster because it made it easy for customers to watch movies at their time, and making it easy for consumption. You look at showrooming concept, where you go to Best Buy's of the world and many others, and look at a product, but you don't buy it right there. You go to your phone and say, "okay, do I do a price compare?" And then order it on the phone, where someone delivers it to your house So the list goes on and on, and the underpinning result as a result of this is disruption, all right? You look at Fortune 500 companies, just in the last decade. Over 52% of those companies have been disrupted and the underpinning phenomenon is all about instant gratification and simplicity. >> And Amazon is another great example of, I remember when my wife said to me, "Dave, you got to invest in this company." It was like... 1997. >> Yeah. >> Invest in this company, Amazon? >> Yeah. >> At the time, it was mostly books, but they started to get into other retail, so right-- >> We missed that boat, didn't we? >> I actually did, but I sold, ah! (laughs) >> I never lost money making a profit, so okay. So, at the same time, customer... Customers just can't get there... >> Yeah. >> Overnight, so what are some of the challenges that they have in getting to that level of simplicity? >> Yeah, so you look at IT spend, and when you look at the breakdown of IT spend, you'll see that about 87%, and in many cases, even greater than 90%, they spend just to keep the lights on and these are well-established companies that I'm talking about. In fact, I was doing a Keynote in, in Minneapolis one time and a CIO came and said, "Harish, I totally disagree." "In my company, it's 96%." >> (Dave laughs) >> Just to keep the lights on! So you're talking about less than 10% of your IT spend gone towards innovation, and then you look at emerging companies who are spending almost 100% all around innovation, leveraging the clouds of the world, leveraging the latest and greatest technology, and then doing these disruptions, and making things simple for consumption, and as a result, the disruption happens, so I think we have an opportunity to re-balance the equation in the enterprise space, and making it more available for innovation than just keeping the lights on. >> So part of that... the equation of shifting that needle, moving that needle, if you will, just eliminating non-value-producing activities that are expensive. We know, still, IT is still very labor-intensive, so we got to take that equation down and shift it. Are you seeing companies have success in shifting, re-training people toward digital initiatives and removing some of the heavy lifting, and what's driving that? >> Yeah, so I think it's a journey, right? So, I mean, the entire notion of journeying to the cloud is one of the big initiative to take out heavily manual-intensive, data center-intensive, which is costing a lot of money. If I can just shift all of those workloads to the cloud, that'll help me re-balance the equation. I view the concept of data intensity, which is really two variables to it. Back to your point, if I can take the non-core activity, rely on my partner ecosystem to say what is best in class solutions that I can use as my foundation layer, and then innovate on top of it, then yes, you have the perfect winning formula to really have a lot of market share and wallet share. If you're trying to do the entire stack by yourself, good luck. You'll be one of those guys who will be disrupted. There is no doubt. >> So well, okay, that says partnerships are very important. >> Without a doubt. >> You're not too alone. >> Channel is very important. >> Yes. >> So, so what do you see, in terms of the ebb and flow in the industry, of partnerships, how those are forming? Hear a lot about "co-opetition," which is kind of an interesting term, that is now, we're living. >> Yeah. >> What's your, what's your observation about partnerships, and how companies are able to leverage them? What's best practice there? >> Yeah, so just as Veritas, we're a data protection leader company. We have incredible market share and wallet share, amongst the Fortune 500 and Fortune 100 companies, but even within our incredible standing, we have to rely on other partners. We don't do everything on our own. We have incredible relationship with our cloud service providers, with the hyper-converged system to the world, like Nutanix. We just announced Pure today, so when we combine those partnerships, we can offer incredible solutions for our customers, who can then take care of the first variable that I talked about, and then innovate on top of it. So I think partner ecosystem is extremely important. For customers, it's very important that they pick the right players, so they don't have to worry about the data, and they can continually focus on innovation. >> We were talking to NBC Universal today, and one of themes in my take-aways was he's trying to get to the... he's a, basically a data protector, backup administrator, essentially, but he's trying to get to the point where he can get the business lines to self-serve. >> Yeah. >> And that seems to me to be part of the simplicity. Now... an individual like that, got to re-skill. Move toward a digital transformation. Move that needle so it's not 90% keeping the lights on. It's maybe you get to 50/50. >> Yeah. What are you seeing in terms of training and re-education of both existing people and maybe even how young people are being educated, your thoughts? >> Yeah, I think the young people coming out of college, they're already tuned to this, so to me, those are the disruptors of the world. You got to keep an eye on those millennials of the world because you don't have to train them more, because they're coming out of college, you know. They don't have the legacy background. They don't have the data centers of the world. They are already in the cloud. They're born in the cloud, sort of individuals, so I think the challenge is more about existing individuals who have the pedigree of all the journey that, you and I, we have seen, and how do you re-tune yourself to the modern world? And I think that presents an opportunity to say, "Okay look, if you don't adapt real quick," "you don't have a chance to survive" "in this limited amount of time you have in the IT space," but having said that, we're also seeing that you have some time window, and that time window will continue to shrink, so when we talk about this transformation journey, you can see year after year, the progress that, that's been made in the transformation, this leap and bound, and that's all related to Moore's Law. You think about computer and storage, it's becoming a lot cheaper, and so the innovation rate is continuing to go up. So you have very limited window: adapt or die. >> So, Harish, we were talking about, we've talked about digital transformation. We talk about simplifying; we're talking about agility. We're talking about shifting budget priorities, all very important initiatives. How is Veritas helping customers achieve these goals, so that they can move the needle from 90% keep the lights on to maybe 50/50, and put more into innovation. >> So four major themes: one is data protection. If you don't have your core enterprise asset, which is your data protected, then you can't really innovate anything on top of it. You'll constantly be worrying about what happens if I have a ransomware attack, what if I have a data outage, so Veritas takes care of it, back to the notion that you pick the best players to take care of the fundamental layer, which is around the data. The second thing that I... I would say Veritas can help is the journey to the cloud. Cloud, again, is another instrument for you to take out cost out of your data center. You're agile, you're nimble, so you can focus on innovation. Do you see the trend? So again, Veritas helps you with that journey to the cloud. It allows to move data and application to the cloud. When you're in the cloud, we protect your data in the cloud. The third thing I would say is doing more with less. I talked about the IT equation already. Software-defined storage allows you to do that. And the last thing I would say is compliance. We can't get away from compliance, the fact that Veritas has solutions to have visibility around the data. You can classify the data. You can always be compliant working with Veritas. You take care of these four layers, you don't have to worry about your data asset. You can worry about innovation at that point. >> So it, to me, it's sort of a modern version of the rebirth of Veritas. When Veritas first started, I always used to think of it as a data management company, not just a backup company. >> Right. >> And that's really what we're talking about here today, evolving toward a data-centric approach, that full life cycle of data management, simplifying that, bringing the cloud experience to your data wherever it is. Could be "on-prem." >> Yeah. >> Could be in the cloud, sort of this API-based architecture, microservices, containers... >> Yep. >> All the kind of interesting buzzwords today, but they enable agility in a cloud-like experience, that Netflix-like experience that you were talking about. >> Absolutely, right, so we're super excited. The one thing I would also say is what our latest net backup, 812, the other thing that I talked about, which is simplicity and ease of use: we are addressing both of that in addition to the robust brand that we have around protecting data. So you now you have simplicity, ease of use, instant gratification, all the basic ingredients, and Veritas is here to protect them. >> Harish, it's been a great day. Thanks for helping me close out the segment here. This venue is really terrific. It's been a while since I've been at Tavern on the Green. Some of you guys, I don't think you've ever seen it before. Seth's down here; he's, he's a city boy but we country bumpkins up in Massachusetts, we love coming down here, in the heart of Yankee country. So thanks very much-- >> Of course. >> For helping me close out here, great segment. All right, thanks for watching, everybody. We're out here, from New York City, Tavern on the Green. You've been watching theCUBE; I'm Dave Vellante. We'll see you next time. (light electronic music)

(Upbeat music) >> From the Hard Rock hotel in Las Vegas, its theCUBE! Covering the Hosho Con 2018, brought to you by Hosho. >> Okay, welcome back every one, this is theCUBE's exclusive coverage here live in Las Vegas for Hosho Con, the first inaugural event where security and block chain conferences is happening, it's the first of its kind where practitioners and experts get together to talk about the future, and solve some of the problems in massive growth coming they got a lot of them. Its good new and bad news but I guess the most important thing is security again, the first time ever security conference has been dedicated to all the top shelf conversations that need to be had and the news here are covering. Our next guest Greg Pinn who's the head of strategy and products for iComply Investor Services. Great to have you thanks for joining us. >> Very nice to be here >> So, we were just talking before we came on camera about you know all the kind of new things that are emerging with compliance and all these kind of in between your toes details and nuances and trip wires that have been solved in the traditional commercial world, that have gotten quite boring if you will, boring's good, boring means it works. It's a system. But the new model with Block Chain and Token Economics is, whole new models. >> Yeah I think what's so exciting about this is that in the Fiat world, from the traditional financial market, everyone is so entrenched in what they've been doing for 20, 30, 40 years. And the costs are enormous. And Block Chain, Crypto coming in now is like we don't have to do it that way. We have to do compliance. Compliance matters, it's important and it's your legal obligation. But you don't have to do it in the same sort of very expensive, very human way that people have been doing it in the past. >> And Cloud Computing, DevOps model of software proved that automations a wonderful thing >> Right >> So now you have automation and you have potentially AI opportunities to automate things. >> And what we've seen is huge increases in technology, in around machine learning and clustering of data, to eliminate a lot of the human process of doing AML, KYC verification, and that's driving down costs significantly. We can take advantage of that in the Crypto Space because we don't have thousands of people and millions of millions of dollars of infrastructure that we've built up, we're starting fresh, we can learn from the past and throw away all the stuff that doesn't work, or isn't needed anymore. >> Alright let's talk about the emerging state of regulation in the Block Chain community and industry. Where are we? What's the current state of the union? If you had to describe the progress bar you know with zero meaning negative to ten being it's working, where are we? What is the state of >> I think if you'd asked me a year ago I think negative would've been the answer. A year ago there was still a big fight in Crypto about do we even want to be part of Compliance, we don't want to have any involvement in that. Because it was still that sort of, Crypto goes beyond global borders, it goes beyond any of that. What's happened now is people have realized, it doesn't matter if you're dealing in Crypto Currency or traditional currency, or donkeys or mules or computers or whatever, if you're trading goods for value, that falls under Regulatory Landscape and that's what we're hearing from the SCC, from FinCEN, from all the regulators. It's not the form it's the function. So if you've got a security token, that's a security, whether you want it to be or not. You can call it whatever you want, but you're still going to be regulated just like a security. >> And I think most entrepreneurs welcome clarity. People want clarity, they don't want to have to be zigging when they should be zagging. And this is where we see domicile problem. Today it's Malta, tomorrow it's Bermuda. Where is it? I mean no one knows it's a moving train, the big countries have to get this right. >> A hundred percent. And beyond that what we're seeing, what's very, very frustrating for a market as global as this is it's not just country-level jurisdiction, the US you've got State-level jurisdiction as well. Makes it very, very hard when you're running a global business if you're an exchange, if you're any sort of global, with a global client reach. Managing that regulation is very, very difficult. >> You know I interviewed Grant Fondo who's with Goodwin Law Firm, Goodwin Proctor they call it Goodwin now, he's a regulatory guy, and they've been very on the right side of this whole SCC thing in the US. But it points to the issue at hand which is there's a set of people in the communities, that are there to be service providers. Law Firms, Tax, Accounting, Compliance. Then you got technology regulation. Not just financial you have GDPR, it's a nightmare! So okay, do we even need GDPR with Block Chain? So again you have this framework of this growth of internet society, now overlaid to a technical shift. That's going to impact not only technology standards and regulations but the business side of it where you have these needed service providers. Which is automated? Which isn't automated? What's your take on all of this? >> I agree with you a hundred percent, and I think what's helpful is to take a step back and realize while compliance is expensive and a pain and a distraction for a lot of businesses. The end of the day it saves people's lives. And this is what, just like if someone was shooting a gun as you were running down the street, in your house, you're going to call the police, that is what financial institutions are doing to save these industries and individuals that are impacted by this. A lot of it from a Crypto Currency perspective, we have a responsibility because so much of what the average person perception is, is Ross Ulbricht and Silk Road. And we have to dig our way out of that sort of mentality of Crypto being used for negative things. And so that makes it even more important that we are ultra, ultra compliant and what's great about this is there's a lot great opportunities for new vendors to come into the space and harness what existed whether that's harnessing data, different data channels, different IDDent verification channels and creating integrated solutions that enable businesses to just pull this in as a service. It shouldn't be your business, if you're in exchange, compliance is something you have to do. It should not become your business. >> Yeah I totally agree, and it becomes table stakes not a differentiator. >> Exactly >> That's the big thing I learned this week it's people saying security's a differentiator, compliance is a, nah, nah, I have standards. Alright so I got to ask you about the, you know I always had been on the biased side of entrepreneurship which is when you hear regulations and you go whoa, that's going to really stunt the growth of organic innovation. >> Right. But in this case the regulatory peace has been a driver for innovation. Can you share some opinions and commentary on that because I think there's a big disconnect. And I used to be the one saying regulation sucks, let the entrepreneurs do their thing. But now more than ever there's a dynamic, can you just share your thoughts on this? >> Yeah, I mean regulators are not here to drive innovation. That's not what their job is. What's been so interesting about this is that because of regulations coming to Crypto along with these other things, it's allowing businesses to solve the problem of compliance in very exciting, interesting ways. And it's driving a lot of technologies around machine learning, what people like IBM Watson are doing around machine learning is becoming very, very powerful in compliance to reduce that cost. The cost is enormous. An average financial institution is spending 15 percent. Upwards of 15 percent of their revenue per year on compliance. So anything they can do to reduce that is huge. >> Huge numbers >> And we don't want Crypto to get to that point. >> Yeah and I would also love to get the percentage of how much fraud is being eaten into the equation too. I'm sure there's a big number there. Okay so on the compliance side, what are the hard problems that the industry is solving, trying to solve? Could you stack rank the >> I think number one: complexity. Complexity is the biggest. Because you're talking about verifying against sanctions, verifying against politically exposed persons, law enforcement lists, different geographical distributions, doing address verification, Block Chain forensics. The list just stacks and stacks and stacks on the complexity >> It's a huge list. >> It's a huge list >> And it's not easy either. These are hard problems. >> Right, these are very, very difficult problems and there's no one expert for all of these things. And so it's a matter of bringing those things together, and figuring out how can you combine the different levels of expertise into a single platform? And that's where we're going. We're going to that point where it's a single shop, you want to release an ICO? You're an exchange and you need to do compliance? All of that should be able to be handled as a single interface where it takes it off of your hands. The liability is still with the issuer. It's still with the exchange, they can't step away from their regulatory liability, but there's a lot that they can do to ease that burden. And to also just ignore and down-risk people that just don't matter. So many people are in Crypto, not the people here, but there's so many people in Crypto, you buy one tenth of a Bitcoin, you buy a couple of Ether, and you're like okay that was fine. Do we really need to focus our time on those people? Probably not. And a lot of the >> There's a lot big money moving from big players acting in concert. >> And that's where we need to be focused. Is the big money, we need to be focused on where terrorists are acting within Block Chain. That's not to say that Block Chain and Crypto is a terrorist vehicle. But we can't ignore the reality. >> And I think the other thing too is also the adversary side of it is interesting because if you look at what's happening with all these hacks, you're talking about billions of dollars in the hands now of these groups that are highly funded, highly coordinated, funded basically underbelly companies. They get their hands on a quantum computer, I was just talking to another guy earlier today he's like if you don't have a sixteen character password, you're toast. And now it's twenty four so, at what point do they have the resources as the fly wheel of profit rolls in on the hacks. >> You know, one of the interesting things we talk about a lot is we have to rely on the larger community. We can't, I can't, you can't solve all of the problems. Quantum computing's a great example. That's where we look for things like two-factor authentication and other technologies that are coming out to solve those problems. And we need to, as a community, acknowledge That these are real problems and we've identified potential solutions. Whether that's in academia, whether it's in something like a foundation like the Ethereum Foundation, or in the private sector. And it's a combination of those things that are really driving a lot of it's innovation. >> Alright so what's the agenda for the industry if you had to have a list this long, how do you see this playing out tactically over the next twelve months or so as people start to get clarity. Certainly SCC is really being proactive not trying to step on everybody at the same time put some guard rails down and bumpers to let people kind of bounce around within some frame work. >> I think the SCC has taken a very cautious approach. We've seen cease and desist letters, we've seen notifications we haven't seen enormous finds like we see in Fiat. Look at HSBC, look at Deutsche Bank, billions of dollars in fines from the SCC. We're not seeing that I think the SCC understands that we're all sort of moving together. At the same time their responsibility is to protect the investor. And to make sure that people aren't being >> Duped. >> Duped. I was trying to find an appropriate term. >> Suckered >> Suckered, duped. And we've seen that a lot in ICOs but we're not seeing it, the headlines are so often wrong. You see this is an ICO scam. Often it's not a scam, it's just the project failed. Like lots of businesses fail. That doesn't mean it's a scam, it means it was a business fail. >> Well if institutional investors have the maturity to handle they can deal with failures, but not the average individual investor. >> Right, which is why in the US we have the credit investor, where you have to be wealthy enough to be able to sustain the loss. They don't have that anywhere else. So globally the SCC care and the other financial intelligence units globally are monitoring this so we make that we're protecting the investor. To get back to your question, where do I see this going? I think we're going to need to fast track our way towards a more compliant regime. And this I see as being a step-wise approach. Starting with sanctions making sure everyone is screened against the sanction list. Then we're going to start getting more into politically exposed persons, more adverse media, more enhanced due diligence. Where we really have that suite of products and identify the risk based on the type of business and the type of relationship. And that's where we need to get fast. And I don't think the SCC is going to say yeah be there by 2024, it's going to be be there by next year. I was talking to Hartej, he was one of the co founders of Hosho and we were talking on TheCUBE about self-regulation and some self-policing. I think this was self-governed, certainly in the short term. And we were talking about the hallway conversations and this is one of the things that he's been hearing. So the question for you Greg is: What hallway conversations have you overheard, that you kind of wanted to jump into or you found interesting. And what hallway conversations that you've been involved in here. >> I think the most interesting, I mentioned this on a panel and got into a great conversation afterwards, about the importance of the Crypto community reaching out to the traditional financial services community. Because it's almost like looking across the aisle, and saying look we're trying to solve real business problems, we're trying to create great innovative things, you don't have to be scared. And I was speaking at a traditional financial conference last week and there it was all people like this Crypto is scary and it's I don't understand it. >> You see Warren Buffett and Bill Gates poopooing it and freak out. >> But we have an obligation then, we can't wait for them to realize what needs to be done. We need to go to them and say, look we're not scary, look let's sit down. If you can get a seat at a table with a head of compliance at a top tier bank, sit down with them and say let me explain what my Crypto ATM is doing and why it's not a vehicle for money laundering, and how it can be used safely. Those sorts of things are so critical and as a community for us to reach across the aisle, and bring those people over. >> Yeah bridge the cultures. >> Exactly. Because it's night and day cultures but I think there's a lot more in common. >> And both need each other. >> Exactly. >> Alright so great job, thanks for coming on and sharing your insights. >> Thank you so much. >> If you have a quick plug on what you're working on, give the plug for the company. >> Sure, so iComply Investor Services is here to help people who want to issue ICOs, do that in a very compliant way. Because you shouldn't have to worry about all of your compliance and KYC and Block Chain Forensics and all that, you should be worried about raising money for your company and building a product. >> Alright final question since I got you here 'cause this is on my mind. Security token, has got traction, people like it 'cause no problem being security. What are they putting against that these days, what trend are you seeing in the security token? Are they doing equity? I'm hearing from hedge funds and other investors they'll want a little bit of equity preferred and or common, plus the token. Or should the token be equity conversion? What is some of the strings you're seeing? >> You know I think it' really just a matter of do you want paper or do you want a token? Just like a stock certificate is worth nothing without the legal framework behind it. A security token is the same way. So we're seeing where some people are wanting to do equity, where some of their investors want the traditional certificate. And some are fine with the token. We're seeing people do hybrid tokens where it morphs from security to utility or back. Where they're doing very creative things. It's what's so great about the Ethereum Network and the Smart Contracts, is there are all of these great options. The hard part then is, how do you fit those options into regular framework. >> And defending that against being a security, and this is interesting because if it converts to a utility, isn't that what security is? >> So that's the question. >> Then an IPO is an, again this is new territory. >> Right, and very exciting territory. It's an exciting time to be involved in this industry. >> In fact I just had an AE3B Election on tokens, first time ever. >> Yeah it's an amazing state that we're in. Where serious investors are saying yeah token's great for me. Give me the RC20 I'll stick it in my MetaMask Wallet, it's unbelievable where we are. And only more exciting things to come. >> Greg Pinn, thanks for coming on and sharing your insights. TheCUBE covers live here in Las Vegas, Hoshocon, the first security conference in the industry of its kind where everyone's getting together talking about security. Not a big ICO thing, in fact it's all technical, all business all people shaping the industry, it's a community it's TheCUBE coverage here in Las Vegas. Stay with us for more after this short break. (Upbeat music)

(lively music) >> Live from San Francisco, it's theCUBE covering Micron Insight 2018. Brought to you by Micron. >> Welcome back to San Francisco Bay everybody, we're here covering Micron Insight 2018. You're watching theCUBE, the leader in live tech coverage. My name is Dave Vellante, I'm here with my cohost David Floyer. Sanjay Mehrotra is here, he's the president and CEO of Micron. Sanjay, thanks very much for coming on theCUBE. >> Great to be on the show. >> So quite an event here! First of all beautiful venue. >> Lovely venue. >> Got the Golden Gate that way, we got Nob Hill over there. So tell us about this event. It's not just about hardcore tech and memory. You guys are talking about AI for good, healthcare, changing the world. What's behind that? >> Yeah, our focus is on AI technologies and how AI is really changing the world. In terms of life, in terms of business, in terms of health. This is a showcase of how these technologies are in very very early innings, they've just barely begun. And what's happened is that AI algorithms have been around for a long time but now the compute capability and the memory and storage capability have advanced to the levels that you can really mine through a lot of data real-time, derive lot of insights and translate those insights into intelligence. And Micron plays a pivotal role here because our memory, our storage is where all this data resides, where all this data is processed. So we are very excited to bring together many industry figures, industry luminaries, park leaders, researchers, engineers all here today to engage in a dialogue on where technology is going, where AI is going, how it's shaping the world. And for the realization that hardware is absolutely central to this trend. And memory and storage is key. And we are very excited about what it means for the future. >> So a lot of thought leaders here today. Well first of all you guys have some hard news, which is relevant to what we're talking about. Talk about the hundred million dollar fund and how you've deployed it even just today you've made some sub-announcements. >> So, one of the things we announced today is we are launching a hundred million dollar fund to support, to fund start-ups in AI. Because we really think AI is going to transform the world. We want to be in the front row. With not only the large existing players that are driving this change but also the start-ups that will drive innovation. Having the front row seat with those start-ups, through our investment fund, will really help us accelerate intelligence, accelerate time to market of various AI applications. So a hundred million dollar fund is targeted toward supporting start-ups that are developing AI technologies. And what I'm really excited to talk about here is that 20% of that fund will go to start-ups that have leadership that is represented by women or under-represented groups. Under-represented--those groups that are under-represented in tech today. This demonstrates Micron's commitment to diversity and inclusion in the technologies phase. >> Well that's, well first of all congratulations on that we're big supporters >> Absolutely >> Of women and tech and diversity, it's something that we cover on the theCUBE extensively. And now you've announced two grants just today, a half a million dollars each. One with Stanford, one with Berkeley that we heard. We heard Amazon up on stage talking about Alexa AI, Microsoft was onstage we had NVIDIA on theCUBE earlier. So bringing together an ecosystem that involves academia, your partners, your customers, talk about that a little bit. >> So the two grants that you talked about, those are from Micron Foundation that is again supporting advancement of AI and AI research as well as teaching of AI to kids so that we can build the pipeline of strong engineers and technologists of the future. So the two grants that we have announced today are one to Stanford Precision Health and Integrated Diagnostics Center, 200,000 grant to Stanford, pioneers in AI applications to precision management of your health. Very exciting field that will really truly enrich life and prolong life in the future as well as advance detection of diseases. Second $200,000 grant that we are giving is to Berkeley. Artificial Intelligence Research Center, absolutely cutting-edge that will be applicable to many industries and many walks of life. These are intended to support advancement of AI research. In addition to this advanced curiosity grant to these two institutions later today you'll hear there will be announcing a $100,000 grant to AI4ALL. And this is an institution that is encouraging women and under-represented minorities at high school level, 9th grade to 11th grade to pursue STEM careers. So Micron is really promoting study of advanced research and supporting the pipeline. In addition to this of course our focus today is on bringing together industry luminaries just like you mentioned, NVIDIA, Qualcomm, autonomous driving of the future, automotive partners, BMW, Visteon, really to engage in a dialogue of how AI is advancing in these various applications. We just heard great talk from vice president at Amazon, on Alexa devices really really exciting how those devices are truly making your life so easy and so intelligent. We heard from Microsoft Corporate Vice-President of AI research. So you see we really are as leaders in our industry, we are really bringing together industry experts to engage in a thought-provoking and inspiring dialogue on AI so that when we leave here today we leave with insights into what is coming next but even more importantly what do we all need to do to get there faster, and this is all about technology. >> So Sanjay and David too, Micron is one of the few companies that was here when I started in the business and is still around. At the time you were just a component manufacturer doin' memories and wow to watch the diversification of Micron over the years but also recently, I mean it's incredibly well-run company so congratulations on the recent success. At the analyst event in New York City this year, you talked about not only that diversification in your investments and innovation but you talked about the cyclicality of this business the historical cyclicality of this business you've dampened that down a little bit, for a variety of reasons. The capital requirements in this business are enormous, there's been consolidation. So how is that going, talk about sort of the trends in your business both in terms of diversification and your ability to make this business more predictable. >> So Dave you are very right to know that Micron is 40 year old company, we actually just turned 40, very proud of it. Really a company founded on the principles of innovation and tenacity. In fact the company has contributed to the industry to the world over the course of 40 years, 40,000 patents, just imagine that's a thousand patents a year, three patents a day over the course of 40 years. We are really a prolific inventor and we absolutely through our innovations in memory and storage have shaped the world here. As technology advances it really unleashes more applications and this is what has brought about the change in our industry. Today memory is not just in your PC. Of course it is in this PC but it is also in your data center it is going to be in the autonomous records of the future you going to have as much memory as what you had in the server just a few years ago. It's inside your mobile phone Artificial Intelligence, facial recognition is only possible because of the data and memory that you have in there. You have NAND Flash that is in these devices and with technology advancing that's bringing down the price points of NAND Flash really bringing more SSD's into these notebook computers, making these notebook computers lighter, longer battery life, more powerful. And of course Flash drives are also replacing hard test drives in data centers and cloud computing. So many applications, these diverse applications really have brought greater stability in our industry. And of course technology complexity has over time moderated the supply growth. And that's what we mean that the cyclicality of our industry, yes one or two quarters here or there you can have demand and supply mismatches but overall when you look at the demand trends and combine them with the moderating supply trends the long-term trajectory for our industry is very healthy. In fact we just completed a record year. >> Our fiscal year '18 was a record 30 billion dollar year for us with profitability that puts us at the very top of the most companies with 50% operating margin and with 30 billion in revenue we are actually number two largest semiconductor company in the U.S. And a lot of opportunity ahead given the demand drivers in the industry. >> Massive free cash flow, you've said publicly the stock is undervalued which is ya know, I don't know any CEO that says it's overvalued but nonetheless the performance that you've had suggests that you very well might be right. Go ahead David please. >> Yeah I just wanted to ask your opinion on, you are leading in this area now, very very clearly you're growing faster than the industry, you've had a magnificent year and the whole area is grown both the NAND and the DRAM. How are you judging how much to invest in this for the future? What's the balance between giving money back to the stockholders by buying stock back or versus investing in this what seems to me a very very exciting area. >> Do you have an AI algorithm for that? (laughing) >> We are in a great position where we are extremely disciplined about investing in CapEx to reduce cost of production and to deploy new technologies into production. We are very ROI focused in terms of any CapEx investments we make. We of course invest in R and D. I mentioned earlier 40,000 patents over the course of 40 years that only comes in investment in R and D. Investments in R and D are essential because we are today the most comprehensive technology solutions provider in memory and storage in the world. >> Yeah. >> In the world. With our DRAM, our Flash, our 3D crosspoint technologies, as well as future emerging technologies really position us as the only company in the world that have all of these memory and storage technologies under one company roof. So we do invest very thoughtfully and we manage our expenses very carefully but we do invest in R and D and of course we are committed to driving shareholder value as well. And we had announced earlier in the year ten billion dollar share buy back program with at least 50% of a fee cash flow. Every quarter on an annual basis actually, 50% of our fee cash flow on an annual basis going, at least 50% going toward share buy back. So we are managing the business, all aspects of it, excitedly looking forward to the opportunities. At the same time prudently in an otherwise driven fashion, building shareholder value through investments in R and D and manufacturing. >> Well of course the great Warren Buffett, David, says when asked if stock buy backs are a good investment says if your stock's undervalued it's a good investment, so. Obviously you believe that Sanjay, so. >> Absolutely! >> So thanks, thanks very much for coming on the theCUBE it was great to have you. >> Thank you. >> I hope we can have you back again. >> Thank you. >> We could talk to you for a long long time. >> Thank you very much. >> Alright, keep it right there buddy, >> Thank you. >> We'll be back with our next guest. We're live from San Francisco Bay Micron Insight 2018. You're watching theCUBE. (upbeat music).

(techno music) >> Announcer: Live, from New York, it's theCUBE. Covering Blockchain Week. Now, here's John Furrier. (techno music) >> Hello and welcome back. this is the exclusive coverage from theCUBE. I'm John Furrier, the co-host. We're here in New York City for special on the ground coverage. We go out where all the action is. It's happening here in New York City for Blockchain Week, New York, #BlockchainWeekNY Of course, Consensus 2018 and a variety of other events, happening all over the place. We got D-Central having a big boat event here, tons of events from Hollywood. We got New York money, we got Hollywood money, we got nerd money, it's money everywhere, and of course great deals are happening, and I'm here with two friends who have done a deal. Al Burgio is a CEO of DigitalBits co-founder, and Nithin who's the partner at Arcadia Crypto Ventures. You guys we've, you know, we're like family now, and you're hiding secrets from me. You did a deal. Al, what's going on here? Some news. >> Yeah, well first John, thanks for having us. We always love coming on the show, and really enjoy spending time with you and so forth. We, you know previous conversations that we've had, we were not out there fundraising. But really had the opportunity to meet a lot of great people Nithin and his firm being definitely one of them. And as a result of that, really building this, say, following, these relationships within the venture community, more specifically the crypto venture community. When we were ready to actually go out and do, let's say a first round, for us it happened very quickly, and it was a result of being able to leverage those relationships that we had. For me, it was kind of remarkable to see that support come and happen so quickly. Normally venture, it's just a process. Many many months. >> John: Long road. >> Then a month to close. >> John: Kiss all the frogs. >> Yeah, here it's like, you know, people can do due diligence on the fly, You have an opportunity with events like this. >> John: They're smart. >> They're smart, and and there's an opportunity to really foster these relationships in this really tight-knit community. And, you know, Nithin and his firm being obviously one of those. And so when we were ready to go out and do our first round, it happened quickly, and I'd like to think that in a lot of ways, it happened amongst friends. >> Well, you're being humble. We've been covering you, you've been on theCUBE earlier, when you just started the idea, so it's fun to watch you have this idea come to fruition, but you're in a, you're hitting a TAM a Total Available Market that's pretty large. And that's one of the secrets, to have a TAM. Aggressive bold move, we'll how it turns out for you, but you know, you got to have the moonshot, you're going after the loyalty market, which is completely run by the syndicate, what do you want to call it, the mafia of loyalty. >> Yeah, well, I would say that in some cases, those that are supporting us see that as really just one use case. Because we built this general-purpose blockchain, one of the use cases and one of the first use cases that were out there to support, happens to be the loyalty space. >> John: Big. And it's massive, highly fragmented but massive market, and we can solve a lot of liquidity issues with our technology. But then it goes beyond that. So it's a big market at the start, and then that can scale even greater from there. and I think that's part of what, I mean obviously, I'm not going to speak for Nithin. >> Nithin, let me weigh in here, pass the mic over. Nithin talk about the deal, why these guys? I know you met 'em, you like Al, and the feedback I've heard from other folks is he's a classic entrepreneur and that obviously, the entrepreneur gets the deal, but obviously you don't just give money 'cause you like someone. What about this deal is it that you guys like? You guys been there early, you got some great people on your team, what about this deal is it that you like? >> Sure, for us, Al met pretty much most of, almost all the criteria that we had, okay. That we had when we go, the thesis before we go fund someone. We don't get so many deals like that. Usually we get you know, they made 50% of the criteria, we might still put money because you can't get the 100%. So one thing, Al as a founder, he's experienced, he has done it multiple times before, he sold companies. Tech guy, which is very key for us. A tech project is very key. Okay, second thing, he's built the whole thing. It's not like he's raising the money to go and build it. He built it, now he's raising money to go for go to market strategies, which makes sense. He's shown it, and we tested it out. So like, we were completely blown away. He has a team behind 'im. He's built a team on every side, on the marketing side, on PR, events. And the idea, this is a general blockchain, but he's addressing a very specific issue. It is a real problem. Loyalty points, or rewards points, or gift points. Or whatever you call them. It is segmented, it's fragmented, and this is a chance. And there might be many people who are trying to solve this problem, but I think Al has the greatest possibility, or probability, of becoming the winner. >> You and I have talked on theCUBE before, both of you guys are CUBE alumni, I know you both, so I'll ask you, 'cause I'll just remind everyone, we've talked about token economics. One of the things that's coming up here at the Consensus 2018 event in New York, onstage certainly, and some fireworks in one of the sessions, is like if you're not decentralized, why the hell are you doing a decentralized model? So one of the criterias is, the fit for the business model, has to fit the notion of a decentralized world, with the ability of tokens becoming an integral part. What about this deal makes that happen? Obviously, fragmentation, is that still decentralized? So, how are you sorting through the nuances of saying, okay, is it decentralized the market for him, and this deal? Or does it fit? >> See no, decentralize is one thing okay, in here, more than decentralized, I would say there was the platform, so that all the companies can come in, use this common platform, release it, and as a user you're getting a chance to atomically swap it if you don't like something. Most of the reward points or loyalty points go waste. Maybe the companies want it to go waste, I don't know if that is. >> It's a natural burn at equilibrium going on anyway right? Perfect fit! >> So that is the only, that was the only doubt that we had. Would companies want this, because do they want their customers' loyalty points going waste rather than swapping it for something else? That was the only question that we had. Well, that's a question that will get answered in the market. But otherwise we hadn't seen something like this before. >> What's your take of the show so far? We saw each other in the hallway as we were getting set up for theCUBE, for two days of coverage, in New York, for Blockchain Week, New York, what's your take? Obviously pretty packed. >> Oh my god, it's so packed, and it's great, the show is going on. It is bringing a lot of money in, it's bringing all the investors in a new money, old money, traditional money, nerd money as you said. >> It smells like money! >> Everybody's coming in. See the beauty about those things coming in is, you're going to get a lot of people from other fields that are going to come into this field to solve problems. 'Cause earlier, if there is no money coming in, you're going to have very smart people, or very intelligent people stick with physics or whichever was their field. Now, they're going to look into the space because they're getting paid. See that brings more people who are intelligent, and who can solve problems. That is very key for me. >> Al, I want to ask you as an entrepreneur, one things you usually have to struggle with, as any entrepreneur, is navigating the 3-D chess you got to play, whether it's competitive strategy, market movement, certainly the market's moving and shifting very quickly, but you've got growth, big tailwind for you. What's your takeaway? Because now you have new things coming on. Every every day it seems like a new shoe is dropping. SEC's firing a warning on utility tokens, security tokens are still coming, are now coming online, but that looks very promising, and then ecosystems become super important. You guys just announced news this morning around the ecosystem. >> Yeah, tomorrow we have some. We had some news today, but we have more tomorrow. >> John: Well talk about the news. >> Yeah, so we have a multi-tiered go to market strategy. Obviously in the loyalty space, again I want to emphasize, it's just one use case, but it's a massive one. You have brands, the enterprise. And many of those those enterprises or brands may operate their loyalty program internally, in terms of like back offices systems, in some cases they're outsourcing the app to a SAS provider, some application provider, that's kind of hidden in the background. But let's just say like Hilton. I use Hilton, it's the location for the event, but Hilton, you have this user experience using this app, but maybe that technology, the SAS application that's powering that, is actually not Hilton technology. And so let's just say, there's 30 million people in the Hilton program and there may be 30 million of them on the Marriott, coexisting on some SAS application. And so that's another important category for us. SAS providers and so forth, supporting that industry. And then last but not least, today, whether enterprise or SAS company, many cases not touching their own hardware, right? They're using the cloud. >> So they're outsourcing the backend. >> Yeah, and so you have managed cloud providers. >> So what does it mean for the market? I don't understand, I'm not following you. >> Well, I guess what I'm saying is that there needs to be a common standard, across enterprise application provider, in global cloud community, cloud is the new hardware. >> True. So horizontally scaling loyalties as we were (mumbles). >> Exactly, so we have, we're basically securing partnerships on all three levels, to make sure that, if you want to use new technology, you want to ensure that it's widely supported, across a variety of partners you may want to work with if you're an enterprise. Whether, a software company, cloud company, and so forth. You want to be able to ensure that it can back up the truck. So we've basically signed partnerships at all of these tiers. You're going to see news in the morning. It's late here on a Monday evening. So tomorrow 9:00 a.m, major cloud company, one of the major cloud companies, and there's more to follow, making an announcement that they've joined our ecosystem partner program, and supporting this open source technology in a number of different ways. Which we're really excited about. >> You see ecosystem as a strategic move for you. >> Absolutely, this is, for us, this is, it's all about helping the consumer, but it's not about one consumer at a time for us. It's very much an enterprise play. It's one enterprise at a time. And with each enterprise we basically add to the ecosystem millions if not tens of millions of consumers instantly. >> Nithin I want to ask you a question, because what he just brought up is interesting to me as well. As a new thing, it's not new, but it's new to the crypto world, new to the analog world, that's not in the tech field. Tech business, we all know about global system integrators, we know about ecosystems, we know the value of developer programs, and community, all those things, check, check, check. But now those things are coming to new markets. People have never seen an ecosystem play before. So it's kind of, not new, it's new for some people, it's a competitive advantage opportunity. >> True, it is. See the whole thing is so new, that you can't even define it at this point. It's very hard to define. It's like, see, as an example I would say, none of us thought that when the iPhone came, there would be a 60 billion dollar taxi sharing economy that comes out of it, right? Same thing. Blockchain comes, we just don't know. And it's very hard to predict. >> New brands are going to emerge, I mean if you look at every major inflection point, I point to a couple that I think are relevant, TCP/IP was created, internetworking. >> Yep. >> That essentially went after proprietary networks, like IBM, Digital, Stacks, but it didn't replace, it wasn't a new functionality, it was interoperability. >> Yes. >> The web, HTTP, created a whole new functionality. >> Yep. >> Out of that emerged new brands. >> Yeah. >> So I think this wave's coming is a, new brands are going to emerge. >> Here, what's the brand, I don't know what's going to emerge. There it was interoperability. >> John: Well, new players. >> It's here, it's more, the collaboration. The collaboration is so huge, it's the scale is so huge, in the sense you can collaborate across the world. You're cutting those borders, there are no borders that can hold you. Even though interoperability happened in internet, There were the Googles, and the Facebook, that still had those borders. >> Well, don't put it, Cisco came out of that, 3Com, and those generations, but the hyper-scalers came out of the web. >> Yep. >> So I'm saying, well I'm saying, I want to get your reaction to, is I think that is such a small scale relative to blockchain and crypto because it's global, it's every industry, it's not just tech it's just like everything. So there's got to be new brands. Startups going to come out of the woodwork, that's my point. >> It's not yet time for the brands to come in. See that's the whole thing. So let's put it this way, the internet was there from 1978, if you really look at it, ARPANET or DARPA, those things were there. Email was there, but it was by 1997, or by the time we all came to know Google it was 2001. There is that gap between the brand forming, because it has to permeate first, more people have to use it, like what is the user-- >> Everything was was a bubble, but everything happened. I got food delivered to my house today, right? It happened, people were saying that's a crazy idea. >> It's now it's going on, right. So it's the timing and they know the time for it to permeate so here, how many people are using Bitcoin, and to do what? Most of them are just speculating right? There's very few real use case of remittance or speculative trading, that's what's happening. See that's what I said. The other use cases, it has to permeate. And that comes with more user adoption. And the user adoption initially is going to come from the speculation. >> I think it's a good sign, honestly I think it's a tell sign, because I remember when the web was new, I was in coming out right and growing in the industry. People were poo poo, oh that's just for kids. The big company's said, we wouldn't, who the hell is going to use the World Wide Web? Enter the search engines. >> I remember that like it was yesterday. I forget that I'm not a kid anymore, and I had the opportunity to be an entrepreneur during that era. One of the things I want to add is that, we had, I think what Nithin is really pointing out, it started with the infrastructure, you had network engineers and ISPs, you know, and email. But what was the enterprise application here? What was that consumer application, and that followed right? So it started infrastructure, then it evolved. Once we saw these applications, enterprises started to go crazy. Whether it was the Ubers of the world surfacing, or enterprises reinventing themselves, that's kind of the next wave. >> Well, this is why I think you're a good opportunity. 'Cause I remember licking stamps and sending out envelopes to get people to come to a seminar, held at a hotel. That's how you did it in the old world. The web replaced that with direct response. >> But there's some, there's something else-- >> The mainframe ran faster than the web. You're replacing an old loyalty, that's like licking the stamps. It's not about comparing what you're doing to something else. >> There's also something that helps, that we're not acknowledging, that really helped take internet from 1.0 to 2.0, it's Linux. You know I remember websites were insanely expensive. It was Windows servers, it was Sun Solaris, all of this crazy, expensive, server systems, that you needed to have, so the barrier of entry was extremely high. Then Linux came along, and you still needed to have your own data center space, and so still high, but the licensing fees kind of went away. >> And now with containers and Kubernetes-- >> Exactly. >> I made a bet I was going to get Kubernetes in a crypto show. >> Anybody from a bedroom could start a company, right? You could do it with your pajamas still on. >> John: Well orchestration's easier. >> Absolutely. So this has started, this really, revolution. Now you have blockchain and you start to introduce enterprise-grade blockchain technologies, it's the next wave, you know, it's not VoIP, it's value over IP. >> Okay, I'm going to ask both you guys a final question, to end this segment here at the block event. I know you guys want to get back, and I'm taking you anyway from the schmoozing and networking and the fun out there, deejay. Predictions, next year this time, what are we going to be? What's the we're going to look like? What's going to evolve? I mean we had a conversation with Richard, who partnered with you guys at Arcadia Crypto Partners, saying the trading things interesting, the liquidity has changed. What's your take? I want you guys both to take a minute to make a prediction. Next year, what's different, who's out, who's in, what's happening, is it growing? >> So I, you know, I would say this, surprisingly, CTOs, I love CTOs, but many CTOs, I would say that well above 50% of CTOs, still can't spell blockchain. Really, and what I mean by that, really understand the transformational power what this is, in terms of how this is really web 3.0. This is going to change so many industries, create so much value for consumers, help businesses and so forth, and we're going to cross that 50% mark. >> Next year. >> With CTOs-- >> 50% of what? Be clear on-- >> Basically, we're going, in terms of the net, that blockchain's going to capture, and really enterprises and not just enterprises, service providers and so forth-- >> 50% of the mind share or 50% of the projects? >> Yeah no, I'm talking it's, people aren't going to be saying, oh, blockchain, isn't that Bitcoin? They're going to really understand, and they're going to understand that impact. And over the course of the next 12 months, we're going to see that. And it starts, obviously in many cases, with the CIO, CTO of many companies. There are definitely a lot of CIOs and CTOs on the forefront of innovation that get it, but what I'm saying is that more than 50% don't. >> So you're saying-- They're very busy in doing what they're doing today, and it hasn't hit them yet. >> To recap, you're saying by next year, 50% of CTOs or CTO equivalents, will have a clear understanding of what blockchain is-- >> Absolutely. >> And what it can do. >> Absolutely. >> Nithin, your prediction, next year, this time, what's different, what's new, what's the prediction? >> So, one of the key things that I think is going to happen is there's going to be a lot more training, and knowledge that's going to spread out, so that a lot more people understand, what blockchain is and what bitcoin is. Even now, as Al said, he was telling about CTOs, if the CTOs are, that's the state, that they can't spell blockchain, imagine where the real common man is. You've got people like Jamie Dimon coming on TV and saying he doesn't like Bitcoin, but he likes blockchain. I'm like, what the heck is he saying? That he likes a database? >> He was selling it short 100% (chuckles) >> Yeah, he likes a database. And then you have Warren Buffett coming over there-- >> Rat poison. >> And then this is rat poison. And like my question is, does any of his funds buy gold? Do they buy gold? He was telling that this is only worth as much as the next buy buying at a higher price. >> What's Warren Buffett's best tech investment? >> I don't know, I think he bought Apple, he started buying Apple now, right? When it's reached a thousand bucks? Or it reached a trillion dollars or close to that, or 750 billion? >> The Apple buy was 2006. If you were there, then you were good. >> Yeah, but-- >> So, your prediction? >> Market wise I don't know, what's going to happen? I'm expecting this, the crypto, the utility token, or the crypto market, to be at least a six trillion dollar business. But it'll happen next year? Definitely not. But I've been proven wrong, like I was expecting it to happen by 2025, but then it went to 750 billion by December. Well, it's not too far. >> You did get the prediction right, in the Bahamas at POLYCON18, about the drop around the tax consequences of the-- >> Right. >> People slinging trades around, not knowing the tax consequences. >> Right, right. We don't know because, who knows? Because what is going on over there, is IRS is still saying it's a property. That's what the last (slurs) is. SEC is saying it is all equity, and the CFTC was saying it's commodity. So what tax do I pay? >> Okay, lightning round question, 'cause I want to, one more popped in my head. The global landscape, from an investor standpoint, the US, we know what's going on in the US, accredited, SEC is throwing, firing across, bullets across the bow of the boats, kind of holding people in line. What percentage of US big investors will be overseas by next year? >> Percentage of-- >> Having, meaning having deals being done, proxy deals being down outside the US, what percentage? >> It's still going to be low though. That is going to be low, because that, I don't think the US investor, means the large scale of those investors-- >> You don't think the big funds will co-locate outside the US? >> There will be some, but not enough. >> Put a number, a percentage. >> Percentage-wise I think it's still going to be less than 10%. >> Al, your prediction? >> In terms of investment? >> Investment, investors saying hey, I got money here, I want to put it out there. >> Outside of the United States? >> Share money, not move their whole fund, but do deals from a vehicle. >> Do deals outside. I think I agree with Nithin. >> Throwing darts at the board here. >> No, I'm going to clarify. There's definitely massive investment happening overseas. In some respects probably bigger than the United States. So that's not going away. If anything that's going to grow. But your question is, in terms of US entities, making abroad investments, overseas investments, versus just domestic? I think that trend doesn't necessarily change. You have the venture community, there are certain bigger venture funds that can have global operations 'cause at the end of the day, they need to have global operations, to be able to do that, and most venture funds aren't that massive, they don't have that infrastructure. So they're going to focus on their own backyard. So I don't necessarily think blockchain changes the venture mindset. It's just easier for them logistically to do due diligence on their own backyard and invest in those. >> Guys, always a pleasure. Great to see you. You guys are like friends with entourage here, great to get the update here at Blockchain Week. We get to Silicon Valley week, we'll connect up again. I'm John Furrier, here in New York, theCUBE's continuing coverage of crypto, decentralized applications, and blockchain of course, we're all over it. You'll see us all over, all of the web, all the shows. Thanks for watching. (techno music)

(electronic music) >> Announcer: From Boston, Massachusetts, it's theCUBE. Covering Cloud Foundry Summit 2018. Brought to you by the Cloud Foundry Foundation. >> I'm Stu Miniman, and this is theCUBE's coverage of Cloud Foundry Summit 2018, here in beautiful Boston, Massachusetts. Happy to welcome to the program first-time guest, Dr. Nic Williams, CEO of Stark and Wayne. Dr. Nic, thanks for joining me >> Thank you very much. I think you must've come to the conference from a different direction than I came. >> I'm a local, and I'm trying to get more people to come to the Boston area. We've been doing theCUBE now for, coming up on our ninth year of doing it, and it's only the third time I've done something in this convention center, so please, more tech shows to this area, Boston, the Hynes Convention Center, and things like that. >> There's plenty of tech people. I was at the Nero Cafe, everyone seemed like they were a tech person. >> Oh no, the Seaport region here is exploding. I've done two interviews today with companies here in Boston or Cambridge. There's a great tech scene. For some reason, you and I were joking, it's like, do we really need another conference in Vegas? I mean really. >> Dr. Nic: Right, no, I like the regional. >> But yeah, the weather here is unseasonably cold. It was snowing and sleeting this morning, which is not the Spring weather. >> It is April, it is mid-April, and it's almost snowing outside. >> Alright, so Dr. Nic, first of all, you get props for the T-shirt. You've got Iron Man and Doctor Doom, and we're saying that there is a connection between the superheroes and Stark and Wayne. >> Right, so Stark and Wayne is founded by two fictional superheroes. The best founders are the fictional ones, they don't go to meetings, they're too busy making, you know, films. >> Yes, but everybody knows that Tony Stark is Iron Man, but nobody's supposed to know that Bruce Wayne was Batman. >> Nic: Right, right. >> But I've heard Stark and Wayne mentioned a number of times by customers here at the conference. So, for our audience that doesn't know, what does Stark and Wayne do, and how are you involved in the Cloud Foundry ecosystem? >> So Stark and Wayne, I first found Bosh, I founded Stark and Wayne. Earlier than that I discovered Bosh, six years ago, when it was first released, became like, I claimed to be the world's first evangelist for Bosh, and still probably the number one evangelist. And so Stark and Wayne came out of that. I was VMWare Pivotal's go-to person for standing things up and then customers grew, and you know. Yeah, people want to know who to go to, and when it comes to running Cloud Foundry, that's us. >> Yeah well, there's always that discussion, right? We've got all these wonderful platforms and these things that go together, but a lot of times there's services and people that help to get those up. Pivotal, just had a great discussion with a Pivotal person, talking about the reason they bought Pivotal Labs originally was like, wow, when people got stuck, that's what Pivotal Labs helps with that whole application development, so you're doing similar things with Bosh? >> Correct. No it's, we have our mental model around what it is to run operations of a platform, where you're running complex software, but you have an end user who expects everything just to work. And they never want to talk to you, and you don't want to talk to them. So it's this new world of IT where they get what they want instantly, that's the platform and it has to keep working. >> Dr Nic, is it an unreasonable thing for people to say that, yeah I want the things to work, and it shouldn't go down, and you know-- >> What is shadow IT? Shadow IT is the rebellion against corporate IT, so we want to bring back, well, we want to bring the wonders of public services to corporate environments. >> Okay, so-- >> That's the Cloud Foundry's story. >> Yeah, so talk to me a little bit about your users. We've watched this ecosystem mature since the early days, you know, things are more mature, but what's working well? What are the challenges? What are some of the prime things that have people calling up your team? >> So our scope, our users, or our customers, are people, they're the GEs and the Fords of the world running either as a service or internally large Cloud Foundry installations. And whilst Cloud Foundry is getting better and better, the security model is better, the upgrades seem to be flawless, it does keep getting more complex. You know, you can't just add container to container networking and it not get more complicated, right? So, yeah, trying to keep up-to-date with not just the core, but even the community of projects going on is part of the novelty, but also it's trying to bring it to customers and be successful. >> Yeah, I go to a number of these shows that are open source and every time you come there, it's like, "Well, here's the main things we're talking about "but here's six other projects that come up." How's that impact some of what you were just talking about? But, maybe elaborate as to how you deal with the pace of change, and those big companies, how are they help integrate those into what they're doing, or do they, you know-- >> So my Twitter is different from your Twitter. So my Twitter is 10 years worth of collecting of people who talk about interesting things, putting in a URL, just referencing an idea they're having, so they tend to be the thought leaders. They might be wrong, or like, let's put Docker into production, like, it doesn't make it wrong, but you've got to be wary of people who are too early. And you just start to peace a picture of what's being built, and you start to know which groups and which individuals are machines, and make great stuff, and you sort of track their work. Like HashiCorp, Mitchell Hashimoto, I knew him before HashiCorp, and he is a monster, and so you tend to track their work. >> So your Twitter and my Twitter might be more alike than you think. >> Nic: No maybe, right. >> I interviewed Armon at the Cube-Con show last year. My Twitter blowing up the show was a bunch of people arguing about whether Serverless was going to eradicate this whole ecosystem. >> Well, we can argue about that if you like, I guess. >> But love, one of the things coming into this show, was, you know, how does the whole Kubernetes discussion fit into Cloud Foundry? We've heard at this show, Microsoft, Google, many others, talking about, look, open source communities, they're going to work together. >> Well Windows is going to track things 'cause they think they need to sell them, right? But then Microsoft has Service Fabric, which they've owned and operated internally for 10 years, and so, I think some really interesting products may be built on top of Service Fabric, because of what it is. Whereas, you know, Kubernetes will run things, Service Fabric may build net new projects. And then Cloud Foundry's a different experience altogether, so some people, it's what problems they experienced, comes to the solution they find, and unless you've tried to run a platform for people, you might not think the solution's a platform. You might think it's Kubernetes, but-- >> Yeah, so one of the things we always look at when we talk about platforms, is what do they get stood up for? How many applications do you get to stand up there? What don't they work for? Maybe you could help give us a little bit of color as to what you see? >> I'm pretty good at jamming anything into Cloud Foundry, so I have a pretty small scope of what doesn't fit, but typically the idea of Cloud Foundry is the assumption the user is a developer who has 10 iterations a day. Alright, so they want to deploy, test, deploy, test, and then layer pipelines on top of that. You also get, you're going to get the backend of long, stable apps, but the value is, for many people, is that the deploy experience. And then, you know, but whilst, you're going to get those apps that live forever, we still get to replace the underlying core of it. So you still maintain a security model even for the things that are relatively unloved. Andthis is really valuable, like the nice, clean separation of the security, the package, CVEs, and the base OS, then the apps is part of the-- >> Yeah, absolutely, there's been an interesting kind of push and pull lately. We need to take some of those old applications, and we may need to lift and shift them. It doesn't mean that I can necessarily take advantage of all the cool stuff, and there are some things that I can't do with them when I get them on to that new platform. But absolutely, you need to worry about security, you know, data's like the center of everything. >> If you're lifting and shifting, there probably is no developer looking after it, so it's more of an operator function, and they can put it anywhere they like. They're looking after it now, whereas the Cloud Foundry experience is that developer-led experience that has an operations backend. If you're lifting and shifting, if it fits in Cloud Foundry, great, if it fits in Kubernetes, great. It's your responsibility. >> Yeah, what interaction do you have with your clients, with some of the kind of cultural and operational changes that they need to go through? So thinking specifically, you've go the developers doing things, you know, the operators, whether they're involved, whether that be devops or not, but I'm curious-- >> So the biggest change when it comes to helping people who are running platforms. And I know many people want to talk about the cloud transformation, but let's talk about the operations transformation, is to become a service-orientated group who are there to provide a service. Yes you're internal, yes they all have the same email address that you do, but you're a service-orientated organization, and that is not technology, that is a mental mode. And if you're not service-orientated, shadow IT occurs, because they can go to Amazon and get a support organization that will respond to them, and so you're competing with Amazon, and Google, and you need to be pretty good. >> Yeah, you mentioned that, you know, your typical client is kind of a large, maybe I'm putting words in your mouth, the Fortune 1000 type companies, does this sort of-- >> We haven't got Berkshire. We haven't got Berkshire, and so if we're going to go Fortune 5, you know, we'd like, I've read my Warren Buffett biography, I reckon the FA are here to meet him I reckon. >> Right, so one of the questions, is this only for the enterprise? Can it be used for smaller businesses, for newer businesses? >> What's interesting is people think about Cloud Foundry as like, "Oh you run it on your infrastructure." Like, I did a talk in 2014, 15, when Docker was starting to be frothy, was, before you think you want to build your own pass, ring me on the hotline. Like, argue with me about why you wouldn't just use Heroku, or Pivotal Web Services, or IBM Cloud, like a public pass. Please, I beg of you, before you go down any path of running on-prem anything, answer solidly the question of why you just wouldn't use a public service. And yeah, so it really starts at that point. It's like, use someone else's, and then if you have to run your own. So, who's really going to have all these rules? It's large organization that have these, "Oh, no, no, we have to run our own." >> Well doctor, one of the things we've said for a while, is there's lots of things that enterprise suck at, that they need to realize that they shouldn't be doing. So start at the most basic level, there's like five companies in the world that are good at building data centers, nobody else should build data centers, if you're using somebody else that can do that. So as you go up and up the stack, you want to get rid of the undifferentiated lifting, things like that, so-- >> I like to joke that every CIO, the moment they get that job, like that's their ticket to get to build their own data center. It's like, what else was the point of becoming a CIO? I want to build my own data center. >> No, not anymore, please-- >> Not anymore, but you know, plus they've been around a little longer than-- >> So, what is that line? What should companies be able to consume a platform, versus where do they add the value, and do you help customers kind of understand that that-- >> By the time they're talking to us, they're pretty far along having convinced themselves about what they're doing. And they have their rules. They have their isolation rules, their data-ownership rules, and they'll have their level of comfort. So they might be comfortable on Amazon, Google, Azure, or they might still not be comfortable with public cloud, and they want the vSphere, but they still have that notion of we're going to run this ourselves. And most of them it's not running one, because that idea of we need our own, propagates throughout the entire organization, and they'll start wanting their own Cloud Foundry-- >> Look, I find that when I talk to users, we, the vendors, and those that watch the industry, always try to come up with these multi-cloud hybrid cloud-type discussion. Users, have a cloud strategy, and it's usually often siloed just like everything else, and right, they're using-- >> Developers-- >> I have some data service, and it's running on Google-- >> Developers just want to have a nice life. >> Microsoft apps. >> They just want to get their work done. They want to feel like, "Alright this is a great job, "like, I'm respected, I get interesting work, "we get to ship it, it actually goes into production." I think if you haven't ever had a project you've worked on that didn't go into production, you haven't worked long enough. Many of us work on something for it not to be shipped. Get it into production as quick as possible and-- >> So, do you have your, you know, utopian ideal world though as to, this is the step-- >> Oh, absolutely-- >> And this is how it'll be simple. >> Tell developers what the business problems are. Get them as close to the business problems, and give them responsibility to solve them. Don't put them behind layers of product managers, and IT support-- >> But Dr. Nic, the developers, they don't have the budget-- >> Speak for utopian-- >> How do we sort through that, because, right, the developer says they want to do this, but they're not tied to the person that has the budget, or they're not working with the operators, I mean, how do we sort through that? >> How do we get to utopia? >> Stu: Yeah. Well, Facebook, Google, Microsoft, they all solved utopia, right? So, this is, think more like them, and perhaps the CEO of the company shouldn't come from sales, perhaps it should be an IT person. >> Well, yeah, what's the T-shirt for the show? It was like running at scale, when you reach a certain point of scale, you either need to solve some of these things, or you will break? >> Right, alright look, hire great sales organizations, but if you don't have empathy for what your company needs to look like in five years time, you're probably not going to allow your organization to become that. The power games, alright? If everyone assumes that the marketing department becomes the top of the organization, or the, you know, then the good people are going to leave to go to organizations where they might be become CEO one day. >> Alright, Dr. Nic, want to give you the final word. For the people that haven't been able to come to the sessions, check out the environment, what are they missing at this show? What is exciting you the most in this ecosystem? >> Like any conference you go to, you come, the learning is all put online. Your show is put online, or every session is put online. You don't come just to learn. You get the energy. I live in Australia, I work from a coffee shop, my staff are all in America, and so to come and just to get the energy that you're doing the right thing, that you get surrounded by a group of people, and certainly no one walks away from a CF Summit feeling like they're in the wrong career. >> Excellent. Well, Dr. Nic, appreciate you helping us understand the infinity wars of cloud environments here. Stark and Wayne, thanks so much for joining us. I'm Stu Miniman, and you're watching theCUBE. >> Dr. Nic: Thanks Stu. (electronic music)

>> Narrator: Live from New York, it's the Cube. Covering Big Data New York City 2016. Brought to you by headline sponsors: Cisco, IBM, Nvidia, and our ecosystem sponsors. Now, here are your hosts, Dave Vellante and Jeff Frick. >> Welcome back to New York City, everybody. This is the Cube, the worldwide leader in live tech coverage. Rob Thomas is here, he's the GM of products for IBM Analytics. Rob, always good to see you, man. >> Yeah, Dave, great to see you. Jeff, great to see you as well. >> You too, Rob. World traveller. >> Been all over the place, but good to be here, back in New York, close to home for one day. (laughs) >> Yeah, at least a day. So the whole community is abuzz with this article that hit. You wrote it last week. It hit NewCo Shift, I guess just today or yesterday: The End of Tech Companies. >> Rob: Yes. >> Alright, and you've got some really interesting charts in there, you've got some ugly charts. You've got HDP, you've got, let's see... >> Rob: You've got Imperva. >> TerraData, Imperva. >> Rob: Yes. >> Not looking pretty. We talked about this last year, just about a year ago. We said, the nose of the plane is up. >> Yep. >> Dave: But the planes are losing altitude. >> Yep. >> Dave: And when the funding dries up, look out. Interesting, some companies still are getting funding, so this makes rip currents. But in general, it's not pretty for pure play, dupe companies. >> Right. >> Dave: Something that you guys predicted, a long time ago, I guess. >> So I think there's a macro trend here, and this is really, I did a couple months of research, and this is what went into that end of tech companies post. And it's interesting, so you look at it in the stock market today: the five highest valued companies are all tech companies, what we would call. And that's not a coincidence. The reality is, I think we're getting past the phase of there being tech companies, and tech is becoming the default, and either you're going to be a tech company, or you're going to be extinct. I think that's the MO that every company has to operate with, whether you're a retailer, or in healthcare, or insurance, in banking, it doesn't matter. If you don't become a tech company, you're not going to be a company. That's what I was getting at. And so some of the pressures I was highlighting was, I think what's played out in enterprise software is what will start to play out in other traditional industries over the next five years. >> Well, you know, it's interesting, we talk about these things years and years and years in advance and people just kind of ignore it. Like Benioff even said, more SaaS companies are going to come out of non-tech companies than tech companies, OK. We've been talking for years about how the practitioners of big data are actually going to make more money than the big data vendors. Peter Goldmacher was actually the first, that was one of his predictions that hit true. Many of them didn't. (laughs) You know, Peter's a good friend-- >> Rob: Peter's a good friend of mine as well, so I always like pointing out what he says that's wrong. >> But, but-- >> Thinking of you, Peter. >> But we sort of ignored that, and now it's all coming to fruition, right? >> Right. >> Your article talks about, and it's a long read, but it's not too long to read, so please read it. But it talks about how basically every industry is, of course, getting disrupted, we know that, but every company is a tech company. >> Right. >> Or else. >> Right. And, you know, what I was, so John Battelle called me last week, he said hey, I want to run this, he said, because I think it's going to hit a nerve with people, and we were talking about why is that? Is it because of the election season, or whatever. People are concerned about the macro view of what's happening in the economy. And I think this kind of strikes at the nerve that says, one is you have to make this transition, and then I go into the article with some specific things that I think every company has to be doing to make this transition. It starts with, you've got to rethink your capital structure because the investments you made, the distribution model that you had that got you here, is not going to be sufficient for the future. You have to rethink the tools that you're utilitizing and the workforce, because you're going to have to adopt a new way to work. And that starts at the top, by the way. And so I go through a couple different suggestions of what I think companies should look at to make this transition, and I guess what scares me is, I visit companies all over the world, I see very few companies making these kind of moves. 'Cause it's a major shake-up to culture, it's a major shake-up to how they run their business, and, you know, I use the Warren Buffett quote, "When the tide goes out, you can see who's been swimming naked." The tide may go out pretty soon here, you know, it'll be in the next five years, and I think you're going to see a lot of companies that thought they could never be threatened by tech, if you will, go the wrong way because they're not making those moves now. >> Well, let's stay cognitive, now that we're on this subject, because you know, you're having a pretty frank conversation here. A lot of times when you talk to people inside of IBM about cognitive and the impact it's going to have, they don't want to talk about that. But it's real. Machines have always replaced humans, and now we're seeing that replacement of cognitive functions, so that doesn't mean value can't get created. In fact, way more value is going to be created than we can even imagine, but you have to change the way in which you do things in order to take advantage of that. >> Right, right. One thing I say in the article is I think we're on the cusp of the great reskilling, which is, you take all the traditional IT jobs, I think over the next decade half those jobs probably go away, but they're replaced by a new set of capabilities around data science and machine learning, and advanced analytics, things that are leveraging cognitive capabilities, but doing it with human focus as well. And so, you're going to see a big shift in skills. This is why we're partnering with companies like Galvanize, I saw Jim Deters when I was walking in. Galvanize is at the forefront of helping companies do that reskilling. We want to help them do that reskilling as well, and we're going to provide them a platform that automates the process of doing a lot of these analytics. That's what the new project Dataworks, the new Watson project is all about, is how we begin to automate what have traditionally been very cumbersome and difficult problems to solve in an organization, but we're helping clients that haven't done that reskilling yet, we're helping them go ahead and get an advantage through technology. >> Rob, I want to follow up too on that concept on the capital markets and how this stuff is measured, because as you pointed out in your article, valuations of the top companies are huge. That's not a multiple of data right now. We haven't really figured that out, and it's something that we're looking at, the Wikibon team is how do you value the data from what used to be liability 'cause you had to put it on machines and pay for it. Now it's really the driver, there's some multiple of data value that's driving those top-line valuations that you point out in that article. >> You know it's interesting, and nobody has really figured that out, 'cause you don't see it showing up, at least I don't think, in any stock prices, maybe CoStar would be one example where it probably has, they've got a lot of data around commercial real estate, that one sticks out to me, but I think about in the current era that we're in there's three ways to drive competitive advantage: one is economies of scale, low-cost manufacturing; another is through network effects, you know, a number of social media companies have done that well; but third is, machine learning on a large corpus of data is a competitive advantage. If you have the right data assets and you can get better answers, your models will get smarter over time, how's anybody going to catch up with you? They're not going to. So I think we're probably not too far from what you say, Jeff, which is companies starting to be looked at as a value of their data assets, and maybe data should be on the balance sheet. >> Well that's what I'm saying, eventually does it move to the balance sheet as something that you need to account for? Because clearly there's something in the Apple number, in the Alphabet number, in the Microsoft number, that's more than regular. >> Exactly, it's not just about, it's not just about the distribution model, you know, large companies for a long time, certainly in tech, we had a huge advantage because of distribution, our ability to get to other countries face to face, but as the world has moved to the Internet and digital sales and try/buy, it's changed that. Distribution can still be an advantage, but is no longer the advantage, and so companies are trying to figure out what are the next set of assets? It used to be my distribution model, now maybe it's my data, or perhaps it's the insight that I develop from the data. That's really changed. >> Then, in the early days of the sort of big data meme taking off, people would ask, OK, how can I monetize the data? As opposed to what I think they're really asking is, how could I use data to support making money? >> Rob: Right. Right. >> And that's something a lot of people I don't think really understood, and it's starting to come into focus now. And then, once you figure that out, you can figure out what data sources, and how to get quality in that data and enrich that data and trust that data, right? Is that sort of a logical sequence that companies are now going through? >> It's an interesting observation, because you think about it, the companies that were early on in purely monetizing data, companies like Dun & Bradstreet come to mind, Nielsen come to mind, they're not the super-fast-growing companies today. So it's kind of like, there was an era where data monetization was a viable strategy, and there's still some of that now, but now it's more about, how do you turn your data assets into a new business model? There was actually a great, new Clay Christensen article, it was published I think last week, talking about companies need to develop new business models. We're at the time, everybody's kind of developed in, we sell hardware, we sell software, we sell services, or whatever we sell, and his point was now is the time to develop a new business model, and those will, now my view, those will largely be formed on the basis of data, so not necessarily just monetizing the data, to your point, Dave, but on the basis of that data. >> I love the music industry, because they're always kind of out at the front of this evolving business model for digital assets in this new world, and it keeps jumping, right? It jumped, it was free, then people went ahead and bought stuff on iTunes, now Spotify has flipped it over to a subscription model, and the innovation of change in the business model, not necessarily the products that much, it's very different. The other thing that's interesting is just that digital assets don't have scarcity, right? >> Rob: Right. >> There's scarcity around the data, but not around the assets, per se. So it's a very different way of thinking about distribution and kind of holding back, how do you integrate with other people's data? It's not, not the same. >> So think about, that's an interesting example, because think about the music, there's a great documentary on Netflix about Tower Records, and how Tower Records went through the big spike and now is kind of, obviously no longer really around. Same thing goes for the Blockbusters of the world. So they got disrupted by digital, because their advantage was a distribution channel that was in the physical world, and that's kind of my assertion in that post about the end of tech companies is that every company is facing that. They may not know it yet, but if you're in agriculture, and your traditional dealer network is how you got to market, whether you know it or not, that is about to be disrupted. I don't know exactly what form that will take, but it's going to be different. And so I think every company to your point on, you know, you look at the music industry, kind of use it as a map, that's an interesting way to look at a lot of industries in terms of what could play out in the next five years. >> It's interesting that you say though in all your travels that people aren't, I would think they would be clamoring, oh my gosh, I know it's coming, what do I do, 'cause I know it's coming from an angle that I'm not aware of as opposed to, like you say a lot of people don't see it coming. You know, it's not my industry. Not going to happen to me. >> You know it's funny, I think, I hear two, one perception I hear is, well, we're not a tech company so we don't have to worry about that, which is totally flawed. Two is, I hear companies that, I'd say they use the right platitudes: "We need to be digital." OK, that's great to say, but are you actually changing your business model to get there? Maybe not. So I think people are starting to wake up to this, but it's still very much in its infancy, and some people are going to be left behind. >> So the tooling and the new way to work are sort of intuitive. What about capital structure? What's the implication to capital structures, how do you see that changing? So it's a few things. One is, you have to relook at where you're investing capital today. The majority of companies are still investing in what got them to where they are versus where they need to be. So you need to make a very conscious shift, and I use the old McKinsey model of horizon one, two and three, but I insert the idea that there should be a horizon zero, where you really think about what are you really going to start to just outsource, or just altogether stop doing, because you have to aggressively shift your investments to horizon two, horizon three, you've really got to start making bets on the future, so that's one is basically a capital shift. Two is, to attract this new workforce. When I talked about the great reskilling, people want to come to work for different reasons now. They want to come to work, you know, to work in the right kind of office in the right location, that's going to require investment. They want a new comp structure, they're no longer just excited by a high base salary like, you know, they want participation in upside, even if you're a mature company that's been around for 50 years, are you providing your employees meaningful upside in terms of bonus or stock? Most companies say, you know, we've always reserved that stuff for executives. That's not, there's too many other companies that are providing that as an alternative today, so you have to rethink your capital structure in that way. So it's how you spend your money, but also, you know, as you look at the balance sheet, how you actually are, you know, I'd say spreading money around the company, and I think that changes as well. >> So how does this all translate into how IBM behaves, from a product standpoint? >> We have changed a lot of things in IBM. Obviously we've made a huge move towards what we think is the future, around artificial intelligence and machine learning with everything that we've done around the Watson platform. We've made huge capital investments in our cloud capability all over the world, because that is an arms race right now. We've made a huge change in how we're hiring, we're rebuilding offices, so we put an office in Cambridge, downtown Boston. Put an office here in New York downtown. We're opening the office in San Francisco very soon. >> Jeff: The Sparks Center downtown. >> Yeah. So we've kind of come to urban areas to attract this new type of skill 'cause it's really important to us. So we've done it in a lot of different ways. >> Excellent. And then tonight we're going to hear more about that, right? >> Rob: Yes. >> You guys have a big announcement tonight? >> Rob: Big announcement tonight. >> Ritica was on, she showed us a little bit about what's coming, but what can you tell us about what we can expect tonight? >> Our focus is on building the first enterprise platform for data, which is steeped in artificial intelligence. First time you've seen anything like it. You think about it, the platform business model has taken off in some sectors. You can see it in social media, Facebook is very much a platform. You can see it in entertainment, Netflix is very much a platform. There hasn't really been a platform for enterprise data and IP. That's what we're going to be delivering as part of this new Watson project, which is Dataworks, and we think it'll be very interesting. Got a great ecosystem of partners that will be with us at the event tonight, that're bringing their IP and their data to be part of the platform. It will be a unique experience. >> What do you, I know you can't talk specifics on M&A, but just in general, in concept, in terms of all the funding, we talked last year at this event how the whole space was sort of overfunded, overcrowded, you know, and something's got to give. Do you feel like there's been, given the money that went in, is there enough innovation coming out of the Hadoop big data ecosystem? Or is a lot of that money just going to go poof? >> Well, you know, we're in an interesting time in capital markets, right? When you loan money and get back less than you loan, because interest rates are negative, it's almost, there's no bad place to put money. (laughing) Like you can't do worse than that. But I think, you know the Hadoop ecosystem, I think it's played out about like we envisioned, which is it's becoming cheap storage. And I do see a lot of innovation happening around that, that's why we put so much into Spark. We're now the number one contributor around machine learning in the Spark project, which we're really proud of. >> Number one. >> Yes, in terms of contributions over the last year. Which has been tremendous. And in terms of companies in the ecos-- look, there's been a lot of money raised, which means people have runway. I think what you'll see is a lot of people that try stuff, it doesn't work out, they'll try something else. Look, there's still a lot of great innovation happening, and as much as it's the easiest time to start a company in terms of the cost of starting a company, I think it's probably one of the hardest times in terms of getting time and attention and scale, and so you've got to be patient and give these bets some time to play out. >> So you're still sanguine on the future of big data? Good. When Rob turns negative, then I'm concerned. >> It's definitely, we know the endpoint is going to be massive data environments in the cloud, instrumented, with automated analytics and machine learning. That's the future, Watson's got a great headstart, so we're proud of that. >> Well, you've made bets there. You've also, I mean, IBM, obviously great services company, for years services led. You're beginning to automate a lot of those services, package a lot of those services into industry-specific software and other SaaS products. Is that the future for IBM? >> It is. I mean, I think you need it two ways. One is, you need domain solutions, verticalized, that are solving a specific problem. But underneath that you need a general-purpose platform, which is what we're really focused on around Dataworks, is providing that. But when it comes to engaging a user, if you're not engaging what I would call a horizontal user, a data scientist or a data engineer or developer, then you're engaging a line-of-business person who's going to want something in their lingua franca, whether that's wealth management and banking, or payer underwriting or claims processing in healthcare, they're going to want it in that language. That's why we've had the solutions focus that we have. >> And they're going to want that data science expertise to be operationalized into the products. >> Rob: Yes. >> It was interesting, we had Jim on and Galvanize and what they're doing. Sharp partnership, Rob, you guys have, I think made the right bets here, and instead of chasing a lot of the shiny new toys, you've sort of thought ahead, so congratulations on that. >> Well, thanks, it's still early days, we're still playing out all the bets, but yeah, we've had a good run here, and look forward to the next phase here with Dataworks. >> Alright, Rob Thomas, thanks very much for coming on the Cube. >> Thanks guys, nice to see you. >> Jeff: Appreciate your time today, Rob. >> Alright, keep it right there, everybody. We'll be back with our next guest right after this. This is the Cube, we're live from New York City, right back. (electronic music)

[Music] live from cambridge massachusetts extracting the signal from the noise it's the cube covering the MIT chief data officer and information quality symposium now your host dave Volante and paul Gillett hi buddy welcome back to Cambridge Massachusetts we're at MIT Paul Gillan and myself are here for two days and we're really pleased to have sandy Pentland on he's the director of MIT Media labs entrepreneurship program just coming off a keynote mr. Alex sandy Pentland Spellman thanks for coming with you how'd you get that name sandy was that the color you know my dad was named Alex too so I had to get the diminutive so Alexander turns into Zander or Sasha or sandy ah excellent so man it's stuck so we learned from your keynote today that like your mom said hey if every other kid jumps off the bridge do you and the answer should be yes why is that well if your other friends or presumably as rational as you and have same sort of values as you and if they're doing something that looks crazy they must have a piece of information you don't like maybe Godzilla is coming bridges come and it really is time to get off but and so so while it's used as a metaphor for doing the irrational things it's actually shows that using your social context can be most rational because it's a way of getting information that you don't otherwise have so you broke down your talk to chief data officers and new types of analysis smarter organizations smarter networks and then really interesting new new architecture if we could sort of break those down sure you talked about sort of networks not individual nodes as really should be the focus to understand behavior can you unpack that a little well it's a little bit like the bridge or metaphor you know a lot of what we learn a lot of our behavior comes from watching other people we're not even conscious of it but you know if everybody else starts you know wearing a certain sort of shoe or or you know acting in a certain or using a phrase in business like all these new sort of buzz phrases like oh you have to - because it's to fit in it means something it's it's part of being hyper formants and being part of your group but that's not in data analytics today today what they look at is just your personal properties not what you're exposed to and the group that you're part of so they would look at the guy on the bridge and they say he's not going to jump because he doesn't have that information but on the other hand if all of other people who like him are making a different decision he probably is going to jump and your research has been you dig into organizations and you've found the relationship between productivity and this type of analysis has been pretty substantial very substantive offenses a ssin and outside of the organization dealing with customers so people focus on things like personality history various sort of training things like that what we find is compared to the pattern of interaction with other people so who do you talk to when and what situations those other factors are tiny they're often a whole order of magnitude less important than just do you talk to all the people in your group do you talk outside of your group do if you violate the org chart and talk to other people if you do you're almost certainly one of the high productivity high innovation people so what what impact does this have or were the implications of this on organizations which historically have been have been highly Madonn hierarchies reporting structures all of these institutions that we evolved in the post-world War two ERA is this working against their productivity well what they did is is they set some simple rules in that they could deal with and wrap their head around but what we find is that those simple rules are exactly the opposite of what you need for innovation and because really what they're doing is they're enforcing silos they're enforcing atomization of the work and everybody talks about we need to be more fluid we need to be more innovative we need to be able to move faster and what that requires is better communication habits and so what we find when we measure the communication habits is that that's exactly right better communication habits lead to more innovative organizations what's really amazing is almost no organization does it so people don't know does everybody talk to everybody in this group do they talk outside of the group there's no graphic there's no visualization and when you give a group a visualization of their pattern of organization of communication they change it and they become more innovative they become more productive I'm sure you're familiar with holacracy this idea that of doing away with with organizational boundaries and sort of do titles and sure everybody talks to everyone is that in your view a better way to structure an organization think that's too extreme but it's headed in the right direction I mean so what we're talking first of all people try to do this without any data so you know everybody's the same well everybody really isn't the same and how would you know if you're behaving as well as the same as other people or I mean there's no data so so what I'm suggesting is something that's sort of halfway between the two yeah you can have leaders you can have organization in there but you also have to have good flow of ideas and what that means is you have to make talking outside your org chart a value it's something you're rewarded for it means that including everybody in the loop in your organization is something you ought to be rewarded for and of course that requires data so the sorts of things we do with peoples we make displays could just be piece of paper that shows the patterns of communication and we give it to everybody and you know what people actually know what to do with it when you give it to them they say well gee you know this group of people is all talking to each other but they're not talking to that group maybe they ought to talk to each other it's that simple but in the lack of data you can't feel so you instrumented people essentially with let's badges and you could measure conversations at the watercooler yeah they're their frequency their duration not the content not the content just that's the activity just is it happening right and is it happening between groups just just people from this group go to that other groups water cooler stuff like that and that actually is enough to really make a substantial difference in the corporation and you gave an example of you were able to predict trending stories on Twitter better than the internal mechanism and Twitter did I understand that Kerina so what we've done by studying organizations like this and coming up with these sort of rules of how people behave so the notion that people learn from each other and that it's the patterns of communication that matter you can encode that along with machine learning and suddenly you get something that looks like machine learning but in many ways it's more powerful and more reliable and so we have a spin-out called Endor and what that does is it lets your average guy who can use a spreadsheet do something that's really competitive with the best machine learning groups in the world and that's pretty exciting because everybody has these reams of data but what they don't have is a whole bunch of PhDs who can study it for six months and and come up with a machine learning algorithm to do it they have a bunch of guys that are smart know the business but they don't know the machine learning so it endured doesn't supply something like a spreadsheet to be able to allow the normal guy to do as good as the machine learning guys there's a lot of focus right now on anticipating predicting customer behavior better a lot of us been focused on on individuals understanding individuals better is that wrongheaded I mean should marketers be looking more at this group theory and treating customers more as buckets of similar behaviors it's not it's not buckets but treating people as individuals is is a mistake because while people do have individual preferences most of those preferences are learned from other people it's keeping up with the Jones it's fitting in its it's learning what the best practice is so you can predict people better from the company they keep than you can from their demographics always virtually every single time you can do better from the company they keep than from the standard sort of data so what that means is when you do analysis you need to look at the relationships between people and at one level it's sort of obvious you analyze somebody personally without knowing something about their relationships right about you know the type of things they do the places they go those are important but they're usually not in the data and what I find is I do this with a lot of big organizations and what I find is you look at their data analytics it's all based on individuals and it's not based on the context to those individuals absolutely I want to ask you further about that because when I think of the surveys that I fill out they're always about my personal preference Yahoo I want to do I can't remember ever filling out a survey that asked me about what my peer group does are you saying that those are the questions we should be asking yeah exactly right and of course you want to get data about that you want to know if if you go to these locations all the time to go to that restaurant you go to this sort of entertainment who else goes there what are they by what's trending in your group because it's not the general population and these not necessary people I know but they're people I identify with Yammer haps that's why I go to certain restaurants not because my friends go there but because people who I aspire to be like yeah there yeah and and the other way around you go there and you say well gosh these other people are like me because they go here too and I see that they're you know wearing different sort of clothes or they're by or the simplest thing you go to restaurants you see other people all buying the mushi yes maybe I should try the mushi I usually don't like it but seems to work well and this is I like this restaurant and everybody else who comes here likes it so I'll try it right it's that simple so it's important to point out we're talking about the predictive analytics Capas they're probably people watching might say this Sandi's crazy we mean we don't want it personalized we want to personalize the customer experience still I'm presuming sure but when we're talking about predictive analytics you're saying the the community the peer group is a much better predictor than the individual that's right yeah okay so I want to come back to the the org chart these are you saying that org charts shouldn't necessarily change but the incentives should or your previous thing to do is you have an org chart but the incentives that are across the entire organization is good communication within the box you're in and good communication outside of the box and to put those incentives in place you need to have data you need to be able to have some way of estimating does everybody talk to each other do they talk to the rest of the organization and there's a variety of ways you can do that we do it with little badges we do it by analyzing phone call data email is not so good because email is not really a social relationship it's just this this little formal thing you do often but by using things like the badges like the phone calls surveys for that matter right you can give people feedback about are they communicating in the right way are they communicating with other parts of the organization and by visualizing that to people they'll begin to do the right thing you had this notion of network tuning oh you don't want an insufficiently diverse network but you don't want a network that's too dense you might find the sweet spot in the middle desert how do you actually implement that that tuning well the first thing is is you have to measure okay you have to know how dense is the social interaction the communication pattern because if you don't know that there's nothing to - right and then what you want to ask is you want to ask the signal property of something being two dances the same ideas go around then around and around so you look at the graph that you get from this data and you ask you know this Joe talked to Bob talk to Mary talk to Joe talk to you know is it full of cycles like that and if it's too full of cycles then that's a problem right because it's the same people talking to each other same ideas going around and there's some nice mathematical formulas for major in it they're sort of hard to put into English but it has to do with if you look at the flow of ideas are you getting a sufficiently diverse set of ideas coming to you or is it just the same people all talking to each other so are you sort of cut off from the rest of the world in your book social physics you talk about rewards and incentives isms and one of the things that struck me as you say that that rewards that people are actually more motivated by rewards for others than for themselves correct me if I'm wrong if paraphrasing you wrong there but but there's but but rewarding the group or or doing something good for somebody else is actually a powerful incentive is it is that the true the case well you said it almost right so so if you want to change behavior these social incentives are more powerful than financial incentives so if you have everybody in a group let's say and people are rewarded by the behavior of the other people in the group what will they do well they'll talk to the other people about doing the right thing because their reward my reward depends on your behavior so I'm gonna talk to you about it okay and your reward depends on it you'll talk and I don't know so what we're doing is we're creating much more communication around this problem and social pressure because you know if you don't do it you're screwing me and and you know I may not be a big thing but you're gonna think twice about that whereas some small financial award usually it's not such a big thing for people so if you think people talk a lot about you know persona persona marketing when I first met John Fourier he had this idea of affinity rank which was his version of you know peer group PageRank hmm do you do you hear a lot about you know get a lot of questions about persona persona marketing and and what does your research show in terms of how we should be appealing to that persona so sorry good questions about that some time and I don't know what he really originally intended but the way people often imply it is very static you have a particular persona that's fixed for all parts of your life well that's not true I mean you could be a baseball coach for your kid and a banker during the day and a member of a church and those are three different personas and what defines those personas it's the group that you're interacting with it's it's the the people you learn with and try and fit in so your persona is a variable thing and the thing that's the key to it is what are the groups that you're you're interacting with so if I analyzed your groups of interactions I'd see three different clusters I'd see the baseball one I'd say the banking one I'd see the church group one and then I would know that you have three personas and I could tell which one you're in typically by seeing who you're spending time with right now is the risk of applying this idea of behaviors influenced by groups is there the risk of falling over into profiling and essentially treating people anticipating behaviors based upon characteristics that may not be indicative of how any individual might act back credit alcoholics as you example right I don't get a job because people like people who are similar to me tend to be alcoholics let's say this is different though so this is not people who are similar to you if you hang out with alcoholics all the time then they're really eyes are good on that you're an alcoholic it may not be yes and there is a risk of over identifying or or extrapolating but it's different than people like me I mean if you go to the you know the dingy bars were beers or a buck and everybody gets wasted and you do that repeatedly you're talking about behaviors rather than characteristics behaviors rather than characteristics right I mean you know if you drink a lot maybe you drink a lot so we have a question from the crowd so it says real time makes persona very difficult yeah so it was come back to furriers premise was I was Twitter data you know such is changing very rapidly so are there social platforms that you see that can inform in real time to help us sort of get a better understanding of persona and affinity group affinity well there are data sources that do that right so first as if I look at telephone data or credit card data even for that matter sure this geo-located I can ask but what sort of people buy here or what sort of people are in this bar or restaurant and I can look at their demographics and where they go to I showed an example of that in San Francisco using data from San Francisco so there is this data which means that any app that's interested in it that has sufficient breadth and although sufficient adoption can do these sorts of analyses can you give an example of how you're working with the many organizations now I'm sure you can't name them but can you give an example of how you're applying these principles practically now whether it's in law enforcement or in consumer marketing how are you putting these to work well there's a bunch of different things that that go together with this view of you know it's the flow of ideas that's the important thing not the demographics so talk about behavior change and we're working with a small country to change their traffic safety by enrolling people in small groups where you know the benefit I get for driving right depends on your safety and we're good buddies we know that that's how you sign up sign up with your buddies and what that means is I'm going to talk to you about your driving if you're driving in a dangerous way and that we've seen in small experiments is a lot more effective than giving you points on your driver's license or discount on your insurance the social relationships so so that's an example another example is we're beginning a project to look at unemployment and what we see is is that people have a hard time getting re-employed don't have diverse enough social networks and it sounds kind of common sense but they don't physically get out enough compared to the people that do get jobs so what's the obvious thing well you encouraged them to get out more you make it easier for them to get out more so those are some examples when you talk about health care what you can do is you can say well look you know I don't know particular things you're doing but based on the behavior that you show right and the behavior of the people you hang with you may be at much higher risk of diabetes and it's not any particular behavior this is the way medical stuff is always pitched is you know it's this behavior that beer every combination of things all right and so you're not really aware that you're doing anything bad but if all your buds are at risk of it then you probably are too because you're probably doing a lot of the same sort of behaviors and medicine is a place where people are willing to give up some of the privacy because the consequences are so important so we're looking at people who are interested in personalized medicine and are willing to you know share their data about where they go and what they spend time doing in order to get statistics back from the people they spend time with about what are the risk factors they pick up from the people around them and the behaviors they engage in um your message this to the cdos today was you know you were sort of joking you're measuring that right and a lot of times they weren't a lot of the non-intuitive things your research has found so I wanna talk about the data and access to the data and how the CBO can you know affect change in their organization a lot of the data lives in silos I mean if they certainly think of social data Facebook LinkedIn yeah Twitter you mentioned credit card data is that a problem or is data becoming more accessible through api's or is it still just sort of a battle to get that data architecture running well it's a it's a battle and in fact actually it's a political and very passionate battle and it revolves around who controls the data and privacy is a big part of that so one of the messages is that to be able to get really ditch data sources you have to engage with the customer a lot so people are more than willing our research we've set up you know entire cities where we've changed the rules and we've found that people are more than willing to volunteer very detailed personal data under two conditions one is they have to know that it's safe so you're not reselling it you're handling it in a secure way it's not going to get out in some way and the other is that they get value for it and they can see the value so it's not spreading out and they're part of the discussion so you know you want more personalized medicine people are willing to share right because it's important to them or for their family you know if you want to share we're willing to share very personal stuff about their kids they would never do that but if it results in the kid getting a better education more opportunity yeah they're absolutely willing so that leads to a great segue into enigma yeah you talked about enigma as a potential security layer for the internet but also potential privacy yeah solution so talk about enigma where it's at yeah what it is where it's at and how it potentially could permeate yeah so we've been building architectures and working with this sort of problem this conundrum basically datas and silos people feel paranoid and probably correctly about their data leaky now companies don't have access to data don't know what to do with it and a lot of it has to do with safe sharing another aspect of this problem is cybersecurity you're getting increasing the amount of attacks done stuff bad for companies bad for people it's just going to get worse and we actually know what the answers to these things are the answers our data is encrypted all the time everywhere you do the computation on encrypted data you never transmit it you never unencrypted it to be able to do things we also know that in terms of control of the data is possible to build fairly simple permission mechanisms so that you know the computer just won't share it in the wrong places and if it does you know skyrockets go up and the cop scum you can build systems like that today but the part that's never been able never allowed that to happen is you need to keep track of a lot of things in a way that's not hackable you need to know that somebody doesn't just short-circuit it or take it out the back and what's interesting is the mechanisms that are in Bitcoin give you exactly that power so you whatever you feel about Bitcoin you know it's speculative bubble or whatever the blockchain which is part of it is this open ledger that is unhackable and and has the following characteristics that's amazing it's called trustless what that means is you can work with a bunch of crooks and still know that the ledger that you're keeping is correct because it doesn't require trusting people to work with them it's something where everybody has to agree to be able to get things and it works it works in Bitcoin at scale over the whole world and so what we've done is adapted that technology to be able to build a system called enigma which takes data in an encrypted form computes on it in an encrypted form transmits it according to the person's permissions and only that way in an encrypted form and you know it provides this layer of security and privacy that we've never had before there have been some projects that come close to this but know we're pretty excited about this and and what I think you're going to see is you're going to see some of the big financial institutions trying to use it among themselves some of the big logistics some of the big medical things trying to use it in in hotspots where they have real problems but the hope is is that it gets spread among the general population so it becomes quite literally the privacy and security level that doesn't have Warren Buffett might be right that it might fail as a currency but the technology has really inspired some new innovations that's right so so it's essentially a distributed it's not a walled garden it's a distributed black box that's what you're describing you never exposed the data that's right you don't need a trusted third party that's getting attacked that's right nobody has to stamp that this is correct because the moment you do that first of all other people are controlling you and the second thing is is there a point of attack so it gets rid of that trusted third party centralization makes it distributed you can have again a bunch of bad actors in the system it doesn't hurt it's peer-to-peer where you have to have 51% of the people being bad before things really go bad how do you solve the problem of performing calculations on encrypted data because they're classic techniques actually it's been known for over 20 years how to do that but there are two pieces missing one piece is it wasn't efficient it scaled really poorly and what we did is came up with a way of solving that by making it essentially multi scale so it's it's a distributed solution for this that brings the cost down to something that's linear in the number of elements which is a real change and the second is keeping track of all of the stuff in a way that's secure it's fine to have an addition that's secure you know but if that isn't better than a whole system that secure it doesn't do you any good and so that's where the blockchain comes in it gives you this accounting mechanism for knowing which computations are being done who has access to them what the keys are things like that so Google glass was sort of incubated in MIT Media labs and well before yeah my group you go right in your group and yeah it didn't take off me because it's just not cool it looks kind of goofy but now enigma has a lot of potential solving a huge problem are you can open-source it what do you yeah it's an open-source system we hope to get more people involved in it and right now we're looking for some test beds to show how well it works and make sure that all the things are dotted and crossed and so forth and where can people learn more about it oh go to a nygma dot media dot mit.edu all right sandy we're way over our time so obviously you were interesting so thanks keep right there buddy Paul and I we right back with our next guest we're live from see this is the cube right back [Music]

live from Las Vegas Nevada it's the cube at HP discover 2014 brought to you by HP the keynotes this afternoon meg whitman was just on a panel with thomas friedman and intel and satya nadella microsoft and pretty interesting i was it was interesting i'm here with Jeff Rick to note how passionate meg is about politics and government wow I'm she comforted by boat for Bobby Patrick is here we've been drilling down into cloud all day Bobby is the CMO of the HP Cloud Division a lot of new announcements coming on a lot of action and HP Cloud Bobby welcome to the cube yeah thank it's great to be here yeah good to see you so yeah good keynotes good good that was a good refresher you know a lot of these keynotes just products pushing and pushing we had some of that earlier but I thought it was a good eye opening refreshing right kind of discussion so it was very worthwhile but anyway you're relatively new to to HP to run to actually soon how's it going it's great it's exciting i joined it like a great time for the company we were gearing up for the big launch of our new brand HP Helion that that was launched on May seventh so just a little over a month ago and we hit the mark market hard globally it's a complete pull together of all of our products and services around cloud under a single brand customers love it and and it's really reiterated our commitment to OpenStack and you know it's great HP announced the billion dollar commitment to HP Helion over the next two years so it's backed by some some big funding that's a great time to come in so I saw that what is that would help us unpack that billion dollars it was big number right it's popular number right even we aren't buffin right her site Warren Buffett hehe underwrote the whole thing the March Madness right giving away a billion dollars for the perfect bracket right no longer a million does out of the abelian so what is that billion what does it go to what does it comprised yeah I mean it goes 2 r.d where where the most where the most active corporate sponsor behind OpenStack which is the fastest-growing open source project on the planet we are we have more contributors we have more team leads for the different projects and so we're working with the community we're hiring OpenStack experts always looking for the best in the world all around the world and we're then hardening and curating it in making a commercial now with our support and we believe it's the underpinning of the future of what we call hybrid cloud the ability to put some of your information some of your applications with an enterprise some of the public cloud some in different countries that matter for compliance reasons and to be able to move around between those different clouds in a very easy fashion so this money is going to that rd2 skills and to you know truly a global global launch so when you think about the sort of messaging for our HP Cloud what do you want customers to think about in the Helion brand and the HP Cloud yeah the number one thing is commitment to open standards so we are if you heard Martin Fink today talk about HP Labs and they're coming to open source we're all in on open source we believe it's the way to deliver innovation faster we can bring the market tech new technologies faster to customers so we're all into open source we are committed to the projects that matter to the next 20 years of IT and so that could emma has a real though we have to be to prove it with to say you know you can run our software on other hardware we think it'll be we'll have some optimal integrated solutions for you using our entire stack but this is about this is about eliminating vendor lock-in which is one of the biggest challenges at IT departments have faced in the last 20 years and so I think the commitment behind it open is at the core of our messaging so we should mention so Martin fake gave i really liked his presentation i have been safer I don't know for years that HP's got to get back to its roots right which are in fence right and I have not heard until today something that excited me about invention and we saw it today right now invention is not easy all we've talked about a lot that the previous administration cut cut cut by the bone right it takes a long time to turn that's Nisha but but we saw today think was put into that job for very particular reason I said about two things one it's a guy who's going to commercialize inventions answer the marketplace and two there's going to be a heavy systems focus so he basically showed a little leg on the machine which eventually is probably gonna be powering your clouds right he also announced HP is going to put forth a new open source operating system optimized for non-volatile memory not only a blank sheet of paper that they're going to work on with universities but also a Linux derivative stripped-down Linux driven and one for Android that was excited yeah I think what's great also is the cloud business actually falls under market so our our entire business worldwide in our cloud effort our rd on product development is all under martin who runs our CTO of our of our HP labs and when you look at the problems he's addressing with the machine and he's going after it's going after the massive scale challenges of the internet right and the massive scale challenge to the cloud and the day-to-day lose that we're all that we're all facing within the Internet of Things and so you know what's great is by being a part of the labs and being part of Martin's organization you know we're we're injecting that thinking into our cloud we're injecting it into our innovation and and you can see a road map here right you can see this this whole new architecture you talk about architecture that's been in existence since 1950 it was called the von Neumann architecture all the way to now and you know the world with copper at the core you know the world's in need of a new architecture and so it's great to be part of that there's that was a cool talk you talking about electrons photons and ions electrons compute compute autonomy photon photons communicate anions door right and that in essence is the future direction of where HP is going with the machine run a civ massive memory blowing away the volatility hierarchy blowing way ultimately slow spinning disks using memory store right as the platform for future systems I love it yeah he mentioned also but one thing that's close to my heart is the distributed mesh you saw that distributed mesh where we're different different hardware software combinations sit at different points of the you know the net work and they work together you know compute and data and that's really hybrid cloud you know hybrid cloud is putting compute workloads in certain areas and having data stored and distributed for maximum availability and doing that you know with self-service and doing that in a way that you know I see over nations can scale effectively yeah I think that you know as a marketing person you realize that customers want to know that your relevant for their future right and you know as much as I love things like store once it's not the future of computing Ryan comes out HP Labs this potentially is so that's got to have customers really excite this really the first time you've unveiled it right massively in the public scale right maybe you're talking you know that's why that's why i joined the HP i saw that coming out a few months ago and the the new style of IT thinking we're we're saying you know we're radically going to be at the core of helping IT transition from the old style very inward to a customer centric style 21 you know where you're delivering the customer you know consumer experience in the business world and i saw that with HP and it got me excited and i joined on board not upside yeah the other part that Martin mentioned I no idea of the power of HP Labs but the leveraging open source as well which are I probably not a tool in the arsenal not that long ago to really bring the power of a large communities engaged you can attack right specific problems and make that a core piece of the of the process yeah we think about it we've got thousands of the world's best developers right the Millennial developers these guys working all around the clock working on you know our core cloud future called OpenStack contributing to that right including our experts and then we're taking that and then bringing it to market you know into providing that twenty four seven support testing and hardening it you know doing the things need to do to help it enterprise feel comfortable with that decision you could never do that we could never do that and deliver that kind of innovation on our own just couldn't afford it we wouldn't be able to deliver on it you know these are the best minds of the world who are contributing this and we're we're all in nope in fact so you talked about we talked about what the brand is stand for you said open no lock-in can open source innovation occur at a pace with somebody who's got full control of a stack it's much faster actually I mean this is the you watch the innovation of OpenStack it's only what four years old we just at a four-year birthday of OpenStack already that's an entire cloud computing platform you've got databases service projects like trove you've got object storage projects like Swift and block storage like Senator you know all of these things are being worked on by people around the world you could never deliver and so what's happening is the pace of innovation with an open source project like OpenStack is like it's a hockey stick and and so I think yeah I think if we did this ourselves we or anyone else you would never be able to deliver the kind of innovation it's coming to market now we talked about some of the announcements you guys know why don't we actually go back a month right but Helion and then work through today we've got some HPC announcements you got the network you know for Helion right start with Helia so what's great about healing on is is it really brought together a lot of great products and services of the cloud that already existed and it took OpenStack and it was our first foray into the market with an OpenStack distribution and what's important actually is we have technology one called HP cloud system that is actually the most popular cloud platform right now private cloud platform on the planet about almost two thousand users right or two thousand companies third of the Fortune 100 right now using that technology so it is a proven capable platform used by big banks and others we're injecting OpenStack into that so that you can you can over time scale that out with new applications and so the launch really was about pulling all the pieces together pulling our support and services together and saying to a customer you know with confidence here's here's our cloud portfolio and here's how we can take you on a journey it's your pace and accelerate that journey take advantage of that cloud portfolio and that was really the launch month ago today and it discover I mean only a month later we've already done a number of great things but one is we brought out OpenStack the commercial version so we've launched community one you can download it thousands of downloads already the commercial versions coming up now and we announced pricing and what we are all about here this is what it really really important we are about accelerating the adoption of OpenStack throughout the enterprise we're about breaking down the barriers that have that have inhibited the proliferation of this great technology so one of those things today was the price point we announced 1000 for three dollars per year per server all in price point for HP Helion OpenStack and that's critical because this is a scale out a scale-out product you're going to have dozens hundreds maybe even thousands of these all around the world and so the price point is it's disruptive it's the lowest of the planet and and you know we said it's gonna be simple and easy we're not going to do all of this good better best packaging it's it's super easy and that's a big part of today the other part of today as we said you know what we're going to work with partners we're going to deploy this all around the world and that was the helium Network announcement along with ATT and the British Telecom and Intel and that's that's just huge for today now now helium comprises both on-premise in an HP public cloud correct that's right so talk about how that pricing works I mean I like what you're saying simple because cloud pricing is really complicated yeah so we use we wear that we're probably the largest user of OpenStack in production in production today without public cloud so we use it and people can consume services from that buy them on a on a you know on an as you go basis but with OpenStack which you what's really happening is people are able to deploy their own private clouds right they're able to a service provider could deploy and build their own public cloud so when I talk about the price point talking about a customer building their own cloud building their own cloud and a third party data center or in one of HP's 82 data centers and that that price point is is is you know it's easy easy to use you can predict it in your business model and feel comfortable about what it's going to cost you know two three four years out and so help me understand let's unpack that a little bit what am I getting for that fourteen hundred dollars per so you get the entire so this is what's amazing you get the entire cloud operating system called OpenStack right you get all of the projects now that are part of the OpenStack bill you're getting a top you're getting an object story it's it's a you know a la amazon s3 but in a box called Swift right with a swift API and you can build that and do that yourself now you can do that in a way that controls that gives you full control and full flexibility you get databases the service product you get a cute engine with cinder grizzly everything that's right no lad for the computer and so you get all of this in that box all of this and you can go deploy this and you can benefit now from the thousands of developers who are every six weeks putting out new code and innovative so okay so all the new innovations will fall under that umbrella and that's right at any price they choose to use you might say I'm just building a cloud storage environment you might choose to be heavy on Swift that's what you're doing but it is all inclusive and you can use the entire cloud platform or you can build a storage platform or databases a service platform that's a different model clearly what a customer is telling you about that yeah so they well they want they want the control and the flexibility of having their own platform for you know security reasons their own for compliance they want to put their data you know in their own centers but they're also saying I want to use public cloud some too and I like the idea that if OpenStack is here and OpenStack is here right same code bases I can fairly easily take a workload take an application to go from here to here and back and forth that kind of flexibility call interoperability and that's what's coming down the road with OpenStack underneath is something that does not exist today is everybody wants make sure I understand so I'm paid 1400 hours per server for that OpenStack instance on-premise and then when I want to access public cloud services I'm what you would pay an answer you might want to burst you might want to just go do you might have some peak demand he's burst out there you pay for and I would vote for money to make your partner of ours yep excellent now you also had some hpc announcements that's right so there's a number what's great is HP now is people are taking Helion OpenStack and they're putting it in their products are hpc group a high-performance computing group said hey we want to have a self-service mechanism we want to be able to scale out sap architecture people want in that in hpc so they put OpenStack inside their solution and launched it today and so it's you know OpenStack and better than hpc open hybrid simple to consume is what I'm that's right that's right it's ductable and predictable all right good Dave Lisa Marie wrote the book on this so this is great if you don't believe Bobby Lisa came I gave me this right gave me the books it's the OpenStack technology breaking the enterprise barrier you've got it you got it it's one of the best best reads on the planet right now yeah excellent all right so what does it go to the next level what is it I'm just buying computer part of just I'm just getting capacity if you just want capacity you might say you might just build a storage cloud yourself or you might use the our public cloud storage or with our Helia network our partners around the world be deploying OpenStack and you can buy it from them awesome all right we got to leave it there Bobby thanks so much for coming to the cube is a pleasure meantime take it all right keep it right to everybody John furrier is in the house he's back from San Francisco or San Jose good to have him back John keep right there but back with job fair in just a moment